Case ID: ohio_13/html/0145-01.html
Source: Caselaw Access Project
Author: {"author": "Wood, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James Weakly, who sues for the use of Samuel Bell, v. T. R. Hall, Executor of Richard Hall.
    Where A. assigns a chose in action to B., who agrees to collect it in the name of A., to employ counsel, advance money, procure the necessary bail for the prosecution of the suit, and reimburse himself from the proceeds, A. and B. are as tenants in common of the chose, and a release by A. will, at law, discharge the cause of action.
    If the release has been made by fraud and covin between A. and the debtor,, tho only remedy of B. is in equity.
    
      In Ohio, there is no statute against champerty or maintenance, hut contracta founded on such considerations are void, and the law tolerates no lien, in or out of the legal profession, which will prevent litigants from compromising controversies.
    This is an action of assumpsit, from Trumbull county.
    The plaintiff declares in the first count, upon a promise by defendant’s testator to indemnify the plaintiff against a certain indorsement made at the testator’s instance and request, and for his .accommodation.
    The second and third counts are upon the testator’s indorsement of a promissory note.
    *The common money counts are added. Upon the plea -of non assumpsit,'and notice of set-off, a trial was had in the common pleas, and a verdict and judgment for the plaintiff.
    The cause being removed to the Supreme Court by appeal, leave was granted the defendant to plead puis darrein continuance, whereupon the following plea was put in :
    “And now, at this day, that is to say, on November 10, A. D. 1843, next after September 9, A. D. 1843, from which time this cause was continued until the next term of said court, with leave to the said defendant to plead puis darrein continuance, comes the said -deiondant by his attorneys, and says that the said plaintiff ought not further to have or maintain his aforesaid action thereof against -him, because, he says, that after the commencement of this suit, ¡md after the joining of issue therein, to wit, on August 15, a. d. 1843, at, etc., the said plaintiff, by his certain writing of release, -sealed with his seal, and which the said defendant now brings here into court, the date whereof is the day and year last afore-said, did release and discharge the said defendant, as such executor as aforesaid, from all debts and demands of every name and nature which the said plaintiff then had, or could allege against the said defendant, as by the said deed or writing of release, refer-ence being thereunto had, will fully appear, and this the said defendant is ready to verify ; wherefore, he prays judgment, if the said plaintiff ought further to have, or maintain his aforesaid action against him.”
    To this plea, the plaintiff replied as follows:
    And now comes the said Weakly, for the use of Samuel Bell, ¡and as to the plea, puis darrein continuance, of said defendant, wherein he alleges the making and delivering to him, by the said Weakly, of a release and discharge of all debts, suits, demands, etc., says, that, by reason of anything set forth in said plea, he, the said Weakly, for the use of said Bell, ought not to be barred from having and maintaining the aforesaid action against the said defendant, because, he says, that long before the making of said supposed release and discharge *set forth in said plea, and long before the commencement of this suit, to wit, on May 1, A. d. 1840, at, etc., the said Weakly, for a valuable consideration, assigned, transferred, and delivered, to the said Samuel Bell, the «aid claim set forth in the plaintiff’s declaration, and then and there authorized and empowered the said Bell to sue and collect said claim in the name of the said Weakly, for his, the said Bell’s use and benefit, and to hold the avails thereof for his own use, and as security for all moneys paid, and costs, charges, and expenses incurred and to be incurred, by the said Bell i'n prosecuting and collecting said claim. And the said plaintiff, for the use as aforesaid, further says, that the said Bell, after the assignment and delivery, as aforesaid, of said claim, long before the making of said supposed release and discharge as aforesaid, to wit, May 1, a. d. 1840, did emplo3r Tod '& Hoffman as his attorneys to commence suit on said claim for his use and benefit, and to procure bail for the costs thereof; and his said attorneys did commence this suit on said claim in the name of the said Weakly, for the use of the said Bell, against the said defendant, in the court of common pleas of said county, and which said suit was appealed by said defendant to this court; and the said plaintiff, for use, etc.; further says, that in and about the prosecuting of this suit, and former suit on said claim, and in and about collecting said claim, he has expended divers large sums of money in the payment of costs of former suit, in taking depositions, and in paying witnesses and attorneys ; and he has become liable to pay the costs of this suit, and has become liable, and has agreed to pay his said attorneys for services in suing and prosecuting suits on said claim, and for other services in and about the collecting of said claim, amounting in all to a large sum of money, to wit, the sum of |260, all of which sums of money have been paid, and said expenses, charges, and liabilities, incurred by the said Bell, long before the making of the said supposed release by the said Weakly, of all which the said defendant, long before the making of said supposed release, to wit, on August 1, a. d. 1840, had notice. *Yet, the said defendant, well knowing that the said Boll bad an interest in said claim; that the same was, and is sued for his use and benefit; that he had paid a large sum of money, and incurred the expenses and liabilities as aforesaid, and had a lien on said claim, and on the proceeds thereof, as well to indemnify him for his trouble, expenses, and liabilities incurred as aforesaid, as to pay him the consideration given for said claim, did, by his attorney, E. Newton, at the time stated in said plea, secretly, covinously, and fraudulently, and without the knowledge or consent of the-said Bell, or his attorneys, procure said pretended release, set forth in said plea, from the said Weakly, all which the saicV plaintiff, for the use of the said Samuel Bell, is ready to verify; wherefore, he prays judgment, and his damages by him sustained on occasion of the non-performance of the said several promises and undertakings in the said declaration maintained to be adjudged to him,” etc.
    To this replication the defendant demurred, and assigned as eause:
    1. The said plea shows that the said Bell had not the exclusivo interest in said claim, that the same was not transferred to him absolutely, but that he was prosecuting the same for hire, compensation to be made from the avails of the suit.
    2. The said plea contains- distinct and independent matters of defense in this, that it sets forth that the claim on which the action is based, was previous to the commencement of the suit assigned to the said Samuel Bell, and also sets forth that the said release was obtained by fraud.
