Niedermeyer, Inc. v. Fehl

IN BANC. Interpleader suit by Niedermeyer, Incorporated, against Earl H. Fehl and Electa A. Fehl, husband and wife, Corinthia E. Stailey, E.E. Kelly and E.C. Kelly, copartners doing business under the firm name and style of Kelly Kelly, Eagle Point Irrigation District, and others. From the decree, defendants Earl H. Fehl, Electa A. Fehl, and Corinthia E. Stailey appeal, and Niedermeyer, Incorporated, cross-appeals.

MODIFIED. REHEARING DENIED. This suit was instituted as an interpleader suit to determine the ownership of a sum of money, $6,473.01, with interest, in the hands of plaintiff Niedermeyer, Inc., due and owing from plaintiff to Earl H. Fehl, or persons claiming through him.

On March 16, 1932, plaintiff Niedermeyer, Inc., an Oregon corporation, filed a suit in the circuit court for Jackson county, Oregon, against Earl H. Fehl and Electa A. Fehl, husband and wife, and others, for the purpose of foreclosing a mortgage on certain real property belonging to the defendants Fehl, situated on West Sixth street, Medford, Oregon. The mortgage secured a promissory note in the sum of $3,500, dated April 1, 1926, payable on or before two years after date, bearing interest at the rate of 7 per cent per annum. The defendants Earl H. Fehl and Electa A. Fehl filed an answer in the suit for the foreclosure of the real estate mortgage in which they set up several counterclaims totaling in excess of $20,000, and contended that the said note and mortgage had been fully paid by said claims for work, labor and services performed by Mr. Fehl for Louis Niedermeyer prior to the assignment of said note and mortgage by him to plaintiff, Niedermeyer Inc. The case was tried before the Honorable E.C. Latourette, circuit judge, who decided said suit in favor of the plaintiff Niedermeyer, Inc., and entered a decree providing for the foreclosure of the real estate mortgage. The judgment and decree foreclosing the real estate mortgage was entered on November 29, 1932, and awarded the plaintiff Niedermeyer, Inc., a judgment in the sum of $3,500, together with interest thereon at the rate of 7 per cent per annum from April 1, 1927, $350 attorney's fees, and its costs and disbursements. Shortly after the entry of said judgment, plaintiff caused an execution to be issued and based upon such execution the premises covered by such mortgage were sold by the sheriff of Jackson county on January 7, 1933, to J.B. Thomas and Nora L. Thomas and Ted Heimroth, for the sum of $5,372.43, of which amount $5,371.43 was paid over to the plaintiff Niedermeyer, Inc., by the sheriff, being the full amount due plaintiff on the date of such sale.

J.B. Thomas and Nora L. Thomas and Ted Heimroth purchased the property at execution sale pursuant to agreement entered into with Mrs. Fehl, by the terms of which Mr. and Mrs. Thomas furnished $3,900, Ted Heimroth furnished $1,400, and Mrs. Fehl furnished $72.43. The amounts advanced by the Thomases and Heimroth were considered as loans to Mrs. Fehl, and it was agreed that the certificate of sale should be issued to Mr. and Mrs. Thomas and Mr. Heimroth and held in escrow by A.C. Walker, county treasurer, as security for the repayment of the money loaned to Mrs. Fehl.

January 24, 1933, a notice of appeal was filed by defendants Earl H. Fehl and Electa A. Fehl; thereafter an undertaking on appeal was filed for costs but no supersedeas undertaking or stay bond was ever filed. The supreme court rendered its opinion (Niedermeyer v. Fehl, 148 Or. 16 (33 P.2d 960,35 P.2d 477,)) and thereafter rendered and entered its mandate reversing the judgment and decree of the lower court, and holding, in effect, that the real estate mortgage had been fully paid and satisfied by the defendants Fehl prior to the institution of the suit and foreclosure thereof by the plaintiff. On behalf of defendants Earl H. Fehl and Electa A. Fehl, the defendant E.E. Kelly, a member of the firm of Kelly and Kelly, and one of the attorneys who had represented the defendants Fehl in the circuit court and also on appeal, filed a motion in the supreme court requesting the supreme court to recall its mandate and enter a corrected mandate ordering the plaintiff, Niedermeyer, Inc., to make specific restitution to the defendants Fehl of the sum of $5,371.43, the amount received by plaintiff from the sale of the property involved. The supreme court refused to recall its mandate in Niedermeyer v. Fehl, supra, and directed that such restitution as was proper under the facts should be ordered by the circuit court.

