Case ID: ad_110/html/0200-01.html
Source: Caselaw Access Project
Author: {"author": "McLaughlin, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James A. Deering, Appellant, Respondent, v. John Schreyer, Respondent, Appellant, and William J. Fields, Respondent, Impleaded with the City of New York.
    First Department,
    December 30, 1905.
    Attorney ánd client — action on contract for contingent fee — amendment at trial setting out an estoppel — evidence warranting finding of estoppel — division of interest on fund in controversey.
    On the trial of an equitable action, a complaint which sets out that a- mortgage on "defendant’s premises which was an offset against the amount of plaintiff’s claim was in fact paid, may be amended so as to set out that the defendant was estopped from ¡asserting the validity of said mortgage as against the plaintiff, when the defendant is given all the time he asks for to answer the complaint as amended and makes no claim that he was surprised or misled.
    When an attorney suing his client on a contract for contingent fees testifies that the defendant told him that a certain mortgage on defendant’s premises, the value of which must be deducted from the recovery before dividing the same, had heen paid, and that in accepting the contract he believed such statement and relied thereon in making the contract, and when affidavits made by the defendant subsequent to the contract which' state that said mortgage was paid are put in evidence, a finding that the defendant was estopped to deny the payment is warranted by the evidence.
    If representations are voluntary and calculated to mislead and actually do mislead another acting in good faith, there is an estoppel to deny them, and it is not necessary that there be an intention to mislead.
    When a fund in controversy is paid to a city chamberlain pending the action, each party is entitled to the interest earned by his share of the fund as deter- ■ mined by the final judgment, and if during the action such fund has been paid to one party in excess of the amount allowed him by the final judgment, he is chargeable with interest at six per cent on such excess while held by him.
    Cross-appeals by the plaintiff, James A. Deering, and by the defendant, John Schreyer, from various portions of a judgment of the Supreme Court, entered in the office of the .clerk of the county of Mew York on the 29th day of May, 1905, upon the decision of the court rendered after a trial at the Mew York Special Term.
    
      Clarence L. Barber, for the plaintiff.
    
      Alexander Thain, for the defendant Schreyer and the respondent Fields.
   McLaughlin, J.

The litigation between the parties growing out of the subject-matter involved in this action has been before the court several times and it is unnecessary, in view of the numerous opinions written in which the facts have been fully stated, to again set them out in detail. (Matter of Lexington Avenue, No. 1, 30 App. Div. 602 ; affd., 157 N. Y. 678 ; Deering v. Schreyer, 58 App. Div. 322 ; revd., 171 N. Y. 451 ; S. C., 88 App. Div. 457.)

