Draper v. Zebec
| Citation | 37 N.E.2d 952,219 Ind. 362 |
| Decision Date | 09 December 1941 |
| Docket Number | 27511. |
| Parties | DRAPER v. ZEBEC et al. |
| Court | Supreme Court of Indiana |
[Copyrighted Material Omitted]
Appeal from Newton Circuit Court; George F. Sammons Judge.
Henry G. Doherty, of East Gary, for appellant.
Jay E. Darlington, of Hammond, Walter Myers, Walter Myers, Jr. and Donald L. Smith, all of Indianapolis, and Bomberger, Peters & Morthland and Crumpacker & Friedrich, all of Hammond, for appellees.
This is an appeal from a judgment abating a proceeding supplemental to execution.
James Hansen, receiver of Mid-City State Bank, recovered a judgment against the appellee Katherine Zebec. Execution issued, and afterward this action was brought by a complaint alleging that the defendant, Federal Life Insurance Company, is indebted to the judgment debtor in a sum exceeding the amount of the judgment and the amount allowed by law as exempt from execution, and that the judgment debtor has no other property subject to execution. The insurance company appeared and answered that it was not indebted to Katherine Zebec in any sum. Afterward the plaintiff filed a supplemental complaint alleging that at the time of the filing of the original complaint there was pending in the United States District Court for the Northern District of Indiana an action by Katherine Zebec against the defendant insurance company, and that Katherine Zebec recovered therein a judgment in the sum of $26,046; that thereafter the judgment was assigned by Katherine Zebec to Minnie Lees and Zora Zebec; that the Federal Life Insurance Company, without the knowledge or consent of the plaintiff, and while the original complaint was pending, paid the judgment. There is prayer for an order against Katherine Zebec to appear and answer concerning the moneys paid her by the Federal Life Insurance Company, and that the company be ordered to appear and answer and pay the amount of the original judgment.
Afterward Katherine Zebec appeared and filed an answer in abatement based upon the ground that, by reason of the enactment of chapter 84, section 5, of the Acts of 1937, which provides that 'no execution shall issue under this act upon any judgment upon a debt secured by mortgage upon real property,' the right to have the execution satisfied is extinguished. A demurrer to this answer was overruled, and the plaintiff replied in six paragraphs, all based upon the statute of 1937. There was a trial and judgment abating the action.
The plaintiff filed a motion for a new trial, pending the determination of which he filed his petition to have Floyd S. Draper substituted as party plaintiff. The petition alleges that on the 24th day of June, 1940, pursuant to authority granted by the Lake Superior Court, the plaintiff, as receiver, sold, assigned, transferred, and set over to Floyd S. Draper all of his right, title, and interest in the judgment which was the basis of the proceeding supplemental to execution, and it is recited that by reason of such authority Floyd S. Draper has become the real party in interest. The defendant Zebec objected to the substitution, which objection was overruled, and Floyd S. Draper was substituted as sole plaintiff. Thereafter the plaintiff's motion for a new trial was overruled. The defendant Zebec then filed her motion that the court take no further action in the cause upon the ground that 'this cause of action became void on June 24, 1940, and the judgment sued on became void on the same date, when said cause of action and judgment were purchased from the original plaintiff by his attorney of record, Floyd S. Draper, during the pendency of the action. * * *' The plaintiff Draper tendered his affidavit in opposition to the motion, from which the following facts appear:
The plaintiff Draper was a member of the firm of Draper & Draper, attorneys, who represented Hansen, the receiver, at all times involved. The judgment against the defendant Zebec was recovered in May, 1932. In November, 1930, the defendant Zebec filed a suit in the Lake Superior Court against the Federal Life Insurance Company, and the cause was afterward transferred to the United States District Court for the Northern District of Indiana. The proceeding supplementary to execution was filed in July 1932. Shortly thereafter one of the attorneys for the defendant Zebec represented to the plaintiff's attorneys that in his judgment would be injurious to the interests of Mrs. Zebec, in her action against the insurance company, if the proceeding supplemental to execution was pressed before the case against the insurance company was concluded, and suggested that if the latter case were permitted to continue pending on the docket until the determination of the action against the insurance company it would be agreed that no money recovered from the insurance company would be disbursed until the proceeding supplemental to execution had been determined. This