On July 14, 1934, Messrs. Kelly and Kelly, attorneys at law, who represented the Fehls in both the circuit court and upon the appeal to the supreme court, served upon Niedermeyer, Inc., a notice of attorneys' lien wherein they claimed a lien in the sum of $2,000, for services rendered by them, upon moneys or property in the hands of the plaintiff belonging to the Fehls as a result of the reversal of the foreclosure decree.

On June 6, 1934, the defendant T.J. Enright, who had represented the Fehls in the trial of the case in the circuit court, served upon plaintiff a notice of attorney's lien, wherein he claimed a lien upon any money due defendants by plaintiff in the sum of $500 for services rendered by him to defendants Fehl in the circuit court.

On September 29, 1934, defendants Fehl and Corinthia E. Stailey wrote a letter to George M. Roberts, the attorney representing Niedermeyer, Inc., advising him that they were no longer represented by either Mr. Kelly or Mr. Enright and that the action of Mr. Kelly in attempting to have the supreme court order a restitution of the proceeds of the sale was entirely unauthorized, and in said letter defendants made a demand for the payment of the proceeds of the sale to them. On the same day a letter was written to defendant E.E. Kelly by defendants Fehl directing him to take no further legal action for the purpose of securing restitution of the property or the proceeds of the sale, and a copy of the letter was forwarded to Mr. Roberts, as attorney for plaintiff. Likewise on the same day a letter was written by defendant Fehl to Mr. Arthur S. Benson, clerk of the supreme court, requesting him to enter of record their objections to any motion or attempt to modify or recall the mandate of the supreme court, and a copy of this letter was likewise forwarded to Mr. Roberts.

J.B. Thomas and Nora L. Thomas plead and assert a claim against the plaintiff by virtue of a writ of attachment issued out of the circuit court for Jackson county in an action wherein J.B. Thomas and Nora L. Thomas were plaintiffs and Earl H. Fehl and Electa A. Fehl were defendants, by which writ of attachment the said Thomases attempted to attach and garnish any money which might be due and owing from plaintiff to the Fehls, as a result of the decision of the supreme court. The validity of this attachment was denied by the defendants Fehl.

Defendant Corinthia E. Stailey pleaded and contended that she had acquired title to the property which was the subject matter of the foreclosure suit and asserted that her title to the property was superior to any lien or interest held by the defendants Thomas and Heimroth.

Defendants Fehl asserted that the plaintiff Niedermeyer, Inc., should pay to them the amount received from the sale of the property.

Plaintiff Niedermeyer, Inc., pleaded that the property had been sold at foreclosure sale to J.B. Thomas, Nora L. Thomas and Ted Heimroth, prior to the filing of the notice of appeal, and that various conflicting claims were being asserted against the plaintiff as a result of the reversal of the decree of the circuit court, and alleged that attorneys' liens had been filed by defendants Kelly and Kelly and J.T. Enright, the validity of which liens was disputed by defendants Fehl; that J.B. Thomas, Nora L. Thomas and Ted Heimroth were asserting a right to the proceeds of the sale received by Niedermeyer, Inc.; that Corinthia E. Stailey claimed to have title to the property sold at the foreclosure sale superior to any interest of the said J.B. Thomas, Nora L. Thomas and Ted Heimroth; that Jackson county, Oregon, claimed a lien on the proceeds of the sale by virtue of a judgment for costs in the case of State of Oregon v. Earl H.Fehl, and that defendants Earl H. Fehl and Electa A. Fehl were demanding both a return of the property, free from the lien of the mortgage, and were also demanding from Niedermeyer, Inc., the proceeds from the sale of the property, together with interest thereon.

Plaintiff petitioned the circuit court to enter an order citing all of the claimants named to appear in said proceeding, so that the rights of all of said parties might be fully determined and adjudicated, and that the court order Niedermeyer, Inc., to make such restitution as might be proper. Judge Latourette suggested that Niedermeyer, Inc., pay the proceeds of the sale to the clerk of the circuit court. Plaintiff Niedermeyer, Inc., believing that it was not safe to pay the money to the clerk without a judgment of a competent court having jurisdiction of the various claimants, instituted the instant suit and made all of the various claimants parties defendant, so that the rights to the fund might be determined.

