In re Clark

• Decision Date: 13 March 1906
• Citation: 77 N.E. 1,184 N.Y. 222
• Parties: In re CLARK.
• Court: New York Court of Appeals Court of Appeals

184 N.Y. 222

77 N.E. 1

In re CLARK.

Court of Appeals of New York.

March 13, 1906.

Appeal from Supreme Court, Appellate Division, Fourth Department.

In the matter of proceedings for the disbarment of Arthur E. Clark, an attorney, based on charges of misconduct preferred by Frank O. Bailey. From an order confirming the report of the referee (95 N. Y. Supp. 388,108 App. Div. 150) and directing the disbarment of the attorney, he appeals. Affirmed.

This proceeding is based upon 11 charges of misconduct preferred by Frank D. Bailey, of Syracuse. The appellant interposed an answer, and the matter was referred to the Honorable Charles A. Hawley, of Seneca Falls, to take the proofs therein and report the same to the Appellate Division, together with his opinion thereon. The referee reported that eight of the charges had been fully established by the evidence, but as to three others (those numbered 6, 7, and 11), while they were proved to be true in fact, the facts thus proved did not constitute wrongful conduct on the part of the attorney. The Appellate Division confirmed the referee's report, and made the order of disbarment, from which the present appeal is taken.

Adelbert Moot, William C. Watson, and Arthur E. Clark, in pro. per., for appellant.

Bayard J. Stedman, Seldon S. Brown, and Frank E. Young, for respondent.

WILLARD BARTLETT, J.

This is a melancholy case, resulting in the destruction of the professional career of an educated lawyer, who for many years appears to have enjoyed an excellent reputation and the general esteem of the community in which he has lived. It demands and it has received the most scrupulous and careful attention of the courts in considering the evidence offered in support of the charges and the proper and necessary inferences to be drawn from the proof. The essential facts are uncontroverted, and they lead unquestionably to the painful conclusion that the appellant ought not to be allowed to pactice law any longer. I do not propose to discuss in detail the evidence which has convinced the referee and the Appellate Division of the truth of all of the eight charges which they have declared to be established; but as to two of them, there are reasons why some observations may well be added to what was said in the court below.

The fifth charge involves an accusation of champertous conduct in violation of the provisions of section 74 of the Code of Civil Procedure, and the proper construction and application of that section are subjects of great interest and practical importance to lawyers throughout the state. The tenth charge, which is practically a charge of selling out his clients, presents so clear a case of premeditated moral turpitude in his professional relations, on the part of the appellant, that a brief consideration of the proof by which it is sustained will suffice to demonstrate that no injustice would have been done if his disbarment had been based upon that charge alone. The fifth charge is as follows: ‘That in or about the years 1896 and 1897 the said Arthur E. Clark entered into certain contracts with one Charles A. Snell, by the terms of which he employed the said Snell to procure persons throughout the state of New York to retain and employ said Clark to commence actions against different telephone and telegraph corporations, and in and by said contracts the said Clark promised and agreed to pay said Snell for inducing said persons to place such claims in his hands for collection and for the purpose of bringing actions thereon; that, in pursuance of said contract, the said Snell did procure persons to the number of over 2,000 to employ said Clark as attorney as aforesaid, and that said Clark paid to said Snell large sums of money on account thereof; that said contracts were in violationof sections 74 and 75 of the Code of Civil Procedure of the state of New York.’

