In re Wilson

• Decision Date: 01 June 1882
• Citation: 12 F. 235
• Parties: In re WILSON & GREIG, Bankrupts.
• Court: U.S. District Court — Southern District of New York

12 F. 235

In re WILSON & GREIG, Bankrupts.

United States District Court, S.D. New York.

June 1, 1882

The assignee of the bankrupts was appointed in June, 1879. Prior thereto the petitioner had been employed by the bankrupts as their attorney in the prosecution of several suits which were pending at the time of the appointment of the assignee. The petitioner, as attorney, had also recovered for the bankrupts, in January 1879, two judgments against one James Wilson by default upon promissory notes for about $877, upon which judgments executions were then in the hands of the sheriff uncollected. The assignee desiring to employ other attorneys in the prosecution of the suits pending, and the petitioner claiming a general lien upon all the papers in his hands for his costs and services, an agreement was made between him and the assignee on June 7, 1879, reciting that the petitioner had 'commenced a number of suits against persons, debtors of said Wilson & Greig, and which said suits have not been finally concluded; that the assignee recognized the petitioner's lien thereon, and desired all papers therein to be surrendered to other attorneys to be substituted;' and providing that the papers in said suits should all be transferred, and substitutions given, and that the petitioner's lien should not be waived thereby; but that the 'lien should be first paid and satisfied by the first moneys coming into the hands of said assignee out of said suits, a list of which is annexed. ' Among the papers transferred were those in the two judgments against Jones Wilson, which, in the receipt given by the substituted attorneys, are recited as given under the terms and conditions of the agreement above referred to. The executions then outstanding upon these two judgments were afterwards returned wholly unsatisfied. Blumenstiel & Hirsch, the substituted attorneys, subsequently, upon proceedings supplementary to execution, in the nature of a creditor's bill, recovered the whole amount of those two judgments being about $1,900.

A third judgment had also been recovered by the petitioner, as attorney for the bankrupt, against Hine, Phillips, and others, upon charges of embezzlement, in which the petitioner's taxed costs were $326.69, and in which his services were reasonably worth, as reported by the register $500 more, making $826.69 for his bill in that suit; and the papers in that case were also among those transferred and receipted for. In the various other pending suits transferred the sum of $144.57 only was collected by the assignee. All of the petitioner's claims have been paid except his bill for the recovery of the last-mentioned judgment, upon which he has received only $43.86, leaving $782.83 just owing to him for his services in that suit.

The petitioner claimed a general lien upon each and all of the suits and judgments transferred for his entire bill, and that he was entitled to be paid what was due to him upon the third judgment out of the proceeds collected by Blumenstiel & Hirsch upon the two prior judgments against James Wilson. The assignee refusing to recognize this claim, the matter, upon petition, was referred to the register, by whose report the above facts appear.

S. B. Hamburger, for claimants.

Blumenstiel & Hirsch, for assignee.

BROWN D.J.

It is not disputed that the sum of $826.69 would be a fair compensation to the petitioner of his services to the bankrupts in obtaining the judgment against Hine and Phillips in May, 1879. Nothing, however, has been recovered thereon. All claims of the petitioner, aside from those connected with that judgment, have been paid, and the only question presented is whether the petitioner has a right to be paid the balance of $782.83 due to him for his services and costs in obtaining this judgment out of the proceeds collected by the assignee, through his subsequent attorneys, upon the two Wilson judgments recovered in January, 1879.

The effect of the agreement of June 7, 1879, between the assignee and the petitioner, was to preserve whatever lien or equitable rights the petitioner then had. It was sufficient for this purpose; it was not intended for any other purpose; it was not approved by the court; and if its terms were in fact such as to enlarge the petitioner's claims beyond his then existing legal lien, it would not bind the bankrupts' estate, and the petitioner would be obliged to resort to his personal remedy against the assignee. The assignee, however, took the bankrupts' estate charged with whatever legal or equitable lien existed against it in favor of the petitioner, and by the agreement then made these liens were preserved as they existed at that date.

On the part of the assignee it was contended that nothing having been collected by the petitioner upon the two judgments against James Wilson, the attorney's lien thereon was limited to his taxed costs and reasonable compensation in obtaining those judgments. The petitioner contends that his general lien for his whole bill, which legally attached upon the papers in his hands, including the notes upon which the judgments were maintained, followed the judgments and legally bound whatever money was subsequently collected thereon by the assignee.

