Appeal of Harris

Decision Date26 June 1936
Docket Number223-226
Citation323 Pa. 124,186 A. 92
PartiesHarris's Appeal; Jacoby's Appeal
CourtPennsylvania Supreme Court

Argued April 27, 1936

Appeals, Nos. 223-226, Jan. T., 1936, from decrees of Q.S Phila. Co. (C.P. No. 1), in the matter of condemnation of property on the South Side of the Parkway, as an addition to the Parkway, etc. (2121 Vine Street and 2134 Vine Street). Decrees reversed.

Condemnation proceeding.

The opinion of the Supreme Court states the facts.

Petition filed by mortgagee, intervening party, asking payment of award in full to mortgagee. Order entered granting petition and refusing any allowance out of fund and counsel fees and costs, opinion by KUN, J. Property owner and claimant attorney, appealed.

Error assigned, among others, was final decree.

The decree overruling appellants' exceptions are reversed and it is directed that the court below allow the appellant, Myron Jacoby, Esq., a reasonable fee for his services in the condemnation proceedings and otherwise also enter a decree in conformity with this opinion; costs to be paid by appellee.

William A. Schnader, with him Gilbert W. Oswald and Myron Jacoby, for appellants.

James McMullan, with him Drinker, Biddle & Reath, for appellee.

Before KEPHART, C.J., MAXEY, DREW, LINN, STERN and BARNES, JJ.

OPINION

MR. JUSTICE MAXEY:

The question presented here is this: Has the attorney for the owner of real estate taken in condemnation proceedings any claim upon the award of compensation therefor, for the reasonable value of his services and costs of litigation, as against the mortgagee of the property?

One of the appellants, Grace Wilson Harris, was the owner of 2121 and 2134 Vine Street, Philadelphia. Appellee, the Corn Exchange National Bank & Trust Co., held mortgages on both properties, securing a debt of Mrs. Harris upon which the balance due is $109,379. Pursuant to an ordinance, the city in 1934 condemned the properties for use as an addition to the Parkway, located therein. Mrs. Harris employed the other appellant, Myron Jacoby, Esq., to represent her in the condemnation proceedings. She sent him a letter stating: "It is understood and agreed between us that your charges for all legal services in this connection will be ten per cent of the gross amount collected from the city for this condemnation." The mortgagee bank had notice of the proceedings, and of the fact that Mrs. Harris, the owner, had retained Jacoby to represent her in the matter. It made no objection (of course, it could not do so successfully), nevertheless, it kept silent during the entire proceedings and permitted Attorney Jacoby to bear the entire professional burden during the condemnation proceedings. The success of his efforts clearly redounded to its gain. A board of view was appointed and held hearings, at which Jacoby appeared for Mrs. Harris and produced expert testimony as to the value of the properties. In due course, compensation was awarded the owner in the amount of $67,000 for both properties, which is less than the mortgage debt. The award became final, but before it was paid by the city the mortgagee intervened and filed petitions to have the whole award paid to it as lien creditor. The lower court granted the petitions and awarded the entire fund to the bank, permitting Jacoby to intervene and file exceptions to the dismissal of his claim to ten per cent of the award, as counsel fee, and his reasonable costs and expenses of conducting the litigation against the city. It now appears that Mrs. Harris is insolvent, so that no hope can be entertained that she will be able to reimburse Jacoby or pay his counsel fee. Appellee does not claim that ten per cent of the award, as agreed upon by Mrs. Harris and Jacoby, is more than the reasonable value of his services. The exceptions of both Mrs. Harris and Jacoby were overruled, and they have appealed.

