Loofbourow v. Hicks , 55 L.R.A. 874 ( 1901 )

MINER, O. J.

The respondent, Joanna W. Hicks, who resided in the State of Ohio with her daughter, the co-respondent, Eloy R. Hicks, through her agent and attorney in 1 that state employed the appellants, a firm of attorneys in Salt lake City, in the year 1897, to foreclose a mortgage held by her against Mr. Edwards of Salt Lake City, amounting to $1,400, the payment of which was secured upon real estate situate in the latter city. Proceedings were instituted by the appellants in accordance with instructions, and a decree of foreclosure and a sale of the property duly obtained for the sum due on the mortgage, including costs, and the further sum of $150, allowed and decreed to be paid as attorney’s fees for the plaintiffs in such foreclosure proceedings. It was provided in such decree that the proceeds of the sale thereof should be applied (1) to the payment of the costs of sale; (2) to the payment of the costs of the foreclosure proceedings; (8) to the payment of the attorney’s fees as allowed by the decree; and (4) to the payment of the amount due the plaintiff on the judgment. The order of sale was duly obtained, and the mortgaged property was sold by the sheriff. By direction of Joanna W. Hicks and Mr. Badger, her attorney, in. Ohio, in pursuance of an arrangement made between them, the property was bid in by the appellants in the name of Eloy R. Hidra, and she has since, through said Badger, received the rents thereof. Joanna W. Hicks sent the appellants money sufficient to pay the costs, except the attorney’s fees, and by direction of Mr. Badger, who evidently acted for said respondents, the remainder of the purchase price bid for the land was credited upon the judgment, the same as if the property bad been purchased by the mortgagee; but no money was paid upon said purchase price. During the pendency of the suit to foreclose in 1897, after the entry of the decree, but before sale, and without the knowledge of the-appellants, until about the time of the bearing of this case, Eloy E. Hicks claims that she purchased the decree from her mother and paid therefor the sum of $800. Miss Hicks testifies that she bought the decree from her mother in 1897, and that it was arranged between them that the property should be bid in to her on the sale. Mr. Badger, the attorney in Ohio who was acting for the respondents, attended to their business correspondence in this matter, directed the sale to be made to Eloy at the price bid, and also directed the deed to be recorded and mailed to him, which was thereafter done. Said attorney also promised in the meantime to send appellants a draft for their fees. These fees were never paid, except $25 as advanced by the plaintiffs. Joanna W. Hicks is shown to have some property in Ohio, but none in Utah. Eloy E. Hicks has no property, except the land in question. Respondents were shown to have been absent in Europe for some time since the sale. This action was brought to enforce a lien for said $125, attorney’s fees; appellants asking that such fees so allowed by the decree be adjudged a lien upon the mortgaged premises, prior to any lien or claim of the respondents or either of them, and for special execution and other relief. Eloy E. Hicks interposed a general demurrer to the complaint, to the effect that it did not state a cause of action which entitled plaintiffs to any relief. This demurrer was overruled, and the respondent, Eloy E. Hicks, filed her answer, to the effect that she purchased the property in 1897 for the sum of $800, and bad no notice or knowledge of the appellants’ lien, but asserted no claim of waiver or laches on the part of the appellants. Joanna "W". Hicks was in default. The trial court made its findings and decree in favor of the respondent, Floy F. Hicks, and the appellants appealed to this court.

