Gray v. Denhalter

Bartch, J.: This case results from a failure of the appellant, who purchased certain property at a foreclosure sale under a deed of trust, to comply, as is claimed, with the terms of the decree of foreclosure respecting a certain sum directed to be paid as an attorney’s fee. It appears from the record that the plaintiff, M. J. Gray, bad previously purchased the same property at a sale made under a second trust deed, and afterwards brought an action in ejectment for the property against the Denhalters, and, still later on, a suit in equity for the appointment of a receiver to take charge of the property. In the equity suit, the Jarvis-Conklin Mortgage Trust Company was made a defendant. J. H. Bacon was the trustee in both trust deeds, and the agent of the defendant trust company. Respondent J. W. Judd was its attorney, and filed a cross complaint for it in the equity suit, joining in the prayer for a — 314 — receiver and to obtain a decree of foreclosure of its trust deed, and obtained tbe decree to sell tbe property. In tbe meantime tbe defendant trust company itself went into tbe bands of receivers, and tbe receivers assigned tbe deed of trust and tbe debt therein secured to tbe appellant, Crebbin. There is some conflict in tbe evidence as to whether tbe respondent was employed as tbe attorney of Bacon or of tbe trust company, but tbe court found that be represented tbe trust company, and this, we think, is supported by tbe proof. Bacon was appointed in tbe decree of foreclosure special commissioner to sell tbe property, and out of tbe proceeds was to retain bis fees; then pay to J. W. Judd, attorney for cross complainant, $1,000 as attorney’s fees; and, after having paid tbe costs, turn tbe balance over to tbe cross complainant or its attorney, in payment of the sum of $23,793, found due on tbe trust deed, and interest. At tbe sale tbe property was bid off by tbe appellant, Crebbin, tbe then owner of tbe debt and judgment, for $25,300. Tbe commissioner executed a certificate of sale, but payment of attorney's fee was refused; nor does it Appear that any part of tbe purchase price was paid to tbe commissioner. Thereupon tbe respondent Judd moved tbe court for a resale of tbe property. Tbe court granted tbe motion, and ordered that appellant, Crebbin, pay to J. W. Judd, $1,000, within 30 days from a certain date, and, upon failure thereof, that “tbe premises be sold to pay tbe several amounts provided for in tbe decree, including tbe attorney’s fee” and costs. This action of tbe court is made tbe basis of complaint by tbe appellant on this appeal. Tbe decisive question appears to be whether tbe respondent bad such an interest in tbe decree, and in lien upon the property, as would authorize the court upon motion — 315 — to make the order in controversy. It is insisted for the appellant that the attorney’s fees form a part of the judgment, and go to the mortgagee, or, in this case, to the as-signee of the mortgagee, and that the respondent had no. standing in court to make and insist on the motion, and had no lien on the judgment. It is true this court in McClure v. Little, 15 Utah, 379, used the language: “Attorney’s fees, when allowed, go to the mortgagee or trustee,, and become a part of the judgment.” In a certain sense-this is true, but -not in the sense that the mortgagee may hold such fees as his property. They do form a part of the judgment, and may go to the mortgagee, but, if they do, the mortgagee receives them in trust for the attorney, and has no tangible interest in them. Nor has he any right to retain them as liquidated damages or as a penalty for the default of the defendant. They are allowed to indemnify him against expense which he may incur,, through the default in the payment of the obligation, but he has no other interest in them than as for such indemnity. Nor can he share in a division of such fees. These views are in harmony with the statute found in chapter 29, p. 25, Sess. Laws 1894, and with McClure v. Little, where it was said: “This statute was enacted to prevent a division of the fees provided for in the mortgage between the attorney and the mortgagee, and to allow only such reasonable attorney’s fees to be taxed against the defendant as were actually agreed to be paid or were paid for his services.” The statute referred to provides (section 1): “In alT cases oir foreclosure, when an attorney or counsel fee is claimed by the plaintiff, no other or greater amount shall be allowed or decreed than the sum which shall appear by the evidence to be actually charged by and to be paid to the attorney for the plaintiff; and if it shall appear that — 316 — there is