1 Del. Ch. 435 | New York Court of Chancery | 1833
In considering this ease I have reversed the order in which the several grounds of defence are presented, and shall examine the last two before adverting to the question of set off.
1. The effect of the order granting a re-hearing does not per se vacate the original decree. It only opens it either for reversal, alteration or correction ; and if the re-hearing does not take place, and the order should be dismissed, the original decree stands precisely as if no such order had been granted. The parties, having, by their agreement entered on the chancery docket, discharged the order for re-hearing, it must be presumed to have been done under the sanction-and approbation of the Chancellor. The re
2. The next ground of defence is that of compromise,— under which it is insisted that the recognizance was satisfied and the order for re-hearing discharged. This, it has been contended, satisfied the decree; and, therefore, the complainant has no further interest or claim under it. In considering this ground,—which has been much relied on by the defendants,—even supposing if. to be true, it appears doubtful whether a defendant can take advantage of it in his answer and whether it is not matter which must he relied on by plea-. In 2 Chitty’s Eq. Dig. 816, it is said, “a defence “ of compromise or release is not proper for answer; it is “ available by way of plea only. Leonard vs. Leonard 1 Ball & B. 323.” But, considering it as properly embraced within the answer, the whole question is covered by the written agreement. Ho proof has been offered of any compromise, and the agreement must speak for itself. If we advert to it, it will appear, by an express provision contained in the agreement, that the parties were not to be thereby precluded from any remedy- they might have against Mitchell. They bound themselves not to proceed on the recognizance, against the sureties, on condition of their paying $1000. This sum being afterwards paid, the receipt thereupon given must be considered in accordance therewith, and cannot be understood so as to contradict ■the written agreement of the parties. The recognizance taken under the writ of ne exeat, was no more than a security for the performance of the decree; and it was com
The argument founded upon the agreement discharging the order for a re-hearing, by which, as it has been contended, a compromise must have taken place, when extended beyond the sureties is inconsistent with the record entry. For, if it had been the intention of the parties to discharge the principal debtor, why did they declare that-the original decree should remain firm and stable forever ?
3. The remaining question in this ease,—the one which appears to be the most material and important,—relates to the matter of set off. Before considering this, it will be necessary to state accurately the dates of the final hearing of the cause, the decree, the assignment and notice thereof. It appears, the final hearing of the cause in chancery was in August, 1823, previous to which the accounts had been filed and excepted to; and, at the August Term, 1823, the same was fully heard, and the Chancellor held the same under consideration, for the purpose of making his final decree. The assignment of the judgment was made in December, 1824; and, as appears from the agreement filed in this cause, notice of the assignment was not given to the debtor until November, 1825. In February, 1826, on petition, the Chancellor made his final decree, which be ordered to he entered as of the last term, viz': the August Term, 1825. The decree is in the following words :
“This cause having come on to be heard, on the llth day “ of August, A. D. 1823, and the bill, answer, accounts “ filed, and the exceptions thereto, and the proofs and alle-
As this question of set off is to be considered with reference to the rights of the assignee, it may be well first to examine what would have been the condition of the obligee, had no assignment taken place. This will present the general question, whether Lockwood under this decree could have availed himself of the sum decreed to be due and payable to him, as a’set off against the judgment held by Mitchell against him for a separate debt. At law,partners cannot maintain an action against each other, unlegs
This decision agrees with all other cases in principle, and determines the right of set off between partners at law by the right of action. The right of set off is dependent on the final settlement; and this result can only be obtained, either by the act of the partners, by a bill in chancery, or by the action of account. If, then, on dissolution of a partnership, the accounts between the partners •are, on bill filed, finally settled and adjusted, and the bal
It has been contended that the decree, being made in a cause where several are complainants, is similar to a joint judgment and, therefore, cannot be set off against a judgment against one only of the complainants. On this point, it does appear that the character of the decree is misapprehended. The bill filed by the several partners against Mitchell, the acting partner, is not a suit instituted by the firm to recover a partnership debt'. Its object was not to ascertain a sum due jointly; but, the partnership being dissolved, it is the mode adopted by the different members interested in the joint concern to adjust and settle their individual interests, and to ascertain and recover what is due to each separately from Mitchell. If it had been a suit on behalf of the firm, to recover a debt due the firm, then it would have been competent for either complainant under the decree to have received the whole, and to have given a discharge for the same. And, on the death of any one of the complainants, the survivors would have been entitled to the whole sum. It is the necessary result of a joint judgment, or of a joint interest under a decree, that the survivor is entitled. But how can the right of survivor-
Supposing therefore no assignment had been made as between Lockwood and Mitchell, the right to set off the amount due Lockwood under the decree, according to the principles of the decided cases would clearly have existed. The sum was a debt due from Mitchell to Lockwood,'and it was liquidated and certain.
