
    MAXWELL v. COTTLE.
    (Supreme Court, General Term, Fifth Department.
    October 20, 1893.)
    1. Reference—Discretion of Court.
    The granting of an order of reference is a matter within the discretion of the court.
    2. Limitation of Actions—Attorney’s Lien after Claim is Barred.
    Where a client was indebted to his attorney at the time of placing a mortgage in the attorney’s hands for collection, the attorney’s lien on the mortgage continues, and is enforceable against the proceeds thereof when collected, though his claim against the client was barred by limitation after the mortgage was received, but before it was collected.
    Appeal from circuit court, Erie county.
    Action by Helen L. Maxwell, as administratrix with the will annexed of Joshua Maxwell, deceased, against Octavius O. 'Cattle. From an order denying a motion for a new trial on the minutes, and from an order denying a motion for a reference of the issues, defendant appeals.
    Argued before DWIGHT, P. J., and LEWIS and HAIGHT, JJ.
    Edmund P. Cottle, for appellant.
    Frank F. Williams, for respondent.
   LEWIS, J.

The order denying the motion for a reference should be affirmed. The account of the defendant consisted of items for services and disbursements as attorney for Joshua Maxwell, deceased, in several actions and in other matters. The account was not of the character contemplated by section 1013 of the Code of Civil Procedure. The granting of the order for a reference was a matter for the exercise of the discretion of the court. Martin v. Hotel Co., 70 N. Y. 101; Godfrey v. Insurance Co., 12 Abb. Pr. (N. Y.) 250.

The serious question in the case arises upon the rulings of the court under the statute of limitations. The action was brought by the plaintiff, as administratrix with the will annexed of her husband, Joshua Maxwell, deceased, to recover $500 in the defendant’s hands, collected by him as an attorney of her deceased husband. The defendant admitted collecting the money as attorney, but claimed to have a lien thereon for services and disbursements made and rendered by him as attorney for said Maxwell during his lifetime. The defendant had for many years prior to the death of Maxwell acted as his attorney in various matters. He commenced to perform the services as early as about 1872. In the year 1875 Maxwell placed in his hands, as attorney, to collect, a mortgage upon real estate in the state of Wisconsin. The defendant instituted proceedings for the collection of it, and in the year 1883 received on account thereof the $500 in question. This was three years after the death of Mr. Maxwell. There was evidence tending to show that at the time the mortgage was placed in defendant’s hands Maxwell was indebted to him for services and disbursements as an attorney. The account accrued less than six years before the mortgage came into the defendant’s hands, and has never been paid. Before the commencement of this action, and before the defendant received the $500, the statute of limitations had run against the portion of the plaintiff’s account referred to. The court, upon the trial, ruled that the defendant had a lien upon the moneys which came to his hands for any amount then due him-which was not barred by the statute of limitations, but that his lien ceased to exist upon any demand set up in his answer which accrued more than seven years and six months before he received the money. Any lien which the defendant had upon the mortgage at the time it was converted into money must, we think, be held to have attached to the money. All there was in the mortgage upon which a lien was effectual was the money that the mortgage-represented, and when it was paid his lien must be held to have been transferred to the proceeds of the mortgage. The question is therefore presented whether an attorney’s lien on funds in his possession continues after the debt becomes barred by the statute of limitations. If not, the ruling of the trial court was correct. If it continues, the defendant is entitled to a new trial; for there was. evidence tending- to show that there was something due him for services which were performed more than seven years and six months prior to the time the money came into his hands. The statute, however, had not run against any portion of his claim at the time the mortgage was placed in his hands for collection. It is a well-settled rule that an attorney has a lien on all papers or moneys belonging to his client in his possession for the amount of a general balance due him for professional services. This rule became well established in England at an early date, and prevails not only in that country, but in this. An attorney has the-right to make application of the funds in his possession upon his • account without the consent of his client, and we think, upon principle and authority, that the lien continues to exist notwithstanding his remedy by action for the debt becomes barred by the statute of limitations. Spears v. Hartly, 3 Esp. 81; Hulbert