Firmenich v. Bovee — 8 N.Y. Sup. Ct. 532

Majority

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JOSEPH FIRMENICH, Appellant, v. LORENZO J. BOVEE and LEWIS KELSEY, Respondents.

Headnote

Attorney.—Lien of, for costs—roMi subyeet to right of set-off by opposite pairty.

The lien of an attorney for his costs, on the judgment recovered, is subject to the right of set-off, in a proper action against the client for that purpose. When, however, the client assigns the judgment, or the costs accrued and to accrue in the action, to his attorney, as security for his costs, the opposite party loses his right of set-off, as the assignment becomes operative before the right of set-off attaches.

The right of set-off does not attach'until the judgment sought to be set off has been actually recovered.

Appeal from an order of Special Term, overruling a demurrer to defendants’ answer.

John H. Yought and Albert Sherwood, who were copartners in business, on October 26th, 1866, recovered a judgment against the defendant, Bovee, for $2,480.35, damages and costs. Sherwood died, and thereafter, and on August 5, 1872, Yought, as survivor, assigned the judgment to the plaintiff, Joseph Eirmenich. On the 23d day of June, 1872, the défendant, Bovee, recovered a judgment against Eirmenich, the plaintiff, for $346.57, damages and costs. Eirmenich appealed from the judgment to the General

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Term, where it was affirmed, and judgment entered for Bovee for $53.91, costs of appeal.

The complaint alleges the insolvency of Bovee, and asks that the judgments be set off against each other. It further alleges that Lewis Kelsey claims some ownership in the judgment in favor of the defendant, Bovee, and against the plaintiff, but denies that he has any ownership or interest therein.

The answer, among other things, sets forth, first, that on the recovery by Bovee of the judgment of June 21, 1872, it was agreed between him and Heddon, his attorney, that Heddon should have a lien on such judgment, for costs, disbursements and services in said action, for $150, and that one Randolph Ballard, who acted as counsel for Bovee on the trial, should have a lien thereon for $20, for his services; and that o.n July 13, 1872, for a valuable consideration, Bovee sold the judgment, subject to the liens aforesaid, to the defendant, Lewis Kelsey. Second, that on the appeal, the judgment was for costs and disbursements, which had been wholly earned and made by Thomas P. Heddon, Bovee’s attorney. The plaintiff demurred to the defense, first above stated, on the ground that it did not state facts constituting a defense to the said action.

■ The court, at Special Term, gave judgment for the defendant on the demurrer, with leave to the plaintiff to withdraw it.

Hamilton B. Squier, for the appellant.

T. P. Heddon, for the respondents.

On the 26th of October, 1866, Albert Sherwood and another recovered a judgment in this court against the above-named defendant, for the sum of $2,354.11 damages, and $126.24, costs, in an action on contract. On the 5th August, 1872, Sherwood, one of the plaintiffs in said judgment, died; and Vought, the survivor of said plaintiff, for a valuable consideration, sold and assigned said judgment to the above-named plaintiff. Execution was issued on said judgment and returned wholly unsatisfied. After plaintiff became the owner of said judgment, and on the 15th August, 1872,

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the defendant was notified of the assignment of said judgment to the plaintiff. On the 21st June, 1872, the defendant recovered a judgment in this court against the plaintiff, in an action on contract, for the sum of $346.57, for damages and costs. The plaintiff appealed from said judgment to the General Term, and that court affirmed it, and judgment of affirmance was entered on the 17th January, 1873, with $53.91 costs.

This action was brought to compel a set-off of the judgment recovered by defendant, against the judgment recovered by the plaintiff, upon the ground of the total insolvency of Bovee. The plaintiff alleged in his complaint, that Lewis Kelsey claimed .ownership of the judgment in favor of Bovee against the plaintiff, or some interest therein, which claim is unfounded. Kelsey is made a party defendant.

The answer of the defendants contains, first, a general denial of the matters charged in the complaint.

For a further defense, it is alleged that Thomas P. Heddon was the attorney for the defendant, Bovee, in the action in favor of defendant against the plaintiff, and immediately on the recovery of said judgment, it was agreed between Bovee and Heddon, that the latter should have a lien on said judgment for his costs, disbursements and services in said action, for the sum of $150, which lien still subsists', and that no part of such costs, etc., have been paid. That Bovee agreed with one Ballard, an attorney of this court, that he should have a lien on said judgment for twenty dollars, counsel fees, for aiding in the trial of said cause, which lien still subsists. That on the 13th of July, 1872, Bovee, for a valuable consideration, sold and assigned said judgment to the defendant, Kelsey, subject to the liens aforesaid, and he is now the legal owner and holder thereof and entitled to the money due- thereon.

