830
FEDERAL REPORTER.
it ever came to him, he could give it to defendant's own children. I do not think the testimony is sufficient to justify the court in coming to that conclusion. Evidently the deceased, James S. Waterman, to whom this contract was given, did not act upon that supposition; neither is there any evidence that any of these parties did until after his death, nor even till the conveyance was demanded. I shall therefore order a decree, in pursuance of the prayer of the complaint, for conveyance of the property, and that it be referred to the master to ascertain the profits that have been made. The other case against Porter is for the same thing, except for a smaller amount. Waterman agrees to convey twenty-four hundredths and Porter three hundredths of the mine. The only defense that Porter sets up is that it was merely as security. Manifestly he did not set that up in response to the demand of the complainant for a conveyance. He seemed at that time to recognize the liability, by implication at least, but was not certain to whom the conveyance should be made. He thought that the family should first settle their affairs before he was called upon to convey; but, briefly, the defense stands upon the same footing as in the other case. These parties all obtained assistance from the deceased, and assignor of complainant here; and through his aid, and at his risk, secured mines that turned out to be valuable, one of them now having one-half and the other nearly one-quarter. Justice requires that they convey the small part 80 richly earned, and which the defendants agreed to convey. I am satisfied, from the testimony, that the same decree should be made in this case that was made in the other.
THE HOLLADAY CASE.
HWKox v. ELLIOTT and others. (Oircuit Oourt, .D. Oregon. June 14,1886.)
1.
CHAMPERTY-LIMITATION.
a..SAME-RES JUDICATA.
The obligation of White under said agreement, and the fact of his having performed the same, is res judicata since July 13, 1870, by the judgment of a competent court in White v. Elliott. note at end of case, pt. 1.
1 See
THE HOLI.ADAY CASE.
831
8.
ATTORNEY'S FEE.
ress of the litigation, and a gross sum allowed for the services of the attorney thereafter.
held to have been tacitly abandoned by reason of unforeseen delays in the prog-
4.
CouR'rs-CoNcURRENT JURISDICTION-REOEIVER.
The mere fact that a court has acquired jurisdiction of a suit between a grantor and grantee concerning their rights in certain property, and has taken possession of such property by the appointment of a receiver. does not prevent another court of concurrent jurisdiction from taking jurisdiction of a suit by a creditor of said grantor against said grantee, brought to set aside or postpone the conveyance of said property to the latter on the ground that it was made and received with intent to hinder and delay the plaintiff in the collection of his demand against the grantor; the relief sought may be granted without interfering with the possession of the receiver. A defendant may answer an allegation in a bill that he has no knowledge, information, or belief concerning the same, and the effect is to leave the matter to be proven by the plaintiff; but such answer is not equivalent, as evidence, to a denial of the fact alleged. nor can the defendant add a direct denial thereof to his answer that he has not even a belief on the subject.
Ii.
EQUITy-ANSWER IN EQUITY.
6. 7.
DEPOSITIONS-ORJECTION TO.
EQUITy-CREDITORS' BILIr-JUDGMENT-PROOF OF DEBT.
A judgment creditor seeking to set aside conveyances anterior in date to hill judgment, because made to hinder and delay him in the collection of his debt. may show by the proceedings in the case prior to the judgment. or other com petent evidence, that his debt existed at or prior to the date of such convey ances.
SAME-INSOLVENCY OF DEBTOR.
It is not necessary to issue an execution on a judgment and have a return of nulla bona thereon. to show the insolvency of the judgment debtor, but the fact may be shown by any competent evidence that he has no property subject to the legal process of the court in which the judgment rflmains. It is not necessary that the grantee in a deed made by a debtor to hinder and delay his creditors should have actual knowledge of the grantor's intent to make it void; but it is sufficient if he have knOWledge of facts sufficient to put a prudent man on inquiry.1
9.
FRAUDULENT CONVEYANOE-KNOWLEDGE OF GRANTEE.
10.
SAME-CASE IN JUDGMENT.
Conveyances made by an insolvent debtor to his brother, who was a large creditor, of all his property in the state, the value of the same being consider· ably in excess of the amount of the grantee's debt, without any settlement or agreement as to values, or cancellation or surrender of the evidences of debt held by the creditor, or any special change in the management of the property included in the conveyances, together with the fact that the grantor contmued in the receipt of a large portion of the rents and profits of the property. held sufficient evidence of fraudulent intent of the ,grantor, and of the grantee'. participation therein.
