Opinion
Argued September 24, 1872
Decided January term, 1873
John H. Reynolds for the appellant. John A. Van Derlip for the respondent.
This case is not distinguishable in principle from that of Bliss v. Otis (1 Denio, 656, 657). In that case, as in this, the attorney by whom the action was brought was held liable for the defendant's costs, and the evidence of his liability was that one of the plaintiffs, in whose name he brought the action, was a non-resident and the other insolvent; and upon the copy of the declaration served upon the defendant he indorsed a notice that he was the assignee of the claim sued upon, and alone authorized to compromise and settle it. In the present case the plaintiff upon the record was insolvent; and the attorney was, by the agreement under which he undertook the prosecution of the action, beneficially interested in the recovery therein in a sum equal to one-half of the demand sued upon, besides his costs; and the agreement not only provided that he should have that sum if successful, but, in the event of his failure to collect the demand, he should not be compensated for his services even by the payment of the taxable costs. That he was beneficially interested in the recovery sought by the action is palpable; and it is not material that he was not interested in the entire amount of the demand involved in the action, but sufficient that he was beneficially interested in the recovery. ( Giles v. Halbert, 12 N.Y., 32, 38.) Omitting any consideration in relation to Dorr's procurement of an insolvent and merely nominal plaintiff as a substitute for security for costs which a non-resident plaintiff must have given if required, and for which Dorr himself would, if security had not been demanded, have been liable in a given amount, it is sufficient, for all the purposes of this case, that, on account of his interest in the demand, he sought to recover in the name of a plaintiff who was insolvent. The statute has imposed upon him the full liability which it was the object of the order appealed from to inforce. It was urged that the change wrought by the Code (§ 303) in allowing attorneys, solicitors and counsel, in civil actions, to bargain for contingent fees, and to become, by way of compensation for services, beneficially interested in the recovery of the claim sued upon, which, before the Code, was forbidden under a penalty, has legalized the contract made by Dorr. In this the counsel was mistaken. The repeal of former laws upon that subject made such transaction by lawyers only tolerable by leaving such of them as might choose to embark in such enterprises upon the same footing with other speculators; any one of whom may employ an attorney to bring an action, in which he is beneficially interested, in the name of another. But in any such case he, by statute, incurs a liability to pay the defendant's costs, to the same extent in which the plaintiff upon the record would be liable; and no exception is made in favor of attorneys. (See 3 R.S., 5th ed., §§ 11, 44, and Giles v. Halbert, cited above.)
The order of the General Term, affirming the order appealed from, should be affirmed.
All concur.
Order affirmed.