St. Louis, Iron Mountain & Southern Railway Co. v. Hays & Ward

Hart, J., (after stating the facts). It will be remembered that the attorneys entered into a contract with the plaintiffs for a contingent fee, that is to say, they were to receive a certain percentage of the amount recovered over $500. The plaintiffs, without consulting their attorneys and without their knowledge, compromised the suit with the railroad company and received in settlement the sum of $5,000. Pursuant to the agreement, the defendant moved to dismiss the cause of action, and the attorneys objected on the ground that their fee had not been provided for in the settlement. They filed their intervention, and the court allowed them the sum of $2,250, being the sum provided for in their contract. Their right to recover depends upon the construction to be given to Act No. 293 of the Acts of 1909, which is entitled “An Act to Provide for an Attorney’s Lien and its Enforcement.” The act reads as follows: “Section 1. The compensation of an attorney or counsellor at law for his services is governed by agreement, express or implied, which is not restrained by law. From the commencement of an action or special proceeding, or the service of an answer , containing a counterclaim, the attorney who appears for a party has a lien upon his client’s cause of action, claim, or counter-claim which attaches to a verdict, report, decision, judgment or final order in his client’s favor and the proceeds thereof in whosoever hands they may come; and the lien can not he affected by any settlement between the parties before or after judgment or final order. ‘ ‘ Section 2. The court before which said action was instituted, or in which said action may be pending at the time of settlement, compromise, or verdict, upon the petition of the client or attorney, shall determine and enforce the lien created by this act.” Acts of 1909, page 893. This act came up for construction in the case of the St. Louis, Iron Mountain & Southern Railway Company v. Blaylock, 117 Ark. 504. There the court held that the attorney did not have any interest in his client’s cause of action, and for that reason the client might dismiss his cause of action, or might settle with the opposite party without consulting his attorney, but that when there were any proceeds from the litigation, derived by settlement, compromise, or final judgment, the attorney has a lien thereon, of which he can not be deprived by the parties to the lawsuit, by any settlement they may make. In the subsequent case of the St. Louis, Iron Mountain & Southern Railway Company v. Kirtley & Gulley, 320 Ark. 389, the court recognized that this statute was taken from New York and applied the rule that the construction of a borrowed statute is adopted with it unless contrary to the settled policy of the State adopting the statute. In that case it was held that the acceptance of an honest settlement by the client liquidated the amount of the attorney’s fees. So it may be taken as settled under the ruling in that case that if Hays & Ward are entitled to recover at all in the present proceedings, the amount allowed is correct. The act again came up for construction in the case of McDonald, Admr., v. Norton, Admr, 123 Ark. 473. In that case the court held that the plain meaning of the statute is that an attorney of record shall have a lien upon his client’s cause of action from the commencement of the suit'thereon; that this lien continues upon the cause of action until merged, and then it attaches to the thing into which the cause of action is merged. In the case of Peri v. New York Central Railway Company, 152 N. Y. 521, 46 N. E. 849, the court said: ‘ ‘ This language is very comprehensive, and creates a lien in favor of the attorney on his client’s cause of action, in whatever form it may assume in the course of the litigation, and enables him to follow the proceeds into the hands of third parties, without regard to any settlement before or after judgment. This is a statutory lien, of which all the world must take notice, and any one settling with a plaintiff without knowledge of his attorney does so at his own risk. Coster v. Greenpoint Ferry Co., 5. Civ. Pro. R. (N. Y.) 146, affirmed without opinion, 98 N. Y. 660. It is urged by the defendant’s counsel that this construction of the section is against public policy, as the law favors settlements; that the plaintiff’s attorney might refuse to disclose his lien, and thereby stand in the way of settlement, and compel parties to litigate who desired to compromise their differences. This criticism overlooks the fact that the existence of the lien does not permit the plaintiff’s attorney to stand in the way of a settlement. The client is still competent to decide whether he will continue the litigation, or agree with his adversary in the way. The lien operates as security, and if the settlement entered into by the parties is in disregard of it and to the prejudice of plaintiff’s attorney, by reason of the insolvency of his client, or for other sufficient cause, the court will interfere and protect its officer by vacating the satisfaction of the judgment, and permitting execution to issue for the enforcement of the judgment to the extent of the lien, or by following the proceeds in the hands of third parties, who received them before or after judgment impressed