37 N.E.2d 952 | Ind. | 1941
Lead Opinion
This is an appeal from a judgment abating a proceeding supplemental to execution.
James Hansen, Receiver of Mid-City State Bank, recovered a judgment against the appellee Katherine Zebec. Execution issued, and afterward this action was brought by a complaint alleging that the defendant, Federal Life Insurance Company, is indebted to the judgment debtor in a sum exceeding the amount of the judgment and the amount allowed by law as exempt from execution, and that the judgment debtor has no other property subject to execution. The insurance company appeared and answered that it was not indebted to Katherine Zebec in any sum. Afterward the plaintiff filed a supplemental complaint, alleging that at the time of the filing of the original complaint there was pending in the United States District Court for the Northern District of Indiana an action by Katherine Zebec against the defendant insurance company, and that Katherine Zebec recovered therein a judgment in the sum of $26,026; that thereafter the judgment was assigned by Katherine Zebec to Minnie Lees and Zora Zebec; that the Federal Life Insurance Company, without the knowledge or consent of the plaintiff, and while the original complaint was pending, paid the judgment. There is prayer for an order against Katherine Zebec to appear and answer concerning the moneys paid her by the Federal Life Insurance Company, and that the company be ordered to appear and answer and pay the amount of the original judgment.
Afterward Katherine Zebec appeared and filed an answer in abatement based upon the ground that, by reason of the enactment of chapter 84, section 5, of the Acts of 1937, which provides that "no execution shall issue under this act upon any judgment upon a debt secured by mortgage upon real property," the right to *368 have the execution satisfied is extinguished. A demurrer to this answer was overruled, and the plaintiff replied in six paragraphs, all based upon the statute of 1937. There was a trial and judgment abating the action.
The plaintiff filed a motion for a new trial, pending the determination of which he filed his petition to have Floyd S. Draper substituted as party plaintiff. The petition alleges that on the 24th day of June, 1940, pursuant to authority granted by the Lake Superior Court, the plaintiff, as receiver, sold, assigned, transferred, and set over to Floyd S. Draper all of his right, title, and interest in the judgment which was the basis of the proceeding supplemental to execution, and it is recited that by reason of such authority Floyd S. Draper has become the real party in interest. The defendant Zebec objected to the substitution, which objection was overruled, and Floyd S. Draper was substituted as sole plaintiff. Thereafter the plaintiff's motion for a new trial was overruled. The defendant Zebec then filed her motion that the court take no further action in the cause upon the ground that "this cause of action became void on June 24, 1940, and the judgment sued on became void on the same date, when said cause of action and judgment were purchased from the original plaintiff by his attorney of record, Floyd S. Draper, during the pendency of the action. . . ." The plaintiff Draper tendered his affidavit in opposition to the motion, from which the following facts appear:
The plaintiff Draper was a member of the firm of Draper Draper, attorneys, who represented Hansen, the receiver, at all times involved. The judgment against the defendant Zebec was recovered in May, 1932. In November, 1930, the defendant Zebec filed a suit in the Lake Superior Court against the Federal *369 Life Insurance Company, and the cause was afterward transferred to the United States District Court for the Northern District of Indiana. The proceeding supplementary to execution was filed in July, 1932. Shortly thereafter one of the attorneys for the defendant Zebec represented to the plaintiff's attorneys that in his judgment it would be injurious to the interests of Mrs. Zebec, in her action against the insurance company, if the proceeding supplemental to execution was pressed before the case against the insurance company was concluded, and suggested that if the latter case were permitted to continue pending on the docket until the determination of the action against the insurance company it would be agreed that no money recovered from the insurance company would be disbursed until the proceeding supplemental to execution had been determined. This suggestion and agreement were afterward incorporated into a letter directed to Draper Draper. In the letter it was stated that one of the attorneys for the insurance company had agreed to stand by in the supplemental