Carl Fischer-Hansen, Aplt., v. B'klyn Hgts. R.R. Co., Resp.

statute makes express provision for the transfer and continuance of the lien. When, however, the claim is extinguished by a settlement, the statute does not expressly provide that the lien shall extend to the proceeds, and the precise question before us is whether, in view of the history and object of the act, this is impliedly commanded. Upon common-law principles the lien on the cause of action follows the proceeds into the hands of the client after payment to him, but as in this case he is irresponsible, it is necessary to determine whether the lien settled upon the fund before the defendant paid it over. Where was the lien during the interval, whether long or short, between the time of coming to terms and the time of payment? The statute says that the lien cannot be affected by any settlement between the parties before or after judgment, but does it mean that no settlement whatever can be made without the consent of the attorney? It clearly means this, unless a lien is impliedly transferred to the proceeds of the settlement. But did the Legislature, in its effort to protect attorneys, intend to sacrifice the client by preventing him from making an honest settlement of his own cause of action? Did it intend to overturn the ancient and honored rule of law that settlements are to be encouraged, by giving the attorney power to insist that the litigation must continue until he consents that it should stop? Did it intend to so tie the hands of the client that he could not settle his own controversy without the permission of his attorney? A cause of action is not the property of the attorney, but of the client. The attorney owns no part of it, for a lien does not give a right to property, but a charge upon it. As it is merely incidental and for the purpose of security only, it would not be reasonable to hold that the Legislature intended it should be the means of blocking an honest and genuine adjustment of controversies. We think the lien is subject to the right of the client to settle in good faith, without regard to the wish of the attorney, and we so held in the Peri case, where we

Carl Fischer-Hansen, Aplt., v. B'klyn Hgts. R.R. Co., Resp.

declared that "the existence of the lien does not permit the plaintiff's attorney to stand in the way of a settlement." The right of the parties to thus settle is absolute and the settlement determines the cause of action and liquidates the claim. This necessarily involves the reciprocal right of the attorney to follow the proceeds of the settlement, and, if they have been paid over to the client, to insist that his share be ascertained and paid to him, for the defendant is estopped from saying that with notice of the lien he parted with the entire fund.

Of course we do not refer to dishonest settlements made to cheat attorneys, which the courts will brush aside with a strong hand, but to honest settlements, made in good faith, because the client preferred something certain in hand to the uncertainty of protracted litigation. Such settlements are not prohibited by the existence of the attorney's lien. The Legislature did not intend to make the lien the chief thing, nor to compel the client to abdicate his position as principal in favor of the agent or attorney whom he employed in order to secure his rights. It did not intend to prevent him from dealing with his own property as he saw fit, provided he exercised his honest judgment and took no advantage of his attorney. In this case the plaintiff, by standing on the settlement, admits that it was made in good faith, and thus confirms his lien upon the proceeds, which was not defeated by payment to his client, for the defendant paid at its peril. It had both actual and constructive notice of the lien, and while it does not appear that it knew the share of the fund that the plaintiff was entitled to receive, its duty was to ascertain the amount and retain it for him.

Moreover, the general rule is that a lien upon the property attaches to whatever the property is converted into, and is not destroyed by changing the nature of the subject. Thus a lien upon timber ordinarily extends to the shingles made out of it; a lien upon domestic animals to their young subsequently born, and a lien upon a mortgage to the land into

Carl Fischer-Hansen, Aplt., v. B'klyn Hgts. R.R. Co., Resp.

which the mortgage is converted by foreclosure. It follows its subject and cannot be shaken off by a change of form or substance. It clings to any property or money into which the subject can be traced, until it reaches the hands of a bona fide purchaser. So a lien upon a claim or a cause of action follows the fund created by a settlement of the claim, which thereupon ceases to exist. It attaches to the amount agreed upon in settlement the instant that the agreement is made, and if the defendant pays over to the client without providing for the lien of the attorney, he violates the rights of the latter and must stand the consequences. We think that the plaintiff had a lien upon the sum which the defendant agreed to pay to extinguish the cause of action, and that the law will not permit it to say that it has nothing in its hands to satisfy it. The lien was not affected by the adjustment, but leaped from the extinguished cause of action to the amount agreed upon in settlement.

