163 Iowa 659 | Iowa | 1914
The plaintiff, as assignee of five assignors, brought this action upon the five separate causes of action of his assignors, respectively. The original transaction involved is the same as that involved in Cress v. Ivens et al., 155 Iowa, 17. The claim on the part of the plaintiff is that the defendants, acting together, induced ten others to join them' in the purchase of a large tract of land, consisting of 14,883 acres, in Minnesota, near the city of Duluth, at a stated price of $5.25 per acre. The proposed purchase was made. Each of such ten persons took a one-fifteenth interest in the enterprise. and the defendants the remaining five-fifteenths. The purchase was made from the Boston & Duluth' Farm Land Company. The purchase was made by executory contract; one-sixth of the purchase price being paid down-and the remainder to be paid in five equal annual installments. At the time of such purchase, each of the defendants had a contract with the seller for a commission of fifty cents an acre, making a total of $1 an acre for both commissions. This commission was also payable in installments out of the corresponding installments of the purchase price. It is contended for plain
The former action was brought by five of such associates. That suit was brought in equity and was in the nature of an accounting as for money received by the defendants from or on behalf of their joint associates; each associate claiming a one-fifteenth share thereof. The parties to that suit recovered the full amount claimed, and the judgment in their favor was affirmed here. In the present suit the rights of the remaining five associates are involved. The present action is brought on the law side but was tried to the court without a jury. The petition is indefinite in its allegations. It does not indicate whether it claims relief as for damages or as for money had and received. The distinction is perhaps not very material. And yet some stress is laid upon it in appellee’s argument as bearing upon the question whether the causes of action now sued upon were covered or included by the settlements pleaded by the defendants and hereinafter referred to. Generally speaking, the theory of the plaintiff is that the false representations of the defendants caused each of their associates to pay more than they otherwise would have paid, and that the defendants received such excess in the form of commissions and are accountable therefor to their associates. There was no misrepresentation in any other sense as to the price of the land. The evidence is undisputed that the price quoted was the minimum price upon the tract. The evidence on behalf of the plaintiff shows that the selling company had a large acreage of land other than the land in question; that it classified its lands and fixed uniform prices upon lands of the same class; and that these were not and could not be deviated from without destroying the market for other unsold lands. The commission of $1 per acre was also the regular and usual commission paid. The alleged false representations, therefore, are confined to the question of commissions received, and the measure of recovery of each associate, if any,
The trial court did not pass upon the question of fact. Because of our conclusions about to be expressed, we find it unnecessary to pass upon it. There are some features of the contracts in question that are not fragrant. For the purposes of the argument, we may assume them to be champertous. It is the contention of appellants that when the taint of champerty is made to appear, and that plaintiff’s title to the cause of action rests thereon, it becomes the duty of the court to
The following excerpts from some of the cited cases is a sufficient indication of their holding:
Even if the rule is still in force as to agreements with laymen, we think the better rule is that the contract is only void between the parties, and does not affect the obligation of the defendant to the plaintiff. (Foley v. Grand Rapids & I. Ry. Co., supra.)
The trial court evidently was of the opinion that the contract of assignment of the notes was champertous and for that reason could not be enforced by the assignee, who had the notes under the champertous agreement. Conceding that the contract of assignment was champertous, the respondent was not a party to that contract, and for that reason was in no position to avail himself of its illegality. . . . This is now the settled rule in Missouri and is supported by a decided weight of authority elsewhere. (Bick v. Overfelt, supra.)
In a suit by Prosky v. Hafer, to enforce the contract, the latter might set up the defense that the contract was void for champerty. Such however is not the case. There is no controversy between the plaintiffs, and whether the suit is con
The contract by which the plaintiff acquired title to the note was in no way oppressive or injurious to the defendant, and there is no reason for his defeating the suit on a ground on which he could not defeat it, if it had been brought in the name of the payee without an indorsement of the note. (Taylor v. Gilman, supra.)
This is not a suit by Osgood against the company to recover compensation rendered under a champertous contract. The defendant cannot set up as a defense that the subject-matter of the suit has been made the subject of a champertous contract between the plaintiff and a stranger, unless he shows that the contract is in some way injurious to him. (Connecticut River Mutual Fire Insurance Co. v. Way, supra.)
