702
FEDERAL'REPORTER.
duty, when undue carelessness of the employe did not contribute to the (injury. . . .' , . ,,' ',' " . The exceptions are overruled, and an order will be entered confirming the report. ' ,' .
at ".
SOUTHERN TEL.
Co.
al.
FARMERS'L. 1'0.' . , .
& T. Co. "
'V. SAME.
(Circuit Oourt, E. D. nrg£nia. December 18,1887.) ,. ·
ATTOBNlllY'- ANt> CLIENT-:-LIEN FOR S'IlinvIOB8.-PURetrABE PENDENTB LITH.
, '[i'
In a suit by' bondholders to foraclo.se a mortgage of the corporate property sl)d franchises, appeared, and contested the creditors' right to proceed, and took IMplJ' du'ring,the progress of the (lause,lnvolvlng labOr and' responsibility on their counsel. Subsequently. duriilg,theprogres8 ol the litigation, the!!!! sold their allowed ,sfee.payable out of the bonds. "On petition byt¥eir counsel dividend wliich wouldg() to these bonds, held, that they had a lien upon such di vidend, and that the purchasers of the bonds pendente lit/J took subject to this lien.
,to, Master's Eeport. . ofCarringtoli'sexecutor and W. w. I:lenry to lien for ·attorney'sJfees against the dividends on certain bonds formerly owned by their clienfs,which dividends WElte a fund in court., The suit in which the services were rendered was ill which Mahone, a hondholder, was plaintiff, and the Southern Telegraph Company, defendant; the petition I alleging tbatdefendant was seekingtQ wind it up. In this suit the Farmers'Loan & Trust Company filed a croSs-bill to foreclose its mortgage. A receiver wasapl>ointed, who, under authority of the court, entered into a traffic arrangement with the Mutual UJiion Telegraph ComAt stage of theproceediogs, petitioner's clients, bondholders of the Telegraph Company, came in and. attacked, unsuccessfully, the regularity of the proceedings. After ·abandoning an appeal they sold their bonds for value in the New York market. W. W. Henry, for himself and Carrington's executor. An attorney has an eqUitable lien on his client's papers. and the judgment l>btained for him, for aU his SerViC(l1l in the case (In re Pasohal, 10 Wall. 493: Railroad 00., 93 U. S. 354, 355; Wyliev.Ooa:e, 15 How. 519, 520;) and that. whether the amount of his compensation;beagreed upon,ordepends on a quantum meruit. (Renick v. LUdington, 16 W. Va. 378.) The sale of .the bondS ,operated as an equitableassignment of the decree establishing them, the purlJllQ.l'!er!l took them subjt.ctto all whether they had notice of them orij.ot.J'ewton,v. Pike. J3,Ark.193; Renick Y. Ludington. 8l{-pl'a. 'Thosebuyj:ni nf}gotiable Securities. from Iltigants. )vitl;l actual notice of the . suit, must abIde the result of thelitigati6n. . Scotlo/nd Oo;V. Hill,1l2 U. B. 185.5 Sup. :Ct. Rep, 93. 'The assignment 'of the bonds was the transfer ofnegotiable paper, after maturity (which occurred on the default in payment of interest as therein stipulated) and jUdgment, and the transferee acqUired noth·
On
MAHOME ; V. SOUTHERN TEL. CO.
70S-
ing more than the rights of the transferrer. 1 Daniel. Neg. Inst. § 724a;Davis v. Miller;14 Grat. 5. "
John S.Wi8e, for purchasers of the bonds. Notice, is a necessary basis: of the lien' as against the defendant. (Read v. Dupper.6 TermR.361; Ackermanv. Ackerman. 14 Abb·.Pr. 229: McDonald v. Napier. 14 Ga. 89; 'McDowell v. Railroad au.. 4 Bosw. 670;) so in states where there are statutes. (Stone v. Hyde. 22 ,Me. 318; Dodd v. Brott,l Minn. 270. Gil. 205;) and as agaillst the assignee. (9rant v. Hazeltine. 2 N. H. 541; Lake v. Ingham, 8 Vt. 158.) An attorney :has no claim on a fund in court against mortgagee or judgmeptcreditor. even though these be his own clients. In distributing money the court of common pleas is guided by the liens of record. , Dl,bois' Appeal. 38 Pa. St. 231. Lis pendens does not apply to negotiable securities purchased before, maturity. nor to articles of commerce sold in the usual way. Oountyof Warren v. Mat·cg. 97 U. S.105.