The third defense is, that Heddon was attorney for Bovee in the appeal by plaintiff to the General Term, from the judgment recovered by Bovee against him, and thus the judgment for costs and disbursements in that case, belonged wholly to Heddon, he having earned all of the costs and made all the disbursements therein; and that no part of said costs or disbursements have been paid said Heddon, and he his entitled to the same.

To the second defense, the plaintiff* demurs, on the ground that

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it does not state facts sufficient to constitute a defense. The Special Term ordered judgment for defendants, on the demurrer, with costs, with leave to plaintiff to withdraw the demurrer.

In the case of Niooll v. Nicoll,^[3] a bill was filed in chancery to set off a judgment in favor of the plaintiff, and to restrain defendant from enforcing his judgment. An injunction issued, which was vacated by the vice-chancellor, on the application of the defendant’s attorney in the action at law in which the judgment was recovered, on the ground that he had a lien thereon for his costs. The chancellor affirmed the order of the vice-chancellor. The Court of Errors reversed the order of the chancellor and remitted the proceedings, with directions to allow the set-off. Cowes, J., delivered the opinion of the court. After stating the practice in the various courts in England and in this State, as to recognizing and enforcing the lien of an attorney on a judgment recovered by him, for his costs, and that, on motion to set off judgments against each other, it was discretionary whether to grant or refuse the relief asked, he says: “ But when we come to a bill filed or a trial at law, there is no discretion. On motion the courts proceed without the statute; on a bill filed or a trial at law, they are within it, and must obey it. No authority can be produced, where the attorney’s lien was ever recognized on a trial at law as barring a set-off, the right to which would be otherwise perfect * * No case can be produced, where on a bill filed this lien has been let in to obstruct a set-off, until Grisley v. Garrison, decided by the present chancellor. * * * Rules of practice are many times arbitrary, but when a statute comes in, there is a common principle by which all courts' must abide; and which, I think, has been departed from by this decree.”

An attorney, recovering a judgment, has, by law, a lien upon it for his costs.^[2] An express agreement that he shall have a lien, is of no greater force than the lien given by law, and hence the lien, in whichever way it is created, is subject to the right of set-off, in a proper action against the client for that purpose. When, however, the client assigns the judgment, or the costs accrued, and to accrue, in the action, to his attorney as security for his costs, the opposite party loses his right of set-off, as the assignment becomes opera

† † Roon v. Second Avenue R. R. Co., 18 N. Y., 368 .

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tive before the right of set-off attaches.^[3] It follows that the lien of Heddon and Ballard cannot prevent the set-off of the judgment, if otherwise admissible. The right of set-off does not attach, until a judgment, sought to be set off, has been actually recovered. The judgment in favor of defendant against plaintiff, was recovered the 21st June, 1872, but he could not have a right of set-off of the judgment against defendant, until he got an assignment of it, on the 5th August, 1872. The assignment of the judgment by Bovee to Kelsey, was on 13th July, 1872, and before plaintiff had any right to demand a set-off. Unless, therefore, a notice from Kelsey to plaintiff, of the assignment of the judgment against him, was essential, in order to defeat plaintiffs right of set-off, the plaintiff had no such right, and the demurrer was properly overruled. Notice of the assignment of the judgment against Bovee to the plaintiff, is alleged to have been known to Bovee. But notice could not have been given to plaintiff, of the assignment of the judgment of Bovee against plaintiff, as plaintiff was an assignee of the judgment, and the fact of the assignment not disclosed.

The plaintiffs in the judgment against Bovee, had no right of offset, and hence, plaintiff acquired none from them. Having had none at the time of the assignment by Bovee to Kelsey, that assignment was a bar to the right of offset of the judgment for damages and costs.

But if I am right in holding that the plaintiff had a right to a set-off of the judgment in favor of Bovee for costs, notwithstanding the lien of his attorneys, the order must be reversed as to that item, and affirmed as to the judgment assigned to Kelsey, without costs of the appeal to either party.

Ordered accordingly.

* Perry v. Chester, 53 N. Y., 240 .

Footnotes

* 16 Wend., 446 .