The facts, so far as the same are material to the question now presented, are, in substance, as follows: The defendant Schreyer was the owner of certain land in the city of Mew York, which was taken by the city for the purpose of extending Lexington avenue; the commissioners appointed in that proceeding to estimate and assess the damages sustained by Schreyer by the taking of such land, held that it had been previously dedicated as a street and, therefore, a nominal award of four dollars was 'all he was entitled to receive. After this award had been confirmed, Schreyer employed the plaintiff, as an attorney, for the purpose of taking.such, proceedings as he thought necessary to set aside the award and, if possible, procure a larger one, and on the 13th of October, 1890, entered into a contract with him which stated: “I do hereby retain, and employ James A. Deering, attorney and counsellor at law, to take such proceedings as to him may seem advisable toward -obtaining compensation for the loss and -damage sustained or which may be sustained by me for land taken or otherwise by reason of the opening of Lexington Avenue; * * * and in consideration of his professional services, do hereby promise, assign and agree to. pay to the said Deering a sum equal to fifty per cent of whatever sum shall be allowed, recovered or confirmed bn account of said loss and damage, it being agreed and understood that in case of no recovery or allowance the said Deering shall receive nothing.” After this contract was made, the plaintiff instituted proceedings to set aside the award; his efforts were successful; new commissioners were appointed, and they made an award of $22,500 to Schreyer. A dispute' then arose between Déering and Schreyer as to how much the former was entitled to receive under the contract above quoted, Deering claiming he was entitled to one-half the award without any deduction on account of incumbrances or taxes, and Schreyer claiming that he was entitled to only one-half of what remained after such deductions. had been made. For the purpose of settling the disputes thus raised, Deering, upon a petition, applied in the proceedings which resulted in the award, to have the amount to which he was entitled fixed and determined and the same paid to him, but on appeal from an order of reference this court held (Matter of Lexington Avenue, 30 App. Div. 602) that his rights under the contract must be determined in an action brought for that purpose. Thereupon this action was brought to determine the amount to which the plaintiff; was entitled under his contract with Schreyer, to establish a lien for such amount upon the award, and to direct the city to pay over whatever sum might be found due. The respondent Fields was made a party defendant, inasmuch as he was the record owner of a mortgage-which purported to be an incumbrance upon the land taken. The action was tried at Special Term, where it was determined that the plaintiff was the equitable assignee of one-half of the whole award and by reason thereof entitled to payment óf such amount without any deductions therefrom. . Judgment to this effect was entered and an appeal taken to this court, where the same was affirmed (58 App. Div. 322); but on appeal to the Court of Appeals (171 N. Y. 451) the same "was reversed'and a new trial ordered, that court holding that both the taxes and the amount of the Fields mortgage “ must be deducted from the gross recovery before ascertaining the amount to which an attorney is entitled.” At the new trial thus ordered the princi-r pal issue litigated was the validity of the Fields moi’tgage, the defendants Schreyer and Fields claiming that it was a valid outstanding incumbrance on the land taken, and the plaintiff that the mortgage, had been paid; that it was merely kept alive by pretended assignments, and was in fact no lien upon the land. The plaintiff was successful in his contention, it being determined that the mortgage had been paid, and consequently there was no basis for deducting the amount of it from the award. "This judgment further determined that the defendant Schreyer was entitled to have paid to him out of the award $2,623.99, being the amount which he-had paid for taxes, together with interest thereon, from August 2* 1895, amounting to $1,296.25, making in all $3,920.24, which sum was paid to him by the chamberlain on October 30, 1903., From this judgment Schreyer and Fields appealed, but excepted from such appeal that portion of the judgment which determined that Schreyer was entitled to payment of the taxes and interest. Deering did not appeal. The judgment, so far as the same was appealed from, was reversed (88 App. Div. 457) and a new; trial ordered on the ground that the trial court had improperly permitted the plaintiff to introduce in evidence the testimony of a witness then deceased, which testimony had been given in the special proceeding instituted by Deering to have his lien' determined. But the reversal did not affect that part of the judgment which decreed that Schreyer was entitled to receive out of the award the taxes paid by him before any division was made. The notice of appeal expressly stated that the appeal was not taken from that part of the judgment and, therefore, there was no authority in this court to review that part of it (Code: Civ. Proc. § 131Í), and a reference to the opinion will show that it was not reviewed, . That judgment, therefore, finally determined that the taxes and interest, aggregating $3,920:24, must be first’ deducted from the award and paid to Schreyer before any división of the balance could be made.

At this new trial the plaintiff abandoned his claim that the Fields mortgage had been paid and by an amendment to the complaint alleged that defendant 'Schreyer was. estopped from asserting its validity as against the plaintiff. Although the amendment was not: made until at or near the close' of the trial, I am of the opinion that the court had the power to allow it to be made and "Schreyer is hot in a position to complain, inasmuch as he was given all the time he asked for- in which to answer the complaint as amended. It is not claimed he. was surprised or that he was misled by the amendment. It is true he objected to it upon the ground that it' did not set up facts sufficient to warrant an estoppel and that it was a material change from the original canSe of action alleged: The action is anv equitable one and the court, in order to do justice between the parties, had the power to allow the amendment, which was in effect-nothing more than conforming the pleading to the proof, to the end that justice might be done. The plaintiff, prior to the amendment, had testified that at the time he entered into, the contract in question Schreyer had informed him that the mortgage which, was apparently outstanding against -the property had been paid off by him, and in accéptmg the retainer he acted upon that assumption. After the complaint had been amended the defendant Schreyer amended his answer in so far as the same was necessary in order to deny the ' facts alleged by the plaintiff as constituting an estoppel. The case was then reopened, additional evidence was introduced upon the issue as framed by the amended pleadings, and the court found that while the Fields mortgage was a valid and subsisting lien upon the land taken—for which reason it should be paid otitof the award•— - nevertheless Schreyer, by reason of- his acts,, was estopped from asserting its validity as against the plaintiff.