Suit in Equity to Set Aside Fraudulent Conveyances. James K. Kelly and O. E. S. Wood, for plaintiff. Henry Ach, for defendant Effinger. Thomas N. Strong, for defendant Joseph Holladav. J. K. Weatherford, for defendant Elliott. DEADY, J. This suit is brought by George C. Hickox, a citizen of California, against Simon G. Elliott, Joseph Holladay, William H. 1 See
note at end of case. pt. 2.
832
Effinger, and Ben Holladay, as citizens of Oregon, to subject certain property, the legal title of which is now in Joseph Holladay, to the payment of a certain decree, heretofore given by the supreme court of Oregon, against Ben Holladay, on the gronnd th'at sltid property was assigned, transferred, and conveyed to the former by the latter, to hinder and delay his creditors; and tb at the plaintiff is the assignee of said decree, in trust for Martin White, a creditor of said Elliott. The case was before this court on November 12,1884, on a demurrer to the bill, and the judgment of the court thereon is reported in 10 Sawy. 415, and 22 Fed. Rep. 13. On March 16, 1885, the suit was dismissed as to Ben Holladay on his plea in abatement, to the effect that he "is a citizen of the city of Washington, in the District of Columbia." The plea was considered as the equivalent of an allegation that the defendant is not a citizen of any state in the Union, and therefore not suable here on the ground of his citizenship. Briefly, the case stated in tile bill, and admitted by the answers or made by the proof, is this: On September 12, 1868, Elliott entered into a partnership with Ben Holladay and C. Temple Emmet, for the purpose of constructing and operating railways in Oregon, which partnership was engaged in the construction of the road of the Oregon Central Railway Company un. til November 5, 1869, when Holladay and Emmet commenced a suit in the circuit court for the county of Multnomah to dissolve said partnership, which suit was afterwards transferred to Marion county, where, on 'September 28, 1877, a decree was made dissolving said partnership and declaring Elliott indebted thereto in the sum of $470, from which decree Elliott took an appeal to the supreme court of the state, wherein, on August 15, 1879, a decree was given dissolving said partnership, and that Elliott recover from Holladay $21,919.46, and from Emmet $8,596.08, together with nine-tenths of the costs in both the appellate and lower court, amounting, as taxed, to $2,710.76: and there is now due on said decree from said Holladay, principal and costs, the sum of $24,630.22, with interest from August 15, 1879, to January 25, 1881, at the rate of 10 per centum per annum, and thereafter at the rate of 8 per centum until date; in all, the sum of $38,806.29. On February 10, 1874, Elliott, being without means or credit, applied to Martin White, then and now a citizen of California, for a loan of $12,000, to enable him to assert and maintain his rights in said snit, and offered to secure the payment of the same by an assignment of all his right, title, and interest in the property involved therein, to the plaintiff, in trust for said White. Thereupon, a contract was duly made and signed by said Elliott and White, which in effect recites that a controversy exists between Elliott and Holladay and others, concerning Elliott's "right" in the property, franchise, and rights of the Oregon Central Railroad Company, and that, "for the purpose of asserting and maintaining his rights in said contro·
THE HOLLADA Y CASE.
