223 F. 479 | 8th Cir. | 1915
Appellant filed its bill in the court below to enjoin the collection of two judgments rendered against it and in favor of Olaf Iverson and Bjorn Iverson, respectively, on March 1, 1907, in the circuit court of the county of Roberts, S. D., and also to have the amount due on certain promissory notes described in the bill offset against the amount due on said judgments. Babcock was the only defendant served with process; the defendants Olaf Iverson and Bjorn Iverson not being found within the district of South Dakota.. The defendant Babcock answered the bill and pleaded as a defense that the right of appellant to recover upon the notes set forth in the bill had been finally adjudicated against it on the merits by the judgment of the circuit coúrt for the county of Roberts in favor of Olaf Iverson. He further pleaded that he was the owner of said judgments by assignment thereof from the Iversons; and that he took said judgments in settlement and satisfaction of two attorney’s liens for services rendered in the action in which said judgments were obtained. No affirmative relief was asked in the answer. The cause came on for final hearing on the pleadings and proofs, and as a result
On May 10, 1904, at Veblen, S. D., Olaf Iverson purchased from appellant the following farm machinery at the agreed price of $3,469.60:
1 Port Huron Traction Engine 30 Horse Power (traction rating) — Simple-Compound.
1 Straw Burning Attachment.
1 Jacket Force Feed Lubricator.
1 Loco Cab Mocking Bird Whistle Canopy Top.
1 Port Huron Rusher Separator, width of Cylinder 40 inches; of Separator 64 inches.
1 Stacker Farmers Friend (Kind).
1 Band Cutter and Feeder Parsons (Kind).
1 Elevator-Weigher-Wagon Loader-Bagger Perfection (Kind).
1 Drive Belt 150 feet long 8 inches wide 4 ply-canvas Rubber. Saw Mill: Mounted-Unmounted: Right-Left Hand (Kind).
1 Saw 38x36 (Canvas Cover).
Port Huron Cylinder Corn Sheller.
Pori Huron Husker-Shredder (Adjustable) Sieve.
1 Ham Head Light.
1 Woods Tender complete.
1 Wood Tank 12% bbl.
1 Tank Pump and Hose Free.
In payment of this sum he executed and delivered to appellant the following promissory notes:
Consisting of note due Oct 1, 1904...............................$1,219 60
Note due Oct. 1, 3905......'...................................... 1,000 00
Note due Oct. 1, 3906.................................'........... 1,000 00
Note due Oct. 1, 1904.»........................................... 125 00
Note due Oct. 1, 1905............................................. 125 00
$3,469 60
■ — with interest at 8 per cent.
Bjorn Iverson indorsed these notes before delivery. On or about February 11, 1905, appellant commenced an action against Olaf and Bjorn Iverson in the circuit court for the county of Roberts, S. D., to recover the amount due on the notes above mentioned, except the note for $1,219.60, due October 1, 1904, which the complaint in the action admitted had been paid by the application of the proceeds of a chattel mortgage foreclosure sale. The chattel mortgage having been given on the farm machinery by Olaf Iverson to secure the payment of the notes. Appellant, in the action so commenced, claimed the right to declare the remaining notes due by virtue of a certain provision of. the diattel mortgage which gave the appellant the option to declare the whole amount of the notes due on the happening of certain contingencies. Bjorn Iverson answered the complaint, but, as the action as to him was subsequently dismissed, his answer may be disregarded. Olaf Iverson answered the complaint and specifically admitted the execution and delivery of the notes, alleged that they had been paid, and by way of counterclaim set forth facts tending to show that the chattel mortgage given to* secure the notes had been foreclosed in a county where the mortgage had not been recorded, and that by reason of this fact the appellant was liable in conversion to Olaf Iverson for the value of the machinery.