suggestion and agreement were afterward incorporated into a letter directed to Draper & Draper. In the letter it was stated that one of the attorneys for the insurance company had agreed to stand by in the supplemental proceeding until the action in the federal court was settled. Prior to the judgment in the federal court, one of the attorneys for the insurance company promised the plaintiff Draper that no judgment obtained by Mrs. Zebec would be paid until and unless he, the attorney, first notified Mr. Draper. In April, 1935, Mrs. Zebec recovered a judgment against the insurance company for $26,026. There was an appeal and the judgment was affirmed in March, 1936. In February, 1936, Katherine Zebec assigned the judgment to Minnie Lees and Zora Zebec, her daughters. It is asserted that the assignment was made without the knowledge of Hansen, receiver, or his attorneys, and with the intention to defraud the receiver. On or about the 16th day of October, 1936, the judgment was paid by the Federal Life Insurance Company, and the satisfaction was signed by Katherine Zebec, Minnie Lees, and Zora Zebec. On June 3, 1940, the receiver had liquidated the assets of his trust to the point where it was, in his opinion, advisable to sell the remaining assets, among which was the judgment against Mrs. Zebec, for cash. He filed his petition in the court administering the trust, and an order was made authorizing a sale. The receiver was unable to sell the judgment, and he then advised the firm of Draper & Draper that he believed they had not acted with due diligence in connection with the matter in that they had relied too greatly upon the written promises of other attorneys, and that as a result the judgment had not been collected, and that in his opinion said attorneys were morally, if not legally, obligated to purchase the judgment, and he suggested that the judgment be purchased by the attorneys for $1,000, the sum to be credited upon the attorneys' fees due in connection with their employment by the receiver. Floyd S. Draper offered the sum of $1,000 for the judgment, which was tentatively accepted. The receiver filed his petition in court for an order confirming the sale, which was approved, and a copy of the petition to the court for approval of the sale is set out as an exhibit. It appears in the petition that all of the facts were submitted to the supervising court, including the fact that there had been a judgment abating the proceeding supplemental to execution, and that a motion for a new trial was pending. The receiver also said in his petition for approval of the sale that he felt the attorneys were morally, if not legally, obligated to purchase the judgment. The sale was outright and unconditional. The petition was approved and the sale confirmed by the court. It is further made to appear from the plaintiff's affidavit that no arrangement had been made between the plaintiff and Hansen, either individually or as receiver, to share the proceeds of the litigation; that it was not purchased for speculative or investment purposes, but purely for the purposes set out. The trial court denied the plaintiff the right to file this affidavit and showing, and thereupon sustained the motion of the defendant Zebec that no further action should be taken, and adjudged and decreed that the plaintiff Draper was not permitted to proceed further as a party in the cause.
Two questions are presented: Was the assignment of the judgment and cause of action to the appellant Draper champertous and therefore void? Did the statute relied upon by the appellees strike down the right of the judgment plaintiff to enforce the execution?
Professor Williston in his work on contracts says: The author says that the technicality of the rules of the English common law 'has led some courts to refuse to apply the common-law tests of champerty and maintenance, and to consider merely whether the particular bargain in question is oppressive to the client, vexatious to the defendant, or a misuse of the courts. * * *' Williston on Contracts, Rev.Ed., Vol. 6, § 1711, 1712, pp. 4833, 4837, 4838.
Space does not permit of an analysis of the authorities dealing with the early common-law rules affecting maintenance and champertous contracts and of the gradual relaxing of safeguards which were thought necessary to protect the public interest in respect to litigation. But it is clear from the authorities that everything declared against and every contract held void as champertous were in violation of a statute or thought to be against the public interest and against public policy,...
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Draper v. Zebec
...219 Ind. 36237 N.E.2d 952DRAPERv.ZEBEC et al.No. 27511.Supreme Court of Indiana.Dec. 9, Action supplementary to execution by James Hansen, receiver of the Mid-City State Bank, against Katherine Zebec, a widow, and another, wherein defendant Zebec appeared and filed an answer in abstement, t......