In September, 1913, Earl Davis lost his life while working in the defendant's service. He left a wife but no children. Husband and wife had lived apart. The mother was sole legatee, and executrix of the will. She retained a lawyer to bring suit against the railroad for causing her son's death. The retainer was on a contingent basis, the lawyer to receive one-half of the proceeds in the event of a trial and one-third in the event of a settlement before trial. He served a complaint, which the defendant answered. Thereafter the defendant paid $400 to the widow, and obtained a release. A supplemental answer pleaded the release in bar. The trial judge instructed the jury, if they found the defendant *Page 246 negligent, to assess the damages as if no release had been given. A verdict of $3,000 was returned. Thereafter in an accounting proceeding in the Surrogate's Court, a decree was made fixing the fees and expenses of the attorney at $1,620.50 and the funeral expenses at $141, a total of $1,761.50. On proof of this decree, an order was made reducing the verdict of $3,000 to $1,761.50, for which amount judgment was entered with costs. From that judgment, as well as from the decree of the surrogate, the defendant appealed to the Appellate Division, where both judgment and decree were modified. The ruling was that the limit of the attorney's compensation was the taxable costs and 50% of $400, the sum paid to the widow. The plaintiff is the appellant here.
In this statutory action (Code Civ. Pro. sec. 1902; now Decedent Estate Law [Cons. Laws, ch. 13], sec. 130) the executrix, though a necessary, is, none the less, a formal party (Matter of Meekin v. B.H.R.R. Co., 164 N.Y. 145, 149;Hamilton v. Erie R.R. Co., 219 N.Y. 343, 350; Rice v.Postal Tel. Cable Co., 174 App. Div. 39; affd., 219 N.Y. 629;Stuber v. McEntee, 142 N.Y. 200; Am. R.R. Co. of Porto Rico v. Birch, 224 U.S. 547). The proceeds of a recovery are held, not as general assets of the estate, but subject to a special trust. The sole beneficiary of the trust was in this instance the widow (Code Civ. Pro. sec. 1903), who, after action brought, extinguished her beneficial interest by settlement and release. The settlement destroyed the cause of action except in so far as continued life was necessary for the securing to the executrix of rights accruing or accrued (Bruck v. N.Y.C. H.R.R.R. Co.,219 N.Y. 668, reversing 165 App. Div. 621, on dissenting opinion of SMITH, P.J., in the court below; Yelton v. Evansville I.R.R. Co., 134 Ind. 414, 418, 419). To that extent, its life endured. The right of the executrix to sue connotes the incidental right to continue a suit begun when loss would otherwise result to trustee or to estate. *Page 247
In this case, we shall assume, though we are not required to decide, that the defendant might have halted the prosecution of the action by abandoning the right to costs, and offering judgment or in some other appropriate way conceding liability for the fees of the attorney up to notice of the release. The result, moreover, will be the same whether the fees might have been limited to a percentage of the settlement, or should have included such additional amount as the attorney could recover if suing on a quantum meruit (Andrewes v. Haas, 214 N.Y. 255). The defendant offered none of these things. It pleaded the release in bar, and demanded judgment for the dismissal of the complaint with costs. The plaintiff, if she had yielded to this defense, would have cast her attorney adrift, to assert against the defendant in some other proceeding a doubtful and contested remedy. She would have done more. She would have subjected the estate to a judgment for costs, which she herself, as sole legatee, would ultimately have had to pay. The only way of avoiding these consequences was by continuing the action, and establishing the liability which the defendant had disclaimed. That is what the plaintiff did. The action was continued, not by the attorney (Fischer-Hansen v. B.H.R.R. Co., 173 N.Y. 492,499), but by the client, and continued for their common benefit. In such circumstances, the fees payable to the attorney are not to be measured by the value of the services rendered before notice of the defense. They must include the value of the services rendered in litigating the merits of the cause of action, and thereby overcoming both denial and defense. The defendant by its own attitude made the litigation of the merits necessary. Whatever loss has resulted, it has brought upon itself.
In these circumstances, our decision does not go beyond the facts of the case before us. Thus confining it, we hold that the plaintiff may properly recover one-half of the damages as compensation payable to her attorney, *Page 248 and also the taxable costs. We find no justification, however, for including the expenses of the funeral. A different question would be here if the executrix, lacking assets of the estate, had paid these expenses herself on the credit of the cause of action. What her rights would then be, we do not now determine. For all that appears, she paid them out of assets of the estate, in which event the primary fund for payment has already borne the burden (Matter of Huth, 88 Misc. Rep. 458).
In upholding, with this deduction, the conclusion of the Trial Term, we are not required to approve its practice. The better practice would have been to prove the extent of the attorney's lien before the verdict, and not after. The irregularity may be overlooked since it has not affected the result.
The judgment of the Appellate Division should be reversed, and that of the Trial Term modified by deducting therefrom the sum of $141, and as so modified affirmed, without costs to either party.
HISCOCK, Ch. J., POUND, McLAUGHLIN, CRANE and ANDREWS, JJ., concur; HOGAN, J., dissents.
Judgment accordingly.