For affirmance -- Chief Justice Weintraub, and Justices Wachenfeld, Burling, Jacobs, Francis and Proctor. For reversal -- Justice Heher. The opinion of the court was delivered by Burling, J.
This is a claim for attorneys' fees alleged to be owing petitioner from a fund paid into the Superior Court, Chancery Division, following an action in New York instituted by receivers appointed pursuant to an order of the Superior Court, Chancery Division, 10 N.J. Super. 545, entered in accordance with the mandate of this court in Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433 (1952), certiorari denied Burlington County Bridge Commission v. Driscoll, 344 U.S. 838, 73 S. Ct. 25, 97 L. Ed. 652 (1952), rehearing denied 344 U.S. 888, 73 S. Ct. 181, 97 L. Ed. 687 (1952).
The essential background facts may be found in the opinion of this court in Driscoll v. Burlington-Bristol Bridge Co., supra.
Petitioner is a partnership regularly engaged in the practice of law in New York City, New York. In January of 1954, petitioner was retained to defend Theodore R. Hanff, Rowland H. Murray and Thomas J. Christensen in an action brought in the New York Supreme Court on January 4, 1954, by David J. Connolly and William H. Wells, as receivers appointed as aforesaid. The receivers instituted the New York action to collect the final judgment against the
defendants entered March 14, 1952, in favor of the Burlington County Bridge Commission.
The partnership of Ketcham & Nongard (hereinafter the partnership entity will be referred to as Ketcham & Nongard) was added as a defendant in the New York action on May 26, 1954, and on June 3, 1954 the receivers caused warrants of attachment to be issued in New York pursuant to which a fund of $1,170,319.80 in the hands of B. J. Van Ingen & Co., Inc., which was owing to the partnership of Ketcham & Nongard, was attached. Petitioner was retained to defend Ketcham & Nongard and the fees which it here seeks to have paid represent its charge to the partnership for services rendered in that litigation.
Without detailing the procedural course of the New York action, the results may be summarized as follows: The Appellate Division of the Supreme Court [ Connolly v. Bell, 286 App. Div. 220, 141 N.Y.S. 2 d 753], on appeal from a summary judgment entered in favor of the receivers, adjudged that the New Jersey judgment ran against the partnership of Ketcham & Nongard and that Ketcham & Nongard was liable to the receivers for the sum of $4,117,996.83. This sum represented $3,283,024.26 being the yet unpaid amount plus interest on the New Jersey judgment for $3,050,347.00, and $834,972.57, being the amount that the Bridge Commission paid to the Chemical Bank & Trust Company as pledgee of bonds owned by Ketcham & Nongard and for which payments the Bridge Commission was subrogated to the rights of the Chemical Bank & Trust Company under the provisions of the New Jersey judgment.
A further appeal was taken on behalf of the defendants to the New York Court of Appeals. That court reversed the portion of the judgment appealed from which adjudged that the partnership of Ketcham & Nongard was liable to the receivers for $3,283,024.26. The New York Court of Appeals was of the view that the portion of the New Jersey judgment which reads:
"To the extent that the members of the selling syndicate or their nominees have an interest therein, the entire transaction in all its
ramifications is rescinded and they shall repay to the bridge commission the sum of $3,050,347 which represents the gross profit which they received from the sale of their stock in the Burlington-Bristol Bridge Company. The obligation to repay this sum shall be both joint and several as to Bell, Hanff, Ketcham, Nongard and Powell, but shall be several only as against the remaining sellers in the amounts they each received, specifically: Rowland H. Murray -- $76,258.68; Thomas J. Christensen -- $305,034.70; Irene E. Powell -- $122,013.88; Paul A. Powell -- $122,013.88; Mildred P. Meader -- $122,013.88; Rickard W. Parks and Gladys A. Parks -- $129,939.75. Judgment in the sums indicated, together with interest thereon from October 22, 1948, will accordingly be entered against these defendants and in favor of the bridge commission." (8 N.J. at page 501)
only ran against the individuals Ketcham and Nongard and not against the partnership. Connolly v. Bell, 309 N.Y. 581, 132 N.E. 2 d 852 (Ct. App. 1956).
On June 30, 1954 (while the New York action was pending) the Superior Court of New Jersey entered an order directing Van Ingen to pay over to the receivers the disputed fund of $1,170,319.80 owing to Ketcham & Nongard. The order directed the receivers to maintain a special and separate bank account for the sum and reserved to the defendants all their rights in the fund. Van Ingen and the attorneys for the receivers then entered into an agreement on September 27, 1955 whereby the receivers authorized the Sheriff of New York County to release the fund and Van Ingen then paid over the sum of $1,158,616.60 (after deducting $11,703.20 for poundage fees payable to the Sheriff) to the receivers. After the decision in the New York Court of Appeals, Van Ingen petitioned the New Jersey Superior Court, Chancery Division, for an order enjoining and restraining Ketcham & Nongard from ...