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the suit, being satisfied that the company had a valid claim, and that it would cost from $8,000 to $10,000. He was informed by the president of the company that it had been losing money very heavily, and it was absolutely impossible for it to undertake any litigation of that kind. He was asked what the company already owed him, and replied in the neighborhood of $9,000 or $10,000. He was told the company did not have the money and could not pay him, and thereupon he said that, if the company would pay him $5,000 in cash, he would cancel the indebtedness. After some reflection the president, Mr. Mandelbaum, told him that the corporation would transfer to him all rights it had against the defendants, if he would be willing to accept it as a satisfaction of the company's indebtedness to him. The plaintiff told him that he would think it over and give him an answer. After a few days' reflection the plaintiff expressed a willingness to accept the assignment, and was told that the board of directors wanted to know whether, if they made the assignment, the plaintiff would as a part of the consideration defend the company and its officers in case any suit was brought against them in matters growing out of their difficulties with the defendants. He agreed to do this, and the assignment was executed.
It appears, therefore, that the assignment originated, not with the plaintiff, but with the Lake Shore Company, and that the consideration for the agreement involved the payment of a past indebtedness, as well as for future services of a professional character. It is also to be noted that the invalidity of the assignment is set up, not by the client, the assignor, who has at no time sought to repudiate it, but by third parties, between whom and the plaintiff no fiduciary relations have existed.
At common law no right of action, whether a right in rem or a right in personam, whether it arose ex contractu or ex delicto, was assignable. Lord Coke wrongly attributed the rule to the doctrine of maintenance and the aversion to the “multiplying of contentions and suits.” Lampets' Case, 10 Rep. 48a. The rule is older than the doctrine of maintenance in English law. As Professor Ames, in his Lectures on Legal History, 211, 212, pointed out, the reason for the rule is in the fact that a chose in action always presupposes a personal relation between two individuals and that personal relation cannot be assigned. And see Pollock on Contracts (5th Ed.) 206; Holmes, Common Law, 340, 341; 2 Spence, Eq. Jur. 850. But the courts of equity always recognized the assignment of choses in action, and in England and in this country generally statutes have been passed which have modified the rule that choses in action are not assignable at law. So that now rights of action arising ex contractu and those arising ex delicto, but not for personal torts, are assignable. The right of action which the Lake Shore Company claimed to have for the damages it sustained by reason of the tortious acts of the defendants was assignable. In United Copper Securities Co. v. Amalgamated Copper Co., 232 Fed. 574, 577, 146 C. C. A. 532, this court held that a right of action for property injuries based on a violation of the Sherman Act, and brought under section 7 for treble damages, is assignable.
But, assuming that the right is assignable, was there anything in the relations existing between the Lake Shore Company and the plaintiff which made it nonassignable as between them. It appears that a suit was brought in the District Court of the United States for the Northern District of Ohio to restrain the prosecution of any action based upon the assignment, it being claimed that the cause of action was nonassignable, and that relief was refused on the ground that if it were nonassignable as claimed the defense was as available at law as in equity. This was carried on appeal to the Circuit Court of the Sixth Circuit, which affirmed the court below. General Film Co. v. Sampliner, 252 Fed. 443, -- C. C. A.
While there is a liberty of contract, which in this country is protected by constitutional provisions, yet the right of parties to make contracts may be in a measure restricted by the relations which exist between them as in the case of a trustee and cestui que trust, guardian and ward, parent and child, and attorney and client. The general rule of public policy which discountenances transactions between persons who are situated in a confidential relation towards each other is regarded as applying with particular force to attorneys at law, and they are restricted in dealing with those with whose interests they are intrusted. This is not only because they are officers of the court, but also because of the fiduciary relation in which they stand to their clients and the great influence they exert over their minds. The courts in some cases have gone so far as to say that a gift from a client to his attorney during the continuance of the relation is absolutely void. These cases go, not upon the ground of the inability of the client to make the gift, but upon the inability of the attorney to accept it. Holman v. Loynes, 4 De G., M & G 270; Morgan v. Minott, 6 Ch. Div. 638; Powell v. Powell (1900) 1 Ch. 243; Greenfield's Estate, 14 Pa. 489, 506. In other cases the gift has not been regarded as void ipso facto, but it has been viewed with the greatest suspicion, and the burden has been placed on the attorney to show the utmost good faith and freedom from all undue influence. Nesbit v. Lockman, 34 N. Y. 167; Bolles v. O'Brien, 63 Fla. 342, 354, 59 South. 133; Whipple v. Barton, 63 N. H. 613, 3 Atl. 922.
