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Steiner v. Stein

Decided: June 13, 1949.

HELEN STEINER ET AL., PLAINTIFFS-APPELLANTS,
v.
MONROE E. STEIN ET AL., DEFENDANTS-RESPONDENTS



On certification to the Superior Court, Chancery Division.

For reversal -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For affirmance -- None. The opinion of the court was delivered by Vanderbilt, C.J.

Vanderbilt

This proceeding brings to us by certification on our own motion two fundamental questions, first, as to the jurisdiction and powers of a Superior Court judge in a cause involving both law and equitable aspects and, secondly, as to the right to a trial by jury in such circumstances.

The complainants were the owners of three-twelfths of the capital stock of The Branford Theatre, Inc., and the defendant Bertha Zucker the owner of two-twelfths, the remaining seven-twelfths belonging to the Stanley Company of America, which was also the tenant of the theatre property in question under a lease expiring June 30, 1947. By November 1, 1946, the minority stockholders of The Branford Theatre, Inc., had agreed with the Stanley Company on many of the terms of a new lease and they then employed the defendant Monroe E. Stein as their attorney to represent them in closing the matter for an agreed fee, they say, of $3,300. Stein disputes the alleged agreement, claiming that he was to be paid $3,300 for redrafting a lease theretofore negotiated by them with the Stanley Company, but that the Stanley Company refused to execute the lease so redrafted by him, with the result that the minority stockholders employed him to negotiate a new lease with the Stanley Company, which he did, and to perform various other services, as to all of which no fee was agreed upon. After the performance of these services the complainants offered to pay the defendant $3,300, which he refused, demanding, the complainants say, $20,000, a demand which the defendant denies making, though he does admit asserting an attorney's lien on the papers of the minority stockholders represented by him, some of which were unrecorded documents. [2 NJ Page 370] The complainants filed their bill of complaint in Chancery on November 14, 1947, alleging in addition to the foregoing facts that they required their papers in their endeavor to make a long term mortgage on their interest in the theatre property and the leases thereon and tendering payment of whatever sum might be adjudged due the defendant in order to redeem their papers from the lien asserted by him. On November 26, 1947, the complainants filed a supplemental bill in Chancery, alleging that Stein had rendered a bill of $40,800 for services (in which is included the agreed $3,300) and $173.88 for disbursements and that he had instituted attachment proceedings in the New York Supreme Court under which he had levied on moneys due the minority stockholders under their lease with the Stanley Company, and praying that Stein be restrained from prosecuting his attachment suit in New York. Orders to show cause and an ad interim restraint issued on the bill and the supplemental bill and the defendant moved to strike the bill and the supplemental bill on the grounds, first, that the complainants did not allege a demand on the defendant for a statement of services and, secondly, that the complainants had a complete remedy at law. The learned Vice-Chancellor held otherwise, 141 N.J. Eq. 478, denying the motion to strike the bills and continuing the restraint against the prosecution of the New York attachment proceedings on terms, the minority stockholders to deposit within 20 days with the Clerk in Chancery $23,000 in cash or their bond conditioned for the payment to Stein of such sum as the Court of Chancery might find to be due him, the defendant Stein then to return to the complainants all their papers and documents and to discontinue the attachment proceedings in New York, the minority stockholders to prosecute the suit in Chancery to final decree and on their failure so to do the defendant to have leave to proceed therewith. The defendant Stein thereupon answered both bills, and in a counterclaim prayed for a decree for $40,973.88 or "such sum as this court may find to be due to this defendant as the reasonable value of his services rendered." He concluded his pleading with a demand for a trial by jury "to determine the amount due

and to be paid to him." The minority stockholders duly answered the counterclaim.

The first proceeding under the new rules of court, promulgated September 15, 1948, was a petition of the defendant of October 15, 1948, praying "an issue at law may be directed * * * to be framed to the end that a jury hear and determine" the scope of the express agreement between the parties, whether certain services of the defendant Stein were within or without the scope of the express agreement and, if without, to determine the value of such services and award the same as damages. The complainants thereupon sought leave to amend their supplemental bill and their answer to the counterclaim by pleading, first, that the defendant Stein had at no time advised the complainants that he was rendering services which were in his opinion outside of his original agreement for $3,300 or that he expected extra compensation and, secondly, that the acts of the defendant Stein in demanding excessive fees, in stating that unless complainants paid him $20,000 for his services he would assert a claim for a much larger amount, in asserting an attorney's lien on his clients' property in excess of $40,000, in instituting attachment proceedings in New York to collect his fees and in making levies on his clients' property, in attempting to procure a dismissal of the proceedings in Chancery by the use of inaccurate affidavits as to his residence and in offering to release the defendant Zucker from her share of any judgment he might recover in excess of $15,000 if she did not cooperate with the complainants in prosecuting these proceedings, were illegal and oppressive and calculated to bring contempt and disrepute upon the administration of justice in the State of New Jersey, by reason whereof defendant Stein was barred from recovering any compensation for his services. The Chancery Division permitted the amendments sought by the complainants but on its own motion ordered the action transferred to the Law Division for trial under Rule 3:40-3 on the ground that the features of the case requiring equitable intervention had been disposed of. In so doing the learned trial judge added, "It is not to be inferred from this that I accept the argument of

counsel for Stein as to the right of a trial by jury. The conclusion I have reached is independent of that contention." It is this order of transfer which has been certified for review.

