
    Moses Wolfe, Appellant, v. James F. Mack, Respondent.
    (Supreme Court, Appellate Term, First Department,
    June, 1913.)
    Attorneys — attorney , and client — money belonging to client — compelled by summary proceedings to pay over.
    Accord and satisfaction — receipt given on payment of retainer —■ acceptance and demand — action to recover balance.
    The relation between attorney and client, in regard to money collected, is that of principal and agent, not that of debtor and creditor; the money belongs to the client and the attorney may be compelled by summary proceedings to pay it over.
    Where a receipt given to plaintiff, on paying a retainer to defendant to bring an action on a claim under a policy of insurance, stated that it was understood that defendant should have in addition to the sum paid twenty per cent, of any recovery in the case, which resulted in plaintiff’s favor, and defendant, claiming that it was the understanding of the parties that such percentage was to be for any adjustment of the claim or collection thereof without action, sends to plaintiff a check for the amount recovered less thirty-three and one-third per cent, upon which was written “ in full settlement ” and plaintiff, retaining the check, immediately wrote to defendant that he would not accept it in full settlement and demanded the balance which defendant refused to pay, a judgment in defendant’s favor in an action to recover said balance, given on the ground that plaintiff’s acceptance of the check operated as an accord and satisfaction, will be reversed and a new trial granted.
    Guy, J., dissented.
    
      Appeal from a judgment of the Municipal Court of the city of New York, borough of Manhattan, fifth district, in. favor of defendant entered upon a trial by the court without a jury.
    Williams & Thomas, for appellant.
    J ames F. Mack, respondent in person.
   Page, J.

This action is brought by a client ag’ainst his attorney to recover a balance of money had and received. The plaintiff had a claim against the Jewellers’ Safety Fund Society under a policy of insurance that he had unsuccessfully attempted to adjust. He retained the defendant, an action was brought and a recovery had in plaintiff’s favor. A dispute then arose as to the amount of defendant’s compensation, the plaintiff claiming that defendant had agreed to accept twenty per cent, of the recovery for his services and the defendant claiming to be entitled to thirty-three and one-third per cent, thereof. The defendant sent plaintiff a check for $1,025.35 upon which was written "Wolfe vs. Jewellers S. F. S. in full settlement. ’ ’ The letter accompanying the check stated ‘ ‘ In accordance with our agreement of last' evening I enclose my certified check for $1,025.35 in full settlement. Kindly sign the enclosed receipt in full as agreed.” The plaintiff retained the check but immediately wrote to the defendant that he would not accept it in full settlement and demanded the balance. Defendant thereupon wrote to the plaintiff You can not keep that check in view of the statement * * * that it was in full settlement in both letter and check, and claim a balance due you, because this is contrary to our agreement, contrary to the terms under which the check was sent and will be in accord and satisfaction.” Some three weeks later a letter wag written to defendant on behalf of plaintiff stating that he still had the check and declining to accept upon the terms stated in the letter. Defendant did not answer this letter and refused to pay the balance on demand. The plaintiff deposited the check and brought this action. Judgment has been given in favor of the defendant. At the time plaintiff retained defendant he paid him twenty-five dollars and received the following:

“ June 24th, 1911.
Eeceived of Mr. Wolfe $25- in the case of Wolfe vs. Jewellers’ Safety Fund Society, it being understood that I am to have in addition to said $25, 20% of any recovery in said case.
’’James F. Mack.”

