Court Opinion

ID: 7102177
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:16:53.331022+00
Date Added: 2024-06-11T16:13:26.818466
License: Public Domain

OPINION ON REHEARING.
Beck, J.
I. A rehearing was allowed in this case upon the petition of defendant. After reargument it lias been *300again submitted. Counsel for defendant, on the petition for rehearing, argue at length the question of defendant’s right to remove the cause to the federal courts, which is identical with the question determined by us in a prior case of the same title. See 64 Iowa, 513. But no such question is in this case, and counsel correct the error into which they had fallen in a brief filed upon the rehearing.
II. In addition to the question expressly determined in the foregoing opinion, upon which we have no occasion to say more, and with the disposition whereof we remain well satisfied, other questions urged upon the rehearing seem to demand further brief attention. These questions arise upon defendant’s answer, a demurrer to which was sustained, pleading, substantially, these defenses: (1) The assignment of the claim to plaintiff was “ collusive, colorable and fraudulent,” in that it was made to deprive defendant of the right to a removal of the cause to 'the federal courts, and the assignor is the real party in interest, and it is to receive the entire benefit of the claim. (2) The assignment' is cham2^ertous, and is “ unlawful maintenance.”
It will be observed that defendant pleads (1) that the assignment is “ collusive, colorable, and fraudulent,” on the ground that it was made to defeat defendant’s right of removal of the cause to the federal court; (2) that the assignor is the real party in interest, and is to receive the entire benefits of the claim; (3) the assignment is champertous.
III. The contract between the assignor and assignee, and the assignment itself, are substantially like, if not identical in form with, the instruments set out in the opinion upon the rehearing of another case of the same title, heretofore decided by us. See 64 Iowa, 513. The question presented in the second defense above stated is sufficiently discussed in the foregoing opinion.
*301„ 2. ASSIGNprevenireiedwaicourts: altionhy assignee. *300IY. The first defense above specified may be disposed of upon the following considerations: If the assignment was lawful *301to defeat the transfer to the federal court, though y n made for that purpose, it cannot be alleged that it was “collusive, colorable and fraudulent,” because of that motive. The law, recognizing ^ lawful notwithstanding the motive that
prompted it, will not pronounce it void by reason of the existence of that motive. It is settled by the decisions of the United States supreme court and this court that a transfer to the United States court cannot be made on the ground that the motive of the assignment was to defeat the transfer. See Provident Sav. Life Assur. Soc. v. Ford, 111 U. S., 635; S. C., 5 Sup. Ct. Rep., 1104; Vimont v. Chicago & N. W. R’y Co., 64 Iowa, 513. In this case the assignment was sufficient to pass to plaintiff the legal title to the claim. He is vested with property therein, and, by virtue óf that property right, clothed with authority to maintain an action upon the claim.
It is not alleged that the assignment is “collusive, colorable and fraudulent ” for any reason other than the purpose to prevent the removal of the action brought upon the claim to the federal court. The plaintiff is the real party in interest, required by the statute to bring suit on the claim. Defendants have no ground of complaint against the assignment, except that it defeats their right of removal, which the courts hold it lawfully does. Now, if the defense under consideration is sufficient to defeat the action, the plaintiff cannot have a remedy at all by suit. The assignment would be as nothing, and any action on the claim must be brought by the assignor in the United States court, or, if brought in the state court, it would be transferred to the federal court. The law never does by indirection what it will not do directly. It declares that the motive of the assignment is not sufficient to give the federal court jurisdiction, in a direct application made for a transfer. In an indirect manner, such jurisdiction is not conferred on the ground of the motive of the assignment. The defendant, as has been said, *302claims on no other grounds than that plaintiff is not the real party in interest, or that, for any other reason than that the motive of the assignment was to defeat a transfer, it was void and fraudulent.
maüítenancecollateral16: coScuwilo may plead. Y. Counsel for defendant, upon the rehearing, again argue the proposition that the assignment under which plaintiff prosecutes this action is void by reason ^act ^at ^ champertous. They insist ^1*13 objection is not disposed of by Vimont v. Chicago & N. W. R'y Co., 64 Iowa, 513, c^e(j jn foregoing opinion as having that effect. We will briefly discuss this question, and present considerations, which, to our minds, support the conclusion that the assignment is not invalidated by champerty.
