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Frank E. Bradner, for complainant. An action in New York. But, suppose there was drew Van Blarcom, for defendants.

a defense made out, it could not avail Wilson

unless he could also show fraud. How, then, HOWELL, V. C. (after stating the facts). does the case stand? An attempt was made The jurisdiction of this court to interfere to convince this court of the fact of fraud by with the enforcement of judgment at law is offering to show that the New York judg. undoubted and is not questioned by the de ment was unjust; that instead of a judgment fendants. The cases on the subject in our for the plaintiff therein the real fact was own state are so numerous that they cannot that the balance of account was in favor of all be alluded to. In this case the court is the defendant; and that the judgment was asked to enjoin enforcement of a domestic therefore the product of false evidence, in judgment for the reason that the foreign short, of perjury. “To secure the interferjudgment, which was its foundation, was ob ence of equity it will not suffice to show that tained by fraud.

injustice has been done by the judgment Mr. Justice Gummere, now Chief Justice, against which relief is sought. It must apin Fairchild v. Fairchild, 53 N. J. Eq. 678, 34 pear that the party has an equitable defense Atl. 10, 51 Am. St. Rep. 650, says: "Can this of which he could not avail himself at law, judgment rendered by a court which had or had a good defense at law of which he jurisdiction over the parties and over the was ignorant until after the time for making subject-matter of the litigation be ignored by defense at law had passed, or that he was the courts of this state notwithstanding the prevented from making his defense by fraud prescription of the Constitution of the United or artifice of his adversary, or by fraud, acStates?

It seems to me not, for. cident, or mistake unmixed with any negliwhile this constitutional provision and the gence of his own, or that his ground of interfederal statutes referred to have been the ference is a matter of pure equity cognize subject of more or less diversity of judicial ance." Green, V. C., in Brick v. Burr, 47 N. opinion, it is now entirely settled that the J. Eq. 189, 19 Atl. 842. Similar language only grounds upon wbich the judgment of a was used by the court in Mechanics' Bank court of general jurisdiction can be disregard v. Burnet Manufacturing Company, 33 N. J. ed in another state are (1) where the adjudg Eq. 486. There the allegations were noning tribunal bad no jurisdiction over the per service of process and no indebtedness. son against whom judgment was pronounced The court refused to consider these grounds, or over the subject matter of the litigation, but enjoined the judgment on another ground. and (2) where the adjudication of the foreign There is no allegation here that the plaintribunal has been obtained by fraud.”

tiff in the New York suit in any way preIs the fraud alleged in the bill of complaint vented the defendant from making his de such fraud as is required by the decision in fense there. The fact of service has been Fairchild v. Fairchild to override the judg adjudicated against him. He had his opment in question? As to the first allegation, portunity to make his defense which he neg. viz., that there was no service of process in lected to avail bimself of, and now no mere the foreign jurisdiction, it is sufficient to say allegation that the judgment is for too large that it appears by the bill that this has al an amount can move a court of equity. In ready been adjudicated against the complain fact, a judgment obtained by perjured testiant, not only in our Supreme Court, but in mony without other matters of equitable cog. our Court of Errors and Appeals, and twice nizance could not avail the complainant on in New York in the original suit, and on the this motion. Chancellor Kent so held in argument complainant's counsel felt compel Smith v. Lowry, 1 Johnson's Ch. (N. Y.) 320, led to admit that he must discuss the case as and this case has been approved on this point if service had been undoubtedly made upon in Cairo & Fulton R. R. Co. v. Titus, 27 N. the complainant in New York. Neither do I J. Eg. 102, Hannon v. Maxwell, 31 N. J. Eq. think that the complainant can avail himself | 318, and Dringer v. Erie Ry., 42 N. J. Eq. of the withholding of the complaint from the 573, 8 Atl. 811, where Vice Chancellor Van files until the entry of the judgment. I think Fleet approves of the statement made by Mr. we must assume, in the absence of evidence Justice Miller in United States v. Throckto the contrary, that the mere procedure morton, 98 U. S. 61, 25 L. Ed. 93. "The acts which resulted in the entry of the judgment for which a court of equity will, on account in the New York court was regular and in of fraud, set aside or annul a decree between accordance with the law of that state. I am the same parties rendered by a court of comquite as confident that the third cause of petent jurisdiction have relation to frauds complaint has as little foundation in law as extrinsic and collateral to the matter tried the other two.

