Gregerson v. Imlay

| U.S. Circuit Court for the District of Southern New York | Jun 14, 1861

SHIPMAN, District Judge.

A variety of points, both in support of and in opposition to this motion, have been raised and ingeniously argued by the counsel, some of which are of an interesting character, but, in the view I take of the case, it is unnecessary to pass upon them. This is certáinly an extraordinary contract and one which a court of equity should hesitate long before it sanctions. It is clearly void at common law, for champerty and maintenance, and, although it is quite true that the doctrines of the common law touching the effect of these features upon the validity of contracts have been greatly modified in modem times, yet I think it doubtful if any court of law, much less any court of equity, has -ever sustained a contract of this description. This is not the case of an assignment of an interest in an individual claim, or a sale of property in esse which is involved in a legal controversy, but it is an attempted transfer of an interest in indefinite litigious rights, and in claims for unliquidat-ed .damages, arising out of torts, indefinite in number and amount, and limited only by territorial boundaries, covering nearly the entire country. Passing by other grave questions that suggest doubts as to the validity of such a contract, it is sufficient to say, that it is one that no court of equity should countenance, inasmuch as it is tainted with champerty and maintenance. This view of the duty of courts of equity is fully supported by the chief baron of the exchequer, in the case of Prosser v. Edmonds, 1 Younge & C. Ex. 481, where he remarks, that such courts should lend no countenance to agreements which partake in any manner of champerty, although they might be barely valid at law. Without impugning the good intentions of either party to the contract before me, and éven assuming that the unmolested execution of this agreement by the plaintiff would be highly beneficial to the defendant, still it is easy to see that such contracts are liable to great ■ abuse. To arm one individual with exclusive and unlimited power over the claims of another for unliquidated damages arising out of numerous torts, with power to sue and press the claims to judgment in all courts, in the name of the injured party, not for a fixed or a reasonable compensation to be determined by the amount of labor performed and the expense incurred, but for what might prove an enormous bounty proportioned to the amount that might be recovered, while at the same time the other party is stripped of all power to adjust, settle or discharge those claims, of the justice of which he ought to be the better judge, would be detrimental to the peace of society and the safety of individuals, and against public policy.

It may be claimed, that this contract is not champertous, inasmuch as the plaintiff does hot agree to indemnify the defendant against taxable costs. This distinction has sometimes been taken; and some of the elementary treatises seem to regard it as valid. But the doctrine was pretty effectually exploded in the case of Lathrop v. Amherst Bank, 9 Metc. [Mass.] 489. Indeed, where the power over the prosecution of the claims is. as claimed in the present case, exclusive and irrevocable, the exemption of the prosecutor from liability for costs, aggravates rather than relieves the mischievous character of the contract. •

The case of Call v. Calef, 13 Metc. [Mass.] 362, was one in which a contract was involved, resembling in many features the one now before me. The facts were these: Leeds & Co. claimed to own the exclusive right to use a patent planing machine in the town of Manchester, New Hampshire, in which town Baldwin & Stevens were infringing upon their rights by the use of another machine. Call, the plaintiff, had an interest in the same patent in Lowell, and Leeds & Co. executed a power of attorney to him, authorizing him, by suit or otherwise, to restrain Baldwin & Stevens from using the machine in Manchester, and promised him one-half of what he might recover or collect for his compensation. It was claimed, on a subsequent trial, in which this agreement was drawn in question, that it was void for cham-perty and maintenance. The court held it valid, upon the sole ground, however, that, as the unauthorized use of the machine in Manchester would diminish the profits and value of the patent in the adjoining town of Lowell, where Call owned the right, the latter had a direct interest in preventing the infringement in Manchester, and that this interest supported the validity of the contract. It is needless to remark that, in the present case, the plaintiff had no interest whatever in the claims committed to his control by the plaintiff, except what arose out of the contract itself.

I am aware that, in Sedgwick v. Stanton, 4 Kern [14 N. Y.] 289, Selden, J., in an able opinion, maintains that the doctrines of the common law touching champerty and maintenance are pretty effectually swept away in New York, by state legislation. But, although the contract under consideration was made in New York, still the lex loci cannot control the determination of the present case. The contract was, by its terms, to be executed in all the states of the Union except four, and the effect of the injunction asked for would be to support the contract in many states where it is clearly void. But, as already intimated, if the contract were barely valid at law, still, by applying the salutary doctrines of the English court of exchequer, in Prosser v. Edmonds, in which I fully concur, I should feel compelled to deny this motion.