, 833
versy, said Elliott has borrowed from Martin White the sum of $12,000 in gold coin of the United States, and has agreed to repay the same within one year from the date of the last installment thereof, as hereinafter provided, (and within two years from the date hereof, whether the last installment shall be demanded by said Elliott within one year from the date hereof or not,) with interest on each installment from the date of the advance thereof at the rate of 10 per centum per annum. " The agreement continues, that, in consideration of the premises, "Elliott has granted to White the option," to be exercised within 60 days after Elliott shall obtain possession of said property, "and notified White thereof," to take in lieu of the repayment of said loan one-half of all the property recovered by said Elliott, less 1,000,000 of the bonds of the Oregon Central Company reserved for the use of the latter, and not exceeding $100,000 of the same for his attorney. "An,d to secure the performance of this agreement on his part, and to secure the payment of any additional advances not exceeding $13,000 that he may obtain from said White or other parties, said Elliott has assigned and conveyed in trust to George C. Hickox all his right and title, interest and claim, in and to the property aforesaid." "And in consideration of the agreement and acts of said Elliott, said White has agreed to loan to said Elliott said sum of $12,000 in gold coin of the United States, and to advance the same upon his demand in installments from ti)l1e to time, as the same shall be required, upon the terms aforesaid." See Hickox v. Elliott, 10 Sawy.417, S. C. 22 Fed. Rep. 14, 15, where this agreement is set out in full. Iu pursuance of this agreement, Elliott, on FeLmary 13, 1874, executed and delivered to the plaintiff the following sale and assignment: "In consideration of the sum of $12,000 in gold coin of the United States to me paid. and other valuable considerations. I. S. G. Elliott, of the commonwealth of Massachusetts. have granted, bargained, sold. and assigned, and by these presents do grant. bargain. sell, and assign. unto George C. Hickox, of the city and county of San Francisco, state of California, all my right, title, interest, and claim, both in law and equity, in and upon the stock. property. and assets of the Oregon Central Hailroad Company of Salem, Or., and the Oregon & California Hailroad Company, of Portland, Or., the firm of A. J. Cook & Co., and the firm of Ben Holladay & Co." White claims and testifies that between the date of said agreement and March 25,1879, he advanced to Elliott thereunder, or to others for him, the sum of $22,201.15. It is not questioned but that he advanced this sum, as stated in the account thereof attached to his deposition herein. But Elliott contends that White failed to advance him money as the agreement required, whereby the arrangement fell through and the assignment became inoperative; and that all Bums paid out by White, as set forth in his account, after July 24,1874, were so paid without his authority or consent, for which he is not liable. This contention is based on the assumption that WhitlJ unv.27F.no.13-53
834
Jertook to advance Elliott not exceeding $25,000, when and as he might require or demand it. But the truth is, White never undertook anything of the kind. Taking this agreement and assignment together, and reading them by the light of the surrounding circumstances, it is evident that White did not undertake absolutely to advance Elliott more than $12,000, and only so much of that amount as might be necessary, from time to time, to enable the latter to properly carryon the controversy with his partners, which was expected to be brought to an end within the coming year, and that any additional advance that Elliott might obtain from White or other persons, not exceeding $13,000, should be equally secured by this assignment; but White did not undertake to furnish any portion of said additional advance. Elliott admits that prior to July 2, 1874, and scarcely five months from the date of the contract, White had advanced him $8,592.50, the larger portion of which appears to have been applied to the former's private use, and not to the expense of the litigation with Holladay & Co. But the evidence shows that by July 14, 1874, there was advanced to Elliott by White $11,718.50, and that on August 18th thereafter the latter paid Domnett a note of $363, which he had accepted for the former, in the February preceding, making the sum thus advanced $12,082.25, or $82.25 in excess of the sum stipulated. On April 29, 1874, when over $7,000 had been advanced to Elliott, he drew on White from Portland in favor of himself for $500, and the defendant Effinger, who was his attorney, for $1,500. On May 6th these drafts were protested for non-payment, and three days afterwards White wrote Elliott, rebuking him sharply for drawing on him for such sums or at all, after he had been advised not to draw on him for a dollar. The letter was put in evidence by Elliott. In the course of it White says if you need some small amounts "for incidental uses in the suit," write and let me know, and I will send my check therefor. "I have already let you have enough to meet all ooming [current] expenses, had it been applied to that purpose; in fact, I have advanced it twice as fast as I expected to, when I began." I would be glad to furnish the $1,500 for Mr. Effinger. "I have no doubt he needs the money, but under the circumstances I cannot see any way to let him have it at present." With this letter White sent Elliott his check for $250 "to defray incidental expenses." On July 24, 1874, Elliott being in San Francisco, and in need as usual, drew on ·White in favor of 'Johnson & Co. for the sums of $325 and $1,575, and the defendant Effinger for the sum of $600, which sums White declined to pay, as he told Elliott he would before the drafts were drawn. Thereafter, Elliott testifies that he considered the arrangement with White at an end, and the assignment inoperative. The only item in White's account of the $12,000 advanced to Elliott,
