Case ID: sc-eq_7/html/0558-01.html
Source: Caselaw Access Project
Author: {"author": "Johnson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Simon Verdier v. Samuel Simons, Executor of Montague Simons, and Orran Byrd, Executor of Samuel B. Simons.
    Champerty, what. If one concerts with another standing in a fiduciary relation, to commit a fraud on his cestui que trust, he will be answerable at least to the extent that he has been been benefitted by it. Champerty does not apply toa bona, fide purchaser of any right, in possession or action.
    This bill was filed to compel the defendants to account for, and pay over to the complainant, a debt which bad been established by an award made by arbitrators pending a suit, and finally confirmed by the court, to be due by the late Montague Simons to Mrs. Rebecca Simons, the widow of S. B. Simons, now Mrs. Wilson. The award decided that a certain deed of release obtained from Rebecca Simons, thewidow of Samuel B. Simons, should be considered as a void instrument, and that Montague Simons, the executor of Samuel B. Simons, should pay out of the funds of Montague Simons’ estate into the hands of the complainants, the amount of a bond given by Montague Simons on account of a horse and chair, watch, and furniture, belonging to the estate of Samuel B. Simons ; and also to pay two thousand dollarsin full of all demands by ^complainants on account of the estate of Samuel B. Simons’ claim against the estate of Montague Simons. Subsequent to the award Samuel Simons the executor of Montague Simons, and Orran Byrd the executor of Samuel B. Simons, came to a settlement, and the former paid to the latter four thousand five hundred dollars in full of all demands, and a release and acquittal was given. The complainants insisted that the settlement was mproperly made.
    First. Because it was made before the expiration of the thirty days after the decree, during which no execution could have been issued.
    Second. That the settlement was an unjust one, in which Samuel Simons obtained a gain of one thousand five hundred dollars as a douceur from Orran Byrd. In other words he paid a debt of six thousand dollars, with four thousand five hundred dollars, to an administrator who gave up one thousand five hundred dollars as a douceur lo S. Simons for paying him the cash.
    Third. That when this settlement was made, it was with the express notice that Mrs. Rebecca Simons (now Mrs. Wilson) had sold and assigned her share of he estate of her deceased husband to the present complainant Simon Yerdier, for a valuable consideration, before the settlement with Byrd.
    January, 1825. DeSaussdre, Chancellor. In considering the first point, it does not appear to me that there is any weight in it. The representative of Montague Simons’s estate was not bound to wait for an execution to settle the debt, and if he were willing to pay those who were entitled to receive it, he was not bound to issue an execution at all, but might receive it at any time. The real question turns upon the fairness and propriety of the settlement. It does not appear to me that there is any difficulty in pronouncing that this settlement was an *unjust one. The administrator had no right to make a compromise and to give up one-fourth, at least, of a just and safe debt, in order to obtain the payment of a part of the debt to himself. I do not say, that there is no case where an executor or an administrator may not be justified in compromising a debt, and giving up a part to save the remainder; but it must be in a clear case of necessity, where great risk would be run of losing all or a great part, unless a compromise bo made. There does not appear to have been any risk in this case. It was clearly a sacrifice of part, in order to obtain the immediate payment of the balance to the administrator for his own convenience and purposes, and to defeat the rights of others. This leads us to the third question. The evidence is very distinct and positive by three witnesses, “that notice was given before the settlement to Simons, that Mrs. Simons (now Wilson) had sold and assigned