'HUGilES,;r.Petitionerssay, in their'brief, that they were employed on behalf of Charles Fowler and F; W.Bound, as well as other persons ill the Merchants' & Bankers' Telegraph Company, to represent in this court the bonds of Fowler & 'Bound, and to, conduct the litigation in theiri llll.tnea. They aver that the litigation waS not confined to the' proof of tbesaid bonds, but involvedthejurisdictionofthe court in the suit"andthe regularity and competerlcy of the pleadings. Their effort VVIlsto trabsferthe'litigationto New York, where the trustee gage, 11tho'was the complainant in the cross-bill ,in the suit here, had, already filed a bill. Petitioners also attacked the validity of the issue of 8629,,000 of the bonds of ,thedefendarit 'company, including those held by Mahone, the plaintiff inithe original bill. They also attacked the' traffi¢'armngeuient which was made' by the receiver of this 'court with the Mutual Union Company. They also, on the requirement of their clients, prepared, the case for an appeal to the supreme court of the United states from the final diecree of this court settling the rights of the creditors of the defendant company"which appeal their clients afterwards abandoned,having finally detemHned to sell their bonds. Petitioners allege that befol'ethis"snle of tneirbonds by their clients, they themselves filed a petitioDstating their services' and chargl:ls, and praying that their claim be paid out of the general fund in court, which had resulted from the sale of the defendant company's property. They furthermore aver that tlie! ptlrsons who afwrwards pui-chased the bonds of their clientS had noticeiofltheir claim, and alleged lien upon the fund due their clients, thronghtheir counsel, Mr. John S. Wise. Their petition for payment out of the genetta:l fund was disallowed by the court, and now, claiming a counsel's lien, they pray that the fee a:nd charges due them as counsel, for servioes performed' under the' orders of their clients, and for representing the bonds of their clients in this litigation, and proving them before the l'naster,be paid by the court out of the dividends declared upon said Donds. !Fheyaver that they received a retaining fee of $200 from'their olients, and no other compensation, and they pray now for an allowance 0[$2,:.5@0, out of the fund due on'the bonds which th'ey represented and proved. tFhispetition was referred, among other things, to the master.
704
FEDERAL REPORTER.
Before him no objection was made to the amount of:the fee which they claimed. The master reported against the claim of Carrington's executor and Henry, basing his action solely upon :tpe.gJ;ound, as he states, that the of Fowler & ·Bound, on whichpetitio;nE;lrs claim a counsel's lien were sold and ,into the.hands of thE;l NeW york & Southern Telegraph.CompanY, without any knowedge of the claim now asserted by petitioners, !llong before their petition was filed;". The questions presented by the petition, the proo;fs, and the very elaborate ahdaple briefs Wise for the purchasing company, and of Mr. Henry for himself and Carrington's executor, are the following: (1) Were professional services at the requiremellt of petitioners' ents? (2) D0they constitute a lien upon the fund decreed to Fowler & Bound or their assignees? When the petition of these counsel for an allowance out of the general fund in court was before me, I had no hesitation in dismissing it. The labors of these counsel were adverse to the purposes of the suit, and wholly obstructive. They were not directed to the benefit of fund, and did not inure to itsbellefit. There was, in my opinion, no imaginable ground on which a'claim against the fUlld,on their part,could be rested, and their petition was dismissed. Thequ.estion now is a, different one. These petitioners rendered- various servieas as counsel, under thedirectioll and at the command of their immediate clients. They did tpek masters' bidding, at the request and for, the supposed iaterests of theirclien:ts. How valuable or effectual· their work was to the general.fund,or even to their, especial clients, is .not to the point in the present inquiry. They did work and labor for th13ir own clients at the special instance and request of those clients,' and are entitled to a quantum merwit compensation from some source. Primarily, it should probably comefrorh their clients personally; but these are"reaidents of a distant state, and may not be solvent or accessible. . Petittioners prefer to look to the fund, near at hand, in this court, which has accrued from the bonds of their clients which they proved in the causa; and upon which a dividend was decreed. And the question is, have they a claim. upon this fund superior and llnterior to that o£ the present holders of the bonds,: and by direct. or indirect.assignment from tbeclients whom the petitioners represented in this suit. . It is not denied-it cannot be denied-that petitioners would have a valid counsel's lien upon the dividends decreed upon the bonds of Bound & Fowler if the bonds 'Yere still owned and in the hands of these particular holders. But, those bonds having been sold after dividends had been decreed upon them, the question arises whether the lien followed them, and whether they are still subject to the equity of the quantum 'neruit, which petitioners at.one time, beyond doubt, held upon them. The object of the suit in which the bonds were proved was to foreclose the mortgage by which the bonds were secured, call in the bonds, and liquidate them as far as the property of the defendant company would do so. From the very nature of the suit the holder of every bond had constructive notice:o£ the Moreover, it is difficult to conceive
MAHONE V. SOUTHERN
CO.
