Case ID: walker_2/html/0320-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HAMBURGER’S APPEAL.
    An assignee of a judgment takes it free from the equities of third parties of ■which he had no notice.
    Appeals from Common Pleas No. 4, of Philadelphia County. Nos. 199, 200, 201 and 202 January Term, 1884.
    This case arose from the distribution of a fund produced from a Sheriff’s sale of the property of Philip H. Ertheiler. The following extract from the report of the auditor sets forth the facts.
    There were present at the hearing before your auditor, and he was severally attended by Morris Sherzer, Esq., a claimant for wages against the said fund amounting to five hundred and fifty dollars ($550) and Harry B. Gilroy, Esq., his counsel; Julius C. Levi, Esq., a claimant for a balance of salary amounting to one hundred and thirty-five dollars ($135) and Oscar B. Teller, Esq., his counsel; Louis Tim, Esq., a claimant of the whole of said fund under writs of execution, issued in the above named-cases, wherein he was plaintiff to the use, which said executions were stayed by the order of your Honorable Court as appears by a copy of the docket entries in said case attached hereto as a part of this report; and by Thomas J. Diehl, Esq., his counsel.
    By Isaac Hamburger, Esq., of the firm of Isaac Hamburger & Co., the plaintiff in the execution issued in the above-named cause, wherein the said firm appears as plaintiffs and under which this fund was realized, and Walter J. Budd, Esq., their counsel and by David Tim and Philip H. Ertheiler, as witnesses.
    Your auditor will first consider the claim for wages made under the Act of Assembly of April 9, 1872.
    These .claims were made by simply leaving with the Sheriff a copy of a bill for the amount of the respective claims prior to the date of sale without, however, setting forth such facts as make a case within the act; so that the officer and interested persons might know that the labor was done within the time limited, in a business defined in the act, the sum due, and that the property subject to the lien was embraced in the levy.
    Your auditor therefore, in consonance with the decision rendered in the case of Allison vs. Johnson, 92 Pa. 314; disallows said claims.
    
      The chief point of contention, however, arises between Louis Tim as above named and the firm of Isaac Hamburger & Co.
    There is no doubt, as appears by the several returns of the SlieriiF to the several writs of execution, that the Tim writs were placed in his hands and levies made thereunder at a point of time anterior to the issuing of the writs in the case of Hamburger & Co.
    Said prior writs, however, were stayed by the order of your Honorable Court pending proceedings by which the validity of tht judgments under which they were issued were sought to be destroyed. Said judgments, however, were fully sustained, as appears by the said docket entries herein before referred to, the result of which has been that the lien of the executions issued thereunder has been preserved, and, if there were nothing more in the cause, your auditor would be at once at liberty to award the fund in question to the prior execution creditor, to wit, Louis Tim.
    But Isaac Hamburger & Co., through their counsel, seriously dispute the right so to do, based upon the following facts and iribrmicesi
    1. That the judgment note under which he claims, to wit, the one in suit to No. 195, June Term, 1880, wasplaced in the hands of Da vid Tim, Esq., a member of the Philadelphia bar, as his attorney, in conjunction with another judgment note in favor of said David Tim, to wit, the one in suit to June Term, 1880, No. 180, for $6,000, under an express agreement that he, the said David Tim, should hold them and not use them, except for the mutual and joint benefit of both parties, and that neither was to have the advantage or preference over the other.
    2. That although the said agreement was only made as to the last two judgments above named, which were executed on the same day, namely, October 31, 1878, yet the facts of the confidential relation of counsel and client having been established between the. said David Tim and the firm of Isaac Hamburger & Co., the law would extend said agreement to the two prior judgment notes held by said Tim in suit, as of Nos. 181 and 182, to June Term, 1880, he having failed at the time of said agreement to disclose the existence of such judgments, or at any time thereafter until after execution issued, and to inform his clients that their interests were, in fact, antagonistic.
    3. These propositions being conceded that the judgments held by David Tim would be affected by said . agreement, no matter into whose hands they passed, without notice and without proof of fraud.
    Your auditor is compelled, after a careful review of the testimony, and weighing the evidence of all parties, to decide that the two judgment notes confessed by the defendant, Ertheiler, October 31, 1878, were for the joint benefit of David Tim and Isaac Hamburger & Co., and that the same were so accepted by David Tim as attorney for all parties.
    The testimony of both Hamburger and Ertheiler on this point is corroborated by David Tim in his letters to Hamburger between the dates of said judgment notes and the day of execution.
    Eor instance, on November 7,1878, David Tim writes Hamburger asking him to help Ertheiler with money, and'i uses' language which cannot be distorted to mean aught else. than there was an agreement between them for mutual protection, and that he, David Tim, was watching matters in Hamburger’s interest, and again, in subsequent letters, to wit, dated January 21, 1879, and July 13,1880, it undoubtedly appears that David Tim was acting as a general attorney for Isaac Hamburger & Co.
    Such being'the case, it would follow that David Tim is within the rule that forbids an attorney from making a profit out of his office to the prejudice of the rights and interests of his clients ; Lockhard vs. McKinlay, 9 W. N. C. 11; Smith vs. Brotherline, 12 P. F. S. 469; Henry vs. Raiman, 1 Casey 359.
    His duty to his client and the high standard, of integrity imposed by the law on a professional adviser should have compelled him to disclose to his client the existence of the two judgments held by himself against the defendant, by the use of which he could defeat his client’s claim and entirely destroy the security placed in his hands for his client’s protection.
    He not only failed in his duty in this behalf, but the evidence shows he allowed himself to be the medium through which Hamburger & Co. were constantly urged to advance money to the defendant, as he expresses it, “to save our cash."
    