her rights in her husband’s estate to the present complainant,” and it cannot be doubted that notice was given to Byrd himself of the assignment prior to his settlement. This seems to have been so well settled, that the counsel for Simons cautioned him not to settle and make the payment, which he did immediately before it took place. Against the force of these facts, it was insisted for the defendants, that Mr. and Mrs. Wilson sold and assigned, or otherwise transferred to Orran Byrd their moiety of the estate of Samuel B. Simons, on which he was entitled to make the settlement and to receive the moiety, and give the discharge to Samuel Simons; and also that the complainant Yerdier was not a fair purchaser for a valuable consideration from Mrs. Simons, the widow (now Mrs. Wilson,) but had purchased a suit then pending for an uncertain right, which was champerty, and for a very inadequate price, which was fraudulent. With respect to the assignment or transfer by Mr. and Mrs. Wilson of ^ler t'ig'bts and powers to Orran Byrd, the evidence does *seem to me to establish, that this was obtained by fraud and misrepresentation, subsequent to the sale and conveyance of Mrs. Wilson’s rights to the complainant Verdier, with the full notice of such an assignment to Byrd, with an express view to defeat that assignment, nothing being paid by Byrd to Mrs. Wilson. With respect to the purchase by Yerdier from Mrs. Wilson, there is no evidence impeaching the fairness of that transaction. As to champerty, contracts of this kind, if made fairly, have not been considered in modern times to be champerty. At any rate it is for the party aggrieved, and not for strangers, to take advantage of these objections. From this view of the whole case it appears, that Samuel Simons paid the money to Orran Byrd m his own wrong. The mind cannot resist the conclusion, that this settlement was hastily made expressly to evade the rights of Yerdier: Byrd to get the money for his own use, and Simons to secure the advantage of one thousand five hundred dollars.
    It is therefore ordered and decreed, that the executor of Samuel Simons, executor of Montague Simons, do pay from his estate to the complainants the amount decreed to be paid in the former suit in this court, wherein Orran Byrd and others were complainants, and the executor of Montague Simons and others were defendants, and that the costs be paid out of the estate of Samuel Simons.
    From this decree the defendant J. C. Levy, executor of Samuel Simons, appealed.
    First. Because the release pleaded was in bar.
    Secondly. That the decree pointed out the mode of settlement, and the same was complied with; the administrator and J. S. Wilson and wife having full power to discharge the defendant.
    Thirdly. That this was a case of champerty, and there was no equity for relief on behalf of complainant.
    *Fourthly. That the decree, at all events, should onlv be for the balance.
    Petigru, Attorney General, for the appellant.
    It maybe admitted, that Byrd had notice of complainant’s purchase from Wilson and wife, and that his receipt of the money from the defendant was intended as a fraud on him. Byrd was the administrator of J. B. Simons, and was authorized to sue and receive the money. Wilson and wife, as the next of kin, might have been entitled to the fund, and they had the power to make an assignment of it; but they had no power to prevent or control the payment of it to Byrd. Regularly, it was obliged to pass through his hands.
    2. The award directs that the money should be paid to their joint receipt. This could not have been performed by payment to the plaintiff, under the order of Wilson.
