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2d 364
The procedural history relevant to the present case goes back almost ten years.
Several months later, Hartford filed a motion to release $59,485.57 of the fund
deposited in the district court. Hartford based its motion on the fact that soon
after it had deposited the fund, the New York court determined that one of
Susi's former attorneys had a lien against the fund which took priority over the
claims of any other creditors, and ordered Hartford to pay $59,485.57 to the
attorney. Therefore, according to Hartford, since the appellant could be entitled
to no more of the original judgment against Orlando than the amount left over
after the attorney's lien had been paid, the fund deposited in court should be
reduced by that amount. The district court, looking to the law of New York
under which an attorney's lien has priority over other creditors, granted the
motion.
The appellant contends that the district court erred in ordering a release of a
part of the fund because, inter alia, the fund had originally been deposited with
the unconditional assurance by Hartford that the entire sum would be payable
either to Susi or to the appellant, and further, because a release of a part of the
fund would have the effect of giving Susi's former attorney a priority over the
claims of the appellant without the appellant ever having an opportunity to
contest either the legality of the priority or the amount of the lien.
Although Hartford did represent to the district court that the fund would be
payable to the appellant or to Susi, and the court conditioned its original order
granting Hartford's motion to enjoin the enforcement of Susi's judgment against
it, upon Hartford's deposit of the entire sum into the court, we fail to see why
such representations or conditions are binding after circumstances have
changed. Unlike the fund in Hansen v. United States, 340 F.2d 142 (8th Cir.
1965), cited by the appellant, the fund in the present case was not deposited to
satisfy a judgment. Rather, it was created as an equitable device, Cooks v.
Fowler, 141 U.S.App.D.C. 236, 437 F.2d 669 (1970), designed to retain the res
until all the claims to it could be adjudicated. As such, appellant had no direct
right to the fund, and its disposition was entirely within the discretion of the
same court that created it. 28 U.S.C. 2042. Since the New York court had
ordered Hartford to pay the attorney's lien, it was not inequitable that the fund
deposited with the district court should be reduced by that amount which, under
concepts of full faith and credit, Huron Holding Corp. v. Lincoln Mine
Operating Co., 312 U.S. 183, 194, 61 S.Ct. 513, 85 L.Ed. 725 (1941), a federal
court would be unlikely to award the appellant.
9
The sole question is whether the appellant has made such a showing of abuse of
discretion as to require that the district court's order be vacated. The appellant
asserts that the district court's decision to allow a withdrawal of part of the fund
had the effect of destroying the appellant's claim to $59,485.57, the amount of
the attorney's lien in the New York judgment, and that this occurred without the
appellant having had an opportunity to challenge the validity or the amount of
the lien in the district court. Even if we were to accept the assertion as true, we
do not see how this can be construed as an abuse of the district court's
discretion. It is well settled under New York law that 'creditors of the client
may only assert and enforce their claims against the portion of the judgment
remaining after the attorneys' lien has been paid or otherwise discharged.'
Application of Peters, 271 App.Div. 518, 67 N.Y.S.2d 305 (1946); see also
Orth v. Service Fire Insurance Co., 56 Misc.2d 569, 289 N.Y.S.2d 536 (1968);
New York Judiciary Law 475. Thus, the appellant is entitled to no more than
the amount of the debt remaining after the attorney's lien had been paid out.
10
Clearly, then, the district court did not abuse its discretion in ordering a release
of part of the fund in the amount of the attorney's lien. 'It ought to be and it is
the object of courts to prevent the payment of any debt twice over.' Harris v.
Balk, 198 U.S. 215, 226, 25 S.Ct. 625, 628, 49 L.Ed. 1023 (1905).
11
Affirmed.