proceeding until the action in the federal court was settled. Prior to the judgment in the federal court, one of the attorneys for the insurance company promised the plaintiff Draper that no judgment obtained by Mrs. Zebec would be paid until and unless he, the attorney, first notified Mr. Draper. In April, 1935, Mrs. Zebec recovered a judgment against the insurance company for $26,026. There was an appeal and the judgment was affirmed in March, 1936. In February, 1936, Katherine Zebec assigned the judgment to Minnie Lees and Zora Zebec, her daughters. It is asserted that the assignment was made without the knowledge of Hansen, receiver, or his attorneys, and with the intention to defraud the receiver. On or about the 16th day *370 of October, 1936, the judgment was paid by the Federal Life Insurance Company, and the satisfaction was signed by Katherine Zebec, Minnie Lees, and Zora Zebec. On June 3, 1940, the receiver had liquidated the assets of his trust to the point where it was, in his opinion, advisable to sell the remaining assets, among which was the judgment against Mrs. Zebec, for cash. He filed his petition in the court administering the trust, and an order was made authorizing a sale. The receiver was unable to sell the judgment, and he then advised the firm of Draper Draper that he believed they had not acted with due diligence in connection with the matter in that they had relied too greatly upon the written promises of other attorneys, and that as a result the judgment had not been collected, and that in his opinion said attorneys were morally, if not legally, obligated to purchase the judgment, and he suggested that the judgment be purchased by the attorneys for $1,000, the sum to be credited upon the attorneys' fees due in connection with their employment by the receiver. Floyd S. Draper offered the sum of $1,000 for the judgment, which was tentatively accepted. The receiver filed his petition in court for an order confirming the sale, which was approved, and a copy of the petition to the court for approval of the sale is set out as an exhibit. It appears in the petition that all of the facts were submitted to the supervising court, including the fact that there had been a judgment abating the proceeding supplemental to execution, and that a motion for a new trial was pending. The receiver also said in his petition for approval of the sale that he felt the attorneys were morally, if not legally, obligated to purchase the judgment. The sale was outright and unconditional. The petition was approved and the sale confirmed by the court. It is further made to appear from the plaintiff's *371 affidavit that no arrangement had been made between the plaintiff and Hansen, either individually or as receiver, to share the proceeds of the litigation; that it was not purchased for speculative or investment purposes, but purely for the purposes set out. The trial court denied the plaintiff the right to file this affidavit and showing, and thereupon sustained the motion of the defendant Zebec that no further action should be taken, and adjudged and decreed that the plaintiff Draper was not permitted to proceed further as a party in the cause.
Two questions are presented: Was the assignment of the judgment and cause of action to the appellant Draper champertous and therefore void? Did the statute relied upon by the appellees strike down the right of the judgment plaintiff to enforce the execution?
Professor Williston in his work on contracts says: "Maintenance consists in maintaining, supporting, or promoting the litigation of another. Champerty is a bargain to divide the proceeds 1. of a litigation between the owner of the liquidated claim and the party supporting or enforcing the litigation." The author says that the technicality of the rules of the English common law "has led some courts to refuse to apply the common-law tests of champerty and maintenance, and to consider merely whether the particular bargain in question is oppressive to the client, vexatious to the defendant, or a misuse of the courts . . ." Williston on Contracts, Rev. Ed., Vol. 6, §§ 1711, 1712, pp. 4833, 4837, 4838.
Space does not permit of an analysis of the authorities dealing with the early common-law rules affecting maintenance and champertous contracts and of the gradual relaxing of 2. safeguards which were thought necessary to protect the public interest *372 in respect to litigation. But it is clear from the authorities that everything declared against and every contract held void as champertous were in violation of a statute or thought to be against the public interest and against public policy, and that no contract was held void as champertous upon any other ground.
