Nevertheless, the language purporting to express such an understanding must itself be clear. See Wilson v. Seeber, 72 N.J. Eq. 523, 66 A. 909 (Ch. 1907). Reflecting the notion that the primary basis for the imposition of an equitable lien is contractual, such a lien may arise through an assignment.
* * *" He cited in support of this conclusion: Wylie v. Coxe, 15 How. 415, 14 L. Ed. 753; Ingersoll v. Coram, 211 U.S. 335, 365-368, 29 S. Ct. 92, 53 L. Ed. 208; Burn v. Carvalho, 4 My. Cr. 690, 702, 703; Rodick v. Gandell, 1 DeG., M. G. 763, 777, 778; and Harwood v. LaGrange, 137 N.Y. 538, 540, 32 N.E. 1000, all of which indicate that an agreement to pay out of an identifiable fund when it shall come into being gives rise to a lien. To the New York decision may be added the recent case of Archibald v. Panagoulopoulos, 233 N.Y. 478, 135 N.E. 857; Wilson v. Seeber, 72 N.J. Eq. 523, 66 A. 909; Geddes v. Reeves Coal Dock Co. (C.C.A.) 20 F.2d 48, 54 A.L.R. 282; U.S. Fidelity Guaranty Co. v. Bristow (D.C.) 4 F.2d 810; and American Surety Co. v. Finletter (C.C.A.) 274 F. 152, are in accord.
The public adjuster cited analogous case law recognizing an attorney's equitable lien on funds generated in litigation. See Wilson v. Seeber, 72 N.J.Eq. 523 (Chancery 1907); Klacik v. Kovacs, 111 N.J.Super. 307 (App.Div. 1970), cert. den. 57 N.J. 237 (1970). The United States had claims to the proceeds for withholding and excise taxes.
Their contract provides that they "are to receive for their services five per cent. of the net estate after the final accounting has been rendered and at the time of distribution." Compare the terms used in Wilson v. Seeber,72 N.J. Eq. 523 (at p. 530), where the client agreed "to pay said Wilson [the solicitor] one-third part of whatever money shall be paid to or received by" the client. Vice-Chancellor Pitney held that an equitable lien or assignment was created, enforceable in Chancery out of the fund which was under its control.
We concur in the result reached by the learned Vice-Chancellor. We do not, however, choose to rest our concurrence upon the theory that complainants' valid and binding contract with their clients gave them an equitable lien upon the proceeds of the suit when those proceeds took form. Wilson v. Seeber, 72 N.J. Eq. 523; 66 Atl. Rep. 909. Rather do we choose to base our concurrence upon the theory that complainants were entitled to have the lien which was decreed in their favor by virtue of the provisions of R.S. 2:20-7, which provisions we have recently had occasion to construe and apply. Norrell v. Chasan, 125 N.J. Eq. 230; 4 Atl. Rep. 2d 88; 120 A.L.R. 1238.
Whether such an agreement has that effect depends on the terms of the contract and the particular circumstances of the case. Weller v. JerseyCity, c., Street Railway Co., 66 N.J. Eq. 11; 68 N.J. Eq. 659;Wilson v. Seeber, 72 N.J. Eq. 523; Metropolitan Life InsuranceCo. v. Poliakoff, 123 N.J. Eq. 524. I pass over this question since I am satisfied that Niebuhr has a lien by statute, Rev.Stat. 2:20-7. It has been held that an attorney's action on the statute to recover his fee from his client's opponent, after settlement of the principal suit, must be prosecuted on petition in the court in which the principal suit was pending.
Lanigan's Adm'r v. Bradley Currier Co.,Ltd., 50 N.J. Eq. 201; American Pin Co. v. Wright, 60 N.J. Eq. 147;Myers v. Forest Hill Gardens Co., 103 N.J. Eq. 1;affirmed, 105 N.J. Eq. 584. However, a contract by a client to pay his attorney compensation out of the fund to be realized by his efforts, raises an equitable lien in favor of the attorney as against the client, which fastens to the fund as soon as it takes form. Wilson v. Seeber, 72 N.J. Eq. 523, dealt with a contract between attorney and client, whereby the former agreed to pay the latter for his services one-third of whatever money should be received on his claim. Vice-Chancellor Pitney, after a careful review of the authorities, found that the attorney had an equitable lien. His decision is the more impressive because he also penned the opinions in Lanigan'sAdm'r v. Bradley Currier Co., Ltd., supra, and American PinCo. v. Wright, supra.
Soper v. Bilder, 87 N.J. Eq. 564. While, as a general proposition, agreements between attorney and client for contingent fees are not looked upon with favor by the courts, they have been upheld and enforced in this state where fair and reasonable as to the client. Soper v. Bilder, supra;Hassell v. Van Houten, 39 N.J. Eq. 105; Wilson v. Seeber,72 N.J. Eq. 523. The test is their fairness and reasonableness as applied to the client. I have found no case, nor has the diligence of counsel referred me to any, where the attorney has not been held bound to the extent that he has not been permitted to charge more for his services than he had agreed to accept.
Rutherford Nat'l Bank v. H.R. Bogle Co., 114 N.J. Eq. 571, 574, 169 A. 180 (Ch. 1933). See In re Loring, 62 N.J. 336, 340-41, 301 A.2d 721 (1973) (assertion of attorney of an equitable lien for a fee claim out of sale proceeds of house); Cohen v. Estate of Sheridan, 218 N.J. Super. 565, 570, 528 A.2d 101 (Ch.Div. 1987) (real estate brokers found to have equitable lien for their commissions on proceeds of sale due vendor at closing); Wilson v. Seeber, 72 N.J. Eq. 523, 535-36, 66 A. 909 (Ch. 1907) (an agreement by an attorney whereby he was to receive one-third of the proceeds of shares of stock to be recovered in an action to undo a shares transaction sufficient to establish intention of the parties for the attorney to receive one-third of the proceeds of the action and thus to form a basis for an equitable lien upon those proceeds). Thus, "[w]here one promises to pay for services rendered out of a fund created in whole or in part by the efforts of the promisee, a lien in favor of the promisee will attach to the fund when it comes into existence."
The present case projects for judicial consideration the propriety of a contingent fee agreement. The validity of such contracts has been sustained by the courts of this State. Hassell v. Van Houten, 39 N.J. Eq. 105 ( Ch. 1884); Wilson v. Seeber, 72 N.J. Eq. 523 ( Ch. 1907); Soper v. Bilder, 87 N.J. Eq. 564 ( Ch. 1917); Metropolitan Life Ins. Co. v. Poliakoff, 123 N.J. Eq. 524 ( Ch. 1938); American Automobile Ins. Co. v. Niebuhr, 124 N.J. Eq. 372 ( Ch. 1938); Marsh v. Murphy, 129 N.J. Eq. 302 ( E. A. 1941); In re Archdeacon, 134 N.J. Eq. 535 ( Prerog. Ct. 1944).