City of Los Angeles v. Knapp , 7 Cal. 2d 168 ( 1936 )

7 Cal.2d 168 (1936)

THE CITY OF LOS ANGELES (a Municipal Corporation), Plaintiff,
v.
JUNE KNAPP et al., Defendants;

L. A. No. 15364.

Supreme Court of California. In Bank.

August 5, 1936.

Clayton L. Howland and Benjamin F. Chipkin for Appellant.

George L. Hampton for Respondent.

SEAWELL, J.

This is an action in interpleader. Before trial the City of Los Angeles dismissed an eminent domain suit which it had brought to condemn land and water rights in Inyo County. Upon dismissal and abandonment of said suit by the city, the defendants therein became entitled to an award of costs and disbursements, including reasonable attorneys' fees. (Sec. 1255a, Code Civ. Proc.) Accordingly, the court rendered judgment in favor of defendants Emmett Warnell Knapp and June Knapp and against the City of Los Angeles for $5,923 for costs, disbursements and attorneys' fees. Of the total award, $4,200 was allowed for attorneys' fees. Thereafter various persons claiming as assignees of the Knapps, or by virtue of garnishments levied in actions brought against them, made demand on the city for the amount due from it by the judgment in the condemnation suit. The city brought this suit in interpleader, and deposited in court the sum of $5,923, plus interest thereon to the date of such deposit in the amount of $207.30. By stipulation of the various defendants who made claims to the fund, all except $875 was distributed. Respondent Tomlinson and appellant Hye both claim this sum.

Hye claims under an assignment executed by the Knapps on July 20, 1931, wherein the Knapps assigned to him any and all moneys up to the sum of $8,500 which they should be awarded as a result of the condemnation suit. At this time the city had not announced its intention to abandon the proceeding. Hye testified that Knapp was indebted to him for money loaned. Subsequent to the dismissal of the suit by the city and the award of costs to the Knapps, they executed another assignment to Hye, whereby they transferred all their right, title and interest in the judgment for costs in the sum of $5,923. In the instant action in interpleader, Mr. and Mrs. Knapp filed an answer praying that the court render judgment in favor of Hye for the full amount due from the city.

Respondent Tomlinson claims as transferee of the rights of attorney W. W. Middlecoff in the judgment for the Knapps rendered in the condemnation suit. The court below found that in January, 1932, Middlecoff was employed by the Knapps to act for them as counsel in the condemnation proceeding, in collaboration with George T. Warren, who had already been employed as counsel. On August 20, 1932, after the city had indicated that it would abandon the condemnation suit, but before actual dismissal thereof, Middlecoff and Knapp, for himself and as agent for his wife, executed the following instrument:

"Total Atty fee in water suit to be divided 3/4 to Knapp, or his assignee, 1/4 to W. W. Middlecoff. All costs to Knapp."

"W. W. Middlecoff"

"E. Knapp"

"Dated: August 20, 1932."

In his answer to the complaint in interpleader Tomlinson, transferee of the rights of Middlecoff in the judgment rendered in the condemnation suit, contended that this instrument constituted an assignment to Middlecoff of one-fourth of the total amount of $4,200 subsequently allowed to the Knapps as attorney's fees, that is, an assignment of $1,050. Tomlinson claimed that although the assignment to Middlecoff was subsequent in time, it was taken without notice of the prior Hye assignment, and notice thereof was given to the debtor, City of Los Angeles, before it received notice of the Hye assignment, and the court so found. [1] As between two bona fide assignees for value the one who first gives notice to the debtor acquires priority. (Smitton v. McCullough, 182 Cal. 530 [189 P. 686]; Widenmann v. Weniger, 164 Cal. 667 [130 P. 421]; Graham Paper Co. v. Pembroke, 124 Cal. 117 [56 P. 627, 71 Am.St.Rep. 26, 44 L.R.A. 632]; 3 Cal.Jur. 283; 15 Cal.Jur. 251.) Tomlinson waived his claim to all part of the fund paid into court in excess of $875 by stipulation in the trial court with the other defendants in the interpleader action to distribution of all except that sum. The court below first announced that judgment would be rendered for Hye, but before findings and judgment were signed granted Tomlinson's motion to reopen the case for further evidence. After the case had been closed, the court reopened it again on its own motion, and subsequently awarded the sum of $875 to Tomlinson.

