In re Application of Hirshbach

Hatch, J.: The petitioner in this proceeding seems to have successfully performed the acrobatic feat of “ jumping from the frying pan into the fire.” The petitioner is an attorney', and he avers in his petition ■ that, in the month of August, 1886, at the request of the respondent Ketchum, he procured from the firm of L. Erstein & Brother a 'written retainer appointing the said Ketchum as attorney for such firm in the prosecution of certain claims against the government of the United States arising out of certain duties upon goods paid by-the said firm, it being claimed that such duties were illegally exacted and retained by the government. By the terms of the retainer, the attorney Ketchum was to receive a fee equal to fifty per centum of-the amount collected,, and the petitioner alleges that it was agreed between Ketchum and himself that he should receive one-half of said fee or twenty-five per centum of the amount recovered; that Ketchum instituted proceedings against the government and recovered therein considerable sums of money which were paid over to th.e firm and the petitioner in the respective sums specified in the petition ; that as to a certain sum so recovered about October, 1900, amounting to $15,-212.90, the said Ketchum paid over the proportion due. to the said firm, but refused to pay the twenty-five per centum thereof to which the petitioner was entitled, amounting to about the sum of $3,625, which sum, together with interest thereon from November 1, 1900, he asks that the said Ketchum be compelled to pay over to him in this proceeding. About - November, 1895, the petitioner herein commenced an action against the said Ketchum to recover moneys claimed to be due to him from prior collections under the same contract. To this complaint the defend [81] ant Ketchum demurred, and the demurrer being overruled at the Special Term, he took an appeal to this court where the same was reversed and the demurrer sustained, with leave to amend the complaint upon the usual terms. Therein it was held that the contract alleged in the complaint, which is substantially the same as is stated in the petition herein, was champertous and obnoxious to section 74 of the Code of Civil Procedure and was, therefore, unenforcible. (Hirshbach v. Ketchum, 5 App. Div. 324.) After such decision the plaintiff amended his complaint by averring therein that the plaintiff was an attorney and made the agreement with the defendant Ketchum as such for a division of the fees, and that, therefore, he fell within the exception contained in section 74 of the Code, which authorizes an agreement between attorneys to divide between themselves the compensation to be received for professional service. A demurrer was interposed to the amended complaint, which was sustained at Special Term; permission to further amend was refused and final judgment for costs was awarded to the defendant therein. No appeal was taken from this determination. It is clear that the relation of attorney and client did not exist between the petitioner and Ketchum; they contracted with each other as attorneys for a division of the fee and such was their relation. It is settled by decisive authority that it is only in cases where the relation of attorney and client exists and the attorney is possessed of money belonging to the client which he refuses to pay over, that a summary proceeding is authorized. (Matter of Cattus, 42 App, Div. 134; Matter of Hillebrandt, 33 id. 191; Matter of Dailey v. Wellbrock, 65 id. 523.) “ ‘ Attorneys have the same right to have their liabilities established in the ordinary channels of the law as other persons, except where the claim is for money received - for their clients.’” (Taylor v. L. I. R. R. Co., 38 App. Div. 595.) The petitioner seeks to avoid this result by asserting that he had been originally retained by -the firm of L. Erstein & Brother on the basis of a contingent fee of fifty per cent, and had done work under that retainer; that, therefore, he had an interest therein to that extent, and when he retained Ketchum it was not only for the interest of the firm, but in his own interest. There is no force in [82] this contention. The petitioner had never claimed that, of the money which Ketchum recovered, he was entitled to any sum except the twenty-five per cent of the fees which Ketchum was to retain, and his present claim is based solely and exclusively upon such theory-; the amount which he asks to be paid over to him is 'arrived at by computing his interest at twenty-five per centum of - the amount recovered. Assuming, however, that his contention in this respect could be upheld it does not improve his condition. He does not show that he had any interest in these moneys, and if he had a fifty per cent interest in some of the claims it is evident that that interest has been already paid over to him. Of the moneys, - the subject of this proceeding, the petitioner avers that fifty per cent belonged to the firm and twenty-five per cent to himself. So far as the retainer affects them, unless he contracted for a division of the fees, he falls at once into the champertous agreement, which was condemned in his former action, and he can only escape this by invoking the exceptions contained in the Code as an agreement for the division of the fees. In no aspect, therefore, can this proceeding be sustained. The order should, therefore, be affirmed, with ten dollars costs and disbursements. Van Brunt, -P. J., Patterson, Ingraham and McLaughlin,. JJ., concurred.. Order affirmed, with ten dollars costs and disbursements.