(Originally published Oklahoma Bar Journal March 6, 1999 - Vol. 70; No. 10) 

Champerty in Real Estate Conveyances in Oklahoma
By Linda A. King

Champerty. Barratry. Maintenance. They sound like archaic terms from days of yore, leftovers from the English common law that are good for law school finals, Home Jeopardy games, impressing the in-laws, but not much else. However, the doctrine of champerty-although much narrowed in its modern scope-is still alive and well in Oklahoma jurisprudence. It not only remains in the Oklahoma statutes; it has been construed and applied in recent years. What's more, a violation of the champerty statutes pertaining to real estate conveyances carries with it a criminal penalty!

A Brief History of Champerty

Common-law champerty is an officious intermeddling in a suit by a stranger, by maintaining or assisting either party with money or otherwise to prosecute or defend it, and dividing the proceeds obtained in the suit between the party and the stranger.1 Maintenance is Aan officious intermeddling in a suit which in no way belongs to the intermeddler by maintaining or assisting either party to the action, with money or otherwise, to prosecute or defend it."2    "Champerty is maintenance with compensation derived from the proceeds of the suit."3

In an attorney disciplinary proceeding in 1992, the Oklahoma Supreme Court was called upon to construe one of the Oklahoma Rules of Professional Conduct, Rule 1.8(e), which is grounded in the doctrines of champerty and maintenance. In her opinion, which was part concurring, part dissenting, Justice Kauger set forth a history and discussion of these ancient concepts.

The common law roots of the doctrines of maintenance and champerty are deeply embedded. The basic notions were present in the legal development of ancient Greeks and Romans, and they became deeply ingrained in the medieval law of England. Movements against the use of champerty and maintenance were a revolt against feudal institutions which required support to the retainers of a feudal magnate despite the justification of a particular action. A champertous agreement is one in which a person lacking an interest in another's litigation finances the suit for personal gain. Champerty is officious intermeddling in litigation in which one has no interest by assisting its prosecution with the intent to derive compensation from the proceeds of the suit.

As early as 1275, the prohibition against maintenance and champerty was applied to royal officers. These restrictions were imposed to check despotism. Lords and other large land holders purchased contested claims against one another, or against commoners. As a defense, the commoners conveyed a portion of their interest in land to some powerful lord to maintain their suit. The nobles' power grew, they paid far below the bona-fide sale price, reducing the tenant's profits. As tenants by champerty, the nobles were entitled to share in the rents and profits with the grantor. The laws of maintenance and champerty were introduced to protect the commoner against the growing power of the nobles. However, it was not considered maintenance for a rich man to assist a poor man with money or advice in order to enable him to bring or defend an action, provided the assistance was given out of charity. It was not maintenance for an attorney to take money for his advice or to expend money for his client, if it was to be repaid. The prohibitions against maintenance and champerty were instituted to prevent the churning up of litigation, the clogging of the courts, and to protect the people. 4

The Smolen opinion goes on to discuss the ironic consequences that can result from the application of the prohibitions against champerty as set out in the Rules of Professional Conduct as well as in Okla. Stat. tit. 21, § 554 (1991).

But it is not only attorneys who can commit champerty. Historically, any meddling or trafficking in another's litigation or conflict would violate the prohibition. However, as early as the 1929 case of Aaronson v. Smiley,5 the Oklahoma Supreme Court established Oklahoma as one of the jurisdictions applying a narrow view of the effect of a champertous agreement. Then, in the 1930 case of Worrell v. Roxana Petroleum Corp.,6 the Oklahoma Supreme Court noted that the doctrine of champerty and maintenance was rooted in an English society quite different from current cultural conditions and recognized the general retreat of English and American authorities from the doctrine. By the time of Mitchell v. Amerada Hess Corp.,7 the Oklahoma Supreme Court could declare emphatically, AThis Court is entirely unwilling to disapprove of Aaronson . . . in light of the fact that the rationale behind such a doctrine applies so nebulously to present conditions of society."8 Nevertheless, in both Mitchell and Voiles, the Court had an opportunity to state that common-law champerty was no longer recognized in Oklahoma, and the Court declined to say so. Moreover, in the recent case of Chimney Rock Ltd. Partnership v. Hongkong Bank of Canada,9 the Court of Appeals confirmed the long-established common law tenet that personal torts are nonassignable and declared, "We do not tolerate champertous claims."

