105 F. 803 | 6th Cir. | 1900
These are appeals taken by interveners in the case first above entitled from the decree of the circuit court directing the distribution of funds in the hands of the court; arising from a sale made upon the foreclosure of a mortgage given by the railroad company, the defendant in the principal case, to the trust company, for the purpose of securing an issue of bonds. The case has been here on former appeals, involving other questions. 31 U. S. App. 675, 15 C. C. A. 273, 68 Fed. 90, 41 L. R. A. 458; 31 U. S. App. 704, 15 C. C. A. 289, 68 Fed. 105. In the case among the appeals reported in the last of the above citations was one by L. F. Mann, who,, though not an original party, had been permitted in the court below to intervene and file a cross bill and answer setting up a lien under the statute of Kentucky for labor and materials furnished in the construction of the railroad, besides interest. By the decree of the circuit court his claims had been allowed in the amount of the principal thereof,, but he had claimed interest from the date of the filing of his lien, and this was refused. From the refusal to allow interest, he appealed. This court was of opinion that he was entitled to recover interest as claimed, and directed that ■the decree be modified so as to include it. The case was remanded to the circuit court, and upon receiving the mandate that court, On July 25, 1895, entered a decree for foreclosure and sale of the road, in which, among other things, the claim of Mann was allowed at the .sum of $22,129.68, and a lien upon the expected fund therefor was ■admitted. But the decree went on to declare that certain partial assignments of Mann’s claim had been made by him to parties, and in amounts enumerated, and ordered that out of the sum allowed to .Mann the several amounts assigned should be paid to the assignees, “subject, however, to the prior lien of Stone & Sudduth for legal services in behalf of said Mann herein.” After several fruitless attempts to sell the road, and on the 1st day of May, 1899, a sale was effected at the price of $301,000; and this sale was subsequently confirmed, and the proceeds were brought into court. All the present appeals relate to the distribution of the sum realized on the Mann claim.
I. On the 30th of October, 1897, Stone & Sudduth filed a petition alleging that, prior to the filing of the answer and cross bill of Mann above mentioned, they had entered into a contract with him whereby ■they undertook the prosecution of his claim in the circuit court, and, if necessary, upon appeal in the circuit court of appeals, in consideration of which Mann agreed to pay them for their professional services, if they succeédéd in establishing' the claim, the sum of
“Attorneys at law shall have a lien upon all claims or demands, including all claims for unliquidated damages, put into their hands for suit or collection, or upon which suit has been instituted, for the amount of any fee which may have been agreed upon by the parties, or, in the absence of such agreement, 'for a reasonable fee for the services of such attorneys; and if the action is prosecuted to a recovery, shall have a lien upon the judgment for money or property which may be recovered- — legal costs excepted — for such fee; and if the records show the name of the attorney, the defendant in the action shall have notice of the lien.”
It cannot be doubted that within the meaning of this statute the claim of Mann was a claim put into the hands of his attorneys for enforcement by suit. And it seems to us it was put into their hands by one competent to enforce it. It is urged that Mann, after his partial assignments, stood in the relation of a trustee for the assignors, and we are referred to cases in which it has been held that the cestuis que trustent are not the clients of the counsel employed by the trustee; that the counsel must look to the trustee for his compensation, and the question of its reasonableness will be open upon the settlement by the trustee of his accounts. And it is further urged that the case - is within the operation of another rule,— that, where one party to a suit employs counsel to take care of his own interests, no liability to compensate such counsel rests upon another , party from the fact that the results accomplished by their endeavors inure incidentally to the benefit of such other party. But, in our opinion, neither of these rules applies to the case before the court, for several reasons. In the first place, the Kentucky statute gives a direct and express lien. Then, again, these assignees must work out their interests through the lien, which is incident to the Mann claim. If Mann had sued in an action at law to recover the debt for which his lien was given, there would have been no question of the case being within the statute. We can perceive no reason for any distinction when the proceeding is in equity to enforce the lien given for its payment, and the statute makes no distinction. Partial assignments of a claim or fund belonging to the assignor are not recognized at law. Suit to enforce the claim must be brought by the assignor. The reason is that the cause of action is entire and cannot be split up. After-the fund is established by judgment, the court in most jurisdictions exercises more or less control by the adoption of equitable principles for the protection of assignees; but until then it looks only to the assignor, who remains the holder of the legal title. The assignment passes only an equitable interest, and in a court of equity the original claim is primarily the subject of inquiry, and must first be established. The separate rights of the
The objection is urged in behalf of Pryse, who is one of the assignees, that his assignment antedates the employment of Htone & Sudduth by Mann. But, for the reasons above stated, we think this makes no difference. Moreover, it appears that Pryse was informed of Mann’s contract with the coupsel, and he approved it. He must be presumed to have known of the provisions of the statute according a lien, and he cannot now complain when it is sought to enforce it. The assignees took no steps for the establishment of the main lieu, and were content that Mann should enforce it. If the contract had been tainted with actual fraud towards the assignees, or was so unreasonable as to operate unjustly upon those holding prior assignments of which the counsel had notice, doubtless they might be relieved. But actual fraud is not alleged or claimed. It is, however, claimed that the contract was unreasonable in the amount stipulated, and oppressive upon the assignees. This might seem to he so if we tested the matter by the amount eventually realized. But at the time when the agreement was made all parties supposed the claim was good for its face value, and that enough would be realized to meet all demands upon it. The result has been a disappointment. The contract was to make the compensation for the establishment of the claim. That has been accomplished, and we can see no valid ground for ignoring the contract in the fact that the fruits of it are not all that was expected. We think, therefore, that the court erred in failing to give effect to the coutract and the lien, incident to the employment. The appeal of Stone is therefore sustained.
2. It appears that Trimble Bros, had two claims, — one derived under an assignment by Mann of a part of his claim to Charles M. Pryse, who was, as already slated, an assignee of Mann. Another was under a different and distinct assignment from Mann to themselves. The first was presented before the decree of July 25, 1895, and was therein allowed. The second was for $680.60, under an assignment bearing date December 31, 1891. It was not presented until May 29, 1899. From these dates it is seen that the presentation of the claim was after the decree last mentioned, and before the fund realized from the sale was brought into court. The court rejected this claim in its order for distribution, and from this Trimble Bros, have appealed. The grounds upon which this claim was disallowed were stated by .the court, as appears from the record, to be these: First, because it was not held by assignment from
■i. The claim of Wheeler, as administrator aforesaid, rests upon another partial assignment, made by Mann to McGuire, of the sum of 81)71.75, on December 22, 1891. This claim was filed October 4, Í895, and had, therefore, been on file several years before the foreclosure sale took place. It was rejected upon the ground that there had been laches in presenting it, and that it was excluded by the operation of the decree of July 25, 1895. We have already considered this objection on the appeal of Trimble Eros., and held that it was not tenable. As there appears to be no other objection to this claim, it should have been allowed. This appeal is also sustained.
It appearing that none of the assignees of Mann were purchasers for value, the question of notice of the assignments in fixing the order of priority does not arise, and they must take in the order of the dates of their respective assignments, so far as respects those appealing. As to the others not appealing, we do not disturb the order of the circuit court. The order appealed from must be re versed upon the appeals of the several appellants in respect of their claims, and the cause remanded, Avith directions to allow them.