Jacob Hirshfeld, Suing in His Own Behalf and on Behalf of All Other Creditors of The Madison Square Bank, Appellant, v. John Bopp and Others, Respondents. In the Matter of the Petition of Robert A. Clirehugh, Appellant, and Application of Jacob Hirshfeld for a Substitution of Attorneys

Jacob Hirshfeld, Suing in His Own Behalf and on Behalf of All Other Creditors of The Madison Square Bank, Appellant, v. John Bopp and Others, Respondents. In the Matter of the Petition of Robert A. Clirehugh, Appellant, and Application of Jacob Hirshfeld for a Substitution of Attorneys. Action to enforce debts against the stockholders of a corporation, by one in Ms own behalf and that of all others similarly situated, under an agreement that the expense of the suit was to be paid by the receivers of the insolvent corporation — when the court will not authorize a change of attorneys or allow the action to be discontinued. Upon an appeal by Robert A. Clireliugh and Jacob Hirshfeld from an order denying their application for a substitution of attorneys in an action in which Hirshfeld was the plaintiff, or, in the alternative, that Clireliugh, to whom. Hirshfeld had assigned his right of action, should he substituted as plaintiff in the place of Hirshfeld, it appeared that flirshfeld began the action upon his own behalf and upon behalf of about 1,100 creditors of the Madison Square Bank, similarly situated, .under an agreement between Hirshfeld and the receivers of the Madison Square Bank that the action should be brought in Hirshfeld's name; that the receivers would hold him harmless and pay the expenses from the general fund in their hands for the benefit of all the creditors, Hirshfeld, on his part, agreeing to leave the management and control of the action to the receivers and to their counsel. It further appeared that, if the present action were discontinued, the Statute of Limitations would be a bar to any new actions which might he brought by the creditors on whose behalf, as well as his own, Hirshfeld had brought the present action, and that Clireliugh, in case this application was successful, contemplated discontinuing the action. The court denied the application. Held, that the ruling of the court was proper; That while, as a general rule, a client has a right to change his attorney, upon, payment of his reasonable charges, he should not be allowed to do so when the effect of the change will be to bargain away the' rights of other persons who are interested in the action, and for whose benefit, as well as for that of the plaintiff, the action was brought; That the court will always decline to permit a plaintiff to discontinue an action where such discontinuance will work an injustice; That an additional reason for refusing to permit a substitution in this case was to be found in the fact that Hirshfeld had expressly agreed to bring the action on behalf of all the creditors through attorneys who substantially represented all, and at the expense of the common fund, and that the court would not permit a violation of such an agreement. Appeal by the petitioner, Robert A. Clirehugh, and by the plaintiff, Jacob Hirshfeld, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 3d day of March, 1896, denying the application of said Clirehugh and Hirshfeld to have Frederick W. Hinrichs substituted as attorney for the plaintiff in this action in place of Moses Weinman, upon payment of Weinman’s fees, or, in the alternative, to have himself, Clirehugh, substituted as plaintiff in place of Hirshfeld. In May, 1890, the Madison Square Bank of the city of New York became insolvent and went into the hands of receivers, and in April, 1895, the plaintiff, a creditor of said bank, under an agreement with the receivers, brought this action on behalf of himself and all other; creditors similarly situated, to enforce the statutory liability of the stockholders of said bank. By the arrangement in question, the action was to be conducted and controlled by the receivers and their counsel, they agreeing to hold the plaintiff harmless and to pay the expenses of the suit from the general fund in their hands, as receivers. On January 31, 1896, the plaintiff assigned his cause of action to one Robert A. Clirehugh, and he, upon the written consent of the plaintiff, applied for an order granting a substitution of plaintiff’s attorneys, or in the alternative to have himself substituted as plaintiff in place of Hirshfeld. The court denied the application, and from the order entered thereon this appeal is taken. Frederick W. Hinrichs, for the appellants. Louis Marshall and Samuel Untermyer, for the respondents. [MAJORITY — Barrett, J.:] Barrett, J.: The appellants rest their case upon two propositions: First, that a party has, ordinarily, a right to change his attorney at pleasure upon payment of the attorney’s reasonable charges; second, that where an action in equity, like the present, is brought by an individual