Case Name: Stephen K. Williams et al., Appellants, v. Orville M. Barkley, Respondent, Impleaded with Another
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1900-11-27
Citations: 165 N.Y. 48
Docket Number: 
Parties: Stephen K. Williams et al., Appellants, v. Orville M. Barkley, Respondent, Impleaded with Another.
Judges: 
Reporter: New York Reports
Volume: 165
Pages: 48–64

Head Matter:
Stephen K. Williams et al., Appellants, v. Orville M. Barkley, Respondent, Impleaded with Another.
1. Decision on Motion—Conclusive as to Matters Litigated. A decision made on a motion after an investigation through witnesses examined and cross-examined is conclusive as to controversies between the parties and their privies which the record shows must have been decided in order to reach the decision in question.
2. Attorney and Client — Order Substituting Attorneys— Effect as a Former Adjudication of Right of Attorneys of Recori to Contingent Fee. The right asserted by attorneys of record to a fund representing the portion of a recovery by their client which, by his agreement, was to be .paid to them by way of compensation, and which was paid into court to preserve their rights pending an appeal from an order of substitution of attorneys, is conclusively determined against them by an order of the Appellate Division which confirms and adopts as its own the report of a referee appointed to take evidence and report the same with his opinion as to the terms upon which a substitution of attorneys should be ordered; the contract relative to compensation having been put in evidence before the referee, and the question of the attorneys’ negligence litigated, with the result that the referee found that they had been guilty of inexcusable delay in the prosecution of the action brought in behalf of the client; that they had forfeited their right to the compensation specified in the contract; and that they should be left to their remedy by action for their fees; his final conclusion being “that the motion for substitution of attorneys should be granted upon” two conditions, one of which was that the client should deposit a specified sum in court or file a bond for that sum, conditioned for the payment of all costs and fees in the action which should be found due to the original attorneys of record and for services of counsel employed by them at such sum as should be adjudged reasonable compensation therefor.
3. Conolusiveness against the Right of Counsel in Fund. The order of confirmation is also conclusive against counsel’s right to or lieu on the fund, if they were privies of the attorneys and relied upon a contract made with them personally, although the counsel were not parties to the proceeding and there is no claim or adjudication that they were guilty of negligence or of other improper conduct.
4. Construction of Contract with Attorneys of Record — When Counsel Chargeable with their Negligence. The counsel are privies of the attorneys, and, therefore, bound by the adjudication, where their employment was iñ pursuance of a contract between the client and the attorneys of record, which contained a recital indicating that the client was to employ the counsel, but the actual agreement of which was that the client should pay the attorneys of record one-half, instead of one-third of the recovery, as previously agreed, for their services, as well as for the services of the counsel, and that the attorneys of record should employ the counsel and pay them “from said one-half for their services,” the amount not being specified, in accordance with which contract the attorneys of record entered into an agreement with the counsel to pay the,latter one-half of what the former, as attorneys of record, were to receive by their agreement with their client.
5. Contract — Variance between Recital and Promise. Where the recital in an agreement is so inconsistent with the covenant or promise that they cannot be harmonized, the latter, if unambiguous, must prevail, because it is the most important.
Williams v. Barkley, 52 App. Div. 631, affirmed.
(Argued October 15, 1900;
decided November 27, 1900.)
Appeal, "by permission, from an order of the Appellate Division of the Supreme Court in the fourth judicial department, entered July 6, 1900, reversing an order made at Special Term which denied a motion made by the respondent for an order requiring the payment to him of money deposited in court, and granting said motion upon certain conditions.
The facts, so far as material, and the question certified are stated in the opinion.
George Raines and Stephen K. Williams for appellants.
The adjudication upon the motion to confirm the report of the referee does not determine the rights or liens of the plaintiffs, George Baines and Thomas Baines, to or upon the fund in question, and is not binding upon them on this motion. (Masten v. Olcott, 101 N. Y. 160; 1 Greenl. on Ev. § 189; Bigelow on Estop. [5th ed.] 142, 347; Boughton v. Harder, 46 App. Div. 355; Nelson v. City of Troy, 29 Hun, 173; Campbell v.Hall, 16 N. Y. 575 ; Zoeller v. Riley, 100 N. Y. 102; Johnson v. U. S. Co., 37 N. Y. S. R. 878; Matter of Haskins, 18 Hun, 42; Brown v. Mayor, etc., 9 Hun, 588 ; People ex rel. v. Lord, 157 N. Y. 408.) The former adjudication upon the motion to confirm the report of the referee and upon the order vacating the injunction does not determine the rights to, or liens upon, the fund in question, of the attorneys, the Williams, and is not binding upon them on this motion, in this action. (Bomeisler v. Forster, 10 App. Div. 43; Banks v. A. T. Society, 4 Sandf. Ch. 438; Matter of Barkley, 42 App. Div. 610; Bell v. Merrifield, 109 N. Y. 202; Springer v. Bun, 128 N. Y. 99 ; Lance v. Shaughnessy, 86 Hun, 411; Randall v. N. Y. E. R. B. Co., 149 N. Y. 211; Stannard v. Hubbell, 34 N. Y. S. R. 413; Campbell v. Consalus, 25 N. Y. 613; W. C. Co. v. Hathaway, 8 Wend. 480.)
