11 N.Y. 625 | NY | 1862
By statute, every action must now be prosecuted in the name of the real party in interest, except in the few cases of trust and representation excepted by law. (Code, § 111.) The object of this provision was to abolish the distinction between the former practice of courts of common law and chancery, and give full effect at law as well as in equity to assignments of rights in action by permitting and requiring the assignee to sue in his own name. If, as between the assignor and assignee, the transfer is complete, so that the former is divested of all control and right to the cause of action, and the latter is entitled to • control it and receive its fruits, the assignee is the real party in interest, whether the assignment was with or without consideration, and notwithstanding the assignee may have taken it subject to all equities between the assignor- and third persons. The consideration and circumstances of the transfer may be important with a view to settle the equities and establish the rights of others; but if it is absolute as between the immediate parties to it, the assignor not only may, but tnust, bring the action in his own name. The consideration was ample, and it does not affect the transaction that it was not to be paid until the notes should be collected, and it may be its payment was conditional, depending upon that contingency. But the notes became the property of the plaintiff, although his liability to pay for them was contingent. Heither Prime nor the payee could have revoked the contract and reclaimed the notes; and upon the recovery and collection of the judgment, or the payment of the notes-without suit, the recovery belongs to the plaintiff, and all that Prime or Sargeant can claim is the Evergreen stock. The plaintiff may, without let or hindrance from the former holder of the notes, receive and appropriate the money that may be collected on them to his own use. This gives him the legal title and makes him the proper party plaintiff. (Selden v. Pugh, 17 Barb., 468;
The notes, however, having been transferred by the payee long after due, were subject to, any defence, legal or equitable, which could have been made to them if no transfer had been made. If, at the time of the indorsement and delivery of the notes to Prime, Sargeant, the payee, could not have maintained an action upon them, the same infirmity attaches to them in the hands of the present plaintiff; and the question is whether the matters relied upon, and proof of which was rejected by the referee, would have constituted a legal or equitable bar to an action at the suit of Sargeant. We may lay out of view the alleged insolvency of Sargeant for the reasons, 1st, it is not averred in the answer; and, 2d, it was alleged to exist only-at the time of the suit, and it was not claimed to have existed when Sargeant parted with his interest in the notes, nor even at the commencement of the action. There is now no exclusion of defences merely equitable in actions strictly legal in their character. The Code (§ 150) secures to a defendant the right to interpose as many defences as he may have, whether legal or equitable, or both ; and this provision has been administered by the courts in its spirit and with just liberality. (Gage v. Angell, 8 How., 335 ; Dobson v. Pearce, 2 Kern., 156; Blair v. Claxton, 18 N. Y., 529; Bank of Toronto v. Hunter, 20 How., 292; Phillips v. Gorham, 17 N. Y., 270.)
The claim of the defendant grows out of partnership dealings between himself, the payee of the notes, and a third person, which have not been settled or adjusted in any way, and in respect of which no account has been, stated between the partners, and the claim itself is unliquidated. This does not constitute a counter-claim under the statute; for, by the terms of the act, that can only arise or exist between the parties to the action, and the plaintiff has had no dealings with the defendant, and the contract dealings, which are the foundation of the claim, were with a third person. (Code, § 150; Vassar v. Livingston, 3 Kern., 248; Gleason v. Moer, 2 Denio, 639; Spencer v. Babcock, 22 Barb., 326; Ives v. Miller, 19 id., 197.)
What would have been the right of the defendant, had he brought a cross action, bringing in Sargeant or his representative, and the other partner, Allen, setting up this defence with proper allegations of the insolvency of Sargeant and his estate, with other circumstances upon which an equitable defence might be based, it is not necessary to consider: It is sufficient here to say that neither Sargeant, nor his representatives, nor Allen, were parties to the action, and that no accounting could have been had for any. purpose by reason of such defect. The
There is no force in the objection that the action was not prosecuted in the name of the real party in interest, within the meaning-of section 111 of the Code. Sargeant, the payee of the notes, indorsed and transferred them absolutely to Prime, in September, 1855, upon a good consideration ; and a few days afterwards, Prime, for a valuable consideration, indorsed and transferred them to the plaintiff. The referee found that the transfer to Prime was not made under any collusion- with Sargeant, or with any purpose or intent to assist him in avoiding the payment of any indebtedness to, or any offset which, the defendant had as against the notes in the hands of Sargeant. The transfer from Prime .to the plaintiff vested in the latter an absolute title to the notes and their proceeds. Having the actual possession of, and legal title to, the notes, an absolute right to the money due on them, and to recover and appropriate it when received to his own use, he is the real party in interest. There is no doubt whatever that a judgment in the plaintiff’s favor would, exonerate the defend ant from all claims by any one else.