an agreement or understanding to divide such fees between the plaintiff and his attorney, or between the attorney and any other person except an attorney associated with him in the cause, only the amount to be re-tainéd by the attorney or attorneys shall be decreed as against the defendants. Nothing herein contained shall be deemed to in any wise prevent the court from passing upon the reasonableness of counsel or attorney’s fees in such cases.” Under this enactment, it is clear that the moment a counsel fee, in a foreclosure suit, is allowed, the attorney for the plaintiff has a property interest in it which cannot be defeated by the purchaser at the sale or the mortgagee. It is equally clear that the plaintiff can have no such interest in such fee, not even by agreement with the attorney; for, in the absence of an agreement between the parties to the suit, the fee must be ascertained by the court from the proof, and, in any event, it must be “paid to the attorney for the plaintiff.” When the amount of such fee has thus been adjudicated and made a part of the judgment, the attorney has an interest in the judgment, and doubtless a lien thereon to the extent of the amount allowed, and this lien cannot be discharged by payment to any one except the attorney, who, to the amount thereof, is deemed the equitable assignee of the judgment. With reference to an attorney’s lien upon the judgment which he recovers, Mr. Justice Harris, in Rooney v Railroad Co., 18 N. Y. 368, said: “It is a valid and established right to receive, out of the moneys to be collected upon the judgment, the amount due him from his client for his services and expenses in obtaining it. In the absence of any agreement on the subject, I suppose, the sum recovered by the party, as an indemnity for his expenses, would be the measure of compensation allowed to the attorney. This, then, would be the extent of his — 317 — lien. But, where there has been an agreement’ for more or less than that sum, the amount which by agreement he is entitled to receive will determine the extent of his lien. It is still true that the attorney is to be regarded as the equitable assignee of the judgment to the extent of his claim for services in the action.” Railroad Co. v. Wilson, 138 U. S. 501; Marshall v. Meech, 51 N. Y. 140; Curtis v. Richards, (Idaho) 40 Pac. 57; Cowdrey v. Railroad Co., 93 U. S. 352. The California cases, cited by counsel for the appellant, to the effect that an attorney has no lien for his fees, are not in point, under the statute of this state. In view of the principles above stated, it now becomes important to ascertain what rights the respondent has under the decree in this case. So far as material here, the decree provides that J. H. Bacon, the special commissioner therein, appointed to sell the property, shall “out of the proceeds of said sale retáin his fees, disbursements, and commissions on said sale, and pay to the attorney for the cross complainant, John W. Judd, out of said proceeds, the sum of $1,000 by .way of attorney’s fees in this cause, together with the costs of this suit, taxed at the sum of -dollars, and the said Bacon shall also pay to the cross complaint, or its attorney, the further sum of $23,-793, the amount so found due as aforesaid, together with interest thereon at the rate of eight (8) per cent, per an-num from the date of this decree, or so much thereof as said proceeds of sale shall pay of the same after first making the payments hereinbefore mentioned.” It will be observed that the respondent is here decreed to be paid by the commissioner out of the proceeds of the sale the sum of $1,000, as attorney for the cross complainant. That sum is thus, by an express decree, fixed as the amount of his compensation for his services in recovering the judg — 318 — ment, and is preferred over the cross complainant's claim. The contract, in the form of the trust deed which was assigned to the appellant, provided for a “reasonable attorney’s fee” in case of resort to judicial foreclosure, and, such fee having been fixed in the decree of $1,000, we must, in the absence of anything to the contrary appearing in the record, assume that the amount so fixed was determined by the court from the evidence, as is provided by the statute. Such amount having been adjudiciated, and having become a part of the judgment, the attorney has a lien on the judgment to that extent. The sale was ordered to satisfy the judgment, including that fee, ás a preferred item in the decree, and it was not in the power of the trust company, or its assignee, who was the purchaser, to deprive the attorney of the fruits of his labor. It is apparent that, if