The next, subject for consideration is the effect and operation of the assignment. It is admitted that the assignee takes subject to all the equity existing in the obligor; but the counsel for the defendant has insisted that the rule is limited to the equity existing at the time of the assignment. For the purpose of understanding this part of the case it will be necessary to advert to the assignment, and ascertain whether either the assignment, or the subject matter thereof; is within any statutory provision of this State. We have an Act of Assembly authorizing the assignment of bills and specialties. (Dig. Del. Laws, 42.) We have also statutory provisions for the assignment of
The next inquiry relates to the effect and operation of the decree which, under the petition in February, 1826, was ordered by the Chancellor to be entered and enrolled as of the 8th of August, 1825. And this presents for consideration the question, whether the assignee of the
But, it may be said, that admitting the rule as settled by the preceding decisions, yet the assignee in the present case was not a purchaser of the subject matter in litigation, but of a judgment rendered for a separate debt of one of the partners. This objection renders it necessary to consider the question as to what was the equity of the obligor in the bond and debtor under the judgment; for the rule is well established that the assignee takes subject to all the equitable claims of the debtor; and in the present case, it being an assignment of a judgment, the assignee must take subject to all the equities of the debtor up to
In Norton vs. Rose, Washington’s Rep. 233, this question as to the equities of the obligor, and how far they prevail against an assignee, was fully considered and decided. A bill was exhibited in the Court of Chancery, in Virginia, by the appellant, to be relieved against a judgment at law recovered against him by the appellee upon an assigned obligation for the payment of money. The equity stated was, that the plaintiff had bound himself to pay to George Anderson £450, being the balance supposed to be due upon a settlement of accounts; that he had insisted upon certain credits for money paid by Charles Harris to George Anderson, to a part of which, he, the plaintiff was entitled, but that the plaintiff, relying upon Anderson’s assurances that no payment had been made to him by Harris, and that he was insolvent, gave his obligation to Anderson for the £450. The bill prayed an injunction against a judgment obtained upon the obligation by the defendant, Rose, as assignee thereof; also to be allowed all discounts which he could make appear against Anderson; and for general relief. An injunction till further order was awarded. The defend
The decree, or so much of it as relates to the subject» of our present inquiry, determined that the plaintiff could not set off against the said debt, as held by Rose, any equ,itable demand which he might have against George Anderson ; and the bill was dismissed as to the defendant, Rose. From this decree Horton appealed. The case was fully argued in the Court of Appeals, and the judges delivered their opinions, seriatim. The principles applicable to the present case are so clearly and forcibly stated in these opinions that I cannot better express my own views than to adopt the opinions at large.
said “There are some points in this cause which “ are not controverted by either side. It is admitted that, “ upon the principles of the common law, a chose in action “ is not assignable ; that is, the assignment does not give “ to the assignee a right to maintain an action in his own “ name. It is also conceded that, in England, the “ assignee of a bond takes it charged with every species “ of equity which was attached to it in the hands of the “ obligee. If a different principle prevail in this country “ it must grow out of the Acts of Assembly which author, “ ized the assignment of bonds. The intention of these “ was to alter the common law, so far as it prevented “ bonds from being assigned, and to give to the assignee “ a right to sue in his own name, in the same manner as “ the obligee might have done. It was not intended to “ abridge the rights of the obligor or to enlarge those “ of the assignee beyond that of suing in his own name ; “ and since it is clear, that prior to this law an original “ equity attached to the bond, following it into the hands “ of the assignee, this law does not expressly nor by im- “ plication destroy that principle. With respect to the
in the concluding part of his opinion, remarked ;—“The case now under consideration comes fully “ within those principles which seem to me to be correct. “Horton and Anderson were concerned together in trade,
said, “If Horton had given this bond before “ assignments were sanctioned by legislative authority, it “ is admitted, on all hands, that his equity would have fol- “ lowed the bond into the hands of an assignee. If so, is it “ possible that the legislature could have meditated so much “ injustice as to exclude him from setting up an objection to “ the debt which, but for the law, he might have made ? “ Whatever would then have been the construction of the “ law must be the construction of it at this day. I mention “ this to shew that the legislature, by making bonds assigna- “ ble, did not mean to deprive the obligors of any equitable “ objections which they might have against them. Hpon “ the whole, I concur in opinion with the other judges.” See also the ease of Pickett vs. Morris, 2 Washington’s Rep. 255.