by the first court, and not to a fraud in the A careful examination of the affidavits sub matter on which the decree was rendered." mitted with the bill, taken in connection with Great stress was laid on the argument by the facts disclosed by the defendants' affidav complainant's counsel on two recent English its, does not satisfy me that there was any cases Aboulofe v. Oppenheimer, 10 Q. B. D. fraud practiced by Bailey. Neither am I 205 (1882), and Vadala v. Laws, 25 Q. B. D. convinced by these depositions that Wilson 310 (1890). There were, respectively, actions had a clear and unmistakable defense to the at la upon foreign judgments-one render

ed by a Russian court, and the other by an the time of the filing of the bill, December, Italian court-and in each case it was held 1906, was in the shape of a promissory note that the English courts would inquire into or notes given by the defendant Seeber to the fact of perjury committed in the original the defendant Schauble, and which notes action. If they have any pertinence what were, I believe, in the hands of the defendever to the matters in controversy here, they ant David. At the filing of the bill, an order show that when the New York judgment was to show cause, with interim restraint, was sued upon in the New Jersey Supreme Court made thereon returnable in January, 1907. the defense of fraud might have been set up Later, on the 15th of January, by consent of and litigated, and that therefore the com all parties, the notes in question were paid plainant is barred from again raising this under order of the court, and enough of the issue. These cases are severely criticised by proceeds to cover complainant's claim were Judge Wallace in the Circuit Court of the committed to the custody of the defendant United States for the Southern District of David, to be held by him as trustee in an New York in Hilton v. Guyott (C. C.) 42 Fed. account in bank in his name as such trustee 249, as being in conflict with the Throck and subject to the order of the court. That morton Case above cited, which has been so fund, now in immediate control and custody strongly approved in this state, and for the of the court, was the proceeds of a comprofurther reason that the authorities cited do mise of a suit brought by bill in this court not sustain the proposition. In my opinion on September 1, 1906, by Schauble against they must be held to have engrafted on the the defendant Seeber, in which the complainDuchess of Kington's Case (2 Smith's L. C. ant herein, Mr. Wilson, a solicitor of this --) a modification of the rule there laid court, was solicitor. This suit, he contends, down, which does not appear ever to have was brought by him in pursuance of a prebeen hinted at in our courts.

liminary contract made between himself and I therefore conclude that the fraud refer the defendant Schauble, by which Wilson was red to in Fairchild v. Fairchild, supra, does to have one-third of the proceeds of the suit, not and cannot relate to the cause of ac and the fund in court aforesaid is admitted tion or to evidence adduced before the court to be a part of the proceeds of a settlement in the foreign jurisdiction, but does relate of that suit. to deception and downright fraud in pro Two questions are involved, both of which ruring jurisdiction or in preventing the de must be resolved in the complainant's favor fendant by fraudulent means from presenting in order to give him the relief now sought: his defense. And, inasmuch as the case does First, was the contract made as alleged? not show any fraud in the institution of the Second, did it give him (Wilson) such an insuit or in obtaining jurisdiction, or that the terest in the proceeds of the suit as to endefendant was in any way hindered by the able him to maintain this equitable action? plaintiff from appearing and defending the The first question is one of fact, and its action, or from producing such witnesses as solution depends upon the consideration of bad knowledge of the facts, the injunction a variety of circumstances and a careful exprayed for must be denied.

amination of several rather bulky affidavits. For present purposes, it will be sufficient if

I shall find that it is probable that on the (72 N. J. Eq. 623) WILSON V. SEEBER et al.

final hearing of the cause and an opportunity (Court of Chancery of New Jersey. May 15,

on each side for cross-examination the com1907.)

plainant will succeed in establishing the con1. ATTORNEY AND CLIENT-ACTION ON CON

tract. TRACT FOR COMPENSATION--EVIDENCE.