    3. The fraud charged in said replication is not charged to have
    been committed upon the plaintifT in the suit, but upon Samuel Bell,, who is not claimed to have any other than a contingent interest in the case. *
    Wade & Rannet, in support of demurrer:
    So far as regards the formal objection to the replication, that it. is double, we suppose there can be no doubt. This difficulty, however, may be removed by an amendment.
    *Wo contend that the replication is bad in substance:
    1. It may be stated as a general rule that pleadings at common law must be predicated upon the legal rights of the parties. An equitable right, however perfect, can not lay the foundation of a, suit at law, nor can an equitable right be interposed to arrest the course of a legal title. 1 Chitty’s Plead. 1, note a; 1 Chitty’s Prac. 6, 7; Foreman v. Jervis, 5 Barn. & Adol. 836.
    2. The replication in this case abandons the legal plaintiff upon the record, and introduces a person not legally a party to the suit.
    3, The facts set forth' do hot show an assignment of the whole interest in the claim to Bell, but a mere lien upon apart for costs, ■etc. He does not, therefore, stand upon the ground of an assignee to whom the whole interest is assigned.
    Peter Hitchcock submitted an argument on the same side.
    Tod & Hoffman, and Hutchins, contra:
    Without looking at the replication with a technical eye, but •merely at the substance of it, and its sufficiency as to matter, we ■refer to authorities as follows, viz:
    Courts of law will take notice of, and protect, the rights of assignees against all persons having either express or implied notice of the trust, or assignment of choses in action. Johnson v. Bloodgood, 1 Johns. Ch. 51; Wardell v. Eden, 2 Johns. Ch. 121; S. P., Van Vechen v. Graves, 4 Johns. 403; Littlefield v. Story, 3 Johns. 425; Anderson v. Van Allen, 12 Johns. 343; Briggs v. Dorr, 19 Johns. 95.
    The assignee of a chose in action can not defeat a suit brought in his name by his assignee, by a release to the defendant, who ■has notice of the assignment. Andrews v. Beecker, 1 Johns. Ch. 411; S. P., Raymond v. Squire, 11 Johns. 47.
    And to a release pleaded, the plaintiff may reply the.assignment, and that the defendant had notice of it. Ib.
    *So to a plea of payment. Littlefield v. Story, 3 Johns. 425. See also 12 Johns. 484; 15 Johns. 405; 16 Johns. 51; 20 Johns. 140, for decisions protecting the rights of assignees 'of choses in action at law.
    The law in Now York and Massachusetts seems to be well settled on this point; and Swan, in his treatise, refers to those decisions as containing the law.
    Where any one has the entire beneficial interest, or only an ■agency coupled with an interest, suing for his use, in order to protect his lien, it is out of the power of the assignor, or legal owner of the chose in action, to deal with the defendant, and defeat the beneficiary. If he could do so, law would be inadequate to project his rights; whether he owns the whole or only a part, whether he has purchased and paid for the equity, or only has a lien by reason of advancements made in collecting, coupled with his authority to collect, it is all the same. He has an equity in the proceeds, in whole or in part, that should be protected. The nominal plaintiff in this case is a non-resident of the state, and may be irresponsible. The defendant had notice of all that is alleged in the replication. His demurrer admits it, nor can he tamper with the nominal plaintiff without the consent of the beneficiary, and thereby legally defeat the beneficial plaintiff.
    The defendant says, in his demurrer, that the beneficiary does not claim tho whole equity; that he has not an absolute suit, only contingent. Well, what matters it? An interest in half should be protected as well as interest in the whole. Why not? Can the defendant complain? He knew the “cestui que use” had a. lien. He knew the attorneys had fees. He knew they had paid large bills of costs in pursuing the claim. He knew they were liable for'eosts. He knew they had a lien. It was his duty to-come and settle with the beneficiary, or with him and legal plaintiff together. He ought not to be permitted to go to the legal plaintiff, behind the back of those having liens, paying him and getting his release. This release can not affect the “ cestui que use.” It is no defense as to him, nor as to the lien of the attorneys, even for *their fees. To protect the beneficiary in such cases, there seems to us to be no other way than to require-the defendant to pay the claim-, if it all belongs to the assignee, or to pay so much as belongs to the assignee. If the assignee, or “ cestui que use” only claims a part,, then such part should be the rule of damage, the release being shown as defense to that part of the claim belonging to the legal owner. The defendant should first pay the lien on the claim and pay the costs, and keep the “ cestui que use ” clear of costs. The very fact of the defendant paying the legal plaintiff and taking a release, is evidence that the plaintiff had a right to recover; and hence the costs should not be thrown onto the beneficial plaintiff.
    If this could not be done, then judgment, generally, should go for the plaintiff, and the defendant should be left to resoz-t to the legal plaintiff, with whom he dealt, behind the back of the assignee.
    The causes of demurrer are not consistent with each other. Demurrant says that plaintiff does not claim full interest. Then, again, that he claims an assignment of the claim; says the replication contains two distinct matters, viz: assignment, then fraud;, but says again, that the fraud charged is not on Weakly, but on Bell.
    The truth is, the replication states exactly the interest of Bell, and how that interest is attempted to be interfered with ; and it, all taken together, constitutes his answer to the plea of release.
    1. His interest, in fact, is just this, he took the claim to collect,, to employ attorneys, pay the expense, and collect, and to have-$100 out of the proceeds. Second suit was commenced, but inability to get depositions, etc., compelled a discontinuance, and costs were incurred and paid by attorneys, and Bell assumed to pay them. The claim sued the third time for Bell’s use, deposi tions taken, paid for, attorneys’ fees incurred to large amount as stated. Newton, attorney for defendant, knew this; the replication charges this notice to Newton, and then says, making fraud the gist of the replication, that Newton secretly got the release, without the knowledge or consent *of Bell, or his attorneys. Does this amount to duplicity? The last allegation barely rebuts the conclusion that the release was obtained by consent, and knowledge of Bell.. We think the replication is not double. We think it good in substance, so far as Bell is concerned. The question recurs, ought he to be protected in law against the after actii of the assignor, or legal holder of the chose in action? The law seems to be clear that he ought. This case is a proper one for the exercise of the rule.
   Wood, J.