the property had been struck off to some person other than the owner of the debt, such person would have been compelled to pay the whole purchase price to the commissioner, and that the commissioner would then have been compelled to pay the several items constituting the amount of the judgment in the order of preference in the decree. Suppose, in such case, the owner of the debt were refused payment thereof; would counsel seriously undertake to maintain that the creditor could not come into court, and, upon motion, ask for a resale? Yet the claim of such creditor forms but a part of the judgment. How, then, can it be successfully maintained that, if the owner of the mortgage debt himself becomes the purchaser at the foreclosure sale, he can bid off the property to satisfy his portion of the judgment, and .refuse to pay a part of the judgment, which is preferred over his in the decree, without, in like manner, having the property exposed to resale? The fact that the owner of .the mortgage debt, in the present instance, purchased the — 319 — property at the sale, affected neither the order of preference nor the lien on the judgment for the item which the purchaser refused to pay. The refusal to pay that part of the judgment was a violation of the terms of the decree. The purchaser, so far as his rights and duties under the decree of sale were concerned, was a quasi party to the suit, and could come into court, and upon motion ask that the conditions of sale respecting the title be enforced, or that he be absolved from his contract. So, likewise, as such party, he was liable to have conditions of the decree and sale enforced against him at any time before the commissioner had made h-is report as directed in the decree, and the sale had been confirmed, and final disposition of the cause made. Until this was done, the court had undoubted control of the sale made under the decree, and, upon the purchaser failing to comply with the conditions of the decree and sale, had the power to set aside the sale, and order a resale of the premises. This could be done upon motion of a party who had an interest in the judgment, and lien thereon, and was aggrieved because of the failure of the purchaser to comply with the terms of the decree. It is true the court did not, in express terms, set aside the sale before ordering a resale. It made an order, in substance, that the appellant, Crebbin, pay, or cause to be paid, to the respondent Judd $1,000, within 30 days from a certain date, and, upon failure to so pay such sum,that the premises be sold to pay the several amounts provided for in the decree, including the attorney’s fee and costs. We are disposed to hold that the effect of this order was to set aside the former sale, and direct a resale, in the event that the money is not paid to the attorney at the expiration of the time specified, although we think the more usual and better practice is to have the sale set aside before ordering a resale. That a court of chancery — 320 — has control of a sale made in a foreclosure suit, until the final disposition of the cause, and has the inherent power to enforce its judgments and decrees, we entertain no doubt. It can make any order necessary for such purpose. In Deaderick v. Smith, 6 Humph. 138, the supreme court of Tennessee, speaking through Mr. Justice Green, said: “Every court must have an inherent power of enforcing its judgments and decrees; and, surely, to no tribunal can this power more properly belong than to the chancery court. It has under its control all the sales made by its order until a final disposition is made of the cause. It can set aside a sale altogether, or upon the biddings, or make any other order that may be necessary for the enforcement of the decree. The purchaser at a sale, made by order of the court, must come into court to obtain a decree vesting in him the title to the property purchased. He is a party to the cause for the purpose of obtaining a decree to make his purchase effectual; and can it be said he is not a party when the conditions to be performed by him are to be enforced? Surely not.” Blackmore v. Barker, 2 Swan 340; Mosby v. Hunt, 9 Heisk. 675; In re Herman, 50 Fed. 517; Newland v. Gaines, 1 Heisk. 720. Whether the attorney was in the first instance regularly employed or not, can make no difference in this case, because it is a fair deduction from the evidence that he performed the services at least under the implied sanction of the appellant and his assignor. We find no reversible error in the record. The decree appealed from is affirmed, and the cause remanded for its execution. Zane, C. J., concurs. Mine», J., concurs in the judgment.