114 Mo. 651 | Mo. | 1893
The Keokuk Northern Line Packet Company was a corporation created under the laws of Missouri, and for some years prior to 1880 was engaged in the transportation of passengers and freight between St. Louis and St. Paul on the Mississippi river. On the twenty-eighth of October, 1880, James "Ward et al, recovered judgments in the St. Louis circuit court against William F. Davidson et al. for $1,952; against Davidson alone for $3,435, arid against William F. and Peyton S. Davidson for $20,081. The decree went further and removed William F. Davidson, who was
Appeals were taken from each of said judgments and. three general supersedeas bonds were given and approved by the court. In each of said bonds William F. Davidson was principal and Peter Conrad and Peter Lehman were sureties. The causes were first appealed to the St. Louis 'court of appeals, where they were affirmed “pro forma” and then appealed to this court, the said sureties consenting in writing that their obligations on the bonds for appeal to the court of appeals should continue and bind them on appeal to- this court. Upon a hearing in this court, April term, 1886, the final decree of the circuit court was affirmed, but the judgment was reversed-and remanded to the end that a final decree might be entered in the circuit court in accordance with certain modifications in the amounts made in this court. Ward v. Davidson, 89 Mo. 445.
On the fifteenth of January, 1881, the packet company became insolvent and on that day made an assignment to Chas. Oreen, for the benefit of its creditors, under the laws of Missouri. He qualified as such, and has ever since been the assignee of the corporation. Clubb, who was appointed receiver in 1880, was discharged in 1888, and ordered to turn over all assets in his hands to Oreen, the assignee.
When the decree and judgment above referred to were rendered by the circuit court, October 28, 1880, the said William F. Davidson was the owner of nine promissory notes made by said packet company, a statement of which is' given in the record. These notes were dated on different days, commencing with December 10, 1879, and ending with October 28, 1880,
The appellant, as assignee, gave due notice by publication and by mail to the creditors of the corporation, and among others to the said William F. Davidson, of his intention to hear and allow demands against the estate of the said corporation, as required by law, and proceeded to hear and allow demands, but neither the said William F. Davidson, who was then living, presented, nor did the executors of his will after his death present either the said notes or the said judgments or either of them in his favor above referred to for allowance against said assignee. The assets of said assigned estate were wholly inadequate to
On March 22, 1890, the appellant as assignee of said corporation, filed three suits in the circuit court of the city of St. Louis against Peter Conrad and the administrator, with will annexed of said Lehman, Conrad and Lehman being sureties in the appeal bonds given as above stated. None of the principals were sued.'
The actions were for the penalties of the bond to be satisfied by executions for the amounts of three judgments in the circuit court, rendered in pursuance of the judgment of this court. The court ordered them consolidated.
After the causes were consolidated, Frank I. Johnson, the executor of William F. Davidson, was on his motion made a party defendant and filed an amended answer to the consolidated case. The answers of Conrad and Lehman, after admitting the execution of the several bonds by them as sureties, the affirmance of the judgments against their principals, proceeded to charge the indebtedness of the packet company to William F. Davidson, and the rendition of the judgment in his favor therefor and claim the right by and with the consent of his executor to insist upon that indebtedness as an off-set or counter-claim to the demand of plaintiff, the assignee of said packet company. The plaintiff moved to strike out all the portion asserting the counterclaim, but the court overruled his motion and he excepted. The executor Johnson also pleaded said judgment and indebtedness in favor of his testator as a counter-claim. This, the court refused also to strike out on motion of plaintiff, and he excepted. To these answers plaintiff replied; to the answers of Conrad and of Johnson, the executor, be admitted that Davidson
The cause was heard on an agreed statement of facts, which appears in full in the record on file.
The plaintiff asked the court to give the following instructions, that is to say:
“1. The court declares the law to be that, upon the pleadings and the evidence plaintiff is entitled to recover against defendants, Peter Conrad and Christopher Sharp,, upon the three bonds sued upon in this cause as consolidated, that the damages which the plaintiff has sustained and is entitled to recover by reason of the breach of the bond sued upon in cause originally numbered 82,060'is the sum of $2,403, with interest from April 12, 1887, at six per cent, per annum to date; that the damages which the plaintiff has sustained and is entitled to recover by reason of the breach of the bond sued on in cause originally numbered 82,058 is the sum of $7,800.
The court gave the first and refused the second of these instructions. To the refusal of the court to give the second instruction the plaintiff duly excepted. The court rendered judgment in favor of the plaintiff for the amounts due on the several bonds sued on in the aggregate amount of $45,650.82, and found in favor of the defendants and against the plaintiff, “upon the defendants’ cause of action stated in their answers to said three suits, the sum of $64,533.65.”
The judgment then proceeds as follows: “It is therefore ordered, adjudged and decreed by the court that so much of the set-off or counter-claim pleaded by defendants and found in their favor by this court .as will be sufficient to cover the amount found in favor of said plaintiff, be and the same is now set off against the amount found in favor of the defendants; that plaintiff recover nothing by this suit in this behalf, but that the defendants go hence without day and recover of said plaintiff their costs and charges in this behalf expended, and have execution therefor.”
