Bent v. Priest

• Decision Date: 31 October 1885
• Citation: 86 Mo. 475
• Parties: BENT, Receiver, Plaintiff in Error and Respondent, v. PRIEST, Appellant and Defendant in Error.
• Court: Missouri Supreme Court

86 Mo. 475

BENT, Receiver, Plaintiff in Error and Respondent,

v.PRIEST, Appellant and Defendant in Error.

Supreme Court of Missouri.

October Term, 1885.

Appeals from St. Louis Court of Appeals.

AFFIRMED.

A. J. P. Garesche and J. M. Holmes for appellant, Priest.

(1) The action, if it ever existed, was included in the transfer to the Mound City Company. (2) The action is brought under a champertous agreement and plaintiff cannot recover. Arden v. Patterson, 5 John. Ch. 44; Weekly v. Hall, 13 Ohio, 175; Webb v. Armstrong, 5 Humph. 381; Rives v. Weaver, 36 Miss. 383; Barber v. Barber, 14 Wis. 143; Greenman v. Cohie, 61 Ind. 206; Gilbert v. Holmes, 64 Ill. 556; Cardwell v. Sprigg, 7 Dana (Ky.) 39; Marks v. Jordan, 3 B. Mon. 116; Crowley v. Vaughan, 11 Bush (Ky.) 517; Coughlin v. N. Y. & H. Railroad, 71 N. Y. 452; Vincent v. Ashley, 3 Head (Tenn.) 594; Haynes v. Coyne, 10 Tenn. 343; Barnes v. Strong, 1 Jones Eq. (N. C.) 100. Champerty is malum in se. 2 Bacon's Abridg't 186; Weeks on Att'ys, 166; Brown v. Beauchamp, 5 Mon. (Ky.) 416. And our statute adopts the common law. 1 Code, 521, secs. 3117-3118; Duke v. Harper, 66 Mo. 58. The abandonment of the bond since suit brought don't impair the defence. For the right to recover depends upon the facts when suit was brought, the statu quo ante bellum. Norcom v. D'Oench, 17 Mo. 115; Weinrich v. Render, 33 Mo. 83; Hunt v. Thompson, 51 Mo. 155; Norfleet v. Russell, 64 Mo. 178; Wilson v. Garaghty, 70 Mo. 519; Dunlap v. French, 76 Mo. 108; Hermann v. Brewster, 7 Bush (Ky.) 355. (3) This action is barred by the statute of limitations. Wilmerding v. Russ, 33 Conn. 67; Smith v. Riccords, 52 Mo. 581; S. C., 56 Mo. 553: Rogers v. Brown, 61 Mo. 187; Wood v. Carpenter, 101 U. S. 135; Cole v. McGlattery, 9 Me. 131; Mudd v. Hamilton, 8 Allen, 130; Webster v. Newbold,41 Pa. St. 482; Murray v. Coster, 20 Johns. 576; King v. Bloodgood, 7 Johns. 114; Hawley v. Cramer, 4 Cowen, 717; Robinson v. Hook, 4 Mason, 151; Clark v. Bowman, 18 Wallace, 493; Beckford v. Wade, 17 Vesey, 87; Gebhardt v. Sattler, 40 Iowa, 157; Haymond v. Kealy, 3 Cranch C. C. 325; Farnham v. Brook, 9 Pick. 242-248; Martin v. Bank, 31 Ala. 113; 1 Bailey S. C. ch. 304. (4) The evidence don't establish a cause of action. 10 House of Lords, 26; Bank of London v. Tyrrel, Story's Conf. Laws. (8 Ed.) sec. 249. (5) It is incumbent on defendant to make out the defence under the statute of limitations. He has the means of showing when Wyman received these bonds; or at any rate he ought to have such means. These particulars were and always have been concealed from us. If the point be left in obscurity the decision must be against him who fails to sustain his plea, though he possesses the means of so doing; or at any rate, the means of showing the facts, whether they sustain his plea or not. (6) But the matter was kept secret at the time; was not a matter of which the St. Louis Mutual Life Insurance Company had any notice or knowledge, and was only discovered by the representative of the St. Louis Mutual Life Insurance Company about a year before the hearing; in other words, cotemporaneously with the institution of this suit. (7) The plaintiff brings himself within the saving clause of the statute (W. S., chap. 89, secs. 8, 10), and the defendant has wholly failed to prove, as it was incumbent on him to do, that more than five years had elapsed since the bonds were received by Wyman. (8) The question whether or not a champertous contract was made between the receiver and his counsel has no relevancy. The receiver does not rely to maintain his action on any instrument or oral contract tainted with a champertous agreement.

