Gilman, Son & Co. v. Jones , 87 Ala. 691 ( 1888 )

SOMERVILLE, J.

The action is one of trover brought by the appellants against the appellees, for the alleged con-version of fifty-eight bonds, of one thousand dollars each, issued by the New Orleans & Selma Bailroad Company. There are also two counts added by way of amendment, in case, based on the alleged unlawful use of the bonds, and of the decree of the Chancery Court in which they were merged.

The main point of controversy in the case is, whether the contract of August 16, 1879, between the plaintiffs, Gilman, Son & Co., on one side, and the defendants, A. W. Jones and D. S. Troy, as trustee, on the other, is void for champerty. Under this agreement, which was made in the State of New York, Jones purchased from the plaintiffs these bonds, for which a suit, by cross-bill, was then pending in the City Court of Selma, Alabama, sitting in equity.—Morton v. N. O. & S. R. R. Co., 79 Ala. 590. They were to be held in trust by the defendant Troy, who /then had custody of them as an attorney of the appellants, and were not to be delivered until the termination of the suit, and the payment of the agreed price. The litigation was to be continued in the name of the sellers, and the purchaser was to pay the attorney’s fees, and “legal expenses incurred and to be incurred,” except a retainer fee of two hundred and fifty dollars due by the present plaintiffs to their attorneys in that suit.

It is shown that in the State of New York, where this contract was entered into, there was no law of champerty which would render it illegal. The contract, consequently, was legal, when tested by the law of that State.—Sedgwick v. Stanton, 14 N. Y. 289; Thallhimer v. Brinkerhoff, 3 Cow. 623; s. c., 15 Amer. Dec. 308. But, as the agreement of the parties was to be carried into effect in the State of Alabama, where the suit was pending, the question of its legality would probably be governed by the laws of the latter State, according to the authorities, and we shall so consider it. 1 Addison, Contr. (Amer. Ed., Morgan), § 257, p. 391; Grell v. Levy, 16 C. B. (N. S.) 73; Richard v. Rowland, 40 Conn. 565.

Champerty is a species of maintenance, which at common law was an indictable offense. Maintenance was an officious intermeddling in a lawsuit by a mere stranger without profit. Champerty involved the element of compensation for such unlawful interference, by bargain for part of the matter in suit, or some profit growing out of it, or, according to some of the authors, as well also for the whole of the thing in dispute. — 1 Hawk. P. C. 462-463; 3 Amer. & Eng. Encyc. Law, 68—69; Holloway v. Lowe, 7 Port. 488; Poe v. Davis, 29 Ala. 683; Ware v. Russell, 70 Ala. 174. It would accomplish no good to quote at length the numberless definitions of these offenses given in the old books. Sir James Stephen, in his Digest of Criminal Law (note Till), alludes to the vagueness with which these crimes are defined by the. ancient common-law writers, and discusses the reasons why they have long since become obsolete. The ground of their origin is found in the familiar principle stated by Lord Coke: “Nothing,” he says, “in action, entry or re-entry, can be granted over; for so, under color thereof, pretended titles might be granted to great men, whereby right might be trodden down, and the Aveak oppressed.” — Co. Lit. 114a. It was a part of the law of maintenance, that no chose in action, which included all rights not reduced to possession, could be assigned or transferred. This was on the ground, as said by Mr. Chitty, that “such alienations tended to increase maintenance and litigation, and afforded means to powerful men to purchase rights of action, and thereby enable them to oppress indigent debtors, Avhose original creditors would not perhaps have sued them.” — Chitty on Bills, *6-*7. It is common knowledge, hoAvever, that this rule, refusing to sanction, or give effect to the assignment of dioses in action, was never adopted by courts of equity, either in England or in this country, and that courts of law, yielding to the growing exactions of commerce, finally allowed the assignees of such rights to maintain suits in the name of their assignors. 2 Story’s Eq. Jur. § 1050. Such assignments are now expressly authorized by the statutes of this State. — Code, 1886, §§ 1762-63, 2594.