The answer did not allege that any settlement of the partnership accounts had ever taken place, but, on the contrary, that an action had been commenced for the purpose of compelling such account in the Court of Chancery, in New Jersey, in which the defendant Morris .was complainant, and Allen and Sargeant defendants, and which was still pending. The answer nowhere alleged that Sargeant was insolvent.
If the matters stated in the defendant’s answer, coupled ' with the fact that at the time of the trial, in May, 1857, Sargeant’s estate was insolvent, constituted or were available as a
The proposition was to use an unliquidated and unsettled partnership account, begun after the giving of the notes and ending subsequent to their transfer, and where the partnership was between three persons, one of whom was not a party to the suit, and there was no allegation of a dissolution of the partnership or Sargeant’s insolvency when the notes were negotiated, as a defence to the action. It was not offered to be shown that there had been a settlement or an account stated between the defendant and the payee of the notes, though the defendant was allowed the opportunity to prove such settlement if any had been had. On the contrary, the referee found that the affairs of the partnership were, at the time of joining issue in the action, open and unsettled; and no adjustment, settlement or other statement of any indebtedness of any of the copartners to the copartnership, or to one another on account thereof, had ever been made.
The proposed defence clearly did not establish a payment, nor was it available as a counter-claim, not being a claim against the plaintiff on the record. A remaining inquiry is, were the facts set out in the answer, in connection with those offered to be proved, sufficient to establish a set-off against the notes at law or in equity.
It is clear that this unadjusted partnership claim could not be set off at law. It was not a claim which existed and was due and payable, and belonged to the defendant before the notes were transferred in September, 1855, nor was it a demand against Sargeant alone, but against him and the partner Allen, jointly. It was not liquidated, nor could it be, without a statement and settlement of the partnership accounts. There was no account stated between the defendant and Sar
Could it be set off in equity according to the established principles of equity jurisprudence ? -If it could, there is probably no technical objection now to interposing an equitable defence against a legal liability which, at law, could not have been pleaded in bar. The Revised Statutes provide that in suits in Chancery for the payment or recovery of money, set-offs shall be allowed in the same manner and with likq effect as in actions at law. (2 R. S., 334, § 40.) In equity, when the demands are unconnected and distinct, the rule as to set-offs is as at law. (2 Story’s Eq. Jur., § 1434; Duncan v. Lyon, 3 John. Ch. R., 351; Dale v. Cooke, 4 id., 11; Barbour v. Spencer, 11 Paige, 507.) A court of equity will not interfere when the set-off claimed is of a debt arising under a distinct transaction, unless there is some peculiar equity calling for relief. When there is a legal debt on one side, and an equitable debt on the other, the mere fact of the existence of such cross demands will not be sufficient to justify a set-off in equity. 1 The party seeking it must show some further equitable' ground. Had the defendant in this case brought an action against Sargeant and Allen, while Sargeant held the notes, there would have been nothing (in the absence of an allegation of Sargeant’s insolvency) to show the existence of a right in equity to demand the set-off. (Bradley v. Angel, 3 Comst., 475; Keep v. Lovell, 2 Duer, 78; Gay v. Gay, 10 Paige, 369; Story’s Eq. Jur., §§ 1434 to 1437, inclusive.) Had Sargeant, prior to the transfer of the notes on the commencement of this suit, brought his action' upon them, and the defendant had interposed the same answer as in the present
There was no legal or equitable right of set-off shown by the pleadings to have attached when the notes were negotiated by Sargeant, or even when the suit was brought; and the offer to show insolvency some eighteen months afterwards, presented no ground for equitable interposition against a bona fide transferee of the notes. The judgment of the Superior Court should be affirmed.
All the judges concurring,
Judgment affirmed.