158 N.Y.S. 585 | N.Y. Sup. Ct. | 1916
These proceedings came before the court in the first instance upon petitions and orders to show cause why the respondent should riot account to the respective petitioners, for certain moneys and securities claimed to have been received by him in his capacity as an attorney and counsellor-at-law. The orders to show cause were returnable at a Special Term of the court and resulted in orders of reference made by such court, with power to the referee to take the evidence of the parties with respect to the matters referred and with directions to him to return to the court for its further action in the premises his findings of fact and conclusions of law thereon, and his opinion and recommendations upon the matters submitted to him. An appeal was taken in each proceeding from such order to the Appellate Division by the respondent where the order was modified in important respects. The referee was directed with respect to the matters referred to him in such modified order to ‘' report the same to the court with his conclusions.” The referee took a large amount of testimony submitted by the respective parties and made his report to the court stating his findings of fact and conclusions of law in each case and also writing a brief opinion. Thereupon the petitioners served a notice in each case upon the respondent, that the report and opinion of the referee together with the testimony, exhibits and pa
These proceedings came before the Special Term held by Justice Cochrane upon the report of the referee. The fact that the justice became disqualified from holding a Special Term before a decision had been rendered, cannot stand in the way of the report of the referee being presented to any other Special Term. The trial or hearing in these proceedings was not before the referee but it is before the court to whom the referee was directed to report and to which he in fact did report. Matter of Cartier v. Spooner, 118 App. Div. 342; Matter of Jones & Co., 117 id. 775, 777; Matter of Ney Co., 114 id. 467, 470; Marshall v. Meech, 51 N. Y. 140, 143; Fenlon v. Dempsey; 21 Abb. N. C. 291; Muhlenbrinck v. Pooler, 40 Hun, 526, 527; Dean v. Driggs, 82 id. 561, 564; Doremus v. Doremus, 76 id. 337.
In Matter of Cartier v. Spooner, supra, the court said: “ In a proceeding of this character the court must determine the controversy, and it may order a reference only for the purpose of assistance to itself in that regard. It cannot shift the whole matter to a referee. If a reference be ordered, the matter must come back to the court on the report of the referee for final determination, and the report may be adopted or
For these reasons the motions of the respective petitioners for a new trial should be denied.
Concurrent with said motions made by the petitioners for a new trial, the respondent has now made a motion in each case to disapprove and overrule the report of the referee and to dismiss the petition with costs. The proceedings are now, therefore, before the Special Term for determination the same as they were before the Special Term held by Justice Cochrane at a time when he became disqualified to act, before signing decisions or final orders.
It appears from the evidence taken before the referee that on February 9,1909, John Carney, James Carney and Elizabeth T. Pratt, brothers and sisters, believing that they had an interest in the estate of their deceased mother, Eliza R. Carney, who it was' claimed was a descendant through William D. Reamey, of one Anna F. Baker who died intestate in Illinois leaving a considerable estate, employed Mr. Powers, this respondent, to assist in establishing such claim for them. The agreement was in writing. Under it Powers agreed to institute all requisite proceedings to establish their rights in such estate and they agreed that Powers’ compensation for all services should be fifty per cent, of the recovered interest in the estate. Powers further agreed that if these parties should need any money for disbursements incident to any proceedings or for any other purpose in connection therewith he would loan them the same and they agreed to repay all such moneys so loaned them and also to pay for his services as above specified. Afterwards another brother, C. M. Carney, bound himself to the same agreement.
The accounting asked for in these proceedings is
Under the order of reference as modified by the Appellate Division,, it was referred to the referee to make inquiry as to the circumstances under which the above mentioned agreement was made and as to its legality and fairness and report the same to the court with his conclusions and in the event, in the opinion of the referee, such agreement should be vacated, that then the respondent account to the petitioners for the moneys, securities and property, in his possession, received by him as attorney for the petitioners, and with power to the referee to inquire as to the conditions and value of the estate, the amounts received and to be received by such attorney on account of his clients’ interest therein, so far as the referee deems it necessary in order to determine the fairness and the legality of the agreement.
