Hudson v. Sheafe

170 N.W. 320, 41 S.D. 475, 1919 S.D. LEXIS 1

• Court: South Dakota Supreme Court
• Decided: March 24, 1919
• Docket: File No. 4279
• Status: Published

Opinions

AVHITING, P. J.

One Sherwood procured a judgment against defendant Sheafe and others in the circuit court of -Cook county, 111. Claiming to be the assignee of such judgment, plaintiff 'brought this action thereon in the circuit court of Codington county, S. D., the place of residence of defendant 'Sheafe. Verdict and judgment were for defendant. From such judgment, and an order denying a new trial, this appeal was taken.

In the answer there was a plea that the judgment sued upon was procured by fraud, and another that the plaintiff was and is-an attorney at law and 'bought the judgment sued on in this action with intent to bring suit thereon in violation of the provisions of section 198 of the Penal Code of this state. We are unable to determine from the record whether it was upon one or both of these defenses the verdict was based, but it is clear that it was based on one or the other of such defenses.

[1] Defendant also pleaded, as a counterclaim., damages alleged to have been suffered through the fraud of plaintiff; but, inasmuch as there was no money verdict for defendant, it is clear that the jury found against defendant thereon, and we are not called upon to consider any alleged errors relating to such counterclaim.

[2] Error is also assigned on an instruction of the trial court whereby the jury were directed that, if they found for .plaintiff, they could not find in his favor in excess of $3,900. Plaintiff contends that he was entitled to recover some $7,000. Inasmuch as the jury found that .he was not entitled to recover at all, the instruction complained of, even if erroneous, was unprejudicial.

[3] When plaintiff rested his case, he moved to strike various paragraphs from defendant’s answer. These motions were overruled, and the rulings thereon are now assigned as error. If plaintiff thought the answer contained immaterial matter, or that it was indefinite and uncertain in its wording, he should have attacked it before trial. The trial court did not err in disregarding such motions made after trial had opened.

[4] Plaintiff contends that the trial court erred in submitting to the jury the question of whether the Illinois judgment was procured by fraud; he contending that such question was one that could not properly be presented to any court other than the one which rendered the judgment. The record before us discloses that a motion to vacate the judgment of the Illinois court was made in that court and refused, and plaintiff contends that such court’s refusal to vacate its judgment is res judicata on the issue of fraud in procuring such judgment. The record of the motion made in the Illinois court, as introduced upon the trial of the present action, wholly fails to disclose that such motion was in any manner based upon any claim of extrinsic fraud in the procurement of such judgment. It follows that there is no proof upon which to base the contention that the order of the Illinois court was an adjudication that there was no extrinsic fraud in the procurement of the Illinois judgment. That defendant, in the absence of such a former adjudication as to fraud, had a right, in the courts of this state, to rely upon this defense is beyond question. We quote from the opinion in Levin v. Gladstein, 142 N. C. 482, 55 S. E. 371, 32 L. R. A. (N. S.) 905, 115 Am. St. Rep. 747:

“An examination of the cases leads to the conclusion that the right to resist in one state, on the ground of fraud, a judgment rendered in another state, is no longer disputed, but that only frauds of certain kinds are adequate to make resistance effective. The frauds which hitherto have been recognized as sufficient to impeach judgments of sister states have been such as (1) went to the jurisdiction (either with respect of the subject-matter or of the person) of the court to render the questioned judgment; or (2) constituted a fraud upon the law of the forum; or (3) operated to deprive the party against whom the judgment was rendered of an opportunity to defend the suit when he had a meritorious-defense to it. Frauds, no matter how gross (forgery and perjury for examples), in the conduct of the litigation, or fabrication of the cause of action, which the defendant might have met and counteracted, are unavailable.”

It would serve no useful purpose for us to set forth the evidence introduced in support of this plea of fraud. Suffice it to say that there was ample evidence to' support the plea, and the issue of fraud was fairly submitted to the jury.

[5] Error is assigned on the admission in evidence of an exemplified copy of certain parts of a record in an action tried some years since in one of the circuit courts of this state. Defendant had a right, in connection with his plea of fraud, and in order to show that in the Illinois action he had pleaded a meritorious defense, to set forth the issues made by the pleadings in such action. As a part of that answer in the Illinois case, there was pleaded this record of the former South Dakota action. Proof of the issues raised in the Illinois case, as well as evidence tending to support the defense pleaded in such case, was clearly competent in this action, -as it would tend to show a motive which might have impelled the plaintiff in the Illinois case to have sought, through fraud practiced upon the court and Sheafe, to procure a judgment in the absence of, and without the knowledge of, Sheafe or his counsel. It is perfectly clear that, if there' was any fraud practiced, the present plaintiff had knowledge thereof.