Champerty Statutes

Even if there remains some question about the continued viability and scope of common-law champerty in Oklahoma, statutory champerty is a different matter. Oklahoma has codified the common-law prohibitions against champerty in two areas: attorney conduct and real estate matters, and those statutes carry with them both civil and criminal consequences. The statutes regulating champertous conduct of attorneys are Okla. Stat. tit. 5, §'7 (1991), which concerns contingent fees, and Okla. Stat. tit. 21, '§ 554 (1991), which forbids an attorney's "buying into" a lawsuit or buying a debt or a chose in action for the purpose of bringing a legal action. For the remainder of this paper, however, we will discuss only the champerty statutes which deal with real estate matters, to wit, The Champerty Act of Oklahoma, located at Okla. Stat. tit. 21, §§547, 548, and 549 (1981).

Buying lands in suit

Every person who takes any conveyance of any lands or tenements, or of any interest or estate therein, from any person not being in the possession thereof, while such lands or tenements are the subject of controversy, by suit in any court, knowing the pendency of such suit, and that the grantor was not in possession of such lands or tenements, is guilty of a misdemeanor.10

Buying or selling pretended right or title to land

Any person who buys or sells, or in any manner procures, or makes or takes any promise or covenant to convey any pretended right or title to any lands or tenements, unless the grantor thereof, or the person making such promise or covenant has been in possession, or he and those by whom he claims have been in possession of the same, or of the reversion and remainder thereof, or have taken the rents and profits thereof for the space of one (1) year before such grant, conveyance, sale promise, or covenant made, is guilty of a misdemeanor. Provided, however that the provisions of this section shall not be construed to be a restriction or limitation upon the sale of Indian lands by the allottees or the heirs of such allottees of their inherited interest in said lands.11

Mortgage of land adversely possessed not prohibited

The two last sections shall not be construed to prevent any person having a just title to lands, upon which there shall be an adverse possession, from executing a mortgage on such lands.12

Section 547 describes the classic offense of champerty as it pertains to real estate: buying trouble. In other words, buying an interest in land, with the knowledge that such land is already the subject of a lawsuit and with knowledge that the grantor is out of possession, is forbidden. This statute comports with the historical understanding of champerty and is unlikely to cause alarm in the ordinarily prudent purchaser or in practitioners of real estate law. The principal cases which have applied this statute have simply clarified that:

a. It is necessary to show that the grantee had knowledge of the pendency of a lawsuit affecting the lands conveyed by the deed at the time of execution of the deed.13

b. A conveyance of land in contravention of this section is void as against the persons holding adversely, and the grantee, standing alone as plaintiff, cannot maintain an ejectment action against the party who was the defendant in the pending suit.14

c. This section does not prevent a landowner in possession from conveying the land during the pendency of his suit, in order to remove a cloud from the title.15

d. The burden of proof is on the party alleging champerty, who must prove that the purchaser had knowledge of the pendency of a lawsuit affecting the land. Otherwise, there is a presumption that the party had no such knowledge. 16

Section 549 is short and forthright and, like §547, easy to understand and apply. Thus it is §548 which has generated the most confusion, question, and consternation. It surprises many Oklahoma lawyers to learn that The Champerty Act has been part of Oklahoma's law since 1890, originating from the Dakota laws of 1887. Oklahoma's statutes have not been amended since 1919, and there are dozens of reported cases construing and applying the Act. As a result, the Supreme Court has had ample occasion to declare what is and is not included within the purview of the Act as a whole and §548 in particular. For example, the Court has held that §548 does not apply to judicial sales,17 to good faith transfers upon the dissolution of a corporation or in other situations where equity would compel a conveyance,18 to the execution of oil and gas leases,19 nor to restricted Indian lands.20

