Mann v. Fairchild , 1853 N.Y. App. Div. LEXIS 18 ( 1853 )

By the Court, S. B. Strong, J.

The revised statutes provide that no attorney, counsellor or solicitor, shall directly or indirectly buy, or be in any manner interested in buying, any bond, bill, promissory note, bill of exchange, book debt, or other thing in action, with the intent, and for the purpose, of bringing any suit thereon. (2 R. S. 288, § 71.) The claims set forth in the complaint are confessedly such as are described in this statutory prohibition. The defendant alledges in his answer, and the plaintiff admits by his demurrer, that the plaintiff is, and at the time when he purchased the claims in controversy was, a practising attorney, counsellor and solicitor, transacting business in those capacities in the city of New-York, and that he purchased such claims with full knowledge and notice that the same were contested and would be litigated, and with the intent, and for the purpose, of bringing a suit, or suits, thereon. The pleadings clearly bring the plaintiff’s transactions within the letter of the statute, and, unless there is something in the history of the case which exempts him from its operation, his purchase was null and void, and conferred upon him no right of action. The complaint alledges, and for the purpose of determining this demurrer the allegation must be taken to be, as it undoubtedly was, true, that his purchase was made at a judicial sale had under a decretal order of the late court of chancery; and the plaintiff contends that the statute was not designed to prevent purchases under such circumstances; and also that the intent to prosecute, which was requisite to make any purchase illegal, had reference to actions at law only, and not to suits in chancery.

It is a safe rule to adopt, in the construction of a prohibitory statute, that it was designed to prevent all acts included in its terms which might be productive of the evils it Was intended to remedy. The main object of the statute in question was to prevent litigation by prohibiting the purchase of choses in action by those whose pecuniary interests might be peculiarly advanced by instituting suits upon them, and who, in consequence of their position, might conduct such suits upon unequal terms. Now the injury resulting from such interested litigation would be the same, whether the purehase was made at a judicial, or a private, sale. There is no conceivable difference. The purchases at judicial sales might not be as numerous as at private sales, and the evil therefore not so widely extended; but a subdivision of a class prohibited from acting, in general terms, by a statute, is not exempt from its operation by reason of some distinguishing peculiarity which in no manner diminishes the mischief it was designed to prevent. It was contended on the argument that as the statute authorizing the sale of the effects'of an insolvent corporation, contained no restriction as to purchasers, the prohibitory provision relative to the purehase of choses in action by members of the bar, was inapplicable to them. That might be true if the application of the restriction would prevent the sales altogether. But it would not have that effect. It might diminish the number of bidders, and to some extent the avails of the sales. But it would no doubt be better to submit to that evil rather than encounter the greater one of creating incentives to, and facilities for, litigation. Statutes should be construed together, and a special prohibition in one should be deemed an exception to a general provision on the same subject, in another, rather than a contradiction. Taking the two statutes to which I have referred, together, they authorize the sale of the effects of a bank which has failed, except of its choses in action to lawyers for the purpose of prosecution. The case of Tuttle v. Jackson, (6 Wend. 213,) was cited by the plaintiff’s counsel to show that statutory restrictions do not apply to judicial sales. That case had reference to the provisions of the statute to prevent the sale and purchase of pretended titles. (2 R. S. 691, §§ 5, 6.) But those provisions referred, in terms, exclusively to private sales. The fifth section prohibits sales of lands which are the subjects of controversy where the “ grantor” is not in possession; and the sixth section forbids the sale of any pretended right or title to lands, unless the “ grantor,” or those by whom he claims, shall have previously been in possession for the space of one year. Judicial sales are made by public officers, and not by private grantors. Accordingly, the provisions of the two sections which I have last quoted are inapplicable to the sale of lands under execution when the sheriff is directed to sell the real estate which the defendant had at the time when the judgment was docketed, in whose hands soever the same may then he. If, however, the prohibition against selling lands out of the possession of the grantor had been sufficiently broad to include judicial sales, in general terms’, then the authority to sell lands out of the possession of the defendant, under an execution, would have been a specific exception, and the court of dernier resort was right in deciding, as that tribunal did, in Tittle v. Jackson, that the prohibition did not extend to judicial sales. I cannot, however, agree with the remark made by the chancellor, in that case, that such sales do not come within the mischiefs intended to be guarded against by the statute. The result of a sale of a pretended title would be quite as mischievous in the one case as in the other; but the good generally resulting from the unrestricted sale of the titles of judgment debtors, no doubt overbalances the evil which would be produced by occasional sales of the titles to land of parties out of possession.

