Dows v. McMichael

| New York Court of Chancery | Aug 22, 1836

The Chancellor.

From the view I have taken of this case, it is not material that I should consider the question whether Bradley and Nichols, two of the defendants in the judgment upon which this suit is brought, were competent witnesses for McMichael, to prove that Douglass & Dunñ were members of the firm, and jointly liable with him and them for the payment of the complainants’ debt. Upon the hearing before the vice chancellor, the question for consideration was as to the truth of the several allegations in the defendant’s plea; and if the truth of every distinct allegation in the plea was not established by the proofs, or if the record of the judgment in the supreme court was conclusive evidence against the defendant as to any matter put in issue' by the replication# the plea should have been overruled as false.

No repleader is awarded in this cotirt, upon an immaterial issue joined upon a plea. The court, therefore, never inquires as to the materiality of the allegations contained in the plea in such a case, If the truth of the plea is established by the proofs, the complainant’s bill must be dismissed, although the matters stated in the plea contain, in fact# no Valid defence to the suit, On the other hand, if the defendant fails in proving the truth of his plea upon the hearing, the plea must be overruled as false; and the complainant will be entitled to a decree according to his case as stated in the bill.

In the case tinder consideration, the plea contained three distinct allegations, for the purpose of showing that there was no equitable claim against the defendant in this suit# to wit; that Douglass & Dunn were members of the firm of Bradley, Nichols & Co. at the time the note was given, and Were jointly liable with the defendants in the suit in the supreme court, for the payment thereof as a copartnership debt; that the judgment had been fully paid and satisfied by Douglass before the return of the execution issued thereon# and that this suit was prosecuted for the sole benefit of Douglass, the complainants having-no legal or beneficial interest therein; and that the amount so paid by Douglass was no more than his proportion of the debts due from the firm at the time of such payment.

As to the first allegation, if the testimony of Bradley and Nichols is to be received and credited, it would probably be sufficient to establish the fact that Douglass & Dunn had such an interest in the firm of Bradley, Nichols & Co. as to render them liable to third persons for the debts of that firm. But, even from that testimony, it is extremely doubtful whether their interest was such as to make them liable, as \between themselves and McMichael, Bradley & Nichols, to contribute towards the payment of the copartnership debts; The récord of the judgment in the supreme court, however, which was read by the complainauts. upon the hearing, is conclusive evidence of the falsity of this allegation in the plea. The same allegation having been put in issue between these parties in the supreme court, and the question of fact having been decided against the defendant in that suit, he is estopped from again alleging the same matter in bar of this suit to enforce the collection of that judgment, or in any other suit between him and the complainants. As special replications are not allowed in this court, the complainants had no opportunity of pleading the decision of the same question in the former suit, as an estoppel; And the rule of law on this subject is, that where the party cannot plead the former decision as an estoppel, the record thereof may be given in evidence, and. is conclusive and binding upon the party, the court and the jury, as to every fact adjudicated and finally decided in the former suit; (Wright v. Butler, 6 Wend. Rep. 284.) The record in this case is not given in evidence for the purpose of establishing the fact of the recovery in the former suit, which was not put in issue by the replication. But the decision of the same question in a former suit against the defendant is given in evidence for the purpose of establishing, conclusively, that the allegation in the defendant’s plea in this suit cannot be true. And it is in this way that the record of a former decision is always introduced as evidence in those cases where it cannot be pleaded as an estoppel. It was, therefore, evidence pertinent to the issue in the present case. To make a former judgment conclusive between the parties in another suit in relation to the same matter, it is necessary that the former suit should have been between the same parties. But the fact that there were other defendants in, the former suit, who are also bound by the decision and estopped from controverting the same fact with these' com» plainants a second time, does not render the former decision any less conclusive against the present defendant. The record in the former suit has therefore falsified this allega» tion in the plea in bar in the present case.

I think the defendant has also failed in establishing the fact alleged in the plea, that the judgment had been paid by Douglass before the return of the execution, and that the complainants had no legal or beneficial interest in the suit. As Douglass & Dunn were endorsers on the note, they were liable to the complainants for the payment; and Douglass'has probably secured the payment of the debt if it cannot be collected of the defendant in this suit. Such a state of facts would be perfectly consistent with the declaration of Dows, which the defendant has given in evidence,- and also consistent with the oath of Dows to the bill, in which he swears positively that the whole amount of the judgment, with the interest thereon, remains unpaid. To establish this part of the plea the defendant was bound ta prove that Douglass had paid the whole amount as a payment on the judgment; and not merely that he had secured the amount for which he was liable as the endorser of the note. For if the complainants have not relinquished their claim upon the defendant upon the judgment, they have both a legal and beneficial interest in this suit, although their principal object in prosecuting the.suit may be to benéfit the endorser. The plea is therefore falsified in this respect also.

There was no evidence whatever introduced on the part tif the defendant, to establish the allegation that in paying the judgment Douglass had paid no more than his share of the debts of the firm. On the contrary, even if Douglass & Dunn were partners, I think the testimony of Williams as' to the settlement made with the other partners at the time of their dissolution, shows that the latter assumed the payment of the debts, and that there was a balance due to-Douglass & Dunn for which- a note was given at that time. If that was the case, Douglass’ share of the debts' due from the firm was nothing at the time of the recovery of this judgment; and McMichael, Bradley and Nichols are in equity bound to pay the whole of this debt to the complainants.

The defendant having wholly failed to establish the truth of the several allegations in his plea, the decree of the vice chancellor was erroneous, and must be reversed with costs. And a decree must be entered for the complainants, overruling the plea as false ; declaring the right of the complainants to have satisfaction of their judgment, with interest thereon from the time it was entered, together with the costs of this suit, out of the property, effects and choses in action of the defendant; and with such other provisions as were directed to be inserted in the decree when this cause was originally before the chancellor, when no testimony had been adduced in support of the plea. (Nee 2 Paige’s Rep. 345.)