Court Opinion

ID: 8193683
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:16:50.228311+00
Date Added: 2024-06-11T16:40:41.485647
License: Public Domain

Eschweiler, J.
The appellant, defendant Janowiak, challenges the findings of the court below on its determination that fraud was perpetrated by him and defendant Ryb-czinski, and for which fraud the court reinstated plaintiffs Aggie Blixt and Joseph Skinkis in the title to and possession of the farm.
We have not set out the details of the evidence in the record because it presents such a clear and convincing picture of gross fraud talcing advantage of gross credulity that no useful purpose would be served by spreading them upon our record. It is enough to say that the evidence amply supports the conclusions of the trial court in that regard and they are confirmed.
It is contended by appellants that, under the established *180doctrine of this court, the contract between the- Chicago attorney and the plaintiffs for the prosecution and carrying on of this lawsuit being champertous and called to the trial court’s attention, it was his absolute duty to dismiss this lawsuit on the ground of public policy. ,
On the other hand it is contended by plaintiffs that if such be the heretofore recognized rule of this jurisdiction it is not in accord with the doctrine on the same subject elsewhere and should be now repudiated, or, in case that be not done, still it was a proper exercise of judicial discretion to permit the parties to such champertous agreement to rescind the same and proceed from that point on with the same litigation upon a new and legitimate contract for its conduct.
That a contract savoring of champerty or 'maintenance at common law cannot form the basis for a cause of action between the parties to such a particular contract is well recognized by a universal line of authorities and needs no further consideration. The rule is declared in such cases as Miles v. Mutual R. F. L. Asso. 108 Wis. 421, 433, 84 N. W. 159; Ellis v. Frawley, 165 Wis. 381, 161 N. W. 364.
But this court stands practically alone in holding that, where it appears in the trial of a civil action that either party thereto has a contract sávoring of champerty or maintenance with his attorney or some third person, such party’s complaint or counterclaim, as the case may be, shall be dismissed, irrespective of the merits and solely because public policy forbids a court to continue hearing a cause where there is such an apparent stain upon the record. See note to Prosky v. Clark (32 Nev. 441, 109 Pac. 793) in 35 L. R. A. n. s. 512, 515; 5 Ruling Case Law, 284; 11 Corp. Jur. 270.
Elsewhere the recognized rule seems to be that the taint of champerty or maintenance only affects the litigation between parties tp such contract itself. It is the rule -in Illinois, where this particúlar contract was made (Elser v. Gross Point, 223 Ill. 230, 240, 79 N. E. 27), and elsewhere. *181Euneau v. Rieger, 105 Mo. 659, 682, 16 S. W. 854; Reichert v. Sheip, 204 Ala. 86, 85 South. 267; Cress v. Ivens, 163 Iowa, 659, 145 N. W. 325; Harness v. B. & O. R. Co.. 86 W. Va. 284, 103 S. E. 866; Irons v. Croft H. & N. Co. 86 W. Va. 685, 104 S. E. 111; Young v. Young, 196 Mich. 316, 162 N. W. 993; also note in 35 L. R. A. n. s. 512; 11 Corp. Jur. 270; 5 Ruling Case Law, 284.
Appellants contend that. the present action should have been dismissed upon the declared doctrine in this state. It is founded upon what was said by this court in Barker v. Barker, 14 Wis. 131, that public policy here and at common law requires that the court should, on its own motion, dismiss an action where champerty or maintenance was either in the contract sued upon or in a collateral agreement concerning the carrying on of the litigation made by one or the other parties litigant. In the Barker Case the contract sued upon was in violation of the .rule concerning maintenance and therefore did not present the situation that we have here. The cases there cited and relied upon other than frpm Tennessee were where suit had been brought directly upon such objectionable contracts.
From subsequent decisions in the Tennessee court it appears that the earlier decisions were based upon a particular statute subsequently repealed rather than upon what was assumed to be the common-law rule, and the Tennessee court now holds that the duty to dismiss is limited to suits in which the illegal contracts are directly sued upon. Staub v. Sewanee C., C. & L. Co. 140 Tenn. 505, 205 S. W. 320.
In Kelly v. Kelly, 86 Wis. 170, 56 N. W. 637, a situation was presented similar to the one here before us, and it was stated that though the ruling in the Barker Case was contrary to the great weight of authority, nevertheless it had become a substantive part of the law of this state and would not be then changed, and that the plaintiff, as party to the champertous contract for its prosecution, not being there *182to consent to the abrogation of such contract, the suit brought against a third person and prosecuted under such champertous agreement was dismissed.
The doctrine was again reaffirmed in Miles v. Mutual R. F. L. Asso. 108 Wis. 421, 432, 84 N. W. 159, and again in Decker v. Becker, 143 Wis. 542, 128 N. W. 67.