The remedy provided by the Code by means of a petition. is not exclusive, but cumulative, for a court of equity has always had power to ascertain and enforce liens. We have endeavored to establish that the plaintiff's lien was transferred from the cause of action to the fund into which the claim was converted by the action of the parties, and hence within familiar principles a court of equity has power to enforce that lien in an action brought for that purpose. Actions to establish and enforce liens are among those most familiar to equity jurisprudence. Even if the relief ultimately granted is in the form of a money judgment, still that will be possible only through the exercise of equitable jurisdiction in ascertaining the lien and determining its amount. A money judgment may then follow, as a foreclosure is unnecessary when the subject of the lien has already been converted into money (Baily v. Hornthal, 154 N. Y. 648, 661; Mooney v. Byrne, 163 N. Y. 87, 96). While the statute gives the lien, the plaintiff must show that he comes within the statute by establishing the facts

Matter of Fitzsimons.

alleged in his complaint, and the action is open to any defense tending to show that no lien ever existed, or that if it once existed it was discharged with the consent of the plaintiff or was waived or forfeited by his misconduct or neglect.

The judgment should be reversed, the demurrer overruled and judgment rendered for the plaintiff, with costs in all

courts.

PARKER, Ch.J.; Gray, Bartlett, HAIGHT, MARTIN and WERNER, JJ., concur.

Judgment reversed, &c.

IN THE MATTER OF THE JUDICIAL SETTLEMENT OF THE ACCOUNT OF MARY E. FITZSIMONS, AS ADMINISTRATRIX DE BONIS NON OF ANN CASSIDY, DECEASED; IN THE MATTER OF THE APPLICATION OF I. NEWTON WILLIAMS TO ENFORCE AN ATTORNEY'S LIEN; I. NEWTON WILLIAMS, APPELLANT, v. MARY E. FITZSIMONS, ADMINISTRATRIX, RESPONDENT.

COURT OF APPEALS-FEBRUARY, 1903.

§§ 66, 73, 74.

Attorney's Lien-Agreement for Fifty per Cent. of Recovery— Secret Settlement Between Parties.

An agreement between an attorney and his client whereby the former is retained to discover and secure all the property to which the latter is entitled as an heir at law and next of kin of a decedent, and whereby the client assigns and sets over to his attorney one-half of all the property which may be recovered in full of

Matter of Fitzsimons.

his compensation, out of which one-half when recovered the attorney agrees to compensate the attorney for whom he is substituted, for past services and for services to be rendered thereafter, as an associate, is not champertous; and is not obnoxious to sections 73 and 74 of the Code.

Under section 74 of the Code, an attorney may agree upon his com

pensation; his agreement may be contingent upon success and payable out of the proceeds of the litigation and he may agree that his compensation shall cover his own services and those of another attorney associated with him.

When a client settles with his adversary without notice to his attorney and in fraud of his rights, of which the adversary has notice, and the attorney endeavors, under section 66 of the Code, to protect his lien in the proceedings in which the settlement was made, and asserts such an agreement and alleges that he has a status to continue the proceeding in the enforcement of his lien, the agreement cannot be held illegal as being unconscionable until the question has been fully and fairly investigated and the facts established by a trial.

Until such trial shall have been had, it is not competent for an appellate court on affidavits alone to hold as a matter of law that an agreement for one-half the recovered amount is unconscionable.

Upon the trial of the issues presented to the court in which the proceeding has been pending, that court presumably will make such disposition of the matter as justice requires and may establish the attorney's lien to such an extent only as shall be legal in view of the agreement between the parties.

Where an accounting executrix settles with an objectant with notice of the attorney's lien and in fraud of his rights under an agreement, and seeks, upon filing a withdrawal of the objections and a release of the objectant's rights, to dismiss the attorney from the case and to have the account judicially settled, whereupon the attorney presents a petition setting forth facts entitling him to a part of any recovery to which his client would be entitled upon the accounting and praying for the determination and enforcement of his lien, and such accountant's motion is denied by the Surrogate, the order of the Appellate Division reversing the Surrogate and dismissing the petition of the attorney for the enforcement of his lien and imposing personal costs upon the attorney, is a final order and reviewable in the Court of Appeals.

(Decided February, 1903.)