The plaintiff in due time filed his motion for a new trial. This motion was overruled by the court, to which action the plaintiff excepted. And from the judgment rendered the plaintiff appealed to this court.
This is an action against the sureties of William E. Davidson on three different appeal bonds executed by him and them, on appeal from judgments rendered by the circuit court of the city of St. Louis on the twenty-eighth of October, 1880, in favor of the Keokuk Northern Line Packet Company, of which company the plaintiff, Charles Oreen, afterwards became the assignee by deed of assignment January 15, 1881.
At the time it obtained said judgments against Davidson, the packet company was a ‘‘going concern,” and was solvent, doing a large business, transporting passengers and freight from St. Louis to St. Paul, Minnesota, on the Mississippi river.
In the record, the indebtedness of the company to Davidson is nowhere impeached, either as to validity or amount. The obligation on which the sureties are sued was that the judgments against Davidson should be performed; that, if said judgments were affirmed in this court, they would comply with said affirmance and pay said judgments, interest, and costs, and this the plaintiff demands.
In their answer they now say that said judgments are in fact satisfied, or ought to be, in law, because by the judgment of the same court which rendered them said packet company is indebted to their principal in said bond in a much larger sum than the judgments against him, in its favor amounted to, and in this defense the executor of William F. Davidson joins and asks that the judgment of Davidson may be set-off or counter-claimed to the amount of the judgment of the packet company.
The circuit court sustained the right of defendants to avail themselves of this judgment as a set-off or counter-claim and this is made the ground of error by plaintiff. His contention is that the circuit court erred in so ruling:
First '. Because there is no mutual indebtedness between the sureties and the company. •
Third. Because the obligation of the sureties on said appeal bonds is for unliquidated damages.
Fourth. Because the judgment against the principal, Davidson, is a judgment for damages growing out of a breach of trust on his part as an officer of thé company.
I. An assignee, for the benefit of creditors, under our statute takes the assigned estate subject to all equities existing at the date of assignment. He is not a purchaser for value without notice. State to use v. Rowse, 49 Mo. 593; Peet v. Spencer, 90 Mo. 384; Huse v. Ames, 104 Mo. 91.
Among these “equities” is the right of set-off and counter-claim. ' In Smith v. Spengler, 83 Mo. 408, a bank made an assignment for the benefit of its creditors, and its assignee sued the defendants on their note to it which became due after assignment. The defendants pleaded by way of set-off a debt due them from the bank before the assignment, and it was held a proper set-off, and the cases of Atkinson v. Elliott, 7 T. R. 214; Holbrook v. Receivers, 6 Paige, 220; Darby v. Savings & Trust Co., 3 McArthur, 349; Finnell v. Nesbit, 16 B. Mon. 351; Morrow’s Assignees v. Bright, 20 Mo. 298; Tucker v. Oxley, 5 Cranch. 34; Aldrich v. Campbell, 4 Gray, 284, were cited with approval.
In City of Kansas to use v. Ridenour, 84 Mo. 253, in an action on a special tax- bill to the use of the assignee of the Mastin Bankv. Ridenoivr, the defendants were permitted to set-off a deposit they had in the insolvent bank when it failed.
So that if this were an action by the assignee, Green, against William E. Davidson or his estate alone upon the judgments rendered against him in favor of
II. Plaintiff saw fit in this case to pass by the estate of Davidson, which was in course of administration in the city of St. Louis where this action was brought, and sue only his sureties, and it is admitted that the estate was and is solvent.
The first exception saved is to the action of tbe court in permitting Johnson, the executor, to become a defendant on his own application. In this the court committed no error. The estate of Davidson had a direct pecuniary interest in the cause. If judgment should go against the sureties, an action would at once lie in their behalf against the estate for exoneration from the debt for which Davidson was primarily liable.
Knowing this, why would a court encourage all this circumlocution and multiplicity of suits, which it is the true policy of the law to avoid? It is the underlying principle of the whole doctrine of set-off and counter-claim that, whenever entire justice can be done both parties by an adjustment of their mutual demands without the violation of any of the settled rules of law, it ought to be done. But it seems to us that it is peculiarly proper to permit the executor of Davidson to defend in this case for the reason that otherwise the rankest injustice may ensue. Revised Statutes, 1889, sec. 1993; Railroad v. Hatton, 102 Mo. 45-56; Valle v. Cerre’s Adm’r, 36 Mo. 575-584.
III. Holding as we do then that Johnson, the executor of Davidson, was rightfully permitted to defend, two-questions arise, first, his full right to pleadDavidson, his testator’s, judgment as a counter-claim to this suit on bond; secondly, the right of the sureties to avail themselves of such a defense.
The learned counsel for plaintiff denies the right of either to make this claim. His position is that Davidson’s executor could not invoke it because the-appeal bonds on which the suit is based are unliquidated demands, and to entitle a party to set-off both demands must be liquidated. But, if we look at this, case as it actually exists, after all it is an action to collect the judgment against Davidson, with interest and costs. It is for this and nothing else the petition is. framed. The fact that the bond names the penal sum
Plaintiff recognizes what the law in its wisdom has decreed, that compliance with the condition will satisfy the penalty in the bond, and unless we are to sacrifice substance to form and ignore the real nature of plaintiff’s suit it must be admitted that plaintiff’s real action is for the amount of his judgment and costs, which has been liquidated and entered of record.