It has been before stated that the questions for our consideration arose upon demurrer to defendant’s answer. To attain a proper understanding of the precise question presented by the record, it becomes necessary to state more particularly the pleadings in the case than is done in the foregoing opinion. The petition se,ts out the assignment of the claim to plaintiff, which is in writing. It is signed by the assignor alone, and purports to be “for value received,” ,and contains no contract, covenant, or expressed obligation binding the assignee. There is nothing in it upon which the charge of champerty can be based. It is simply, in effect, an assignment of the claim, and nothing more. The defense of champerty is pleaded in the fourth count of the answer, which is in the following language:
“For further defense herein defendant says that said alleged assignment was executed, delivered and accepted b}7 plaintiff, and its acceptance took effect, in the state of Illinois; and that at the time of the delivery and acceptance thereof by plaintiff, and as a part of the same transaction, the plaintiff executed and delivered to said Darby Carr an agreement in writing, in words and figures as follows, to-wit:
*303“ ‘ In consideration of the assignment to me by Darby Carr of his claim for damages against the Chicago &.Northwestern Eailway Co., [describing it,] I hereby agree to dispose of the entire amount realized on said claim as follows: Eor my own compensation in and about the prosecution of said claim, and for the use of any advance of money I may make, I am to retain thereof the sum of fifty dollars. I am also to retain all sums of money that I may advance in the prosecution of said claim. Next, I agree to pay out of the proceeds of such recovery the reasonable fee of the attorneys and agents employed to prosecute said claim, or such fee therefor as may be agreed upon, if an agreement for a specific amount be agreed upon,and the balanceo! said recovery I agree to pay to said Darby Carr.
[Signed] “‘Wit. IT. Yimont.’
“ That said assignment and agreement is barratrous and champertous, and unlawful maintenance, and is illegal and void, both in the state of Illinois and Iowa; and that plaintiff has no right or cause of action thereunder, enforceable in this state or elsewhere.”
It clearly appears from the pleadings that the transaction is evidenced by two distinct and independent writings, — the first, an assignment of the claim, showing nothing to support the charge of champerty; the second, a unilateral contract in the nature of a declaration of trust, binding plaintiff to dispose of the proceeds of the claim, when collected, in the manner therein prescribed. In my opinion, the first instrument cannot be held invalid and incapable of enforcement by reason of any provision, illegal or otherwise, found in the second, which would be alone affected by any source of infirmity found in it. The contracts are independent, though the covenants of one may be regarded as the consideration of the other. Yimont could not plead the invalidity of the last contract on the ground of its champertous character, should he be sued on the second for a failure to collect the claim. Neither could he set up a like defense to an action against *304liim to enforce the appropriation of the funds as prescribed by the second, on the ground that it is champertous. Tho assignor, Carr, could not plead champerty against the enforcement of the first instrument, for it is not champertous in character, and contains no provision setting out, or in any manner evidencing, an unlawful contract. Whether he could defeat the provisions of the second instrument because it is champertous I need not inquire in order to support the view just presented. I conclude, therefore, that the assignment does not present a champertous contract.
I am also of the opinion that the second instrument, in its conditions and terms, does not embody a champertous contract. The conditions for the payment of attorneys and agents employed about the prosecution of the suit, and $50 compensation to plaintiff, are not champertous. The condition authorizing plaintiff to retain sums of money advanced by him in the prosecution of the claim is not champertous, for the reason that plaintiff does not undertake or obligate himself to make any such advances. It is not an agreement to maintain or support a lawsuit. Plaintiff is not bound thereby to furnish or supply money for the ¡prosecution of an an action. It is not, therefore, champertous.
But if it be assumed that the terms of the instrument signed by plaintiff are champertous, a majority of the court are united in the. opinion that a defense based upon that ground cannot be pleaded in this case. It is a matter that can be pleaded only in an action between the parties to the contract, and, if not pleaded therein, the contract may be enforced as valid between them. If the party wronged by the champertous contract fails to plead the illegality as a defense, the contract may be enforced against him. The interest or rights of a stranger not being affected, he cannot set up champerty to invalidate the contract. The defense pertains to the contract itself, and can only be pleaded in an action between the parties to it. See Knadler v. Sharp, 36 *305Iowa, 232; Hyatt v. Burlington, C. R. & N. R. Co., 68 Id., 662.
¥e adhere to the conclusion announced in the former opinion filed in the case.
Affirmed.