1. Tbe court found, among other things, that tbe plaintiffs bad by their laches and delay waived their right to have said sale vacated and set aside, and also waived any lien in their favor on the property described in the complaint. This finding was excepted to. It is clear that said finding was not based upon any defense set up in the answer. If the respondent wished to aváil herself of this defense, she should- have pleaded it in her answer, so as to inform the appellants of the nature of her defense and give them an opportunity to meet it. The finding made was merely a legal conclusion, 2 not within the issues raised by the answer, and was therefore nugatory, and can not be considered as supporting the judgment. Seymour v. McKinstry, 106 N. Y. 230, 12 N. E. 348, 14 N. E. 94; Phinney v. Insurance Co. (C. C.), 67 Fed. 493; Maynard v. Insurance Ass’n, 14 Utah 458, 47 Pac. 1030; Weaver v. Barden, 49 N. Y. 286; Reed v. Insurance Co., 21 Utah 295, 61 Pac. 21; Muldoon v. Brown, 21 Utah 121, 59 Pac. 720; Hamilton v. Dooly, 15 Utah 280, 49 Pac. 769. By the terms of the decree it was adjudged that the proceeds of the sale of the property should be applied — Third, to the payment of the attorney’s fees allowed at $150; fourth, to the fpayment of the judgment, etc. After the decree was obtained, and before the sale, Mr. Badger, the attorney in Ohio, wrote the appellants to bid in the property in the name of Floy F. Hicks who resided in Ohio with her mother, Joanna W. Hicks, and take possession of the property in her name, and rent the same, and that he would send them a draft for their attorney’s fees, and that whoever had charge of the property should report to him in regard to the rent. It also appears from the deposition of Floy F. Hicks that she received the rents therefor from her agent. The attorney’s fees awarded by the decree have not been paid, and the requirements of the decree have not been complied with. ’ Through the agency of Mr. Badger, who evidently was acting for both respondents, the land was bid in for Eloy E. Backs. Badger had actual notice, and the respondents are chargeable with notice, of the provisions of the decree that $150 attorney’s fees, at least, were by its terms to be paid to the attorneys managing the foreclosure. Through this same agency, the title was bid in to Eloy on a promise to pay the fees. Several months passed in which negotiations were pending for a settlement. Such negotiations were prolonged largely on account of the absence of the respondents in Europe, so that a final refusal to pay was not made until within a reasonable time prior to the commencement of this suit. Being chargeable with notice of the terms of the decree, which she purchased from her mother, in consideration of which she had promised to have the title taken in her name, and by claiming title and receiving rents thereof, Eloy E. Hicks necessarily ratified all acts necessary to procure it, and can not now claim the benefits derived from it and at the same time repudiate the burdens attached to it, of which she or her attorney had notice. Under the circumstances, to allow Eloy E. Hicks, in the manner stated, to deprive the appellants of the compensation decreed to them, .would be ungrateful and unjust to them. The transaction, as shown in the record, strongly tends to show that the respondents attempted, by fraudulent means to deprive the appellants of their rights under the decree by having the property struck off to Eloy.

2. It is true, as held in McClure v. Little, 15 Utah 379, 49 Pac. 298, 62 Am. St. Rep. 938, that attorney’s fees, when allowed, go to the mortgagee and become a part of the judgment; but this is not true in the sense that the mortgagee or purchaser of a decree of foreclosure, allowing attorney’s fees, may hold such fees for his own and cheat the attorney to whom they should be paid. While the fees form part of 3 the judgment, and go to the mortgagee, yet, if the fees have not been paid to the attorney, they go to the mortgagee in trust for tbe attorney. They are allowed to indemnify the mortgagee against expense which he has or may incur through a default in the payment of the obligation; but he has no other interest in them, unless he has actually paid them to the attorney, than as for such indemnity. As held in Gray v. Denhalter, 17 Utah 312, 53 Pac. 976: “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 can not 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: Tt 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 lien. . . . It is still true that the attorney is to be regarded as the equitable as-signee of the judgment to the extent of his claim for services in the action.’ ” Railroad Co. v. Wilson, 138 U. S. 501, 11 Sup. Ct. 405, 34 L. Ed. 1023. The purchase of the decree by Eloy before sale was, as we have seen, with notice of the appellants’ claim and lien. The decree was of record, and the attorney, acting for her and directing the sale in accordance with the agreement made by the respondents, knew of its terms. When she bought it she purchased with notice that appellants owned a '$150 interest in it, and when she took title she took it with notice that the lien continued upon the land until the amount was paid. Especially is this true when, as in this case, the sale to her was probably brought about through the connivance or fraud of herself, or those acting with her in procuring it. In any event, Eloy was the willing recipient of proceeds obtained through the wrongful connivance of others to defraud the attorneys out of their legitimate fees as decreed by the court. It also appears that only $800 was paid for the decree or claim, whereas Eloy bid $1,250 for the land. The difference between these sums was never actually paid, although credited upon the judgment by direction of the respondents or their attorney. Under the circumstances disclosed, a court of equity has inherent power to enforce its judgments and decrees, and can make any order to carry such decrees into effect, when, as in this case, no innocent parties suffer, and may set aside a sale altogether, or make any other sale or 4 order necessary for the enforcement of its decrees, and do justice in the premises. The lien of the appellants, through the decree, attached to the land, which should, in justice, be held to satisfy it.

The findings and decree of the district court are set aside and annulled, with directions to enter findings and decree in favor of the appellants, in accordance with this opinion, and directing that they have a lien amounting to $125 and interest thereon, upon the said real estate, prior to any lien or claim of the respondents or either of them, and that execution issue for the sale of said property to satisfy such lien, with costs. Appellants are entitled to costs.

BARTCH. I., concurs. BASKIN. J., concurs in result.