    The payment of a debt due on account to the person to whom it is due is good after notice of an assignment. 2 Const. Rep. (Threadw. Ed.) 498. On this principle the payment would be good, although the release would be void as to the balance of the debt of §6,000. If deeds be set aside for want of a sufficient consideration, the universal rule in equity is, that what has been paid shall be returned. Murray v. Palmer, 2 Sell. & Lef. 474. Wharton v. May, 5 Yes. 27. Fanning v. Dunham, 5 Johns. Cha. Rep. 123. Butler v. Haskell, 4 Desaus. Rep. 486. On this principle it is held, that if an executor dispose of the property of his testator, with the intention to appropriate it to his own use, which is known to the purchaser, the contract is, notwithstanding, good. 4 Term Rep. 625. 2 Mad. Cha. 289. 3 Atk. 235. 17 Yes. 153. The principle on which these cases go, is, that the courts cannot distinguish between the testator and the executor.
    *The contract between the complainant and Wilson and wife was champerty, and void. It was buying a thing in suit, in the very terms of the statute. Pub. Laws, 30. If a contract be against the policy of the law, the court will not lend its aid to enforce it. And there is no distinction between those that are mala prohibita and malum in sc. If the contract is prohibited by law, it is void, although not declared to be so. 13 Ves. 542. 2 Com. Contr. 38. This is a contract within the statute against champerty, and is therefore void. 2 Atk. 224. 5 Johns. Cha. Rep. 48. 8 Johns. Rep. 479. 13 Johns. Rep. 289. 20 Johns. Rep. 386.
    W. H. DeSaussure, contra.
    The definition of champerty is, when one contracts to have part of the thing in dispute, in consideration of maintaining the suit. 1 Bac. 575, tit. Champerty. 4 Com. Dig. 207, tit. Main. Co. Litt. 368. Fitzh. 172. There is nothing in the cases or in the principle which operates to exclude one from fairly purchasing a legal demand. Strangers cannot take advantage of it. 2 Bridg. Ind. 288. 2 Desaus. Rep. 636. All the cases referred to by the appellant’s counsel relate to contracts made by persons standing in the relation of agent. By several acts of the legislature, bonds, notes, judgments, and decrees, are made assignable at law. These matters were always assignable in equity. So are contingent interests; and equity will protect the purchaser. Nor do they amount to champerty. 1 Fonb. 214. 1 Swanston, 56. The courts of law as well as the courts of equity will take notice of and protect the rights of assignees to dioses in action. 3 Johns. Cha. Rep. 425. 2 P. Wms. 608. If one purchase wdth notice of another’s right, paying a consideration will not avail him. He throws away his money, voluntarily. Mead v. Oring, 3 Atk. 238. The object in ordering that the money should be paid on the joint *receipt of Byrd and Wilson was to prevent Byrd’s practicing a fraud on Wilson. The defendant was trustee for Byrd and wife, and for their assignee the complainant, and he could do nothing to affect the interest of his cestui que trust. The defendant Simons knew these circumstances, and having united with Byrd to defraud him, he was answerable for all the consequences. Simons, moreover, participated in the spoil, by which he gained an unconscientious advantage to the amount of $1,600, equal to twenty-six or twenty-seven per cent in the payment of his own debt. If one concerts with an executor to get the estate of the testator atan inadequate price or fraudulent under-value, contrary to the duty of the executor, he shall be answerable for the full value. The objection as to the inadmissibility of Wilson and wife cannot prevail. Releases were executed.
    Grimke, in reply.
    By the terms of the decree, Wilson and wife, and Byrd were jointly entitled to receive the money from the defendant Simons. In law Byrd alone was entitled to receive it, and unless the complainant had done something tc change their rights. He remained silent, and he is bound by the confidence reposed in them. As to the objection, that Simons only paid a part, it was only the case of one paying a part for the whole before it is due, and is legitimate. The complainant’s purchase was champerty, and he could take nothing by it. It was one of the stipulations that Wilson was to have $200 in the event of a recovery, and falls within the counsel’s own definition. It is said that a contract founded in champerty is only void as between the parties. But the very object of the statute was to protect others from oppressive and legal persecution.
    March, 1827.
   Curia, per

