113 A.D.2d 184 | N.Y. App. Div. | 1985
OPINION OF THE COURT
Plaintiff is an attorney who has asserted a charging lien which he seeks to enforce against the proceeds of an insurance policy on the life of Archimedes Cervera. The policy, with a face amount of $250,000, had been purchased by Tele-Signal Corp. pursuant to employment and shareholders’ agreements with Mr. Cervera and had been authorized by corporate resolution as well. Tele-Signal was the named beneficiary. Following Mr. Cervera’s death, plaintiff’s law firm was re
Plaintiff’s firm commenced an action on behalf of Tele-Signal and plaintiff ultimately negotiated a settlement in the amount of $175,000. The insurer then forwarded to plaintiff a check for that amount made out to both Tele-Signal Corp. and plaintiff’s law firm as attorneys. After the check was received, but before it was deposited, the defendants in this action, the executors of Mr. Cervera’s estate, commenced a discovery proceeding against both Tele-Signal and the plaintiff seeking to have the policy proceeds turned over to the estate in exchange for Mr. Cervera’s share of stock in Tele-Signal, pursuant to the terms of the employment and shareholders’ agreements and the corporate resolution. The proceeds of the check were then deposited in an account in Tele-Signal’s name but the account was managed by plaintiff pending the outcome of the discovery proceeding. That proceeding was ultimately resolved in favor of the Cervera estate, and this court affirmed the resulting decree (Matter of Reuss v Telesignal Corp., 89 AD2d 1062). Shortly after the discovery proceeding was commenced, plaintiff’s law partnership was dissolved and its rights with respect to the Tele-Signal litigation were assigned to plaintiff, who had personally provided the legal services involved.
In the petition commencing the discovery proceeding on behalf of the estate, one of the executors noted that the proceeds of the insurance policy were subject to a lien for plaintiff’s services. Nevertheless, plaintiff, who was named as a respondent in that proceeding and who represented TeleSignal in it, made no attempt to assert any lien at that time. Indeed, no lien was asserted until after the discovery proceeding had been finally resolved in the estate’s favor, the full amount of the proceeds had been turned over to the estate, and the estate had delivered Mr. Cervera’s stock to TeleSignal. Only then did plaintiff, who has not been paid for his services by Tele-Signal and who does not claim to have made any effort to obtain payment from Tele-Signal, commence this action. After issue was joined, plaintiff moved for summary judgment and defendants cross-moved for the same relief. The Surrogate denied both the motion and the cross motion and plaintiff has appealed. In view of the undisputed facts, we conclude as a matter of law that plaintiff has waived his charging lien and that if he is to obtain his fee he should seek it from Tele-Signal.
Although an attorney has a retaining lien on the proceeds of an action that come into his or her hands, a charging lien does not depend upon possession but rather upon the existence of identifiable proceeds of the litigation (see, Goldstein, Goldman, Kessler & Underberg v 4000 E. Riv. Rd. Assoc., 64 AD2d 484, 487, affd 48 NY2d 890; Kaplan v Port Taxi, 89 AD2d 577, 578). A charging lien may in an appropriate case be enforced against third parties who have taken the proceeds with knowledge (e.g., Todd v Mutual Factors, 3 AD2d 537, affd 4 NY2d 759; see also, Goldstein, Goldman, Kessler & Under-berg v 4000 E. Riv. Rd. Assoc., supra) or against a defendant who either still possesses the proceeds (e.g., Matter of King, 168 NY 53; Matter of Gutchess, 90 AD2d 663) or who has knowingly paid the proceeds to the client so as to deprive the
Although a charging lien thus may be enforced even when the proceeds have passed into the possession of the client or a third party with knowledge, the right to enforce such a lien will be waived by any action inconsistent with an intent to enforce the lien (Goodrich v McDonald, 112 NY 157; West v Bacon, 164 NY 425, rearg denied 165 NY 624; Todd v Mutual Factors, supra; Newark Fire Ins. Co. v Brill, 7 NYS2d 773, 779; see, 7 NY Jur 2d, Attorneys at Law, § 195). The waiver rule is intended to prevent other parties from being misled by the attorney’s actions or inaction. Therefore, if the attorney knowingly allows the proceeds to pass into the hands of the client or another party without asserting his or her rights (compare, Goodrich v McDonald, supra, and Newark Fire Ins. Co. v Brill, supra, with Matter of King, supra), or if the attorney fails to enforce the lien within a reasonable time (Todd v Mutual Factors, supra; see, 7 NY Jur 2d, Attorneys at Law, § 195), the lien will be deemed waived and the attorney relegated to a plenary action against the client for any fees.
Here, despite defendants’ contentions to the contrary, it is evident that at the time the discovery proceeding was commenced by the Cervera estate, plaintiff had a charging lien on the proceeds of the life insurance policy because they were obtained through his efforts. Equally clear, however, is that plaintiff subsequently waived his right to enforce that lien.
That waiver may well have occurred when plaintiff indorsed the check from the insurer and deposited it in an account in Tele-Signal’s name without taking any steps to protect his lien (see, generally, Marsano v State Bank, 27 AD2d 411, appeal dismissed 23 NY2d 1018; Newark Fire Ins. Co. v Brill, supra). The circumstances surrounding this action are not clearly delineated in the present record, and if that were the only source of the waiver, a factual inquiry would be necessary.
As it is, however, a clear and undeniable waiver is to be found in plaintiff’s failure to assert the lien until after the discovery proceeding and the appeal that resulted were finally resolved in the estate’s favor and the estate had exchanged Cervera’s stock for the proceeds of the policy. To allow plaintiff belatedly to assert his lien at that date would deprive the estate of the full benefit of that exchange in which the plaintiff acquiesced (see, Todd v Mutual Factors, supra).
Finally, we note that plaintiffs position is not strengthened
Although defendants have not appealed from the Surrogate’s denial of their cross motion for summary judgment, this court has the power to search the record and grant summary judgment to any party in an appropriate case (CPLR 3212 [b]; Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106, 110-112; Peoples Sav. Bank v County Dollar Corp., 43 AD2d 327, 334, affd 35 NY2d 836 on opn at App Div). In the absence of any relevant question of material fact, we deem this to be such a case and grant summary judgment to defendants in order to bring this litigation to a more timely end.
Mangano, Gibbons and Niehoff, JJ., concur.
Order of the Surrogate’s Court, Suffolk County, dated March 1, 1984, modified, on the law, by deleting the provision thereof which denied defendants’ cross motion for summary judgment dismissing the action, and substituting therefor a provision granting the cross motion and dismissing the action. As so modified, order affirmed insofar as appealed from, with costs to defendants.