La Fleur v. Schiff
| Decision Date | 24 April 1953 |
| Docket Number | No. 35983,35983 |
| Citation | 58 N.W.2d 320,239 Minn. 206 |
| Court | Minnesota Supreme Court |
| Parties | LA FLEUR v. SCHIFF. |
Syllabus by the Court.
1. Under M.S.A. § 481.13(3), an attorney's lien on his client's cause of action is superior to the rights of a judgment creditor of the plaintiff or the assignee of such judgment creditor.
2. The right to offset one judgment against another is not statutory but is an incident of the general jurisdiction of the court over its suitors and is of an equitable nature.
3. Ordinarily a court, in the exercise of its authority to set off one judgment against another, will not do so if it will defeat an attorney's lien.
4. Whether the municipal court of Minneapolis has power to set off one judgment against another is not determined.
F. Gordon Wright, Minneapolis, for appellant.
Clarence O. Holten and James S. Eriksson, Minneapolis, for respondent.
During the month of July 1951, plaintiff commenced this action in the Minneapolis municipal court to recover $115 alleged to have been loaned by him to defendant. The case came on for trial on September 20, 1951.
Prior to the commencement of this action, one James D. Scarsdale had obtained a judgment against plaintiff in the district court of Hennepin county for $2,137.71. An execution was issued thereon and returned unsatisfied. Supplementary proceedings were instituted in March 1950, and in the order for such supplementary proceedings the court prohibited plaintiff from transferring or disposing of unexempt property. Plaintiff was examined in such supplementary proceedings and failed to disclose the existence of his claim against defendant upon which the present action is based. Plaintiff's present attorney represented him at such supplementary proceedings.
On September 19, 1951, prior to the trial of the present action, defendant acquired by assignment an interest in the judgment held by Scarsdale against plaintiff in the amount of $130. Thereafter, defendant attempted to file a supplemental answer in this action alleging, as an offset to any claim which plaintiff might have against him, the judgment he had so acquired against plaintiff. The court denied his right to do so, and the case proceeded to trial, resulting in findings in favor of plaintiff. Judgment was entered in plaintiff's favor for $151.20 on October 25, 1951. On October 26, 1951, plaintiff's attorney filed a notice of attorney's lien in the amount of $100 with the city clerk of Minneapolis and with the clerk of the municipal court. On the same day defendant, by his present counsel, who did not represent him in the trial of the case, served a notice of motion for an order offsetting the judgment which defendant had acquired from Scarsdale against the judgment which plaintiff had acquired against him, supported by an affidavit in which the facts stated above respecting the supplementary proceedings were included. The court granted the motion and this appeal is from that order.
It is the contention of plaintiff (1) that his attorney's lien is prior and superior to the interest in the Scarsdale judgment acquired by defendant which the court offset against the judgment which plaintiff holds against defendant and (2) that the municipal court has no power to offset one judgment against another in any event.
Defendant contends that the Scarsdale judgment, by virtue of the order in the supplementary proceedings, became an equitable lien on all unexempt property of plaintiff and, as such, is superior to the lien of plaintiff's attorney.
1. M.S.A. § 481.13 provides:
'An attorney has a lien for his compensation whether the agreement therefor be expressed or implied:
'(3) Upon the cause of action from the time of the service of the summons therein, or the commencement of the proceeding, and upon the interest of his client in any money or property involved in or affected by any action or proceeding in which he may have been employed, from the commencement of the action or proceeding, and, as against third parties, from the time of filing the notice of such lien claim, as provided in this section;
'(5) Upon a judgment, and whether there be a special agreement as to compensation, or whether a lien is claimed for the reasonable value of the services, the lien shall extend to the amount thereof from the time of giving notice of his claim to the judgment debtor, but this lien is subordinate to the rights existing between the parties to the action or proceeding;'
Prior to R.L.1905 an attorney had no lien on the cause of action. Northrup v. Hayward, 102 Minn. 307, 113 N.W. 701. Under the old law we held that the equitable right of setoff between the parties is superior to the claims of attorneys. Morton v. Urquhart, 79 Minn. 390, 82 N.W. 653. This decision was based largely on the requirement of the then existing statute that an attorney must give notice of his lien. Since R.L.1905, § 2288(3), an attorney has a lien upon the cause of action from the time of service of the summons; notice to the opposite party is not required. In Desaman v. Butler Brothers, 114 Minn. 362, 364, 131 N.W. 463, 464, we said:
See, also, Byram v. Miner, 8 Cir., 47 F.2d 112, which contains an exhaustive review of our cases.
In Barnes v. Verry, 154 Minn. 252, 255, 191 N.W. 589, 590, 31 A.L.R. 707, we said:
'* * * A judgment debtor may purchase a judgment for the purpose of using it as a set-off (Morton v. Urquhart, 79 Minn. 390, 82 N.W. 653; 15 RCL p. 823, 23 Cyc. p. 1483), but is not entitled, as a matter of right, to offset one judgment against another, it being discretionary with the court to grant or deny such relief (Lundberg v. Davidson, 68 Minn. 328, 71 N.W. 395, 72 N.W. 71; Martin County Nat. Bank v. Bird, 92 Minn. 110, 99 N.W. 780).'
Under the Barnes case, the lien of plaintiff's attorney is superior to the rights of plaintiff's judgment creditors. Defendant, as an assignee of a part of the judgment held by Scarsdale against plaintiff, could acquire no greater right than his assignor had. It must follow that there could be no offset which would defeat the attorney's lien unless a prior lien existed by virtue of the order issued in the supplementary proceeding conducted by Scarsdale. In contending that Scarsdale acquired a lien upon plaintiff's claim against defendant by virtue of the court's order in the prior supplementary proceeding and that when he acquired part of the Scarsdale judgment he also acquired such lien, defendant relies upon Billson v. Linderberg, 66 Minn. 66, 70, 68 N.W. 771, 773, where we said:
'The commencement of supplemental proceedings under section 5486, Gen.St.1894 (M.S.A. § 575.02), by the service of the order on the judgment debtor, gives the judgment creditor an equitable lien on the assets subsequently discovered, If he proceeds with proper diligence to discover and apply the same to the payment of his judgment.' (Italics supplied.)
There is no claim here that Scarsdale ever proceeded with diligence to discover and apply the claim of plaintiff against defendant upon his judgment. The complaint in the present action alleges that defendant is indebted to plaintiff for money loaned to defendant by plaintiff. Defendant interposed an answer denying liability. Plaintiff thereupon moved to strike the answer as sham, and that motion was denied. In the trial of the case, the exhibits introduced by plaintiff consisted of five checks drawn by M. P. LaFleur & Associates, Inc., to defendant. From the denial of liability on the part of defendant it is apparent that he must have thought that he had a meritorious defense to the claim. The judgment clearly came into being by virtue of the labors of plaintiff's attorney.
It is also obvious that the lien of plaintiff's attorney...
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