26 How. Pr. 213 | N.Y. Sup. Ct. | 1863
This action is brought for the purpose of enforcing three judgments against the defendant, of which the plaintiff is the assignee. A motion was first made at special term for liberty to issue executions, but various matters of defence were interposed, and the motion was denied, with liberty to bring an action.
At the trial the plaintiff abandoned all claim under the third judgment specified in the complaint, and by permission of the court withdrew it from the cause. The cause therefore stands on the two judgments entered February 3d, 1853 ; one for $599.65, the other for $145.25.
The defendant, by omitting to deny it, admits the allegation of the complaint whereby the recovery and entry of the judgments are averred. This allegation stands admitted of record. Nor is it charged in the answer that the judgments are without jurisdiction and void. The defendant is not, I think, in a position to claim that the judgments are invalid. But had he not admitted the due recovery of the judgments, the objection could not prevail. The court had jurisdiction of the parties and of the subject matter of the actions, and the entry of judgments, if irregular, was not void. They remain of record, not vacated, annulled or reversed.
The plaintiff was a practicing attorney and counsellor of this court at the time he purchased the judgments. But according to the decision in Warren agt. Paine (3 Barb. Ch. 630), he had a right to make the purchase for the purpose of issuing executions and collecting the debts, notwithstanding the statute prohibiting attorneys from buying choses in action with the intent and for the purpose of bringing suits thereon. As was there held, the policy of the law does not embrace such case. At one time it was supposed that this defence was not available in suits in equity where costs are in the discretion of the court. (7 Hill, 586.) It is, however, now well settled that it is as effectual in actions in equity as in actions at law. (2 Barb.
The defences interposed by the answer to the first two judgments specified in the complaint (the third being withdrawn, hence out of the case) are, first, payment; second, statute of limitations; and third, that the judgment belonged in fact to the plaintiff to pay, under an agreement made between him and the defendant at the commencement of the actions, to the effect that he would indemnify the defendant against all costs that might be recovered therein.
As to the first defence of payment, no evidence whatever was offered in its support; so that defence fails.
The second defence sets up that the causes of action stated in the complaint did not, nor did either of them, accrue within twenty years before the suit was commenced. The two judgment^ in suit, it seems, were entered on the 3d February, 1853, less than ten years prior to the commencement of the action. Hence this defence is unsupported.
As to the third defence, the jury, on the evidence, have found a verdict in favor of the plaintiff, that no such agreement as that set up in the answer was made between the parties. The verdict therefore disposes of that defence.
It was insisted on the trial that this third alleged defence was unavailing, if the facts on which it depended were established; first, because covered by the arbitration be
It is but fair to the plaintiff to remark here, that he indignantly denied, on oath, that he made any such contract, and the jury declared it unproved against him. On further consideration, I am not entirely satisfied with my decision at the circuit on the two points above stated ; and although unnecessary, the verdict having been in favor of the plaintiff, I propose to submit a few suggestions on those points.
In 1860, about ten years after the alleged agreement was charged to have been made, the parties submitted all their matters in difference, claims and demands to arbitration, and the plaintiff claimed for services in these suits, which claim the defendant resisted; but the plaintiff prevailed. Was not this determination of the arbitrator— this adjudication—conclusive between the parties ? And in regard to champerty and maintenance: According to the alleged contract, the plaintiff, an attorney and counsel of this court, agreed to carry on those suits at his own expense, and indemnify the defendant against all costs. An agreement by an attorney to carry on a suit at his own expense was, before the Code, unlawful. Section 303 has modified the law of champerty. By this section the former rules and provisions of law, restricting or controlling the right of a party to agree with an attorney, solicitor or counsellor, for his compensation, is repealed ; so an agreement between a party and his attorney, that he shall share in the recovery or have an interest in the subject matter of the suit, is now lawful. (23 Barb. 420.) In this case, however, it is intimated that a contract by an attorney to carry on the suit of his client at his own expense would
Important questions yet remain for examination.
It is insisted that the plaintiff can recover only the amount actually paid by him on the purchase of the judgments, for the reason that he was the attorney and counsel of the defendant in the actions, and also was his counsel in efforts to defeat the judgments after they were entered, on a claim that they were invalid and void. The position is, that the purchase by the plaintiff should be deemed and held to be a purchase for the benefit of the defendant.
Against this it is first urged, that no such defence is set up in the answer, I entertained the point on the trial,
It appears that these actions terminated in judgments against the defendant, entered February 3d, 1853; but the plaintiff continued to be his general attorney and counsel until 1860, when all confidential business and social relations ceased between them. Two years after, the plaintiff became the purchaser of the judgments. At this time he was not the attorney, counsel or agent of the defendant, either as regards those judgments or as to any other suit, matter or thing whatsoever; nor did he owe the defendant any duty, unless some obligation or restriction remained, growing out of their former confidential relation.