We do not think it can be said that the finding ini this respect is against the weight of evidence.. In addition,to' the testimony of the plaintiff already referred to, to the effect that at-the time he accepted the contract Schreyer told him the mortgage had been paid, he testified, on being recalled after the amendment had been made, that he believed the statements made by Schreyer to be true at the time they were made; that he relied upon such statements in entering into the contract; and would not otherwise have done so.

The plaintiff also introduced in evidence, bearing on this subject, three affidavits made by Schreyer—one, verified October 24, 1890, in which he stated that: “ The said premises are subject to a mortgage o,f $6,000 which, since the confirmation of the report herein (awarding four dollars) I have been obliged to provide for.” Another, verified February 20, 1891, in which he stated that: “Subsequently to the confirmation of the report herein I was compelled to pay the mortgagee the amount of said mortgage, $6,000, and instead of having the same discharged of record, owing to the still outstanding claim on my part to compensation against the City, and for reasons connected therewith, an assignment thereof upon such payment was made to my son-in-law, Hr. Fields.’? And the other, verified in June, 1892,, where he stated that: “ Subsequently to the confirmation of the report herein I was compelled to pay the mortgagee-the amount of said mortgage, $6,000, and instead of having the same discharged of record, owing to the still outstanding claim on my part to compensation against the City, and for reasons connected therewith, an assignment thereof upon such payment was made to-rny son-in-law, Hr. Fields.” These affidavits were not objected to by the defendant Schreyer, the only objection raised being that they were incompetent as to Fields, and they were excluded by the court as to him.

It is true they were verified after the contract itself had been executed, but, nevertheless, as an admission of Schreyer’s, were some evidence tending to corroborate the truth of the plaintiff’s statement that Schreyer told him the mortgage had, in fact, been paid. Schreyer having made this statement to the plaintiff, and he, relying upon it and believing the same to be true, having entered into the contract, it would be inequitable and unjust to permit Schreyer to thereafter change his position and thereby gain a pecuniary advantage by reason of his false statement. This a court, will not permit a jiarty to do. The rule is that when a party, either by his declarations or conduct, has induced another to act in a particular manner, he will not thereafter be permitted to deny the truth of the declarations or repudiate the effect, of his conduct, if the consequences would be to work injury to the person who’ had- acted' upon them. (Mattes v. Frankel, 157 N. Y. 609 ; Carpenter v. German American Ins. Co., 135 id. 298 ; Trustees, etc., v. Smith, 118 id. 634), and there need not necessarily be on the part of the person making the declaration or doing the act, at the time, an intention to mislead the one who, is. induced to rely upon them. (Continental National Bank v. National Bank of the Commonwealth, 50 N. Y. 583.) If his- act were voluntary and calculated to mislead, and actually has misled another acting in "good faith, that is -sufficient. (Blair v. Wait, 69 N. Y, 113.)

The plaintiff, as already said, testified that Schreyer told him the. mortgage had been paid; that he believed such statement to be true and relied upon it-in executing the contract,- and that he would not have entered into the contract if the representation had not been made and he had not believed it to be true. This' being so, Schreyer will not now be permitted to deny the truth of the-asserr tion, because to do so would work material injury to the plaintiff.