Appellee's position is that Jacoby was attorney for Mrs. Harris and must look to her for his fee and costs. It insists that its lien on the fund, by virtue of its mortgage, is superior to the claim of anyone through or under Mrs. Harris, the owner. It does not deny, however, that the owner of the property was the party entitled to claim compensation for its taking, and to initiate and conduct the proceedings before the jury of view. In Phila. & Reading R.R. v. Penna. Schuylkill Valley R.R., 151 Pa. 569, 575, 25 A. 177, it was said: "It is the undoubted right of the owner to institute and maintain proceedings for the recovery of the damages resulting from the appropriation of its land and to have the full benefit of the same." To the same effect is Knoll, Admr., v. N.Y., etc., Ry. Co., 121 Pa. 467, 15 A. 571. Our decisions establish that in carrying on this type of litigation and securing a proper award the property owner sustains a trust relation as to creditors possessing liens on the property, sufficient to entitle the latter to equitable aid in enforcing such liens upon timely intervention in the proceedings. In Knoll, Admr., v. N.Y., etc., Ry. Co., supra, at pages 474 and 475, we said: "The right of action for . . . damages [in condemnation proceedings] is in the owner. . . . If the owner should refuse to move, or should act fraudulently, the courts upon a proper application by lien creditors would no doubt treat him as a trustee and require him to do, or permit his creditors to do in his name, what might be necessary to an adjustment of the damages, and impound the money for those equitably entitled to receive it. . . . The claim asserted, however, would have been that of the owner, and the damages when settled would have been paid out under an order of the court. . . . In these cases, the courts seem to have regarded the owner as a trustee for his lien creditors, and a recovery in his name as one to be controlled for their benefit." To similar effect is Woods Run Avenue, 43 Pa.Super. 475. The owner may even release damages against the municipality which takes the property for public use, so long as this is not in fraud of the mortgagee: Shields v. City of Pittsburgh, 252 Pa. 74, 97 A. 124. For all practical purposes, in the case before us, the City of Philadelphia stands ready to pay the award to those rightfully entitled to it, as the court shall direct. It must be distributed under equitable principles: Irons v. Pittsburgh, 64 Pa.Super. 126, 130.

Under these decisions it cannot be said that appellee bank did all that it could to enhance the fund now to be distributed, by waiting until the litigation between the owner and the city had terminated, to step in at the last moment and claim the entire proceeds, just prior to payment, without bearing any of the labor and expense of producing the fund. If it thought its rights prejudiced, there was no reason why it could not intervene at the commencement of the condemnation proceedings, averring its claim as lien creditor, and demanding a right to be heard. Upon a proper application it would have had the right to appear by counsel and present evidence as to the value of the property taken, since it had the primary interest in the property. It is with poor grace that it now presses its claim to the full amount of the award, having held aloof when its interest was imperiled and was being protected by another party in interest seeking (but unsuccessfully) to salvage her equity in the property. If a principle in law or equity can be found to sustain an award of reasonable counsel fee and costs to the owner's attorney, who litigated the compensation dispute and whose services helped produce the fund, it ought to be applied.

Appellants do not contend that Jacoby has an ordinary common law or retaining lien upon the fund which the city is now prepared to pay, and which has been substituted for the condemned land. Such a lien is dependent upon possession by the attorney and binds only money, papers or other property in his hands: Dubois's App., 38 Pa. 231; Quakertown & Eastern R.R. Co. v. Guarantors' Liability Indemnity Co., 206 Pa. 350, 55 A. 1033; 2 Thornton on Attorneys at Law, 969, section 572. On the other hand, the right of an attorney to a charging lien upon a fund in court or otherwise applicable for distribution on equitable principles, which his services primarily aided in producing and to which, by agreement with his client, he is to look for compensation, has long been recognized by the authorities. In Patten v. Wilson, 34 Pa. 299, where counsel for a judgment creditor was held entitled to the whole amount of the judgment as against his client's attaching creditor, this court referred to the right as an "equitable assignment." In McKelvy's & Sterrett's Appeals, 108 Pa. 615, the attorney was termed the "equitable owner," to the extent of the value of his services, of the fund in court produced by his efforts. In that case this court said at page 620: "The fact is found by the auditor and the court that the appellee was to look to this fund for his compensation. Its existence is due in great measure to his professional services. To the extent of the value of those services, then, the fund belonged to him; that is to say, he was the equitable owner thereof to the amount of his fee. When, therefore, it was discovered that the appellant was endeavoring to take the fund out of court by the aid of other counsel, thus ignoring the appellee's claim, the court below did right in laying its hand upon such a proceeding. It was acting as a court of equity; it was administering a fund within its actual grasp, and it was entirely competent to dispose of every question connected with that fund. It had been in the hands of a receiver but the receiver had paid it into court. The allowance of counsel fees touching a fund in equity has always been under the control of a...

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