[6] Was the assignment of the judgment tainted with champerty ? Section 198 and 202, Penal 'Code, provide:

“Every attorney who, either directly or indirectly, buys or is interested in buying any evidence of debt, or thing in action, with intent to bring suit thereon, is guilty of a misdemeanor.”

“Nothing in the four preceding sections shall be construed to prohibit the receiving in payment of any evidence of debt or thing in action for any estate, real or personal, or for any services of any attorney actually rendered, or for a debt antecedently contracted, or the buying or receiving any evidence of debt or thing in action for the purpose, of remittance, and without any intent to violate the preceding section.”

The assignment itself disclosed no illegal purpose in the transfer of the judgment, but no party to a champertous agreement can be heard to say that a court cannot go outside of the writing to determine the true nature of the agreement. As said in Stewart v. Welch, 41 Ohio St. 483:

“Courts are not so helpless that they can be rendered powerless by the easy diange of words in the contract, or the shifting of parts in a play of champerty. Such tribunals, when not shackled by statute, look through words and form to substance; deal with things, rather than names; look at what was intended, more than at what was said, or written, in all cases where evidence, legally admissible, establishes the actual facts.”

[7, 8] The trial court instructed the jury that, if they found that plaintiff (who was conceded to be an attorney at law of Illinois) purchased. this judgment for the purpose of bringing suit thereon, the transaction would be champertous, unless he took such judgment in payment for attorney’s fees, or for an antecedent debt owing to him by Sherwood; but that, if he did take it in good faith for attorney’s fees, or for such fees and a debt, Sherwood was owing him, it was not a champertous transaction, even though he purchased the judgment with intent to -bring suit thereon. To such instruction plaintiff excepted:

“For the reason that there is no evidence before the court upon which the jury can make any finding as to champerty -and for the further reason that it appears b)f the undisputed testimony that the assignment' of the judgment, which assignment is' claimed to be champertous, was made to assign an Illinois judgment, and made in the state of Illinois, and to take effect there, and that such an assignment is not prohibited under the laws of the state of Illinois, and for the further reason that the evidence shows that the plaintiff herein is not an attorney licensed to practice in the state of .South Dakota, and that he has never practiced herein as an attorney, and that he is a resident and citizen of the state of Illinois.”

It will be noted that such exception in no way challenges the correctness of such instruction as an abstract proposition of law under our statute, but simply challenges the sufficiency of the facts to warrant submitting this question to the jury. There 'was evidence from which the jury was warranted in finding that plaintiff purchased the judgment with the intent and expectation of suing thereon. That, in case the laws of this state apply, the burden was upon plaintiff to bring himself under the exception provided for by section 202, supra, is too clear for doubt. The only evidence that he took such judgment in payment of attorney’s fees, or for a debt then owing him, is his own uncorroborated testimony. Under those circumstances, and even though there was nothing in any of the other evidence appearing in the record that would throw doubt upon plaintiff’s credibility, yet the jury had a right, if they disbelieved him-, to find that he did not take the assignment in payment of fees or a previous debt due him. In Nicholson v. Conner, 8 Daly (N. Y.) 212, it was held that the rule that, where a witness is unimpeached and his evidence not contradicted, his testimony cannot be disregarded by the court or jury, does not apply where such witness is a party, and the credibility of such party is always a question for the jury, and a verdict may be found against his uncontradicted evidence.

. This court has so held in several cases, some of them being cases where the testimony offered presented -a situation quite analogous to that presented in this case. McGill v. Young, 16 S. D. 360, 92 N. W. 1066; Iowa Nat. Bk. v. Sherman, 19 S. D. 238, 103 N. W. 19, 117 Am. St. Rep. 941. We are bound, therefore, to assume that, if the jury found with defendant on this defense of champerty, it so found because it rejected as false plaintiff’s testimony whereby, he sought to bring himself under the provisions of section 202, supra, and did find that he purchased this judgment — “evidence of debt” — with intent to bring suit thereon.

[9] Plaintiff contends that the assignment of a claim after it has been reduced to judgment is not champertous. Such contention is well founded, where the assignment is not taken for- the purpose of bringing suit on the judgment. The assignment of a judgment is, however, an assignment of an “evidence of debt” (McLaughlin v. Alexander, 2 S. D. 226, 49 N. W. 99), and if made- to an attorney for a purpose prohibited by said section 198, supra, it is champertous, unless the facts bring it under section 202, supra.