v. Clark, 128-N. Y. 295, 302, 28 N. E. Rep. 638; 1 Jones, Liens, § 231; Overt. Liens, p. 26, note 1; Jones v. Bank, 6 Rob. (N. Y.) 162. After the statute has run against the claim the remedy by action is barred, but the debt is not discharged. It still exists. Hulbert v. Clark, 57 Hun, 559,11 N. Y. Supp. 417. The running of the statute against a claim does not raise a presumption of its payment, but merely creates a bar to the remedy by action. Rogers v. Murdock, 45 Hun, 30. The case, 3 Esp., supra, was an action of trover for a log of mahogany. The defendant "was a wharfinger, and claimed a lien on it, as well for the wharfage as for the balance of a general account. The account was barred by the statute of limitations. Lord Eldon, in deciding the question, says: “If what has been stated by the defendant’s counsel be law, that the debt is discharged by the operation of the statute of limitations, no lien could be obtained by reason of it. But the debt was not discharged. It was the remedy only. I am of opinion that, though the statute of limitation has run against a demand, if the creditor obtains possession of goods on which he has a lien for a general balance, he may hold them for that demand by virtue of the lien. In this case the defendant had a subsisting demand when the goods came to his possession, and I am of opinion he may enforce it by the lien which the law has given him for his general balance.” It was held in Higgins v. Scott, 2 Barn. & Adol. 413, that the statute of limitations bars the remedy only, not the debt; and therefore, where an attorney for the plaintiff had obtained judgment, though he had taken no step in the cause or to recover the amount of his bill of •costs within six years, he had still a lien on the judgment for his bill of costs, and the court directed the sheriff to pay him the amount out of the proceeds of the goods. Darby & Bo. St. Lim. p. 11. It was held in Richards v. Platel, 18 Eng. Ch. 79, that the lien of a solicitor on the papers of his client for the amount of his bill is equivalent to a contract, and therefore a solicitor will not be ordered to deliver up such papers until he is actually paid. In McKelvy’s Appeals, 108 Pa. St. 615, it was held that an attorney has a lien for his services upon the papers actually in his possession; that, having the money in his hands, he may deduct the amount due him, and pay over the balance if there is any. To the same effect is Griffith’s Estate, Nagle’s Appeal, 147 Pa. St. 278, 23 Atl. Rep. 556. It was held in McNagney v. Frazer, (Ind. App.) 27 N. E. Rep. 431, that while an attorney having taken no steps to perfect a statutory lien on a judgment obtained by him, and the statute of limitations having run against his action at law, cannot sue in equity to establish a lien on the judgment, still, if he has in his possession property pledged to secure his debt, his lien would not become extinguished if his debt should become barred by the statute of limitations. It was held in Hulbert v. Clark, 57 Hun, 558, 11 N. Y. Supp. 417, (opinion by Dwight, P. J.,) that the Tunning of the statute of limitations against a claim did not prevent the foreclosure of a mortgage under seal to collect the amount of the claim thus barred. This case was affirmed by the court of appeals, 128 N. Y. 295, 28 N. E. Rep. 638. Earl, J., in his opinion, says: "The statute of limitations does not, after the prescribed period, destroy, discharge, or pay the debt, but it simply bars a remedy thereon. The debt and. the obligation to pay the same remain, and the arbitrary bar of the statute alone stands in the way of the creditor seeking to compel payment. The legislature could repeal the statute of limitations, and then the payment of a debt upon which the right of action was barred at the time of the repeal could be enforced by action, and the constitutional rights of the debtor are not invaded by such legislation.” “It is a general rule, recognized in this country and in England, that when the security for' a debt is a lien on property, personal or real, the lien is not impaired because the remedy at law for the recovery of the debt is barred.” There are many other authorities sustaining this doctrine, but we do not deem it necessary to refer to them. The authorities referred to by the respondent, which it is claimed maintain a contrary doctrine, were cases where the attorney sought by an affirmative action to enforce his lien, and it was held he could not maintain the action because his remedy was barred by statute. The defendant is not asking, nor does he require, any affirmative action in his behalf. He has the money in his possession, and claims the right to retain it until his account is adjusted. We are of the opinion that the defendant did not lose his lien upon the moneys, for the reason that the statute of limitations had run against his claim. It therefore follows that his motion for a new trial should be granted, with costs to abide the event. Order denying motion for a reference affirmed. All concur.  