The circuit court decreed that the plaintiff forthwith pay to the clerk of that court the sum of $6,473.01; that out of such funds so deposited in court there should be paid by the clerk the following amounts to the following persons in the following order of priority, to wit: (1) The amount of plaintiff's costs and disbursements herein to be taxed; (2) the sum of $2,000 to defendants and cross-complainants, Kelly and Kelly, together with their costs and disbursements herein to be taxed; (3) the amount of the judgment of Jackson county, Oregon, based upon said conviction of defendant Earl H. Fehl for costs in the sum of $3,962.35, and its costs and disbursements herein, and if there be not a sufficient amount to pay the same, said judgment for costs to be satisfied to the extent only of said balance remaining in the hands of said clerk for disbursement; (4) the balance, if any there be out of said fund, shall be paid to defendants Earl H. Fehl and Electa A. Fehl, but that they are not entitled to their costs and disbursements herein. It was further decreed that none of said other defendants were entitled to any sum or amounts out of said fund to be deposited in court by the plaintiff, or to any costs and disbursements herein.

Defendants Earl H. Fehl and Electa A. Fehl and Corinthia E. Stailey appealed from the decree. Plaintiff Niedermeyer, Inc., filed a cross-appeal. The plaintiff Niedermeyer, Inc., was in the possession of a fund, which, according to the opinions of the supreme court, it was its duty to return to the parties entitled thereto. To this fund numerous conflicting claims were being asserted, and it was impossible for plaintiff to determine with safety to whom this money should be paid. The plaintiff was clearly entitled to institute this interpleader suit: 33 C.J. 424 to 446; 15 R.C.L. 222, et seq.; Pope v. Ames, 20 Or. 199 (25 P. 393); North Pac.Lbr. Co. v. Lang, 28 Or. 246 (42 P. 799, 52 Am. St. Rep. 780);McFadden v. Swinerton, 36 Or. 336 (59 P. 816, 62 P. 12); NewAmsterdam Casualty Co. v. Hyde, 148 Or. 229 (34 P.2d 930,35 P.2d 980).

It is first contended by defendants Fehl that a bill of interpleader does not lie. It is stated in 33 C.J. 427, as follows:

"Where two or more persons severally claim under different titles, derived from a common source, the same debt or thing from another who, not claiming any title or interest therein himself, and not under independent liability to either of the claimants, and not knowing to which of the claimants he ought of right to render the debt or duty claimed, or to deliver the property in his custody, is either molested by an action or actions brought against him or fears that he may suffer injury from the conflicting claims of the parties, such debtor or person in possession is entitled to the remedy of interpleader."

Plaintiff claims, and is entitled in equity to, reasonable attorneys' fees in this suit. The complaint filed by plaintiff is good either as a pure bill of interpleader or it is certainly good in the nature of a bill of interpleader and shows an equity entitling the plaintiff to relief. Plaintiff claims no interest in the fund involved. It appears that it is now and has been, since it offered to tender the money into court, willing at all times to pay the fund involved to whomever it rightfully belonged, as soon as the plaintiff could safely do so. Its acts in regard to the repayment of the funds, which were received upon the erroneous sale of the real estate, have been at all times free and above board. It is not, on the part of Niedermeyer, Inc., like a contested suit, but the filing of the complaint and presenting a portion of the record necessarily devolved upon plaintiff, as well as taking the cross-appeal, filing brief and presenting the case to this court.

The testimony shows that the sum of $500 is reasonable as attorneys' fees. We fix the attorneys' fees for plaintiff at $500, which should first be paid, together with plaintiff's costs and disbursements, from the fund in question: Thos. Kay WoolenMill Co. v. Sprague, 259 F. 338; North Pac. Lbr. Co. v. Lang, supra; Baker L. T. Co. v. Portland Cattle Loan Co., 141 Or. 524 (6 P.2d 36, 18 P.2d 599); First Nat. Bank v. Reynolds (127 Me. 340 (143 A. 266, 60 A.L.R. 712).

Plaintiff claims that it should not be required to pay interest upon the fund after the date of the filing of this suit. John Niedermeyer, secretary and manager of plaintiff corporation, testified that at all times since the institution of this suit the plaintiff was ready, able and willing to pay whatever amount the court determined to whoever was entitled thereto. His testimony was not contradicted. See 15 R.C.L. 34, § 31; 26 R.C.L. 625, § 4. It was not the fault of Niedermeyer, Inc., which caused delay in the determination of the matter as to who should receive the money, and it is only equitable that plaintiff should not be required to pay interest during the pendency of this suit.

CLAIM OF KELLY AND KELLY The respondents Kelly and Kelly performed various legal services for the appellant Fehl. At the time the decree in the lower court was entered, Fehl was practically a bankrupt and without funds. Roy M. Parr obtained a judgment for $15,000 against Fehl in a libel suit, and this judgment creditor had attached all of Fehl's salary warrants as county judge. Whatever income he had coming by way of rentals had been assigned to his mother-in-law, Corinthia E. Stailey, one of the appellants. He was unable to procure a supersedeas bond and filed a cost bond only upon the appeal. Prior to the service of notice of appeal the building in question was sold under execution upon a judgment of foreclosure of Niedermeyer, Inc. Fehl at that time, by reason of his financial condition, was unable to procure a transcript of the testimony in the lower court. His various letters filed in this case indicate his financial condition and his promises to pay respondents Kelly and Kelly for their services on the appeal, and he acknowledged that the amount claimed was reasonable.