The complainant's contention is, in brief, In a proceeding by an attorney to obtain as follows: In October, 1904, Schauble was part of the proceeds of a compromise of a suit as compensation under a contract of retainer,

the owner of 179 shares of the capital stock evidence examined, and held to show that the of the Rising Sun Brewing Company, and in contract was made.

that year transferred the same for the sum 2. SAME-LIEN.

of $130,000 to one Nugent, who really bought Where an attorney contracted with his cli

in the interest of the defendant Seeber, to ent that, as compensation for conducting the suit, he should receive one-third of the proceeds

whom the stock was subsequently transferof the action, the contract gave him an equita red, and in whose name it has since stood., ble lien upon the proceeds when they took form. Schauble subsequently thought that he had

(Ed. Note.--For cases in point, see Cent. Dig. been unfairly dealt with in the transaction. vol. 5, Attorney and Client, 88 378, 380.]

At and subsequent to that time Judge Gil. Bill by William R. Wilson against George hooly, of Elizabeth, was his standing counsel Seeber and others. Heard on return of an in important matters; but Mr. A. J. David, order to show cause. Preliminary restraint a young lawyer In Elizabeth, was employed continued until final hearing.

by him in unimportant matters. On divers Alan H. Strong, for complainant. Edward occasions, and particularly in the early part M. Colie, for defendants.

of 1906, Schauble consulted with Judge Gil

hooly as to his right to undo the transaction PITNEY, Advisory Master. This is a con and recover the shares of stock, and wished test over a part of a sum of money which, at to employ him to bring a suit for that pur

pose. Judge Gilhooly expressed doubts as to then pending, and he wished that the sum to the prospect of a recovery, and finally de be paid him by Judge Gilbooly for the 179 clined to be retained for that purpose, stat shares of stock should be over and above ing that he had been somewhat involved in any amount that he (Schauble) should be transactions connected with or growing out obliged to pay as a result of the suit of the of the transfer of the stock, and suggested to brewing company against him. Schauble that he employ the complainant, In this state of affairs, Mr. Wilson and Wilson, for that purpose. Shortly after, and Mr. Schauble met by appointment early in in the summer of 1906, Schauble called upon the morning at Judge Gilhooly's office; SchauWilson, and expressed a wish to employ him, ble having both contracts in his possession but stated that he had no money to invest -first, the one Judge Gilhooly bad drawn in the sult, and desired that Wilson under between Wilson and Schauble, and, second, take it on shares. He gave Mr. Wilson the the one between Schauble and Gilbooly for particulars of the case. That gentleman, the sale by Schauble to Judge Gilhooly, acting learning from Mr. Gilhooly that he had no for Mr. Isham, of the shares of stock, if re objections to his (Wilson's) undertaking the covered. Mr. Schauble then informed Judge suit, did undertake it, upon the agreement, Gilhooly that he was entirely satisfied with as he swears, that he was to have one third the contract with Mr. Wilson for his comof the proceeds, and to run all the risks of ex pensation, but he wished the contract for the penses and costs, provided that after an ex advancement of the money and the sale of the amination of the circumstances he thought stock to Gilbooly to be amended in the respect it could be successfully carried through. He previously mentioned. Mr. Gilhooly there did make this examination, and commenced upon drafted a new contract between bimthe preparation of his bill and affidavits, self and Schauble, which was supposed to, which I have seen, and they show a great and did in fact, cover the objection. Upon deal of labor. At the same time, before filing this new draft being shown to Schauble, he the bill, he asked Judge Gilhooly to draw a expressed no dissatisfaction with it, but said written agreement between him and Schauble that, before executing it, he wished to subas to compensation, which Gilhooly did, and mit it to Mr. David. This remark seems to which Wilson handed to Schauble, and which have irritated Judge Gilhooly, and he declarThe said Mr. Schauble agreed to and promised ed that he would have neither of the papers Ito execute. Before the agreement, however, executed in his office, and hastened the de was actually executed, it came to the knowl. parture of Mr. Schauble. The result was edge of Wilson that there was a scheme on