The referee reported to the Appellate Division that in his opinion the proofs abundantly sustained this charge. In 1896 Mr. Clark entered into an oral agreement with Mr. Charles A. Snell, who was not an attorney, whereby Snell undertook to induce persons having claims against telegraph and telephone companies on account of the erection of poles in the highways upon which they owned lands to place such claims in the hands of Clark for prosecution. Clark agreed to pay Snell $3, and subsequently $5, for each claim so procured. Snell obtained about 100 claims at $3, and about 300 at $5. Then Clark and Snell entered into the following contract in writing: ‘It is agreed by and between Arthur E. Clark and C. A. Snell both of Batavia, Genesee county, New York, that said Snell shall work for the said Clark in getting telephone and telegraph contracts in the same manner as he has done heretofore, and that said Clark agrees to pay him one-half of the proceeds realized by said Clark on account of said claims; said Snell is to pay his own expenses while he is out soliciting the said claims; said Clark is to pay his own expenses while he is out settling, and in case said Snell goes out to settle them, said Clark is either to pay said Snell's expenses while he is out or said Clark is to see that said Snell's expenses are paid by the company or companies. Said Clark is to have the right to hire other men to do the same work provided he cares to do so. Said Snell is to have the right to employ men to work under him, but said Clark is to have the same share in the proceeds of their work. Dated February 22nd, 1897. Arthur E. Clark. C. A. Snell.’ For use by Snell under this contract a printed blank for the retainer was prepared for execution by Mr. Clark and the landowner in each case when the blanks were filled out, in which provision was made for specifying the landowner's claim for damages at so many dollars per pole, so many dollars for mutilating shade trees, and so many dollars for mutilating fruit trees, and whereby Clark agreed to accept from the landowner 10 per cent. of the damages recovered from the company to be proceeded against in full compensation for his services. In some cases the stipulated compensation was more than 10 per cent. About 2,000 claims were obtained by Snell and his agents under this contract and turned over to Clark, who paid Snell a large sum of money in the aggregate for his services in procuring the same. Most of the claims appear to have been settled without suit, although the referee reports that suits were brought upon some of them. Upon these facts as to which there is no substantial dispute, the question of law is whether Mr. Clark can be deemed to have violated section 74 of the Code of Civil Procedure. To quote the language of his learned counsel upon this appeal: ‘It is claimed that it is champerty for a lawyer to hire a local collector and an insurance agent, like Snell, to visit farmers and get their written contracts authorizing an attorney like Mr. Clark to bring actions of ejectment for them, with an agreement to give the attorney from 10 to 30 per cent. of the amount collected in such actions.’ He denies that such conduct on the part of an attorney is forbidden by the laws of this state, and it is now incumbent upon this court directly to decide whether it is or not.

Champerty, under the law of England, was an agreement to assist another in prosecuting a suit in consideration of receiving a share of the sum or property recovered. As recently as 1873 it was defined by Blackburn, J., as ‘a bargain whereby the one party is to assist the other in recovering property and is to share in the proceeds of the action,’ and was declared to be illegal under the English law. Blackstone makes it an element of the offense that ‘the champertor is to carry on the party's suit at his own expense’ (4 Blackst. Com. [184 N.Y. 227]135), but this is not the uniform view of the writers on elementary law as was pointed out by the Supreme Judicial Court of Massachusetts in Lathrop v. Amherst Bank, 9 Metc. 489, 492. Whatever may have been the law of champerty in this state prior to that time, it became wholly comprised in the Revised Statutes upon their enactment in 1827 and 1828. Judge Samuel L. Selden, writing for this court in 1856, said that ‘not a vestige of the law of maintenance, including that of champerty, now remains in this state, except what is contained in the Revised Statutes.’ Sedgwick v. Stanton, 14 N. Y. 289, 301.

These provisions of the Revised Statutes material to the present discussion were as follows: ‘Sec. 72. No attorney, counsellor or solicitor, by himself, or by or in the name of any other person, either before or after suit brought, shall lend or advance, or agree to lend or advance, or procure to be lent or advanced, any money, or any bond, bill of exchange, draft or other thing in action, to any person, as an inducement to the placing, or in consideration of having placed, in the hands of such attorney, counsellor or solicitor, or in the hands of any other person, any debt, demand or thing in action, for collection.

‘Sec. 73. Every attorney, counsellor or solicitor, who shall violate either of the two last preceding sections, shall be deemed guilty of a misdemeanor, and on conviction thereof, shall be punished by fine or imprisonment, or both; and he shall also be removed from office in the several courts in which he is licensed.’ 2 Rev. St. (1st Ed.) pt. 3, c. 3, tit. 2, §§ 72, 73.

The effect of these sections upon contracts between attorney and client was considered in Coughlin v. N. Y. C. & H. R. R. Co., 71 N. Y. 443, 452,27 Am. Rep. 75, in the light of the language of section 303 of the then existing Code of Procedure, providing that ‘all statutes establishing or regulating the costs or fees of attorneys, solicitors and counsel in civil actions, and all existing rules and provisions of law restricting or controlling the right of a party to agree with an attorney, solicitor or counsel for his compensation are repealed; and hereafter the measure of such...