BOOK XII.

COSTS.

In no respect has the Code effected a more radical and complete change, than as regards the costs of actions or suits in the different courts, whether as to the relations of the parties in a proceeding to each other, or with reference to those between such parties, and their attorneys or counsel. The former provisions on both subjects are completely swept away, and an entire new system substituted.

It is hardly possible, indeed, to imagine a more complete contrast, than that which exists between the former and the present provisions on the subject. Whether too much may not have been attempted on the one hand, and too little preserved on the other, is a matter by no means free from doubt; and, possibly, some may even be entertained as to whether the provisions of the Code itself do not even tend, in many respects, to counteract the expressed intentions of its framers. Those intentions are thus stated by the parties in question, upon their report:

"The losing party ought, as a general rule, to pay the expense of the litigation. He has caused a loss to his adversary unjustly, and should indemnify him for it. The debtor who refuses to pay, ought to make his creditor whole."

The extent to which the object thus proposed is actually carried out, will best be seen hereafter. The practical effect of the provisions made for this purpose, seems rather to be the rendering a complete and accurate indemnification a matter of impossibility in practice; and this, even with the precarious assistance, which an application for an allowance under sec. 308 may perhaps afford in some cases. The prevailing party is, as a general rule, saddled with the payment of his counsel fees, without the possibility of obtaining reimbursement from his opponent, however unavoidably he may himself have been

forced into the suit, or however great, nay, even ruinous, the burden may be upon him.

The wisdom of giving an attorney in a cause a direct interest in procrastinating proceedings to the utmost, by the disproportionate ratio which exists between the allowances for term-fees, and those for the preparation and argument of a cause, seems very questionable. It appears to be assumed, too, that all causes require the same preparation, and present the same difficulties; no means of making any distinction between a simple inquest or judgment by default, and a really litigated trial, involving forethought and preparation, being provided by the present enactments.

To argue that the same compensation is adequate in all these cases, without any distinction whatever, would shock common sense; and yet, no adequate means of drawing that distinction are provided—at least, as regards the very large and important class of cases, which, though requiring a large sacrifice of time and labor for their due preparation, and experience and skill in their conduct, may, perhaps, not strictly fall within the definition of being either "difficult" or extraordinary, within the meaning of the legislature.

The whole of the new system, as thus established, is in singular and marked contrast with the course of legal reform on the same subject in England, in which country the facilities for obtaining an exact and equitable adjustment of the costs in each litigated case, according to its peculiar circumstances, have been of late years greatly increased; and special officers have been appointed, for the express purpose of watching over and effecting such adjustment in all cases: important additional facilities being given to that adjustment, by the establishment of two scales of taxation-viz., 1st, that between party and party, comprising the costs of an ordinary recovery, or defence, and including a reasonable and proper counsel fee on the hearing; and, 2d, that between solicitor and client, under which a party whose costs are ordered to be so taxed, obtains a complete indemnity against every reasonable expense incurrred by him in consequence of the litigation: answering, by these means, the very object proposed by the framers of the Code, in the passage of their report above cited, but which the enactments of the measure itself have obviously failed to obtain.

With these few preliminary remarks on the subject of costs

in general, we proceed to notice shortly, in the first instance, the relation in this respect, as between the client and his attorney.

The whole of the previous checks upon this relation are thus swept away by sec. 303:

§ 303. All statutes establishing or regulating the costs or fees of attorneys, solicitors, and counsel in civil actions, and all existing rules and provisions of law, restricting or controlling the right of a party to agree with an attorney, solicitor, or counsel, for his compensation, are repealed; and hereafter the measure of such compensation shall be left to the agreement, express or implied, of the parties. But there may be allowed to the prevailing party, upon the judgment, certain sums by way of indemnity, for his expenses in the action; which allowances are in this act termed costs.

This complete repeal is a bold experiment.

The following most valuable and pertinent remarks are made by Hand, J., upon this subject, in Barber v. Crosset, 6 How. 45: "It was the intention of the legislature to abolish the fee bill, as between attorney and client." And they go further, and repeal" all existing rules and provisions of law, restricting or controlling the right of a party to agree with" his lawyer "for his compensation," and leave the measure of that compensation to the agreement of the parties.

"If this strips the courts of all control over the subject, which I doubt, and, upon consideration, shall be found, as to the profession, to licence champerty, and leave an open field for the encouragement of barratry, it is to be hoped that the bar of this state will, in countenance and conduct, and by common consent, maintain the high position heretofore held by them, and frown upon everything dishonorable, whether legally pun ishable or not. To the fair-minded lawyer, nothing can be more repulsive than the quack system of "no cure, no pay;" particularly when the pay is to be a division of the spoils ! All experience has shown that justice is better administered where suits are conducted by those not parties to the controversy."