/
835
now disputed by the latter, is the $2,465 paid by the former to discharge a debt of Elliott's of that amount secured by a mortgage on the property assigned to the plaintiff, as a security for White, and called the Mackey-Toomey mortgage. It is reasonable to suppose that when White agreed to advance $12,000 on the security of this assignment, that for his own protection he would require or provide that a prior mortgage thereon for not less than $2,OQO should be taken up or satisfied out of that sum. And the evidence is very satisfactory that such was the distinct understanding of the parties to this arrangement. On July 1st the defendants Elliott and Effinger were in San Francisco, the latter having in his possession this mortgage for Mr. Toomey, who was anxious to realize on it. White, having knowledge of these facts, and being about to go to Nevada, to be absent some time, on the next day deposited with Mr. R. P. Clement, the attorney for Elliott, $3,400, that being the remainder of the $12,000 yet unadvanced; and informed Elliott of the fact, and told him to take Effinger to Clement the next day, and have the mortgage paid, and receive the balance of the money. But Elliott tried to effect an arrangement by which the mortgage could be satisfied, and the debt otherwise secured, so that he could draw the full amount deposited with Clement; and, being unable to do this, he drew from Clement, on July 3d, $650, and the 13th and 14th, $200, leaving only $2,550 for the payment of the mortgage, whereon $2,645 was then due; which sum White, on August 31st, thereafter paid to Effinger on Elliott's account. From this it appears that although White had not advanced the full sum of $12,000 on April 29, 1874, still Elliott had no right, under the contract, to draw on him for such sums as he did, or at all, because he had already received a much larger sum under the contract than he had any right to expect or demand, within the time which had elapsed siuce it was made. But really this is not an open question between these parties. From defendant Elliott's Exhibit 18, it appears that on September 25, 1874, White commenced a suit in the Twelfth district court, of San Francisco, to enjoin him from disposing of the property covered by the. assignment to the plaintiff, in which he set out the agreement and assignment of February 10 and 13, 1874, and alleged that the advances then made thereunder amounted to $13,337.25. In an answer and cross-complaint, filed November 4, 1874, Elliott admitted the execution and existence of the agreement and assignment, but denied that White had advanced thereunder $13,337.25, but only $8,592.50; and alleges that he agreed to loan him $25,000, "as he might wish to use or draw the same;" and claimed $100,000 damages for the alleged failure to do 80; and prayed that the agreement and assignment might be declared null and void; and on April 9, 1875, the court found that prior to the commencement of that action White had "lent and advanced"
836
Elliott $12,000, "as the same was required for the purpose mentioned in said agreement;" that White "never agreed to lend Elliott $25,000, or any other or greater sum than $12,000; and that Elliott was not entitled to recover any damage in that action, or have either said agreement or assignment 'annulled;' " on which finding there was a judgment duly given by said court on July 13, 1875, which still remains in full force and effect. By this finding and judgment the parties thereto are bound. The fact that White advanced Elliott $12,000, under the agreement, before September 25, 1874; that he never agreed to furnish him any more; and that the agreement and assignment were valid and binding instruments,-is res judicata, and no longer open to question. Davis v. Brown, 94 U. S. 428; Cromwell v. County of Sac, ld. 353; Russell v. Place, ld. 608; Beloit v. Morgan, 7 Wall. 619; Outram v. Morewood, 3 East, 346; Sharon v. Hill, 26 Fed. Rep. 344; Oregonian Ry. Co. v. Oregon Ry. et Nav. Co., 27 Fed. Rep. 277. The payments and advances made by White in and about the litigation with Holladay & Co., in excess of the sum of $12,000, are not necessarily secured by this assignment. Whatever Elliott obtained from him for that purpose is so secured. The advance or payment must have been made with the consent, express or implied, of Elliott; and the nature and necessity of the advance has much to do with the question of an implied consent. It is true, White had a direct interest in the subject of the litigation which may have justified him in incurring expense in protecting the same, and would have authorized him, under the circumstances, to apply to the court to be allowed to intervene and conduct the cause, as the real or principal party in interest. But even then his advances or expenses would not necessarily be secured by this assignment. Tbere must have been an express or implied assent to the expenditure by Elliott. On this view of the matter, I think the following items in White's account ought to be included in the sum for which the assignment is a security: September 16 and October 31, 1874, payments to Mr. Effinger, the leading counsel in the litigation with Holladay & Co., $500 and $1,500. Elliott had already drawn on White for these sums, and $100 more, for this very purpose; and although the latter did not then ad'vance the money. he paid it to Effinger soon after, with Elliott's knowledge and apparent approbation. At least, no objection was made to the payment at the time. It was a matter of vital importance to the maintenance of Elliott's rights in the matters then in controversy; and, in the absence of any act or word to the contrary, his assent to an act so well calculated to benefit himself ought to be presumed. September 3 and October 1 and 12, 1875, payments to Moreland, referee, $20, $20, and $600, the amount due from Elliott for fees and charges. These payments were absolutely necessary to get the report of the referee before the court. No objection appears to have been made at the time, and Elliott's assent
THE nonADAY CASE.
