In re Coleman
| Citation | 87 F.2d 753 |
| Decision Date | 08 February 1937 |
| Docket Number | No. 243.,243. |
| Parties | In re COLEMAN. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Henry E. Coleman, of New York City, in pro. per.
M. W. Markowitz, of New York City (Nathan A. Markowitz, of New York City, of counsel), for trustee-appellee.
Before MANTON, SWAN, and CHASE, Circuit Judges.
The order appealed from grants the trustee's motion to determine the amount of an attorney's lien due to the bankrupt on a judgment he had recovered for a client, with directions that he pay the amount to the trustee. The bankrupt, an attorney at law, in March, 1933, commenced an action in the Supreme Court of Kings county on behalf of a client to recover damages for personal injuries. His retainer provided that he receive 40 per cent. of any recovery either by way of judgment or settlement; and no fee otherwise.
January 21, 1936, the bankrupt filed his voluntary petition in bankruptcy and was adjudged a bankrupt that day. At that time the personal injury cause was pending and undetermined. On March 11, 1936, a judgment was entered in favor of the bankrupt's client for $4,000. After an appeal to the New York Appellate Division of the Supreme Court, Second Department, the judgment was affirmed June 16, 1936. Cantor v. Vim Electric Co., 248 App.Div. 734, 290 N.Y.S. 144. The trustee then made claim to the fee earned by the bankrupt. The bankrupt moved to restrain the trustee from interference with the collection of the legal fees due him, claiming that on January 21, 1936, the lien of the bankrupt was not property within the purview of section 70 of the Bankruptcy Act (30 Stat. 565, as amended 11 U.S.C.A. § 110) and that the trustee had no right to any part of these legal fees, which accrued and became payable subsequent to the date of adjudication. The trustee moved that the amount of the lien be determined with directions that it be paid to him. The latter motion was granted; the former denied.
Section 70a of the Bankruptcy Act (11 U.S.C.A. § 110(a) (5) provides that the trustee of the estate of a bankrupt upon his appointment and qualification is vested by operation of law "with the title of the bankrupt, as of the date he was adjudged a bankrupt, except in so far as it is to property which is exempt, to all * * * (5) property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him."
Under the state law, section 475 of the Judiciary Law of New York (Consol. Laws c. 30), an attorney has a lien upon the cause of action, from the commencement thereof, which attaches to the proceeds of a judgment in his client's favor. The statute creates a charging lien different from the one at common law which did not arise until judgment and might therefore be defeated by an honest settlement. See Beecher v. Vogt Mfg. Co., 227 N.Y. 468, 471, 125 N.E. 831. The lien secures not only the contract of retainer but the payment of the reasonable value of services where the attorney has been wrongfully discharged, Matter of Weitling, 266 N.Y. 184, 194 N.E. 401, or has died before a settlement or judgment, Sargent v. McLeod, 209 N.Y. 360, 103 N.E. 164, 52 L.R.A.(N.S.) 380. While the statute refers to the "attorney who appears for a party," and it has therefore been said that the attorney of record alone is entitled to a lien, Holmes v. Bell, 139 App.Div. 455, 124 N.Y.S. 301, it has been held by the lower state courts that the lien may be transferred or assigned, Muller v. City of New York (Com.Pl.) 29 N.Y. S. 1096; Leask v. Hoagland, 64 Misc. 156, 118 N.Y.S. 1035. Cf. also, Woodbury v. Andrew Jergens Co., 69 F.(2d) 49 (C.C. A.2).
Assuming that the right of transfer exists, we must still determine whether an attorney under a contingent fee contract, prior to the creation of a fund by a favorable judgment or settlement, possesses any property or property right which passes to the trustee in bankruptcy. We think that he does not. Under the contract, the bankrupt had no rights till the services were fully performed and a fund was created, In re Woodworth, 85 F.(2d) 50 (C.C.A.2); and at common law no lien arose until that time. The absence of property which could pass to the trustee would therefore seem obvious unless section 475 of the Judiciary Law of New York has altered the situation in this respect. The statutory lien attaches to the cause of action from the commencement of the suit. This merely means that the attorney receives additional protection; the charging lien secures his suit for reasonable services and guards him against a settlement...
To continue reading
Request your trial
-
In re Cilek
...bequest to him or a promised gift — even though state law might permit all of these to be alienated in advance. E.g., In re Coleman, 87 F2d 753 (2d Cir.1937); see 4 Collier, Bankruptcy 70.09, 70.27 (14th ed 1962). Turning to the loss — carry back refund claim in this case, we believe it is ......
-
Itar-Tass Russian News Agency v. Russian Kurier
...in cases where attorneys have agreed among themselves to share in the fruits of their combined labor. As noted in In re Coleman, 87 F.2d 753 (2d Cir.1937), "[w]hile the statute refers to the `attorney who appears for a party,' and it has therefore been said that the attorney of record alone......
-
Pacific Far East Line, Inc., Matter of
...argues that he had no claim for pre-petition services since he was not entitled to any compensation during that period. Cf. In re Coleman, 87 F.2d 753 (2d Cir. 1937) (attorney's charging lien does not pass through bankruptcy if not reduced to settlement or judgment at time of bankruptcy.) H......
-
United States v. Grand Jury Investigation
...out that in some of the cases the bankrupt has earned nothing at the time of the filing of his petition. See, for example, In re Coleman, 87 F.2d 753 (2 Cir. 1937). But here again the responsibility for that determination is upon the trustee. The bankrupt must supply the information even th......