Case Name: RANDEL v. VANDERBILT et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1902-10-10
Citations: 78 N.Y.S. 124
Docket Number: 
Parties: RANDEL v. VANDERBILT et al.
Judges: Argued before GOODRICH, P. J., and BARTLETT, JENKS, WOODWARD, and HIRSCHBERG, JJ.
Reporter: West's New York Supplement
Volume: 78
Pages: 124–129

Head Matter:
(75 App. Div. 313.)
RANDEL v. VANDERBILT et al.
(Supreme Court, Appellate Division, Second Department.
October 10, 1902.)
1. Attorney’s Fees — Contract—Construction—Recovery or Settlement oe Claim.
There is not a “settlement or recovery,” within an agreement of a plaintiff with his retiring attorney to pay him a certain sum, in case of a settlement or recovery of the claims sued on, where the defendant in the action, not acknowledging the validity of the claim, made a certain payment merely for the purpose of terminating the litigation and disposing of the annoyance from its prosecution.
2. Equitable Assignment.
There is no equitable assignment where a party agrees to pay his attorney a certain amount if there is a settlement of or recovery on a claim, though payment is to be made at the time of the settlement or recovery, a payment first to the party being contemplated.
8. Res Judicata.
The attorney for plaintiff in an action, who had retired therefrom, after an agreement, attempting to preserve his attorney’s lien, that the plaintiff should pay him $4,500 if there was a recovery on or settlement of the claim sued on, filed a verified petition in the case, referring to the agreement as one continuing his attorney’s lien, to require defendants therein to pay him the $4,500, the litigation having been terminated by their paying the plaintiff a certain sum, which petition was denied on the ground that his consent for substitution of an attorney in his place terminated his attorney’s lien. Seli, in an action by him against the defendants for the $4,500, that the question of the termination of the attorney’s lien was res judicata.
¶ 2. See Assignments, vol. 4, Cent. Dig. §§? 107, 109; Attorney and Client, vol. 5, Cent. Dig. § 353.
Appeal from special term, Kings county.
Action by William F. Randel against William K. Vanderbilt, and others. From a judgment dismissing the complaint on the merits after a trial without a jury, plaintiff appeals.
Affirmed.
Argued before GOODRICH, P. J., and BARTLETT, JENKS, WOODWARD, and HIRSCHBERG, JJ.
William F. Randel, for appellant.
Henry B. Anderson, for respondents.

Opinion:
HIRSCHBERG, J.
In the month of November, 1895, the plaintiff, as attorney for William H. A. Brown, administrator, commenced an action in the supreme court in the latter's behalf against the executors of the estate of Cornelius Vanderbilt and various members of the Vanderbilt family. The ostensible object of the action was the recovery of the sum of $2,000,000, with interest from. October 1, 1853, under a claim arising out of alleged transactions pursuant to a written agreement executed in 1851 between Vanderbilt and Brown's intestate. The plaintiff continued as plaintiff's attorney in the action until June 22, 1897, when another attorney was substituted with his consent. Meanwhile issue had been joined, the defendants denying every material allegation of the complaint, and setting up the statute of limitations by way of additional defense. The new attorney, shortly after his appointment and substitution, entered into negotiations with the defendants with a view of effecting a discontinuance of the suit, and on the 18th day of December, 1897, the defendants in the action paid to Brown's counsel for such discontinuance the sum of $5,000, and received from Brown a general release, executed both in his individual and in his representative capacity. The present action is brought against the defendants in that suit and their legal representatives for an adjudication declaring the plaintiff to be the equitable owner or assignee of Brown's claim and cause of action to the extent 'of $4,500, enforcing a lien therefor against the defendants, and requiring them to pay the amount of such interest and lien to him. It appears that the plaintiff opposed the proposition that another attorney should be substituted in his place, and application was made by Brown to the supreme court to compel such substitution. This was refused, unless provision should be first made for the plaintiff's compensation, and thereafter, viz., on June 21, 1897, the plaintiff and his client, together with one Hartung, executed an agreement in reference to the matter, and the substitution was given. A copy of the agreement was served upon the attorneys for the defendants in that action. The material parts of the agreement are as follows:
"Whereas, the said Brown is indebted to each of the other parties to this contract in various amounts, and has made agreements with them heretofore which have been matters of disagreement between them, and which said several indebtednesses are, respectively, liens upon the clainis of said Brown and of the estate of said William H. Brown, deceased, against the estate of the late Commodore Cornelius Vanderbilt, and his heirs and legal representatives, and also liens upon the cause of action now pending in the supreme court, First department, wherein said Brown, as administrator, etc., is plaintiff, and the executors and heirs and legal representatives of said Vanderbilt, deceased, are defendants; and whereas, it is intended by this agreement to provide for the payment of said several indebtednesses, and to secure the same and preserve same as such liens, it is hereby mutually agreed as follows: Second. The said Brown hereby agrees to pay, and said Bandel hereby agrees to receive, if paid within six months from the date hereof, the sum of three thousand five hundred dollars, and, if not paid within said six months, the sum of four thousand five hundred dollars, in full settlement of said Bandel's claim and said Brown's indebtedness for legal services and advice in connection with the said claim and action against said Vanderbilt estate and against said defendants in said action; and said Bandel agrees to pay out of said sum or sums any and all expenses and disbursements incurred by him as attorney for said Brown, excepting any expenses due the said surety company from said Brown. Fourth. The aforesaid payments are to be made only upon the contingency of a settlement or recovery by the said Brown or his successors or assigns of the claims or cause of action hereinbefore specified. Fifth. This agreement is to be communicated to the defendants or their attorneys in said action, and to be made a lien upon any and all moneys or settlements or recoveries by any means whatever of the said Brown's claim against the said Vanderbilt estate, heirs, or legal representatives, and to be paid and deducted therefrom at time of such settlements or recoveries."