It is a misnomer to denominate a claim based upon such facts as unliquidated. State to use v. Modrell, 15 Mo. 421, was a suit upon an executor’s bond, and the damages to be recovered for breaches of the bond by various acts of misconduct were unliquidated, but that case is easily distinguished from this.
But it is not necessary to base defendant Johnson’s right to a counter-claim upon the fact that plaintiff’s claim is liquidated. By section 2050, Revised Statutes, 1889, “in an action arising on contract,” the right of counter-claim is given a defendant to plead, uany other cause of action arising also on contract and existing at the commencement of the action.” Emery v. Railroad, 77 Mo. 346.
Under this statute, as plaintiff’s case is based upon the contracts, to wit, the three bonds for appeal, it is immaterial whether this claim is liquidated or unliquidated, for in either case the defendant, Johnson, if sued separately, might plead his cause of action also arising on contract, to-wit, his notes, upon which his judgment rests, which were all due when Ward et al. recovered their judgment in October, 1880. Peet v. Spencer, 90 Mo. 384; Barnes v. McMullins, 78 Mo. 260-273.
In the case of Himrod v. Baugh, 85 Ill. 435, the action was upon an appeal bond executed by Himrod as principal and Livingston and Millard as sureties to Thomas Baugh on appeal from the city court of East St. Louis. The suit was brought for t^ie use of Levi Baugh to whom it was alleged the judgment was assigned in June, 1874. The plea was that Neidenfelt had obtained judgments against Thomas Baugh, the plaintiff in the first mentiond judgment, and had instituted a proceeding by garnishment against the defendants; that they had answered without notice of the assignment of the judgment by Thomas to Levi Baugh, and had paid the garnishment judgment; and asked that the amounts so paid should be applied to the said assigned judgment. They further averred that Livingston and Millard were sureties for Himrod in the appeal bond. In that case the supreme court of Illinois while recognizing the general rule that demands to be set off must be mutual as respects the parties, and that joint and separate debts could not be set off against each other, said: “But Himrod and Elithorpe are here the principal debtors, and Livingston and Millard only their sureties; and such a circumstance has been admitted by some courts of respectable authority, as creating an exception to the general rule, they holding that a
We think the circuit court properly ruled that the defense might be made, in view of the fact that Davidson’s executor was in court making the defense in the right of his testator, the principal in the bond, with the other
We have no hesitation in holding that under the circumstances the executor and sureties could together interpose the judgment of Davidson as a counterclaim. The fact that Davidson refused or failed to present his judgment for allowance before the assignee, does not affect the right of his executor and sureties-to interpose the counter-claim now against the suit of the assignee. Lay v. Bank, 61 Mo. 72; Stiles v. Smith, 55 Mo. 367; Holbrook v. Receivers, 6 Paige, 220; Rubey v. Watson, 22 Mo. App. 433.
But still another reason is asserted by the plaintiff why this off-set or counter-claim cannot be allowed and it is this. “The judgments in favor of the packet company against Davidson et al was for money of the corporation wrongfully appropriated by them while acting as president and directors'; that these judgments were assets of the corporation, and the duty to return it was in no sense such a debt as equity deals with in allowing set-offs, and the executor and sureties in seeking to avail themselves of it are attempting to do what Davidson would not be permitted to 'do in a court of conscience.'”
As to this contention, in the first paragraph of this opinion we have considered the attitude of the assignee with reference to the assets of the packet company. Under our decision and of the courts of the various
“This is all the fund the assignors would have to satisfy their creditors, in case they had made no assignment for the benefit of creditors.” Smith v. Spengler, 83 Mo. 408; Chenault v. Bush, 84 Ky. 536; Scammon v. Kimball, 92 U. S. 362-371; Rubey v. Watson, 22 Mo. App. 428-434.
Granting that the assets of an insolvent corporation are a trust for the benefit of its creditors, there is nothing in this principle which will deprive a debtor of said corporation of his right of off-set or counterclaim which exists at the time of the assignment.
The debt which Davidson’s executor and sureties seek to counter-claim in this case, was created when this corporation was a “going concern,” and the cases of Shickel v. Watts, 94 Mo. 410 and Roan v. Winn, 93 Mo. 503, do not conflict with our view of this case.
This is an action at law. The plaintiff is the assignee of a corporation, that had obtained judgments against Davidson. In a court of law he is suing the sureties and administrator of Davidson to collect those judgments. To this action they interpose another judgment at law obtained by Davidson, and we are asked to go back of these judgments and examine into the elements of the debt, upon which the packet company’s judgments were obtained. We think it a sufficient answer to this claim to say that, whatever might have been the complexion of the transaction which resulted in plaintiff’s judgments, it is clear that when that judgment is made the foundation of an action at law, the judgment itself merges the prior proceedings-
The judgment of the circuit court is affirmed.