that neither the contract with Mr. Wilson or foot by which the ownership of these shares that with Judge Gilhooly were ever executed. of stock by Seeber might within a very short On the return of the order to show cause, time be transferred to some other person, and Mr. Wilson employed Mr. Marsh, of Plainhe thereupon hurried matters, finished the field, as assistant counsel, and the hearing preparation of Schauble's affidavit, and came went over by consent. In the meantime, before me on September 1, 1906, at Morris Schauble seems to have become either sustown, with Schauble, and upon presentation picious of complainant's sincerity in his de of the bill I advised an order to show cause, votions to Mr. Schauble's interest in the sult, with interim restraint against the transfer or his ability to properly conduct it, and, be of the stock by Seeber. Naturally, and at sides employing Mr. David, sought to employ once upon obtaining this order, the question Mr. Colie, of the Essex bar, and asked Mr. arose where the money was to come from in Wilson to go with him to Mr. Colie's office as case Seeber should immediately tender a re soon as the latter should return from Europe. transfer of the stock and demand a return A meeting took place at Mr. Colie's office of the purchase price, and Schauble at once about September 13th, in which the subject of asked the assistance of Wilson in procuring Mr. Wilson's compensation was taken into money for him. Nothing was said in the consideration, Mr. Wilson insisting upon his written unsigned contract which made it the contract in writing as already agreed upon, duty of Wilson to raise any money. Mr. Wil. and that it should be signed. Mr. Colie, son applied to Mr. Gilhooly, and learned after hearing all the parties, acting as counfrom him that Mr. Isham, an Elizabeth capi sel for Schauble, prepared another agree talist, would advance the money provided he ment, which distinctly recognized and procould have the stock for the sum of $155,000. vided that complainant should have one-third Mr. Schauble, upon learning this from Wil of the recovery and one-third of any compro son, agreed to it generally, or in part. Either mise; but in a subsequent clause provided Wilson or Gilhooly had prepared a contract that Schauble might discharge Wilson at a to that effect to be signed by Schauble. That certain stage of the cause by paying him a contract, however, was nominally with Judge comparatively small sum of money. This conGilhooly; Isham's name not being mentioned tract Wilson declined to sign. in it. Objection was made to' this contract I have stated Mr. Wilson's contention. It by Schauble, because it did not provide for is thoroughly supported by his own affidavits, protecting him against a suit which had and, as to the consent of Schauble to the been brought by the brewing company to en terms of the contract, it is sustained by the force a large claim against bim, which was affidavit of Judge Gilhooly. It is also sus