The peculiar state of society, out of which such a law grew, carried it to the most absurd extremes. Men were held indictable for aiding a litigant to find a lawyer; for giving friendly advice to a neighbor, as to his legal rights; for lending money to a friend, to vindicate his known legal rights; for offering voluntarily to testify in a pending suit, and other like offices of charity and friendship. — 3 Amer. & Eng. Encyc. Law, 71. It is not surprising, therefore, that the law on this subject has gradually undergone a great change, which is recognized universally by jurists, judges and law-writers everywhere. This change has been called for by the new conditions of modern society, considered in its varied relations, commercial, political, and sociological. In many of its phases, it has been, both in America and England, emphatically discarded, as “inapplicable to the present condition of society, and obsolete.” —Sedgwick v. Stanton, 14 N. Y. 289, 296; Masters v. Miller, 4 Term B. 320; Thallhimer v. Brinckerhoff, 3 Cow. 623; s. c., 15 Amer. Dec. 308; Richardson v. Rowland, 40 Conn. 565; 2 Whart. Cr. L. (8th Ed.), § 1854, note. It is accordingly asserted, on high English authority, that no one has been punished criminally for the offense of maintenance or champerty within the memory of living man. — 3 Stephen’s Hist. Crim. Law, 234. Public opinion in England has advanced so far on this subject, that the Criminal Law Commissioners many years ago recommended very earnestly that the offenses of maintenance and champerty be abolished, observing of them, that they “are relics of an age when courts of justice were liable to intimidation by the rich and powerful and their dependents.” —Stephen’s Dig. Crim. Law, note VIII.

There is much reason, it thus seems, for the relaxation of the old doctrines pertaining to the subject, so that they may be adapted to the new order of things in the present highly progressive and commercial age. Necessity and justice have, accordingly, forced the establishment of recognized exceptions to the doctrine of these offenses. Among these may be enumerated the following instances: Belationship by blood or marriage will often.now justify parties in giving each other assistance in law suits; and the relation of attorney and client; or the extension of charitable aid to the poor and oppressed litigant; and especially is an interference in a law suit excusable, when it is by one who has, or honestly believes he has, a valuable interest in its prosecution. It is especially with the last mentioned exception we are concerned in the present case, which, in our judgment, is controlled by it.

The principle is thus generally stated in 3 Amer. & Eng. Encyc. Law. p. 76: “It has been seen that the gist of the offense of maintenance is, that the interference is officious; where, therefore, a party either has, or honestly believes he has, an interest, either in the subject-matter of the litigation, or in the question to be determined, he may assist in the prosecution or defense of the suit, either by furnishing counsel, or contributing to the expenses, and may, in order to strengthen his position, purchase the interest of another party in addition to his own. The interest may be either small or great, certain or uncertain, vested or contingent; but it is essential that it be distinct from what he may acquire from the party maintained. ” In Thompson v. Marshall, 36 Ala. 504; s. c., 76 Amer. Dec. 328, this principle was applied to a case where one co-defendant, in a suit pending to rescind a conveyance for fraud, purchased the interest of his co-defendant in the property in litigation, and assumed a liability for his vendor’s share of the costs and expenses of suit. The contract of purchase was held not to be champertous, because the interference was to protect a valuable interest, and was not, therefore, either an unlawful or officious intermeddling. So, in McCall v. Capehart, 20 Ala. 521, where certain persons, erroneously believing that they had an interest in a piece of land then in litigation, purchased the interest’of the defendant, and indemnified him against the costs and damages of suit, the court held the transaction free from the taint of champerty, on the ground that the assistance was rendered by the defendants “under the honest belief that they were interested in the result of the suit, and not for the purpose of fomenting litigation.”

The modern and better-definitions of champerty incorporate this idea fully. Mr. Wharton says: “Maintenance is support given to a litigant in any legal proceeding in which the person giving the assistance has no valuable interest, or in which he assists for an improper motive.” — 2 Whart. Crim. Law. (9th Ed.), § 1854. In 2 Bouvier’s Law Dict. (14th Ed.) 90, it is defined to be “a malicious, or at least officious interference, in a suit in which the offender has no interest, to assist one of the parties to it against the other with money or advice to prosecute or defend the action, without any authority of law.” So, Mr. Addison involves in the definition the idea of agreeing to assist in the prosecution of a law suit, “in which the party making the agreement is in no tuise interested, and with which he has no just or reasonable ground for interference.” — 1 Add. Contr. 256. Of course, it is necessarily true that, if the offense in question does not amount to maintenance, there can be no champerty in it, because, as we have said, champerty is but a species of maintenance.- — 2 Co. Inst. 207.