837
may be presnmed. September 20 and November 25, 1879, payments for printing briefs in San Francisco, and expressage to Portland, $234.60 and $23. This brief was prepared and printed in San Francisco, under the direction of Elliott, and the charges paid by White were for his benefit and with his implied assent. Altogether, these items make the sum of $14,979.85, for which this assignment is a security, and for the amount of which, with interest, the plaintiff is the assignee of the judgment against Ben Holladay, in trust for White, and entitled to maintain this suit for its enforcement. Hickox v. Elliott, 10 Sawy. 422; S. C. 22 Fed. Rep. 17. Averaging the periods during which these four sums were advanced, and adding interest thereon from that time to this, at the rate of 10 per centum per annum, gives the whole amount for which the assignment is security as follows: Interest on $12,082.25, from April 15, 1879, $14,699.85; interest on $2,000, from October 1, 1874, $2,422.22; interest on $640, from September 15, 1875, $778.60; interest on $257.60, from March t5, 1879, $323.51; total principal, $14,979.85; total interest, $18,224.17; whole amount of claim, $33,204.02. Of the remaining $7,221.30 of the gross amonnt ($22,201.15) advanced and paid by White in and about this litigation, nearly $5,000 went to L. L. Bullock. Mr. Bullock was in the employ of Elliott, in the litigation with Holladay & Co., as what may be called an "outside man," when White made the arrangement with Elliott to advance him money. Thereafter he was paid a monthly stipend much of the time, down to the spring of 1879. I think the payments made to him after July, 1874, and particularly after the suit commenced by White against Elliott, in f:\eptember of that year, may be safely regarded as having been made for services rendered White, if anyone, althollgh they may have been of benefit to Elliott as well. At least, there is nothing in the nature of the services, or the necessity for them, so far as appears, which justifies the conclusion that Elliott assented to the payments being made on his account. On the hearing of the demurrer to this bill it was claimed for the defendant Elliott that the suit was barred by the lapse of time. and that the contract on which the money was advanced was void for champerty. l'he same defenses are now set up in his answer, and insisted on in the argnment. But I see no reason to question the soundness of the conclusions then reached on these points. As was then said: "It is immaterial whether an action could now be maintained by White against Elliott to recover this money or not. This is not sucll an action, Out a snit brought by a person, claiming to be the assignee of a decree, to subject the property of the debtor therein to its payment and satisfaction. And it can be maintained, although the right of action against Elliott to reeover the money in question is barred by lapse of time. The statute bars the remedy against Elliott in six years, but does not destroy the debt, and it still exists, for the purpose of enforcing any lien or pledge given to secure its payment.
838
Quantock v. England, 5 Burr. 2628; Sparks v. Pico, 1 McAllister, 497; Myer v. Real, 5 Or. 130; Goodwin v. Morl'is, 9 Or. 322; 2 Pars. Cont. 379; Rapalje & L. Law Diet. ·Limitations.'" 22 Fed. Rep. 17.