Frank O. Sargent for respondent.
The ad judications of the court below are binding upon all of the plaintiffs in this action. (Supervisors of Onondaga v. Briggs,12 Den. 26; Dwight v. St. John, 25 A. Y. 203; Demurest v. Darg, 11 Abb. Pr. 9 ; 32 N. Y. 281; Matter of Livingston, 34 N. Y. 555 ; Brown v. Mayor, etc., 66 N. Y. 385 ; Smith v. Zalinski, 94 N. Y. 519; Leavitt v. Wolcott, 95 N. Y. 212; Culross v. Gibbons, 130 N. Y. 447; Matter of Davis, 7 Daly, 1; Matter of Roberts, 10 Hun, 253.) Ao court will extend its protecting arm to an attorney, whose conduct, -in the management of a case, has been improper and neglectful. (Matter of Lexington Avenue, 30 App. Div. 602; Barkley v. N. Y. C. & H. R. R. R. Co., 35 App. Div. 169.)

Opinion:
Vam, J.
The facts in this protracted controversy between attorneys and client have been stated so often that it is unnecessary to again repeat them. (Barkley v. N. Y. C. & H. R. R. R. Co., 35 App. Div. 167; Matter of Barldey, 42 App. Div. 597; 161 N. Y. 647: Williams v. Barkley, 52 App. Div. 631.)
The question we are now called upon to determine was certified to us by the court below in the following form, viz.: " Does the former adjudication of this court, upon the motion to confirm the report of the referee in the case of Barkley v. New York Central & Hudson River Railroad Company and upon the order of this court vacating an injunction in this action (see 42 App. Div. 597) determine the rights to or liens of the parties upon the fund' in question, and if so, is it binding upon the plaintiffs, or either of them, in this action ? "
The appeal underlying said question is from an order of the Appellate Division reversing an order of the Special Term, which denied a motion made by Mr. Barkley, the respondent, to require the county treasurer of Monroe county to pay him the sum of $6,240.08, deposited pursuant to an order directing the railroad company, as judgment debtor of Barkley, to pay him one-half of his judgment, and to pay the other half into court by depositing it with the county treasurer. The object of the court in requiring such deposit, was to preserve all possible rights pending an appeal to this court from the order of substitution hereinafter mentioned, brought by Stephen K. and Byron C. Williams, who were the original attorneys for Barkley, and claimed to own a part of the judgment by virtue of a contract with him. When said appeal was dismissed the motion was made to pay over the amount so deposited. The order now appealed from not only reversed the order of the Special Term denying said motion, but granted the motion upon condition that Mr. Barkley should " either deposit the sum of $2,000, or file a bond in that amount," in accordance with a previous order of the court. (Matter of Barkley, 42 App. Div. 597.) It appears from the record that said condition had been complied with before the motion now before us was made.
The " former adjudication," referred to in the question certified, was through an order of the Appellate Division substituting Frank C. Sargent, Esq., as attorney for Mr. Barkley in the action brought by him against the railroad company, in the place of the Messrs. Williams, who were removed. That order confirmed the report of a referee appointed " to take evidence and report the same to the Special Term with his opinion as to the terms upon which a substitution of attorneys " should " be ordered."