[2] Appellant Hye contends that the above instrument executed by Knapp and Middlecoff contemplated an unlawful splitting of attorneys' fees with Knapp, a layman, and therefore Middlecoff and Tomlinson should have no rights by virtue of the instrument. This contention would also preclude appellant Hye from receiving any portion of the fund which represented the allowance for attorneys' fees, since Hye also is a layman. The only reasonable interpretation is that the reservation by Knapp of three- fourths of the total amount to be awarded as attorneys' fees was made to enable him to compensate the other attorneys who had represented the Knapps in the condemnation suit.

The judgment of dismissal of the condemnation suit and for payment to the Knapps of $5,923 for their costs and disbursements was rendered on October 3, 1932. The cost bill as allowed by the court contained an item of $4,200 for attorneys' fees, including $3,500 as the reasonable value of legal services of George T. Warren, $500 as the value of services rendered by attorney Middlecoff, and $200 for the legal services of Robert Richards. Attorney Warren was named as a party defendant in the action in interpleader, the city alleging that he had filed a claim for $3,500 against the judgment in favor of the Knapps. Presumably he was paid pursuant to the stipulation made between the various parties to the within interpleader action for distribution of all except $875 of the $5,923, plus interest, paid into court by the city. No question as to his rights or as to those of attorney Richards are involved on this appeal.

[3] Appellant Hye has not made the stipulation for distribution of all except $875 of the fund deposited in court, or the judgment entered on this stipulation, a part of the record on this appeal. Hence it does not appear in what manner the fund was paid out. The rights of attorney Middlecoff, or his assignee Tomlinson, by the terms of the instrument of August 20, 1932, attached only to the sum awarded as attorneys' fees, which was $4,200, and not to the sum awarded as other costs. Said instrument provided: "Total Atty fee ... to be divided 3/4 to Knapp, or his assignee, 1/4 to W. W. Middlecoff. All costs to Knapp." If under the stipulation for distribution of all except $875 of the amount deposited by the city, attorney Warren had received $3,500 and attorney Richards $200, then only $500 of the sum of $4,200 would remain upon which the assignment of attorney's fees to Middlecoff could operate. The court below awarded the full amount of $875 remaining in court to Tomlinson, Middlecoff's assignee. All presumptions are in favor of the judgment. In this situation it must be presumed that the sum of $875 represents a balance of attorneys' fees arising from the other attorneys having failed to claim or having by the stipulation consented to accept less than the amounts found to be the reasonable value of their services in the condemnation suit. In fact, attorney Richards was not named as a party defendant or claimant to any part of the sum due from the city in its complaint in interpleader, and he may have already received payment from the Knapps for his services.

[4] The judgment for attorneys' fees in the condemnation suit was in favor of the Knapps, as was the balance of the award for their costs. Where the court is authorized by statute to allow attorneys' fees in certain actions or proceedings, such allowance must be made to the party to the action for fees paid or incurred by him, and not directly to the attorney, who is not a party to the action. (Keck v. Keck, 219 Cal. 316 [26 PaCal.2d 300]; Stevens v. Stevens, 215 Cal. 702 [12 PaCal.2d 432]; Chavez v. Scully, 62 Cal.App. 6 [216 P. 46].)

[5] The court below found that the instrument of August 20, 1932, constituted an assignment to Middlecoff of one-fourth of the total sum allowed as attorneys' fees in the award to the Knapps in the condemnation suit. Appellant Hye contends that the instrument was not an assignment, but merely an agreement for payment of compensation which would give Middlecoff no rights in the judgment as against Hye, an assignee thereof. (McGown v. Dalzell, 72 Cal.App. 197, 200 [236 P. 741].) We are of the view that without the aid of said instrument respondent Tomlinson, as successor to the rights of Middlecoff, would be entitled to $500 of the amount of $875 remaining on deposit. This sum the court in the condemnation suit found to be the reasonable value of Middlecoff's services, and included it in the award to the Knapps. The rule in this state, unlike that in other jurisdictions, is that an attorney generally has no lien on a judgment procured by his professional services in the absence of an express agreement for a lien. (Tracy v. Ringole, 87 Cal.App. 549 [262 P. 73]; McGown v. Dalzell, supra; Gage v. Atwater, 136 Cal. 170 [68 P. 581]; 3 Cal.Jur. 682.) But the judgment for attorneys' fees rendered in favor of a defendant upon abandonment of a condemnation suit is not the ordinary judgment in favor of a successful party to an action. Defendants' attorneys' fees are expressly mentioned in section 1255a of the Code of Civil Procedure, as an item to be included in the award of costs. The allowance of attorneys' fees is made to reimburse the defendant for fees which he has paid, or to indemnify him for fees which he has not paid, but has incurred. (City of Long Beach v. O'Donnell, 91 Cal.App. 760 [267 P. 585].) Where an award is made to the defendant in a condemnation suit for fees of an attorney whom the defendant has employed but has not paid, the rights of said attorney to a sum expressly allowed as and for his attorney fee is superior to the claim of an ordinary assignee of the judgment for costs and attorneys' fees, whether such assignee claims under an assignment prior or subsequent to the judgment for costs and attorneys' fees. If the superior right of said attorney may not accurately be described as a lien (Tracy v. Ringole, 87 Cal.App. 549, 551 [262 P. 73]), nevertheless he is entitled to the equitable interference of the court to protect his priority.