Having reached this conclusion, the only tiling remaining is to . determine what amount the plaintiff' .is entitled -to under his' contract, to the end. that a judgment may be directed, by this court, as requested by all ’the parties in their'briefs and upon the oral argument. ' , „ - ■. '

Oh the 1st of June, 1894, the report of the commissioners of estimate and assessment was confirmed, awarding to the defendant Schreyer $22,500 for the land taken. Under the judgment of June 23, 1903, heretofore referred to, there must be deducted from this award, before a division is made between Peering and' Schreyer, the amount of taxes paid by the latter, together - With the interest thereon, amounting fo $3,920.24, and which sum was paid to him by-the chamberlain'on the 30th of October, 1903. After making ■ this deduction there remains a balance of $18,579.76, to one-half of which the plaintiff is entitled, or-$9,289,88.. On October .9, 1895, there was deposited with the. city chamberlain, pursuant to an order of this court dated March 2, 1895^ the sum of $12,376.01,- which remained in his hands until October 6, 1896,. during which period interest accrued thereon, amounting to' $183.84, of which" Peering was entitled to $138 (that being the amount of interest which $9,189.88 had earned), and Schreyer to the balance, $45.84. On the 6th of October, 1896, there was paid by the chamberlain to the plaintiff the amount originally deposited with him, $12,376.01, together with the interest which had accrued thereon, .$183.84, making a total of $12,559.85, and this was held by the plaintiff until October 28, 1898, when he returned it to the chamberlain: This sum remained with the chamberlain until June 29, 1900, during which time interest accrued thereon, amounting to $402.15, of Which Peering was entitled to $301.87 (that being the amount of interest which $9,427.88 had earned) and Schreyer to the balance, $100.28. Adding this interest, $301.87, to the $9,427.88 which belonged to the plaintiff, makes $9,729.75 as plaintiff’s share in the award, including all interest earned by it. He is entitled to no more interest than his share in the award earned while it was in the hands of the chamberlain (Deering v. Schreyer, 88 App. Div. 466) and from this sum certain deductions must be made. As already stated, on the 6th of October, 1896,. the chamberlain paid to him $12,559.85 and he was then only entitled to receive out of the fund $9,427.88, which made a payment to him of $3,131.97 in excess of what he was entitled to receive, which he retained until October 28, 1898, a period of two years twenty-two days, and for which he must be charged interest at the rate of six per" cent per annum, which amounts to $387.32. The plaintiff, on the 21st of July, 1897, also received from • the comptroller ■ $46.27, which he held •until October 28, 1898, and this being a sum to which he was not entitled he is chargeable with interest upon it at the rate of six per cent for the period of one year three months and seven days, which amounts to $3.52. These two items of interest amount to the sum of $390.84.

On the 29th of June, 1900, plaintiff received from the chamberlain the amount deposited with him on the 28th of October, 1898, viz., $12,559.85", together with the interest" which had accrued thereon to ' June 29, 1900 ($402.15), making a total of $12,962. But as already shown the plaintiff was at. that time only entitled to receive $9,729.75, and he, therefore, received $3,232.25 more than he was entitled to. This he held at the time the judgment appealed from was entered, May 25, 1905, a period of four years ten months and twenty five days, and he must be charged with interest on such excess at the rate of six per cent for that time, which amounts .to $950.82. This added to $390.84 — the other interest with which he is chargeable — makes a total charge against him of $1,341.66, which, deducted from the $9,729.75, leaves due him out of the award $8,388.09. But he has in his. hands, as already shown, $12,962, which is $4,573.91 more than his share of such award. From this amount, however, he is entitled to retain $1,256.88, the balance remaining due upon the Fields mortgage and which the judgment directs him to pay, and also the costs as taxed, $837.53 (less the $100 directed tó be paid for the privilege of amending his complaint), without the extra allowance of five per cent, which we do not think should have been granted in view of the liberal terms imposed in permitting an amendment to the complaint after so many trials, and also in view of the fact that Schreyer was successful on his" various appeals and in the issue as'to taxes. After making these deductions there still remains $2,579.30 in Deering’s hands to which he is not entitled, and, therefore, judgment is directed against hitn in.favor of Schreyer for this sum.

The judgment appealed from, therefore, must be modified as indicated in this opinion, and as thus modified affirmed, without costs to either party.

O’Brien, P. J., Patterson, Clarke and Houghton, JJ., concurred.

Judgment modified as directed in opinion, and as modified affirmed, without costs.