Johnson, J.

This case presents two ques-ions.* First. Whether the assignment made by Rebecca Simons, (nowWilson)tothecomplainantof herinterestin the estate of her deceased husband, Samuel B. Simons, pending a suit in chancery to recover it, was or was not void, as constituting what is called champerty,

Secondly. How far the release subsequently executed by Orran Byrd, and Wilson and wife (late Rebecca Simons) to Samuel Simons, operates as a bar to the complainant’s rights under the assignment to him ?

In relation to the first of these questions it may be necessary to premise, that the complainant paid to Mrs. Wilson, as a consideration for the assignment made to him in the first instance, twelve hundred dollars, and that he afterwards voluntarily superadded about two hundred dollars more, making in the whole about fourteen hundred dollars.

Judge Blackstone (4 Comm. 135) derives the term “champerty” from the words campi partitio, and if we take the literal interpretation of these terms, as descriptive of the offence, it will, I think, follow that it consists in promoting law suits, by furnishing the means of carrying them on, and speculating in the result, by sharing the profits, and never was intended to apply to a bona fide purchaser of any right, whether in possession or in action. It is, according to Lord Coke, the most odious species of maintenance, Bacon’s Ab. tit. Maintenance A. 2; and is punished in all actions, real personal or mixed. But it will not be champerty if A contracts with B for a manor, for which B is afterwards impleaded, and pendente lite B conveys it to A (Id. A. 3.) So if a stranger purchase bona fide, pendente lite, it is no maintenance, (Id. A. 5.)

The complainants in this case did purchase, for a consideration, agreed upon with Mrs. Wilson, her whole interest in this estate. It was not, therefore, a speculation on the probable result, or a sharing of the profits, but a *bona fide sale for a valuable consideration ; and whatever might have been the consequences of an act of champerty on the rights of these parties, they do not attach, as the offence has not been consummated.

The remaining question is one of more difficulty. Orran Byrd, as the administrator of Samuel B. Simons, had in law the exclusive right to receive all moneys which belonged to that estate, from whomsoever due, or on whatever account. By the terms too of the award, which by its confirmation became the judgment of the court, Samuel Simons was directed to pay the amount to the joint receipts of Byrd and Mrs. Wilson, and under it the decree could not have been satisfied without his receipt. He had a right, therefore, to stipulate as to the terms on which he would give his receipt, at least so far as a moiety of the demand. He was clothed too with the authority of Wilson and wife to receive the whole. It is said, however, and the proof is very satisfactory, that there was a combination between Samuel Simons and Byrd to defraud the plaintiff, and that Simons entered into the compromise with the avowed determination of preventing the complainant fromderivingany benefitfrom his contract, and that the means resorted to was, by paying over the money to Byrd, who was irresponsible on account of his insolvency. The equitable rights of the complainant are opposed by the direct legal right of Byrd to receive the money, and it appears to me that no contract or combination of circumstances to which Byrd himself was not a party, could divest him of that right; for it was one with which the law had clothed him. So far, therefore, as relates to the money actually received, the complainant must be regarded as concluded.

The amount of the decree against Samuel Simons was something upwards of §6,000, and by the compromise entered into with Byrd, he paid it off with §4,500; *and if the release is to be considered as conclusive, Samuel Simons would pocket, as the fruits of his iniquity, more than §1,500, upwards of twenty-five per cent, on the amount of his debt. Let it be asked, on the broad principles of equity and natural justice, is he entitled to retain it? I think not. There was no consideration for the release beyond the sum paid. The debt was then due and owing, and although by the forms of law, the complainant, in that case, could not then, have taken out process against the defendant on the decree, the obligation on him was the same. In point of law, therefore, it might well be questioned, whether the release was binding. But again, Byrd in making this compromise acted in the double character of administrator of Samuel B. Simons, and as agent of Wilson and wife. He had no authority from them to make it. It was, therefore, a fraud upon them, and Samuel Simons being a particeps criminis, is clearly liable, except so far as he is protected by the positive rules of law.

The rights of the complainant, under and by virtue of the assignment made to him by Mrs. Wilson, although not strictly legal, are such as the law recognizes. The courts of law, in some instances, and the courts of equity will always protect them. And I think it has been well maintained by the cases cited in the argument, that if one concerts with him who stands in a fiduciary relation to commit a fraud on the person beneficially interested in the subject matter, that he is answerable, at least, to the extent that he is benefitted by it. 3 Johns. 425. 2 P. Wms. 608. 1 Mad. 256. 17 Ves. 167.

It is therefore ordered, that the defendant, Jacob C. Levy, do pay to the complainant, out of the estate of his testator, Samuel Simons, the amount of the decree obtained against him at the suit of Orran Byrd, administrator of Samuel B. Simons and Rebecca Simons, *de-therefrom the sum of him to the said Orran Byrd, on account thereof, with interest thereon and costs of this *uit.

Decree affirmed.