It is pointed out in Stotsenburg, Adm'r, v. Marks, et al.,Ex'rs (1881),
Champerty originally involved a bargain to divide the proceeds of litigation, but now it is generally held allowable for an attorney to contract for a contingent fee based upon the 4. amount of recovery. It is sometimes said that it is champertous to contract for a percentage of the amount to be recovered, but that it is not champertous to contract for an amount equal to a given percentage of the amount recovered, which seems to involve a distinction without a difference. InSedgwick v. Stanton (1856),
In West v. Raymond et al. (1863),
If an attorney buys real estate or a chose in action from his client, the transaction is not per se oppressive. In Lord Campbell's case the attorney purchased the judgment from 10. his client for the full amount thereof because his client needed money immediately, but it seems that at that time certain fees accrued to the attorney for the plaintiff which might be charged as costs against the defendant, and it seems to have been thought oppressive of defendants to permit an attorney to purchase a right of action from his client in order to obtain fees and charges from the defendant, but no such practice exists in this State, and there is no reason to fear oppression of a defendant because of a transaction between a plaintiff and his attorney. See Rogers v. Hendrick (1912),
We are not unmindful of the fact that the judgment, which was the subject of the contract between attorney *378 and client in this case, amounted to several thousand 11-13. dollars, and that it was purchased for $1,000, and that, if successful in collecting, the purchasing attorney will profit largely from the transaction, and that such transactions must be open to careful scrutiny by the courts. But the contract was not made by a private litigant and his attorney. The property was in custodia legis, the judgment was procured by a receiver, the agent of the court administering a trust, and the sale, before consummation, was submitted to the administering court for approval and confirmation. It is difficult to see how it can be said that under such circumstances the attorney was in more advantageous position to negotiate than his client, or why the fairness of the contract should be submitted to still another court for examination and approval before it is valid. Under the rule announced in Hart et al. v. State ex rel. Rock, supra, a judgment defendant may not defend against the enforcement of a valid and just judgment upon the ground that the attorney who purchased it, and to whom it was assigned, acquired it from his client. If there was any unfairness between the attorney and client it has worked no injury to the judgment defendant.
Chapter 84 of the Acts of 1937, upon which the appellees rely to defeat the appellant's action, is entitled "An Act to amend sections 592, 593, 596 and 598 of an act entitled `An 14-19. act concerning proceedings in civil cases,' approved April 7, 1881." The act of 1881 (Acts 1881, ch. 38, p. 240) is the Civil Code. It contains 867 sections and covers 151 printed pages in the official published Acts. It deals with practically every phase of civil procedure. The four sections sought to be amended deal with proceedings supplemental to execution only and are four of eight sections *379
dealing with that subject. The sections as amended by the act of 1937 deal with the same subject, except that by "Sec. 5 (a)," which is separated from section 4, which amends section 598 of the act of 1881, and which is a separate section not specifically amending any of the sections included in the title of the act of 1937, it is provided: "Sec. 5. (a) Except in such cases where the denial of this remedy would be a violation of the Constitution of the State of Indiana or the United States of America, no execution shall issue under this act upon any judgment upon a debt secured by mortgage upon real property, nor upon any judgment upon any contract of the sale of personal property unless the title to the said property passes at the time of said sale." This section 5 does not deal with proceedings supplemental to execution, but seeks to expressly change the law providing for the issue of execution, and to curtail and limit the cases in which executions shall issue. It, in effect, exempts all property from execution upon money judgments upon debts secured by mortgage or contract of sale of personal property except the property mortgaged or sold. This provision is not amendatory of any of the provisions of the sections of the statute of 1881 referred to in the title of the act of 1937, but if effective it does amend or partially repeal certain other unnamed sections of the act of 1881, and changes and modifies the law concerning the issuing of executions and the satisfaction of money judgments, and the exemption of property from execution. Section 19 of Article 4 of the Constitution of Indiana provides: "Every act shall embrace but one subject and matters properly connected therewith; which subject shall be expressed in the title. But if any subject shall be embraced in an act, which shall not be expressed in the title, such act shall be void only as to so much thereof *380
as shall not be expressed in the title." The purpose of this provision is to prevent surprise or fraud by including in the body of the act matter of which the title gives no indication, and to apprise the members of the law making body and the public of the subject of the legislation under consideration, and the title of an act sufficiently expresses the subject if it gives such notice as to reasonably lead interested persons to inquire into the body of the act. Kleihege v. State (1934),
The court erred in overruling the demurrer to the answer in abatement. The court erred in sustaining appellee Zebec's motion to take no further action in the cause and entering judgment that the appellant should proceed no further as a party to the cause.