,
This contract is claimed to be champertous, and therefore void, mainly on the option clause therein, whereby White was given the choice, within 60 days after Elliott had recovered possession of the railway property in question, and some millions of bonds of the company, and notified White thereof, of taking, in lieu of his mOlaey with interest, one-half thereof, less $1,100,000 of the bonds reserved for the use of Elliott and his attorney. This clause was put into the conti'act at the suggestion of Elliott, to give the transaction and the subject thereof an air of importance and vastness to which it was not entitled. As was determined by the supreme court of the state in its judgment in Holladay v. Elliott, these bonds were issued by a corporation (the Oregon Central) that was a sham and a fraud from its inception, and were utterly worthless. But Elliott did not recover any railway property or bonds in the suit, and of course did not give notice to White to exercise his option. The contingency never happened on which this clause in the contract was to take effect. Nothing was ever claimed or done under it, and, practically, it is no part of the agreement. And, even admitting that the validity of the contract for the loan and repayment of the money is to be tried by the law of this state, I do not believe that the courts thereof will ever hold a contract champertous or void for maintenance, whereby a party not an attorE.6Y in the case, or at all, lends a man, in straitened circumstances, money to enable him to maintain his rights in the courts, against powerful and wealthy adversaries, on the promise to repay the same, with legal interest, secured by a mortgage on his interest in the subject of the litigation. If so, one man could not safely loan another money to defend an action brought to disposseS8 him of his farm or homestead. In the brief of counsel for Elliott it is stated that the supreme court of the state, since the decision in this case on the demurrer to the bill, has held, in the unreported case of v. Sears, "tha,t champerty does exist in all its force in this state." It is also understood that the case is still pending on a rehearing. But I cannot, in a matter of this importance, act on any such informal and indefinite information concerning the judgment of that court. If not published in authentic form, a certified copy of the opinion should have been obtained from the clerk. However, I am still satisfied with the conclusion reached on the demurrer to the bill. It was then said, (10 Sawy. 430; 22 Fed. Rep. 23:) "This contract was made in California, and in contemplation of law was to be fulfilled or performed there." It is not only the lex loci contra ctus, but also the lex loci solutionis. -"It has been held in that state since 1863 that there is no law there against any form of maintenance. Mathewson v. Fitch. 22 Cal. 93; Hoffman v. Vallejo, 45 Cal. 566. And the contract being
839
valid there, is valid here. Story, Const. Law, §§ 242, (1,) 279, 280." And on the point, now urged again, that security was taken for the performance of the contract on property in Oregotl, which makes it a contract to be performed here, and therefore its validity is to be tested by the laws of this state, it was said: "The authorities are uniformly otherwise." Story, Const. Law, § 287; De Wolf v. John80n, 10 Wheat. 367. In the latter case Mr. Justice JOHNSON, speaking for the court, says: "Taking foreign security does not necessarily draw after it the consequence that the contract is to be fulfilled when the security is taken. The legal fulfillment of a contract of loan, 011 the part of the borrower, is repayment of the money; and the security given is but the means of securing what he has contracted for, which, in the eye of the law, is to pay where he borrows, unless another place of payment be expressly designated by the contract."
In support of his argument, counsel for Elliott now cites Whart. Const. Law, §§ 402, 509-511, and Parsons v. Trask, 7 Gray, 473. The first citation from Wharton is only to the effect that the mode of payment is determined by the law of the place of payment, and that the latter is inferred from the facts. In the other three sections the question is discussed as to what determines the validity of a cop.tract to pay interest, in which the learned writer truly says: "This· question has been frequently litigated in the United States, and with results which, on their face, are irreconcilable." But neither of them bear on the question whether the validity of this contract, as to champerty, is to be determined by the law of California or Oregon. But, at section 403, Wharton, after stating that so far as performance is concerned, where the law of the place of solemnization of a contract conflicts with that of the place of performance, the latter controls; and that the validity of a mortgage depends on the law of the place where the thing exists, because there alone payment can be enforced,-says, at note 4: "But this is otherwise when a foreign mortgage is taken as collateral security merely, in which case the place of performance is the place of the payment of the principal bond;" citing the case of De FVoljv.Johnson, supra. In Parsons v. Trask it was merely decided that a contract made in a foreign conntry, by which an adult person bound herself to serve a citizen of the United States for five years, for $10, and board, lodging, and clothes, without specifying the nature or extent of the service, or the place of performance, even if valid where made, gave no right to the service in Massachusetts, because contrary to the laws and policy of that commonwealth. But the question here is, where was this contract-this agreement to loan and repay this money-to be performed? If it was to be performed here, then the law of this state as to champerty may apply; otherwise not. The contract was executed in California, and the money loaned there, and the only reasonable inference from the facts is that the repayment was to be made there also. Both par-
840
