It is conceded that these attorneys filed a petition of appeal from the tax assessment for the year 1956 to the Essex County Board of Taxation and secured a reduction of such assessment for that year; also that this reduction in tax assessment entitled the defendant to a refund of $ 5,058 of the taxes paid upon the property for that year. After the right to this refund had accrued, but before the City of Newark had made payment thereof, the execution issued upon plaintiff's judgment, and the City, therefore, refused to pay over the refund moneys unless afforded the protection of an order of this Court.
Although the petitioning attorneys invoked the provisions of N.J.R.S. 2A:13-5, N.J.S.A. in support of their lien claim, I conclude that the cited Statute is inapplicable here and would not support this Court's jurisdiction to recognize or enforce the lien. However, petitioners also rest their claim upon the contention that they have obtained, as a result of their agreement with their client and their success in securing the tax assessment reduction, a common law equitable lien upon the moneys constituting the refund to which the client has become entitled; also, that such lien is enforceable in this Court which has jurisdiction under the execution and levy, over the refund moneys.
The factual situation here is suggestive of that in Terney v. Wilson, 1883, 45 N.J.L. 282, in which the former New Jersey Supreme Court recognized that an agreement between a client and his attorney that the attorney should have a lien for his services upon a judgment to be recovered in behalf of the client was valid both in law and in equity, and operated as an equitable assignment to the attorney of so much of the judgment as was necessary to pay for the attorney's services. This equitable assignment operated upon the judgment immediately upon its recovery, and would, therefore, be superior to the claim of the judgment debtor to a setoff of another judgment held by him against the judgment creditor.
The principle in Terney was applied in In re McCormick's Estate, 1936, 182 A. 485, 14 N.J.Misc. 73, and by the Court of Appeals for the District of Columbia, in 1939, in Continental Casualty Co. v. Kelly, 70 App.D.C. 320, 106 F.2d 841. See also, Phillips v. Mackay, 1892, 54 N.J.L. 319, 23 A. 941.
The refund moneys became available through the services of the petitioning attorneys, which were rendered in reliance upon their client's agreement, contingent upon their recovery, that they might look to such moneys for their compensation. It would, therefore, be inequitable to permit the plaintiff's levy upon the product of the attorneys' services to deprive the attorneys of their contractual right to compensation. Moreover, plaintiff concedes that if these attorneys acquired an equitable lien upon the tax refund moneys, it is prior pro tanto to plaintiff's right under its execution.
The City of Newark Will, therefore, be directed to pay one-half of the tax refund moneys to Van Riper & Belmont and the remaining half to the United States Marshal for the District of New Jersey.
An order may be presented in accordance with the views herein expressed.
© 1992-2004 VersusLaw Inc.