Case ID: ny-super-ct_11/html/0275-01.html
Source: Caselaw Access Project
Author: {"author": "Oakley, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Morgan L. Ogden v. Theodore Des Arts and George L. Heuser.
    The plaintiff undertook to institute a suit against the Collector of New York, to establish that mustard, and canary, and other seeds, were not chargeable with the payment of duties under^ihe tariff of 1846, and the defendants, and other importing merchants, signed a written agreement, by which they bound them-Belves to pay to him one-third part of the sums which should be recovered by them respectively, as a return of duties exacted from them on their importations of such seeds.
    
      Held, that the agreement was not confined to a return of duties that had been previously exacted from the parties signing it, but embraced all that should, thereafter be returned to them, in consequence of the judicial determination that the plaintiff undertook to obtain.
    
      Held, that the agreement thus construed was not liable to the imputation of champerty, but could be enforced as to all duties returned without suit. Judgment affirmed.
    (Before Oakley, Ch. J., Dues and Campbell, J.J.)
    Feb. 6; Feb. 24, 1855.
    Appeal by defendants from a judgment at Special Term in favor of plaintiff for $588.85, damages and costs.
    Tbe action was founded upon tbe following agreement in writing, wbicb was signed by tbe defendants and tbirty-five other persons, and mercantile firms, in tbe city of New York, importers of tbe seeds mentioned in tbe agreement:
    “ Morgan L. Ogden having undertaken to carry on, at bis own expense and risk, a suit at law against the Collector of tbe port of New York, to establish’ that mustard-seed, canary-seed, and certain other seeds, are not chargeable with any import duty, under the Tariff Act of 1846, we, the undersigned, in consideration thereof, hereby agree and engage to allow and pay the said Morgan L. Ogden one-third part of such sum or sums which may be recovered by us respectively, as return of the duties exacted under the said act of 1846, on our importations of such seeds; it being understood, that if nothing be recovered, we are not to pay any thing for services or expenses of any description.
    “ New York, August, 1848.”
    The complaint averred that in pursuance of this agreement, the plaintiff had instituted two suits, one of them in the name of the defendants as plaintiffs, in the Circuit Court of the United States for the Southern District of New York, against the Collector of the port, for the purpose of establishing that seeds such as specified in the agreement were not chargeable with any duty under the Tariff Act of 1846, and that in the month of October, 1850, a final judgment in each of the suits was rendered in favor of the plaintiffs''. That by such judgments it was judicially determined that the seeds so imported by the defendants, and the other merchants, who had signed the agreement aforesaid, were not chargeable with the duties that had been levied and collected thereon, and that the exacting of such duties was illegal and invalid. That the plaintiff, in further execution of the agreement on his part, made repeated efforts to procure the acquiescence of the' Secretary of the Treasury in the principle so judicially determined, and that in consequence of these efforts, and of the judgment so rendered, such acquiescence was obtained, and the Secretary of the Treasury, by a printed circular, dated February 4, 1851, addressed to the collectors, and other officers of the customs, throughout the United States, instructed them not to collect thereafter any duties upon the seeds mentioned in the agreement aforesaid, and to issue certified statements for the return of all-such duties as had been exacted, and paid under protest. . That in consequence of these instructions, the defendants had recovered several sums of money as a return of duties that had been exacted from them, and particularly had recovered and received the sum of $119.60, on tbe 14th Eebruary, 1851, as a return of duties exacted from them on an importation of seeds made by them on the 18th of January, 1851; and on the 19th of April, 1851, had recovered the further sum of $1,197.60, as a return of duties upon various importations of seeds made by them between the 20th of November, 1849, and the 80th of July, 1850; that the one-third part of the sums so recovered amounted to $439.09, which the defendants, although requested, had refused to pay to the plaintiff, as they were bound to do by their agreement. For this sum, with interest, judgment was accordingly demanded.
    The answer of the defendants admitted the execution and delivery of the agreement, and the receipt by them of the return duties, mentioned in the complaint, but insisted that by the true construction of the agreement it applied only to duties which had been exacted and paid when the agreement was made, and not to any duties that might thereafter be exacted, — consequently that the agreement did not embrace any of the return duties mentioned in the complaint, one-third of which the plaintiff claimed unjustly to recover. The defendants also claimed to recover from the plaintiff the sum of $172, with interest, being one-third of the moneys recovered and collected by him in the suit against the collector, and which, against their wishes and without their consent, he retained and withheld from them. To this counterclaim there was a reply.
    The cause was tried before Hoffman, J., without a jury, on the 28th- of December, 1853 — who, after hearing the evidence and the arguments of the counsel, made his decision, in writing, as follows:
    The following are the facts found by me upon the trial of this cause:—
    That the written agreement mentioned and set forth in the complaint, and dated August, 1848, was duly proven. That the plaintiff, in the spring of 1850, commenced a suit for the settlement of the question under the tariff; that such suit was properly instituted. It was with the authority of the defendants, and in-their names. That the duties which accrued and had been paid by the defendants, prior to the date of the agreement,-amounted to $497.40. The duties between that date and the 22d June, 1849, were $516, making together the sum of $1,013.40. The suit of tbe defendants, instituted in tbe spring of 1850, was for tbe recovery of those duties specifically.