T. T. Gant and J. M. Glover for respondent, Bent.

(1) Whatever was received by Wyman was received by Priest. He turned Peck over to Wyman for conference and settlement and is answerable for whatever came into Wyman's hands in the same manner precisely as if he had received it in his own hands. Shines v. Bank, 70 Mo. 524. (2) The money or property thus coming to Wyman's or to Priest's hands was the consideration paid for Priest's action in promoting the assignment and re-insurance spoken of. (3) The action of Priest, thus paid for, was what he did in his capacity as director; and whatever was thus paid to him for that action became the property of the company whose director he was. Perry on Trusts, secs. 206-7; Gaskell v. Chambers, 26 Beav. 360; Story's Eq. Jur., sec. 1564. (4) As to the defence of the statute of limitations, it cannot prevail. The “ratifications” were exchanged after the middle of January, 1874. The bonds were turned over at least as much as three or four weeks afterwards--(Peck says from four to six weeks)--and presumably much later. It is shown by the record that Wyman (who, besides being the partner, was the alter ego of Priest) chafed at the delay made by Peck. He wanted the money. He wanted the gas light bonds. He was disappointed in getting either. He finally, in despair of anything better, took these railroad bonds. If the interval between the exchange or ratification and the delivery to Wyman of the bonds was five weeks, this suit, which was begun on February 19, 1879, was within the five years.

BLACK, J.

In 1873, the superintendent of insurance began proceedings to wind up the St. Louis Mutual Insurance Company, which was not then in a satisfactory condition. Most of the directors regarded a reinsurance as the best way out of the difficulty. Efforts were made to that end, including negotiations with the Mound City Life Insurance Company. Charles H. Peck, who was a large stockholder in the St. Louis Mutual, but not a director or officer, made proposals to some of the officers of the Mound City to bring about such an arrangement, the result of which was a contract between Peck and the president of that company, dated the twenty-seventh of November, 1873, by which, after reciting the desire of that company to effect the reinsurance, and the deemed necessity of Peck's services to accomplish that object, the company agreed to pay him $155,000 within sixty days, for which sum Peck was to “devote his services for the procurement of such reinsurance and effecting a contract between said companies.”

Peck thereupon approached the defendant, a director of the St. Louis Mutual, who at first did not take much interest in the matter. Peck, then, in substance, stated that he was largely interested in having the reinsurance effected; that it was worth ten or fifteen thousand dollars to the stockholders of the St. Louis Mutual, and that he meant business.

Priest and Wyman were partners in the real estate business and upon Peck's suggestion that his business was legitimately within the partnership business, Priest referred Peck to Wyman, who was at a desk in the same room or office. The result of the negotiation between Peck and Wyman was that the former placed bonds of the Leavenworth, Atchison & Northwestern Railroad Company of the par value of fifteen thousand dollars in the hands of Mullikin to be handed to Wyman, if the reinsurance was effected, otherwise they were to be returned to Peck. This agreement was in writing, but was subsequently destroyed. The evidence, including a letter from Peck, shows that he agreed within thirty days to substitute money, or bonds of the Vulcan Iron Company, or St. Louis Gas Light Company, for these railroad bonds, the latter, it is said, then being worth but sixty cents on the dollar.

As the Mound City Insurance Company then stood, the superintendent of insurance did not regard it strong enough to make the reinsurance, and it was required to add a half million dollars to its capital stock. In December, 1873, a contract of reinsurance was made by the St. Louis Mutual with the Mound City, the latter also stipulating that for a transfer of all of the assets of the St. Louis Mutual it would assume all the liabilities of that company, increase its own stock a half a million dollars, and out of this increased stock exchange its own stock for that of the St. Louis Mutual. Of the twenty directors of the St. Louis Mutual, seventeen, including the defendant, voted for the measure. The Mound City increased its stock as agreed, the reinsurance was approved by the superintendent of insurance and by the court in which the proceedings against the St. Louis Mutual were pending, and those proceedings were dismissed. By the seventeenth of January, 1874, the whole contract was substantially completed. Peck received his agreed compensation from the Mound City Insurance Company in secured notes which that company acquired by the assignment from the St. Louis Mutual. Peck would not, at least did not, substitute money or bonds of the Iron Company, or Gas Company, as he had agreed, for the railroad bonds in the hands of Mullikin, and Wyman, unable to do better, took those bonds. In August, 1874, Priest and Wyman dissolved their partnership, at which time Wyman handed over to Priest the one-half of the railroad bonds.

The conclusion from all the evidence is irresistible that defendant agreed to and did advocate and vote for the assignment and reinsurance, in consideration of the arrangement between Peck and Wyman. At all events the bonds were given to secure defendant's active influence in favor of the measure, though without this he might not have been hostile to the transaction.

In 1877 the superintendent of insurance commenced new proceedings against the St. Louis Mutual Life Insurance Company, and plaintiff was appointed receiver. By this suit he seeks to charge the defendant as a trustee of all the railroad bonds. The circuit court so held and decreed as to the one-half received by the defendant, and on his refusal to produce the same, entered a money judgment for the estimated value. From this judgment the defendant appealed. Plaintiff took a writ of error. In like manner both parties come to this court from the court of appeals, where the judgment of the circuit court was affirmed.

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