There is a very practical reason why the rule contended for by appellants at this point should not obtain. The question whether champerty exists is usually a question of fact and may be made such in any ease. It is not usually made to appear upon the face of an assignment. It does not so appear in the case at bar. If it were permissible, therefore, for the defendant in any case to raise the issue of champerty against an assignee plaintiff, it would necessarily be permissible for him to do so in every such case. He could thus deflect the course of a trial to settle an issue in which he had no real interest and which could not affect his ultimate liability. To open such a door would be to add greatly to the burden and confusion of litigation. It is more appropriate, therefore, that such issue should be raised and tried between the appropriate parties at a more appropriate time. Our . statutes and ’our previous decisions are liberal in their recognition of the right of an assignee of a cause of action to sue thereon, regardless of the nature of the consideration paid and regardless of whether he hold the same as absolute owner or as agent or trustee for the owner. It is enough that he hold the uneontested legal title to the cause of action. Knadler v.
The assignments in this ease have the merit that they enable five causes of action arising out of the same general transaction to be tried in one suit. This operates presumptively to the benefit of all the litigants. Similar motives frequently obtain in the assignment of causes of action, and they are not contrary to public policy.
III. We turn our first attention to the cause of action of Mrs. Rowe and to the alleged settlement thereof. The following is her entire testimony: Emeline Rowe:
Acquainted with Dr. Andre and Ivens. Known them about twenty-seven years. I entered into the contract, jointly with other parties, known as No. 832. Dr. Andre approached me in relation to this purchase. He said he thought it would be a good investment. He said we was to pay $5.25 an aere. I took a one-fifteenth interest. I don’t remember of anything being said by either Ivens or Andre about their receiving a commission. Q. If you had known that there was any such commission to have been paid them, would you have gone into the transaction? A. Yes, I think I would. Q. You would have bought the land just the same, you think ? A. Yes, sir. It is my signature attached to Exhibit 3. [Exhibit 3 offered in evidence.] I think I signed Exhibit 3 on or about the date it bears. (Cross-examination:) I signed Exhibits C and D at or about the time that they purport to have been signed.. Q. Now, Mrs. Rowe, before you signed these papers marked Exhibits C and D on August 25, 1908, you had signed a power of attorney to Mr. Cress relative to a suit brought against Dr. Andre and Theodore Ivens, is that correct? A. Well, it was for the . . . about the timber lands and to look after any fraud, as he told me, and that there was timber being taken off the lands, and it was to look after the interest of that. Q. Well, you had signed a paper at Mr. Cress’ request? A. To that effect; yes, sir. Q. And the
To the court’s ruling striking the foregoing from the record, the defendants at the time duly excepted.
Redirect: After signing the paper which I gave to Mr. Cress, I have had very little conversation with either Dr. Andre, Mr. Ivens, or either of the Johnson brothers, or Mr. Scott, in relation to the transaction. The first conversation was in June, after having signed the paper. I remember of having a conversation with them concerning this paper. I told them I had signed the paper. I don’t know that I told them what it contained. My talk was with Dr. Andre and A. C. Johnston. The conversation took place at my home in Sehaller. They came to my home to interview me with relation to the paper I had given to Dr. Andre. They spoke about the paper I had given to Mr. Cress. They wanted to know if I understood what it was. I told them I felt like it had been misrepresented to me because I didn’t think as I understood Mr. Cress; that it didn’t relate to anything to the other one where I was released from all obligations; that after I had signed the paper I understood that it did. I understood so before th’ey told me. I came to that conclusion by thinking and studying the matter over. I think the Cress contract relates to the same matter as the Andre contract. When I signed the paper for Mr. Cress, I had been told that Dr. Andre and Ivens had received a commission for the sale of the land, but I didn’t believe they had when I signed the contract with Mr. Cress. I signed the paper because he said I had better. When I signed the paper for Dr. Andre, I understood that I was going to get out of being brought into court. At the time I signed the papers with Dr. Andre, he bought my other shares that I had, my shares in the land. At the time that I made the assignment to
It will be noted that a part of the foregoing testimony was stricken by the trial court. In view of the testimony of the defendants on the same subject, the ruling is not very material. It was doubtless stricken • upon the theory that the present attitude of the witness was not binding upon the plaintiff. We may as well say at this point that as the beneficiary of the cause of action, and as the holder of the fruits of the settlement, her testimony at this .point was clearly admissible and ought to have received the consideration of the trial court. Passing that question, however, this evidence shows no misrepresentation whatever on the part of the defendants in the original transaction. Nor does it show any in the settlement. It further appears from her testimony that the settlement was supported by a substantially full consideration in that defendants purchased from her all her interest in the Minnesota land. This settlement was satisfactory to her at the time and ever after down to the day of her testimony. She retained the fruits of the settlement and was not willing to relinquish them or to set the settlement aside. As already indicated, the plaintiff made no tender or offer of any kind to support his repudiation of the settlement. Plaintiff’s pleadings and argument have proceeded upon the theory that if there was any fraudulent concealment on the part of the defendants at the time of the settlement, or failure to confess their receipt of the commissions, this of itself would render the settlement void in toio, regardless of any election to repudiate, and regardless of their return or offer to return the fruits of the settlement.