plaintiff, upon his own behalf and upon behalf of all others similarly situated, such individual plaintiff may discontinue the action at any time before judgment. The appellant Clirehugh frankly intimates that it may be his purpose, upon securing a change of attorney, to discontinue the present action, and thus leave the other creditors of the bank, some 1,100 in number, without redress. We say without redress, because it seems to be conceded that the Statute of Limitations has now run against fresh actions by any of these creditors. The proper disposition of this appeal does not require us to analyze the rules above referred to, nor will it be necessary to consider their precise scope or limitation. The real question is, shall we permit these general rules, viewed in their broadest aspect, to be utilized for a fraudulent purpose? There is here no question of a client’s right to change his attorney for proper or ordinary purposes. Shall he be permitted to do so for improper purposes foreign to the action ? Shall he, to secure his own ends, be allowed directly or indirectly in effect to bargain away the rights of those whom he represents, or, rather, having substantially made such a bargain, will the court sanction and enforce it ? For that is what it comes to under the guise of applying the general rule that a client should be at liberty to dispense with his attorney when the latter has ceased to be satisfactory to him. There can be but one answer to this question. As to the second proposition, it is said that each of these creditors might have brought suit upon his own account, and, not having done so, he must take the consequences of a discontinuance which he should have known that the law authorizes before judgment. But 1,100 independent actions would have been impracticable, and, indeed, intolerable. It was to avoid this suggested multiplicity of actions that the arrangement in question was made between Hirshfeld and the receivers of the bank. We think that arrangement was not only legitimate, under the circumstances, but commendable, and that it should be enforced. It prevented a multiplicity of actions, and it placed the responsibility for an appropriate single action upon behalf of all the creditors, where it properly belonged, namely, upon those whose duty it was to secure the largest possible dividend for these creditors. As the receivers could not technically bring the action, they were quite justified in agreeing, as they did, to bring it in Hirshfeld’s name, to hold him harmless, and to pay the expenses from the general fund which is in their hands for the benefit of all the creditors. In consideration of this agreement upon the part of the receivers, Hirshfeld on his part agreed to leave the control and management of the suit to them and their counsel. Hirshfeld’s assignee stands precisely in his shoes, that is, he took Hirshfeld’s claim and occupies his position subject to this arrangement. The court will not lend itself to any breach of the original understanding, nor permit any variation therefrom to affect the great body of creditors for whose benefit this arrangement was made. This arrangement should be treated as though it had been made by Hirshfeld directly with the body of creditors, quite, in fact, as though he had agreed with them, and each of them, to bring the action upon his and their behalf at his and their joint expense, and for his and their joint benefit. Such was the practical effect of his agreement with the receivers, from which a quasi trust relation resulted as between himself and his fellow-creditors. The court may always decline to permit the discontinuance of an action where such discontinuance would work injustice. It may equally decline to substitute an attorney contrary to an express agreement, or where the substitution is sought, not for the benefit of the client, not for the purpose of realizing that to which the client is honestly entitled, but for ulterior and inequitable purposes. "We distinguish this case, therefore, in the application of the rules upon which the appellants rest: First, in that Hirshfeld has consented to a change of attorney, not for his own purposes, not for any legitimate purpose of his assignee, but for inequitable purposes foreign to the action itself, and foreign to any rights which he or his assignee secured thereby; second, in that the action was not brought by Hirshfeld independently, for himself and others similarly situated, but under an express agreement that he would act for all, through the attorneys substantially representing all, and at the expense of the common fund. The court will not permit a discontinuance or a substitution of attorneys in violation of that agreement. The court at Special Term properly exercised its discretion in denying the application and the order appealed from should be affirmed, with costs. Van Brunt, P. J., Rumsey, O’Brien and Ingraham, JJ., concurred. Order affirmed, with costs.