Gilroy v. Badger , 58 N.Y.S. 392 ( 1899 )

O’Dwyer, J.

The action is brought "to recoven the amount remaining due on a promissory note made and delivered by Harriet N. Hale to one: Gussie Smith, and indorsed by the defendant before delivery, and before maturity indorsed to the plaintiff for a valuable consideration.

Among other defenses set up, it is alleged “ that the plaintiff is an attorney, duly admitted to practice in this state, and that he purchased the note on which this suit is brought with the intent and for the purpose of bringing an action thereon.” This was the only def ense submitted' by the court to the jury, and the jury found a general verdict, for the defendant.'. Upon this verdict a judgment has been entered'as follows: “ Adjudged, that the defendant .have judgment upon the merits against the plaintiff on the., issues in this action.”

The' statute in force at the time of the purchase of the claim, forbidding an attorney from directly or indirectly, purchasing such a claim with the- intent and for. the" purpose of bringing a suit thereon, is found in section 73 of the Code of Civil Procedure.

Under the statute an attorney is prohibited from purchasing any bond, promissory note, bill of exchange, etc., with intent and for the purpose of bringing an action thereon, and no cause of action can arise out of a transaction thus prohibited.

We are of opinion that the defense of champerty raises a question of law to be disposed of by the court, and it has been so decided in Hall v. Gird, Y Hill, 586, where it is said: “the purchase or procurement of a demand for prosecution, contrary to the statute, does not annul or cancel the demand thus purchased or procured. It constitutes no defense to the debtor, in the appropriate sense of that term. He is not, for that cause, to have a verdict in his favor, but the plaintiff, prosecuting in pursuance of an illegal agreement, and in order to carry it into effect, is, under the statute, to be nonsuited.”

While the intent of the attorney making a purchase is a proper subject for inquiry and determination by a jury, yet that subject ought to be submitted to the jury for a special finding of fact, and on the coming in of their verdict/ the court can then determine whether the plaintiff should have a recovery or the complaint be dismissed.

In this case that procedure was not followed, and as a result the defendant in this action appears to have a judgment on the merits, which would make it appear that he has a good defense to the note, whereas, as a matter of fact, all that has been decided is that the plaintiff has no legal capacity to sue.

The judgment and order appealed from should be reversed and a new trial ordered, with costs to appellant to abide the event.

Schtjchmait, J., concurs.