The referee, after hearing the parties, made his report wherein he laid down the rule that " upon an application by a party for a substitution of another attorney of record, ordinarily the court will see that the attorney is protected as to his fees ; yet where the attorney's conduct has been improper and neglectful, the court will deny this protection and direct an unconditional substitution, leaving the attorney to his action for his fees." He found that " the conduct of the plaintiff's attorneys has been improper and neglectful, in unreasonably and unwarrantably delaying the prosecution of this action since the rendition of the verdict. * " While this delay of nearly eleven years in proceeding to enforce the verdict was attributable in part to circumstances beyond the control of the plaintiff's attorneys, it was in the main the result of their deliberate purpose," and was without " reasonable excuse." After quoting from the evidence and discussing the law the referee continued: " These views lead to the conclusion that the delay of the plaintiff's attorneys in prosecuting the action was improper and neglectful within the rule above referred to. There is no issue here as to the propriety of substituting Mr. Sargent. If a case for substitution is made out, the plaintiff has the right to employ such new attorney as he pleases and on such terms as lie thinks proper. If the views above expressed are correct, it follows that the plaintiff's attorneys hy their misconduct and neglect have forfeited their right to the compensation specified in the contract with the plaintiff, which they have put in evidence. They owe their client a reasonable degree of diligence as well as of skill in the conduct of his case. Having failed in their duty in that respect, they are left to their action for their fees and expenses. The question as to what amount of compensation is due to the counsel employed by them is also left to be determined by action." His final conclusion was " that the motion for a substitution of attorneys should be granted upon " two conditions, the first of which is not now important, while the second is as follows : " The plaintiff should deposit $2,000 in court to the credit of the cause, or file a bond in that sum with two sufficient sureties to be approved by a justice of the court, conditioned for the payment of all costs and fees in the action which shall be found due to his original attorneys of record and for services of counsel employed by them at such sum as shall be adjudged reasonable compensation therefor." The requirement of a bond or deposit was not intended to limit the recovery by action to the sum named, but to furnish some measure of security for what might be recovered, in response to the allegation that Barkley was insolvent. The- Appellate Division confirmed the report of the referee, which it in terms adopted as its own opinion, and an order was entered accordingly.
Shortly after the referee made his report, the Messrs. Williams, the attorneys of record, and George and Thomas Raines, known as the Raines Brothers, who acted as counsel in the trial of the action against the railroad company, commenced
this action against Mr. Barkley- to require certain contracts relating to their compensation as attorneys and counsel, one entered into between the Messrs. Williams and Barkley and the other between the Messrs. Williams and the Baines Brothers, to be specifically performed and to restrain the railroad . company from paying and Mr. Barkley from receiving the one-half of the judgment which the plaintiffs alleged that they owned by virtue of said contracts. A temporary injunction, granted accordingly, was set aside by the Appellate Division at the same time that the order was made confirming the report of the referee and directing a substitution of attorneys, upon the following ground as stated in the opinion: " This court having reached the conclusion that the report of the referee should be confirmed, in which it is found that the plaintiffs have lost all right by their misconduct and delay to have either of the contracts specifically enforced and that the plaintiffs have lost their lien upon the judgment, it follows that the injunction should not be sustained restraining the New York Central & Hudson Biver Bailroad Company from paying and Orville M. Barkley from receiving the amount of the judgment."
A former adjudication is binding upon parties and their privies and prevents them from litigating over again such matters as were previously at issue between them and were finally decided by a competent court'. If the record of the former proceeding, although made upon a motion, but after an investigation through witnesses examined and cross-examined, shows that the decision could not have been made without deciding the particular matter now in controversy, the latter must be regarded as settled by the previous action of the court, for to litigate the fact anew would impeach the first decision. (Dwight v. St. John, 25 N. Y. 203 ; Demarest v. Darg, 32 N. Y. 281; Brown v. Mayor, etc., 66 N. Y. 385; Smith v. Zalinski, 94 N. Y. 519; Culross v. Gibbons, 130 N. Y. 447; -Wells Res Adjudicala, § 2 ; Freeman on Judgments, § 325.) This is especially true when the controversy involves the conduct of an attorney, as such, because as an offi cer of the court he is subject to its general authority and control. (Hamilton v. Wright, 37 N. Y. 502.)
The proceeding, now asserted as a bar, was for a substitution of attorneys, and. the order of reference was to take evidence and fix the terms upon which a substitution might be had. . The contracts between the parties relative to compensar tion were put in evidence, and the question of the attorney's negligence was litigated at length with the result stated. The Supreme Court could have made the order of substitution subject to the claim of the Messrs. Williams upon the verdict, in accordance with their contract, but it did not do so. On the contrary, it directed a substitution substantially without terms, upon the ground that the Messrs. Williams had, by their negligence, forfeited the right to enforce their contract. (Holmes v. Evans, 129 N. Y. 140.) It adjudged that they had been negligent in prosecuting the action against the railroad company and that by reason of such negligence they had forfeited their right to compensation according to their contract, and were left to recover such compensation by action as they could establish upon a quantum meruit. It was not adjudged that they were entitled to no compensation whatever, but that on account of their negligence they could not enforce their contract, which fixed the amount and gave a lien therefor. At the same time it was also adjudged that they were entitled to such amount as, in a proper action, they could prove their services were reasonably worth.
Whether they had been negligent or not was an issue that was necessarily determined in order to decide as to the terms upon which the order of substitution should be made. That subject and its consequences were directly involved in the controversy. If the contract had been performed by the attorneys no valid order of substitution could have been made without recognizing it. If it had been found that they were not guilty of negligence the court would have had no power to remove them without preserving their rights under it. It was only because they were found guilty of inexcusable neglect that the court ordered a substitution virtually without terms, upon the ground that the contract could not he enforced. The question of negligence was the main, if not the only question tried and decided. It was necessary to determine that they were negligent, or else the order of substitution doing away with the contract could not have been made. It was adjudicated that the contract of the attorneys could not be enforced because they had been negligent, and that adjudication necessarily controls the present controversy, so far as the Messrs. Williams are concerned, for if they had no lien upon or right to the fund in court, by virtue of their contract, they had no right to object to the payment over to Mr. Barkley.