with the lien.” (1) The statute under consideration plainly says that the attorney has a lien upon his client’s cause, of action which attaches to a verdict, report, decision, judgment or final order in his client’s favor, and the proceeds thereof in whosoever hands they may come, and that the lien can not be affected by any settlement between the parties before or after judgment. This gives the attorney a lien for that percentage of the proceeds which his contract with his client entitled him to receive and an express statutory liability of a legal character was thereby created. (2) The second section of the act provides a remedy for the enforcement of the lien in the same court before which the original action was instituted or in which the action may be pending at the time of the settlement or compromise. It was not necessary that the railroad company should again be served with process because the attorneys became a party to the original action by force of the statute, and the case might continue as a special proceeding to enforce the attorney’s lien. This is on the same principle that the purchaser at a commissioner’s sale in chancery becomes a party to the proceedings as far as his rights as purchaser are concerned and must thereafter take notice of all subsequent proceedings which affect his rights. The statute under consideration provides the remedy for the enforcement of the attorney’s lien and the enforcement of the lien in the manner provided by statute is a special proceeding which was witbin the power of the Legislature to adopt. The constitutionality of similar statutes has been attacked because they allow the enforcement of the lien by petition or special proceeding in a law court thereby depriving the defendant of the right of trial by jury. In answer to this argument it has been said that the constitutional right of trial by jury applies only to rights that existed at common law before the adoption of the Constitution, and does not apply to new rights created by the Legislature since the adoption of the Constitution. In re King, 168 N. Y. 53, 60 N. E. 1054; O’Connor v. St. Louis Transit Co., 198 Mo. 622, 8 Ann. Cas. 703; Wait v. Atchison, etc., R. Co., 204 Mo. 491, 103 S. W. 60; Standidge v. Chicago Railways Co., 254 Ill. 524, 98 N. E. 963, Ann. Cas. 1913 C-65. (3) The act created a lien upon the cause of action in favor of the attorney, and requires the defendant to take notice of the lien and respect it. The parties to the suit have the right to make a settlement, hut in making such settlement, the act requires that they shall take into consideration the fact that the attorney has a lien upon the cause of action and provides for its enforcement in the action to the end that the parties may not ignore his lien, and deprive him of his rights under his contract. (4-5) Counsel for the defendant also insists that that portion of the judgment attempting to charge the roadbed and equipments of defendant with a lien to secure the judgment of appellees is without authority of law. The action of the court in this respect is based upon section 6661 of Kirby’s Digest. That section, among other things, provides that every person who shall sustain loss or damage to person or property from any railroad for which liability may exist at law, shall have a lien on the railroad, its belongings, equipments, etc., for said loss or damage. It is conceded that under this statute the plaintiffs in the original case, Mr. and Mrs. Burris, would have a lien on the roadbed and equipments of defendant for any judgment obtained by them, but it is insisted that the statute is not broad enough to bring the attorney’s lien under its provisions. The statute giving the attorney a lien upon his client’s cause of action was passed subsequent to this statute and must be construed with reference to it. The section of our statute giving the lien to an attorney is remedial in character and must be liberally construed to effectuate the purpose sought to be accomplished by its enactment. The statute provides that the light to the lien in favor of the attorney can not be affected by any settlement between the parties before or after judgment. The lien created in favor of the attorney is not a general lien, but is a specific lien on the subject-matter of the controversy. As we have already seen, it can be preserved only by permitting judgment in favor of the attorney where a settlement has been made without his consent between the parties before judgment, The attorney’s lien was given to protect his compensation by charging it against the judgment or proceeds of settlement which had been secured to his client by his services. So if the attorney is entitled to have judgment awarded against the defendant for the amount of his compensation where there has been an honest settlement between the parties, we think it follows that this judgment should be a lien upon the roadbed and equipments of the railroad company, or else the very purpose of the statute will be defeated. We think the statute creates a lien in favor of the attorney on his client’s cause of action in whatever form it might assume in the course of the litigation, and enables him to assert his lien in the same manner that his client could assert against the roadbed and equipments of the railroad company. It follows that the judgment will be affirmed.