“Gentlemen of the Jury: ünder the undisputed evidence in this case the court is of the opinion that Olaf Iverson is entitled to a verdict at your hands for the value of this threshing rig. The court will therefore direct the following verdict. There is only one question for you to decide in this case and that is to decide what was the value of this threshing rig at the time it was taken by the plaintiff in this case for foreclosure under this mortgage sale. While some evidence has been offered in regard to a sale being made of this machine, the court is of the opinion that-said mortgage sale was a void mortgage sale and the plaintiff in this case has converted this threshing machine to its own use and benefit. You may swear a bailiff, Mr. Clerk, to take charge of this jury. There is a blank left in this verdict for filling in whatever amount you may find. After you have ascertained the value of the machine you may insert that in the form of verdict. You may retire.”
On appeal the Supreme Court affirmed the judgment in favor of Olaf Iverson and denied a rehearing. The Supreme Court decided that the alleged conversion of the mortgaged property was.properly pleaded as a counterclaim and that there was sufficient evidence of conversion. Then follows this language in the opinion of the court :
“It is further contended by the appellant that, if in fact there was sufficient evidence to establish the conversion of the mortgaged property, it does not appear that the defendant sustained any damages, and in any event he would be entitled to recover only the value of the property, less the amount of the mortgage debt. This contention is untenable, for the reason that it was disclosed by the record that the plaintiff had previous to the trial disposed of the notes, and that they were still unpaid and outstanding as against the defendants. The plaintiff offered no evidence in the action tending to prove the amount due upon the notes, and hence the controversy as to the notes and amount due thereon was practically out of the case, and the defendant Olaf Iverson, having introduced evidence showing the value of the mortgaged machinery at the time of its alleged conversion by the plaintiff, was entitled to recover the value of the same, and there was ample evidence to support the findings of the jury that the value of the mortgaged property at the time of the conversion was $3,500 found by them in favor of the defendant Olaf Iverson by their verdict.”
After the affirmance of the judgment and denial of a rehearing, but before the remittitur was sent to the lower court, the appellant
The defendant Babcock was the attorney for the Iversons during all the litigation in the state courts and had actual knowledge of all the facts appearing therein. On April 24, 1907, less than a month after the rendition of the judgment in favor of Iverson, Babcock filed a notice with the clerk of the court where the judgment was docketed, claiming an attorney’s lien under the laws of South Dakota for SI ,800 for services rendered in-the action. July 31, 1908, he filed in the same place a notice pursuant to law that he claimed an attorney’s lien for services rendered therein in the sum of $3,500. November 23, 1908, Olaf Iverson, in settlement of the claim of Babcock for attorney’s fees, assigned, transferred, and set over all his interest in and to the judgment in his favor against appellant to the defendant Babcock. February 11, 1909, Bjorn Iverson assigned the judgment in his favor against appellant to Babcock. No other consideration for these judgments was paid by Babcock than the value of his services as attorney for the Iversons in the action in which the judgments were rendered.
The pleadings and the evidence fully warrant the finding that the Iversons are nonresidents of the state of South Dakota and are insolvent as insolvency is defined by the law of that state (Civil Code 1903). By this law a person is deemed insolvent when he is unable to pay his debts as they become due in the ordinary course of business, which also is the definition of the common law. In Cunningham v. Norton, 125 U. S. 90, 8 Sup. Ct. 811, 31 L. Ed. 624, it was said:
“When a person is unable to pay his debts he is understood to bo insolvent. It is. difficult to give a more accurate definition of insolvency.”
