108 Va. 542 | Va. | 1908
Lead Opinion
delivered the opinion of the court.
"On or about the 27th day of July, 1890, Charles Selden and wife executed their joint note to the Baldwin Avalon Fertilizer Company, in the sum of $1,914, payable three months after date to the order of the fertilizer company, without offset; negotiable and payable at the Citizens Bank of Richmond, Va., the note being executed under the following circumstances:
One of the makers’ sons was employed by the fertilizer company, and wished to purchase 500 shares of the stock of the company; and the note was executed, upon the promise on the part of the fertilizer company that it would issue the shares of stock to the son of the makers of the note; but this the fertilizer company never did, nor have the makers of'the note, or either of them, or their son, received one cent of consideration for the note.
The fertilizer company owed to the Citizens Bank the sum of $890 at that time, and put the said note in that bank as collateral security for this debt; and afterwards the fertilizer company failed and went into the hands of a receiver. The Citizens Bank instituted suit in the Circuit Court of Elizabeth City county against the makers of the note, and recovered judgment thereon at the September term, 1892, for the face value thereof, with interest and costs, but on the margin of the judgment docket of the court the following endorsement is made: “Judgment released. Thomas Tabb, p. q. As this judgment was confirmed contrary to an understanding between counsel, and as a court of equity would give relief, the same is released. Thomas Tabb, p. q.”
At the March term, 1893, of the same court, the bank again recovered a judgment against the makers of said note for the sum of $1,914, with interest and costs, but to be credited by the sum of $981.22 as of the 24th day of December,' 1892. Eo execution ever issued on either of said judgments at any time.
In March, 1902, the bank, notwithstanding it had stated in its bill in the above mentioned chancery suit that the judgment belonged to the fertilizer company, instituted a scire facias proceeding for the revival of the judgment, and in that proceeding the following order was entered by the Circuit Court of the county of Elizabeth City, on May II, 1902:
“This day came the plaintiff (the Citizens Bank), by its attorney, as well as the defendants, by their attorney, and on motion of the plaintiff, by its attorney, it is considered by the court that the plaintiff may have execution against the defendants for nineteen hundred and fourteen dollars ($1,914) with interest thereon from the 30th day of October, 1890, and eight dollars and' sixty-one cents costs in the writ aforesaid specified; and also that the plaintiff recover against the said defendants its costs by it expended in suing forth and prosecuting this writ.”
In the execution book in the clerk’s -office of Elizabeth City county is found this entry:
“Citizens Bank oe Richmond
vs.
“Chaeles Selden and Wiee.
“Judgment on the 11th day of May, 1902, for the plaintiff against the defendants; and to have execution on scire facias for the sum of nineteen hundred and fourteen dollars, with interest thereon from October 30, 1890, and $8.61 costs in the
On May 21, 1902, the clerk of the circuit court issued an execution on this judgment, or order, as though it was a judgment quod recuperet, returnable to first July rules, 1902, no credit as in the original judgment being mentioned, and the execution was received by the sheriff of Elizabeth City county on June 17, 1902, but there was never any return of it. The clerk of Elizabeth City county, who went into office under the present Constitution on January 1, 1904, issued on May 17, 1904, returnable to first July rules, 1904, what he called an alias fi fa, upon the above mentioned order in the scire facias proceding, for $1,914, with interest from October 30, 1890, till paid, and $19.31 costs, no mention being made of the credit on the original judgment upon which the scire facias proceeding was had; and this execution was returned endorsed by the sheriff “no effects to satisfy this execution.”
On the 6th day of January, 1904, the Citizens Exchange Bank of Richmond assigned, or attempted to assign, one of the above mentioned judgments to H. A. Williams, reciting that the Citizens Bank of Richmond, by an agreement made January 14, 1898, conveyed all of its assets of every kind to the Citizens Exchange Bank; and on the 26th of June, 1906, H. A. Williams filed his petition in two certain chancery causes pending in the Circuit Court of Gloucester county, to which Selden and wife were parties, and in which it was sought to subject their interest in certain property to the payment of the liens thereon, the object of Williams’ petition being to enforce the lien of the judgment assigned, or attempted to be assigned, to him by the Citizens Exchange Bank.
