JOSE C. BUCOY, PROVINCIAL SHERIFF OF ZAMBOANGA, PLAINTIFF, VS. JOHN R. MCFIE, JR., ET AL., DEFENDANTS. JUAN S. ALANO AND FT. E. HOLMES, APPELLANTS.

Bucoy versus McFie

The Case

This is an appeal in an interpleader-type proceeding brought by the Provincial Sheriff of Zamboanga, who held a sum of money realized from a judgment and was confronted by several claimants, each asserting a preferred right to be paid out of it. The claimants were John R. McFie, Alfonso Marquez, Adam O. Poole, Juan S. Alano, and R. E. Holmes. The central question is one of concurrence of credits: whose claim is preferred, and in what order. The case matters because it fixes the ranking between a lawyer's retaining lien under the old Code of Civil Procedure and ordinary judgment credits enforced by garnishment, and because it states the rule that a lawyer's lien takes effect only from the date it is entered upon the records.

Procedural History

The parties submitted the case to the Court of First Instance of Zamboanga for decision upon a stipulation of facts. The lower court held that the credits of John R. McFie, Alfonso Marquez, and Adam O. Poole were preferred in that order, and that the claim of R. E. Holmes, being guaranteed by the bond posted by Marquez and Poole, should not be filed in this proceeding but in a separate action. Juan S. Alano and R. E. Holmes appealed. The appeal was elevated to the Supreme Court, which affirmed the judgment of the lower court in all its parts, with costs against the appellants.

Facts

J. J. Loewinsohn won a judgment against Jos. S. Johnston in a civil case before the Court of First Instance of Zamboanga, and that judgment was affirmed on appeal by the Supreme Court. A writ of execution issued, and the sheriff came into possession of the sum of 656.27 pesos belonging to Loewinsohn. Several persons who were creditors of Loewinsohn then sought to reach that fund.

On October 17, 1934, John R. McFie registered his lien by right of retention for 100 pesos in attorney's fees owed him by Loewinsohn for representing him in that very case. On October 22, 1934, Alfonso Marquez, who had obtained a judgment against Loewinsohn, caused the sheriff to garnish 386.20 pesos of the fund. On October 25, 1934, Adam O. Poole obtained a preliminary attachment in a justice of the peace case and garnished the remaining funds, later obtaining a final judgment for 69.85 pesos with interest and 17.22 pesos in costs. On October 26, 1934, Juan S. Alano registered his right of retention for 250 pesos in attorney's fees for services rendered to Loewinsohn in the same case, both in the trial court and on appeal.

On November 21, 1934, R. E. Holmes filed third-party claims on both garnishments, based on a notarial acknowledgment of indebtedness executed by Loewinsohn on March 22, 1933, whereby Loewinsohn, in consideration of 2,300 pesos, ceded to Holmes all his rights and interest in the judgment. Because of those third-party claims, the sheriff required Marquez and Poole to post bonds, which they did, in order to retain the garnishments.

Issues

• Whether or not the credits of the appellants Juan S. Alano and R. E. Holmes have preference over those of their codefendants John R. McFie, Alfonso Marquez, and Adam O. Poole.
• Whether or not the claim of R. E. Holmes, being guaranteed by the bond posted by Marquez and Poole, may be filed in this proceeding or must be pursued in a separate action.

Applicable Provisions

Section 37 of Act Number 190, the old Code of Civil Procedure, provides:

A lawyer has the right of retention upon all judgments and decrees for the payment of money, and executions issued in pursuance of such judgments and decrees which he has secured in a litigation, in favor of his client, from the time his said right has been entered upon the records, enabling him to enforce his lien on all judgments, orders and writs of execution that may be rendered in favor of his client.

This is the provision that gives McFie and Alano their claimed preference, and its phrase "from the time his said right has been entered upon the records" is decisive of their ranking between themselves.

Article 1924 of the Civil Code provides:

With respect to the other credits, the order of their preference shall be as follows: credits of the nature of those mentioned in the preceding article shall follow the order of the dates of the judgments wherein they are recognized.

This governs the ranking of the ordinary money credits of Marquez and Poole, which follow the dates of their respective judgments.

Ruling

On the first issue, the Court held that the credit of John R. McFie enjoys preference over all the others under Section 37 of Act Number 190, because his right of retention was entered upon the records on October 17, 1934, several days before Marquez obtained his garnishment on October 22, 1934. Immediately after McFie comes Alfonso Marquez, and next Adam O. Poole, because credits of their nature follow the order of the dates of the judgments wherein they are recognized, under Article 1924 of the Civil Code. The claim of Juan S. Alano for 250 pesos, although also for attorney's fees in the same case, ranks after those of his codefendants, because his right of retention was not entered upon the records until October 26, 1934, and the law provides that a lawyer's right of retention takes effect only from the time such lien has been recorded in the corresponding case.

On the second issue, the Court agreed with the lower court that, a bond having been furnished by Adam O. Poole and Alfonso Marquez to guarantee the payment of the Holmes claim, that claim should be presented in another case within the corresponding prescriptive period, and not in this proceeding.

Doctrine

A lawyer's retaining lien under Section 37 of Act Number 190 takes effect only from the time the right of retention is entered upon the records; it is the date of recording, not the date the services were rendered or the judgment obtained, that fixes its rank against other creditors. Between competing money credits of the kind recognized by Article 1924 of the Civil Code, preference follows the order of the dates of the judgments in which they are recognized. Where a third-party claimant's demand is secured by a bond posted by the garnishing creditors, the claim is properly pursued in a separate action rather than in the proceeding over the garnished fund.

Disposition

The Supreme Court affirmed the judgment of the lower court in all its parts, with costs against the appellants Juan S. Alano and R. E. Holmes.

Remember This

Memorize the line that a lawyer's right of retention takes effect only from the time the lien is entered upon the records. Examiners use this case to test the ranking of a lawyer's retaining lien against garnishing judgment creditors, and to test whether a bond-secured third-party claim belongs in the same proceeding or in a separate action.