Purpose of the Act

Perhaps the most surprising aspect of the Champerty Act is that its purpose is to protect adverse possessors so that they needn't suffer the consequences of useless litigation. So declared the Oklahoma Supreme Court in the early case of Drennan v. Harris,21 as well as the later cases of Bartlett v. Lashley,22 and Atlantic Richfield Co. v. Tomlinson.23 If there is no one in adverse possession of the property, §548 does not apply. A deed is not champertous merely because the grantor is not in possession nor has received rents and profits for the past year. There must also be adverse occupancy of the land in order to trigger the provisions of §548. Just what constitutes adverse possession of land is a mixed question of law and fact, "actual possession" consisting of acts of dominion over the property, in making ordinary use of it and taking ordinary profits it is capable of yielding in its present state.24 In McGrath v. Eichhoff,25 the Supreme Court of Oklahoma discussed adverse possession, saying:

The law does not attempt to list all of the acts of dominion which may constitute such possession, so that what constitutes adverse possession, like the question of what constitutes negligence, often depends on the circumstances of the particular case, as measured by the judgment of reasonable men. It has been said that such a determination in a given case must largely depend upon "the situation of the parties, the size and the extent of the land, and the purpose for which it is adapted."26

Personal occupancy is not a necessary element of adverse possession required to perfect title by prescription,27 nor is the payment of taxes a controlling circumstance. The payment of taxes is simply "one of the means whereby a claim of ownership is asserted, and a failure to pay taxes weakens a claim of ownership by adverse possession."28 For example, in the 1955 case of Cox v. Montgomery,29 the plaintiffs deraigned their title to the land from the purchaser of a treasurer's resale deed. The tax deed was allegedly void because of defects in the advertising, notice, and sale of the property. Nevertheless, the plaintiffs' predecessor entered on the land under the tax deed and mined rock on it regularly for several years. The defendant Cox obtained a quit claim deed from one Winnie Selsor, the former owner, who had never been in possession, occupied the land, or received any rents or revenues therefrom. The trial court found that the deed from Selsor to Cox was champertous and in plain violation of 21 O.S. §548. As a result the deed was void as to those persons holding adversely, namely the plaintiffs. In addition, because the plaintiffs occupied the land in question under color of title by way of the tax deed which their predecessor had obtained, the court held that the "adverse occupancy embraces all of the land included within the boundaries named in the occupant's deed, and he cannot be ejected by a person holding in contravention of our above maintained champerty statute. . . ."30

The Cox case is typical of a number of the champerty cases in that it involves tax deeds. Welch v. Langley,31 was a quiet title suit in which the plaintiffs had entered under color of title and had constructed fences, maintained hogs and cattle, and used and operated a tract in open, adverse, hostile and peaceable possession of the land. The defendant had acquired a deed from the purchaser at a tax sale. However, neither purchaser nor the defendant herself had ever occupied the land either in person or by tenant. In finding the conveyance from the tax sale purchaser to the defendant void under the champerty statute, the Oklahoma Supreme Court elucidated part of the reason behind the statute. In the second paragraph of the Syllabus by the Court, it was stated:

2. Possession of real property carries with it the presumption of ownership, and it is the duty of those purchasing such property from others than those in possession to ascertain the extent of their claims, and the open, actual possession of such property gives notice to the world of just such interest as the possessor actually has therein.32

Similarly, in Miles v. Pressley,33 the Supreme Court of Oklahoma held that the plaintiff's deed was champertous and void as against the defendant in adverse possession where neither the tax deed holder nor the plaintiff as remote grantee of the tax deed holder had been in possession nor received rents and profit for more than one year next preceding the date of the deed. The court went on to distinguish its holding from earlier Oklahoma cases involving tax deeds.