In Thallhimer v. Brinckerhoff, 3 Cow. 623; s. c., 15 Amer. Dec. 308, 314, a leading and learned case on the subject of champerty, it is said, “that any interest whatever in the subject of the suit is sufficient to exempt him who gives aid to the suitor from the charge of illegal assistance.” And referring to such interferences, it is said: “Upon all such cases these laws were never intended to were intended, to prevent the interference of strangers having no pretense of right to the subject-matter of the suit, and standing in no relation of duty to the suitor. They were intended to prevent traffic in doubtful claims, and to operate upon buyers of pretended rights, who had no relation to the suitor, or the subject, than as purchaser of the profits of litigations.” In Ware v. Russell, 70 Ala. 174; s. c., 45 Amer. Rep. 82, this court sustained an agreement between .attorney and client, as free from champerty or maintenance, where the defendant in attachment, in consideration of professional services on the part of the assignee, assigned to his attorney the entire property in litigation, giving him the entire management and control of the suit, and stipulating for his own, the assignors, active prosecution of it. It was said by Brickell, C. J.: “The corrupting element of the contract [of champerty] is its tendency to foment or protract litigation, its dependency for its value upon the termination of suits, and its introduction, to control and manage them, of parties 'without other right or interest than such as is derived from the contract.” In Call v. Caleff, 13 Met. 362, where two persons owned distinct rights to the exclusive use of a patent in two different places, near each other, it was held, that the interest which each had in maintaining the value and profit of his particular right would justify him in aiding the other to prosecute a suit for the infringement of the exclusive right of the latter. So it has been held, and is manifest, that any citizen may lawfully contribute to tbe lawful expenses of any public criminal prosecution, and the act will not subject him to the charge of maintenance. Com. v. Dupuy, Brightly (Pa.) 44. See, also, Story on Contr. § 579; Parsons Contr. *765-*766; 2 Story’s Eq. Jur. § 1050.

We may safely say that the whole doctrine of maintenance has been modified in recent times, so as to confine it to strangers who, having no valuable interest in a suit, pragmatically interfere in it for the improper purpose of stirring up litigation and strife. And champerty, which is a species of maintenance attended with a bargain for a part or the whole of the thing in dispute, does not exist in the absence of this characteristic of maintenance. If the pecuniary interest of a person, even though he own no part of the immediate subject-matter of the suit, be so connected with it collaterally in any way as to be diminished or increased in value by the result of such suit, we can perceive no principle of public policy that ought to forbid such person from taking proper care that such interest shall be properly protected in the courts. The forfeiture of the charter of a railroad, for example, on the line of which the owner of a factory or rolling-mill may have his plant, might result in his financial ruin; could it be said, in the light of modern views on this subject, that an agreement to aid in preventing the forfeiture would be cliampertous, and as such criminal, because the mill-owner held no stock in the railroad company, nor was otherwise immediately interested in the corporate charter or property? Interference in law suits, it has been said, to savor of maintenance, “must have some tendency to pervert the cause of justice” (Stanley v. Jones, 7 Bing. 369), or else, as said by Blackstone, “to pervert the remedial process of the law into an engine of oppression.” — 4 Bla.-Com. 135. These elements of unlawfulness are -entirely wanting in the supposed case.

Mr. Story asserts, that one “may purchase by assignment the whole interest of another in a contract or security, or other property, which is in litigation, provided there is nothing in the contract which savors of maintenance — that is, provided he does not undertake to pay any costs, or make any advance beyond the mere support of the exclusive interest which he-has so acquired.” And he puts his conclusion upon the ground, that a court of equity would, without special contract, compel the assignor to permit his name to be used in the suit, on the assignee’s giving him indemnity for such costs. “Such indemnity, and such proceedings, under such circumstances,” he adds, “are not deemed maintenance.” — 2 Story’s Eq. Jnr. § 1050. This seems to be the more correct and logical view, and better comports with the necessities of modern commerce, except as to transactions between client and attorney, which, by reason of their peculiar relations, ought perhaps to stand on a different basis from other contracts savoring of a maintenous character. Ware v. Russell, 70 Ala. 174; s. c., 45 Amer. Rep. 82; Elliott v. McClelland, 17 Ala. 206. Although, by the great weight of modern authority, contingent fees of a legitimate character charged for professional services, dependent on the amount of recovery, are not deemed within the rules against champerty and maintenance. — Thallhimer v. Brinckerhoff, 15 Amer. Dec. 321, note, and cases cited; Stanton v. Embrey, 93 U. S. 548; Blaisdell v. Ahern, 144 Mass. 393; s. c., 59 Amer. Rep. 99; Walker v. Cuthbert, 10 Ala. 213, 219.