The superior court, in Satterlee v. Frazer, 2 Sandf. S. C. R. 141, held that, by the section above cited, the provisions of the Revised Statutes, (2 R. S. 288,) prohibiting attornies from buying debts to sue thereon, or giving an inducement to procure suits to be placed in their hands, are repealed, and that it is now

lawful for parties to make such bargains as they please with their attornies.

In Hall v. Bartlett, 9 Barb. S. C. R. 297, it was considered that the statute which prohibits attornies, counsellors, &c., from purchasing choses in action with a view to sue thereon, (V. 2 R. S. 288, sec. 71,) would extend to the purchase of a mortgage with such intent, but that the usual statutory proceedings for a foreclosure by advertisement, did not bring the case within the operation of that provision; and judgment was accordingly given for the defendant, on his demurrer on that ground.

In Barry v. Whitney, however, 3 Sandf. S. C. R. 696, 1 C. R. (N. S.) 101, the superior court asserted its powers to interfere in arrangements between attornies and their clients, to prevent overreaching or fraud. "It is contended," says Oakley, C. J., in pronouncing the opinion of the general term, “that, under the Code, any arrangements may be made between attorney and client as to compensation in suits, and that with such agreements the court has no right to interfere. Without considering the question whether the statutes of champerty and maintenance have been abrogated by the provisions of the Code in relation to the subject of costs, which we very much doubt, we do not think that the court is deprived of the power of looking into these arrangements between attorney and client. Before the Code, the court had the general power of examining into bargains of this character, to see that they were not unreasonable or oppressive, and the power has not been taken away. There are numerous cases in the books, where courts have exercised this superintending power. Even where a judgment has been confessed by a client in favor of an attorney, although resting upon a record of the court, which has received its sanction, the courts have not hesitated to open it, and investigate the transaction. Many cases of this character are collected in Graham's Practice, p. 28. This power results from the general superintending power of the court over its officers, and the very peculiar relations which exist between clients and attornies. It is a power which should be exercised with caution; but which is, nevertheless, to be exercised firmly, where a necessity for it exists." A reference was accordingly granted in that case, and action taken upon the report, when made, in accordance with the foregoing principles.

A question has arisen, as to whether the costs in a suit, when

recovered, belong to the party or to the attorney, and the opinions of the courts upon the subject are somewhat discordant.

Although, in strictness, under the terms of the Code, the allowance for costs is made to the party; yet in Gihon v. Fryatt, 2 Sandf. S. C. R. 638, a case where a non-suit had been entered, the following doctrine was laid down on the subject by the superior court: "The court cannot fail to see, that although, technically, the costs belong to the party, yet, in point of fact, they belong to the attorney. Here, all the judgment" (it being a judgment in case of non-suit.) "really belongs to the attorney;" and a set-off claimed by the plaintiff for a former judgment against the defendants, was accordingly refused to be allowed. The same principle had been previously laid down in Smith v. Lowden, 1 Sandf. 696, referred to in the judgment.

In the supreme court, however, a contrary doctrine appears to prevail, as is apparent from the case of Noxon v. Gregory, 5 How. 339, where it was held that an attorney's lien for his costs, is subordinate to the equities existing between the parties; and a set-off was therefore allowed of one judgment against another, notwithstanding the effect of that allowance was to nullify an assignment of the other judgment, to the attornies in discharge of their costs; and also from that of Benedict v. Harlow, 5 How. 347, where it was decided that an attorney has no lien on damages recovered for his client, until the same are actually received by him. "The parties have a right to settle the suit before judgment, without first paying the attorney his costs. It seems that, under the Code, attornies have no longer a lien for their costs. Their compensation now rests in contract." See, likewise, Davenport v. Ludlow, 4 How. 337, and Ward v. Syme, 9 L. O. 313, 1 C. R. (N. S.) 208, a decision of the common pleas to the same effect. In a note to the last report it is, however, stated that in Anderson v. Johnson, decided by the general Term of the 1st district of the supreme court, Nov., 1851, it was held that, after notice from the attorney that the judgment, which was for costs, belonged to him, the defendant could not avail himself of a release obtained from the plaintiff.

A partial modification of the foregoing doctrine, as held by the supreme court, appears also in the following, inserted amongst a number of decisions of Edwards, J., in the New York