Section 32-303, Oregon Code 1930, provides:

"An attorney has a lien for his compensation, whether specially agreed upon or implied, as provided in this section, —

* * * * * Upon a judgment or decree to the extent of the costs included therein, or if there be a special agreement to the extent of the compensation specially agreed on, from the giving notice thereof to the party against whom the judgment or decree is given, and filing the original with the clerk where such judgment or decree is entered and docketed." See Scott v.Kirtley, 113 Fla. 637 (152 So. 721, 93 A.L.R. 661).

In Stoddard v. Lord, 36 Or. 412 (59 P. 710), it was held that an attorney's lien served and filed upon an action at law attaches to a decree in supplemental proceedings without notice being served and filed in connection with such decree.

The question to be determined is, was the fund recovered by the labor and skill of the attorneys Kelly and Kelly? The form or condition of the decree or judgment is not material. This is a suit in equity, and equity will consider that done which ought to have been done, and will consider the fund in question the same as though the mandate of this court had been regularly entered and the decree carried out by a regular entry of a proper judgment and decree in the circuit court.

At the time the foreclosure decree was rendered in the circuit court and defendant Fehl solicited Kelly and Kelly to appeal the case, he became responsible to them for their labor and skill. The money which had been paid to Niedermeyer, Inc., under the decree of foreclosure was recovered back upon the appeal. The decision was to the effect that the defendant Fehl was entitled to restitution. There is no dispute but that Niedermeyer, Inc., should restore the funds in question to the Fehls, or those claiming through them.

We read in Weeks on Attorneys at Law (2d Ed.) 746, § 370, as follows:

"Under the common law in England, an attorney or solicitor is entitled to recover his taxable costs from a fund recovered by his aid, both in legal and equitable proceedings. The lien attaches on the fruits of a judgment or decree. It attaches to the money payable to the client thereunder, or by virtue of an award, and to money paid or payable into court in the course of an action or suit, or in any other way, if the proceeds of the labor and skill of an attorney. The lien has been held to attach on sums received or payable by way of compromise, to the client in a cause, even where the verdict and judgment are against him; for the money is regarded as the fruit of the attorney's labor and skill, especially if he has taken up the cause of a poor person.

"In the United States, the doctrine of the ``charging lien' of the attorney appears to have been pushed in some courts quite as far as in England. The United States Supreme Court has decided that an attorney employed to prosecute a claim before a commission for a contingent fee of five per cent. had a lien for this amount on the fund recovered, and such a one as the court would enforce by a bill in equity.

"In several State courts, the lien has been held to cover, not merely costs and advances, but fees. In some States, the lien is regulated by statute. In others, the lien is totally denied; but the lawyer has a right to deduct from funds in his hands."

An attorney has a lien upon a sum awarded in favor of his client, as well as if recovered by judgment. Weeks on Attorneys at Law, (2d Ed.) § 384.

CLAIM OF JACKSON COUNTY The judgment in favor of Jackson county against Earl H. Fehl for costs in the criminal action was duly filed in the circuit court prior to the time the interpleader was at issue. The county filed its answer and cross-complaint claiming a lien for the costs.

In all cases of commission or attempt to commit a felony, the state has a lien, from the time of such commission or attempt, upon all the property of defendant, both real and personal, for the purpose of satisfying any judgment which may be given against him for any fine on account thereof, and for the costs and disbursements in the proceedings against him for such crime: § 14-1019, Oregon Code 1930; Knott v. Shaw, 5 Or. 482; State v.Munds, 7 Or. 80.

The county is entitled to enforce the lien on the personal property, namely, the fund involved, against the defendant Fehl, for its judgment for its costs in the criminal action, and the judgment and decree of the circuit court in regard thereto is affirmed, except as herein stated.

