Case ID: scl_31/html/0386-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Curia, per Wardlaw, J. O’Neall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James S. Colburn vs. William Matthews.
    
    The defendant purchased from the plaintiff a judgment against C D, and gave his bonds for the purchase money. Held, in an action on the bonds, that the defendant might shew that the judgment had been fraudulently confessed, and was therefore void as against the creditors of C D, and that the defendant had been deceived and injured by the false and fraudulent representations of the plaintiff, that the judgment was valid and bona fide.
    
    
      Before O’Neall, J. at Charleston, Spring Term, 1845.
    The report of his Honor the presiding Judge is as follows :
    “ This was an action of debt on several bonds of the defendant. The defence stated to me, and as I noted it at the time, was ‘failure of consideration.’
    “ H. A. DeSaussure, Esq., was sworn, and proved the execution of the bonds. On his cross-examination, he stated the transaction out of which the bonds arose. He said various notes of B. P. Colburn & Co., were placed in his hands for collection by the plaintiff; that after various negotiations, the firm confessed judgement to the plaintiff, 12th June, 1841, for $51,123 33-100, debt, and $18 75-100, costs. After some time, it was found that this judgment would swallow up all the assets; and then B. P. Colburn and Isaac Mordecai began to contest the matter with the plaintiff. Mr. Matthews, also, came into the controversy, and after some time a compromise was effected by Mr. DeSaossure and M.r. Memminger, and Mr. Matthews became the purchaser of the judgment, for, perhaps, eleven or twelve thousand dollars, and gave several bonds of two thousand four hundred dollars each. The judgment was regularly assigned to him. The judgment is unreversed and in full force. The proof proposed to be given, to make out the defence, was, that the judgment confessed by B. P. Colburn & Co. was fraudulent, inasmuch as it was alleged that James Smith Colburn, the plaintiff, was one of the firm. I thought, and so ruled, that the assignee of the judgment could not question its bona fides ; and generally, that a judgment could not be impugned by the parties for fraud, in this collateral way. 1 further thought, that if the allegation was true that James S. Colburn was one of the firm of B. P. Colburn & Co., the assignee of the judgment, if he had any remedy on that account, must have it in another form.”
    The jury, under the instructions of the presiding Judge, found for the plaintiff.
    The defendant appealed, accompanying his notice of appeal with a statement of what he had proposed to prove. The statement and ground of appeal are as follows :
    The defence was, that defendant, being indorser on the notes of B. P. Colburn & Co. to a large amount, purchased a judgment held by James S. Colburn against the said firm, (which had stopped payment,) and which judgment would swallow up all their assets. For the purchase of this judgment, the bonds in question were given. The plea was fraud. That James S. Colburn, being secretly a partner of the said firm, procured himself to be made a judgment creditor, under false pretences; and by aid of this judgment so procured, imposed upon an innocent in-dorser, and induced him to buy the said judgment to save himself as indorser, when, in fact, the plaintiff, as partner, was liable on the very notes which the said indorser had to take up; thus procuring from him bonds without any equivalent consideration. His Honor, the presiding Judge, refused to permit the defendant to go into the proof of the facts, inasmuch as they would impeach the validity of a judgment of this Court. Defendant appeals from the decision of the judge, and asks a new trial, on the following ground:
    Because his Honor erred in deciding that the evidence, under the circumstances, was inadmissible.
    
      Rhett and Yeado?i, for the motion.
    Mazyck, contra.
   Curia, per Wardlaw, J.

The defendant filed two pleas : First, that the bonds were procured by certain fraudulent representations, made by the plaintiff to the defendant : Second, that they were void for fraud generally. A single replication to the two pleas traversed all fraud as alleged, and issue was joined.

In support of the first plea, the defendant offered to prove that J. S. Colburn, the plaintiff, was a secret partner with B. P. Colburn <fc Isaac Mordecai, and that the judgment for which the bonds were given was fraudulently confessed by the ostensible partners to the secret partner.

Now it may be that, upon the second plea, the defendant was estopped by his seal from contesting the consideration of the bonds, and that the only fraud he should have been permitted to shew, was such fraud as made the bonds void ab initio, — that is, fraud in the execution of the bonds, and not fraud in the previous transactions which induced them, (6 Munf. 358; 2 Johns. R. 177,) and it may be that the first plea was bad, and should have been met by a demurrer. (See Cowp. 47; 13 Johns. R. 430.)

But the evidence offered was pertinent to the issue joined on the first plea, and, (without deciding whether a repleafier or a judgment for the defendant should have followed a general verdict for the defendant, upon an issue joined on the first plea only,) it is sufficient to say that, upon the trial of the issue, the evidence should have been heard. (6 Munf. 120 ; 2 Rand. 426.) Of itself, it would not have availed the defendant, but accompanied by proof of the defendant’s having been induced to give the bonds by representations that the judgment was bona fide, and of injury that had resulted to him from the misrepresentations, this'evidence might have sustained the affirmative of the issue.

