Case Name: Charles Krone, Respondent, v. Frederick E. Klotz, Defendant. Frederick Beltz, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896
Citations: 3 A.D. 587
Docket Number: 
Parties: Charles Krone, Respondent, v. Frederick E. Klotz, Defendant. Frederick Beltz, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 3
Pages: 587–593

Head Matter:
Charles Krone, Respondent, v. Frederick E. Klotz, Defendant. Frederick Beltz, Appellant.
Supplementary proceedings — money in the hands of a third pa/rty—it cannot he-ordered paid where tlweis a substantial dispute as to ownership — an attorney has a general lien for all services upon moneys in his hands.
Upon an appeal by a third person, Frederick Beltz, from an order made in proceedings supplementary to execution directing him to pay over, in partial satisfaction of a judgment recovered in this action against the defendant, a sum of money in his hands alleged to belong to the defendant, it appeared that the appellant had acted as attorney for the defendant in an action against the Germania Publishing Company, and had received in that action for his client §350 about January 1, 1895, of which he took §150 as compensation for his-services in that action, and retained the balance ; that the defendant had another claim against the publishing company in which as well as in forming a corporation the appellant had also rendered services, for which he had not been paid.
©a April 13, 1895, the appellant wrote the defendant stating that he would honor his draft for any amount not exceeding' the $200 then in his hands, and subsequently gave the sheriff a certificate stating that he held $200 of the defendant’s money in his hands subject to his own lien for fees. Thereafter, in supplementary proceedings instituted against the defendant, the appellant was examined and claimed to be entitled to retain the $200 in question for his services in and about the second claim against the publishing company and for his services in organizing the corporation in which the defendant was interested.
Held, that there existed a substantial dispute as to the ownership of the $200, and that, therefore, the order was improperly granted;
That an attorney has a general lien upon moneys in his hands belonging to his client which extends not only to the services rendered in the particular action in which the money is realized, but also to any other services rendered by the attorney to his client.
Appeal "by Frederick Beltz, a third party in the action, from so much of an order of the Court of Common Pleas for the city and county of New York, entered in the office of the clerk of said court on the 21st day of November, 1895, as directs him to pay over to the sheriff of the city and county of New York, in. ■partial satisfaction of a judgment recovered by the plaintiff against the defendant, a sum of money in Ms hands alleged to belong to the judgment debtor.
The order appealed from was made in proceedings supplementary lo an execution issued upon' a judgment recovered in this action.
/The appellant, the third person, had acted as attorney for the judgment debtor in an action against the Germania Publishing Goinpany, and had received in that action for his client $350 about January 1,- 1895. The appellant was paid for his services in the action $150, and the balance, $200, he held for his client, the judgment debtor. His client had another claim against the Germania Publishing Company, growing out of the alleged fraudulent 'issue to him of stock in the company, and a suit was in contemplation. The appellant also rendered services for the judgment ■debtor and others in the organization of a corporation in the State of New' Jersey, for which he was to be paid $150, but he had been paid nothing, although his client had acknowledged this claim. April 13, 1895," the appellant wrote his client saying, among other things, that his client’s draft upon him for any amount not exceeding the $200 in his hands belonging to his client would be honored. -April 16, 1895, the sheriff, having an attachment in this action against the property of the judgment debtor, served a notice thereof upon the appellant, and pursuant thereto the appellant gave the sheriff a certificate to the effect that he held $200 of his client’s money in his hands, subject to his, the appellant’s, lien for fees.
August 26,1895, and again on October 16 and 18,1895, the appellant was called and examined in supplementary proceedings instituted against his client, and the foregoing facts appeared. The appellant then claimed that he was entitled to retain the $200 for his services in the suit which was in contemplation -but was never commenced, and for his services in organizing the New Jersey corporation, all of which services were worth fully $200.
In this condition of things appearing, the court made the order appealed from.
Fulton Ifolfahon, for the appellant.
Julius J. Fra/nk, for the respondent.

Opinion:
Williams, J.:
It seems to be conceded by the counsel for the respondent that if there was a substantial dispute as to the ownership of the $200, the order appealed from was improperly granted under section 2447, Code of Civil Procedure, and this is true. Wherever such dispute-exists in good faith the court cannot settle such dispute in supplementary proceedings, but should leave the parties to their action.. (Rodman v. Henry, 17 N. Y. 482; West Side Bank v. Pugsley, 47 id. 368 ; Barnard v. Kobbe, 54 id. 516 ; Waldron v. Walker, 43 N. Y. St. Repr. 605,)
The fact of ownership should be clearly and conclusively established in order to warrant the making of the order to pay over the money under this section of the Code. The appellant claimed a right-to retain these moneys for services rendered by him for the judgment debtor in proceedings other than the suit in which the money was recovered. The rendering of such other services and the value thereof were proven and apparently were uncontradicted. But if there was any conflict of evidence in reference thereto, the judge-had no power to determine the question of fact in these proceedings. The appellant claimed that he had a general lien upon the money for these services. That such lien exists and enables the attorney to hold the money as against the judgment debtor himself, seems to have been frequently held in this State. (In re H-, an Attorney, 87 N. Y. 521; Ward v. Craig, Id. 550 ; In re Knapp, 85 id. 284 ; Bowling Green Savings Bank v. Todd, 52 id. 489.)
Our attention is-called to the case of Williams v. Ingersoll (89 N. Y. 508), which, it is claimed, held that such lien was confined to the judgment in the same action in which the services for which the lien was claimed were rendered. Let us see what these various cases do really decide.