CLAIM OF MRS. ELECTA A. FEHL In her answer Mrs. Electa A. Fehl made no personal claim to the funds in question, but now for the first time comes into court claiming an interest in the judgment against Niedermeyer, Inc. A defense which is personal and single as to each defendant should be pleaded specially and not jointly: 49 C.J. 208, §§ 240 to 243. It is true that Mrs. Fehl was a party to the original foreclosure suit of Niedermeyer, Inc. The record shows that the mortgaged property was deeded to Earl H. Fehl and not to Fehl and wife jointly, so that Mrs. Fehl's interest in the property could have been only a dower interest which Mrs. Fehl barred by joining in the mortgage conveyance which was foreclosed. The fund in question originated in the mortgage transaction, the mortgage being executed by Earl H. Fehl and Electa A. Fehl, his wife, which was held and foreclosed by Niedermeyer, Inc., and embraced the real estate which was owned by Fehl. The mortgage was foreclosed and a decree regularly rendered by the circuit court and the real estate embraced therein was sold upon execution to the Thomases and Heimroth. A sheriff's certificate of sale was issued to them and in due time a sheriff's deed of the real estate was executed and delivered to them. They took possession and improved and rented the real estate. We mention the real estate not for the purpose of passing on the title but only as bearing upon the fund in question. Upon appeal to this court the decree of foreclosure was reversed. Therefore, it was necessary for Niedermeyer, Inc., to make restitution of the proceeds of the real estate which it had received and the question herein is to whom should the money be paid. The proceeds of the sale are in the same condition, as we view it, as though Earl H. Fehl had sold and conveyed the real estate, his wife joining in the deed, and the proceeds of the sale had been placed in the hands of Niedermeyer, Inc. Mrs. Fehl, having relinquished her right of dower in the real estate, is not entitled to any dower right. The fund is subject to any valid lien against Earl H. Fehl. The Thomases and Heimroth now hold a deed to the real estate, claiming the same under the rule which is stated in 23 C.J. 771, § 822, as follows:

"The title of a bona fide purchaser who is a stranger to the suit, and who purchases before an appeal is taken and before the judgment is superseded or suspended by giving a bond, is not impaired by the subsequent reversal of the judgment on appeal or its being set aside by the trial court on grounds which do not render the judgment absolutely void, * * *."

The restitution to be made by Niedermeyer, Inc., should be made to Earl H. Fehl or those claiming through him, except, in addition to the money borrowed from Thomases and Heimroth on the claim of the real estate sold on execution, Mrs. Fehl furnished $72.43 of her own money, which, in equity, should be paid to Mrs. Fehl together with interest thereon from January 7, 1933, to November 16, 1934, amounting to $8.06, although the briefs of appellants mention the money paid to Niedermeyer, Inc., as all having been furnished by the Thomases and Heimroth. Mrs. Fehl is not entitled to any other portion of the fund in question, she having relinquished her right of dower by joining in the mortgage.

CLAIM OF DEFENDANT CORINTHIA E. STAILEY Defendant Corinthia E. Stailey sets up a claim by virtue of the sale upon execution issued on the Parr judgment of some of the Fehl real estate. That matter is not involved in this suit and the court correctly determined that she was not entitled to any portion of the fund in question.

Defendants J.B. Thomas, Nora L. Thomas and J.T. Enright took no appeal. While they filed briefs making claims, they are presumed to be satisfied with the decree of the lower court; hence their claims need no further consideration.

There is considerable said in the briefs in regard to different conveyances of the Fehl real estate, but the title to the real estate is not involved in this case, and these matters need no consideration.

Respondents Kelly and Kelly ask for 10 per cent damages on account of this appeal. The suit is very complicated and we are not able to say that the appeal was wrongfully taken so as to award such damages.

The decree of the lower court will be modified so as to be as follows: Plaintiff Niedermeyer, Inc., shall pay to the clerk of the circuit court the sum of $5,970.29, and shall thereby be relieved and discharged from any liability arising out of said suit on foreclosure, and by reason of any decrees rendered in said suit for foreclosure or any sales of any property made upon execution issued upon such decrees by reason of the reversal of the decree of the lower court in said foreclosure suit; that out of said fund so deposited in said court there shall be paid by said clerk the following sums and amounts to the following persons and in the following order of priority, to wit: (1) The amount of plaintiff's attorneys' fees, $500, and costs and disbursements; (2) The sum of $2,000 to defendants and respondents Kelly and Kelly, together with their costs and disbursements herein; (3) To Mrs. Electa A. Fehl the sum of $80.49. This change in the decree being so small, it will not entitle Mrs. Fehl to costs or disbursements; (4) The amount of the judgment of Jackson county, Oregon, based upon said conviction of said defendant Earl H. Fehl for costs in the sum of $3,962.35 and its costs and disbursements herein, to the extent of said balance remaining in the hands of the said clerk for disbursement. No costs or disbursements shall be awarded to any of the parties except as above specified.

RAND and BAILEY, JJ., not sitting.