    Tbe trial in tbis suit came on in tbe month of June, in tbe year 1850. A verdict was rendered for tbe plaintiff. A bill of exceptions, however, was filed, and proceedings stayed. On tbe 10th of October, 1850, final judgment was entered in favor of tbe plaintiffs in the suit, the defendants here.
    On or before the 29th of November, 1850, tbe above sum, with interest, was paid, and was received by tbe present plaintiff, who accounted to tbe defendant for tbe amount, retaining bis own third. That tbe sum of $172, part of tbe amount so retained, is demanded by tbe defendant in bis answer. That after tbe final judgment, in October, 1850, applications were made, renewed, and earnestly pressed at tbe Treasury Department, to obtain a circular to Collectors, adopting tbe principle of tbe decision at tbe Circuit, and instructing them no longer to demand such duties as bad been previously paid upon tbe articles in question. These exertions did not succeed until the 4th of February, 1851, when a circular to that effect was issued.
    I also find, that decisions upon tbe construction of tariff laws, -made by judges in tbe Circuits, do not necessarily bind the Treasury Department. That although recovery may be bad in tbe given case against tbe Collector, yet tbe same duties continue to be exacted until tbe Secretary of tbe Treasury coincides with tbe decision, or submits to it, or is bound by a decision of the Supreme Court, when be issues directions for tbe government of Collectors in future cases. Tbe final judgment, as before observed, was obtained on tbe 10th day of October, 1850, and the circular from tbe Treasury Department issued on tbe 4th February, 1851. In tbe mean time, and between tbe 20th November, 1849vand tbe 80th July, 1850, further duties bad been paid by tbe defendants, under protest, to tbe amount of $1,197; and tbis - amount was received back by tbe defendants on tbe 19th of April, 1851.
    Another sum of $119.60 was paid by the defendants for such duties, on tbe 18th January, 1851, and was returned to them on tbe 14th February, 1851.
    And my conclusions of law upon tbe above-stated facts, and the evidence, is, that the plaintiff is not, upon tbe true construetion of the agreement of August, 1848, restricted to the proportion, of one-third upon the duties paid before the date of the same, but that such contract covers, and was intended to cover, all duties, the recovery of which should be secured by any suit which might be instituted, or would be secured by the institution of a suit; that as he was to bear all the expenses of any suit, there was nothing to restrict him from commencing suits for all the parties; from instituting successive suits on behalf of these defendants, to recover the duties paid, down to the judgment in October, 1850, as well as for the recovery of those duties, for which the suit was actually brought. That he might have resorted to actions which would insure recovery, instead of the Treasury Department, to obtain summary and final relief.
    That the plaintiff is entitled to his per centage upon all duties paid before the judgment of October, 1850, to recover which suits could have been instituted, and which duties were subsequently refunded; but that he is not entitled to such per centage on any amount paid for duties after the said judgment. And that the defendant is not entitled to recover back the sum of $172, mentioned in his answer.
    The plaintiff is therefore to have judgment for one third part of the sum of $1,197, or $899, with interest, from the 19th day of April, 1851, and costs.
    The defendant’s counsel thereupon took the following exceptions to the decision of the Justice:—
    I. They except to the decision that the agreement of August, 1848, covers, or was intended to -cover, all duties, the recovery of which should be secured by any suit which might be instituted, or which could be secured by the institution of a suit.
    TT. They except to the disallowance by the Justice of the claim of defendants, set up in the answer to recover the $172, withheld by plaintiff from the duties collected in the suit in the name of defendants.
    TTT- They except to the decision of the Justice that the right of the plaintiff under the agreement to receive one-third of the sums which might be recovered for duties illegally exacted, extended to duties exacted after the making of the agreement.
    IY. They except to the decision of the Justice that the said right of plaintiff extended, to duties exacted after the verdict in the suit of Boving & Witte.
    Y. They except to the decision of the Justice that the said right of plaintiff extended to duties exacted after the verdict, in the suit of defendants against the Collector.
    YI. They except to the decision that the plaintiff is entitled to judgment for $899, with, interest and costs. . ..
    Jernigan,. for the defendants,
    now argued in support of . the exceptions, and contended that the Judge, at Special. Term, had erred in his finding of the facts, as well as in the construction which he had given to the agreement of the parties; that the agreement, hy its legal construction, was limited to duties that had been previously exacted from the merchants signing it, since it was only for the recovery of such that the ;plaintiff had any authority to institute a suit or suits, and that it was a necessary consequence of this construction that the defendants were entitled to recover the sum of $172, claimed by their answer. The counsel also insisted that the agreement was on its face illegal and void for champerty, and could not therefore be enforced by action. He cited upon this point, among other cases, the following : (Small v. Mott, 22 Wend. 406; Merritt v. Lambert, 10 Páige, 352; Wallis v. Lonbat, 2 Denio, 607; Harrington v. Levy, 2 Myl. and K. 590.
    
