Court Opinion

ID: 3870716
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:05:06.581368+00
Date Added: 2024-06-11T07:41:40.758580
License: Public Domain

Upon examination, we can find no case in which the transfer of a negotiable promissory note has been held to be void for champerty, and do not feel disposed to make such a case under the facts here disclosed to us. The plaintiff took from E. Whitehouse, Son  Morison the legal title to this note of which they are the payees, by their delivery of it to him with their indorsement in blank. As their mere agent and trustee he might have maintained an action upon it against the defendant, subject to all defences to which it would have been liable in their hands; and the defendant, if they were content, could not object to his want of beneficial interest. But the plaintiff, in addition to his legal title, has stipulated, at a certain price and mode of payment, for such an amount of the judgment he might obtain as he might be able to use; he to pay the costs of collection on such amount. Had he bought half or the whole of the note at such rate, certainly the contract would not have been champertous; and we cannot see why it should become so, because at a fixed rate he is entitled, under his contract, to an election as to the portion he will make his own; he paying only so much of the costs of collection as will be proportionate to the amount he shall conclude to take. He unquestionably took a transfer of it to sue for the common benefit of himself and the transferers; the amount of the interest of each in the judgment, and of the costs which each should pay for obtaining it, to depend on the amount of the judgment which he should so use and make his own at the agreed rate. Considering that the subject of this contract is a chose in action which the policy of the law allows to be legally assignable, we do not feel disposed to fetter this leading quality of such property by nice inquiries or refined distinctions. The rights of the defendant, at least, are fully protected by holding under such a contract of transfer, as well as because the plaintiff purchased the note when overdue, that in his hands it is subject to all the equities between the defendant and the payees, E. Whitehouse, Son  Morison.
It is argued that these equities require us to hold the note void under the statutes of New York, where it was made, against stock-jobbing and gambling. The statutes in question apply *Page 222 
only to cases where neither party intends to deliver or accept the stock or shares bargained for, but merely to pay differences, according to the rise or fall of the market, at the time when the bargain requires the differences to be adjusted. It is said that E. Whitehouse, Son  Morison acted as the defendant's brokers in such gambling transactions, and took the note in question as security for any balance which might accrue to them therein. The evidence shows a large balance, far exceeding the amount of this note, due to these brokers on account of the stock transactions of the defendant carried on through them; but, except in one or two instances not materially affecting the balance, fails to prove that the transactions were of the illegal character supposed; and, unless indeed we are to follow our own conjectures rather than the evidence, fails to show, even in the excepted instances, that the brokers were aware that the sellers of the stock to the defendant through them had it not to deliver, when it might be called for. There being no proof of any general scheme between his brokers and the defendant to violate the laws of New York directed against stock-jobbing and gambling in stocks; and their balance being far more than sufficient to require the application to it, for their reimbursement, of the whole amount of this note, we can see no reason why they should not recover the whole of it from the defendant, and none, therefore, why the plaintiff should not; suing and acting in this suit, as he does, partly for himself and partly as their agent and trustee.
The evidence clearly proves that the stocks of the defendant sold by his brokers at a loss, although not carried by them sixty days, were sold by his direction; and that he never objected until this suit, though the account was duly presented to him, to the balance now claimed. By the very form of the collateral note the brokers were empowered to transfer it; which distinguishes this case from those cited for the defendant where no such power accompanied the pledge; and the rights of the defendant are sufficiently protected by holding, as we do under the circumstances of this case, that the plaintiff, as indorsee of the note, can recover no more thereon than the defendant's brokers would have been entitled to do according to the terms *Page 223 
of their agreement. The amount of their balance equally limits his right of recovery and theirs; but as this exceeds the amount of the note and interest, let judgment be entered for the plaintiff for this latter sum.