tained by the account of what occurred on the that Wilson should pay the court expenses ; 13th day of September in the office of Mr. that in consideration of his services and asColie. It is quite impossible to account for sumption of costs Schauble should pay Wilthe provision for one-third compensation son a sum equal to the one-third part of the found in the contract prepared by Mr. Colie, value of the stock over and above the amount except upon the assumption that such pro for which it was sold to Seeber. Then comes portion had been previously agreed upon. the contract itself-that Wilson should comThe defendant Schauble, in opposition to the mence suit in chancery praying for the andeposition of Judge Gilhooly and complain nullment of the sale and a recovery of the ant, denies some of the allegations of the stock, and "will devote his best endeavors circumstances leading up to his employment and energies in the prosecution of the suit of Mr. Wilson, and he denies that he ever until its final determination, and agrees to agreed to give one-third, and he denies a part accept as compensation for his services, and of what occurred in Judge Gilhooly's office on for such disbursements as he may be required the occasion when the judge swears that the to make, the one-third part of the value of second draft of the contract was prepared by said stock over and above the amount or sum him between himself and Mr. Schauble. But paid by Seeber to Schauble, or the amount or I think that denial, when carefully examined, sum that may be required to be paid by and, compared with the other affidavits, is Schauble for the redemption of said stock.” not sufficient to overcome their probative This event has never happened, but then folforce, and I think that the great probability lows this further provision: “And he furis that at the final hearing the complainant ther agrees that, in case a compromise is will be able, by clear preponderance of proof, made by his consent in writing or settlement to show that the written draft of a proposed otherwise effected, in like manner to accept contract between himself and Schauble was in payment of his services and disbursements clearly assented to by Mr. Schauble and that as aforesaid the one-third part of the amount the suit which was commenced by him was paid upon such compromise or settlement So commenced on the strength of that con whether the same be received by said Schautract. I am entirely satisfied that Schauble ble or not.” Then follows this covenant on was aware that Wilson prepared the bill and the part of Schauble: "And the said Philaffidavits, and appeared before the vice chan-lip Schauble on his part, on performance by cellor and procured an order to show cause, said Wilson of the services and covenants and employed assistant counsel on the occa above named, agrees to pay said Wilson the sion of the return of that order, upon the one-third part of whatever money shall be honest supposition that the written agree paid or received by said Schauble or by any ment which had been prepared, but not ex other person on his behalf in compromise or ecuted, was agreed to by Schauble, and would settlement of the aforesaid claim." There be executed. If I am right in this conclu was a further agreement on his part that he sion, from the affidavits and circumstances of would not settle or compromise or sell or the case, then upon plain principles the mere dispose of his interest in the stock without nonexecution of the contract is of slight im the consent in writing of Wilson; and, furportance. No answers were ever put in to ther, "that if there is a decree that the stock complainant's bill, and the result was that shall be returned to Schauble, he would pay in the latter part of October that suit was to Wilson one-third part of the value of settled by Scbauble behind complainant's the stock over and above the amount reback, by paying or securing to Schauble the quired to be paid by him for the redemption sum of $40,000, a portion of which sufficient of the stock." Then follows a definition of to pay the complainant is, as before mention what is meant by the "value of the stock." ed, now in the custody of Mr. David and un It is not necessary for present purposes to der the control of the court.

consider whether the agreement for one-third The second question is whether that con of the value of the stock, taken in connection tract gives such an interest in the proceeds with the clause providing against a settle of that settlement as to enable the complain ment of the claim or a transfer of the stock, ant to succeed in this suit. The paper itself, without the consent of Wilson, gave Wilson prepared by Judge Gilhooly, purports to be an interest in the stock itself, for it seems to dated on the

day of August, 1906, and me that the sole question for present purposes recites that Schauble had stated to Wilson is the true construction of the clause by the facts and circumstances attending the which Schauble "agrees to pay said Wilson transfer of the stock; that Schauble claims the one-third part of whatever money shall that the same was procured from him by be paid to or received by Schauble or by any fraud; that he is now the owner of the other person on bis behalf in compromise or stock; that it is worth a larger sum than settlement of the aforesaid claim." A great Seeber paid him; that Schauble has asked many authorities were cited by counsel on Wilson to take proceedings to have the trans. each side, showing commendable industry and fer set aside and the stock returned to him, research. I have gone through them all. and had proposed to Wilson that his compen The general rule undoubtedly is that it must sation should be paid out of the sale of the appear that the complainant has an interest stock when recovered, and not otherwise; by the contract in the very fund itself, either

existing at the date of the contract, or there on appeal from his decision by Lord Truro, after to come into existence. In examining Lord Chancellor, as reported in Rodick v and considering the authorities, two matters Gandell, 1 Mac. and Gor. 763 (in 1851 and must be borne in mind: First, that in Eng 1852), where there is an exhaustive examina. land, and in many of the states of the Union tion of the authorities. Subsequently, in where the common-law doctrine of champer. 1855, the subject came before Sir W. P. ty still prevails, the question could not arise, Wood, Vice Chancellor, afterwards Lord and hence there are no authorities; and, sec Hatherly, in Riccard v. Prichard, 1 K. John. ond, in examining the English cases, a rule 277, 1 Jur. N. S. 750. The Vice Chancelarising out of their bankrupt law, dealt with lor there abstracts the rule laid down by by me in Board of Education v. Duparquet, Lord Truro, supra, thus (1 Jur. N. S.): "That 50 N. J. Eq. 234, 24 Atl. 922 (and see Ward where there is an agreement between debtor v. Duncomb, L. R. App. C. (1893] 369, per and creditor that the debt owing shall be paid Lord Macnaughten, at page 383 et seq.), must out of a particular fund coming to the debtor, be borne in mind, since it has no application that creates a valid equitable charge upon the here. Moreover, it must be remembered that fund, and operates as an equitable assignthis is not, in its present shape, a suit in ment of the fund pro tanto." These Eng. which a third party is interested, but be lish cases are all based upon the decision tweer the sole parties to the contract them. of Lord Hardwicke (1749), in Row v. Dawson, selves.