In Webb v. Ketcham, 157 Okla. 294, 12 P.2d 191 (1932) and in Jones v. Sitterly, 190 Okla. 36, 120 P.2d 341 (1941) we held that where the grantee in a tax deed purchased at the tax sale for another, his conveyance to the person for whom such purchase was made was not champertous, although such grantee in the tax deed had never been in possession of the property. This for the reason that the tax deed for the county was a part of the tax procedure of the State, and that the deed from the grantee to the real owner simply passed the naked legal title to the real owner of the property. In Evans v. Terrill, 189 Okla. 577, 118 P.2d 250 (1941), we held that where title was vested in the county by a resale tax deed, the County Commissioners' Deed conveying such title to a third person was not champertous, although the county had never taken possession of the land, for the reason that such deed was part of the tax procedure of the State.34

Another area where questions of real estate champerty arise has to do with the sale of an interest by a cotenant who is not in possession. In Biard v. Carlton,3535 the Supreme Court of Oklahoma considered the application of 21 O.S. §548 to the situation in which the owner of an undivided one-half interest was in possession when the nonpossessing cotenant conveyed away her interest. Quoting an earlier Oklahoma case, the Court stated,

The mere possession of a tenant in common, no matter how full and complete, does not operate as an ouster of his cotenant, or amount to adverse possession as against the claim of his cotenant. There must be something to show a denial or repudiation of his cotenant's rights. . . 36

The Court went on to conclude that since the mere possession of one tenant in common of land is the possession of all, and where there has been no actual ouster, a deed by the other tenant in common to a third person is not inhibited by the statute against champerty, 21 O.S. §548.

The possession of one tenant will be deemed to be in subordination to the rights of other cotenants, in the absence of an express denial of the rights of the cotenants.37

This is not to say that adverse possession by cotenants is impossible in a champerty case. In the early case of Hurie v. Quigg,38 a landowner died intestate, leaving four heirs, one being absent and the other three claiming to be the sole heirs. The estate was administered and distributed to the three. The grantee of the absent heir brought suit, alleging champerty and maintenance. On that question, the point at issue was whether the three distributee heirs possessed the lands adversely to the absent heir. The court stated:

The recording of a deed to the property and continued actual possession of the premises with the collection of rents and profits by certain of the tenants in common in our judgment is sufficient notice to the missing tenant in common of an adverse claim. . . . We are inclined to our view as to constructive notice of an adverse possession herein, by the fact that at no time did the tenants in possession acknowledge the right of the missing heir and, as we understand the rules relative to possession in cotenancy, the underlying principle is that the law zealously guards the interest of one who is lulled into dependence by his confidence and denounced. But in the case before us, at all times the heirs in possession maintained themselves to be the sole and only persons entitled to the estate, and there has been no acknowledgment of Louis Lynn Mathews' cotenancy in the case. 39

Similarly, in Wirick v. Nance, for the Use and Benefit of Wimbish,40 where coheirs and the purchaser at a foreclosure sale had been in open and notorious possession for years, with their occupancy, deed records and court records evidencing their claim of absolute ownership to the exclusion of an heir, that heir's deed to land was champertous and void. It has also been held that a defense on the ground that plaintiff's title in a quiet title suit was champertous and therefore void, was an affirmative defense which should have been plead.41 The burden of proof is on the party wishing to establish violation of the statute. This would obviously be the case in a misdemeanor proceeding, but it would also be true in civil suits which rely on the statute.42 Whether an agreement is champertous or not is a mixed question of law and fact, and this appears to be the case as to common law champerty as well as statutory champerty.43

 Procedures in Champerty Actions

Since the Champerty Act itself prescribes no specific criminal penalty, punishment would be assessed pursuant to the general misdemeanor statute,44 which states that every offense declared to be a misdemeanor is punishable by imprisonment in the county jail not exceeding one (1) year or by a fine not exceeding $500, or both.