To this petition of Williams, Charles Selden filed his answer and amended answer, which were treated as a cross-bill, to which Williams filed his demurrer and answer; and the cause was referred to a special commissioner of the court, to inquire and report (among other things), “Whether or not there are
Selden and wife excepted to the commissioner’s report on the following grounds:
(1) Because the plea of the statute of limitations, filed by the exceptants, was not sustained, in so far as the judgment in the petition of Williams mentioned, obtained by the Citizens Bank of Eichmond against the exceptants, was concerned, and because the commissioner reported that the exceptants were precluded from making their defense by reason of laches;
(2) Because the proceedings mentioned in the report, on the scire facias sued out by the Citizens Bank against exceptants, stopped the running of the statute of limitations, and because the commissioner did not report that these proceedings on the scire facias were void, or at least voidable, and could he attacked collaterally;
(4) Because the commissioner reported that the judgment in question was a subsisting lien on the property of exceptants; and
(5) Because the commissioner also held that Williams was entitled to have the judgment in question paid to him.
All of these exceptions were overruled by the circuit court, and the report of Commissioner Ashby confirmed; and from the decree of the circuit court so ruling this appeal was allowed.
To this decree two errors are assigned; which present the two questions: Birst, Was the judgment asserted by appellee, Williams, barred by the statute of limitations when he filed his petition in said chancery causes?; and, second, Can a nonnegotiable chose in action (a judgment) be assigned, and, if so, does the assignee thereof take it subject to all the equities of the debtor against the assignor, existing at the time of the assignment ?
If the answer to the first question should have to be in the negative, but to the second in the affirmative, the appellants would prevail in this appeal, and, therefore, we shall take up for consideration the second question only, since, in the view we take of the case, the decree appealed from is erroneous in holding that the appellants are not entitled to the relief they set up against the judgment lien asserted against them.
“The recovery by the payee of a judgment on a note against the maker destroys its further negotiability” (7 Cyc. 524, 3 Min. Inst. 43); and therefore the judgment here in question was but a non-negotiable chose in action, which, though assign
It is also equally as well settled, that tbe assignee of nonnegotiable obligation can take no rights wbicb bis assignor did not possess, and generally make no defense be could not make. Stockton v. Cook, 3 Munf. 69; Meredith v. Salmon, 21 Gratt. 762; Michie’s Ann. 9 Gratt., supra; Prim v. McIntosh, 43 W. Va. 790, 28 S. E. 472.
As suggested by counsel for appellants, “tbe stream cannot rise higher than its source;” and if tbe Citizens Bank bad no interest in tbe judgment after appellants bad paid tbe debt for wbicb their note bad been deposited as collateral, wbicb it could enforce against appellants, it certainly could not, either indirectly or directly, assign tbe judgment to appellee, with tbe right to tbe latter to enforce its payment by appellants. When appellee acquired, if in fact be ever acquired, title to tbe judgment, be acquired nothing but tbe actual right and title of tbe Citizens Bank, and took that subject to all tbe equities to wbicb it was subject in tbe bands of tbe bank. Authorities supra, and Cussen v. Brandt, 97 Va. 1-9, 32 S. E. 791, 75 Am. St. Rep. 762.
It is well to bear in mind, in tbis connection, that the Citizens Exchange Bank and not tbe judgment creditor, tbe Citizens Bank, made tbe assignment to appellee; and there is no proof that tbe Citizens Exchange Bank ever owned tbe judgment or any • interest therein, other than tbe recitals in its attempted assignment to appellee. Every cent that tbe original judgment creditor, tbe Citizens Bank, could demand of appel
ISTor does their failure to make defense to the action at law, in which the judgment in the name of the Citizens Bank was obtained against them in 1893, sufra, or their failure to defend against the scire facias proceeding in 1902, preclude them from making the equitable defenses relied on in this suit. They could have made these defenses at law under section 3299 of the Code only, and that section and section 3300, left it optional in appellants whether they would or would not then make these equitable defenses; provided nothing occurred in the law actions which the statute declares precludes them from relief in equity; and it is not pretended that by the terms of the statute, as applied to what took place in either of said law actions, appellants should be considered as precluded from setting up their equitable defenses in this suit. It will be observed -that the original law action was upon a past-due negotiable note held as collateral for a debt of the pledgor for a much
“Where a chose in action is assigned as collateral security, the pledgee may bring an action upon it, and recover the whole amount, even though such amount exceeds the debt secured, the rule being that the pledgee, if he realizes more than the amount of the debt secured, shall hold the surplus as trustee for the pledgor;” but in an action by the pledgee of a promisory note which has been pledged to secure a sum less than the amount for which the note was given, the pledgee cannot deprive the maker of all equitable defenses against the pledgor, who is still a part owner of the note. 22 A. & E. Ency. L., pp. 898-899.
