Oishei v. Pennsylvania Railroad , 102 N.Y.S. 368 ( 1907 )

Ingraham, J.:

This action was brought to enforce an attorney’s lien. It appears that on or about the 21st of February, 1901, the defendant Bonaddio was a passenger upon one of the trains of the defendant railroad company, and received injuries thereon in the State of blew Jersey; that on or about the 26th of February, 1901, the plaintiff, an attorney and counselor at law duly admitted to practice in the courts of this State, was employed and retained by Bonaddio to bring suit against the defendant railroad company to recover for the injuries sustained by him, and at that time made an agreement by which he was to pay the plaintiff one-third of any .recovery had pr settlement made with the said Pennsylvania Bailroad Company by reason of the injuries so received, and the plaintiff was also to be entitled to any costs awarded in any proceeding brought to enforce such cause of action. Pursuant to this retainer and on or-about the 28th of February, 1901, an action was brought in the Supreme Court of this State by th 3 defendant Bonaddio against the Pennsylvania Bailroad Company, the plaintiff appearing as his attorney. On the 17th of June, 1901, the said railroad company settled the cause of action to enforce which the action in the Supreme Court of this State was brought for $1,500, which was paid to the defendant Bonaddio, from whom the company received a general release. Such settlement was effected and release delivered without the knowledge or .consent of tlie plain till The said. Bonaddio has not paid the plaintiff; any part of the amount for which the said cause of action was settled and adjusted, and is at present' without the jurisdiction of the State and financially irresponsible.

Upon the plaintiff commencing the' action.against, the Pennsylvania Railroad Company for the injuries which Bonaddio sustained while a passenger upon one of its trains, there accrued to the plaintiff a lien upon the cause of action sought to be enforced. Undér section 66 of the Code of Civil Procedure this lien attached upon 'the commencement of the action to any “ verdict, report, decision, judgment or final order in his client’s favor, and the proceeds thereof in whosoever^* hands they may come ■; and the lien can not be affected by any settlement between the parties before Qr after . judgment or final order.” A lien of this character was before "the Court of Appeals in Fischer-Hansen v. B. H. R. R. Co. (173 N. Y. 492), and. while it was there held that the existence of this lien did not interfere with the client’s right to settle the controversy, it was also held that upon such a settlement the claim or cause of action is extinguished and the lien follows and attaches to the fund which represents the cause of action extinguished by the settlement, and the claim of the attorney for compensation for his services becomes a lien upon the¡ fund in the hands of the railroad company which belongs to the client and it stands in place of the cause of action which, prior to the settlement, was subject to the lien ; that “ the right of the parties to thus settle is absolute and the settlement determines the cause of .action and liquidates the claim. This necessarily involves the reciprocal right of the attorney to follow the proceeds of the settlement, and if they have been paid over to the client, to insist that his share be ascertained and paid to him, ■for the defendant is estopped from 'Saying that with ■ notice of the lien he parted with the entire fund.” The lien thus having been attached to the fund in the hands of "the railroad company which stood in place of the cause of action upon which' plaintiff-had a lien, that lien could not be defeated by payment to the client) for defendant made such payment at its peril. It had at least consti'uctive notice of the lien and its duty was to ascertain the amount of the lien and retain it for the benefit of the attorney. The court said, “ a lien upon a claim or a cause of action follows the fund created by a settlement of the claim, which thereupon ceases to exist. It attaches to the amount agreed upon in settlement the instant that the agreement is made, and if the defendant pays over to the client without providing for the lien of the attorney, he violates the rights of the latter and must stand the consequences. We think that the plaintiff had a lien upon the sum which the defendant agreed to pay to extinguish the cause of action, and that the law will not permit it to say that it has nothing in its hands to satisfy it. The lien was not affected by the judgment, but-leaped from the extinguished cause of action to the amount agreed upon in settlement.” Applying this rule, it follows that, when the terms of the settlement were actually agreed upon and the defendant had in its hands the sum of $1,500, such amount was subject to a lien in favor of this plaintiff for one-third of that sum, or $500. The defendant having appeared in the action commenced in the Supreme Court of the State of Hew York, the courts of this State had jurisdiction as it did not appear that plaintiff was a non-resident, and the defendant holding in its hands the sum of $1,500 subject to a lien in favor of the plaintiff, it could not impair this lien or take from the plaintiff the right to enforce such lien by paying the money to the plaintiff in that action. (See, also, Oishei v. Pennsylvania R. R. Co., 101 App. Div. 473; and Oishei v. Metropolitan St. R. Co., No. 1, 110 id. 709.)