The law is well settled that if an attorney purchases any property belonging to his client-not property which is at the time in litigationthe transaction is viewed with suspicion, and he assumes the heavy burden of proving that the transaction is characterized by the utmost fairness and good faith, and not tainted with fraud or undue influence, and that the client acted upon the fullest information and advice. But when he acquires the title to property which is at the time in litigation, or which is about to come into litigation, it is a still more serious matter.
The common law from a very early period made it a crime, designated as common barratry, to induce others to commence even just suits, if done with an oppressive motive, and it punished the offender by fine and imprisonment. And by St. 12 Geo. I, c. 29, it was enacted that if any one who was convicted of common barratry practiced as an attorney or solicitor in any suit he should be transported
for seven years. And so the common law also punished as a crime the offense of maintenance, which is described by Blackstone as "an ofñcious intermeddling in a suit that no way belongs to one, by maintaining or assisting either party with money or otherwise to prosecute or defend it.” 4 Blackstone, 135. This he declares is an offense against public justice, as it keeps alive strife and contention, and perverts the remedial process of the law into an engine of oppression. Champerty, a species of maintenance, was also punished by the common law.
“It signifies,” Blackstone says, “the purchasing of a suit, or right of suing: a practice so much abhorred by our law that it is one main reason why a chose in action, or thing of which one hath the right, but not the possession, is not assignable at common law, because no man should purchase any pretense to sue in another's right. These pests of civil society, that are perpetually endearoring to disturb the repose of their neighbors, and officiously interfering in other men's quarrels, even at the hazard of their own fortunes, were severely animadverted on by the Roman law; 'Qui improbe coeunt in alienam litem, ut quic quid ex condemnatione in rem ipsius redactum fuerit inter eos commudicaretur, lege Julia de vi privata tenentur.' Those who knavishly interfere in other men's suits, for the purpose of sharing whatever may be awarded by the verdict, are liable to the Julian law de vi privata (of secret influence); and they were punished by the forfeiture of a third part of their goods, and perpetual infamy."
In Sherman's Roman Law in the Modern World, vol. 2, p. 456, it is said:
"An agreement with a client that remuneration for conducting his law suit should be a certain portion of the proceeds (pactum de quota litis) was forbidden; an advocate making such an agreement was disbarred. This Roman prohibition, designed to uphold the honor of the legal profession, has exerted a strong influence in modern law."
And see Mackenzie's Roman Law, p. 446.
 In maintenance no personal profit is expected or stipulated. The motive is simply to aid a party, with money or otherwise, to prosecute or defend his suit. Spicer v. Jarrett, 61 Tenn. (2 Baxt.) 454, 457. And in champerty there is a bargain with the plaintiff or defendant by which the champertor is to carry on the suit at his own expense and is to derive some profit out of the thing sued for if he prevails. Roberts v. Cooper, 20 How. 467, 484, 15 L. Ed. 969; Breeden v. Frankford Marine, etc., Insurance Co., 220 Mo. 327, 119 S. W. 576. And see 11 C. J. 234. And a champertous agreement is of course void and unenforceable.
In Peck v. Heurich (1897) 167 U. S. 624, 630, 17 Sup. Ct. 927, 929 (42 L, Ed. 302), the Supreme Court declared that
"According to the common law, as generally recognized in the United States, wherever it has not been modified by statute, and certainly as prevailing in the District of Columbia, an agreement by an attorney at law to prosecute at his own expense a suit to recover land in which he personally has and claims no title or interest, present or contingent, in consideration of receiving a certain proportion of what he may recover, is contrary to public policy, unlawful, and void, as tending to stir up baseless litigation."
The plaintiff contended in this court that, as his assignor was not objecting to the validity of the assignment on the ground of inade
quacy of consideration, the objection certainly could not be raised by a third party. We may concede that ordinarily the validity of an assignment cannot be attacked by third parties on the ground of inadequacy of consideration. As between an assignor and an assignee, if the inadequacy of the consideration is sufficient to shock the conscience of a chancellor, it may be in some cases sufficient ground for setting a transaction aside. But the wrong in such cases is a private wrong to the assignor, and third parties are without standing to complain. And if assignor and assignee stand in a fiduciary relation there is still no right in third persons to allege the invalidity of the assignment solely on that ground. But the weakness of this contention in this case lies in the fact that the question here is not between the plaintiff and the defendants alone. If it were, the argument advanced might be conclusive. The question is one of public policy, and upon that ground the decision rests.