[6] The trial court held that Tomlinson, as assignee of Middlecoff's rights, was entitled to receive the full amount of $875 remaining on deposit in court, and not only the sum of $500. We have heretofore said that on this appeal it must be presumed in support of the trial court's judgment for respondent Tomlinson that the entire amount of $875 represents an undistributed balance of the sum of $4,200 allowed as attorneys' fees in the condemnation suit, and paid into court by the city in this action in interpleader.

The court below upheld the rights of Tomlinson, as assignee of attorney Middlecoff, to receive the balance of $875 on the theory that the instrument of August 20, 1932, constituted an assignment to Middlecoff of one-fourth of the total amount which the court allowed as attorneys' fees in the condemnation suit. The amount of $500 found to be the reasonable value of Middlecoff's services in the condemnation suit was less than one- fourth of the total sum of $4,200 allowed as attorneys' fees. The award of attorneys' fees was in favor of the Knapps, and determined the amount which the city should pay. The separate computation in the condemnation action of the reasonable value of the services of the several attorneys was made primarily as a convenient mode of arriving at the total amount which the city should pay. The attorneys were not parties to said action. (Keck v. Keck, and other cases cited supra.) The award did not determine as between said attorneys and the Knapps possible conflicting claims of the attorneys in the sum awarded based on the relative value of their respective services or agreements with the Knapps for payment of fees. If this appeal involved conflicting claims of the several attorneys a question would be presented as to whether the instrument of August 20, 1932, assigned to Middlecoff more than a fair share of the award for attorneys' fees, considering the relative value of his services, and if so whether such an agreement would be valid as to the other attorneys. But on this appeal the other attorneys are asserting no claim to the balance of $875 attorneys' fees remaining, and the assignment of $875 may operate on this balance without prejudice to the rights of said other attorneys.

The court found in the instant action that the assignment to Middlecoff was for value, which, in the light of the findings as a whole, implied that the sum of $875 awarded to his assignee in this action, to which said assignee is a party, is not unreasonable for the services rendered by Middlecoff. We would not be warranted upon the record before us in overturning the finding of the trial court that the instrument of August 20, 1932, constitutes an assignment, rather than a mere agreement for compensation. The trial court made this finding in the light of evidence of the circumstances under which the instrument was executed. (Sec. 1860, Code Civ. Proc.) Furthermore, it would seem that the rights of an attorney asserting a claim to a fund allowed as attorneys' fees, and relying on this instrument, would be superior to the rights of a lay assignee even if it constituted only an agreement for compensation, and not an assignment.

[7] Appellant further contends that a letter written by Middlecoff to Knapp on September 14, 1932, constituted an abandonment of whatever rights Middlecoff may have had under the instrument of August 20, 1932. Middlecoff wrote, "... you may fix and pay me such sum for attorneys fees ... as you see fit, and such sum is hereby agreed by me to be accepted in full satisfaction of all claims for services rendered or which may be rendered hereafter in said case". It does not appear that Knapp ever replied to this letter. There is no satisfactory evidence that Knapp in response to Middlecoff's offer contained in his letter of September 14, 1932, ever acted to fix his fee. The court made no finding as to a new arrangement for Middlecoff's fee having been substituted for the agreement of August 20, 1932. This being the case, it must be held that the instrument of August 20th continued in full force and effect.

The judgment is affirmed.

Curtis, J., Langdon, J., Shenk, J., and Waste, C.J., concurred.