Case ID: ad_5/html/0324-01.html
Source: Caselaw Access Project
Author: {"author": "Rumsey, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Simon Hirshbach, Respondent, v. Alexander P. Ketchum, Appellant.
    
      Illegal contracts — an attorney promising a consideration to induce a person to procure claims to be put in his hands for collection — burden of proof as to the plaintiff being an attorney and within the exception of section 74 of the Code of Civil Procedure.
    
    The complaint in an action alleged that the plaintiff, at the request of the defendant, procured his employment as an attorney for the firm of L. Erstein & Brother to prosecute and recover all the claims of that firm arising out of the payment of duties exacted of them by the United States, for which service the • defendant was to receive from the firm fifty per cent of the recovery, one-half of which fifty per cent he agreed, in consideration of the plaintiff's having procured for him this employment, to pay to the plaintiff.
    
      Held, that the contract was obnoxious to section 74 of the Code of Civil Procedure providing that an attorney should not, either before or after action brought, promise or give a valuable consideration to any person as an inducement to .placing, or in consideration of having placed, in his hands a demand of any kind for the purpose of bringing an action thereon;
    That an agreement to prosecute and recover the claims of the firm necessarily meant that the attorney was employed for the purpose of bringing an action upon the claims;
    
      That the burden rested upon the plaintiff, if he desired to avail himself of the exception contained in section 74 of the Code of Civil Procedure, providing that "this section does not apply to an agreement between attorneys and counselors, or either, to divide between themselves the compensation to be received,” to bring the case within the exception, by proving that he was an attorney and counselor.
    Appeal by the defendant, Alexander P. Ketchum, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 15th day of February, 1896, upon the decision of the court rendered after a trial at the New York Special Term overruling the defendant’s demurrer to the plaintiff’s complaint.
    
      J. Campbell Thompson, for the appellant.
    
      Joseph A. Arnold, for the respondent.
   Rumsey, J.:

The complaint alleges that on the 27th of August, 1886, the plaintiff, at the request of the defendant, procured the employment of the defendant as an attorney by and for the firm of L. Erstein & Brother of the city of New York, for the purpose of prosecuting and recovering all the claims of said L. Erstein & Brother, arising out of the payment of duties exacted of them by the United States . that the defendant by his contract was to receive from Erstein & Brother, in payment for said services, fifty per cent on his recovery; that in consideration of the procurement of said employment which the defendant accepted and entered upon, the defendant promised to pay to the plaintiff one-lialf of any sum or sums which the defendant was, or became entitled to thereunder. Then follow allegations that the defendant collected and received a certain sum for Erstein & Brother, of which he himself received one-lialf for his services, and that he had refused to pay the plaintiff in accordance with his contract, and the complaint demanded judgment for the amount which was alleged to be due. A demurrer was interposed to this complaint upon the ground, first, that the court had no jurisdiction of the subject of the action; and, second, that the complaint did not state facts sufficient to constitute a cause of action. This demurrer was overruled, and from the judgment entered upon the ■decision of the court this appeal is taken.

The real strength of the defendant’s case lies in the second ground of the demurrer, which is based upon the proposition that the contract set out in the complaint is one which is forbidden by the statute. It is provided that an attorney or counselor shall not, either before or after action brought, promise or give a valuable consideration to any person as an inducement to placing, or in consideration for having placed, in his hands a demand of any kind for the purpose of bringing an action thereon. (Code Civ. Proc. § 74.) The defendant alleges that the contract set up in the complaint isa violation of this section of the Code and for that reason the plaintiff is not entitled to recover upon it. It is hardly necessary to cite authorities upon the proposition that if the contract is forbidden by the law, the court will not aid either of the parties to it, either in enforcing it or in recovering back any money which may be paid upon it. In such a case as that the courts will take no cognizance of the case, but will apply the maxim, In pari delictu potior est conditio defendentis. (Goodell v. Hurlbut, 5 App. Div. 77.) This contract is precisely within the prohibition of the statute. It appears necessarily from the allegation of the complaint that he is an attorney and that the plaintiff procured his employment for the purpose of prosecuting and recovering certain claims. The thing which the statute forbids is to procure one’s employment for the purpose of bringing an action upon a claim or demand. The word prosecution, when applied to legal proceedings, means to begin a civil action. Such is the meaning given to it by all the lexicographers, and applied in legal proceedings. (Dolloway v. Turrill, 26 Wend. 383, 399.) Therefore, when it is alleged in the complaint that the defendant was employed to prosecute certain claims, it necessarily meant that he was employed for the purpose of bringing an action upon them. When that is made to appear the case is precisely within the prohibition of the statute. (Moses v. McDivitt, 88 N. Y. 62, 67.) It is not disputed by the counsel for the respondent that this is a fair and natural construction of the complaint, but he claims that the demurrer was properly overruled because it does not appear from the complaint that section 74 applies to this particular contract. The last sentence of section 74 of the Code provides, that this section does not apply to an agreement between attorneys and counselors, or either, to divide between themselves the coinpensation to be received.” The plaintiff claims tliat the case is within this exception of the law, and such seems to have been the opinion of the learned judge who decided the case at the Special Term; but the trouble is that it does not appear upon the face of the complaint that the ease is within the exception. The - rule is well settled that where one relies upon an exception in the statute to take his case out of the rule laid down in the body of the statute itself, it lies upon the person insisting upon the exception to bring himself within it. (Fleming v. The People, 27 N. Y. 329 ; Bliss on Code Pleading, §§ 202, 203.) Within this rule, before it could be considered that the case was within the exception of section 74, it must be made to appear that the plaintiff was an attorney and counselor at law, and, therefore, entitled to make a contract to share in the compensation to be received by the defendant for the work that he did. Nothing of that kind appears upon the face of the papers. There was no presumption on the subject which will aid the plaintiff, but the case must stand upon the facts as they appear in the complaint, which bring it clearly within the prohibition of the section, and are not sufficient in any way to enable us to apply the exception to it.

Whether or not this is one of the cases which would come within the exception if it had been made to appear that -the plaintiff, as well as the defendant, was an attorney at law, it is unnecessary to decide upon this appeal. Upon the facts as they appear in the complaint, it is sufficient to say that the judgment below w^as erroneous and must be reversed, and that the defendant must have judgment upon the demurrer, with costs, with leave to the plaintiff to amend his complaint on payment of costs of this appeal and of the demurrer in the court below.

Van Brunt, P. J., Barrett and O’Brien, JJ., concurred.

Judgment reversed and judgment ordered for defendant on demurrer, with costs, with leave to plaintiff to amend on payment of costs in this court and in the court below.