Park Place-Dodge Corp. v. Collins

• Decision Date: 06 July 1973
• Docket Number: PLACE-DODGE
• Parties: PARKCORPORATION, Plaintiff, v. Gregory v. COLLINS, Defendant.
• Court: New York Supreme Court

Page 949

346 N.Y.S.2d 949

75 Misc.2d 25

PARK PLACE-DODGE CORPORATION, Plaintiff, v. Gregory v. COLLINS, Defendant.

Supreme Court, Special Term, New York County, Part I.

July 6, 1973.

Kass, Goodkind, Wechsler & Gerstein, New York City (David M. Gerstein, William J. Greene III, New York City, of counsel), for plaintiff.

Lawrence Anderson, New York City, for defendant.

THOMAS C. CHIMERA, Justice:

This is a motion by plaintiff in an action for injunction and damages, for a temporary injunction compelling defendant, a certified public accountant, to surrender and return certain books and records consisting of 'ledgers, journals, check books, bank statements and records and pay-roll records' upon which he asserts a retaining lien for alleged substantial unpaid fees.

The defendant says that his duties as accountant consisted of more than merely auditing plaintiff's books; that defendant had plaintiff's books and records in the former's office for the purpose of working on them; that defendant 'prepared payrolls, drew checks, made entries, devised systems and acted as bookkeeper' for the plaintiff corporation.

Plaintiff charges on the other hand, of defendant's discharge by plaintiff, the former presented 'additional bills in the sum of $35,281.98 for services rendered during periods of 1971 and 1972, despite the fact that he had been paid on a current basis for services rendered during said periods, in accordance with bills covering such periods, which he had previously rendered' and that these are the alleged unpaid fees for which defendant asserts a lien on plaintiff's books and records.

Defendant indicates in his answering papers that he 'will counterclaim in this action for the sum alleged to be due.'

Plaintiff relies heavily on Scott Machinery v. Broaker, 35 Misc. 382, 71 N.Y.S. 1023 (1901) and 8 NYCRR 70.5, for the proposition that accountants have no right to assert liens on their clients' books and records.

We turn first to 8 NYCRR 70.5.

Plaintiff contends that in refusing to return his books and records, defendant violates 8 NYCRR 70.5 and is therefore guilty of unprofessional conduct.

Defendant, on the other hand, claiming awareness of the rules of the Commissioner of Education, and, obviously acting on his attorney's advice, states that he has returned all of the books and records to which plaintiff is entitled retaining only those books and records 'which he worked on and created for the plaintiff.' The principal argument of defendant's attorney is to the effect that if 8 NYCRR 70.5 be construed adversely to his position, such construction would be in conflict with Lien Law § 180 which 'supercedes any rule made by a Commissioner.'

Section 70.5 of Title 8 of the Official Compilation of Codes, Rules and Regulations of the State of New York (8 NYCRR 70.5), in so far as pertinent to this decision, provides as follows:

'(a) A certified public accountant or a public accountant of this State shall be guilty of unprofessional conduct if he: * * *

(13) refused to furnish to his client upon request * * *

(ii) any accounting or other records belonging to or obtained for the client which he or his firm may have had occasion to remove from the client's premises or to receive for the client's account, but this shall not preclude him from making copies of such documents when they form the basis for work done by him or his firm.'

The validity of 8 NYCRR 70.5 supra, is established by the New York State Constitution (Art. IV, § 8), having been filed in the office of the Department of State and published by the Legislature pursuant to §§ 102 through 106 of the Executive Law. When these are reasonable rules not in conflict with any other law they have the force and effect of law. (1 N.Y.Jur., Administrative Law, § 102 and authorities therein cited.)

The language of 8 NYCRR 70.5 could be construed so as to include any books and/or records belonging to a client which an accountant has 'worked on and created for the (client)'. But in all fairness, it must be said first, that the said language is hardly precise, and, secondly, that the specific question does not appear to have been answered in any disciplinary proceedings coming before the Board of Regents, of which this court is aware. Nevertheless, this court is without authority in the first instance to determine if defendant's acts constitute professional misconduct, such authority being vested exclusively in the Board of Regents pursuant to Education Law, Section 6510.