    His urgency in such matters, coupled with the non-disclosure of the judgments held by ■ himself, was certainly a fraud upon his client, the fruits of which he should not be permitted to enjoy; and were the contest alone between Mr. David Tim and Isaac Hamburger & Co., your auditor would not hesitate under the principles laid down in the above-quoted eases to divide the fund between these two parties until the judgment notes of ■October 31,1878, were fully satisfied, and thus postpone the two earlier judgments as between the counsel and client by reason of the fraudulent concealment of their existence..
    Unfortunately for Messrs. Hamburger & Co., all of the judgments held by Mr. David Tim passed by assignment into the hands of a third party, Mr. Louis Tim, prior to their entry of record and before execution issued.
    There is no evidence that the ■ assignments were not made in good faith, so far as the holder of them is concerned, nor that they were assigned without consideration.
    There is no prooí that there was any arrangement between David Tim and Louis Tim by which the latter was to use the judgments for the benefit of the former.
    They both swear positively that the judgments were transferred in payment of debts actually existing, and no attempt is made to deny it, except in argument by clothing the matter with suspicion by reason of the relationship of the parties.
    Again, no notice is brought home to Louis Tim of the agreement between David Tim and his clients, Hamburger & Co., by which he would be affected with the equity existing between them in the distribution of this fund ; nor, indeed, does it appear that Louis Tim was aware of any confidential relation existing between the said counsel and clients, until this litigation ensued.
    It'is a well-settled principle that the assignee of a judgment is bound by any equities that may exist in a defendant therein, but that he should be bound by equities existing in an execution ■creditor, a stranger to his own record, without notice and without proof of fraud in the assignment as against the contesting creditor, is a proposition for which your auditor cau find no-authority.
    Your auditor is, therefore, compelled, in the absence of any testimony showing collusion between David Tim and Louis Timr to award the fund in Court to Louis Tim as the owner of the judgments, which were prior in lien to the judgment of Hamburger & Co,
    The Court confirmed the report of the auditor and awarded the fund to Louis Tim. Hamburger & Co. then appealed.
    
      W. J. Budd, Esq.,
    
    argued that there was sufficient to put Louis Tim on inquiry, and he was not an innocent purchaser; Mott vs. Clark, 9 Pa. 404; Tritt vs. Colwell, 31 Pa. 228; Guthrie vs. Bashline, 25 Pa. 80.
    
      Thomas J. Diehl, Esq., contra
    
    argued that the auditor found that Louis Tim was. an innocent purchaser for value, and his finding will not be disturbed except for flagrant error; White-side’s Appeal, 23 Pa. 116; Bull’s Appeal, 24 Pa. 288; Dellinger’s. Appeal, 71 Pa. 428; Roddy’s Appeal, 99 Pa. 12. The assignment was under seal and implied a consideration; Hancock’s Appeal, 34 Pa. 156; Horton vs. Miller, 44 Pa. 256; Penna. Co.’s Appeal, 86 Pa. 102. The assignee of a judgment takes it subject to the equities of the original parties only; Hendrickson’s Appeal, 24 Pa. 365; Appeal of Mifflin Co. Bank, 98 Pa. 150; Reineman vs. Robb, 98 Pa. 474.
   The Supreme Court affirmed the decree of the Common Pleas April 21, 1884 in the following opinion:

Per Curiam.

These cases .were argued together. They present the same question, and it might have been presented on one appeal. We see no error in the decree. The assignee of a j udgmont takes it subject to the equities of the original parties therein; but he does not take it subject to the equities of a third person, when he pays for it a valuable consideration, and buys it without notice of those equities. These rules of law and the facts found are decisive of this case. We find no error in the decree.

Decrees affirmed and appeals dismissed at the cost of the appellants in each case.