1 Ves. Sr. 331. There Tonson and Conway It may for present purposes be admitted loaned money to Gibson, who, by way of rethat à mere promise to pay out of a particu imbursing those gentlemen, drew a draft on lar fund, when received by the promisor, will Swinburne, who was the deputy of Horace not amount to an assignment of an interest Walpole, a member of the cabinet in charge in the fund. I noticed this rule in Lannigan of the Exchecquer of England, with these V. Bradley & Currier Co., 50 N. J. Eq. at words added, "out of the money due to me page 205, near the bottom, 24 Atl. 505. The

from Horace Walpole out of the Exchecquer, cases referred to by the learned annotators of and what will be due at Michaelinas, pay to 2 Leading Cases in Equity, p. 1644, were Tonson and Conway, value received." Gibson those where the fund sought to be charged became bankrupt, and the question was was in no wise connected with or the result whether the holders of this draft were first of the transaction out of which the debt arose entitled to be paid the amount of the draft which it was sought to charge upon it. On out of the moneys due to Gibson from the the other hand it seems clear that an order Exchecquer. Lord Hardwicke held that the by a debtor, in favor of his creditor, ad draft was clearly distinguishable from an dressed to a third party, to pay tħat cred ordinary bill of exchange, and worked an as. itor out of a certain fund either then existing signment of so much of the money due to Gibor thereafter to exist in the hands of that son in favor of Tonson and Conway, and gave third party, gives an interest in that fund to them a preference. Lord Hatherly's terse the party in whose favor the order is drawn. statement of the rule was approved by Mr. And, further, it may be said with safety that Justice Dixon, in his opinion in Terney v. the rule is that the solution of the question Wilson, 45 N. J. Law, 282. The Supreme will depend upon the proper construction of Court was there exercising its equitable juthe language of the contract-whether that risdiction in the matter of set-off to a judg. language be committed to writing or not-to ment. And the same doctrine was acted upon be taken in connection with all the facts and in Brown v. Dunn, 50 N. J. Law, 111, 11 Atl. circumstances of the case. So construed, it 149; also a case of the exercise of equitable seems to me that the complainant's case is jurisdiction by the court. free from serious doubt. The first important There is a case in New York, of Williams v. element is that the fund in question is the Ingersoll, 89 N. Y. 508, which deals with the immediate result of the litigation instituted construction of instruments of this character, by complainant, and is the very fund men which seems to show that the law in the tioned in the contract. In the next place, state of New York was at one time somewhat no other creditor or assignee is claiming it, different. The learned judge there states, and the case is free from all complications at page 518, that, "whatever the law may be arising out of conflicting claims between two elsewhere, it must be regarded as the settled creditors or two assignees of the same fund, law of this state that an agreement either by such as we find in most of the adjudged parol or in writing to pay a debt out of a cases. And the language is clear. Schauble designated fund does not give an equitable agrees to pay Wilson "one-third part of what | lien upon the fund or operate as an equitable ever money shall be paid to or received by assignment thereof”; but he proceeds, in thai Schauble” by way of compromise, etc. The very case, at page 521, to state a rule of law language is not to pay a som equal to one which seems to me directly in conflict with third, but to pay the one-third part.

that previously stated. He uses this lanThe question of the effect of several such guage: “It is not important to inquire bere writings making up a contract was discussed whether the agreement proved by the plainfirst by Lord Langdale, as Master of the tiffs was an agreement to assign or an agree Rolls, in Rodick v. Gandell, 12 Beav. 325; and ment for a lien upon any sum which might be

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