Scott, supra, is authority holding that an answer of defendants--accountants asserting a lien in a replevin suit, was demurrable where 'they have done nothing to the (client's) books, but have merely made an examination of them * * * (for the purpose of preparing a report) the books remained as they were before, nothing whatsoever having been added to their value.' (p. 383, 71 N.Y.S. p. 1024)

In granting leave to defendants to amend their answer by alleging 'either of the following facts, both of which (were) essential to their defense: (1) That they either made, altered, or repaired the (plaintiff's) books; (2) that they added to their value or improved them'. (page 384, 71 N.Y.S. page 1024), the court, in Scott, supra, appears to have concluded on the hand, that accountants have no common law liens as such, and on the other hand, that they could acquire a retaining lien under the former New York Lien Law, § 70, fit they had performed services of any nature on the books and records themselves as distinguished from rendering services utilizing the said books and records as source material.

The latter conclusion was clearly an expression of opinion wholly unnecessary to the disposition of the Scott case, supra, and is not binding on this court.

'If, as sometimes happens, broader statements were made, by way of argument or otherwise, than were essential to the decision of the questions presented, they are the dicta of the writer of the opinion and not the decision of the court.

A judicial opinion, like evidence, is only binding so far as it is relevant; and, when it wanders from the point at issue, it no longer has force as an official utterance.' (Colonial City Traction Co. v. Kingston City Ry. Co., 154 N.Y. 493, 495, 48 N.E. 900, 901).

This Court's opinion that the 'broader statements' in Scott, supra, are dicta, appears to have been shared by Brenner, J., in Sterling v. Brahms, 10 Misc.2d 958, 170 N.Y.S.2d 112 (1958) the only other comparable case in this jurisdiction. There Sterling engaged Brahms, an accountant, to conduct an investigation concerning a matter involved in a U.S. District Court proceeding. Brahms was said to have taken into his possession from the Sterling files exhibits, documents, interrogatories and reports in addition to other papers pertaining to the said proceeding and thereafter refused to return them to Sterling asserting that Sterling had refused to pay him for the investigation and that he had a lien on the papers. Citing Scott, supra, Mr. Justice Brenner said (Sterling supra, p. 958, 170 N.Y.S.2d p. 113):

'Assuming arguendo that the defendant (Brahms) has a lien, such lien can only extend to papers and documents which he has produced, altered or enhanced in value' (Emphasis supplied)

Section 70 of the New York Lien Law referred to in Scott, supra, was the Lien Law of 1897, Chapter 418, Section 70, subsequently incorporated without change into Lien Law Section 180 (L.1909) and amended (L.1968, c. 30, Section 1, effective March 12, 1968) by adding the words 'or performs work or services of any nature and description upon'.

As amended, Lien Law § 180, reads as follows:

'A person who makes, alters, repairs Or performs work or services of any nature and description upon, or in any way enhances the value of an article of personal property, at the request or with the consent of the owner, has a lien on such article, while lawfully in possession thereof, for his reasonable charges for the work done and materials furnished, and may retain possession thereof until such charges are paid.' (Emphasis supplied)

Throughout the history of Lien Law 180 (formerly § 70), the legislative intent comes through clearly and substantially unchanged in its heading, in its content, in this jurisdiction's early judicial opinions and in the primary source material on the legislation, resulting in the 1968 amendment.

The original Lien Law § 70 and its successor § 180, in intent and effect, are simply declaratory of the common law granting to an Artisan a lien upon personal property for work done thereon with right to retain possession of it until the lien is discharged either by payment or proper tender. Smith and ano. v. O'Brien (1905) 46 Misc. 325, 94 N.Y.S. 673, aff'd 103 App.Div. 596, 92 N.Y.S. 1146.

'Nor does the general Lien Law (§ 180 prior to the 1968 amendment) enlarge in any way the right of lien given an Artisan over that granted by the common law' (Jeanette Doll Co., Inc. v. Cusmano (App.Term, First Dept.1923), 120 Misc. 782, 783, 199 N.Y.S. 751, 752; Brackett v. Pierson (1905) 114 App.Div. 281, 99 N.Y.S. 770.) (Emphasis supplied)

It is suggested with some emphasis that if prior to the 1968 amendment of § 180 supra, the statute were held not to be broad enough to grant to accountants a lien on their clients' books and records denied them at common law, the amendment of the said statute by adding the words 'or performs work or services of any nature and description upon' was apparently intended to give to accountants, among others, the same privileges accorded artisans at common law. This suggestion is without merit since the legislature appears to have had a different purpose in mind.

An examination of the 'Memorandum of Neighborhood Cleaners Association, New York, New Jersey, Connecticut' (New York State Legislative Annual 1968 quoted in part from page 93) discloses the legislative intent for the 1968 amendment, to be:

'Personal property services, liens. A....