National Exhibition Co. v. Crane

60 N.E. 768, 167 N.Y. 505, 5 Bedell 505, 1901 N.Y. LEXIS 1099

• Court: New York Court of Appeals
• Decided: June 14, 1901
• Status: Published

Opinions

Per Curiam.

The following question has been certified to us by the Appellate Division for decision, viz.: “ Where it appears that, after issue joined in an action at law in which no counterclaim is interposed, the defendant, after the cause is on the calendar and noticed for trial, without the knowledge or consent of his attorney; without paying or providing for the payment of his costs, and for the [lurpose of depriving him of his costs, stipulates with the plaintiff that the action may be discontinued, without costs, is the Supreme Court vested with discretionary power to impose the payment of costs to the defendant’s attorney by plaintiff, as a condition to the granting of an order discontinuing the action on application of the plaintiff ? ”

Honest settlements by parties, made with no intention to take advantage of their attorneys, but for the simple purpose of ending the litigation, are praiseworthy and should be encouraged. Dishonest and collusive settlements, made with intent to defraud the attorneys upon either side, are reprehensible and should be condemned. The plaintiff asked for relief founded on a settlement of the latter character, and the court had the power to refuse to stain its records by an entry based upon fraud. The power of the court is not founded upon a lien of the defendant’s attorney, for, as there was no counterclaim, he had none, but upon its right to protect one of its own officers against collusion and fraud practiced by the parties after they had come before it for trial. The power is not statutory but inherent, and has frequently been recognized by the courts, although their decisions upon the subject are not uniform. (Coughlin v. N. Y. C. & H. R. R. R. Co., 71 N. Y. 443, 448 ; Randall v. Van Wagenen, 115 N. Y. 527, 532; Pulver v. Harris, 52 N. Y. 73 ; McBratney v. R., W. & O. R. R. Co., 17 Hun, 385 ; Walsh v. Flatbush, N. S. & C. R. R. Co., 11 Hun, 190; Wormer v. Canovan, 7 Lans. 36; Quinnan v. Clapp, 10 Abb. N. C. 394; Quincey v. Francis, 5 Abb. N. C. 286 ; Rasquin v. Knickerbocker Stage Co., 21 How. Pr. 293, 295; Marquat v. Mulvy, 9 How. Pr. 460, 463; Talcott v. Bronson, 4 Paige, 501; People v. Hardenbergh, 8 Johns. 335.) In this case the plaintiff asked the aid of the court to carry into effect a settlement “ made for the purpose of depriving ” an attorney of his costs, and the court was not obliged to assist in effecting the fraudulent design. While the parties have an undoubted right to adjust their differences, when the settlement is the result of a conspiracy between them to cheat the attorney of either out of his compensation for faithful service, the court may properly withhold its aid from those who seek by furtive means to perpetrate a wrong under the cover of a compromise.

The order of the Appellate Division should be affirmed, with costs, and the question certified answered in the affirmative.