It seems clear that notwithstanding the misdemeanor status of champerty, the criminal courts of Oklahoma are rarely presented with an enforcement of the Oklahoma Champerty Act. Rather, particularly in the last four decades, the most frequent use of the Act has been to establish a right or defense in civil suits, such as quiet title, ejectment, and damages. This raises such questions as who can sue and where. In the 1945 case of Concho Washed Sand Co. v. Sallstrom,45 the Supreme Court of Oklahoma stated in the second paragraph of its Syllabus that "[a] grantee who holds a deed to land, made in violation of [the] champerty statute, may maintain an action to recover the land, in his name and in the name of his grantor, and on objection by adverse party to such grantee's maintaining such action in his name, may move to have his grantor made a party plaintiff and it is not error to grant such motion when timely made."46 In Roberson for Use and Benefit of Miles v. Brown,47 the Oklahoma Supreme Court held that

under the jurisprudence of this state, a grantor in a champertous conveyance may maintain in his own name an action of ejectment or other action to recover possession from the adverse occupant, or, in the grantor's name, for the benefit of the grantee, or in the names of both the grantor and grantee, but not in the name of the grantee alone.48

The Court went on to state that a grantee, without the permission or knowledge of the grantor, cannot bring an action in the name of the grantor for the use and benefit of the grantee, citing with approval a Connecticut decision which stated ". . . the grantor in his own behalf or that of his grantee may . . . assert his right to the land, and if he secures possession this will in certain instances inure to the benefit of the grantee. . . . but the grantee cannot compel the grantor to bring suit or to permit him (the grantee) to do so in the grantor=s name, for this would be to obviate the effect of the statute by indirection.49

With regard to the enforcement of the Act as a criminal statute, it has been held that the venue for the offense is in the county in which the conveyance is executed and delivered, not where the land is situated and the conveyance recorded.50 As to the civil remedies of the champertous deed, quiet title and ejectment, it would seem that the venue would be in the county where the land is located.

 Conclusions

With or without the Oklahoma Champerty Act, it is unlikely that practitioners of real estate law in Oklahoma would ever buy into someone else's lawsuit, purchase property that is the subject of a lawsuit or with the purpose of instigating a lawsuit, or advise their clients to do so. However, it is likely that the provisions of Okla. Stat. tit. 21,§548 (1991) could pose a trap for the unwary. The conduct prohibited by §548 is somewhat less obvious and intuitively wrongful than the garden variety of champerty, and it may seem particularly outdated. After all, one could reason, land is so valuable these days and so heavily populated that there are no "squatters" anymore, no trespassers who run up the Jolly Roger like pirates of land. And if there were, why would they need the cloak of criminal statutes to protect them? But the answer and continuing rationale for the Oklahoma Champerty Act in general and "548 in particular, seems to lie not in the weathered pages of English feudal history nor in the wish to protect squatters, usurpers, and pirates. Rather, it lies in the ancient and venerable notion of possession and the respect and deference which possession has accumulated over the centuries and which continues to this day. In other words, if possession of land, even adverse possession, gives notice of a claim to the property, then conveyance by a nonpossessing grantor is tantamount to conveyance of a property which is already the subject of a dispute, an incipient lawsuit. Viewed in this light, "548 is only reasonable and consistent with the remainder of the anti-champerty law which prohibits the intermeddling in another's controversy. As such, these statutes which comprise the Oklahoma Champerty Act should and probably will remain the law of Oklahoma for the foreseeable future.

