Hartman v. Swiger

215 F. 986 | N.D.W. Va. | 1914

DAYTON, District Judge

(after stating the facts as above). [1] It is very apparent from pleadings and evidence in this cause that defendants are asserting in good faith a lien for legal services running over a number of years. At the threshold I may state that careful consideration of the facts, as disclosed by the evidence, convinces me. that George W. Hartman employed these attorneys personally to protect his interests as a bondholder and stockholder of these two brewing companies, that they rendered such services and incurred such expenses in attending to his interests as to entirely warrant them in charging and receiving the sums claimed by them, and that the position taken by plaintiffs’ counsel to the effect that the companies and the bondholders interested should alone be held liable for payment does not impress me as sound. Any stockholder or bondholder of a corporation may well employ attorneys to defend his interests in the conduct and winding up of its affairs, and it by no means follows that in such case, the attorneys must seek remuneration alone from the corporation assets. The relation is a purely personal one between the attorney and his client, the stockholder or bondholder, and it is only under peculiar conditions that such person, employing the attorney, can call for contribution in payment of legal services from his fellow stock or bond holders. Trustees v. Greenough, 105 U. S. 527, 26 L. Ed. 1157; Central Railroad v. Pettus, 113 U. S. 116, 5 Sup. Ct. 387,28 L. Ed. 915; Harrison v. Perea, 168 U. S. 311, 18 Sup. Ct. 129, 42 L. Ed. 478.

[2] The next question to be considered is whether these attorneys had a lien upon the funds involved herein. The law governing attorney’s hens, classifying them into possessory and charging ones, is too well settled to warrant further discussion, and it must be admitted that:

“If the relationship oí attorney and client, exists, the possessory lien will cover in general property of any sort belonging to the client and held by tbc attorney.” 4 Cyc. 1005.

It also extends to the fees of associated counsel employed by the attorney or, rather:

“If the attorney collects the judgment, he may deduct, not only his own fee, but he is protected in the payment of like reasonable fees to other attorneys or counsel employed in the suit.” Jones on Liens, § 144.

In the leading case in this state of Renick v. Rudington, 16 W. Va. 378, it is said:

“(1) An attorney has a lien, on the judgment * * * obtained by him for his client, for services and disbursements in the case, whether the amount of his compensation is agreed upon or depends upon a quantum meruit.

“(2) This lien includes not only the amount necessary to pay for his services and disbursements in the case, in which the judgment or decree is rendered, but also the amount necessary to pay for his services and disbursements in any other case, so connected with it as to form the basis on which such judgment or decree is rendered, or essential to the realizing of such judgment or decree. * * *

“(4) * * * Notice of the existence of such lien to the assignee of such judgment or decree is not essential to the maintenance of such lien against such assignee without notice.”

Under these well-settled principles it is beyond doubt that these attorneys would be entitled to the lien claimed by them as attorneys of record in this running and related litigation, involving Plartman’s interest in these two companies, as against Hartman, if he had not assigned his stock, or part of it, to his mother and wife, or if he had not been adjudged bankrupt and his interest had not vested thereby in his trustee. Do these or either of these conditions affect or destroy the lien? We have already seen that assignment, pending the litigation, even where no notice is given the assignee of the lien, neither affects nor defeats it. Renick v. Rudington, supra. If this were not so as a general principle, it seems to me that where, as in this case, one assigns his interests to near relatives, such as mother and wife, and continues to call upon the attorneys originally employed by him to prosecute and protect such interests, to perform such additional services, the law would presume him as doing so with knowledge and consent of such related assignees, in short, as their agent.

So far as the assignment by law to the bankrupt trustee is concerned, it is too well-settled to admit of controversy that such trustee takes only such title as the bankrupt has, subject to all liens and equities existing upon or against the property. Zartman v. Bank, 216 U. S. 134, 30 Sup. Ct. 368, 54 L. Ed. 418.

[3] This birings us finally to the question of the effect of the bankruptcy proceeding upon this lien and the failure of the defendants to assert it therein. It is to be borne in mind that this bankruptcy proceeding was instituted in the District Court for the Western District of Pennsylvania, and not in this Northern District of West Virginia, where these companies were located, their property situated, and the fund arising from the sale of it must and did necessarily arise and have its existence, and, further, that no attempt whatever was made in this proceeding by the trustee therein to secure and reduce into possession this fund.' He did not even intervene in the state court proceeding, instituted prior to the bankruptcy one, and seek to have it decreed to him. Prior to the amendment of June 25,1910 (chapter 412, 36 Stat. 838 [U. S. Comp. St. Supp. 1491]) of the Bankruptcy Act, some conflict of cases existed as to the propriety or necessity for the institution of ancillary proceedings in bankruptcy in other districts to secure possession in the trustee appointed by the bankrupt court of original jurisdiction, of property or funds situate in such other districts. I have always believed that propriety and necessity therefor was very apparent -frhen, for instance, bankrupt courts in other states undertook to decree direct, real, and personal property situate in this state of corporations claimed to have their “principal place of business” or office situate in some one of their large cities, and that the power to entertain such ancillary proceedings was inherent in bankrupt courts as courts of equity. But it is no longer an open question. This amendment of 1910 expressly authorizes courts of bankruptcy to exercise ancillary jurisdiction over persons or property within their respective territorial limits,' in aid of the receiver or trustee appointed in any bankruptcy proceeding pending in any other court of bankruptcy. This amendment effectively disposes of any conflict which may have arisen in respect to the exercise of ancillary jurisdiction. Collier on Bankruptcy (10th Ed.) § 23b, par. 4i, pp.-498, 499. Hartman’s bankruptcy proceeding was instituted after this amendment. It was the plain duty of his trustee, if he desired to claim this fund, to institute such ancillary proceeding for the purpose, and give all persons interested due and proper notice of his claim, and to have this claim of lien on the part of these attorneys adjudicated here under the laws of this state, as it was entitled to be. He did not do this, but chose to sell, in another state, Hartman’s certificates of stock for what he could get, possibly for less than half what he would have secured had he instituted such ancillary proceeding, and let the purchaser get what he could as his assignee. This purchaser cannot have one particle better right than he had, and no court here, in my judgment, under the law of this state, would have authorized the surrender of this fund to him until this attorney’s lien had been paid thereout.

It follows that the defendants are entitled to retain out of this fund the $2,000 for fees as claimed by them, and to surrender to plaintiffs only the balance, and decree may be entered to that effect.