Brooks v. Mandel-Witte Co.

• Decision Date: 11 January 1932
• Docket Number: No. 111.,111.
• Citation: 54 F.2d 992
• Parties: BROOKS v. MANDEL-WITTE CO., Inc., et al.
• Court: U.S. Court of Appeals — Second Circuit

54 F.2d 992 (1932)

BROOKS v. MANDEL-WITTE CO., Inc., et al.

No. 111.

Circuit Court of Appeals, Second Circuit.

January 11, 1932.

Blackman, Pratt & King, of New York City (Addison S. Pratt, of New York City, of counsel), for appellant.

M. Robert Gadrich, of New York City, for respondents.

Before MANTON, L. HAND, and CHASE, Circuit Judges.

MANTON, Circuit Judge.

Appellant, an attorney at law, admitted to practice in the state and federal courts, including the United States Customs Court, seeks to enforce a lien against a fund of money set aside to satisfy a claim for professional services. The question presented is whether appellant has an attorney's lien.

Stern, a Customs House broker, on January 17, 1925, contracted with appellee, who was engaged in importing artificial flowers and feathers at the port of New York, to represent it in obtaining a reduction and refund of excess customs duties on artificial flowers under the Tariff Act of 1922 (section 1 19 USCA § 121). The contract read in part as follows: "We authorize said S. Stern to make, file and prosecute protests and appeals in our name, to retain counsel, and to engage the assistance of our custom brokers or agents (but at their own expense), and generally to use all lawful means to secure the allowance of said refunds and abatements of excessive customs duties." It provided a payment of one-third of all amounts refunded as compensation for all services.

On May 22, 1926, after retaining appellant, a second contract was made, when other counsel than appellant were also retained, and it provided for a fee of 50 per cent. in which appellant had a third interest. Appellant was retained by Mr. Stern, and his retainer was fully ratified by appellees later. Refunds were eventually awarded to appellee, and appellant, not having been paid, asserts an attorney's lien. By agreement, the amount which appellant would receive if the lien is lawful was deposited in a trust company to await the determination of this controversy. Appellant's services consisted of filing and prosecuting protests against assessments, appearing before the United States Customs Court when the protests appeared on the calendar, prosecuting the protests in the court after a decision in a test case, and obtaining judgment orders thereon sustaining the protests, holding the merchandise dutiable at 60 per cent. instead of 90 per cent. Some items were reliquidated, at plaintiff's request, at 60 per cent. by the collector without prosecution of the protests before the court. Blumenthal & Co. v. United States, 14 Cust. App. 17.

In May, 1930, when payment for his services was refused, appellant filed with the collector a notice of lien as appellee's attorney, claiming under section 475 of the Judiciary Law of New York state (Consol. Laws, c. 30). Whatever may be said of the sufficiency of this notice or its efficacy, it is sufficient to point out that, if the lien exists, it is statutory and notice thereof is not required to be given. Peri v. New York Central & H. R. R. Co., 152 N. Y. 521, 46 N. E. 849. The state court has held that an attorney's lien will not be allowed by virtue of section 475 of the Judiciary Law for services in the special tribunals established by the United States. Matter of Albrecht, 225 App. Div. 423, 233 N. Y. S. 383, affirmed 253 N. Y. 537, 171 N. E. 772. But there the court considered services performed before the Board of Tax Appeals, which is not a judicial tribunal. The United States Customs Court is a judicial tribunal. Act of May 28, 1926, chap. 411 (19 USCA §§ 405a, 405b). It is not an administrative body, commission, or board. For instance, the service of appellant before the collector in obtaining rebates is upon a different basis as to this asserted lien than the services in the United States Customs Court and the Court of Customs Appeals. The Board of Tax Appeals, by the act creating it, is declared to be a board and independent agency in the executive branch of the government. The Revenue Act of 1924, § 900 (k), 26 USCA § 1212 note. See, also, Revenue Acts of 1926 and 1928 (26 USCA §§ 1211, 2001 et seq.). It is not a court. Old Colony Trust Co. v. Com'r, 279 U. S. 716, 49 S. Ct. 499, 73 L. Ed. 918. A final order or decree of the Customs Court, sustaining or overruling a protest, is in the form of a declaratory judgment and a direction to the collector, as the Tariff Acts require, to reliquidate the entry accordingly. Section 515 of the Tariff Acts of 1922 and 1930 (19 USCA §§ 399, 1515). The United States Court of Customs Appeals has held the Customs Court to be a judicial tribunal, and a protest filed by an importer is the initial pleading in an action. U. S. v. Macy & Co., 13 Cust. App. 245; U. S. v. McCoy, 5 Cust. App. 264; Jordan Marsh Co. v. U. S., 57 Treas. Dec. 392, No. 43901.