The statements of the law just quoted are supported by authorities cited in the foot note; and in the case in judgment it is to be noted that the pledgor of the note, the fertilizer company, never had at any time the right to enforce its payment, as the consideration for which the note was given had wholly failed; so that the equities set up by appellants were inherent in the note itself. When the judgment was recovered against appellants, the plaintiff bank being a nominal plaintiff, and the amount for which the note had been held as collateral having then been paid, and the fertilizer company, the pledgor, having no beneficial or equitable interest in it, appellants were entitled to equitable relief against the balance due on the note, and therefore the pledgee, the Citizens Bank, had no beneficial or equitable interest in it to transfer to the Citizens Exchange Bank, under whose assignment appellee claims the right to enforce payment of the judgment in this suit.
That there was an absolute failure of the consideration for which the note, upon which this judgment was obtained, was
The equities of appellant are manifest from what has been stated, and the essential to appellants’ right to set them up here, pointed out by the learned author to whom we have just referred, is fully met, as plainly appears from the record.
Appellee, in answer to interrogatories propounded to him by appellant, Charles Selden, states that he acquired, as an investment, the judgment in question on or about January 6, 1904; that the amount, $750, paid the Citizens Exchange Bank therefor “was his own money and nobody else’s;” but the fact remains that there is no proof in the record of any right in the Citizens Exchange Bank to the judgment, other than the mere recital in a copy of the assignment above mentioned, that this bank “had acquired from the Citizens Bank its assets,” etc. It will be observed that the Citizens Bank had declared in 1894 that it had no interest in the judgment; that the same belonged to the fertilizer company; and that the judgment was assigned to the bank as collateral only for a debt of $890 due from the fertilizer company, which had been paid, and not for collec
It cannot be that the Citizens Bank, after disclaiming any interest in or right to the judgment in question, for the reason that it had been assigned to it as a collateral only for a debt of $890, which had been paid, could have assigned or attempted to assign the judgment to appellee’s assignor, the Citizens Exchange Bank, and in the absence of proof of that fact it would not be presumed.
This being the case in judgment, a repetition of what was so well said by Carrington, J., in Pickett v. Morris, supra, is justified, viz.: “It would perhaps seem strange that a court of equity should not possess the power of relieving against a judgment at law, obviously unjust and against the right of the cause.”
The further contention of appellee, that the appellants are estopped to make defense in this suit by reason of their “gross
We are of opinion, upon the whole case, that the decree appealed from is erroneous, and that the appellants are entitled to the relief they seek; therefore, the decree will be reversed and annulled, and this court will enter the decree the circuit-court should have entered, dismissing appellee’s petition in the cause, with costs to appellants.
Reversed.
Dissenting Opinion
dissenting:
We are unable to concur in the conclusion reached by a majority of the court in this case.
We concede the correctness of the general proposition upon which the opinion is based, that the assignee of a judgment takes it subject to all equities of the debtor against the assignor. But in this instance the appellants are estopped from invoking that doctrine by the consent decree of September 22, 1894, pronounced by the Circuit Court of Elizabeth City county in the case of the Citizens Bank of Richmond, Virginia v. the appellants, et als.; which confirmed a commissioner’s report establishing the validity of the judgment in question. The decree, moreover, directed the sale of real estate belonging to Mrs.
Reversed.