Snydersnyder v. De Forest Wireless Tel. Co.

• Decision Date: 19 November 1907
• Citation: 82 N.E. 742,190 N.Y. 66
• Parties: In re SNYDER. SNYDER v. DE FOREST WIRELESS TELEGRAPH CO. et al.
• Court: New York Court of Appeals Court of Appeals

190 N.Y. 66

82 N.E. 742

In re SNYDER.

SNYDER

v.DE FOREST WIRELESS TELEGRAPH CO. et al.

Court of Appeals of New York.

Nov. 19, 1907.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Henry B. Snyder against the De Forest Wireless Telegraph Company and others, in which plaintiff Snyder applied for payment out of court of moneys deposited to the credit of the action, to which James A. Allen and Roger Foster, his attorneys in the original action, objected. From an order of the Appellate Division, objectors appeal. Reversed, and judgment of Special Term affirmed.

See 99 N. Y. Supp. 644,113 App. Div. 840.

This is an appeal from an order reversing an order of the Special Term which appointed a referee to determine the value of legal services performed by the appellants in order that the amount of their lien upon certain moneys paid into court might be determined. Said order appealed from also permitted the respondent Snyder, who was the client of said appellants, to withdraw from court a certain amount of the moneys held therein.

Edward T. Bartlett, J., dissenting.

Roger Foster, for appellants.

George P. Breckenridge, for respondent.

HISCOCK, J.

The appellants, who are practicing attorneys, made a written agreement with the respondent for the prosecution by them in his behalf of litigation against various parties under a plan of contingent compensation. Said agreement, amongst other things, originally provided that the attorneys should receive for their services one-third of the proceeds of said litigation or the proceeds of the sale of certain stock, and nothing else; also, that neither party to the agreement should ‘settle any of said litigations without the consent of each of the other parties.’ Subsequently this agreement was modified so as to provide that the compensation should be one-half instead of one-third. Various actions and proceedings were instituted under this retainer, and, as in claimed by the appellants, services of much value were rendered to the client. After a time Snyder entered into negotiations with the parties whom he was prosecuting for a settlement of the litigation, and not only without the consent of his attorneys, but in spite of their protest made an agreement for such settlement for the sum of $7,500. Still later a motion was made by the party with whom Snyder had made his agreement for an order settling and discontinuing the litigation for the sum agreed upon, and to which motion both Snyder and the appellants were made parties. Notwithstanding the opposition of the latter, and after the consideration of quite voluminous affidavits presented by the attorneys and the client, respectively, in opposition to and in support of the settlement, and order was made granting the motion upon payment into court of the sum of $7,500 ‘to respond to the lien of the plaintiff's attorneys.’ Some time later, a motion having been made by the client to withdraw one-half of this sum in accordance with the terms of the agreement between him and his attorneys, the court directed a reference to ascertain the value of the services which the attorneys had rendered in order that the amount of their claims and lien upon the fund might be determined before Snyder withdrew any money. This was done upon the theory that Snyder, by making a settlement in violation of the wishes of his attorneys, had so broken his contract that the latter were no longer limited to the terms of their agreement for their compensation, but were entitled to recover from the fund for the value of their services on the basis of quantum meruit. As already indicated, the Appellate Division took the view that this order was improper, holding that the attorneys were limited so far as their lien upon the fund in court was concerned to the compensation fixed by the original agreement and relegated for any further relief to an action against their client for breach of contract. We think that the disposition made by the learned justice at Special Term was correct, and that it was error to reverse the order then made and substitute the one from which this appeal is now taken.

Some propositions involved in the appeal seem quite clear. The attorneys had a lien upon the moneys paid into court for the amount or value of their services, whatever it might be. This was secured to them by section 66 of the Code, and, in addition, the order allowing the settlement of the litigation and directing the payment of the proceeds into court expressly provided that the latter should ‘respond to the lien of the plaintiff's attorneys' without any limitation upon the amount for which the said lien should be allowed. If the clause prohibiting a settlement without the consent of the attorneys is valid, the client has prevented them from carrying out their contract, and they are entitled to treat it as terminated and recover the actual value of services rendered before the breach without reference to the terms of the original contract. If the clause prohibiting the settlement without the consent of the attorneys is void as against public policy, so that it may be repudiated by the client, but yet is so connected with the clause prescribing the percentage of recovery which the attorneys were to receive as compensation that the latter clause falls with it, then, again, the attorneys must be entitled to recover the value of the services rendered by them upon the basis of actual worth. While the adoption of either view, therefore, would render necessary an appraisal of the value of appellants' services, it is proper to determine which one shall prevail, assuming that the latter one is permissible, and in this determination the first and fundamental question will be as to the validity of the clause prohibiting a settlement.

It has been decided so often and so fully that attorneys may undertake litigation for a compensation contingent upon their successful efforts that it is unnecessary to refer to the decisions upon that point. But this court, so far as I am aware, has never yet decided the naked proposition now urged upon on us that an attorney, in furtherance of his contract for a contingent compensation, may reserve a veto power upon the right of his client to make in good faith an honest settlement of his claim, and I think it would be unwise and opposed to sound public policy to so decide now. In the first place, a decision upholding such a contract would confer upon the person occupying a position of trust toward another unusual power over the later in the control and management of his own property, for we must not forget that the attorney has only a lien upon the client's cause of action which still remains the property of the latter. It is not too much to assume that such power would at times be the source of abuse as between the two parties. But more important than any such personal and private considerations is the one of public concern that such contracts would prove added obstacles to that quieting of disputes, and to that adjustment and settlement of litigation which always has been and always should be favored by the acts of Legislatures, the decisions of courts, and the expressions of public opinion; for, in my judgment, there is no need of long argument to demonstrate that such contracts would prove such obstacles. We have before us in this very litigation an illustration of the manner in which they would be utilized if so permitted to prevent settlements even when the attorney and client were involved in no other differences than those of an honest opinion about the amount which ought to be realized from the litigation. And, if this result would have happened where reputable attorneys were prosecuting what we are...