Section 475 of the N. Y. Judiciary Law provides: "From the commencement of an action or special proceeding, or the service of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client's cause of action, claim or counterclaim, which attaches to a verdict, report, decision, judgment or final order in his client's favor, and the proceeds thereof in whosoever hands they may come; and the lien can not be affected by any settlement between the parties before or after judgment or final order."

The federal courts sitting in a state have enforced statutes of that state creating attorney's liens whether the suit for services in which the lien was claimed was originally brought in a state court or in a federal court. In re Baxter & Co., 154 F. 22 (C. C. A. 2); Machcinski v. Lehigh V. R. Co., 272 F. 920 (C. C. A. 2). The state courts have enforced liens claimed for services rendered in a suit brought in a federal court or removed from the state court to the District Court. Central R. R. & Bkg. Co. v. Pettus, 113 U. S. 116, 5 S. Ct. 387, 28 L. Ed. 915; In re Paschal, 10 Wall. (77 U. S.) 483, 19 L. Ed. 992; Spellman v. Bankers' Trust Co., 6 F.(2d) 799 (C. C. A. 2); Meighan v. Amer. Grass Twine Co., 154 F. 346 (C. C. A. 2); Matter of Chorosh v. Woodbury, 135 Misc. Rep. 910, 240 N. Y. S. 157; McKennell v. Payne, 197 App. Div. 340, 189 N. Y. S. 7. In Fischer-Hansen v. Brooklyn Heights R. Co., 173 N. Y. 492, 66 N. E. 395, 397, the court said: "The statute is remedial in character, and hence should be construed liberally in aid of the object sought by the legislature, which was to furnish security to attorneys by giving them a lien upon the subject of the action." The fund is now in the possession of, and under the control of, the appellee's attorney Mr. Keve. Large sums have been paid the appellees as refunds. These were paid in satisfaction of judgments. The lien attaches to the proceeds, under section 475, "in whosoever hands they may come." But a sufficient sum having been set aside and on deposit in a special account subject to the further order of the court, it is within the power of the court to enforce the appellant's lien thereon. It is said in the Matter of Levy, 249 N. Y. 168, 163 N. E. 244: "The lien, whether before or after judgment, is subject to the right of the client to settle in good faith. The attorney may, however, follow the proceeds to enforce his lien. The law does not permit the client to cheat his attorney." See Cunningham v. Sizer Steel Corp. (D. C.) 1 F.(2d) 653; Robinson v. Rogers, 237 N. Y. 467, 143 N. E. 647, 33 A. L. R. 1291; Beecher v. Peter A. Vogt Mfg. Co., 227 N. Y. 468, 125 N. E. 831.

But it is argued that section 3477 of the U. S. Revised Statutes, now section 203, title 31, U. S. Code (31 USCA § 203), forbids the creation of a lien. This section applies only to voluntary transfers or assignments by a claimant of his claim against the United States, of whatever character it may be, whether the transfer be absolute or given as collateral security or for the purpose of bringing suit thereon, and whether the claim is to be prosecuted in the courts or in one of the executive departments of the government. Brothers v. United States, 250 U. S. 88, 39 S. Ct. 426, 63 L. Ed. 859; Prairie State Nat. Bank v. United States, 164 U. S. 227, 17 S. Ct. 142, 41 L. Ed. 412; St. Paul & Duluth R. Co. v. United States, 112 U. S. 733, 5 S. Ct. 366, 28 L. Ed. 861; United States v. Gillis, 95 U. S. 407, 24 L. Ed. 503. The purpose of the statute was to protect the government and not the parties to the transfer or assignment. Goodman v. Niblack, 102 U. S. 556, 26 L. Ed. 229; McGowan v. Parish, 237 U. S. 285, 35 S. Ct. 543, 59 L. Ed. 955; Price v. Forrest, 173 U. S. 410, 19 S. Ct. 434, 438, 43 L. Ed. 749. In Price v. Forrest, supra, the court said: "There was no purpose to aid those who had claims for money against the United States in disregarding the just demands of their creditors. We perceive nothing in the words or object of the statute that prevents any court of competent jurisdiction, as to subject-matter and parties, from making such orders as may be necessary or appropriate to prevent one who has a claim for money against the government from withdrawing the proceeds of such claim from the reach of his creditors; provided such orders do not interfere with the examination and allowance or rejection of such claim by the proper officers of the government, nor in any wise obstruct any action that such officers may legally take under the statutes relating to the allowance or payment of claims against the United States."

Nutt v. Knut, 200 U. S. 13, 26 S. Ct. 216, 217, 50 L. Ed. 348, considered an agreement for payment to an attorney for his services of "a sum equal to 33 1/3 per cent. of the amount which may be allowed on said claim." The court said: "Such an agreement did not give the attorney any interest or share in the claim itself, nor any interest in the particular money paid over to the claimant by the government. It only established an agreed basis for any settlement that might be made, after the allowance and payment of...