    
      W. A. -Butter, for the plaintiff,
    insisted that the agreement covered, and was intended to cover, all duty moneys that should thereafter be returned to the defendants, whether the same should be returned-to them as the fruits of a suit at law prosecuted in their names, or should be obtained from the Treasury Department without suit ;■ and that the agreement ought to be; construed in reference to the acts of Congress regulating the collection and return of duties, the usage of the Treasury Department, and the relations and interests of the merchants who signed it. He cited (5- U. S. Stat. 566, § 24; id. p. 348, § 2; -id. -p. 638-; 9 U. S. Stat.-p. 43, §§ 2, 8, 11; id. p. 84, §■ 2 Lawrence v. Allen, 7 Howard, -785; The United States v. Southmayd, 9 How. 637.) That as to the sum of $172 claimed by the defendants in their answer, the-plaintiff was justly entitled to retain it, and that at any rate, the defendants were not entitled to recover it back, in the present action.
   By the Court.

Oakley, Ch. J.

We see no reason for dissenting from the finding of the Judge at Special .Term upon the questions of fact that he was required to decide. We think his decision was fully sustained by the evidence before him.

The cause, therefore, turns entirely upon the question of law, what is the construction of the agreement of August, 1848, which, in order to carry into effect the intention of the parties, as collected from the terms of the agreement and the circumstances under which it was made, we are bound to adopt? This question we have fully considered, and we are all satisfied that the true and reasonable construction of the agreement is that which was given to it by the counsel for the plaintiff, and, consequently, that it will be our duty to affirm the judgment that he has obtained.

It seems to us that the meaning of the agreement, judging from its terms and its object, was plainly this, that if the plaintiff should procure, as he had.undertaken to do, in a suit to be instituted by him for that purpose, a judicial determination establishing that the seeds mentioned in the agreement were not chargeable with the duties which the Collector was then exacting, the importing merchants who signed the agreement would allow and pay to Mm one-third of the sums which, in consequence of such a determination, should be received by them -respectively from the Treasury Department, as a return of duties that, at any time, previous to such return had been illegally exacted from them; and we agree with the counsel for the plaintiff, that we are bound to presume that the agreement was made-with a full knowledge of the provisions of the various acts of Congress, by wMch. the powers and duties of the Treasury Department in relation to the 'return of duties are regulated and defined. A suit was to be-instituted for the purpose of establishing a principle, that the Treasury Department might elect, or would be bound to -follow, and the agreement was meant to embrace every sum that the principle thus established, might induce or compel the head of the Department to refund. Should he choose to abide by a determination in a circuit court against the practice that had prevailed, the return -of duties would be an exercise of bis ■ discretion; should he suspend his action until a final determination in the Supreme Court of the United States, it would then become a positive duty, but in either case the return of duties, at whatever time they had been previously exacted, would be equally a consequence of the judicial determination which the plaintiff, at his own risk and expense, undertook to procure, and would therefore entitle him to a proportional share of the benefits which, through his means, and by his exertions, the importers who signed the agreement would be enabled to secure. The words, therefore, “ recovered by us respectively,” as used in the agreement, are not to be understood in their strict technical sense, as confined to a recovery by judgment, thus limiting the compensation of the plaintiff to one-third of the sums for which judgments should be rendered, and imposing upon him the necessity, in order to secure the reward for which he stipulated, of instituting as many separate suits, and obtaining as many separate judgments, as there were parties, by whom respectively the agreement was signed. It is manifest, that when the agreement was signed, but a single suit was contemplated by the parties as necessary or proper to be instituted, and that, for the plain reason, that it was known to them all that a favorable determination, in a single suit, would be sufficient to establish the principle for which they contended, and entitle them to a return of duties that had been, or might be, illegally exacted. Let the word received” be substituted for recovered,” and the agreement is at once freed from ambiguity, and, as it seems to us, the right of the plaintiff to retain his judgment made apparent. It cannot be denied that the sum of which the one-third has been adjudged to the plaintiff, was received by the defendants as a return of duties exacted from them under the tariff act of 1846, upon their importation of the seeds mentioned in the agreement; and it is equally clear, that it was by the efforts of the plaintiff in the faithful performance of his undertaking, that this return was secured to them. It is covered, therefore, alike by the words and the spirit of their agreement. We are indeed convinced, that if there was any error in the judgment of the court at Special Term, it was an error in favor of the defendants, by not allowing to the plaintiff one-third of the sum .which was paid for duties by the defendants, on the 18th January, 1851, and refunded to them on the 14th of February, in the same year. The propriety of the distinction that has been made between duties paid before, and those paid after - the judgment in October, 1850, we think may be seriously doubted.