The court has found as a fact that the payment of $5,000 was made for the purpose of terminating the litigation, and disposing of the annoyance caused by its prosecution, and not as a settlement of any existing or valid claim, or in acknowledgment of the validity of the claim. It cannot be said that this finding is without support. The plaintiff in the action was without means, and immediately left the state upon receiving the money, — less than one-tenth of 1 per cent, of his alleged claim, — and left without paying the sums agreed upon. No proof was made upon the trial tending to show that his claim was a valid one, and its validity is, and always has been, disputed by the defendants. The counsel selected by him to negotiate for the discontinuance of the suit was a firm of private counsel for the Vanderbilt family, or some of them. And on its face the release by an impecunious plaintiff of a claim for $2,000,000, with nearly a half century of interest added, against defendants so notoriously solvent as the Vanderbilts, for a mere $5,000, paid to his counsel, is more suggestive of purchased peace than of the settlement of an admittedly valid obligation. The case of Beran v. Bank, 137 N. Y. 450, 33 N. E. 593, is very similar in fact and principal to this one. There a portion of a claim in suit was formally assigned by one Duffy, the plaintiff in such suit, to secure an obligation to his debtor, and notice of the assignment was given to the defendant, the Tradesmen's National Bank. Thereafter the latter, without notice to the assignee, and without his consent or knowledge, settled with the plaintiff, and took a discontinuance. On trial of an action brought to enforce the assignment against the bank, the latter was prevented by a ruling of the trial court from proving that the payment was not made in recognition of the claim, but for the purpose of terminating the litigation. The rejection of this evidence was held to be erroneous. The assignment provided that the assignee was to be paid the assigned interest whether the plaintiff "recover from said bank or compromise" his claim. The court said (page 458, 137 N. Y., page 595, 33 N. E.):
"The assignor could not assign to another a claim which in truth had no real and valid existence. He assumed to assign part of what he alleged was a valid claim; and if that claim were acknowledged to any extent, and a payment made, or a compromise agreed upon as an extinguishment oí-as an accord and satisfaction of such claim, then, hy the terms of the assignment, the assignee was to be entitled to a certain amount of the proceeds of such settlement. Unless there were some acknowledgment, actual or implied, of the validity of the claim, or unless there had been some payment on account and in extinguishment of an admitted indebtedness to some amount, the plaintiff made ho cause of action by merely proof of the payment of money to Duffy by the bank. We are therefore wholly unable to agree with the claim set forth in the court below that, if the bank did nothing but buy its peace in settling with Duffy, yet even in that event the payment by the bank, by reason of which the suit was discontinued, was a settlement within the meaning of the assignment. And, if the assignment were intended to include such a payment as within its meaning, X think it was in such case wholly ineffectual as regards the bank. The possibility that a person may thereafter choose to pay money to another to rid himself of a then existing litigation with an insolvent opponent, and not by way of acknowledgment of any real and valid demand, is not so far the subject of an assignment by the party to whom the money may possibly be paid as to render a payment to such person wrongful after knowledge on the part of the person making the payment that such assignment had been executed."
