Merchants' Protective Ass'n v. Jacobsen

• Decision Date: 11 October 1912
• Citation: 127 P. 315,22 Idaho 636
• Parties: MERCHANTS' PROTECTIVE ASSOCIATION, Appellant, v. S. JACOBSEN, Respondent
• Court: Idaho Supreme Court

127 P. 315

22 Idaho 636

MERCHANTS' PROTECTIVE ASSOCIATION, Appellant, v. S. JACOBSEN, Respondent

Supreme Court of Idaho

October 11, 1912

CHAMPERTY AND MAINTENANCE-COMMON-LAW RULE NOT IN FORCE-SUPPLANTED BY STATUTE.

(Syllabus by the court.)

1. The common-law doctrine of champerty and maintenance was repudiated by the supreme court of California as early as 1863, and it was held that the common-law doctrine on the subject was incompatible with our institutions and form of government and that the subject was governed by statute alone. The statutes of Idaho were copied from the California statutes, which had thus been considered and construed by the court of the state from which they were taken, and the decision of the California court on this subject is presumed to have been accepted and adopted by the legislature of this territory.

2. The common-law rule of champerty and maintenance is not in force in this state, and under the provisions of sec. 4900 of the Rev. Codes of this state, the measure and mode of compensation of attorneys is left to the agreement express or implied, entered into between the attorney and client, and so long as such agreement is not contrary to good morals or sound public policy, it will be enforced by the courts.

3. Under the provisions of sec. 6524 of the Rev. Codes of this state, an attorney at law is prohibited and forbidden, either directly or indirectly, buying any evidence of debt or thing in action with intent of bringing suit thereon, and for a violation of this statute the attorney is held guilty of a misdemeanor.

4. Although the doctrine of champerty and maintenance does not prevail, the courts will refuse to grant relief or enforce contract where the contract is contrary to good morals or sound public policy.

APPEAL from the District Court of the Fourth Judicial District for Elmore County. Hon. Edward A. Walters, Judge.

Action for debt. Judgment for defendant and plaintiff appealed. Reversed.

Reversed and remanded, with direction. Costs awarded to appellant.

T Bailey Lee, for Appellant.

"In the United States the doctrines of maintenance and champerty have not generally found favor." (Roberts v Cooper, 20 How. (U.S.) 467, 15 L.Ed. 969; Boon v. Chiles, 10 Pet. (U.S.) 177, 9 L.Ed. 388; Barrell v. Mohawk, 8 Wall. (U.S.) 153, 19 L.Ed. 406; Armstrong v. Toler, 11 Wheat. (U.S.) 258, 6 L.Ed. 468; 3 Am. & Eng. Ency. of Law, 1st ed., 73.)

It does not exist in California. (Mathewson v. Fitch, 22 Cal. 86; Howard v. Throckmorton, 48 Cal. 482; Ballard v. Carr, 48 Cal. 74; Hoffman v. Vallejo, 45 Cal. 564.) Nor in New Jersey, Michigan, Texas or Arkansas. (Hassell v. Van Houten, 39 N.J. Eq. 105; Lytle v. State, 17 Ark. 608.)

These authorities explain the old common-law rule, and announce the nonexistence in this country of ancient British conditions which made such a rule at one time imperative for the protection of the general commoner. While such a contract in its executory form might be subject to suspicion, it becomes purged of such suspicion when there appears an honest execution, partial or entire. (6 Cyc. 859 (B); 9 Cent. Digest, tit. "Champerty and Maintenance," par. 26.)

W. C. Howie, for Respondent.

Even with attorneys and collection agencies, if the attorney or collector agrees in addition to performing the services to pay the costs of court and other expenses, etc., it is almost universally held that the agreement to pay costs, etc., renders the agreement void for champerty (Kelly v. Kelly, 86 Wis. 170, 56 N.W. 637; Phelps v. Manecke, 119 Mo.App. 139, 96 S.W. 221; Geer v. Frank, 179 Ill. 570, 53 N.E. 965, 45 L. R. A. 110; Barngrover v. Pettigrew, 128 Iowa 533, 111 Am. St. 206, 104 N.W. 904, 2 L. R. A., N. S., 260; Croco v. Oregon Short Line Ry. Co., 18 Utah 311, 54 P. 985, 44 L. R. A. 285; Dahms v. Sears, 13 Ore. 47, 11 P. 891); but as this is a Utah contract and of course would be governed by the decisions of the state of Utah, I call special attention to Nelson v. Evans, 21 Utah 202, 60 P. 557, and In re Evans, 22 Utah 366, 83 Am. St. 794, 62 P. 913, 53 L. R. A. 952; also Croco v. Oregon Short Line Ry. Co., supra.