The learned referee failed to find any fraud on the part of Mr. Powers in inducing the making of the agreement. He reported, however, that, in his opinion, it was void on its face. Notwithstanding that conclusion he held that Powers should be paid for his services to the petitioners and that the reasonable value of such services was fifty per cent, of the distributive share of the petitioners after deducting therefrom the-necessary expenses of the litigation. In passing upon the account of expenses the referee recommended the disallowance of moneys paid by Powers to an attorney or associate in his office who had assisted him and also moneys paid to employees therein. He also reported in favor of allowing all the other disbursements made by the respondent at the full amount stated in his account and that he has a lien for the payment of his services upon all moneys and property
The Special Term to which the reports of the referee were first presented, in the opinion written by Justice Cochrane, hereinbefore referred to, disagreed with the referee that the agreement was void and came to the conclusion that it was valid. He agreed with the referee that it was obtained without fraudulent suppression or concealment or representation.
While the court now considering the matter is not bound by the reports and opinion of the referee, nor by the opinion of Justice Cochrane, it is strongly impressed by the reasoning of the latter and with the force of the authorities cited by him in respect to the validity of the agreement, and is also satisfied with his conclusion that it was obtained without any fraud on the part of Mr, Powers.
I also agree with Justice Cochrane that the amount paid to Mr. Welch for legal services should come out of the share of Mr. Powers. In the agreement the latter was to institute all requisite proceeding to establish the rights of the parties in the estate and this expense should not be added to the amount which the parties agreed to pay Powers for services, but deducted therefrom. Mr. Powers had employed Welch as an attorney in Chicago to look after the Baker estate in the Probate Court there and he should pay him.
I am compelled to disagree with the conclusion of Justice Cochrane stated in his opinion, with respect to the amount paid on what is known as the Martin .contract. The referee has found on sufficient evidence that this contract was an agreement between Martin’s clients and the Carneys and Mrs. Pratt in settlement, of litigation or to purchase peace, “ was not made upon the advice of Mr. Powers, but was made after Mr. Powers had told him, James Carney, that in his
The Martin contract was voluntarily entered into by the petitioners with full knowledge of the situation, after Powers had refused to become a party to it or to advise them to make it and after he had refused to permit his share to be diminished by reason of it. There is no reason therefore why the parties thereto should not be left to be- bound by the agreements they have made.
If I am correct in the conclusion which I have reached that the agreement between the parties is a valid one, that alone must fix their rights and the rate of compensation which the respondent is entitled to receive for the services rendered and to be rendered thereunder, regardless of the value of such services. The respondent is also entitled to be reimbursed from these petitioners for their proportionate part of the moneys disbursed by him for expenses as found by the referee which amount all told to the sum of $1,975.
It appears from the evidence that there is likely to be a further distribution of money and property to the petitioners as the result of the respondent’s services in establishing their claim thereto. For that reason and because the petitioners have tried to take the matter out, of his hands, I approve the conclusion of the referee that Mr. Powers has a lien upon all the moneys and property distributed and to be distributed to the petitioners from the Baker estate for his services.
• It also appears that the respondent has fully accounted for all the money and property of the peti
Decisions ór final orders in harmony with the conclusions above stated may be submitted for signature with costs in each case against the respective petitioners.
Copies of the opinions of the referee and of Mr. Justice Cochrane, which have been referred to, are appended.
Ordered accordingly.
Herrick, Referee. I have held the agreement in these proceedings invalid largely because it is an agreement on the part of the defendant to advance the necessary, expenses of conducting the litigation or proceeding necessary to be taken to establish the rights of the other parties to the agreement. That that was the intention and design is apparent from the fact that the defendant did pay such expenses and did not deduct the amount thereof, excepting in one instance, from the distributive shares of the petitioners before taking his fifty per cent.
The agreement I think is void upon its face and it is not necessary for me to cite authorities.
In establishing the reasonable value of defendant’s services in these proceedings three lawyers of established reputation were called by the defendant, all of whom testified that the reasonable worth- and value of the defendant’s services in these proceedings was fifty per cent, of the recovery after deducting the necessary expenses of the litigation or proceeding. No one was called in behalf of the plaintiff to give testimony as to the value of the defendant’s services.