The definition of the bankruptcy law is not controlling here. The evidence in the present case is to the effect that appellant is owner and holder of all the notes given by the Iversons on May 10, 1904, and no part of the same has been paid, except $352.70 paid October 15, 1904, which sum paid one note for $125 and interest amounting to $2.70; the balance of $225 being applied on the note for $1,219.60. What became of the amount received on foreclosure of the chattel mortgage, if any, does not appear. It is probable that the defendant was of the opin
It thus appears from the foregoing facts that, if appellant may not be granted the relief prayed for in this action, it will have lost, not only the purchase price of the farm machinery, but will also be obliged to pay the Iverson judgments now amounting to over $5,500. Such an unjust result ought not to be brought about, unless there be no escape therefrom under well-settled principles of law and equity. The defendant Babcock seeks to defeat the relief asked, for by appellant by insisting that the right of appellant to recover anything on the notes given by Iverson was finally adjudicated against it by the proceedings in the circuit court and Supreme Court of the state of South Dakota, and in this behalf the well-established rule of law is invoked that, where the second suit is upon the same cause of action and between the same parties as the first, the judgment in the former is conclusive in the latter as to every question which was or might have been presented and determined in the former. The law is plain enough in cases of the kind mentioned, but the question for determination in this case, as well as all others of like character, where the plea of res judicata is interposed, is: Do the facts show that the question at issue was determined on its merits or might have been so determined in the former action ? That we may not be misunderstood, it is proper to state that in any examination we may make of the proceedings in the Supreme and circuit courts of South Dakota, which resulted in the Olaf Iverson judgment, our single object will be to determine from such examination whether the right of the appellant to recover on the Iverson notes was adjudicated therein, or whether, under the circumstances in that case, the right of the appellant to recover on the notes might have been determined therein on the merits. Whatever the proceedings were in- the state courts, they stand here unquestioned.
The first question presented for decision is: Was the right of appellant to recover on the notes decided on the merits in the former suit ? This cannot be seriously claimed; neither the trial court nor the Supreme Court had any such idea and such was not the fact; and defendant Babcock has at all times known this. Appellant desired to get out of the circuit court for Roberts county and moved at the beginning of the trial and at its close to dismiss its action, but it was held for the purpose only of trying the issues arising on the counterclaim. The Supreme Court, on appeal from the judgment in reply to the suggestion of counsel for appellant that.Iverson could not recover only the value of the property alleged to have been converted, less the mortgage debt, used the language hereinbefore quoted, showing clearly that the Supreme Court' had no idea that the liability of the Iversons on the notes had in any wise been adjudicated in the court below.
By the clear weight of authority, the nonresidence of a judgment creditor is in itself sufficient ground to justify a court of equity to interpose and allow a set-off against the judgment. Especially would this be true if the judgment creditor be both insolvent and nonresident. North Chicago Rolling Mill Co. v. St. Louis Ore & Steel Co. et al., 152 U. S. 596, 14 Sup. Ct. 710, 38 L. Ed. 565, in which case it was said:
“In addition to insolvency, it is field fiy many well-considered decisions, including tfiose of Illinois, tfiat tfie 'nonresidence of the party against wfiom tfie set-off is asserted is good ground for equitable relief. Quick v. Lemon, 105 Ill. 578; Taylor v. Stowell, 4 Metc. (Ky.) 175; Forbes v. Cooper, 88 Ky. 285, 11 S. W. 24; Edminson v. Baxter, 4 Hayw. (Tenn.) 112 [9 Am. Dec. 751]; Davis v. Milburn, 3 Iowa, 163. It is not deemed necessary to review’tfiese cases and make quotations from them. They fully establish tfie principles for which they are cited.”
In Loy v. Alston et al., 172 Fed. 90, 96 C. C. A. 578, it was said:
“If tfie court below should decline to grant relief in this suit, the complainant must pay the amount due upon the judgment against him, and then bring another action at law in North Carolina upon his Missouri judgment and collect the judgment he may recover in that action * * * by subsequent execution or other process issued in that state. This remedy is not as prompt, efficient, and adequate as the simple decree of this court that Alston shall credit on the judgment it has rendered in his favor the amount due to Loy on the judgment against Alston in the state court.”
We are not called upon in this case to determine what might have been done if defendant was here asserting an attorney’s lien for a reasonable amount for the reason that the defendant has become the owner of the judgments and the liens no longer exist. The lesser interest has been merged in the greater. We certainly, as a court of equity, could not treat the whole amount due on these judgments as an attorney’s lien and give it precedence over the right of the appellant to .set off the amount due on the notes against the judgment. Upon the whole record we are of the opinion that the judgment below must be reversed and the case remanded, with instructions to the trial court to grant the relief prayed for in the bill.
And it is so ordered.