AILSHIE, J. Sullivan, J., concurs, STEWART, C. J., Concurring Specially.

OPINION

AILSHIE, J.

This is an appeal from a judgment sustaining a demurrer to plaintiff's complaint and dismissing plaintiff's alleged cause of action. The material allegations of the complaint are as follows:

Appellant is a corporation organized under the laws of the state of Utah, carrying on a general business of publishing credit ratings of firms and corporations and furnishing commercial information and adjusting and collecting delinquent and disputed accounts and claims for an agreed commission or rate of compensation. On about the 3d of June, 1903, respondent delivered to appellant for collection a certain claim against Simonds Bros. of Ft. Wayne, Ind., for the sum of about $ 1,160, together with $ 108.70 accrued interest, and employed and instructed the appellant to collect the same on certain agreed rates of commission or compensation. Appellant began negotiations for the collection of the claim, and in order to defray the expenses demanded of the respondent the sum of $ 30, which respondent paid. Appellant thereupon continued negotiations and employed a firm of lawyers in Ft. Wayne to assist in the prosecution of the claim. These transactions and negotiations continued until the 10th of July, 1905, when, in view of further costs and expenditures and the probability of having to prosecute an action against the debtor, a modified or new contract was entered into. This new or modified contract consisted of an assignment by the respondent to the plaintiff of an undivided one-half interest in the claim, under an agreement that the plaintiff should bear all further expenses of the proceedings and furnish any bonds that might be necessary, and that after the claim was finally adjusted or collected the appellant would return to respondent the sum of $ 30, which had already been paid by respondent to appellant toward defraying costs and expenses. The appellant proceeded with its negotiations but without success, and thereafter and on or about the 7th of June, 1907, and while the plaintiff was still attempting to collect and adjust the claim, the respondent, without notice to appellant, entered into an agreement with the debtor, Simonds Bros., whereby the claim was paid directly to respondent, and Simonds Bros. were released and discharged from further liability. The appellant thereupon made demand on respondent for one-half the sum collected, less the sum of $ 30, which had been advanced for costs, and upon refusal by respondent to pay commenced this action. Respondent demurred to the complaint, and the demurrer was sustained, on the ground that the contract was in violation of the common-law doctrine of champerty and maintenance, which rule of law, it is maintained, is in force in this state.

The first question to be determined on this appeal is, whether the common-law rule of champerty prevails in this state. Champerty, which seems to be a species of the ancient law of maintenance, consisted in supporting or maintaining a suit for someone else in consideration of a bargain or agreement to have a part of the thing in dispute or some profit out of the results of the litigation or an agreement to divide the receipts derived from the suit or action. Maintenance of causes of action was denounced by the Roman law in the strongest terms. (Institutes, Book 4, Title 16; 4 Blackstone's Commentaries, 135.) It was adopted in England as a part of the feudal system, and but for the feudal system would doubtless have found no place in English common law. It was subsequently enacted by parliament into written law by statute Westminster I, c. 25; 3 Edw. I; 28 Edw. I, c. 11; 32 Henry VIII, c. 9. When first adopted in England, it had special reference to suits and actions involving title and right of possession to real property. (Lytle v. State, 17 Ark. 608.) At that time England was infested (I think "infest" correctly expresses it) with great feudal lords and barons, and class distinction prevailed everywhere. (Vol. 2, Hume's History of England, p. 320.) It is said by law-writers that this law was invoked for the purpose of preventing great men of the times using their power and influence in supporting questionable titles against the weak and oppressed of various degrees and distinctions, and thus, perhaps, obtaining judgments and decrees to which they were not entitled. A somewhat careful examination of the early authorities, however, and the results accomplished thereunder tends at least to leave the impression on one's mind that this doctrine may have been invoked as much for the protection of the feudal lords against each other as for their weaker and less influential subjects. (See Hovey v. Hobson, 51 Me. 62; Wright v. Meek, 3 G. Greene (Iowa), 472.) Feudal tenure never prevailed in this country, nor has class distinction had any place with us. The poor man who has a just and righteous cause of action may be without means to prosecute his action, and therefore be under the necessity of selling or hypothecating a part of his claim in order to obtain the means with which to prosecute it. The mere fact that he does so cannot affect the result of his action or work any injustice either on his adversary or the public. One man is no more powerful in the eyes of the law than another. For a learned and interesting discussion of the origin of this doctrine, see Lytle v. State, 17 Ark. 608. However this may be, it seems quite clear to us that no such condition has ever prevailed in this country as would require or necessitate the application of such a doctrine in the law of this country.

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