The question raised by the pleadings is, whether the replication avoids the effect of the release set up in bar of the action, in the special plea, and therefore shows a right of recovery.

It is by no means our intention to shake tho well-established principle, that a court of law will protect the interest of the bona fide assignee of a chose in action, after notice to the debtor of the assignment. The rule is convenient, and necessary in the administration of justice, to secure parties against fraud and circumvention.

What, then, is the case made by the replication? It is this - Hall was indebted to Weakly in a claim of many years’ standing. For some reason he does not choose to prosecute it himself, and he assigns it over to Bell, not a lawyer, who agrees to collect it in Weakly’s name, to employ counsel, advance money, procure bail, etc., reimburse himself tor his allowances from the proceeds when collected, and receive a portion of the avails for his compensation. The averment is that advances had been made, and liabilities incurred to a largo amount, that Bell had a lien on the claim assigned to him, of all which premises, Hall had notice ; and that alter such notice, in fraud of Bell’s rights, Hall procured the release from Weakly.

While the replication thus attempts to avoid the release sot up in the special plea, it show clearly there was no absolute transfer of tho entire interest in the chose to Bell. The extent of his interest was to depend on circumstances, limited by his allowances and liabilities, and his share of the claim.

*Weakly and Bell, therefore, were tenants in common in this chose in action against Hall, as between themselves. Each had a distinct interest, and there was, therefore, something which Hall’s release could operate upon and discharge, notwithstanding this assignment to BolL and notice to Hall. It would seem to follow that Bell could no longer pursue Hall at law, in Weakly’s name, for Weakly’s rights are all absolutely discharged by the releaso. He can not sue at law in his own name, because tho chose in action is not negotiable, and his remedy, if any, must be in equity.

It is insisted, moreover, by counsel, that the assignment by Weakly to Bell shows a case of champerty, and is therefore void. ■Champerty and maintenance are offenses at common law, punishable by fine and imprisonment. The English and American courts have considered agreements founded on such considerations as champerty or maintenance, as against sound policy, and void. Key v. Vattier, 1 Ohio, 132.

Champerty is an agreement to prosecute at one’s own risk and expense, and to take a part of the thing received in compensation. Tho common law discourages officious intermeddling in the litigation of others, as it clearly ought. In some of the states they have statutes passed to prevent it, in others not; but where no statutory regulation exists, the common law is universally holdon to prevail, as imported by our ancestors, and applicable to our local circumstances; and Bell, by the agreement set out in the replication, would seem to be within its provisions.

It is unnecessary, perhaps, to say anything in reference to the lien which is set up in the replication, and which, it is insisted, ■could not be discharged by the release of Weakly to Hall. But wo take occasion to say that the law of Ohio will tolerate no lien in or out of the profession, as a general rule, which will prevent litigants from compromising or settling their controversies, or which, in its tendencies, encourages, promotes, or extends litigation. We think the replication is bad, and^he demurrer is sustained. Judgment for defendant.