Kelerher v. Henderson.

• Court: Missouri Supreme Court
• Writing for the Court: Per Curiam
• Citation: Kelerher v. Henderson., 101 S.W. 1083, 203 Mo. 498 (Mo. 1907)
• Decision Date: 29 April 1907
• Parties: KELERHER et al. v. HENDERSON.

101 S.W. 1083

203 Mo. 498

KELERHER et al. v. HENDERSON.

Supreme Court of Missouri.

April 29, 1907.

1. PLEADING—ANSWER—NEW MATTER—ISSUES.

Under Rev. St. 1899, § 604 [Ann. St. 1906, p. 631], providing that the answer shall contain a statement of any new matter constituting a defense or counterclaim, a defendant in an action on a contract cannot interpose the defense of champerty not raised in the petition or answer.

2. CHAMPERTY—CHAMPERTOUS CONTRACTS.

A contract between plaintiff and defendant, an attorney, which provides that in consideration of services rendered by plaintiff in procuring bonds of a county as described in a receipt, to be sued on by defendant in accordance with a contract, appended to the receipt, defendant agrees to pay plaintiff one-half of the fee accruing in accordance with its terms, it being understood that plaintiff "shall pay one-half of any and all reasonable expenses * * * that may be necessary and proper" to insure the successful prosecution of the suit, does not bind plaintiff to pay any part of the costs of a suit on the bonds, and is not champertous on its face, though the contract appended to the receipt stipulates that, in case a suit is defeated, the attorney will pay all the costs thereof.

3. SAME—WHAT LAW GOVERNS.

The common law governing champerty is in force in Missouri.

4. SAME—CONTRACTS ENFORCEABLE.

A contract not void as champertous which binds an attorney to pay to a third party a portion of the fees which he may earn and collect in pursuance of a champertous contract will be enforced.

Lamm, J., dissenting.

In Banc. Appeal from St. Louis Circuit Court; Warwick Hough, Judge.

Action by Patrick Kelerher and another against John B. Henderson. From judgments against plaintiffs on the cause of action stated in the petition and in favor of plaintiffs on the cause of action stated in the answer, both parties appeal. Reversed and remanded.

The following is the opinion of Woodson, J., in division No. 1:

"This is a suit which was instituted in the circuit court of the city of St. Louis, and based upon a written contract which is set out in the petition. The petition, in substance, alleges: That at all times therein mentioned the plaintiffs were copartners in business under the firm name of P. F. Kelerher & Co. That defendant and one George H. Shields were copartners in business under the firm name and style of Henderson & Shields, engaged in the practice of law. That at the city of St. Louis, on or about the 20th day of February, 1878, the said firm of Henderson & Shields, of which defendant was a member, entered into the following written agreement with the plaintiffs, to wit: `It is hereby agreed by the undersigned that for and in consideration of the services rendered by P. F. Kelerher & Co. in procuring from the bondholders of Knox county, Missouri, a certain lot of bonds and past due coupons as described in a receipt given to said P. F. Kelerher & Co., as trustees, this day and to be sued upon in accordance with a contract appended to said receipt to pay said P. F. Kelerher & Co., 50 per cent., one-half of the fee accruing to us in accordance to the terms of said contract. It being understood that said P. F. Kelerher & Co. shall pay one-half of any and all reasonable expenses or sums of money that may be necessary and proper for us to expend to insure the successful prosecution of said suit. In other words, said P. F. Kelerher & Co. to share equally with us in the expenses and profits accruing from said suit'—and dated at St. Louis, February 20, 1878. That said contract appended to said receipt provided that Henderson & Shields were to receive a fee for their legal services to be rendered by them 25 per cent. of the total amount of bonds and coupons involved in the suit or suits which they might bring. That plaintiffs did procure from various bondholders of Knox county, Mo., a large number of bonds and turned them over to the firm of Henderson & Shields to be sued upon according to the contract appended to said receipt, and that, in pursuance of said agreements, Henderson & Shields did institute suits upon said bonds and coupons and prosecuted same to final judgment and received as their fee in said matter, on or about the 1st day of October, 1894, the sum of $20,000, and that by reason of the premises the defendant became indebted to the plaintiffs in the sum of $10,000, which sum plaintiffs demanded of defendant on or about October 17, 1894, which was refused, and is still due and unpaid. The prayer of the petition is for a judgment for the $10,000 and 6 per cent. interest from October 17, 1894. The answer of defendant admits the copartnership of plaintiffs, the copartnership of defendant and said Shields, and that the firm of Henderson & Shields executed the contract of February 20, 1878, set out in the petition, and denies all other allegations in the petition. The answer further, substantially, states that plaintiffs procured from various persons certain bonds and coupons and coupons of other bonds of Knox county, Mo., and turned them over to Henderson & Shields, to be sued upon by said firm, in the name of Samuel C. Davis, and that said firm, with consent and at the request of plaintiffs, instituted a suit thereon in the name of said Davis, in the circuit court of the United States, against Knox county, and recovered judgment thereon on March 22, 1878, for the sum of $16,975.35; that in the prosecution of said suit it became necessary and proper for defendant to expend, and he did expend, divers and large sums of money, aggregating the sum of $5,911.06, the items of which appear in an attached account, a sum in excess of the sum received or contracted to have been received by said Henderson & Shields from the owners of bonds; that plaintiffs were fully advised of the making of said expenditures and admitted the reasonableness and necessity of making same. The defendant demanded of plaintiffs one-half of said sum so paid by him, which they refused to pay, and asks judgment for said sum and interest.

