Champerty and Contingent Fees III
Bill Long 12/14/05
Understanding the Development of Champerty
The New York Court of Errors (technically called "The Court for the Trial of Impeachments and the Correction of Errors") handled a case in 1824 which provided it an opportunity to construe the champerty statute in a more liberal way. Citing the words of the case summary, a certain "H. T. claimed land as heir at law of his father, and was about to commence suits to recover the possession of it, entered into an agreement with the plaintiff, who had married his sister, by which he covenanted, in consideration of the premises, & c., to convey to the plaintiff the one-fourth part of the property which should be recovered; and the plaintiff, in consideration of such covenant, & c., promised H. T. to pay, bear and sustain the one-half of all the expenses which might occur in the prosecution of the intended suits" (Thallhimer v. Brinckerhoff, 3 Cowen's Reports 623 (1824).
Should be clear enough. Plaintiff, whose only "interest" in the land was as a brother-in-law of the man claiming the land, brought suit. The plaintiff was going to pay 1/2 of the expenses of the suit, with the expectation of recovering 1/4 of the property as a result of a successful suit. If champerty is defined at common law (and this is Blackstone's definition) as being a bargain with a plaintiff or defendant to divide the land or other matter sued for if they prevail at law, we seemingly have a slam dunk case of champerty. And, as we saw in the previous essay, the NY statute (sec. 1) provided, in essence, that no "officer or other person" shall take upon himself any business that is or may be in suit, or to have any part of the thing in plea or demand; that no person, upon such agreement, shall give up his right to another person; that every such conveyance or agreement shall be void and that every person who maintains such a plea or has part of profit in them shall be punished by fine or imprisonment. However, the court concluded that the deal was not champertous. It reasoned as follows.
What the statute does not say, and the point on which the court decided that such an agreement was not champertous, is the nature of the "interest" which the plaintiff must have in the litigation. It happened that H.T. was a widower, that he had no children, and that the only surviving member of his family was his sister, who was married to the plaintiff. Therefore, the court construed the champerty statute only to refer to "strangers" to a lawsuit. As the court says:
"In this case the wife of Thallhimer was the sister of Teller (H.T.); and this relation, recited in the contract, evidently led Thallhimer and Teller to the contract itself. Thallhimer did not obtrude himself into the concerns of a stranger; but he agreed to give aid to his relative, as he might justifably do. He was not the promoter of litigation, in which he had no concern. His wife might inherit Teller's lands; and this reason alone, exempts the contract before us, from the imputation of champerty, or illegal maintenance" (Id. at 848).
A common law court in England or earlier in America would have looked at the transaction and concluded that it was champertous. If you obtrude yourself in a suit which was not yours, you were a champerter. Here, by stretching the concept of a person's interest in litigation, the NY court found that the intervention was not champertous. It was the first of many "relaxations" of the meaning of champerty, this time of a statute. As the next essay will show, it could also be relaxed when there was no statute in view.
The remainder of this essay will focus on the reasoning of the court and their explanation of why the English notion of champerty might not be appropriate in NY state in the 1820s, despite having a statute prohibiting it.
The New York Court "Explains" Champerty
The court explained the rise of the doctrine of champerty from the perspective of English history. Why would resorting to courts of justice, which champertous deals enable [i.e., by a plaintiff's taking part of the "action," so to speak, causes could go forward], be something that was condemned? It doesn't seem to make sense. Unless...the administration of public justice in medieval England "is weak or corrupt, or where the laws are very imperfect" (Id. at 643).
This insight then leads the court to a historical survey. In Roman times, in order to prevent vexatious suits, the plaintiff had to take an oath that the suit was not commenced from malice but that he believed his cause was legal and just. The defendant swore that the plaintiff had no just claims. Advocates on both side were required to swear similarly. If the plaintiff failed in his suit, he was fined a sum, sometimes a tenth part of the demand; and if great malice and vexation of the plaintiff was shown, he was further punished by a decree of ignominy. Id. at 644.
Likewise, the English doctrines of maintenance and champerty arose from causes unique to English life. The court especially pointed to a statute from the 32nd year of Henry VIII, "to repress the practices of many who when they thought they had title or right to any land, for the furtherance fo their pretended right, conveyed their interest in some part thereof to great persons, and with their countenance, did oppress the possessors." Bingo. This statute is illuminating for the court because it suggests now a historical reason for the condemnation of the practice of champerty. What had happened was that "small men" transferred their rights of action in property disputes to "great men" in order to get the great men's support at law. Because the legal establishment was weak at the time, the great men could overwhelm the court, thus enabling the little man to get his land claim and the great men to get their share. In other words, champerty was a means by which great men increased their power at the expense of the courts of justice. And note, also, that champerty was not something at first practiced by lawyers. Or, to put it differently, lawyers were not the people the statute had in mind as the 'bad guys.'
What, then, of today? The court says:
"In modern times, and since England has enjoyed a pure and firm administration of justice, these evils are little felt; and champerty and maintenance are now seldom mentioned, as occurring in fact, or as producing mischief in that country. The statutes for the limitation of actions, the statute of frauds, the extension of the action for malicious prosecutions, and the costs given against unsuccessful parties, have all taken place since the law of maintenance was established; and all these alterations have contributed to prevent or punish groundless and vexatious litigation" (Id. at 645).
The next essay finishes my remarks on Thallhimer and moves to another case which shows how courts of the 19th century tended to limit the reach of the champerty doctrine.
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