Opinion
November Term, 1901.
N.M. Banker and Horton D. Wright for the appellant.
Clarence W. Smith, R.P. Anibal and D.H. McFalls, for the respondents.
I think the court erred in denying the plaintiff's motion to compel the attorneys to restore to the plaintiff the allowance of costs collected by them in excess of the sum to which, under the order of this court, they were entitled. While I do not doubt that the money was collected by them in good faith, through a misinterpretation of the order of this conrt, the absence of any wrongful purpose on their part cannot relieve them from their duty to make restitution. The order modifying the order of the Special Term by reducing the allowance to five per cent on the plaintiff's judgment clearly had reference to his judgment of $977.30 set forth in his complaint in this action. He had no other judgment. The money erroneously collected by the attorneys was never, in fact, paid over by them to their clients, but was credited by them to their clients on indebtedness to them for professional services. It was money to which neither the attorneys nor their clients had at any time any legal right. The power of the court to compel restitution to the plaintiff is not denied, but it is urged by the counsel that the facts do not justify the exercise of such power. I think otherwise. The case is in principle unlike those where money has been collected by an attorney on a judgment in law deemed to be valid and a settlement has been had with his client before the reversal of the judgment. There the client has a legal right to the money. Here there was no such right, and the presumption that the attorney had knowledge of that fact is conclusive. The acquisition of the money under such circumstances is wrongful in fact, though not in intent, and furnishes proper ground for an order for its restoration. An essential distinction exists between the facts of this case and those in Langley v. Warner ( 3 N.Y. 327) and Butcher v. Henning (90 Hun, 565), cited by the defendants' counsel. In the former, the money was collected by the attorney from the plaintiffs on a judgment and after its receipt by him there was a settlement between him and his client. Thereafter the judgment was reversed and an execution against the client on the judgment of reversal having been returned unsatisfied the plaintiff brought suit to recover from the attorney. The court said: "Walsh (the plaintiff in the action in which judgment was recovered) had a perfect title to the money when it was collected." "No one was bound to presume that the judgment of a court of competent jurisdiction was erroneous and would be reversed. The legal presumption was the other way — that the judgment was right and would be affirmed." The court further said: "We are referred to cases where money paid to an agent has been recovered back from him, notwithstanding the fact that he had given his principal credit for the money in account. But they are all cases where the principal had no right to the money at the time it was paid to the agent; while here the principal had a perfect right to the money at the time his agent received it. The distinction is obvious." In Butcher v. Henning the facts were the same as in Langley v. Warner. There the defendant had a right to receive the money when it was paid to him, and the court simply held that on a reversal of the judgment an action will not lie against the attorney to recover the money, where, by agreement between him and his client, he had retained it in payment of a debt from the client. There the moneys were collected by the attorneys on judgments which the law deemed to be valid, and the clients had a legal right to such moneys. Here, as I have said, the attorneys received money which they are deemed to have known to belong to the plaintiff and not to their clients. This case is similar in all its important features to Moulton v. Bennett (18 Wend. 586), where the attorney had improperly taxed costs and received them under a misapprehension of his client's right to them. The costs were voluntarily paid to the attorney, who paid out of them sixty dollars for counsel fees and had paid over sixty-five dollars to his client, but the attorney was ordered by the court to refund. The principle there announced is here applicable.
While we cannot impute wrong intent in the receipt of the money, we must impute legal error which calls for restitution.
The order appealed from should be reversed and the motion granted.
All concurred. Order to be settled by EDWARDS, J.
Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.