Case Name: John Pallace, Jr., Plaintiff, v. Niagara, Lockport and Ontario Power Company, Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-03-03
Citations: 131 A.D. 453
Docket Number: 
Parties: John Pallace, Jr., Plaintiff, v. Niagara, Lockport and Ontario Power Company, Defendant.
Judges: 
Reporter: Appellate Division Reports
Volume: 131
Pages: 453–456

Head Matter:
John Pallace, Jr., Plaintiff, v. Niagara, Lockport and Ontario Power Company, Defendant.
Fourth Department,
March 3, 1909.
Attorney and client —action to recover for services rendered—accounting by attorney prerequisite.
An attorney at law employed by the general counsel of an electric power company to obtain municipal franchises and to condemn rights of way must, as . a condition precedent to á recovery for services rendered, account for the moneys of his principal that came into his hands and show that he properly disbursed the same.
The mere fact that he made an oral statement of his disbursements- to the. satisfaction of the.'general counsel who employed him does not absolve him from making a detailed account to the client.
Eobson, J., dissented.
Motion by the defendant, the Niagara, Lockport and Ontario Power Company, for a new trial upon a case containing exceptions, ordered to be heard at the Appellate Division in t-lie first instance, the verdict of a jury in favor of the plaintiff having been rendered bn the 23d day of March, 1908, after a trial at,the Monroe Trial Term.
Eugene Van Voorhis, for the plaintiff.
L. L. Babcock, for the defendant.

Opinion:
Spring, J.:
The respondent is an attorney and counselor at law, admitted in 1901, and engaged in the active practice of his profession. The defendant is a corporation engaged in the transmission of electricity from Niagara river to the city, of Syracuse. In the years 1905 and 1906. it was engaged in securing franchises from the various towns and municipalities along its proposed route and also. in acquiring lands by purchase and condemnation proceedings for the building and operation of its line.
Robert E. Drake of Syracuse was the general counsel of the defendant at a yearly salary of $6,000, and in active charge, of the work referred to. At his suggestion the plaintiff was employed by the defendant to assist in this work and a retainer of $500 was paid to him, and this action is to recover for services rendered in pursuance of that employment.
The plaintiff was energetic and skillful and faithfully performed the duties intrusted to him by Hr. Drake, was instrumental in procuring about forty franchises from towns and municipalities for the defendant's transmission line and participated in the condemnation proceedings instituted by the defendant for the acquisition of lands needed for its right of way, which was on private lands. In all this work he was devoted to the interests of the defendant and claims that he spent 214 days, from September, 1905, to May, 1906, in the performance of the duties assigned to him by Mr. Drake, and that his services were worth $100 a day.
We think there was sufficient evidence to permit the jury to find that the plaintiff was employed by the defendant instead of the construction company; and also that he did not make use of improper or illegal methods to obtain the franchises.
Mr. Drake was supplied with money by the defendant to purchase rights of way .and for expenses incurred in securing these franchises. From September, 1905, to the date of his death early in May, 1906, he paid to the plaintiff over $12,000. The plaintiff so testified and said that no part of this was in payment for his services or was used in any way for his benefit and that none of it was used for any file- gal purpose. He stated that he could not account for any part of this large sum of money. It was paid to him by means of checks and the greater number of them bore only his indorsement, indicating that he received the cash from the paying bank. He testified that he kept no account of the sums received or the use he made of them, and that he had no recollection whatever of the expenditures from these funds. His 'recollection of the details of the transactions in the course of his employment is accurate and minute, and yet he testified he was unable to give any light concerning the way these moneys were paid out by him.
He excused his failure to keep an account of these moneys intrusted to him by the statement that from time to time he verbally accounted to Drake in a manner satisfactory to him. The plaintiff did not claim that he ever kept or rendered an itemized account of these moneys to Drake. His testimony is that he kept no account whatever.
We think the excuse is not sufficient. He knew this money belonged to the defendant. He and Drake were trustees and the defendant is entitled to know how the money was expended. An oral statement to Drake did not absolve the plaintiff from his obligation to account in detail to the owner of the moneys. An .attorney intrusted with the money of his client must be able to furnish an itemized statement of his expenditures when requested by the client. (Matter of Raby, 29 App. Div. 225; Matter of Ernst, 54 id. 363.)
In the former case the court say (at p. 226): " Where an attorney is shown to be in the possession of his client's money, and he is called upon to account, he is bound to show in detail what he has done with the money, and to justify its retention or expenditure. He cannot merely state that he has retained it for counsel fees and for moneys which he has paid out on account of the petitioner."
While the plaintiff testified that he may have expended some of this money in his personal expenses in the course of his employment, which seems reasonable, he did not furnish any approximate estimate of .the amount expended. His field of operations was chiefly in the vicinity of Bochester, so his traveling expenses could not have been large in the seven or eight months he was engaged in the business of the defendant. He did not claim that he paid for rights of way or the expenses of the town or village boards, -only tom very limited amount, if at all. 'The plaintiff-must be charged with these sums paid' to him by Drake, and the burden is upon him to account* therefor. He is entitled to adequate1 com-pensation for the valuable services he rendered for the- defendant. Before he can recover, however, he must show that he lias properly disbursed the moneys which he admits came into1 his--custody.
By the verdict of the .jury he is exonerated from rendering any account whatever to the defendant of these moneys. In other ¡words, admittedly -lie lias received $12,000, and.in-am action for services lie is permitted to recover their full value,, and •still retains, soifar as the record-shows, unaccounted for, this large sum- of money 'belonging to his-client, and-is-acquitted of .-any. liability -to account hereafter,
'His failure- to--account-was properly raised on the trial by motion for -nonsuit and" for the - direction of a verdict, and also by exceptions to- refusals to charge.
The--defendant's exceptions should he -sustained and - the -motion for new "trial granted, -w-itli costs to the defendant to abide- event.
All concurred, except Bobson, • J., who dissented; McLennan,. P. J., not sitting!
Defendant's exceptions sustained and motion for new trial- granted, 'With costs-to-defendant to abide- event.