Clark et al. v. Harrison, insurance commissioner, et al.

Supreme Court of Georgia1936-02-19No. No. 10883

182 Ga. 56

Summary · law.co

Holding. The judgment is affirmed. The appointment of attorneys to prosecute the insurance commissioner's suit did not constitute champerty or maintenance because the suit sought only injunctive relief to enforce state law rather than monetary recovery, and the attorneys served as appointed state officers rather than under private employment contracts.

The insurance commissioner brought suit to prevent a company from conducting insurance business without proper state authorization. The defendants challenged the suit on grounds that the attorneys appointed to bring it on behalf of the commissioner engaged in champerty or maintenance—namely, agreeing to share in the proceeds of litigation they financed. The court rejected this challenge, holding that champerty requires both payment of litigation expenses and a promise to share monetary recoveries. Since the suit sought only injunctive relief to enforce the insurance laws rather than recovery of money, there was nothing to share, making the arrangement non-champertous. Additionally, the attorneys were appointed as special attorneys-general under state law and thus acted as state officers rather than under private employment contracts, which further precluded any champerty claim.

The court also addressed a procedural issue: although certain parties were improperly allowed to intervene in the case, this error was deemed harmless because their participation did not alter the nature of the suit. The court directed that their names be struck from the parties and their intervention dismissed upon remand. On the merits, the evidence supported granting an interlocutory injunction against the company because its contracts constituted life insurance policies issued in violation of state law.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether appointment of attorneys to bring suit on behalf of insurance commissioner constituted champerty or maintenance
Whether an interlocutory injunction was properly granted to prevent unlicensed insurance business
Whether unauthorized intervenors must be dismissed from the litigation

Procedural posture

The defendants appealed the lower court's refusal to dismiss the suit brought by the insurance commissioner's appointed attorneys on grounds of champerty and maintenance.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Per Curiam.

1. There are two essential elements of a champertous agreement: first, there must be an undertaking’ by one person to defray the expense of the whole or a part of another’s suit; second, the agreement or promise on the part of the latter to divide with the former the proceeds of the litigation in the event it proves successful. Meeks v. Dewberry, 57 Ga. 263; Anderson v. Anderson, 12 Ga. App. 706 (2) (78 S. E. 271); Black’s Law Dictionary (3d ed.), 306.

(а) The present suit brought by the insurance commissioner did not seek a recovery of anything of value, but its purpose was merely to restrain the defendants from violating the insurance laws of the State. Accordingly, there ivas no recovery to be shared with the attorneys appointed by the Governor to bring the suit, and their relation to the case was not champertous. Ellis v. Smith, 112 Ga. 480 (2) (37 S. E. 739); Robison v. Beall, 26 Ga. 17 (3); 11 C. J. 231.

(б) Moreover, the attorneys who instituted the action in behalf of the insurance commissioner were appointed as special attorneys-general, in accordance with the Code of 1933; § 40-1609, and in the service performed under this appointment the attorneys were acting as officers of the State, and were not performing services under any contract of employment. There being no contract of employment, there could be no champerty or maintenance. City Council of Augusta v. Sweeney, 44 Ga. 463 (9 Am. R. 172); Collins v. Russell, 107 Ga. 423 (33 S. E. 444); Tucker v. Shoemaker, 149 Ga. 250, 252 (99 S. E. 865). It follows that the court did not err in refusing to dismiss the suit on the ground that the appointment of these attorneys was void as tainted by maintenance or champerty.

No. 10883.

February 19, 1936.

Rehearing denied March 11, 1936.

2. The suit having been brought in behalf of the insurance commissioner by attorneys who were duly authorized to institute it, it was not improper for the attorney-general or any of his regular assistants to appear and sign the pleadings, as counsel for the State, at any later stage of the litigation. See Tatum v. Allison, 31 Ga. 337; Brooke v. Lowry National Bank, 141 Ga. 493 (2) (81 S. E. 223).

3. It is not the right of a stranger to a pending cause to intervene therein, unless it is necessary to Ms protection that he be allowed to become a party to the litigation and thus be afforded an opportunity to resist the rendition of a judgment which would operate to his prejudice. Clark v. Wheatley, 113 Ga. 1074 (39 S. E. 437); Armour Car Lines v. Summerour, 5 Ga. App. 619 (63 S. E. 667). While under this principle it was error to allow the intervenors to be made parties in the present case, yet since the nature of the suit was not changed by their appearance, the error was harmless and may be easily corrected by striking their names as parties and dismissing their intervention when the case is reached for final trial in the court below. It is so directed.

4. In this suit by the insurance commissioner to enjoin a company from conducting an insurance business without being chartered as an insurance company, the evidence authorized the grant of interlocutory injunction on the ground that the contracts issued by the company constituted policies of life insurance, and that the company, in the issuance of such contracts, was doing a life-insurance btisiriess contrary to law. Benevolent Burial Asso. v. Harrison, 181 Ga. 230 (181 S. E. 829).

Judgment affirmed.

All the Justices concur.

Hay & Gainey, for plaintiffs in error.

M. J. Yeomans, attorney-general, Dave M. Parker, W. C. Hendrix, W. P. Buchanan, J eff A. Pope, Wilcox, Connell & Wilcox, Theo Coleman, and Alexander S J ones, contra.