17 S.E.2d 795 | W. Va. | 1941
About August, 1924, plaintiff, Joe Perkins, then a resident of McDowell County, West Virginia, made a visit to his sister, Lista Hall, the wife of Joseph Hall, who then lived in Marion, Ohio. Shortly prior to this visit, Perkins had suffered the loss of a leg, and was in financial straits. He was seeking some occupation by which he could provide a livelihood for himself and wife. He learned that a restaurant in Marion was for sale, and after some negotiations with the owner the same was purchased at the price of $2,000.00. Under the terms of the purchase, he was required to pay $1,000.00 in cash and the residue in monthly installments of $100.00 each. The $1,000.00 cash payment was secured by a loan from the Marion Savings Bank, for which Perkins, Joseph Hall and Lista Hall executed to said institution their note for $1,000.00, dated September 29, 1924, payable six months after date, which note contained this provision:
"And we hereby authorize and empower any Attorney at Law of any Court of Record, at any time after the above note becomes due, to appear for us, or any of us, without process, in any Court of Record in the State of Ohio, or elsewhere, and confess a judgment for the said amount, interest and costs in favor of the payee, *709 legal holder, indorsee, or assignee hereof, and release all errors which may accrue in the rendition of such judgment. * * *."
A chattel mortgage was executed by Perkins to secure the payment of the ten deferred purchase money notes, and a second chattel mortgage given to secure the payment of the note to the Savings Bank both covering the restaurant property so purchased. Perkins operated the restaurant for about two months, paid two of the $100.00 notes and then, for reasons which are in dispute, he gave up the restaurant, left Marion and returned to West Virginia, where he has since resided. Lista Hall and her husband operated the restaurant a short time, two weeks at the outside, when it was surrendered to the original owner, Beck, who afterwards sold the same to one Murphy, and out of the proceeds of the sale satisfied the remaining deferred installments of purchase money then due him. On March 2, 1925, twenty-seven days before the $1,000.00 note held by the Marion Savings Bank was due, Joseph Hall and Lista Hall paid said note, and at that time the Savings Bank made the following indorsement on the back thereof: "Joseph Hall and Lista Hall, accommodation makers having paid this note, the same is endorsed to Joseph Hall and Lista Hall without recourse." On the 30th day of January, 1933, Joseph Hall and Lista Hall obtained a judgment on said note for the sum of $1,832.15, in the Court of Common Pleas of Marion County, Ohio. This judgment was obtained by a confession made by a member of the bar of said Court, under the provisions of the note quoted above. There was no other appearance on behalf of Joe Perkins, he was not served with process, and had no notice of the action prior to the date the judgment was entered. In the year 1936 Joseph Hall and Lista Hall instituted, in the Circuit Court of McDowell County, West Virginia, their action in debt on the judgment aforesaid, whereupon Perkins instituted this suit for the purpose of enjoining the further prosecution of said action at law.
Plaintiff's bill sets up the transactions with reference to the purchase of the restaurant, as outlined above. It alleges *710 that just prior to leaving Marion, Ohio, and returning to West Virginia, he, the plaintiff, entered into an agreement with Joseph Hall and Lista Hall, by which they took over the restaurant, and assumed all liabilities in connection therewith, including the amount due the Marion Savings Bank; and it is further averred that in securing the judgment on the said $1,000.00 note, the said Joseph Hall and Lista Hall perpetrated a fraud which rendered said judgment void. Primarily the bill is based upon these allegations of fraud, but the bill also avers that by "payment by the said Joseph Hall and Lista Hall of the $1,000.00 note, as they had greed to do, the note became extinguished for all legal purposes whatsoever," and further averred, referring to the suit in which the said judgment was obtained, "that no process in said suit, notifying him of the bringing of the same or the pendency thereof, was ever served upon this complainant; that he never at any time appeared in person or by attorney in said suit; that he never submitted himself to the jurisdiction of the court wherein the said suit was instituted and prosecuted to judgment; that he never authorized any attorney or other person to appear for him or in his behalf in said suit or for any purpose whatever, and especially, that he never authorized any attorney or any person to appear in his behalf and confess judgment against him, as was done or undertaken to be done in said suit." In the prayer of the bill, referring to the fraud complained of, it is stated, "and that, for this reason, the said court never obtained or had jurisdiction over this complainant in said proceeding." The prayer is that Joseph Hall and Lista Hall be restrained and inhibited from further prosecution of their action at law in the Circuit Court of McDowell County, and that they be required to deliver to the plaintiff possession of the $1,000.00 note, dated September 29, 1924. The Circuit Court of McDowell County, upon a full hearing of the cause, denied plaintiff any relief and dismissed his bill, from which action Perkins prosecutes this appeal.