As the plaintiff had a lien upon the fund in the hands of the' defendant, in an action or proceeding to enforce such lien the client was a necessary party, as such client was entitled to the fund subject to the lien and had a right to be heard as to the existence of the lien and the attorney’s right to enforce it. (Oishei v. Pennsylvania R. R. Co., supra; Oishei v. Metropolitan St. R. Co., No. 1, supra.) This action was, therefore, properly brought against the railroad company, in whose hands the fund was at the time the lien attached, and against the client, who had a-right to be heard before a part of his money in the possession of the railroad company could be appropriated to the payment of the plaintiff’s lien. Since the settlement, however, the client has departed from this State and service of process upon him personally could not be had, and the defendant claims that the court, therefore, lost all jurisdiction to determine the amount of the lien. It bases this claim upon the allegation that as it was a foreign corporation and the money upon which the lien attached was in its hands as such foreign corporation, the fund was, therefore, not within this State, so that the rights of the- several parties ■ to the action to it could he adjudicated. The defendant, although a foreign corporation, was-served in this State and appeared in this action. The court thus obtained jurisdiction over the person of the defendant and had jurisdiction over the subject-matter of the action to enforce a lien on a cause of action, an action to enforce which was pending in this State. By the service upon the defendant and its appearance in this actibn tile court obtained jurisdiction over the defendant and could enforce on behalf of the plaintiff — a resident and citizen of this State — his right to the possession of the- fund in its hands. • The right-to attach tliis fund and adjudicate as to-whom it belonged 'attached when the court obtained jurisdiction of the person of the defendant, and the courts of this State, therefore, had the right to bring in by substituted service all .tiróse who had any interest in the fund, the ownership of which was in dispute: Here a defendant over whom the court had jurisdiction concededly- had in its hands a fund, the ownership of which was in dispute between a citizen of this State and others who were without its jurisdiction. The defendant who had possession of the fund was before the court and the court had jurisdiction over him and could enforce a judgment determining the ownership of the fund; and by virtue of the jurisdiction thus acquired over the corporation in whose possession the fund was, the fund itself was within the jurisdiction of the court. The court, therefore, had power to call in all others interested in the fund by substituted service of process. As the question to be determined was the ownership of a fund subject to the jurisdiction of the court the proceeding was in rem, the" judgment cfeter- . mining the ownership of the fund was binding upon all the parties to the action properly served* by process, either personally or by substituted service as authorized by law.

The decisions relating to the jurisdiction obtained over property in the hands óf a foreign corporation by a service of attachment upon an agent of the corporation situated within the jurisdiction in which the attachment proceeding was issued have no application to a case where the court has accpiired jurisdiction over such foreign corporation by personal service of process within the jurisdiction or the voluntary appearance of such foreign corporation. If the plaintiff was the owner of a promissory note or bond of the Pennsylvania Railroad Company and commenced an action to recover the amount of such note or bond and obtained jurisdiction over the. person of defendant, I apprehend that there could be no defense to such an action on the ground that, the defendant was a foreign corporation ; and if a non-resident of the State make a claim to such obligation and as such was made a defendant and was brought in by service of process by publication, the jurisdiction of the court to determine the question as to who was entitled to recover upon such an obligation could not be questioned. The ownership of the obligation being the question in controversy, the court having obtained juris, diction over the person of the defendant in the action to enforce that obligation would have a right to make any one whose presence was necessary a party to that action for the purpose of a complete determination of the question, and make service of process upon him by publication or otherwise as the Code of Civil Procedure (§ 438 et seq.) required. An entirely different question is presented where a debt or demand in.favor of a non-resident against a foreign corporation is sought to be attached in an action in which the court has no jurisdiction over either the person of the defendant or the cause of action or demand sought to be attached.

There is nothing in the case of Morehouse v. Brooklyn Heights R. R. Co. (185 N. Y. 520) which is at all inconsistent with this view. It is true the court approved in that" case of a judgment" which required the plaintiff to issue execution against the property of the client, as the defendant company only became liable to pay in case such execution issued against Nathan, was returned unsatisfied. But in this case it was expressly found that the client, although served with process, did not appear; that he was without the jurisdiction of the court, and was a day laborer,- financially irresponsible. The law never requires an unmeaning ceremony to be performed before a substantial right is enforced, and although a joint judgment iq awarded against both defendants, the provision that an execution, should be issued and returned unsatisfied against the client before the railroad company is bound to pay, where the issuance of such an execution would, upon the facts found, be entirely ineffectual, is not error. By payment of this claim the railroad company would have ■ a right to enforce the claim against the client, or, by way of subrogation, the right to enforce the judgment awarded against him. I think, therefore, the court had jurisdiction..

These questions were discussed in Oishei v. Pennsylvania R. R. Co. (supra) and Oishei v. Met. St. R. Co. No. 1 (supra), and although it is claimed by counsel for the defendant that such discussions in those cases were ohiter, the rule' there announced received the approval of the court, and we are satisfied that what was said is correct.

The other question presented upon this appeal is whether the court lost jurisdiction to determine this question in consequence of the removal’ of the action brought to enforce the cause of action upon which the plaintiff had a lien to the United States Circuit Court before the settlement. It is quite clear, however, that such removal did not affect the plaintiff’s lien upon the cause of action sought to be enforced as the lien existed by operation of law. The right to the lien did not depend in any way upon the decision or judgment of the United States Circuit Court; .the lien attached upon the commencement of the action in the Supreme Court of the. State of liew York and upon the settlement attached to the fund in the hands of the defendant, which determined the cause of action, and the relation between the plaintiff and defendant was not different from that in any case in which the defendant had in its hands a fund to which a lien had attached. The plaintiff, therefore, had' the right to apply to the Supreme Court of the' State of Hew York, a court of competent jurisdiction, to enforce that lien if it could get jurisdiction over the defendant railroad company, who had in its hands the fund to which the lien attached.

It follows, therefore, that upon the facts found, "which are supported by the evidence, the judgment in favor of the plaintiff was right, and should be affirmed, with costs.

Patterson, P. J., McLaughlin, Houghton and Lambert, JJ., concurred.

Judgment affirmed, with costs. Order filed.

* Sic.