The defendant claims that it was the understanding of the parties that this twénty per cent, was to be for any adjustment of the claim or collection thereof without action. If this were the fact he used very inept language to express the idea. The word “ recovery,” in law, means “ the restoration or vindication of a right existing in a person, by the formal judgment or decree of a competent court, at his instance and suit, or the obtaining by such judgment of some right or property which has been taken and withheld from him.” Black L. Diet. Therefore an attorney should not be allowed to urge that when he used the words “ recovery in said case ” he did not intend thereby that he should prosecute or even bring an action, but that he intended to only agree to collect by amicable negotiation without suit. The attorney claims that at about the time the complaint "was verified he told the plaintiff that he should claim a' reasonable fee, and again he testified that after he had collected the judgment he informed the client that he demanded one-third of the recovery as a fair and reasonable fee, and that after some discussion the plaintiff agreed to his making such deduction from the recovery. Both of these statements were flatly denied by the plaintiff, and if the learned trial justice had resolved these contested questions of fact in defendant’s favor and given judgment on that ground I would not be inclined to inter-' fere with his "decision. He has, however, expressly given judgment for the defendant upon the ground that “ The acceptance of the check, after notice to plaintiff by defendant in writing operated as an accord and satisfaction. ’ ’ With this conclusion I cannot agree. The relation between attorney and client with regard to money collected, is not that of debtor and creditor, but the fiduciary one of principal and agent. The money belongs absolutely to the client, and he can compel the attorney to pay it over by summary proceedings. If in such proceeding'the attorney asserts a lien his lien will be adjusted and he will be required to pay over the balance. But if he pays over the balance, over and above the amount which he claims for services, his lien on the ¿mount paid over is gone and only attaches to the amount held by him which is still subject to adjustment by the court either in a summary proceeding or in an action. This identical question has been, recently passed upon by the Appellate Division, fourth department, in General Fireproof Construction Co. v. Butterfield, 143 App. Div. 708. The court said: “ The money collected by the defendant belonged to the plaintiff. The defendant at most had a lien upon it for his services, and could retain what he was legally entitled to for such services. When the defendant sent the check for a part of the inoney, he limited his right to compensation to the amount retained by him and conceded that the amount sent belonged to the plaintiff. Under these circumstances the plaintiff was not bound to return its own money to defendant, under penalty of acknowledging defendant’s right to the balance retained. Plaintiff had a right to retain the money paid to it and to sue for and recover any portion of the balance to which it was entitled. It was not a case for the application of the rule of accord and satisfaction. It would not be quite fair for the defendant to say: I send you an amount which I concede is yours, but if you take it you must acknowledge you are not entitled to any part of the moneys I have retained. (Eames Vacuum Brake Co. v. Presser, 157 N. Y. 289, 291.)” The case of Dunn v. Whalen, 120 App. Div. 729, relied upon by the respondent is not an authority in support of the case at bar. In that case the attorney accepted a check in full settlement of his bill for services rendered. The liability of the client to the attorney for. services rendered is that of debtor and creditor, and of course if there is a dispute as to the value of the services and the client sends a check for a less amount than the attorney claims in full settlement thereof and he accepts and retains it an accord and satisfaction arises.

The judgment should be reversed and a new trial ordered, with costs to appellant to abide the event.

G-ebabd, J., concurs.

Guy, J. (dissenting).

I cannot concur either in the conclusion arrived at by my learned colleagues or in the reasons ■ advanced by them in support thereof. Their decision is predicated on the erroneous assumption that the relations between plaintiff and defendant herein were merely fiduciary, and not contractual. The evidence shows just the contrary. Both plaintiff and defendant testified to the making of an express contract whereby plaintiff employed defendant to col-loot a certain claim of insurance for plaintiff, and agreed to pay Mm either a contingent fee of twenty per cent, or a reasonable fee for his services. Plaintiff and defendant agree that a contract of this general character was made, though they differ as to the terms of the contract, plaintiff claiming that defendant was limited thereby to a twenty per cent, fee, and denying any subsequent modification of the contract, and defendant claiming that the twenty- per cent, provision was only applicable to collection without litigation, and that there was a subsequent modification of the agreement providing that he should receive in addition to the twenty per cent, a reasonable fee for his services in the event of litigation. The effort to collect without litigation failed; an action was brought, the case tried before a jury and judgment recovered in favor of plaintiff; the case was appealed and on appeal the judgment affirmed, and the amount of the judgment, $1,440.-53, collected by the defendant herein. A dispute then arose between client and attorney as to the proper amount of the attorney’s fees. Plaintiff and defendant had one or more conferences on the subject, and defendant testified that on May 15', 1912, plaintiff stated to him that if he, the defendant, would send him a certified check the following morning for two-thirds of the amount collected, retaining one-third of the amount collected as his fee, plaintiff would send him a receipt in full settlement of the matter. Plaintiff denies making such a statement, but the documentary evidence introduced supports defendant’s contention. On May 16, 1912, the morning following the alleged conference, defendant sent plaintiff a certified check, across the face of which was written “ Wolfe vs. Jewelers S. F. S. in full settlement,” accompanied by a letter worded as follows: “In accordance with our agreement of last evening, I enclose you my certified check for $1,025.35 in full settlement. Kindly sign the enclosed receipt in full as agreed.”

