Seligman v. Franco-American Trading Co.

The judgment was confessed on the 5th of October, 1888, for an indebtedness stated to be owing to the plaintiffs for professional services as the defendants’ attorneys and counsel, and on the twenty-sixth of December of the same year, the plaintiff was appointed receiver of the property of the defendant at the suit of a judgment-creditor, whose execution had been returned unsatisfied.

The statement for the judgment was drawn with very great brevity, barely complying, if indeed it did comply, with what has been directed to be stated in it, to render it

To defeat the application, the plaintiffs have taken the position that the receiver was not authorized to make it, and the case of Whittelsey v. Delaney ( 73 N. Y. 571 ), has been brought to the attention of the court, as an authority sustaining this position. But that case is entitled to no such weight or effect. For there the action was brought to vacate a judgment on the ground that it had been fraudulently recovered, and the court held that an action by the receiver was there necessary to secure that relief. ' In this respect it followed the decision made in Tracy v. First National Bank, etc. ( 37 N. Y. 523 ), which decided that a, receiver could not move to vacate an attachment, as the law then existed, without first making himself a party to the action.

But the judgment, against which the receiver in this case-endeavored to obtain relief, was entered on confession, and it has been the practice of the courts at all times to interfere in the way of vacating, modifying, or reducing such judgments, by way of motion, and at the instance of other parties whose interests or rights may be shown to require protection against the judgment; and accordingly a subsequent judgment-creditor was permitted to move to vacate

The receiver appointed in this case represented a judgment-creditor, and being vested with his rights, was authorized, under these authorities, to make this application; and from the very brief, if not materially defective, statement made for the plaintiffs’ judgment, he was justified in moving to vacate it, or to secure such an investigation concerning the amount mentioned in it as would prove the plaintiffs to be entitled to its allowance. And this rule applies with peculiar force to transactions between attorneys and clients. The relation is of a confidential character, and liable to be used by the attorneys for their advantage,, to the prejudice of the parties employing them, as well as of other creditors. And to sustain transactions between the attorney and client, actual proof of good faith and fair dealing has been required by the law; and to promote that, the receiver was entitled to a statement supported, at least, by the evidence of the attorneys, showing that the amount, allowed by the judgment was a just and legal claim against the defendant. That they failed to furnish, and as the judgment contains no statements of facts from which the justice of the plaintiffs’ demand can be seen, a reference should be ordered, upon which proof should be required to-be given by them, or in their behalf, to establish their right, as against the defendant, to this sum of money, or to some portion of it, and if the amount has been overcharged, then the judgment should be correspondingly reduced.

The order from which the appeal has been taken should

Van Brunt, Ch. J., concurs; Brady, J., concurs in result.