The two preceding cases, which were decided in the Court of Appeals of Virginia, clearly establish the prin
In all the cases I have referred to, the assignee was a purchaser for valuable consideration. But how stands the present case in this respect? Was Martin W. Bates, or were the creditors for whose use he took the assignment of the judgment from Mitchell, purchasers for a valuable consideration ? It appears that after the final hearing of the suit in Chancery, which was had at the August Term, 1823, in which suit Lockwood, as one of the partners, was claiming a balance due him from Mitchell, and the object of that suit was to establish and recover bis claim from Mitchell, the whole matter in controversy being confined to the question of indebtedness, and the accounts filed under the interlocutory decree, and the exceptions heard and considered,—that while matters were thus pending, and when the Chancellor had the same under advisement, for the purpose of making up his decree, Mitchell, the defendant, being indebted to other persons and insolvent or embarrassed, assigned this judgment, which he had against Lockwood, to Martin W. Bates, in trust for certain other creditors, they having judgments against him. It is not alleged that any valuable consideration was actually paid by the assignee, or that satisfaction was entered on the judgments for the payment of which the assignment was made. From all that appears it was nothing more than an assignment of a collateral security. This presents a case very different from that of a purchaser for valuable
It is admitted that, at law, there cannot be a set off under our Act of Assembly,except in cases of mutual debts ; but where there are," upon accounts, mutual credits between two parties, though they cannot be set off at law, yet it is the common ground of a bill in equity. This was the opinion of Lord Chancellor Loughborough,in the case of James vs. Kynnier, 5 Ves. Jr. 108, supposing no bankruptcy had taken place. In the case of French, assignec, vs. Fenn, 3 Doug. R. 257, being a case of bankruptcy, the
That on the 24th of January, 1778, Cox, Holford and Fenn, agreed to purchase a row of pearls for an adventure in trade, and that Fenn should advance the money. The agreement was as follows : “ London, 24th January, “ 1778, J. Cox, J. Holford and J. Fenn, purchased a row “ of pearls of James L. Jenne, for £2050, including the “ commission. The said sum was advanced by J. Fenn, “ upon an agreement that profit and loss thereon should “ be equally divided between them, in thirds; in conse- “ quence of which, we, the undersigned, do hereby agree to “ pay two-thirds of the interest thereon, from the said 24th “ of January, 1778, till the said row of pearls is sold.”
In November, 1778, Cox became a bankrupt, after which the defendant sent the row of pearls to China, where it was sold for £6000, and the net proceeds being £5000, was remitted to the defendant. Cox, at the time of his bankruptcy, was indebted to the defendant in a much larger sum than a third of the profits of this adventure. The question for the consideration of the Court, therefore, was whether he was entitled to set off the sums owing to him from the bankrupt in bar of the action brought by the bankrupt’s assignees for a third of the profits arising from the sale of the pearls. Lord Mansfield, said, “ The Act “ of Parliament is accurately drawn to avoid the injustice “ that would be done,if the words were only mutual debts; “ and it, therefore, provides for mutual credit. In this case, “ credit is given to the defendant for a row of pearls which “ is to belong in thirds to three persons. As Fenn ad- “ vanced the whole money, the other two were to pay
Upon a full consideration of all the cases, I am of opinion that the complainant is entitled to relief and to have the amounts due him, under the decree, set off against the sum due upon the judgment.
Let a decree be entered accordingly.