The plaintiff argued in this court and in the court below that the consideration for the assignment of the Lake Shore Company's cause of action was the extinguishment of a precedent debt due from the assignor and that therefore the assignment was valid and not champertous. If his premise is correct, there is very respectable authority which would support his conclusion. Professor Ames in his Lectures on Legal History, 258, note 1, states that
“The distinction was established at an early period, that the grant of a power of attorney to a creditor was not maintenance while a similar grant to a purchaser or donee was maintenance. 34 Hen. VI, 30, 15; 37 Hen. VI, 13–3; 15 Hen. VII, 2-3; South v. Marsh (1590) 3 Leon. 234; Harvey v. Beekman (1600) Noy, 52. As late as 1667–1672, the same distinction prevailed also in equity."
In 1 Bacon's Abridg. 360, 361, referring to champerty it is said that
“A grant of part of a thing in suit, made in consideration of a precedent debt is not within the meaning of the statute, but such only as is made in consideration of maintenance."
"But neither a conveyance executed, pending a plea, in pursuance of a precedent bargain
are within the meaning of the statute.”
In 11 C. J. 247, the law is stated as follows:
"A grant or assignment of an interest in the subject matter of the suit, made by the client to his attorney in consideration of a precedent debt, is not contrary to public policy or champertous. Nor is it made so by a statute which prohibits an attorney from buying a thing in action with intent to bring an action thereon, except in payment for services rendered.”
In Tapley v. Coffin, 12 Gray (Mass.) 420 (1859), an attorney and client agreed that the attorney was entitled to $1,240 for past services and that he should have $400 in full satisfaction for future services in certain suits. And in order to secure the payment of these sums the client assigned to the attorney his share in his father's estate then under administration, and it was agreed that the attorney should collect and receive the same and after deducting the necessary ex
penses and sums of $1,240 and $400 pass over to the client the residue. The court sustained the legality of the agreement and said: “It does not present a case of champerty or maintenance.”
In Jordan v. Gillen, 44 N. H. 424 (1862), the client assigned to his attorney a cause of action sounding in tort, the consideration being the discharge of a precedent debt due from the client to the attorney. The transaction was held to be not invalid and that the attorney would have the right to enforce the claim.
The New York statute laws of 1818 made the purchase of a chose in action by an attorney a ground of defense against a suit upon it, but where it was received bona fide in payment of an antecedent debt it was allowed by a proviso in the statute. See Watson's Executors v. McLaren, 19 Wend. (N. Y.) 557, 565 (1838), affirmed in 26 Wend. (N. Y.) 425, 37 Am. Dec. 260.
(1) But the difficulty with all this is that this court cannot accept the plaintiff's premise and hold that the consideration for this assignment was a precedent debt which was thereby extinguished. At the close of the plaintiff's case in the court below, when counsel for defendants rested and asked for the direction of a verdict, the plaintiff's counsel stated to the court the issue as follows:
"The defense is that this plaintiff's title is void because he purchased this cause of action with the intent to sue thereon. It now appears uncontradicted, from the evidence, that instead of having purchased this cause of action, that it was assigned to him under a bona fide assignment for an antecedent indebtedness owing to him for services which he had performed for the corporation."
This being the issue as the plaintiff's counsel understood it, and which was not controverted by defendants, the plaintiff and defendants each moved for a directed verdict in their favor. There was the plaintiff's testimony which, if the court accepted it, would have justified a finding that the cause of action was assigned for an antecedent indebted
There was other testimony from which a court might infer otherwise. No bill had ever been rendered by the plaintiff to the Lake Shore Company for the legal services the plaintiff says he rendered between July, 1908, and December, 1911, and no demand of payment had been at any time made. No entry had been made in the Lake Shore Company's minute book, either of the making of this assignment or of a meeting of the directors at which this assignment was discussed or authorized. No disclosure of this assignment was made to the Mutual Film Company to which, in March, 1912, the Lake Shore Company sold all its assets, notwithstanding the fact that the president of the latter company entered the employ of the Mutual Film Company as general manager at that time, and remained with it in that capacity until March, 1913. The above facts are disclosed by the testimony of the plaintiff's own witnesses. The weight to be given to the testimony and the inferences to be drawn from it were for the court to determine, in view of the request made by each side to direct a verdict in their favor. This was equivalent to a request for a finding of fact and as the court directed the jury to find a verdict for one of them, both are concluded on the facts so found. Beuttell v. Ma