In the Matter of the Application of Henry Salant, an Attorney and Counselor at Law, to Have an Attorney's Lien Determined upon the Judgment, etc., of David Sandler, Plaintiff, v. Abraham Shebar and Harry Klein, Defendants. Henry Salant, Respondent; Abraham Shebar and Harry Klein, Appellants

In the Matter of the Application of Henry Salant, an Attorney and Counselor at Law, to Have an Attorney’s Lien Determined upon the Judgment, etc., of David Sandler, Plaintiff, v. Abraham Shebar and Harry Klein, Defendants. Henry Salant, Respondent; Abraham Shebar and Harry Klein, Appellants. First Department, November 7, 1913. Attorney and client — attorney’s lien on judgment—satisfaction of judgment by client at less than face value — execution against persons against whom judgment has been obtained. An attorney having a retainer giving him a percentage of any judgment obtained for his client has, by virtue of section 475 of the Judiciary Law, a lien which attaches to such judgment which, cannot be affected by any settlement between the parties, and, hence, where the client satisfies a judgment at less than its face value, the satisfaction piece should be vacated on the application of the attorney. It seems, that even after judgment the client may satisfy the same for less than its face value providing he acts fairly and in good faith and in reasonable apprehension that the defendant may become insolvent or the judgment may be reversed on appeal. But the burden is upon the client to justify that action. It seems, that where an attorney’s retainer gives him a percentage to be determined by the sum “ realized” “either by way of settlement or suit,” he is only entitled to the percentage on the sum for which the client satisfies a judgment obtained by him as that is the amount “realized.” The summary proceeding authorized by section 475 of the Judiciary Law is applicable only to disputes between attorney and client. Where an attorney seeks to enforce his lien against persons' not his clients against whom he has obtained a judgment, the court cannot in such summary proceeding authorize him to issue execution to satisfy his lien, as that must be done by foreclosure. Appeal by the defendants, Abraham Shebar and another, 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 1st day of August, 1913, vacating the satisfaction of a judgment and permitting the attorney for the plaintiff to issue execution thereon. Charles L. Meckenberg, for the appellants. Henry Salant, petitioner in person. [MAJORITY — Scott, J.:] Scott, J.: The respondent was retained by plaintiff to prosecute a claim for commissions against the defendants. Suit was begun and a judgment entered in favor of the plaintiff for $1,264.63, which included $181.85 costs. Respondent was employed under a written retainer by which plaintiff agreed to pay him “ thirty per cent of any and all moneys realized in such proceedings either by way of settlement or suit.” The defendants appealed from the judgment, but do not seem to have prosecuted their appeal with much vigor. Some time after the entry of the judgment plaintiff and defendants came to an agreement to settle the matter by payment of $650 to the plaintiff, of which thirty per cent, or $195, was set apart to be paid to respondent. Thereupon plaintiff executed a satisfaction piece, which was duly filed and the judgment satisfied of record. The respondent appears to claim that by virtue of his contract with plaintiff he became, as he expresses it, the “equitable assignee” of so much. of the judgment as amounts. to his agreed fee. Although this expression is to be found in some of the reported cases, we do not consider that it accurately states the nature of the attorney’s interest in the judgment. The language of the statute is that the attorney “ has a lien upon his client’s cause of action * * * which attaches to a * * * judgment * * * and the lien can not be affected by any settlement between the parties.” (Judiciary Law [Consol. Laws, chap. 30; Laws of 1909, chap. 35], § 475.) The respondent’s position, therefore, is that he had a lien upon the judgment which the parties could not destroy by any settlement. The order appealed from was, therefore, clearly right in so far as it vacated the satisfaction of judgment. A more serious question is presented by that portion of the order appealed from which permits the respondent to issue execution for $506.66. This sum represents not only thirty per cent of the amount recovered as damages, but also the whole amount of costs included in the judgment. This is considerably more than the attorney would be entitled to under his written retainer and is attempted to be justified by his statement that in addition to the written retainer he had a verbal agreement as to his right to the costs. If there was no doubt as to the amount due to the attorney the order appealed from would find justification in Peri v. N. Y. C. R. R. Co. (152 N. Y. 521). There is, however, a doubt not only as to the alleged oral agreement as to costs, but also as to the amount due to the attorney under his written retainer. The terms of that agreement were that he should be entitled to a percentage of any and all moneys “ realized ” in such proceeding either by way of settlement or suit. The amount “realized” here was $650, and if the settlement was fair and honest it would seem that the attorney’s recovery ought to be limited to a percentage of that sum. It is claimed by the respondent, and there are expressions to be found in some reported cases to support the claim, that while a party may settle a claim for less than the amount claimed without his attorney’s consent before judgment, providing the settlement be fair, yet after judgment the right of the attorney to an agreed percentage of the judgment, if he has an agreement for a percentage, is absolutely fixed, and if the owner of the judgment accepts less than the face thereof, even in good faith and to save a possible loss of all, the attorney is entitled to a lien, based upon the face value of the judgment. We are not prepared to go to that length, but should be disposed to hold that even after judgment the client still retains the right to satisfy a judgment for less than its face, providing he acts fairly and in good faith, and in reasonable apprehension that the defendant might become insolvent or that the judgment might be reversed on appeal. In such a case, however, it would clearly rest upon the client to bear the burden of justifying his action in settling. In the present case, however, the question does not arise. The form of the retainer to which we have already referred left the amount of the attorney’s compensation to be determined by the sum “ realized,” and if the amount of $650, which was the amount realized, was fairly arrived at, it is that sum on which the attorney’s fee must be estimated. This question cannot be summarily determined as between the attorney and the defendants who were not his clients. The summary proceeding authorized bv section 475 of the Judiciary Law is applicable only to disputes between attorney and client. If the attorney seeks to enforce his lien against a third party, except when the amount due is beyond dispute, he must proceed to foreclose his lien otherwise. (Pilkington v. Brooklyn Heights R. R. Co., 49 App. Div. 22; Matter of Evans, 58 id. 502; Rochfort v. Met. St. R. Co., 50 id. 261.) It follows that the order appealed from must be so far modified as to strike out the provision authorizing the respondent to issue execution for the sum of $506.66, and as so modified affirmed, without costs to either party. Ingraham, P. J., Clarke, Dowling and Hotchkiss, JJ., concurred. Order modified as stated in opinion, and as modified affirmed, without costs. Order to be settled on notice.