
    Frank D. Heyward and Georgie Anna MacDonald, Respondents, v. Reuben L. Maynard, Appellant.
    Second Department,
    April 26, 1907.
    Attorney and client—when attorney acquires lien on trust, property by agreement of beneficiaries — converC'on— attorney may assert lien as counterclaim. .
    An 'attorney at law who obtains hi's clients’property by fraud acquires no lien thereon. .
    When the beneficiaries of trust property agree that the securities, shall be with- ■ drawn from the trustee and .placed.with another trustee, and that an attorney 'shall deduct the amount of his bill from the trust, securities of which he is. given possession, the possession so acquired by' the attorney is not fraudulént, and the securities are; subject to a lien in his favor. The lien once acquired by lawful possession'cannot be destroyed by subsequent protests by the clients'.
    Even though the services were not all rendered to the beneficiaries jointly, an '
    - -agreement by the beneficiaries that the attorney take lps pay out of the securities before creating, a new trust is binding upon them.
    In an action against- an attorney for converting securities) he may assert a lien "thefebn for services whether the lien be legal or equitable. •
    ... ReaRghment- of. an appeal by the defendant, Reuben L. Maynard, from a judgment; of-.the. Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Westchester on the 2d day of March, 1905, upon the report of a referee, .
    
      Frank S. Black, for the appellant.
    
      John B. Hill, for the respondents.
   Hirschberg, P. J.:

This appeal has been reargued by order of the court, only four members sitting on the original argument and being then divided in opinion on some of the questions presented. (See 115 App. Div. 910).

The action is brought to recover possession of certain securities which, it is alleged, the defendant, an attorney and counselor of the Supreme Court of this State, acquired by force and fraud. The answer, besides denying the charge of force and fraud, asserts alien upon the securities for professional services rendered to the plaintiffs, together with a counterclaim for the valué of such services. The referee has found that the possession of the- securities was obtained by the defendant by fraudulent means, and that he never became entitled to any lien thereon, or to any "compensation for services in connection with them, and the judgment appealed from, bas.ed upon the report, requires the immediate delivery of the, securities to the plaintiff, Georgie Anna MacDonald, the beneficiary of the trust, and dismisses the counterclaim.- '

There is no - evidence whatever tending to establish any fraudulent conduct on the part of the defendant. On the contrary* aside •from the mere assertion of a lien on his part and the taking possession of the securities ,in question, his conduct throughout all the transactions disclosed in the record has been that of an honorable, upright and zealous attorney. As he could not acquire a lien by fraud, the finding of fraud by the refer.ee". necessarily vitiates' his finding that there was no lien, and on this ground alone the judgment must be reversed. •

In view of the fact that a new trial will be necessary, it is deemed desirable that a brief statement should.be made of' the facts in the case and the view entertained by the court of the proper conclusion to which they lead. ' The plaintiff Frank D. Heyward, in the month of July, 1899, executed a trust to the Fifth Avenue Trust Company of New York, as trustee, in a number of securities, the income of which, to the extent of $3,500, was to be paid to the plaintiff, Ms mother,. Georgie Anna MacDonald, annually during her .life, and the remainder of the income to him. • From'the time of the execution of this trust down to the time- when the defendant ■ -' acquired possession of the securities as complained of, the defendant, as- attorney, on the written consent of both plaintiffs, withdrew'" a large amount of the trust property, which was turned over to and used for the benefit of Heyward: This was in accordance with a provision of the trust deed, to the effect that Upon .such written consent all or any part of the principal of the trust fund might, be. . withdrawn from the trust and turned over to him. It - is' unnecessary to refer to these transactions in detail. It is sufficient to say that they were Occasioned by the pecuniary necessities of Heyward, and that in consequence of then! the trust fund was /being rapidly-depleted. In the latter part of the year 1903 it became necessáiy to make a further withdrawal in order to- meet Heyward’s financial • needs. Prior to-that time, however, the parties had been notified by ■ the Fifth. Aventie'Trust Company that' in case any móre withdrawals should be'made, the entire trust fund remaining should be taken away and the trtist canceled; and it was agreed between the plaintiffs .and the defendant that the latter should prepare- papers for a . new trust, naming the United States Trust Company -as trustee, the new trust fund to consist of the securities which should remain after . the then pressing needs of the plaintiff Heyward had been met and • ■ after the defendant’s bill for "services against both the: plaintiffs had been paid out of such securities'. '

The parties met at the office of the Fifth Avenue Trust.Company in December, Í903, and the securities then remaining were produced and delivered. They were laid upon a table, and were taken by the defendant into his possession. There is practically no dis-whatever about the fact that .the parties met in order that the defendant should then and there receive the securities and take them inte his possession,, that he should realize from them the amount which- it was necessary the plaintiff Heyward should then . have, and the amount which was necessary to pay the defendant’s bill against both the plaintiffs, and that he should draw up .and have executed the necessary deed to create a trust with the, United-States Trust Company as to the remainder of the securities under terms similar to the trust then about to be canceled. The most explicit evidence that his bill was to be first paid was given, by the plaintiff, the beneficiary, Mrs. MacDonald. She said: “ The arrangement that Mr. Maynard had with me was that a new trust should be created and that the securities should be put in the United States Trust Company under a new deed of trust, after he 'took out the amount of the hill, though.” The evidence justified the conclusion that the defendant, who had worked for both plaintiffs in connection with thisi trust and other matters for a number of years without being paid, seeing that the fund was being rapidly depleted,.insisted on being paid before the new trust was created, and that the parties, ' agreed that' he should be so paid in the manner already stated. It is . true that after he had taken possession of the'securities the plaintiffs ■ protested, and at their request he gave a receipt for them. If, however, his possession of the securities -was contemplated by the parties when they met at the office of the Fifth Avenue Trust Company, he certainly obtained a legal lien by virtue of their possession which could not be destroyed by any subsequent repentance on the part of the plaintiffs; and in any event, independently of his possession of the securities or his right to the possession of them, the transaction and agreement gave to him an equitable lien upon them which he is. entitled to assert and enforce in this action. I do not think the fact that his bill is not all for services rendered jointly to the plaintiffs is material. It was stated on the argument that a part of the bill was for services rendered to the plaintiffs separately and part for services rendered to them jointly. Assuming this to be the fact, .they were still at liberty to .agree that he might take his pay out of the securities before creating the new trust. On the commencement- of the action the defendant brought the securities info court and deposited them subject to the suit, and I see no reason why his counterclaim for the actual value of the services rendered is not good as against the plaintiffs’ claim for the possession of the securities, whether his lien be a legal one or only equitable in its nature.

The judgment should be'reversed.

Woodward, Jenks, Hooker and Miller, JJ., concurred.

Judgment revei’sed and new trial granted, costs to abide the event.  