In a recent appeal, the issue of poundage came up.
The appeal involved our client, who was the plaintiff in trial court, and an appellant, who had been the defendant — and whose sizeable bank account was frozen by a City Marshal after the court imposed a judgment favorable to our client.
Early on in the process, we entered into an agreement in which we would allow the account to be released if the other side secured a bond while the appeal was pending. We stipulated that the defendants’ “bondsman” (an insurance company) would pay the amount of the judgment. We also agreed that the defendant’s stockbroker would set aside an additional amount to cover the Marshal’s poundage in the event that our client was still victorious after the appeal.
This provision turned out to be critical in our strategy to recover the money when we settled the case. Whenever a bank account or other asset is frozen by the sheriff or city marshal, a flat fee, referred to as poundage, is assessed on whatever the settlement turns out to be. Once you retain the Marshal to start the collection process, poundage is payable upon receipt of any funds, regardless of whether the Marshal actually collects the money. In New York, the poundage payable to the City Marshal is 5%, a substantial amount of money in this case.
While the defendant acknowledged that it was liable for the poundage, the City Marshal had no preference as to who paid the poundage, as long as it was paid; unless the defendant contractually agreed to pay it, the Marshal would attempt to collect it from the plaintiff!.
In the setting of a mediation months later, both sides came to a compromise, and in finalizing the settlement agreement, the defendant had to pay, in addition, the 5% fee for the City Marshal.
The moral of the story is “Don’t forget the poundage.” If you attach an account, before releasing it, either have everything paid up on the spot, including the poundage, or contractually confirm that the defendant is going to pay the extra amount.