The general doctrine was also declared in Emerson v. McDonnell, 129 Wis. 67, 107 N. W. 1037, where the cham-pertous contract was directly concerned and involved the purchase by an attorney of his client’s interest in certain lands. The last expression of this court is in Ellis v. Frawley, 165 Wis. 381, 385, 161 N. W. 364, where action was brought to recover by one attorney from another the former’s claim for an interest arising by virtue of champertous contracts with clients.
In Stearns v. Felker, 28 Wis. 594, it was held in a suit ’ between attorney and client concerning a claim for services that although there was. a champertous agreement between them under which such services were rendered and that such champertous agreement could not be enforced, yet that nevertheless the attorney might recover for the-value of his services.
The rule having been so long recognized in this state and the express challenge made in the Kelly Case to have this court change its ruling and that having been refused, we are not prepared to nor do we feel called upon to now overturn the former declarations of this court in that regard.
Such position now taken, however, does not require a reversal of the trial court’s ruling permitting the lawsuit to continue. Plaintiff’s right of action as against the defendants was not of itself contrary to public policy nor one that a court could refuse to recognize. A dismissal of the present action for the reason contended by appellants would of course be no’ bar to the immediate commencement of another action by plaintiffs against the same defendants upon a contract or arrangement for the prosecution of the same which *183would not be in violation of the law as to champerty or maintenance. So a dismissal of the present action would amount to no more than a delay in the final judgment between the plaintiffs and defendants upon the merits. We think it was well within the discretion of the court, therefore, to permit the present lawsuit to continue after being purged of the champertous agreement with counsel, rather than to dismiss the same and thereby require the commencement of a new action. We think such procedure is clearly recognized by what is said in the Kelly Case, supra.
We are unable, however, to sustain the ruling of the court on the other question involved in this appeal as to the refusal to deduct from the amount with which the defendants are charged as having been received by them in the shape of rents during the possession of the premises the sums paid for the unquestioned valid assessment of taxes and the interest paid on the unquestioned valid incum-brances on the property.
Were the fraud for which the conveyance from the plaintiffs was set aside that which is designated by the courts as a constructive as distinguished from one in which the elements of positive bad faith and intentional wrongdoing appear, there would not be much doubt that under the recognized doctrine of this state such relief should be granted. Cook v. Berlin W. M. Co. 56 Wis. 643, 649, 650, 14 N. W. 808; Kickbusch v. Corwith, 108 Wis. 634, 651, 85 N. W. 148.
Here, however, is presented a situation where the defendants are properly found guilty of positive and gross fraud. They are wilful wrongdoers, and it is argued forcibly here and was so held by the trial court, that, being such wrongdoers, they are entitled to nothing that savors of relief as to the situation in which their own wrongdoing placed them.
There is sharp conflict in the authorities on this particular question presented, but we are disposed to follow those which hold, as did this court in the case of Hawley v. Tesch, *18488 Wis. 213, 242, 59 N. W. 670, that on an accounting for rents and profits as against one held as trustee through active fraud (p. 231), nevertheless he shall be allowed his disbursements for taxes paid and other expenses from which the complainants received a benefit.
The question is fully discussed and the authorities on both sides considered in the case of Loos v. Wilkinson, 113 N. Y. 485, 487, 21 N. E. 392, and it is there held in effect that the setting aside of the fraudulent conveyance is separate and distinct from the demand for an accounting of the rents and profits during possession, which is in the nature of an equitable proceeding and must be disposed of on equitable principles, and that from rents received shall be deducted payments for taxes, interest, and other items necessarily expended in preserving the property. Such holding does not appear to have been changed in New York since and has been several times expressly recognized. Smith v. Wise, 132 N. Y. 172, 30 N. E. 229; Hamilton Nat. Bank v. Halstead, 134 N. Y. 520, 524, 31 N. E. 900.
The same holding was had as to an allowance for taxes paid in Lamb v. McIntire, 183 Mass. 367, 370, 67 N. E. 320. The same rule is recognized as valid in Morley Bros. v. Stringer, 133 Mich. 690, 694, 95 N. W. 978. To the shme effect, Hutchinson v. Park, 72 Ark. 509, 82 S. W. 843; Sheridan v. McCormick, 39 N. Dak. 641, 168 N. W. 59, 8 A. L. R. 523, note p. 527. See, also, 12 Ruling Case Law, 643; 27 Corp. Jur. 664, 676.
There is a substantial distinction between payments for such items as the lawful owner would have had to pay if in possession himself and amounts paid or claimed by the fraudulent grantee as a part of the original fraudulent transaction such as were presented and discussed in McGovern v. Milwaukee M. Co. 141 Wis. 309, 124 N. W. 269; Baldwin v. Frisbie, 163 Wis. 26, 157 N. W. 526.
We deem it more consonant with the idea of an equitable accounting, such as this necessarily is as to the rents and *185profits during the use and possession of the premises, to allow the taxes and interest charges.
By the Court. — Judgment modified by deducting the sum of $1,034.71 from the $1,550 allowed as damages, and as so modified is affirmed.