Home

Legislative Memo

T 518.465.7517

BILL:

S.7609 (Lack)

Support

SUBJECT:

Rule of Champerty

 

DATE:

June 18, 2002

 

This legislation would amend section 489 of the Judiciary Law which prohibits corporations or collection agencies from soliciting, buying or taking an assignment of, among other things, debts, claims, causes of action and judgments with the purpose of bringing an action to recover on the claim by allowing the solicitation, purchasing or assignment of such claims if the claim exceeds $1,000,000.00 or the consideration paid for such claim exceeds $500,000.00.

A violation of the existing statute is a misdemeanor and a fine not to exceed $5,000.00 may be imposed.

The roots of section 489 of the Judiciary Law can be traced to provisions in the Penal Law dating back to 1909 and it is intended to enforce a long standing public policy against champertous agreements, It is "directed at the public interest" and its purpose is to prevent "..strife, dicord and harassment." See Elliott Associates, L.P. v. Republic of Peru, 1988, 12 F. Supp. 2d 328; Elliot Associates, LP v. Republic of Panama, 1997, 961 F. Supp. 83.

If champertous agreements are still against public policy, the Business Council can see no reason why monetary thresholds, if met, should somehow make such agreements no longer against public policy.

For these reasons, the Business Council of the State of New York opposes this legislation.