The Baines Brothers were not parties to the proceeding which resulted in the order of substitution, and, although they knew it was pending, and one of them was sworn as a witness therein, they are not bound by it unless they were in privity with the Messrs. Williams. So far as we are informed, there has been no claim asserted nor adjudication made throughout this controversy, in the various forms which it has assumed, that the Baines Brothers were guilty of negligence or of other improper conduct; still, if, according to the contracts, they were privies to the Messrs. Williams, they are bound by the misconduct of their principals, although in nowise personally responsible for it.
The first contract entered into, between Barkley and the Messrs. Williams provided that they were to have an equal third part of all damages recovered by him in the action against the railroad company in lieu of any other compensation for their services as attorneys therein. Subsequently this agreement was modified so as to provide for the employment of the Baines Brothers as counsel by increasing the amount going to the Messrs. Williams to one-half of the sum that might be recovered from the company. The recital in this contract indicates that Barkley was to employ the Baines Brothers, but the actual agreement was that Barkley was to pay the Messrs. Williams one-half instead of one-third of the recovery for their services as well as for the services of' the Baines Brothers, and the former were to employ the latter and pay them " from said one-half for their services," the amount not being specified. Accordingly the Messrs. Williams entered into an agreement with the Baines Brothers, in consideration of services to be rendered by them as counsel, to pay them one-half of what they, as attorneys of record for Barkley, were to receive by their second agreement with him.
Where the recital in an agreement is so inconsistent with the covenant or promise that they cannot be harmonized, the latter, if unambiguous, must prevail, because it is the most important. The promise is what the parties agreed to do, and hence is the operative part of the instrument, while the recital states what led up to the promise and gives the inducement for making it. When the explanation of the reason for the promise is at variance with the promise itself, the «latter, if clear and unambiguous, must prevail, as it is the transaction between the parties. The rule governing the subject is well stated in a late English case as follows : " If the recitals are clear and the operative part is ambiguous, the recitals govern the construction. If the recitals are ambiguous and the operative part is clear, the operative part must prevail. If both the recitals and the operative part are clear, but they are inconsistent with each other, the operative part is to be preferred." (Ex parte Dawes, L. R. [17 Q. B. Div.] 275, 286. See, also, Young v. Smith, L. R. [1 Eq. Cas.] 180, 183; Bailey v. Iloyd, 5 Russ. 330, 344.)
Whatever may be said of the recitals in the contract under consideration, the operative part is clear and must, therefore, prevail under the rule adopted. There was a distinct agreement by Mr, Barkley to pay the Messrs. Williams onc-half of the recovery for their services and for the services of the Baines Brothers in the action, and the Messrs. Williams agreed to employ the latter and pay them from their half. They did employ them accordingly, not in the name of Barkley, but in their own names, and agreed to pay in their own names and from their own share. The Baines Brothers had no contract with Barkley, for their only contract was with the Messrs. Williams, and they acquired no right except through and against them. They were represented by and claimed under them. They had an interest derived from a contract to which they were not parties. This derivative interest, founded wholly on the contract of other persons, placed them in privity with those persons. Their only claim was under their contract with the Messrs. Williams, which gave them an interest in the latter's contract with Barkley, and thus there was a mutual relationship between the two firms to the right springing from the promise of Barkley. They were employed as counsel by the attorneys of record, who agreed to pay them from their own share, which was simply increased by the client to enable them to do so. " The term privity denotes mutual or successive relationship to the same rights of property. The ground, therefore, upon which persons standing in this relation to the litigating party are bound by the proceedings to which he is a party, is, that they are identified with him in interest; and whenever this identity is found to exist all are alike concluded."- (1 Greenl. Ev. § 523, quoted with approval in Litchfield v. Goodnow, 123 U. S. 549, 551.) The Baines Brothers, therefore, were in privity with the Messrs. Williams, and, so far as Mr. Barkley is concerned, were bound by their negligence and the adjudication made in consequence thereof, although they had not contributed to it. Hence the plaintiff is entitled as against them also to have the fund in court paid over to him.
The question certified was framed in disregard of our suggestion that each question should be separately stated so that it may be categorically answered. (Devlin v. Hinman, 161 N. Y. 115)
We think that the former adjudication determined the rights of all concerned to the fund in court, and that it is binding upon all the parties to this action.
The order appealed from should be affirmed, with costs, and the question certified answered as above stated.