Joseph Hall and Lista Hall rely upon Section 1, Article IV of the Constitution of the United States, which provides *711
that, "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State * * *." This Court, in Coleman v. Waters,
That question is one of fact, and has been determined adversely to the claim of Perkins. Many circumstances developed by the record, including the long and practically unexplained delay in instituting their action in the Ohio court, indicate that the Halls did take over the restaurant. before Perkins returned to West Virginia in December, 1924, and dealt with it as their own property. If the court, upon the record, had found in favor of Perkins on that issue, we would not feel disposed to disturb its ruling. However, upon highly conflicting testimony, it found otherwise, and, giving due weight to its decision, we will. not disturb the same. We, therefore, hold that fraud in the procurement of the judgment in question has not been established, and that if the Court of Common Pleas had jurisdiction to render the same, it must be given the full faith and credit to which it is entitled under our Federal Constitution. *714
It is assumed that the Court of Common Pleas of Marion County, Ohio, had jurisdiction of the subject matter involved in the suit instituted therein, in the sense that, if it also had jurisdiction of the parties, a judgment rendered by it would have been legal and entitled to full faith and credit in this state. However, the judgment sought to be enjoined in the suit before us is based upon a personal judgment, and to obtain that judgment there must have been service of process on the defendant, Perkins, or an appearance by him either in person or by attorney. It is admitted that there was no service of process, and if there was an appearance on the part of Perkins, it was through an attorney, and under authority of the power of attorney contained in the note involved. If by the payment of said note on March 2, 1925, by two of the makers thereof, the same was discharged, then the power of attorney authorizing confession of judgment was no longer of any force. We are, therefore, met squarely with the proposition of determining whether the payment of the note in the circumstances admitted amounted to a discharge thereof.
There seems to be some confusion on the point of defining who is primarily, and who secondarily liable on a negotiable instrument. Unquestionably indorsers are secondarily liable, but a surety may be, and usually is, primarily liable. Under the negotiable instruments law, Ohio General Code, Section 8226, corresponding to our Code, 46-8-3, an instrument paid by a party secondarily liable is not discharged. But is a maker of a note under any circumstances a person "secondarily liable"? Section 8296 of the Ohio Code, our Code, 46-17-2, provides, "The person 'primarily liable' on an instrument is the person who by its terms is absolutely required to pay it. All other parties are 'secondarily' liable." Applying this statute to the note involved herein, Joe Perkins, Joseph Hall and Lista Hall were all primarily liable, because each of them was absolutely required to pay the same, and when paid by them the note was, we think, discharged.
While the force and effect of the Ohio judgment must be governed by the law of that state, we feel warranted *715
in resorting to the decisions of other states bearing on the question of the discharge of a note when paid by the makers or one of them. We think it has always been the law that the payment of a negotiable instrument, at or after maturity, by the makers thereof, or any of them, extinguishes the note, and nothing in the negotiable instruments law weakens that proposition. In Cussen v. Brandt,
We do not think the rule in Ohio is different from that so strongly upheld by the decisions above cited and discussed. InZuellig v. Hemerlie,
Many cases could be cited which are in apparent conflict with the view we have expressed, but such conflict is not real. The discharge of a negotiable instrument, while destroying its force, as such, may, at the same time, create new obligations, as between the parties thereto. For example, as between several makers of such an instrument the moral obligations to pay the same may rest on one or more of them. In such cases, where the obligation is discharged by one, for the benefit of him whose duty it was to pay the same, the law creates an obligation in favor of him who pays against him who should have paid, on which a suit or action may be founded as circumstances may require. Subrogation, an equitable right, arises; and contribution may be enforced in equity, and, generally, at law. In most states, a statutory action at law is provided for. It is so with us. Code,
It should be stated here that "authority to confess judgment without process must be strictly pursued, and that all proceedings in the confession of judgment must be within the strict letter of the warrant of attorney. An attorney acting under a warrant may not change its terms or enlarge its scope." 31 Am. Jur. 116. While we have no disposition to restrict or circumscribe the right and power of courts of a sister state to render judgments upon confession, in the circumstances developed by this record, yet power granted to attorneys to confess judgment, contained in a note, are not recognized in the courts of this state, and we feel inclined, in keeping with our general *719 policy, to strictly construe them as applied to judgments taken in states where they are recognized, and which are sought to be enforced in this state. The note here in question was executed by three makers, and the power of attorney incorporated therein authorizing confession of judgment, applied to each of the makers, and in a sense became a part of the contract between them. It was not, we think, contemplated that such power of attorney could be used to take the place of remedies of subrogation or contribution. If, as a matter of fact, the Halls were accommodation makers of the note for Joe Perkins, they were nevertheless primarily liable. There was an implied undertaking on the part of Perkins to repay to them any sum which they might be called upon to pay by reason thereof, but this implied obligation in their favor could not be enforced by the use of the power of attorney, contained in an instrument which had been extinguished by payment. That power of attorney was limited to confessing a judgment against all of the makers, and, independent of the extinguishment of the note by payment, the right of the Halls as against Perkins was one growing out of an implied obligation, which could only be enforced through the regular service of process, or by appearance in person or by attorney in answer thereto.
Lack of jurisdiction on the part of the Court of Common Pleas was apparent upon the face of the record. As stated above there was no service of process, and there was no personal appearance on the part of Perkins. There was appearance on the part of the attorney assuming to act under authority of the power of attorney embodied in the note. On the back of the note was an indorsement showing that the note had been paid by two of the makers, which was notice to the court that the note had been thereby extinguished, and the force of the power of attorney absolutely destroyed. The court had, therefore, the simple case of an action at law where there was neither process against, nor legal appearance on behalf of the defendant, and it was without jurisdiction to enter any judgment therein.
Another question fairly developed by the record is *720
whether plaintiffs' bill, being based primarily on an allegation of fraud in the procurement of the judgment is sufficiently definite in its charge of lack of jurisdiction. The question is definitely raised in the petition for appeal to this Court, and in the appellant's brief. We have held that "Equity having acquired jurisdiction of a cause for one purpose, although the relief sought be finally denied, any relief, legal or equitable, justified by the pleadings and tending to end litigation between the parties, will be granted." Evans v. Kelley,
The decree of the Circuit Court of McDowell County will be reversed and the cause remanded for further proceedings.
Reversed and remanded.