1. See Mitchell v. Amerada Hess Corp., 1981 OK 149, 638 P.2d 441, 444.
2. Voiles v. Santa Fe Minerals, Inc., 911 P.2d 1205, 1211 (Okla. 1996)(citing Hall v. State, 655 A.2d 827, 829 (Del. Super. Ct. 1994)).
3. Id. at 1211 (citation omitted).
4. State ex. rel Oklahoma Bar Ass=n v. Smolen, 1992 OK 116, 837 P.2d 894, 897 (citations omitted).
5. 142 Okla. 29, 285 P. 59 (1929).
6. 144 Okla. 297, 291 P. 47 (1930).
7. 1981 OK 149, 638 P.2d 441.
8. Id. at 446.
9. 1993 OK CIV APP 94, 857 P.2d 84, 87.
10. Okla. Stat. tit. 21, ' 547 (1991).
11. Okla. Stat. tit. 21, ' 548 (1991).
12. Okla. Stat. tit. 21, ' 549 (1991).
13. Courtney v. Worley, 181 Okla. 399, 74 P.2d 370, 373 (1937).
14. See Cox v. Fowler, 141 Okla. 110, 283 P. 995, 997 (1929).
15. See Gilbreath v. Smith, 50 Okla. 42, 150 P. 719, 720 (1915).
16. See Jennings v. Brown, 20 Okla. 294, 94 P. 557, 560 (1908).
17. Drennan v. Harris, 67 Okla. 313, 161 P. 781, 785 (1916).
18. Warner v. Wickizer, 61 Okla. 200, 160 P. 885, 890 (1916).
19. State v. Welch, 16 Okla. Crim. 485, 184 P. 786, 787 (Okla. Crim. App. 1919).
20. Murrow Indian Orphans= Home v. McClendon, 64 Okla. 205, 166 P. 1101, 1103-04 (1917).
21. Supra.
22. 204 Okla. 299, 229 P.2d 185 (1951).
23. 1993 OK 106, 859 P.2d 1088.
24. See Cox v. Kelley, 295 P.2d 1061 (Okla. 1956).
25. 187 Okla. 64,100 P.2d 880 (1940).
26. Id. at 886 (citation omitted).
27. Tucker v. McCrory, 266 P.2d 433, 435 (Okla. 1954).
28. Anderson v. Francis, 177 Okla. 47, 57 P.2d 619, 620 (1936).
29. 282 P.2d 734 (Okla. 1955).
30. Id. at 736.
31. 264 P.2d 347 (Okla. 1953).
32. Id. at 347.
33. 198 Okla. 124, 176 P.2d 473 (1947).
34. Supra, note 34 at 375.
35. 207 Okla. 545, 251 P.2d 485 (1952).
36.  Id. at 487.
37. Id. at 485.
38. 121 Okla. 80, 247 P. 677 (1926).
39. Id. at 679, as quoted in Records v. Miles, 200 Okla. 62, 191 P.2d 918, 919 (1948).
40. 178 Okla. 180, 62 P.2d 997, 1002-03 (1936).
41. See Terwilleger v. Bridges, 192 Okla. 642, 138 P.2d 79, 80 (1942).
42 See Anderson v. Hill, 205 Okla. 561, 239 P.2d 1016, 1019 (1951).
43. See Temeron Inc. v. Ferraro Energy Corp., 1993 OK CIV APP 97, 861 P.2d 319; Cox v. Sarkeys, 304 P.2d 979 (Okla. 1956).
44. Okla. Stat. tit. 21, ' 10 (1991).
45. 195 Okla. 302, 157 P.2d 176, 177 (1945).
46. See also Rock Island Improvement Co. v. Davis, 185 Okla. 513, 159 P.2d 728 (1945).
47. 205 Okla. 680, 241 P.2d 181 (1952).
48. Id. at 183 (citations omitted).
49. Id. at 185.
50. See Bray v. State, 35 Okla. Crim. 37, 247 P. 415 (1926).

LINDA A. KING is a 1977 graduate of the University of Oklahoma College of Law. Mrs. King practices oil and gas law and real property law in the Oklahoma City office of Gable and Gotwals. Over the last 20 years, she has been a frequent CLE lecturer in the areas of title examination and oil and gas law. She reports that she finds not only the devil but also many delights in the details.