The claim of the defendants, to recover from the plaintiff $172 of the moneys collected by him on the judgment in their favor against the Collector, assumes that by their agreement he was entitled to retain one-third only of those duties that had been exacted from them before the date of the agreement, and as we have rejected this construction of the agreement, it is of course disallowed. Another objection was stated to this claim that seems equally fatal. When the defendants received the residue of the proceeds of the judgment against the Collector from the plaintiff, they permitted him to retain without objection the sum which they now demand. Their doing so was equivalent to a voluntary payment, which, when made with a full knowledge of facts, can never be recovered back.

An objection to the plaintiff’s recovery, and, therefore, a ground for the reversal of the judgment in his favor, was strongly urged upon the argument before us, that is not raised by the pleadings, and does not appear to have been taken in the court below, namely, that the agreement upon which the action is founded is, upon its face, illegal and void for champerty. The objection is not destitute of plausibility, but in our opinion, without adverting to other considerations, it is sufficiently refuted by that construction of the agreement which we have adopted.

It may be true, notwithstanding the doubts that seem recently to have been expressed by a learned Judge in the Court of Appeals, (Hoyt v. Thompson, opinion Paige, J.; 1 Selden, 347,) that the common law doctrine of champerty is still in force, and that it is just as applicable to agreements for the recovery of money in personal actions as to those for the recovery of land in real; but when we remember that the doctrine had its origin in a state of society widely different from our own, and was adapted to meet evils that no longer exist, we cannot believe that it ought to be extended by construction beyond the eases which its definition, in its strictest sense, is found to embrace. Now the only cases which this definition, in its proper terms embraces, are those in which the person who at his own expense and risk carries on a suit in tie name of another, is to receive for his compensation a certain share of the avails of the suit, that is, (when the suit is for money,) of the sum" for which a judgment is sought to be obtained. (2 Black, Com.,. 1 Bouvier’s Law Dictionary, 218.) Hence, if the imputation of .champerty is applicable, at all, to the agreement, of the parties before us, which we do.not assert, it applies only to the .moneys that it was expected would be, and which in fact were, collected in the suit against the Collector, and not at all to the duties, which as illegally exacted, it was expected yrould be, and which in the result were, .returned, without suit, by the Treasury Department, and it .is to such returned duties alone that the present action relates. Had the agreement contained no mention of a suit, but had promised a compensation to the plaintiff-only from the duties that by argument or solicitation he might prevail upon the head of the treasury to return, no one, .probably would have asserted, or supposed, that, it was liable to the imputation of champerty, but such -in reality is the -substance of .the agreement,- with the exception of the singlesuit which the plaintiff undertook to institute.. This exception may perhaps have had the effect of rendering void- at common law that part of the agreement in which it is found, but, according to a -well-known distinction, it could not have the effect of vitiating the residue of the agreement.

The moneys collected -in .the suit against the Collector-having been voluntarily paid, cannot be recovered back, and those which the plaintiff now seeks to recover, the defendants, by their agreement, are bound to pay.

The judgment against them must therefore be affirmed with costs.