But, even if the payment of the $5,000 is regarded as an acknowledgment of the validity of the demand, and a payment of it by way of accc^d and satisfaction, the plaintiff is in no better case. He insists that the agreement in question effected an equitable assignment, and that as equitable assignee he has a lien upon the cause of action and upon the money paid in settlement which is enforceable against the defendants. "The test of an equitable assignment," said the court in Fairbanks v. Sargent, 117 N. Y. 320, 330, 22 N. E. 1039, 6 L. R. A. 475, "is an inquiry whether the debtor would be justified in paying the debt, or the portion contracted about, to the person claiming to be assignee." In Thomas v. Railway Co., 139 N. Y. 163, 34 N. E. 877, the court said (page 179, 139 N. Y., page 881, 34 N. E.):
"It is the settled doctrine in this state 'that an agreement, either by parol or m writing, to pay a debt out of a designated fund, does not give an equitable lien upon the fund, or operate as an equitable assignment thereof.' Williams v. Ingersoll, 89 N. X. 508, and cases cited. In Trist v. Child, 21 Wall. 441, 22 £. Ed. 623, the court, referring to this subject, said: 'But a mere agreement to pay out of such fund is not sufficient. Something more is necessary. There must be an application of the fund pro tanto, either by giving an order or by transferring it otherwise in such a manner that the holder is authorized to pay the amount directly to the creditor without the further intervention of the debtor.' "
And in the case of Williams v. Ingersoll, 89 N. Y. 508, cited in the decision just considered, Earl, J., said, at page 518:
"Nor can the plaintiffs base their claim to an equitable lien upon the award upon the mere promise of Heath that they should be paid out of any money that should be recovered in any of the actions or proceedings. Whatever the law may be elsewhere, it must be regarded as the settled law of this state that an agreement, either by parol or in writing, to pay a debt out of a designated fund, does not give an equitable lien upon the fund, or operate as an equitable assignment thereof. It was so decided in Rogers v. Hosack's Ex'rs, 18 Wend. 319. That case was followed, and the same rule laid down, in Christmas v. Russell, 14 Wall. 69, 20 L. Ed. 762, and Trist v. Child, 21 Wall. 441, 22 L. Ed. 623."
It is true that the court held that in that case there was an equitable assignment, but the finding was based upon the fact that the entire fund was payable to the assignee in the first instance, and they were to retain therefrom the amount to' which they were entitled. The court said (89 N. Y. 521):
"The agreement was not alone that the plaintiffs should be paid out of any sum recovered. Such an agreement, as I have above shown, would not have been sufficient to give the plaintiffs any claim upon the award. But there was also proof tending to show that it was the intention to assign to the plaintiffs, or to give them a lien upon any sum recovered, and that plaintiffs were to receive the sum recovered, and retain out of it their compensation, and to pay the balance, if any, to Heath."
In Fairbanks v. Sargent, supra, reported on the first appeal in 104 N. Y. 108, 9 N. E. 870, 58 Am. Rep. 490, and cited by the appellant, the same distinction is manifested. Chief Judge Ruger said at page 117:
"It is also important to notice that this contract does not contain a provi-sión by Underwood to pay plaintiff from the fund produced or otherwise, but is an engagement that plaintiff shall have one-third of the proceeds of the collections in specie, or in such form as they shall be received from the •debtor."
And in Deering v. Schreyer, 58 App. Div. 322, 68 N. Y. Supp. 1015, affirmed in 171 N. Y. 451, 64 N. E. 179, the amount to which the plaintiff was to be entitled from the recovery was expressly assigned to him by the terms of the agreement.
Applying the logic of these decisions to this case, it is plain that there was no equitable assignment. The engagement of Brown was in express terms to pay Randel 'a specific sum in the contingency of a settlement or recovery of or on account of the litigated claim. 'True, it was to be paid at the time of the settlement or recovery, 'but the contract was similar in both particulars in Beran v. Bank, .supra, and the court held that the agreement contemplated a pay ment first to the assignor, and that the bank was fully protected in such payment, notwithstanding the receipt of notice of the assignment.
Nor can the plaintiff recover herein upon his attorney's lien. The manifest object of the agreement was to "preserve" such lien, and the plaintiff doubtless supposed it would have that effect, and that his lien as attorney would, by virtue of its provisions, survive the contemplated substitution. As the agreement permitted and justified payment by the defendants directly to his client, the lien referred to in the fifth clause must be assumed to be the lien referred to in the recitals, viz., the attorney's lien upon the claim or cause of action and upon the moneys, settlements, or recoveries thereon. The intention was to preserve an existing lien, rather than to create a new one. This was certainly the plaintiff's understanding, for after the settlement he applied to the supreme court, upon notice to the defendants, for an order requiring them to pay to him the sum of $4,500 as the amount of his lien upon the settlement and proceeds, in a verified petition, in which he referred to the agreement as one which continued his attorney's lien. His application was denied upon the ground that the consent for substitution terminated his attorney's lien. No appeal was taken from this decision, and it must be regarded as having the force of an adjudication as between the parties to this action. Williams v. Barkley, 165 N. Y. 48, 54, 58 N. E. 765. The judgment should be affirmed.
Judgment affirmed, with costs. All concur.