But where the party undertaking to rescind has received money or property under the terms of the agreement sought to be avoided, to which he has no claim other than by virtue of the contract, the rule is of universal application that an offer to return, unless the necessity therefor has been obviated by conduct of the other party constituting a waiver, is essential as a condition precedent to the maintenance of an action at law for the. recovery of property alleged to have been fraudulently procured. Bishop on Contract, section 679; Beach on Modem Law of Contracts, 792; Perley v. Balch, 23 Pick. (Mass.) 283 (34 Am. Dec. 56); Sheldon Axle Co. v. Scofield, 85 Mich. 177 (48 N. W. 511); Masson v. Bovet, 1 Denio (N. Y.) 69 (43 Am Dec. 651); Balue v. Taylor, 136 Ind. 368 (36 N. E. 269). Such a contract is voidable only. The injured party may confirm it and sue for damages if he chooses, or he
See, also, Lake v. Dredge, 158 Iowa, 725. We think it very clear that there can be no recovery in this branch of the case.
IV. We pass next to the claim of Hammond. Hammond testified in support of the claim. He testified that false representations were made to him in the original transaction, and perhaps inferentially at least that there was fraudulent concealment at the time of the settlement. The consideration of the settlement with him was that he exchanged his interest in the Minnesota land and certain mining stock with the defendants for an Iowa farm of 128 acres adjoining his own. The following excerpts from his testimony in rebuttal, in relation to the settlement, will be sufficient to indicate the general facts:
James Hammond:
I have heard the testimony relating to the settlement between myself, Andre, and Ivens for the commissions. The testimony in reference to the written instrument which I signed with Dr. Andre, I signed the contract, but I could not tell you who wrote the contract itself. This contract was read to me by Dr. Andre. I didn’t know at this time about any commissions being received by Dr. Andre and Mr. Ivens. I don’t remember that they said anything to me about it, I didn’t think they had any commissions. Q. Then, of course, you didn’t think you had any rights to any commissions? A. I didn’t give any thought to it at all. I thought I was signing everything over, and it didn’t make any difference to me. It didn’t make any difference, and I didn’t make any further inquiry. Q. Why didn’t it make any further difference? A. Because I was not interested. Q. You didn’t know there was any commissions to be interested in ? A. I did not. Q. If you had known they had received $1,500 commissions belonging to you, would you have entered into the contract for settlement you did? A. I don’t know about that. Q. Why
(Redirect:) Q. How could it have been your intention to do that if you did not know you had any commissions?
Much of what we have said in the preceding paragraph is applicable here. It is 'difficult to find in the foregoing testimony any support for a claim of fraudulent representations in the settlement. Be that as it may, it is very clear therefrom that the witness has at all times ratified the settlement, and that he has never been willing to repudiate it at the expense of yielding its fruits. Not only has he and his assignee failed to tender a return of such fruits, but it is manifest from his testimony that he would not consent to return them under any circumstances. Under the settlement he has received the Iowa farm, and he proposes to beep it as he is entitled to do; but he cannot keep it and at the same time repudiate the contract of settlement under which he received it.