While, perhaps, as a matter of law, I have the right
I am perfectly aware of the very anomalous condition in which the conclusions which I have arrived at place this case and that it results apparently in a decision which causes an illegal contract under which the attorney is to pay the expenses of the proceedings being more advantageous to the plaintiff than to pay what has been found to be the reasonable value of his services after deducting the amount of the expenses.
But with my view of the law in relation to such agreements and whát I feel to be the almost absolute necessity of abiding by the testimony of the witnesses produced as to the value of the legal services rendered in these proceedings, I cannot see my way clear to coming to any other conclusion.
I have been asked by the plaintiff’s counsel to hold that where any attorney has entered into an illegal agreement, and it has been so held, that then he is not entitled to recover anything for his services. I do not think the order of reference permits me to determine that question.' The order is a limited one, confining the referee to certain specific things and to report to the court, upon these things where a final action is to be taken.
In passing upon the account of expenses rendered by the defendant I have taken into consideration the fact that, relying upon his contract and not expecting to charge his expenses to Ms clients, the defendant has not been careful in keeping a record of all his ex
The item for Mr. Clinton and for office help I do not think should be allowed. They are the kind of services that are presumably paid for and taken into consideration in determining the value of the services and the work to be perf ormed by any lawyer when .he engages himself to perform services for a client, and when the- estimate is given that the reasonable worth and value of a lawyer’s services in a proceeding such as this is a given amount, exclusive of expenses, I do not understand that that means his office expenses or the amount that he chooses to pay either employees in his office or an associate in his office that he employs to assist him from time to time.
I cannot agree with the learned referee that the contract of February 9,1909, was void for champerty. At the time it was made a proceeding was, and had for some time been, pending in the Probate Court of Chicago, which was the only proceeding contemplated or to which resort could be had for the establishment of the rights of the petitioners. No question ever existed as to the right of these petitioners to participate in the' Baker estate provided their identity and legitimacy as descendants of William D. Bemey was established. Distribution of a portion of the estate had already been made before the contract in question and the rights of these peti-. tioners were recognized in such distribution to the extent that their distributive shares had been set apart and were being held subject only to satisfactory proof as to such identity and legitimacy. There was no proceeding actual or contemplated hostile to the
The referee has found that no fraud has been proved to have been practiced by Mr. Powers in making the contract. The ordinary rules affecting the relationship of attorney and client should not be applied in considering this contract of employment. Clifford v. Braun, 71 App. Div. 432; Boyd v. Daily, 85 id. 581, affd., 176 N. Y. 613; Matter of Howell, 215 id. 466, 472. For the purposes of this case, however, I may assume that it was the duty of Mr. Powers before he made the contract to see that his prospective clients were acquainted with every fact within his possession which might aid their judgment in determining whether or not they should make such contract. I shall assume that the petitioners had a right to know all that Mr. Powers knéw about the size of the estate and to have from him a fair statement without suppression or exaggeration of the actual difficulties in the way of their success and of any fact or evidence known to him at that time which would materially diminish such difficulties. Certainly knowledge of the amount of the Baker estate was an important factor to be known by
The conclusions I have reached make it unnecessary to consider that part of the referee’s report as to the reasonable value of the services and I express no opinion in reference thereto.
I think that what was paid on the $7,700 Martin contract should be regarded as a settlement of litigation and deducted from the amount received before a division of the proceeds. It is true that Mr. Powers says he did not advise that contract and that he told his clients he would not consent to have any payment thereunder deducted from his 'compensation. But he did not advise against it. He says he was not certain of his position. It was probably good judgment to make the contract. It disposed of the opposition, removed the possibility of failure, and, inasmuch as Mr. Powers was not sufficiently sure of his position
The payment of $500 to Mr. Welch being for legal services, it seems to me should be paid from the share of Mr. Powers.
Other disbursements of Mr. Powers are adopted as fixed by the referee.
Neither party having been entirely successful in these proceedings, each should pay his own costs, but the referee’s fees and disbursements, including the stenographer’s fees, may be charged as a disbursement against the fund in controversy. An order may be entered to effectuate the views herein contained, which order should be settled on notice. If there is any matter involved herein not covered by this memorandum it may be disposed of on the settlement of the order.
Ordered accordingly.