"Defendant, for further answer and counterclaim, states that there were placed in the hands of plaintiffs, by the owners thereof, two other bonds for the sum of $500 each, with coupons attached, of said Knox county, Mo., which, under the provisions of the contract set out in the petition, should have been turned over to Henderson & Shields, to be sued upon by them, but that plaintiffs, in violation of their duty, failed and refused to turn same over to said Henderson & Shields, and wrongfully converted them to their own use, to defendant's damage in the sum of $500; that said firm of Henderson & Shields was dissolved January 1, 1883, and its affairs have been fully settled, and said George H. Shields has assigned to defendant his interest in said claim for damages, and for which, with interest, defendant asks judgment. Defendant, for further answer and counterclaim, states that on June 27, 1887, plaintiffs sold said last two bonds and coupons to L. A. Coquard, with all interest accrued thereon, with the amount of judgment obtained on coupons formally attached to them, aggregating the sum of $2,203.58, in consideration and for which said Coquard paid the sum of $743.75; that plaintiffs delivered to said Coquard only one of said bonds, and refused to deliver to him the other one, by which Coquard was damaged in the sum of $1,600; that said Coquard for value received assigned said claim to defendant, for which he asks judgment, with interest. Defendant, for further answer, says that on the 8th day of April, 1889, plaintiff Wm. C. Little, for value received, assigned to defendant all of his right, title, and interest that he might be or become entitled to under the contract set out in the petition, wherefore defendant says said Little is not a necessary or proper party to this suit. To this answer plaintiffs file separate replies; Kelerher's being a general denial of every allegation in the answer. Little denies all the allegations in the answer excepting the fifth paragraph thereof, and in reply to that says that he made the assignment stated therein, not absolutely, but as collateral security for an indebtedness owing by him to defendant, which was much smaller than the value of the said security. On the pleadings the case was, by agreement of parties, referred to John F. Dryden, as referee, to try all of the issues of the case.

"Upon the trial before the referee the plaintiffs introduced the following evidence:

"First. The contract, dated February 20, 1878, signed by Henderson & Shields, and set out in the petition.

"Second. A receipt from Henderson & Shields to P. F. Kelerher & Co., and in connection therewith a printed form of letter from Henderson & Shields to bondholders, the printed letter not being signed in any other manner than having the name of Henderson & Shields printed upon it. The said receipt is in the following language:

         "`St. Louis, February 20th, 1878
                

"`Received of P. F. Kelerher & Co., trustees, for the purpose of bringing suit in the U. S. federal courts the following described bonds and coupons of Knox county, Missouri, issued in behalf of the Mississippi and Missouri R. R. Company, to wit: [then are enumerated a large number of bonds and past due coupons, $13,504 in face value thereof belonged to Samuel C. Davis & Co., $1,400 to C. F. Walther, $1,120 to Catherine A. Thornbury, executrix, and $280 to Stover] said suit to be brought according to the terms of agreement herewith printed.

    "`[Signed]     Henderson & Shields.'
                

"The letter or agreement appended to said receipt is printed, and is as follows:

                 "`St. Louis, ______, 187___
                

"`To the Bondholders of ______: It is hereby proposed by the undersigned to institute and prosecute to final judgment a suit or suits in the Circuit and Supreme Courts of the United States at own proper cost, charge and expense on the matured coupons from bonds of the...