Y. Passing tó the Collins claim, Collins also testified for the plaintiff:. He testified to false representations in the original transaction. He also testified that at the time he signed the settlement he did not know there was any com
VI. Passing to the claim of Patterson, he also was a witness. There is no substantial dispute as to the consideration for the settlement received by him. The settlement with him was more favorable than any of the other assignors unless it be Hammond. The defendants purchased his interest also in the Minnesota land and agreed further that, if the plaintiff recovered judgment in the then pending suit, Patterson should receive from the defendants fifty per cent, of the amount which he would have received if he had continued party plaintiff in such suit. There was therefore no fraud in the settlement, so far as Patterson was concerned. This part of his settlement was made contingent upon the outcome of the then pending suit. If he is entitled to recover, notwithstanding the settlement, it can only be on the ground that there was no consideration for a promise to accept fifty per cent, of a liquidated claim in lieu of the whole. In this case, however, there was other consideration than the mere promise to pay fifty per cent, in the fact already stated that the defendants purchased his interest in the enterprise. Like the cases already considered, there was no repudiation by Patterson nor any offer or tender to return such benefits as he had received.
VII. As to the case of Larson, the facts are quite different in their details from those of the other cases. By the testimony of the defendants, Larson went into the enterprise under -a conditional arrangement with them that, if at any
I 'bought a one-fifteenth part of the tract of land. I after-wards sold it back to Andre and Ivens. I couldn’t say, but I think probably a year or two later. I don’t think that my resale to Andre and Ivens was according to some arrangement which I had made with them at the time that I went into the deal. I don’t remember at present what was said about me not having money to handle this land at the time that I purchased it. I don’t remember the details. I don’t think or remember that anything was said at that time about them taking the lands off my hands. There was no arrangements made at that time.
Larson conceded as a witness that he had received back the full amount paid, with eight per cent, interest, and that he was released from further performance of the contract. This arrangement, however, was consummated long before there was any question raised as to the commissions. The arrangement, therefore, was not a settlement of any pending suit or any claim for fraud. The real question presented here is whether he ever suffered any damage by the alleged fraud of the defendants. The theory of liability put forward by the plaintiff is that the commissions received by the defendants came out of the pockets of their associates. These commissions were paid in installments corresponding to the installments of the purchase money. Larson paid only-two or possibly three of such installments. The defendants themselves took care of the rest. Under no circumstances,
It is our conclusion upon this record that the settlements shown therein have been fully ratified and never repudiated in a legal sense. Nor is there anything in this record indicating that the considerations received and agreed to be received by the plaintiff’s assignors in pursuance of such settlements were not a full and fair restitution for the wrong done.
Finally we feel constrained to say that the prosecution of this suit by the plaintiff, as assignee, illustrates the evil of champerty and maintenance. Plaintiff obtained these assignments from unwilling assignors. It is manifest that not one of them would ever voluntarily have prosecuted his own action. We have above set out the testimony of Mrs. Bowe and Hammond. Even Collins testified: “I told him I didn’t know if he could get anything out of it or not, and if he' wanted to try to go ahead. ... As near as I can remember, I told him I didn’t think he could get anything out of it.”
Patterson testified that plaintiff “had approached me with reference to signing Exhibit 4 a few times, a couple of times before this. . . . Yes, that he was going to prose
Larson testified as follows:
I understood that he had taken the other parties for what he could get out of it, and I told him I was willing to give half if I could get anything out of it, and he could get the other half the same as the other contracts you have right here. Mr. Cress had told me about the other contracts. I couldn’t swear who first spoke about it. I knew that Cress was working this ease up. He had told me so himself. Cress was the first one to talk to me about it. He told me he was trying to recover this here commission, and that he would have the cases up for one-half and no expense to me whatever. He was to pay all the expenses. I think this was also talked in Judge Goldsmith’s office. It was also talked when we signed the agreement, but the talk and understanding with Cress, at these various times when he was trying to get me to make this assignment, was that it was to be without expense to me, and that he (Cress) was to bear the expenses, and he was to bring the suit in his own name and pay his own expenses, pay the lawyers and all the expenses, and I was to be to no expense, and he was to repay to me one-half of what he got.
For the reasons indicated in the discussion, the case must be reversed on all counts, and it is so ordered. — Reversed.