Underhill v. Jacob Doll & Sons

• Citation: 69 F.2d 519
• Decision Date: 05 March 1934
• Docket Number: No. 289.,289.
• Parties: UNDERHILL et al. v. JACOB DOLL & SONS et al.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

69 F.2d 519 (1934)

UNDERHILL et al. v. JACOB DOLL & SONS et al.

No. 289.

Circuit Court of Appeals, Second Circuit.

March 5, 1934.

L. & A. U. Zinke, of New York City (Alexander U. Zinke and Max J. Wolff, both of New York City, of counsel), for appellants.

David W. Kahn, of New York City (Myron K. Wilson, of New York City, of counsel), for respondents.

Before MANTON, L. HAND, and MACK, Circuit Judges.

MANTON, Circuit Judge.

Receivers were appointed for Jacob Doll & Sons and the Premier Grand Piano Corporation in September, 1930. Prior to the appointment of such receivers, the appellants were attorneys for both defendants. In September, 1925, the defendant corporations had claims against the Bartlett Music Company of Los Angeles, Cal. The Bartlett Music Company caused an assignment to be made early in 1926 to trustees for the benefit of its creditors. The trustees were granted power to wind up the business and distribute the assets pro rata after paying preferred claims. Suits were instituted on the claims of the defendants herein and resulted in recoveries.

The defendants assigned their claims, for the purpose of such suits, to one Blanche Brown, and were represented by an attorney in Los Angeles, Cal., who agreed to prosecute the claims on a contingent basis of 50 per cent. of any recovery to himself. In the California suits the appellants arranged to take depositions in New York to establish the claims. The receivers were not advised of the litigation in California until March, 1933, when they were notified by appellants that appellants were holding two checks for $519.01 and $1,183.67, drawn by the attorneys for Blanche Brown, the assignee of the claims, to the order, respectively, of Jacob Doll & Sons and the Premier Grand Piano Corporation. The appellants could not use the checks, but were claiming a retaining lien, as distinguished from a charging lien, in holding the checks.

By the law of the state of New York, there are two types of attorneys' liens. Judiciary Law (Consol. Laws, c. 30) § 475, provides: "From the commencement of an action or special proceeding, or the service of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client's cause of action, claim or counterclaim, which attaches to a verdict, report, decision, judgment or final order in his client's favor, and the proceeds thereof in whosoever hands they may come; and the lien can not be affected by any settlement between the parties before or after judgment or final order. The court upon the petition of the client or attorney may determine and enforce the lien." Kedrovsky v. Archbishop of R. O. G. C. Church, 218 App. Div. 121, 217 N. Y. S. 873; Matter of Albrecht, 225 App. Div. 423, 233 N. Y. S. 383. But to enforce such lien he must appear as attorney of record. Goodwin Film & Camera Co. v. Eastman Kodak Co. (D. C.) 216 F. 831. There is a second kind of lien, a retaining or possessory lien which permits the retention by the attorney of such papers, securities, or moneys, belonging to his clients, which come into his possession in the course of professional employment. Matter of Heinsheimer, 214 N. Y. 361, 108 N. E. 636, Ann. Cas. 1916E, 384. This is the retaining lien that the appellants contend they have.

Did the two checks come into the possession of the appellants in the course of their professional employment? Coming, as they did, after the receivership of the appellants' clients, the corporations, it may be admitted that they rightfully acquired possession; still it is plain that it was not such a possession as authorized the right to liens on the checks.

The checks should have gone at once into the possession of the receivers. Appellants had no right of possession in them. The appellants knew that receivers had been appointed for both corporations, and therefore of assets which would include the checks which should have been transmitted to the receivers. They were the proceeds of the chose in action in existence at the time of the appointment of the receivers. A possession, such as the appellants obtained, was one through mistake on the part of the transmitter of the checks in California. Appellants had no legal right to retain the checks. If the checks were sent after the receivership, at the request of the appellants, rights of possession would not be created in their favor. The appellants' services, transmitting the claims to California for pro...