Ideal Tile Corp. v. N. T. Inv. Co.

• Decision Date: 24 August 1932
• Parties: IDEAL TILE CORPORATION v. N. T. INV. CO.
• Court: New Jersey Court of Chancery

162 A. 111

IDEAL TILE CORPORATION

v. N. T. INV. CO.

Court of Chancery of New Jersey.

Aug. 24, 1932.

Syllabus by the Court.

1. An attorney has a lien for a general balance due for professional services upon moneys in hand belonging to his client which have come to him in the course of, and with reference to, his professional employment.

2. An attorney has no lien on a fund in his hands for a special purpose inconsistent with his claim to a lien.

Suit by the Ideal Tile Corporation against the N. T. Investment Company, in which the receiver of the defendant corporation prayed that one Devin be ordered to turn over property of the company. The master ruled against the receiver, and the receiver files exception.

Exception sustained.

Barney Larkey, of Newark, for complainant.

Joseph J. Corn, of Newark, for defendant.

BACKES, Vice Chancellor.

The receiver of the insolvent company prays that the respondent, Devin, may be ordered to turn over to him $496.57, claiming it as the property of the company. The master to whom the matter was referred ruled against the receiver who filed exception.

Devin was the company's lawyer. It owed him $496.57 for professional services. He had in hand $513.44 and applied the amount of his debt in satisfaction of his supposed lien. If he has a lien, he may retain it; if not, the receiver is entitled to it, and the court has jurisdiction to compel him to turn it over. This summary proceeding must not be confused with instances of adverse claim of title to property and where recovery must be sought in a plenary action in the proper tribunal. Here the question is one of lien upon funds, the property of the receiver under the statute.

.An attorney has a lien for a general balance due for professional services upon moneys in hand belonging to his client which have come to him in the course of, and with reference to, his professional employment. That is settled law. Delaney v. Husband, 64 N. J. Law, 275, 45 A. 265. If the money belonged to the defunct company and he had a lien, it was appropriable by the respondent even though the corporation was insolvent; the appropriation was not preferential, void under the section 64 of the Corporation Act (2 Comp. St. 1910, p. 1638), for then it was applied in satisfaction of his lien, subject to which the money passed to the receiver under section 66 of the act (2 Comp. St. 1910, p. 1643).

The money was lienable unless, as the receiver claims, it came to the respondent's possession in trust for creditors of the corporation under a trust agreement, and if that be so the respondent has no lien. That there was a trust arrangement, later reduced to writing, to which arrangement and writing the respondent was a party and knew all about, and that the money is charged with the trust, the testimony leaves not a shadow of doubt.

The facts as developed before the master are these: The company was unable to meet its obligations; it was insolvent. The creditors were called together and the company's condition was explained. Its assets were two...