I.

To clarify the respective rights and liabilities of the parties in the pending suit it will be helpful to state briefly what their position would have been before the adoption of the new Constitution and the promulgation of the new rules. The law courts were and still are the forum for suits by attorneys for services rendered and disbursements made on behalf of clients. Such suits are actions for breach of contract and the parties were and are entitled to a trial by jury as of right. Bolte v. Rainville, 138 N.J. Eq. 508 (E. & A. 1946); 5 Am. Jur. (Attorneys at Law), p. 378. By reason, however, of the confidential relation of client and attorney and because an attorney's position of trust as an officer of the courts obligates him to the highest standard of fair dealing, equity has long exercised jurisdiction to supervise at the behest of the client an attorney's conduct toward his client. In so doing the Court of Chancery has invoked a variety of remedies ranging from the investigation of the fairness of any agreement between attorney and client to restraining actions at law, threatened or existing, and from revising or cancelling contracts for services to determining the just and reasonable sum due the attorney from his client. Brown v. Bulkley, 14 N.J. Eq. 451 (Ch. 1862); Porter v. Bergen, 54 N.J. Eq. 405 (E. & A. 1896); Kelley v. Schwinghammer, 78 N.J. Eq. 437 (Ch. 1911); Raimondi v. Bianchi, 100 N.J. Eq. 448 (Ch. 1926); reversed on other grounds, 102 N.J. Eq. 254 (E. & A. 1928); Grimm v. Franklin, 102 N.J. Eq. 198 (Ch. 1928); Sinisi v. Milton, 107 N.J. Eq. 179 (E. & A. 1930); Lewis v. Morgan, 132 N.J. Eq. 343 (Ch. 1942); Bolte v. Rainville, 138 N.J. Eq. 508 (E. & A. 1946), where the subject is thoroughly canvassed and the cases collated. The only limitation in point of time to the client's invoking the aid of equity is that he must not wait until after he has had his day in a court of law, Raimondi v. Bianchi, 102 N.J. Eq. 254 (E. & A. 1928).

It has long been a cardinal principle of equity that once it has obtained jurisdiction of a cause it will ordinarily dispose of all of the issues to avoid a multiplicity of suits; see Pettit v. Port Newark National Bank, 110 N.J. Eq. 324 (Ch. 1932), where in an action by a stockholder against officers and directors to recover for maladministration and negligence, equity assessed damages for such negligence; Middlesex Concrete, etc., Corp. v. Northern States Imp. Co., 129 N.J. Eq. 314 (E. & A. 1940), where in a suit for the enforcement of a lien, equity proceeded to assess unliquidated damages; and Mantell v. International Plastic Harmonica Corp., 141 N.J. Eq. 379 (E. & A. 1947), where in a proceeding for an injunction where injunctive relief became inappropriate pendente lite, equity awarded damages for breach of contract. There the court said (141 N.J. Eq. 393):

"And Chancery has jurisdiction to assess the damages attributable to the defendant manufacturer's breach of the contract. It is the settled rule that where equity has rightfully assumed jurisdiction over a cause for any purpose, it may ordinarily retain the cause for all purposes, and proceed to a final determination of the entire controversy, and establish purely legal rights and grant legal remedies. Middlesex Concrete P. & E. Co. v. Northern States Improvement Co., 129 N.J. Eq. 314; Pomeroy's Equity Jurisprudence (5 th ed.), secs. 181, 231-242. * * *

"Ordinarily, the jurisdiction of equity is tested by the facts existing at the inception of the suit; and if the complainant is then entitled to equitable relief, equity's jurisdiction to settle all the issues, even though purely legal in nature, and to award damages for the breach of a legal right involved in the suit, will not be defeated by subsequent events which render equitable relief impracticable or unnecessary or unsuitable. Rooney v. Weeks, 290 Mass. 18, 194 N.E. Rep. 666; Ricaby v. McCrory Stores Corp., 35 Fed. Rep. (2d) 14. Pomeroy's Equity Jurisprudence (5 th ed.), Sec. 237 e; 30 C.J.S. 419, 430; 19 Am. Jur. 132. This must necessarily be so, for the rationale of the rule that an equitable feature draws the cause completely within the cognizance of equity is the policy of ...


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