. In Bowling Green Savings Bank v. Todd (supra) the action was to foreclose a mortgage. After the decree in foreclosure was made, a receiver of the property of the plaintiff was appointed. He continued the same attorneys, who caused the mortgaged property to be sold, and received the proceeds of such sale. Besides their -costs and fees in that action, the attorneys retained from such proceeds a certain sum to apply upon the indebtedness of their client to them for other professional services. The court held that the attorneys had a lien upon the papers in the foreclosure suit, not only for the costs and charges of that suit, but for any general balance due them for any other professional service ; that this rule was not peculiar to attorneys, but applied to an ordinary factor who had a lien upon goods consigned to and received by him for unpaid balunces theretofore accrued.
In In re Knapp (supra) the petitioner applied to the court to compel her attorney to pay over to her $4,411.50, alleged to have been unlawfully retained by him out of moneys collected for her. . It -appeared that one Stephen H. Knapp had, in his lifetime, instituted, proceedings, to recover moneys due him from the city of New York for the erection of an armory, and employed the attorney in such proceedings. At his death the proceedings were pending, and thereafter the petitioner was appointed as executrix, and continued the same attorney in the proceedings. Under a power from her, the attorney received from the city in the proceedings $6,781.85. The estate was insolvent. The attorney claimed the right to retain from the moneys so received by him $4,411.50, not alone for his services in the particular proceedings in which the money was recovered, but in part for his services in other matters in which he had been retained by the deceased and the executrix. All of such services were rendered in the general effort to enforce the same claim.
It was held that the attorney had a lien on the moneys received for all his services rendered in connection with the claim sought to be recovered, which lien was not confined to his services in the particular proceedings in which the money was recovered.
In In re H-, an Attorney (supra), the proceeding was instituted to compel the attorney to surrender up to his client a policy of insurance delivered to the attorney for the purpose of enabling him to perfect or confirm the rights of his client therein. His client was indebted to him for. other professional services, and the court held that the attorney's lien extended to a general balance of account 'ior professional services, and was not confined to such services as ivere rendered in the litigation which terminated in the particular judgment, citing Ward v. Craig and In re Knapp (sapra).
In Ward v. Craig (supra) attorneys were employed to obtain the remission of a forfeiture of certain property by the United States government. Their client made an assignment for the benefit of creditors, and the assignee retained the same attorneys in the proceeding, which was continued in the name of the assignor, and resulted successfully. The action was brought by the assignee to recover from the attorneys the money received by them from the United States government. It appeared that while this proceeding was pending, and before the assignment was made, there was a criminal action instituted against the assignor at the suit of the United States government, and also a civil action for customs due, and that after the assignment there were two other actions brought against him on warehouse bonds, and that in all these actions these same attorneys were employed. There were also three other civil suits for custom duties which were included in the remission proceedings, and the attorneys' services in all these cases and proceedings were worth the amount the attorneys had received in the remission proceedings. It was held that the attorneys had a lien upon the money so received for their services in all of these matters. The attorneys did not set up a technical counterclaim, but they alleged the performance of the services, their value and the right of the attorneys to retain therefor the moneys received from the government, and this was held sufficient.
The cases of Bowling Green Savings Bank v. Todd and In re Knapp (supra) were cited in that case.
In Willimis v. Ingersoll (supra) the plaintiffs were employed as attorneys and counsel in various suits and legal proceedings. One case was for malicious prosecution brought by their client. ' There was an oral agreement between them and their client that they were to be paid for their services out of any moneys their client might obtain or become entitled to from any of the suits' or proceedings, and that they should have a lien for all such services, upon such moneys,, which should be superior to any right their client might have. All these actions were finally, by agreement, submitted to-an arbitrator who; awarded to their client-$10,000 for malicious prosecution. The services of the attorneys in all these matters were worth $10,000. It was held that the agreement operated as an equitable assignment which attached to the award as soon as made,, and was good against the client and any attaching creditor. It was-said, in the opinion, that the attorneys could, claim no'general lien upon the award as attorneys, and could not base their claim to an equitable lien upon the mere promise of their client that they should, be paid out of any moneys recovered, and that an agreement,, oral or in writing, to pay a debt out of a designated fund did not give an equitable lien upon the fund or operate as an equitable assignment thereof. These statements, however, were with reference to an abstract question which was not necessarily involved in the decision of the case. The attorneys were permitted to hold the award upon the theory of an equitable lien as above stated, and all that was said thereafter by the court was clearly obiter, and no. reference was made to the cases above .analyzed, nor were any of them considered or criticized. •'
The theory of the order made in. this case was, that the judgment-debtor himself would have been entitled to recover the. $2.00 from his attorney, the appellant, if the order had not been made. Suppose that he had sued the attorney for the money and the attorney had counterclaimed the indebtedness for his services. Would he-not thereby have defeated the client's right to recover \ In this-condition of the authorities, aud in view of the suggestions- we liavemade, it cannot be said that the- claim made by the appellant to the--$200 was not made in good faith, or that there was no substantial. dispute as to the debtor's ownership of the money at the time the order was made, or that the fact of the debtor's ownership was clearly and conclusively established. "W e are not called upon to determine whether in an action between the parties the appellant or the judgment debtor would be found to be such owner. The fact of such ownership of the debtor was in doubt, and could not, therefore, be determined in these supplementary proceedings. It seems to us that the court had no power to make the order appealed from, and that such order should be reversed, with costs of the appeal, and the motion should-be denied, with ten dollars costs.
Van Brunt, P. J., 'Patterson, O'Brien and Ingraham, JJ., concurred.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.