705
how the holder of any of the bonds did not have actual notice of the pendency of the suit at every stage ofits progress. It is clear to me that the doctrine of lis pendens applied to all the bonds. and all the holders of them; and, moreover, that if any of the bonds changed hands during the litigation, the purchasers took them with actual notice of the suit, at least to the counsel who represented them in it. As soon as the suit was in progress, certainly as soon all any bonds were proved before the JDaster, the bonds proved ceased to be absolutely negotiable, and remained negotiable only in a quasi manner; that is to say, remained negotiable subject to all the equities that had attached to them by having become part of the subject-matter of the suit. Although still transferable by mere delivery from seller to purchaser, yet, technically, the transfer was an assignment under which all the equities that bound the bonds as subjects of the suit remained with them and bound the dividends which accrued, by decree of court to the bonds. It was wholly unnecessary to impound the bonds in the hands of the master in order to fix and perpetuate this lien upon them. The numerous authorities cited in the able briefs, both of Mr. Wise and Mr. Henry, more particularly the later decisions of the supreme court of the United States on the subject of counsel's fees, and the case of.Renick v. Ludington, 16 W. Va. 398, cited and enforced by Mr. Henry, establish the propositions I have stated. The lien of an attorney upon the, fund he represents in court, as against his own clients, and their assignees, pendente lite, is so well established, and ought by this time to be so ,well known to those who deal with litigants in respect to bonds which become the subject-matter of litigation, that no hardship can be presumed to result, or ought to result, from the enforcement of it by the courts. I am clearly of opinion that the services rendered their clients by Carrington & Henry, at the instance and request of those clients. ought to be compensated, and constitute a lien upon the dividend that was declared by the court upon the bonds of Fowler & Bound. I might award a less or greater amount as a quantum meruit for those services than the one which the petitioners claim, if that matter had been litigated before the master and passed upon in his report. But, in the present stage of the controversy, it does not seem competent for me to open and consider that matter. I will therefore sign a decree granting the prayer of the petitioners. ,v.33F.no.13-45
FEDlCRAL REPORTER. 1 ..
r 'i
M"n:>DAUGH "'. BACHELDER
et al.
(C'ircuit Oourt, D.
Ma8BaCn1l8ettB.
January 80,1888.)
VJllNDOR AND VENDEE-MORTGAGED· PROIJJllRTy-PAYMENT OF }lORTGAGlll.
Where vendees buy a 'piece property fllr certain sum, bu' 'with no understanding or agreement· til at they are to pay the mortgage sa , ... &ipartof the consideration, they are not liable to their vendor. the mortgagor, . .yh,q has been compelled to pay the mortgage debt.
J·. ,N.
,G. Nichols and O. K. Cobb;. for plaintiff. for
COLTj'J. ,This case was heard by the court, jury trial having been waived. It appears that on June 26,1866, the plaintiff made a mortgage note for $1,200, payable to the order of John Dorchester, secured hy, a: deed ,Of trust of certain land .situated in Chicago, Illinois, which was Iduly recorded; " Subsequently, on November 19, 1866, the plaintiff con1/eyed by deed to· one of the :defendants John Q. A. Bachelder the same premises subject to saidroortgage. Some months after Bachelder.conveyed. the same premises to his brother Cyrus T.Bachelder, the other defendant,· subject to the same mortgage. In December, 1&78, Dorchester; the mortgagee, brought suit against the plaintiff in the circuit court for Cook county, Illinois; for the amount of said note, and interest" and in November, 1882, judgment was rendered against the plaintiff for $2,407.97, and costs, which judgment was satisfied December 18, 1882. The present suit is brought to compel the defendants to pay the mortgage debt 011 the ground of an implied contract arising out of the purchase of the land from the plaintiff. The position taken by the plaintiff is this, that under the laws ,of the state of lllinois, where real estate upon which there· is a mortgage is sold for a given price, and the amount of the mortgage is deducted from the purchase money and left unpaid in the hands of the purchaser, :the law treats the amount so deducted from thepurchasermoney as being :left in the hands of the purchaser for the purpose· of paying the incumbrance,and implies a .promise on his part to pay the incumbrance with, the portion of the purchase money left in his hands. In the present case, the consideration mentioned in the deed from the plaintiff to Bachelder was $7,891.65, and the deed contained the following provision: .. This deed is given subject to the conditions of two certain trust deeds, the first is given by Henry C. Middaugh to Tbos. D. Snyder, dated June 26, 1866. in the sum of $1200, and recorded in the recorder's office of Cook county, Illinois, .July 9, 1866; and the second by Henry C. Middaugh to George Scoville in the sum of $2420, dated July 2,1866, and recorded July 6th in said recorder's office."
The amount of cash paid by Bachelder was 84,000.