While the relation of attorney and client continues, the court will carefully scrutinize the dealings and contracts between them, and guard the client’s rights against every attempt by the attorney to secure an advantage to himself at the expense of the client. Nor is it necessary in such case for the client to show actual, or, as it is sometimes called, active, fraud, in order to obtain relief; but the law will presume in his favor, so soon as the confidential relation is shown to have existed at the time of the transaction complained of. This rule has its foundation on principles of public policy, and is adhered to by the courts with the utmost rigor. (Story’s Eq. Jur. sec. 308 to 324; 9 John. 253; 5 Denio, 640 ; 1 John. Ch. 344; 11 Paige, 538 ; 3 Cow. 527; 13 Barb. 524 ; 31 Barb. 9; 7 Simons, 539 ; 27 Eng. Law & Eq. 100; 16 N. Y. 285 ; 6 N. Y. 268, 272.) Several of these cases were .between principals and their agents, but the rule is the same in all cases whenever a confidential relation is shown to exist between parties. In this case, however, the purchase of the judgments was not made from the client. No contract was made with him. All business relations, indeed all social relations, had ceased between them long prior to the purchase. He was not led into any improvident contract, sale or arrangement with
But if an attorney purchase the subject matter in litigation from his client’s adversary in the suit, or any interest therein, his client will be entitled to the advantages growing out of the purchase at his election—the attorney will be held to be the agent of his client for the purpose of effecting the purchase, if the client chooses to hold him to that position. His agreement with the client under the retainer is to the effect that he will use his faculties and powers for the advantage of his client in regard to the matters of the litigation; and his purchase will be deemed to be a purchase in trust for his client, if the latter choose so to regard it. A purchase under such circumstances by the attorney, for his own benefit and profit, is inconsistent with the duty he owes to his client, and its advantages may be claimed by the latter at his option. (4 John. Ch. 118 ; 4 Cow. 717.) But the purchase in this case was not of the subject matter of the litigations in the suits between Consalus and Linn, as to which the plaintiff was at one time the attorney and counsel of Consalus. Those litigations were in regard to rights and claims preferred by Consalus against Linn; not in relation to demands preferred by Linn against Consalus. In those litigations Linn prevailed, and the judgments, of which the plaintiff became the assignee, were for the costs recovered by Linn against Consalus as a defeated plaintiff. The plaintiff was not, therefore, the purchaser of the subject matter of the litigation in those suits, nor of any interest therein. Hence it follows that the rule, that an attorney shall not be permitted to purchase from his client’s adversary the matter in litigation, and hold it to the disadvantage and against the wishes of his client, has no application here—for the reason that the plaintiff did not purchase any subject matter in litigation in the suits between Consalus and Linn.
The disability of an attorney to purchase a demand against his client, as to which he has been retained and consulted, and to hold it for his own benefit against the wishes of his client, will continue in some cases after the confidential relation has ceased. It has been held that such disability continues so long as the reason for it exists. (8 Clark & Finnel. 657; 25 Penn. R. 354.) It was said, in the first case cited, that an attorney is disabled from purchasing for his own benefit charges on his client’s real estate without his permission; and the disability will continue as long as the reason exists, although the confidential employment may have ended. In the last ease cited, it was held that the disability did not terminate with the relation of attorney and client, but was perpetual in its character; so that the purchase of any adverse claims or rights by the attorney will be held to be in trust for the former client and those claiming through or under him. (See also 5 John. Ch. 44.) To the same effect is the decision in Galbraith agt. Elder (8 Watts, 81). These cases show that the attorney will not be permitted to buy and hold for himself against his former client a right, claim or demand as to which he had been the adviser of the latter; for it will be presumed that he acquired information in regard to it under the confidence of his former relation, or in the exercise of his duty as attorney and counsel. In such case, an obligation remains to be faithful to the trust reposed in him, notwithstanding his employment may have terminated : and it is not in his power to relieve himself from a disability which he voluntarily assumed, and which became permanent so soon as it attached. It is no answer in a case of this character to say, that the demand was already fixed and determined as a legal obligation; that the claim was open alike to all purchasers ; and that the party is not injured in being compelled to pay a just and
Here, it is true, the purchase was not a purchase of the subject matter of the litigation in the suits between Consalus and Linn. If it had been, the plaintiff, according to the authorities cited, could not have purchased and held the purchase for his own benefit in defiance of his former client. He would have been presumed to have acquired a knowledge of those matters during his confidential employment which would put him under a disability to hold the purchase for his own advantage, in case his client saw fit to claim its benefits to himself. But the purchase was of judgments for costs, embracing no- litigated claim, and if no question as to their effect or validity had been raised, nor any effort been made to resist their collection, I can see no reason why the plaintiff would not have been at liberty to purchase .and enforce them, 'the same as if he had been an entire stranger to them. Being formally entered they became ostensibly the adjudication of the court, and the plaintiff’s duties in regard to them ceased, unless he again laid himself under obligation by a further retainer to defeat their effort.
It appears, however, that a serious question arose in regard to their validity, and it seems that the defendant
It does not follow from these conclusions that the plaintiff has been guilty of any moral turpitude, or of any breach of duty, or actual violation of good faith, as an attorney and counsel; for it does not appear that he did in fact
The defendant's counsel insists that this is an action in equity; hence that the costs are in the discretion of the court. In this I think he mistakes. The action is in the nature of a scire facias, and is strictly an action at law. The costs follow the recovery as a matter of course. It has been treated as a case in equity by the counsel on both sides from the first, and I have permitted it to be tried and heard as an equity cause, no objection being made. But if an action in equity, costs should be allowed I think to the plaintiff. He moved in the first instance for liberty to issue execution on the judgments. The defendant could then have tendered the amount advanced by the plaintiff in their purchase, or consented that executions might issue for that amount; but he resisted the motion—insisted that the judgments were paid—and also urged the defence which on the trial was determined to be without foundation in fact. He demanded that the plaintiff should be put to his action on the judgments. Consequently the motion was denied, with liberty to the plaintiff to bring this action. Here, too, various defences were interposed, all of which have been found to be unsubstantial. It is said that the defendant succeeds in part, but his partial success is not on any of the points litigated under the answer, and could have been just as well and effectually raised on the motion for leave to issue execution, as on trial in an action. The
The plaintiff must have judgment in accordance with the above views.