Gray v. Denhalter

• Decision Date: 13 June 1898
• Docket Number: 895
• Citation: 17 Utah 312,53 P. 976
• Court: Utah Supreme Court
• Parties: M. J. GRAY, PLAINTIFF, v. DENHALTER, MATTHEWS ET AL., DEFENDANTS. In re APPEAL OF ALFRED CREBBIN, APPELLANT, from Decision, Order and Decree made on application of Respondent John W. Judd

53 P. 976

17 Utah 312

M. J. GRAY, PLAINTIFF, v. DENHALTER, MATTHEWS ET AL., DEFENDANTS. In re APPEAL OF ALFRED CREBBIN, APPELLANT, from Decision, Order and Decree made on application of Respondent John W. Judd

No. 895

Supreme Court of Utah

June 13, 1898

Appeal from district court, Salt Lake county; Ogden Hiles, Judge.

Suit by M. J. Gray against Henry Denhalter and others. From a decree directing Alfred Crebbin to pay John W. Judd $ 1,000, and upon failure to do so, that certain premises be resold Crebbin appeals.

Affirmed.

William Kahn and Day & Street for appellant.

George W. Moyer and H. P. Henderson, for respondent Judd.

BARTCH J. ZANE, C. J., concurs. MINER, J., concurs in the judgment.

OPINION

BARTCH, J.:

This case results from a failure of the appellant, who purchased certain property at a foreclosure sale under a deed of trust, to comply, as is claimed, with the terms of the decree of foreclosure respecting a certain sum directed to be paid as an attorney's fee. It appears from the record that the plaintiff, M. J. Gray, had previously purchased the same property at a sale made under a second trust deed, and afterwards brought an action in ejectment for the property against the Denhalters, and, still later on, a suit in equity for the appointment of a receiver to take charge of the property. In the equity suit, the Jarvis-Conklin Mortgage Trust Company was made a defendant. J. H. Bacon was the trustee in both trust deeds, and the agent of the defendant trust company. Respondent J. W. Judd was its attorney, and filed a cross complaint for it in the equity suit, joining in the prayer for a receiver and to obtain a decree of foreclosure of its trust deed, and obtained the decree to sell the property. In the meantime the defendant trust company itself went into the hands of receivers, and the receivers assigned the deed of trust and the debt therein secured to the appellant, Crebbin.

There is some conflict in the evidence as to whether the respondent was employed as the attorney of Bacon or of the trust company, but the court found that he represented the trust company, and this, we think, is supported by the proof. Bacon was appointed in the decree of foreclosure special commissioner to sell the property, and out of the proceeds was to retain his fees; then pay to J. W. Judd, attorney for cross complainant, $ 1,000 as attorney's fees; and, after having paid the costs, turn the balance over to the cross complainant or its attorney, in payment of the sum of $ 23,793, found due on the trust deed, and interest. At the sale the property was bid off by the appellant, Crebbin, the then owner of the debt and judgment, for $ 25,300. The commissioner executed a certificate of sale, but payment of attorney's fee was refused; nor does it appear that any part of the purchase price was paid to the commissioner. Thereupon the respondent Judd moved the court for a resale of the property. The court granted the motion, and ordered that appellant, Crebbin, pay to J. W. Judd, $ 1,000, within 30 days from a certain date, and, upon failure thereof, that "the premises be sold to pay the several amounts provided for in the decree, including the attorney's fee" and costs. This action of the court is made the basis of complaint by the appellant on this appeal.

The decisive question appears to be whether the respondent had such an interest in the decree, and in lien upon the property, as would authorize the court upon motion to make the order in controversy. It is insisted for the appellant that the attorney's fees form a part of the judgment, and go to the mortgagee, or, in this case, to the assignee of the mortgagee, and that the respondent had no standing in court to make and insist on the motion, and had no lien on the judgment. It is true this court in McClure v. Little, 15 Utah 379, 49 P. 298, used the language: "Attorney's fees, when allowed, go to the mortgagee or trustee, and become a part of the judgment." In a certain sense this is true, but not in the sense that the mortgagee may hold such fees as his property. They do form a part of the judgment, and may go to the mortgagee, but, if they do, the mortgagee receives them in trust for the attorney, and has no tangible interest in them. Nor has he any right to retain them as liquidated damages or as a penalty for the default of the defendant. They are allowed to indemnify him against expense which he may incur, through the default in the payment of the obligation, but he has no other interest in them than as for such indemnity. Nor can he share in a division of such fees. These views are in harmony with the statute found in chapter 29, p. 25, Sess. Laws 1894, and with McClure v. Little, where it was said: "This statute was enacted to prevent a division of the fees provided for in the mortgage between the attorney and the mortgagee, and to allow only such reasonable attorney's fees to be taxed against the defendant as were actually agreed to be paid or were paid for his services."

The statute referred to provides (section 1): "In all cases of foreclosure, when an attorney or counsel fee is claimed by the plaintiff, no other or greater amount shall be allowed or decreed than the sum which shall appear by the evidence to be actually charged by and to be paid to the attorney for the plaintiff; and if it shall appear that there is an agreement or understanding to divide such fees between the plaintiff and his attorney, or between the attorney and any other person except an attorney associated with him in the cause, only the amount to be retained by the attorney or attorneys shall be decreed as against the defendants. Nothing herein contained shall be deemed to in any wise prevent the court from passing upon the reasonableness of counsel or attorney's fees in such cases." Under this enactment, it is clear that the moment a counsel fee, in a foreclosure suit, is allowed, the attorney for the plaintiff has a property interest in it which cannot be defeated by the purchaser at the sale or the mortgagee. It is equally clear that the plaintiff can have no such interest in such fee, not even by agreement with the attorney; for, in the absence of an agreement between the parties to the suit, the fee must be ascertained by the court from the proof, and, in any event it must be "paid to the attorney for the plaintiff." When the amount of such fee has thus been adjudicated and made a part of the judgment, the attorney has an interest in the judgment, and doubtless a lien thereon to the extent of the amount allowed, and this lien cannot be discharged by payment to any one except the attorney, who, to the amount thereof, is deemed the equitable assignee of the judgment. With reference to an attorney's lien upon the judgment which he recovers, Mr. Justice Harris, in Rooney v...