Cunningham v. Sizer Steel Corporation

• Decision Date: 10 October 1924
• Citation: 1 F.2d 653
• Parties: CUNNINGHAM v. SIZER STEEL CORPORATION. FIDELITY TRUST CO. OF BUFFALO v. SIZER STEEL CORPORATION et al.
• Court: U.S. District Court — Western District of New York

1 F.2d 653 (1924)

CUNNINGHAM v. SIZER STEEL CORPORATION.

FIDELITY TRUST CO. OF BUFFALO v. SIZER STEEL CORPORATION et al.

District Court, W. D. New York.

October 10, 1924.

Myron S. Short, of Buffalo, N. Y., for petitioners.

Louis Desbecker, of Buffalo, N. Y., for receivers.

HAZEL, District Judge.

This is a motion to impress an attorney's lien upon a fund in the custody of the receivers of the defendant corporation appointed by this court. The petitioners concededly have performed legal services at the request of the insolvent corporation in the settlement and adjustment of income tax matters pending before the United States Department of Internal Revenue. The subject-matter arose from an alleged tax indebtedness amounting to $232,026.78, which, in consequence of petitioners' services, was finally adjusted with the government at $18,413.80, and after the receivers were appointed the petitioners presented to them their bill for $41,213.09, covering their services and expenses, which was audited and allowed them in full, but no part thereof has been paid. The defendant's property, a manufacturing plant, was sold under order of this court in the consolidated action of foreclosure of a trust mortgage to secure an issue of bonds and the pending action in equity to conserve assets, and the proceeds of the sale were insufficient to pay the petitioners' claim or the claims of unsecured creditors. A lien ahead of the trust mortgage is not contended. Since the confirmation of the sale the government has refunded to the receivers $10,505.07, being the interest on certain excess payments of income and profit taxes which were made during the period affected by the adjustment.

Since no legal or judicial action or proceeding against the government was ever instituted to adjust the tax, and no judgment, order, or judicial mandate secured in a pending case or proceeding, the receivers in opposition contend that no retaining lien or charging lien eventuated. But I think a lien of the latter class has been fairly established. It was not necessary that a judgment should have been recovered in a judicial action or proceeding in order to maintain a charging lien. There is authority to the effect that an attorney or solicitor is entitled to reimbursement for his costs and services rendered out of any fund or judgment recovered by his efforts. The particular services rendered required the skill and experience of an advocate. Questions of law were involved, and in the proper performance of professional services it was necessary to file complicated tax returns, accounts, and amortization schedules, and participate in conferences and arguments before heads of departments at Washington, to the end that a favorable decision or adjustment of defendant's tax liability would be secured.

Charging liens, as distinguished from retaining liens, exist under section 475 of the Judiciary Law of the state of New York (Consol. Laws, c. 30), and they attach to the cause of action from the beginning, viz. to a verdict, report, decision, judgment, or final order in favor of the client, and such a lien, moreover, covers and includes any proceeds recovered, even though they have not come into the possession of the attorney or client. The attorney, owing to an enlargement of the statute, has a lien, even before judgment, for his compensation upon any fund recovered by him. Matter of Heinsheimer, 214 N. Y. 361, 108 N. E. 636, Ann. Cas. 1916E, 384.

In the Matter of Knapp, 85 N. Y. 284, the Court of Appeals of this state held that an attorney's lien attached for services performed in an action or proceeding before a statutory commission...