[10] Plaintiff also contends that it is only Sherwood, the other party to the assignment, who could question the validity thereof. Such is not the law. Plaintiff has cited severrd authorities to the point that, if Sherwood was the plaintiff herein, the mere fact that there might be in existence a champertous contract between him and his attorney could not be urged in defense of this action. That this is the law seems well settled. But it must be, borne in mind that the attorney is plaintiff here, and that to make out his case he must prove a valid assignment. It is a well-settled and certainly sound rule of law that, where a plaintiff’s claim is inseparably connected with an unlawful contract, it must fall. Mazureau & Hennen v. Morgan, 25 La. Ann. 281. This assignment is not collateral to the cause of action sued upon, tout it is upon this assignment that plaintiff’s right of recovery rests. The above principle then applies, in line' with which the law is that:

“If the champertous agreement is not collateral- to the claim sued on but is the foundation thereof, the action must fail, although defendant in the suit is a stranger to the champertous contract. * * * If an action is brought by an assignee in his own name, and the assignment is shown to be champertous, the court will treat it as void for all purposes and refuse on grounds of public policy to enforce it.” 5 R. C. L. § 14, “Champerty”; Miles v. Mutual Reserve Fund Life Ass’n, 108 Wis. 421, 84 N. W. 159.

[11] Plaintiff contends that the statutes of this state have no application, because of the fact that this assignment is an Illinois contract. He submitted proof that Illinois has “no such provisions as the sections named (198 and 202, supra) upon her statute books.” But plaintiff’s contention must fall for two reasons : (1) Because it was not enough to prove merely that Illinois had no statute law like ours; (2) because there is no rule of comity that requires the courts of this state to allow a recovery based on an assignment champertous under our statute.

[12] If Illinois has no statutes governing the law of champerty, then, in absence of proof to the contrary, the trial court was bound to assume that the common law pertaining to champerty obtains in Illinois. Moreover, that it does so obtain is established by the decisions of the courts of that state. In Thompson v. Reynolds, 73 Ill. 11, wherein the court held a contract tainted with champerty to be void, the court also said:

“It thus appears that champerty was an offense at the common 'law, and our General Assembly having adopted the common law of England as the rule of decision, so far as applicable to our condition, until modified or repealed this must be regarded as in force in this state, as affecting all such contracts, and as being opposed to sound public policy.” ,

[13] We take it that no one will dispute the fact that our section 198, supra, is but a statutory declaration of a part of the common law relating to champerty. It follows then that, even though it were the law of Illinois that controls, the fact that the trial court referred to.our section 198, supra, was unprejudicial, as the assignment, if taken for the purpose of suit, was void in-Illinois.

[14] But there is no rule of comity between states that requires the courts of this state to enforce a contract that would be criminal if entered into in this state, simply because such contract may be valid in another state. In the case of Knittle v. Ellenbusch, 38 S. D. 22, 159 N. W. 893, we discussed quite fully the question of how far the law of comity requires the courts of one state to enforce laws of another. While in that case we held that -comity required us to construe- a certain transaction in accordance with the laws of a sister state, we fully recognized the law to be as announced in 1 Lewis’ -Sutherland, Statutory Construction, 24:

“Foreign laws are not enforced where they conflict with our own regulations, our local policies, or do violence to our views of religion or public morals.”

That such is the established law is beyond question. 12 C. J. 439; 5 R. C. L. “Conflict of Laws,” § 5; 2 Elliott on Contracts, § 1112; Carstens Packing Co. v. Southern Pac. R. Co. 58 Wash. 239, 108 Pac. 613, 27 L. R. A. (N. S.) 975; Parker v. Moore, 115 Fed. 799, 53 C. C. A. 369; Hamilton v. Chicago, B. & Q. Ry. Co., 145 Iowa, 431, 124 N. W. 363; Fox v. Postal Cable Co., 138 Wis. 648, 120 N. W. 399, 28 L. R. A. (N. S.) 490. And even if we should limit the cases, where we would refuse to apply the rule of comity, as was done in International Harvester Co. v. McAdam, 142 Wis. 114, 124, N. W. 1042, 26 L. R. A. (N. S.) 774, 20 Ann. Cas. 614, it would avail plaintiff nothing. It was held in that case that foreign contracts, valid where made, should be enforced, except where such contracts are pernicious or inherently harmful in character. As before noted, we must assume that the jui'y found plaintiff to have been guilty of that which is made criminal by section 198, supra — purchasing the judgment with intent to sue thereon. For an attorney at law to purchase a thing in action or an evidence of debt for the purpose of bringing an action thereon has from time immemorial been considered a pernicious coxrtract, to be condemned by the courts; and the Legislature of this state has set its seal of condemnation thereon, axid declared the public policy of this, state in relation thereto, by enacting said section 198.

There are xio other assignments of error which we feel called upon to discuss. What we have said herein disposes of the merits ■of this appeal.

The judgment and order appealed from are affirmed.