Stanley v. Bouck
83 N.W. 298
Wis.
1900
Check Treatment
Wihslow, J.

The essential facts in the case are few and simple. Stanley wrongfully attached the property of the Careys September 14, 1889. The assessment of damages therefor was had in September, 1891, and a special verdict rendered, on which (as afterwards held by this court in Stanley v. Carey, 89 Wis. 410) the Careys were entitled to judgment for about $6,000, but wrere given judgment January 20, 1892, for only $800 and_ costs. March 1, 1892, Stem-ley obtained judgment against the Careys for deficiency upon mortgage foreclosure for over $10,000. February 5, 1895, that part of the judgment in the attachment refusing full damages was reversed by this court, and judgment directed for the Careys against Stanley for full damages. February 7,1895, the Careys assigned the judgment already rendered in the attachment súit, and any judgment to be thereafter entered, to Bouck and Wood, their attorneys, as collateral security for their fees' and disbursements in that action and in their other litigation. March 12, 1895, the Careys assigned the judgment for costs in this court in the attachment suit absolutely to Bouck and Wood. March 23, 1895, Stanley commenced this action to offset the damages in the attachment suit against the deficiency judgment. March 25, 1895, Bouck and Wood gave notice to Stanley of their assignments. January 29, 1897, judgment was for*230mally entered, in the attachment suit for $6,603.77, in favor of the Careys against Stanley. The Careys were insolvent March 1, 1892, and have remained so ever since.

Upon these facts the plaintiff’s claim is that he is entitled to set off the damages in the attachment suit against his judgment for deficiency because his deficiency judgment antedated the damage judgment, and because he commenced this action before any notice was given by Bouck and Wood of their assignment.

The legal principles applicable to the equitable lien of attorneys upon a cause of action or judgment are quite well settled in this court. When the action is founded upon a written instrument in the possession of the attorney, he has a lien on the cause of action for his services and disbursements at least from the time of the commencement of the action (Courtney v. McGavock, 23 Wis. 619; Howard v. Osceola, 22 Wis. 453; Rice v. Garnhart, 35 Wis. 282), and after judgment he has a lien on the judgment obtained. When the action is not founded on any such instrument, but is brought to recover unliquidated damages, either in contract or tort, there was, at common law, no. lien before judgment. If such cause of action was assignable, a lien might be created thereon by agreement between attorney and client, but, if not assignable, no such lien could be created. Kusterer v. Beaver Dam, 56 Wis. 471. By a statute passed since that decision, however, such a lien may now be given by contract between the attorney and his client. Ch. 204, Laws of 1891 (now sec. 2591a, Stats. 1898). But when judgment has been recovered in an action, whether in contract or tort, the rule is well established that the attorney has an equitable lien thereo'n, by operation of law, for his services and disbursements in that action. Rice v. Garnhart, supra; Marshall v. Meech, 51 N. Y. 140; Gauche v. Milbrath, 105 Wis. 355. As between attorney and client, this equitable lien or right to be paid out of the judgment obtained by the attorney’s ef*231forts, whether resting upon agreement or raised by operation of law, is complete without notice to the opposite party. This is elementary.

Where, however, the action is not founded upon a written instrument in the attorney’s possession, notice must be given, by the attorney claiming the lien, to the opposite party, in order to preserve his right to a lien against a settlement of the cause of action-or judgment, made in good faith. This is simply an application of well-known rules of estoppel. The opposite party in such case has changed his position in reliance upon an apparent state of facts, and in ignorance of the attorney’s claim, and will be protected. Courtney v. McGavock, supra. No such principle, however, can in reason apply to a mere claim of equitable setoff, because there has been, in such case, no expenditure nor change of position by the party claiming the setoff. The mere commencement of an action is not such a change of position as raises an estoppel in pais. Frei v. McMurdo, 101 Wis. 423.

In the present case the claim of the Careys for damages resulting from the destruction of the property wrongfully attached was a claim which survived under sec. 4253, Stats. 1898, and hence, under well known principles, it was assignable at any time, either before or after judgment. Furthermore, the plaintiff’s deficiency judgment could not be pleaded as a counterclaim thereto. Hence when it was assigned before judgment to Bouck and Wood as collateral security for their services and disbursements in the same case, it is plain that the assignment gave them a valid lien, and that there was no existing setoff. How such lien could be defeated by a setoff afterwards coming into existence we cannot perceive. As soon as judgment was entered, the lien theretofore existing on the cause of action attached to the judgment itself. There was no interval of time in which the right of setoff could first attach and defeat the lien. Had there been a bona fide settlement made before notice of *232the assignment and. lien was given to the plaintiff, the principle of Courtney v. McGavock would apply, but there was none. An application to the court to set off one judgment against another is addressed to the sound discretion of a court of equity, whether made by motion or action, and when the judgments are rendered in actions having no connection with each other, it will not be allowed as against an attorney’s equitable lien for services and disbursements, where evident injustice will be done. Gauche v. Milbrath, supra.

By the Court.— Judgment affirmed.