On the following day, the defendant received from plaintiff a letter stating that plaintiff would not accept the said check in full settlement, but only on account, whereupon defendant wrote plaintiff as follows: ‘1 My letter to you of the 15th inst., enclosing said check was in full settlement, and requested you to send a receipt in full as agreed. My said check also bore on its face that it was in full settlement of the above case. Ton cannot keep that check, in view of the statement in my letter and the statement that it was in full settlement in both letter and check, and claim a balance due you, because this is contrary to any agreement, contrary to-the terms under which the check was sent, and it will be in accord and satisfaction.” This letter was dated May 17,1912, and plaintiff returned no answer thereto until June 8, 1912, twenty-four days later, when a letter was written by plaintiff’s direction to defendant, stating: “ Mr. Wolfe still has this check and declines to accept it upon the terms stated in your letter. ’’ Defendant did not answer this letter or a subsequent letter written by plaintiff to him. In my opinion, no further answer could be required from defendant after his letter of May seventeenth.

While conceding that this state of facts would make out a complete accord and satisfaction as between ordinary debtors and creditors, my learned colleagues have concluded, on the authority of General Fireproof Construction Co. v. Butterfield, 143 App. Div. 708, that the principle of accord and satisfaction does not apply as between attorney and client where the attorney has collected money on behalf of the client; that where an attorney collects money for a client, the money belongs to the client, and the attorney is only entitled to retain what he claims for his services; that in sending a check to the client, he concedes that the amount sent belongs to the client, and, under such circumstances, the client is not bound to return.the money to the attorney under penalty of acknowledging the attorney’s right to the balance retained, but has a right to retain the money paid and sue for and recover any portion of the balance to which the client is entitled. In the case cited the learned Appellate Division bases its decision upon what I deem to be an utter misconception of the principle laid down in Eames Vacuum Brake Co. v. Prosser, 157 N. Y. 289-301. The ground of the decision in the latter case is that, in view of a rescission agreement entered into between plaintiff and defendant, there was no basis for defendant’s claim for commissions, and the court, referring to the decisions in Fuller v. Kemp, 138 N. Y. 231 and Nassoiy v. Tomlinson, 148 id. 326, says: “In those cases there were disputed claims, and the checks were deemed to have been offered in each instance as a settlement * * *. In the case under consideration we have no such tender of checks as a settlement between the parties. ’ ’

In the case at bar we have not only a tender óf the check in full settlement, as shown by the endorsement on the face of the check, and the contents of the letter accompanying it, but a subsequent reiteration by the defendant that, if used, the check must be accepted in full settlement of the controversy. The decision of the learned Appellate Division, fourth department, in General Fireproof Construction Co. v. Butterfield, supra, is furthermore in direct contravention of the rule laid down in every recent decision of our highest court of review and of the Appellate Division of the first department, which it is our duty to follow.