After examination of the numerous authorities of this subject, English and American, I am satisfied that the claim of the petitioner cannot be sustained, and that an attorney has no general lien upon an uncollected judgment for services in other suits, but only a particular lien for his costs and compensation in that particular cause.

An attorney's lien, as now generally recognized, is of two kinds: First, a general lien resting wholly upon possession, which is a mere right to retain, until his whole bill is paid, all papers, deeds, vouchers, etc., in his possession upon which, or in connection with which, he has expended money or given his professional services. This 'retaining lien' is a general one for whatever may be due to him; and, though a client may change his attorney at will, if the latter be without fault and willing to proceed in pending causes, none of the papers or vouchers can ordinarily be withdrawn from him except upon payment of his entire bill for professional services. In re Paschal, 10 Wall. 483, 493-6; In re Brown, 1 N.Y.Leg.Obs. 69; In re Broomhead, 5 Dowl. & L. 52; Blunden v. Desart, 2 Dru. & Warr. 423; Ex parte Nesbitt, 2 Sch. & Lef. 279; Ex parte Sterling, 16 Ves. 258; Griffiths v. Griffiths, 2 Hare, 592, Ex parte Pemberton, 18 Ves. 282; Lord v. Wormleighton, 1 Jacob, 580; Bozon v. Bolland, 4 Myl. & C. 354, 356; Ex Parte Yalden, L.R. 4 Ch.Div. 129; Colmer v. Ede, 40 Law J. (N.S.)Chanc. 185; Hough v. Edwards, 1 Hurl. & N. 171; Cross, Lien, 216; Stokes, Attys.' Liens, 28, 38; 2 Kent, *641. This lien, like other mere possessory liens, is, however, purely passive, being a bare right to hold possession till payment.

The articles cannot be sold or parted with without loss of the lien, nor can any active proceedings be taken at law or in equity to procure payment of the debt out of the articles so held. Cross, Lien, 47, 48; Thames Iron Works v. Patent Derrick Company, 1 Johns. & H. 93; The B. F. Woolsey, 4 F. 552, 558. The statute of this state passed May 8, 1869, (Laws 1869, c. 738,) which was designed to afford means of realizing payment upon such mere possessory liens, applies only to liens 'upon any chattel property.' Mere choses in action, such as the notes or demands placed in the petitioner's hands for collection, are not 'chattel property,' (2 Bl. *387; Ingalls v. Lord, 1 Cow. 240; Ransom v. Miner, 3 Sandf. 692,) and therefore not within the statute. As this general lien of the attorney upon the notes and demands in suit depended wholly upon possession, and was a mere right of retention, incapable of any active proceedings to enforce payment, it could not be transferred, nor attach to the judgments obtained upon them or to any proceeds thereof, unless such proceeds came into the attorney's possession, which is not the fact in this case.

The second kind of lien which an attorney has is that existing upon a judgment recovered by him, or moneys payable thereon, or upon some fund in court. This lien, so far as it extends, is not merely a passive lien, but entitles the attorney to take active steps to secure payment. It did not exist at common law. It is stated by Lord Mansfield to be not very ancient. 1 Doug. 104; Stokes, 3. It does not depend upon possession, but upon the favor of the court in protecting attorneys, as its own officers, by taking care, ex aequo et bono, that a 'party should not run away with the fruits of the cause without satisfying the legal demands of the attorney by whose industry and expense those fruits were obtained. ' Read v. Dupper, 6 T.R. 361. As this equitable right rests solely upon the compensation due to the attorney for his services, and money expended in procuring the judgment or the fund secured, it is manifest that it cannot upon principle be extended beyond the services and expenses in the suit itself, or in any other proceedings by which the judgment or fund has been recovered, or in the same subject-matter.

The distinction between an attorney's 'retaining lien' upon papers in his possession, and his 'charging lien' upon a judgment or other fund, is carefully pointed out by the lord chancellor in Bozon v Bolland, 4 Myl. & C. 354, 359. 'The solicitor's claim upon the fund,' he says, 'has been called transferring the lien from the document to the fund recovered by its production. But there is no transfer; for the lien upon the deed remains as before, though perhaps of no value; and, whereas, the lien upon the fund, if established, would give a title to payment out of it. The active lien upon the fund, if it...