Small v. C., R. I. & P. R.

8 N.W. 437, 55 Iowa 582
CourtSupreme Court of Iowa
DecidedApril 6, 1881
StatusPublished
Cited by27 cases

This text of 8 N.W. 437 (Small v. C., R. I. & P. R.) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Small v. C., R. I. & P. R., 8 N.W. 437, 55 Iowa 582 (iowa 1881).

Opinion

Rothrook, J.

coSFcf-1wifo may plead, I. In the seventh division of the answer the defendant pleaded as a defense that before the commencement of the suit it was agreed, between the plaintiff and his attorneys, that said attorneys should carry on the suit at their own costs and expense, and that they should receive for their services and said costs and expenses about one-sixth of the amount of the recovery, if the litigation should prove successful, and if they should fail in the action, they should receive nothing. It was averred that said agreement and contract was against public policy, champertous and void. There was a demurrer to this division of the answer, which was sustained. To this ruling exceptions wore taken, and error is assigned thereon.

That the averments of the answer would be a good defense to an action by the attorneys to recover of the plaintiff upon the alleged contract may, for the purposes of this case, be admitted. But that it can be interposed by the defendant to defeat a recovery by the plaintiff, in his own name, for the damages sustained by him, is quite another question. That [584]*584there are authorities, the most respectable, which hold that when it appears that a plaintiff is prosecuting an action under a champertous arrangement between himself and his attorney, the action should be abated, must be conceded. But on the other hand there are cases which hold the contrary doctrine. In Hilton v. Woods, L. R. 4 Eq. Cas., 432, Malvin, V. C., said: “ I have carefully examined all the authorities which were referred to in support of this argument, and they clearly establish that when the right of the plaintiff, in resj>ect of which he sues, is derived under a title founded in chamjoerty or maintenance, his suit will on that account necessarily fail. But no authority was cited, nor have I met with any, which goes the length of deciding that, when a plaintiff has an original and good title to property, he becomes disqualified to sue for it by having entered into an improper bargain with his solicitor as to the mode of remunerating him for his professional services in the suit or otherwise.”

See also Elborough v. Ayres, L. R., 10, Eq. Cas., 367; Whitney v. Kirtland, 27 N. J. Eq., 333; Robinson v. Beale, 26 Ga., 17.

It seems to us that there is no sound reason nor just principle in a rule which would allow a party to defeat a just cause of action because the opposite party has made a contract with his attorney which is utterly void, and which, therefore, cannot be enforced by either of the contracting parties. As to the defendant in this action, who seeks to avail itself of the illegal contract, the rights of the j>arties are the same as if it had never been made. The plaintiff is still the real party in interest. The illegal and champertous contract, being void, divests him of no right. That by reason thereof he should be disabled from asserting his rights we do not believe. It is enough that the parties to such contracts be authorized to repudiate them, without allowing others to exonerate themselves from just obligations by reason thereof. As is said by Bay, J., in Allison v. C. & N. W. R. Co., 42 Iowa, 274, [585]*585“ If lie (the defendant in the action) could do so, an unheard of effect would be given to a void agreement. Suppose a suit upon a promissory note is prosecuted under a champertous arrangement between the plaintiff and his attorney; does this avail the defendant to defeat an otherwise just liability? "Will not the law rather compel the defendant to perform his undertakings and leave the question of champerty to be determinad between the plaintiff and his attorney?” '

2. —: assignation. II. In another division of the answer it was alleged that the Farmers’ Union Elevator was a corporation organized under the laws of Iowa; that its affairs were managed by a board of directors of which plaintiff, at the time of the fire and at the time of the assignment, was a member; that the elevator building described in plaintiff’s petition, and the machinery connected therewith, together with the land upon which it was situated, and its franchise uuder and by virtue of its articles of incorporation, constituted the entire property of said corporation, and all of said property was necessary to the prosecution of the business of said corporation, the same being solely for the purpose of storing and handling grain; that said corporation was largely indebted to various parties, and judgments had been rendered against it, and the elevator building, and the land upon which it was situated, had" been advertised for sale under execution issued upon a judgment against said company; that by the articles of incorporation of said company it is nowhere provided that its board of directors may alienate the property essentially necessary for the transaction of the company’s business, or give away its funds, or deprive the corporation of the means of accomplishing the objects of its creation, or so dispose of its property as to prevent creditors from reaching the same; that the assignment of the alleged claim for burning the said elevator building and other property to the plaintiff was without consideration, and its effect was to destroy the corporation and so alienate the property as to deprive it of its means, and prevent it from accomplishing [586]*586the purpose for which it was created, and to gratuitously dispose of its property in fraud of the rights of the stockholders and creditors of the company; that the alleged assignment was fraudulent and void, and in excess of the powers and authority of the board of directors, and conferred upon plaintiff no right whatever.

There was a demurrer to this division of the answer, which was sustained. The defendant assigns this ruling of the court as error.

That the assignment in question, without consideration, to a member of the board of directors would not be binding upon the stockholders or creditors of the corporation may be conceded. But the defendant is neither a stockholder nor a creditor. It has no right as a mere stranger to insist that the corporation may not donate its property to whom it pleases. Besides, the assignment did not and could not have the effect of dissolving the corporation. It was the assignment of a mere chose in action — a right to sue for and collect a claim for damages. It appears to us the ruling of the court upon the demurrer to this division of the answer, as well as the rulings upon the admission and rejection of evidence upon the same question, and the giving and refusal of instructions in relation ^thereto, are so clearly correct as to demand no further consideration at our hands. We think the court might well have said to the jury, as matter of law, that the written instruments exhibited with the petition and introduced in evidence operated as an assignment of the claim to the plaintiff,

III. ■ There had been a previous trial of the action and a verdict and judgment for the plaintiff, which, upon appeal to this court, was reversed. 50 Iowa, 338. The plaintiff was a witness in his own behalf, and upon cross-examination counsel for defendant interrogated him as follows:

Question. “ Will you say you have not said, in substance, that the only thing you were fighting for now was to get a bigger judgment than before?

[587]*587Question.’ “ Have you, at any time since this case was transferred to this county or place, said in substance that you had no apprehension about getting a judgment.

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Bluebook (online)
8 N.W. 437, 55 Iowa 582, Counsel Stack Legal Research, https://law.counselstack.com/opinion/small-v-c-r-i-p-r-iowa-1881.