ties lived in that state. There was nothing in the a,greement to the contrary, nor anything in the situation or circumstances of the parties, present or prospective, that pointed in any other direction. Nor does the fact that collateral security was taken for such repayment on property in Oregon change its character in this respect. On the contrary, such security, as a mere incident of the debt, is so far valia or not according to the law of the place where the loan was made and to be repaid. Another point is now first made, by counsel for Elliott, on section 161 of the Penal Code of California, which makes it a misdemeanor for an attorney to directly or indirectly buy any evidence of debt or thing in action, with intent to bring suit thereon. It may be admitted that a contract of sale or assignment, the making of which involves the commission of a misdemeanor, is impliedly prohibited and void. The agreement by which the money was loaned, and repayment promised, does not come within this section. The transaction, so,far, was not a purchase of anything, but a loan. Nor does the section effect the sale or assignment to Hickox; because whatever passed by the same was obtained, not with intent to bring suit thereon,-to stir up strife,-but to defend one already pending. Nor were Hickox or White attorneys at the time of the transaction. The former never was an attorney. White was admitted to the bar in California in 1859, and in 1864 quit the practice on account of his health, and has been engaged in mines and mining ever since. Admitting, then, that White indirectly acquired whatever Hickox took in trust for him by the assignment, I do not think, on the facts, he was an attorney, within the meaning of the statute. From the evidence it appears that the defendant Effinger was reo tained by Elliott in the case of Holladay v. Elliott in the fall of 1872. Thereafter, on December 1st, Elliott agreed to pay him $400 a month to act as his attorney until the termination of the controversy. By November 4, 1874, he had received from Elliott $1,450, and from White, on the latter's account, $:a,OOO,-in all, $3,450. The suit dragged along for reasons not always within the control of Elliott, and still less of his attorney, and was not finally decided until 1879, when Effinger filed a notice of lien on th,e judgment, in pursuance of the statute, (Code Civil Proc. § 1012, sub. 4,) for the sum of $31,800, the amount of his compensation, reckoned at $400 per month, from December 1, 1872, to the date of the decree,less the sum of $3,450, received thereon, as above stated. I do not think, under the circumstances, that this contract ought to be considered in force after 1874. Shortly before White advanced bim the $2,000, Mr. Effinger, seeing the difficulties and delays in which Elliott was involved, wrote the former, offering to take $3,000 in addition to what he had already received, in full of his services to :late, and such other and further compensation at the end of the liti· gation as might be considered reasonable, under the circumstances.
THE HOLL.\ DolY CASE.
841
On this suggestion, White seems to have advancl::d the $2,000, wbich Effinger tacitly accepted, and thereafter looked to what might be obtained in the suit as the measure and means of any further compensation. Certainly it was never in the contemplation of the parties that this large compensation was running on from month to month, and year to year, while the suit was much of the time at a stand-still. Effinger testifies that when judgment was obtained in the supreme court he purposed to apportion it between White, Elliott, and himself; but the latter immediately 'repudiated his claim and White's also; whereupon, as a protection for both himself and White, he fell back on his contract, and filed the notice of lien accordingly. And the controversy between these two is now, apparently, a friendly one, and may be adjusted by them irrespective of the action of this court. An ullconditional fee of $5,000, promptly paid or secured, would, in my judgment, be a reasonable compensation for Mr. Effinger's services. But if the compensation was wholly contingent on success,dependent on making the money out of the litigation,-.$10,000 would not be an unreasonable fee. After 1874, Effinger's compensation was practically contingent, not only on getting a decree, but in realizing on it. This delay and risk mllst be considered in fixing the amount of this contingent compensation. In addition to the $3,450 he received prior to 1875, I will allow him the sum of $5,000, with legal interest from August 15, 1879, the date of the judgment, which amounts to $7,871.85. The defendant Joseph Holladay states in his answer that he has "no knowledge, information, remembrance, or belief" as to the alleged contract and assignment, or the payment of any money thereunder by White, "wherefore he denies" the same. On the hearing he claimed the benefit of this denial as being evidence against the existence of such writings and the making of sl1ch payments. 'rhis allegation is a motley of code and equity pleading, but not proper under either. The Code "does allow a defendant to controvert an allegation in the complaint by denying "any knowledge or information thereof sufficient to form a belief," but not on that acqount to deny the allegation itself. In equity a defendant who has no knowledge, information, or belief concerning the matter of an allegation shonld say so; and this is sufficient to put the plaintiff on the proof thereof. But such an answer is not evidence that requires at least one witness and corroborating circumstances to overcome. It is a mere negation, and proves nothing; and the addition, "wherefore he denies the same," amounts to nothing except to stultify the defendant; for how can a party truthfully deny an allegation of which he has just affirmed he has not even a belief. Clark v. Van Riemsdyk, 9 Cranch, 160; Brooks v. Byam, 1 Story, 301; Dutilh v. Coursltult, 5 Cranch, C. C. 351. At the close of the argumept, counsel for Holladay also filed a motion to suppress the copies of the agreement and assignment, marked