But we prefer to place our decision in this case upon the broad ground, that the interest possessed by the defendant Jones in the pending suit, involving the fate of the Selma & New Orleans, Eailroad, was sufficient to rescue this transaction from the element of officious intermeddling, or pragmatical interference on his part. He and his associates owned another railroad, o^ed the Selma & Greensboro Eailroad, which was in operation between Akron and Marion Junction. The bed of the road extended from the latter point to Elizabeth Station, • a point on the New Orleans & Selma road; and on this portion of the track, iron had formerly been laid, but was removed by the Confederate Government during the late war. The owners of the Selma & Greensboro road had no access to Selma, except over the track of the Alabama Central Eailroad, and at a very heavy expense, by way of rental compensation. To avoid this expense, and thus appreciate the value and increase the profits of their road, they formed the plan of leasing or buying the Selma & New Orleans road, so as to connect with it at Elizabeth Station, and have an open route of their own to Selma. Negotiations were opened with the trustee of .the litigant bond-holders, and the bond-holders themselves, all of whom except Gilman, Son & Co., the plaintiffs in this suit, gave their consent to have such lease to be legalized by approval, of the Chancery Court in which the suit was pending. These particular bonds were purchased, and the agreement of August 16th, 1879, entered into, in order to consummate this enterprise. As stated by the record, the purpose of Jones was to enable him and his associates “to obtain the use of the New Orleans & Selma Eailroad, to run their cars over from Elizabeth Station to Selma; and, soon after such purchase, the proposed lease was made with the approval of the court, and the Selma & Greensboro road was put in order and ironed afresh to Elizabeth Station, and used by it to run their cars to the latter point, and thence on the said New Orleans & Selma .Eailroad into Selma.” It is argued by counsel, with much reason, that the interest which the purchasers had in the Selma & New Orleans road — the one in litigation — was emphasized by the existing right of the Selma & Greensboro road “to intersect, connect with, or cross” the former road at any point, and the duty of each road to receive and transport the cars of the other without dela or discrimination, as guaranteed by law. — Const. 1875, Art. XIY, § 21; A. G. S. R. R. Co. v. S. & N. R. R. Co., 84 Ala. 570. We hold that these facts relieved the contract in question of all taint of champerty, iriespective of other considerations which we do not propose to discuss.

There are other grounds, which, in our opinion, would justify the conclusion reached by the City Court adverse to the plaintiffs, but we need not consider them.

The action of the court in sustaining the demurrer to the second count of the complaint becomes immaterial, in view of the fact that the plaintiff, in the trial of the cause, had the full benefit of the issues raised under that count, under the first count.

On the remaining point, we entertain no doubt.' This involves the right of the plaintiffs to recover the further sum of $Í4,300.00, additional to the cash installment of $6,000, already paid. This sum was made payable by the terms of the contract only contingently, “whenever it is finally decided in said suit, or otherwise, that said bonds are a superior lien to the othei; bonds of said Railroad and Immigration Company of the same issue,” and to what was known as the Robertson judgment, which was the busis of said chancery suit. “Superior” means higher in dignity, quality, or excellency. — Worcester’s Diet. Here it manifestly means prior— superior lien meaning prior lien. This is made clearer, if possible, by a subsequent provision in the contract itself, that “in case such priority of lien shall not be finally established,” then the six thousand dollars already paid shall be deemed full payment, without any further payment, except settlement of the legal expenses assumed by Jones. This, moreover, was the main question in controversy in the case to which the agreement had reference, the proceedings in which are made a part of the present record. — Morton v. N. O. & S. Railway Co., 79 Ala. 590. The bonds of Gilman, Son & Co. were not decided to be a superior lien to all other bonds of the same issue. The record shows that an equal priority was accorded by the decree of this court to forty-seven other bonds held by Seligman & Go., as collateral security, for-which they were allowed to prove on terms of perfect equality with Gilman, Son & Co., as bona fide holders without notice of any infirmity of title in them. This fact is fatal to the contention of appellants on this particular point.

We discover no error in the judgment of the City Court, either in sustaining the demurrer of appellees to the second count of the complaint, or in the charge given the jury, to find for the defendants if they believed the evidence.

Affirmed.