It seems to have been the opinion of Judge Beardsley, as expressed in Hall v. Gird, (7 Hill, 586,) that the intent requisite to prevent the purchase of choses in action by members of the bar, had reference to the institution of actions at law only, and not to suits in equity. The reason assigned by him is that the provisions in the 75th and the six following sections of the same title of the revised statutes relative to certain actions on the purchased claims, are applicable to legal, but not to equitable actions. That is so, undoubtedly; but those enactments do not purport to include all suits which may be instituted on such unlawfully purchased claims. There may be others, and to them, and indeed to all on such claims, in whatever court they may be instituted, the maxim ex malificio non oritur actio would apply and defeat them. Accordingly, it was said by the late chancellor, in Baldwin v. Latson, (2 Barb. Ch. Rep. 307,) that the prohibitory provision in question undoubtedly applies to the purchase of a chose in action for the purpose of instituting a suit in equity, as well as to the purchase with the intention of bringing a suit thereon at law, and he held in that case that a purchase made contrary to the provisions of the statute would defeat a suit instituted by the guilty party, in a court of equity. That such was the design of the legislature, is evinced by extending the provision to “ solicitors,” who at the time of the passage of the revised statutes acted as such only in the court of chancery.

In a case between the parties to this suit, and upon the same transactions, in this court sitting at a general term in the fourth district, published in the fifth volume of Barbour’s Reports, (p. 108,) an opinion was expressed that the restriction in question does not extend to purchases made at judicial sales. But that point was not necessary to the determination of that case as it was then presented. It was then as it is now, a suit in equity, and a plea had been interposed to the whole complaint, and in the opinion of the court satisfactorily proved, and it was then very properly determined, without reference to the absolute sufficiency of the defense against the claims, that the plaintiff must fail. The opinion that the demands were valid in the hands of the plaintiff, and would have prevailed, under appropriate pleadings, was obiter. It could not have been reviewed on an appeal, and we are at liberty to disregard it as a controlling authority without departing from the salutary injunction stare decisis.

The admission of the wrongful intent, made, in effect, by the plaintiff’s demurrer, was probably not designed as absolute, but merely for the purpose of having the applicability of the restriction to the supposed circumstances, settled. Although, therefore, the defendant is entitled to judgment on this demurrer, the plaintiff should be permitted to reply as to the facts which it admits, on payment of the costs.

The demurrer interposed by the defendant to a part of the replication, raises the question whether the case presented by the plaintiff is one over which a court of equity has peculiar and exclusive jurisdiction. If it is, as it is not wholly on the ground of fraud, the answer that the cause of action did not commence within the six years next before the commencement of the suit, presents no bar. The complaint sets forth that the defendant had been for several years prior to the failure of the bank, its cashier and principal financial agent; that he was also its assignee under several assignments; that as such his accounts with the bank, at the time when its affairs were transferred to the receiver, were numerous and complicated; that the plaintiff had purchased from'the receiver all the claims and demands and rights of action of the bank against the defendant, not only singly, but as one of the late firm of Fairchild &. Bacon, and the plaintiff asks, as (if his purchase is valid,) he had a right to ask, that the defendant may be directed to answer and account to him for the money, property and assets of the bank, of every description, which came into his possession or under his control, to state the nature and extent of his indebtedness to the bank, arising from his dealings with it in his individual capacity, and as cashier, agent and consignee, and that he may be adjudged to pay to the plaintiff the money and property which may be found, upon such accounting, to be due or to belong to him, or to which he may be entitled. Surely the old action of account would not give to the plaintiff the relief to which, under the allegations in his complaint, he would be entitled; nor could such relief be obtained by him in any other action at law. The ease is within the 52d section' of the title of the revised statutes relative to the time of commencing actions; and the plaintiff will not be barred from obtaining relief by lapse of time, if his causes of action accrued within ten years before the institution of this suit.

[Kings General Term, January 3, 1853.

Barculo, Brown and S. B, Strong, Justices.]

There must be judgment for the plaintiff on the demurrer, interposed to a part of his replication, by the defendant; with liberty to the defendant to withdraw the demurrer on payment of costs.

Judgment against both demurrers.