In Dunn v. Whalen, 120 App. Div. 729, the principle of accord and satisfaction is applied where the attorney has received and retained a check sent by the client in full settlement of the attorney’s claim. It is naively suggested in the majority opinion herein that this only furnishes authority for applying the principle of accord and satisfaction to the attorney, not for applying it to the client; but it is a novel and most unjust proposition that where parties have entered into contractual obligations, a universally recognized principle of law may be invoked by one of the contracting parties, but must be denied to the other. If the matter in dispute is properly the subject of accord and satisfaction, either party to the dispute is entitled to invoke that principle. I deem it equally fallacious to contend that defendant’s lien for services only applied to so much of the money collected as represented his fees. The rule is well established that, where an action at law has been begun, the attorney’s lien for services applies to the entire subject matter of the controversy and the proceeds thereof. Code Civ. Pro., § 66; Matter of Regan, 167 N. Y. 338-343. In this case the money collected after judgment was deposited in the attorney’s bank account; it did not belong, as suggested, to the plaintiff alone, but was the joint property of plaintiff and defendant in proportion to their respective interests therein. It was not separable or distinguishable, after deposit, from the other moneys in defendant’s account; but plaintiff was entitled to recover from the defendant, on an accounting between them, the amount so collected less the proper fee of the defendant as attorney. The amount of his claim was matter of dispute, which the trial judge, acting without a jury, may be assumed to have decided in favor of the defendant, even though in his opinion he states that the acceptance and retention of the check constituted in itself an accord and satisfaction. In the light of all the evidence in the case, the acceptance and retention of the cheek did establish an accord and satisfaction. To hold that the principle of accord and satisfaction cannot apply to the adjustment of a dispute of this character is to hold, in effect, that the principle does not exist; for in every conceivable case where the doctrine is sought to be applied the person paying the money admits that the person receiving it is entitled to at least that amount, and that the person making the payment is only entitled to what he retains. The principle underlying accord and satisfaction is not merely the admission of the person paying money that a certain amount belong’s to the recipient thereof, but also the implied admission of the person receiving the money, which arises from his retention thereof, where it is unequivocally tendered as in full settlement. The decisions of the Court of Appeals on this point are too numerous to leave room for doubt. When money is tendered in full settlement of a matter as to which there has been a genuine dispute: ‘1 The law permits of but two alternatives, either reject or accept in accordance with the condition.” Logan v. Davidson, 18 App. Div. 356, 357. See also Jackson v. Volkening, 81 App. Div. 36; affd., 178 N. Y. 562; Fuller v. Kemp, supra.

Where a debtor offers a certain sum of money in full satisfaction of an unliquidated demand, and the creditor accepts and retains the money, his claim is cancelled, and no protest, declaration or denial on his part, so long as the condition is insisted upon by the debtor, can vary the result.” Fuller v. Kemp, supra.

If a demand is unliquidated, the acceptance of a part and án agreement to cancel the entire debt furnishes a new consideration, found in the compromise, which will support an accord and satisfaction. A demand is not liquidated, even if it appears that something is due, unless it appears how much is due; and when it is admitted that one of two specific sums is du,e, but there is a genuine dispute as to which is the proper amount, the demand is regarded as unliquidated, within the meaning of that term as applied to the subject of accord and satisfaction. • If, when the amount of an indebtedness is in dispute, the debtor sends the creditor a check for the sum conceded by the debtor to be due, with an unsigned receiptá in full ’ and a letter requesting the signing and return of the voucher, the offer of payment is to be deemed made upon the condition of its acceptance in satisfaction of the debt; and if the creditor retains the papers,- and, after claiming a larger sum, and the refusal of the debtor to pay anything more, indorses and collects the check, such acceptance of the check imports an election to be bound by the condition on which it was offered and constitutes an accord and satisfaction which will not be affected by the creditor’s subsequently sending the debtor a receipt * on account, ’ unless such receipt is acquiesced in by the debtor.” Nassoiy v. Tomlinson, supra.

Proper deference for the views of our highest court of review and for the decisions of the Appellate Division of this first department requires an affirmance of the judgment in this case.

Judgment reversed and new trial ordered, with costs to appellant to abide event.  