Judgment reversed, with instructions to sustain the demurrer to the answer in abatement, and for further proceedings not inconsistent with this opinion.
NOTE. — Reported in
Addendum
ON PETITION FOR REHEARING.
The appellee Katherine Zebec has filed a petition for rehearing in which it is asserted that: "The decision contravenes two earlier Supreme Court decisions regarding title of statutes," and it is suggested that, if the opinion is to stand, Lewis v.State (1897),
It is clear that the subject-matter of an amending act may be as broad as the title of the act which is amended unless 20. the title of the amending act restricts the subject-matter to a narrower field.
In the Lewis case the court considered an act entitled, "`An act to amend section 209 of an act entitled, "An act concerning public offenses and their punishment," . . .'" (Page 348 of 148 Ind., page 676 of 47 N.E.) The amending act contained two sections. The court held that the subject-matter of both sections of the amending act was within the purview of the subject of section 209, which was amended, and that the act would not be stricken down because the amending act was in two sections. The appellee is in error in assuming that the original opinion holds the act to be unconstitutional because of the division into additional sections.
The result reached in the Stiers case rests upon the conclusion that (page 654 of 174 Ind., page 376 of 92 N.E.): "Under the decisions of this court the mere fact that the proviso of the amendatory act of 1901, supra, refers to matters not germane to the subject-matter *384
of the particular section it purports to amend does not render it unconstitutional and void, if the subject-matter incorporated in the amendment is within the purview and is germane to the title of the act amended. Lewis v. State (1897),
In Cain v. Allen et al. (
In Rose et al. v. State (page 665 of 171 Ind., page 104 of 87 N.E.), it is said: "The subject of the act of 1907, supra, is that of the act of 1875 (Acts 1875 [s.s.], p. 55), of which it is an amendment. . . ." An examination of the briefs in the case discloses that no question was made concerning the title of the amending act. The only contention was that the act dealt with two non-related subjects.
As we have already pointed out, the sufficiency of the title of the amending act was not involved in Lewis v. State. It is clear therefore that the statement quoted from the Stiers case is not supported by the authorities cited. We have investigated the cases to discover whether it finds support elsewhere in the decisions of this court.
Reed v. State (1859),
State v. Bowers (1860),
In Brandon v. State (1861),
From the earliest times it has been uniformly held that an act of the Legislature which attempts to amend a section of a statute which has already been amended is unconstitutional and 21, 22. void, notwithstanding the title of the amendatory act sets out in full the title of the act sought to be amended. See Feibleman v. State ex rel. Brown, etc. (1884),
The case of Reed v. State is well considered and clearly indicates the conclusion of the court that the subject-matter of the amendatory act must come within the purview of the section of the original act indicated for amendment in the title of the amendatory act. Some of the language in State v. Bowers andBrandon v. State, standing alone, may seem to announce a rule inconsistent with Reed v. State, but, in so far as the language is inconsistent, it is obiter dictum. When the facts and questions presented are considered, the decisions in the latter two cases are not inconsistent with the earlier case. A careful examination of the Stiers case convinces that the court's attention was not called to Reed v. State. The rule announced is assumed to be established. Reed v. State is not overruled, nor is there any *388 indication that the court was conscious of a conflict with this early case.
In Board of Com'rs of Allen County v. Trautman (1933),
It appears that the rule announced in Stiers et al. v. Mundyet al., supra, is inconsistent with and conflicts with the rule announced upon the same subject in the early Reed case and in the late Trautman case; that it is inconsistent with principles which have always and consistently controlled the decisions of this court in respect to legislative enactments, and that it is against the great weight of authority elsewhere. The statements in the other cases, which seem consistent with the rule laid down in the Stiers case, are too broad as general statements of the law, and should be treated as precedents only in cases where the factual situation is the same. Stiers et al. v. Mundy et al., in so far as it conflicts with the rule laid down in the principal opinion, is overruled.
Petition for rehearing denied.
NOTE. — Reported in 38 N.E.2d 995. *389