The circuit judge seems to have supposed that it was incompetent to inquire concerning the judgment. No doubt, that judgment was binding between the parties, and was conclusive of the indebtedness of the defendants in the judgment to the assignee of the judgment, as, before the assignment, to the plaintiff in the judgment. But it will be seen that the inquiry, needful in investigating the alleged fraud, and really proposed, was not into the validity of the judgment, but into its money value. A fraudulent judgment, good between the parties, but void as to creditors of the defendant in the judgment, when imposed upon a purchaser as a bona fide jttdgment, is just like a mortgage in similar circumstances. If the purchaser might shew that he had been defrauded by deceitful representations concerning the character and value of the mortgage, so should he be permitted to shew the like representations concerning the judgment, whereby he was induced to purchase, as valuable, that which was worthless and unproductive.

Very difficult questions may hereafter arise in the case: shall any fraud established, sustain the plea, and thereby defeat the whole bonds? — or may there be an assessment of the sum really due on the conditions of the bonds, after abatement for'the fraud ? If the former, shall the defendant, who, by the fraud, has lost something, still retain the judgment, without inquiry into its value? — and, if so, shall this be a total loss to the plaintiff, or may he, by other proceeding, recover back the true value of the judgment ? If the latter, shall the abatement, for loss by the fraud, be absolutely of the whole amount of loss, or only .relatively of that amount, adjusted according to the proportion between the price paid for the judgment and its nominal amount, or between the price paid and the real value of the judgment?

Most of these questions would have been avoided if the defendant, according to our practice, in admitting these equitable defences to actions on bonds, had claimed, by way of discount, damages for the failure of the consideration of the bonds by deceit or otherwise ; and, perhaps, upon some of the questions, a judgment more suitable to the practice of a law court might have been obtained by different pleading on the part of the plaintiff. Having been brought-into this discussion, these questions are now only hinted at, that it may be seen they have not been decided, and that the parties may shape their courses according to the views they may respectively take of them. The motion is granted.

Richardson, Evans, Butler and Frost, JJ. concurred.

O’Neall, J.

dissenting. In this case, I trust that, without the slightest feeling of disrespect to the judgment of a majority of my brethren, I may be allowed to express the deep regret which I entertain, that such a decision should ever have been made. It seems to me to unsettle every thing, and that, hereafter, it will only be necessary to plead or allege fraud, and every door of the common law will be opened by its magical influence.

Heretofore, I had supposed that, until the judgment of a court of competent jurisdiction upon the same matter is reversed in a course of regular proceedings on it, a resort to any other tribunal, or to the same tribunal, for its judgment on the same controversy, is inadmissible. Cottom vs. Cottom, 4 Rand. 192. In Peck vs. Woodbridge, 3 Day, 30, it is said, in affirmance of the same principle, that, a judgment obtained fraudulently, must be impeached directly by writ of error. Here, having no such proceeding, the same end may be attained by rule to shew cause why the judgment should not be set aside for fraud, or by a suggestion setting out the fraud and claiming that it should be tried by a jury. Posey vs. Underwood, 1 Hill, 262.

The relation which the defendant bears to the judgment of this plaintiff against B. P. Colburn & Co. must be first ascertained, before we can apply the legal principles which I have stated, and shall hereafter state. It cannot be denied that he is a privy in every legal sense. He is the assignee, and entitled to sue upon it m his own name. This makes him essentially the plaintiff in the case. He has become, for all purposes involved in this question, the same as James S. Colburn; and would he be allowed, in this collateral way, to aver that the judgment was fraudulent 'l Such a proposition would be scouted, as too absurd to be mentioned, yet that is exactly what the court is permitting him to do here. The defendant, the assignee of that very judgment, asks to be allowed to shew that it was fraudulent, and the court answer, “ yes, you may shew it was fraudulent against you !”

The leading case at law, on this subject, Prudham vs. Phillips, Amb. 763, pointed out the very distinction which is violated by this judgment. In it, Willes, C. J. said, there is a distinction between a “ stranger who cannot come in and reverse the judgment, and must, therefore, of necessity, be allowed to aver it was fraudulent, and the case of one xoho is a party to the proceedings. If he plead the judgment was fraudulent, he cannot give eviedence of it, but must apply to the court, which pronounced the sentence, to vacate the judgment; and if both parties colluded, it was never known that either of them could vacate it.” This last clause of the C. J’s judgment, covers the case before the court. The allegation is, that B. P. Colburn & Co., and James S. Colburn, colluded together to set up a fictitious judgment. Neither of them could vacate it, and yet the assignee of one of them, it is said, may. How that can be, I confess I have yet to learn. For, as I conceive, the assignee has the rights of his assignor, and no more.

But, it is said, the fraud is in the purchase, as that by false pretences the defendant was induced to buy a judgment which was fraudulent, and void against him, as an indorser. To say nothing of the impropriety of giving here an opportunity of explaining an offer of evidence made on the circuit, it will be enough to say that the evidence, thus enlarged, leads exactly to the same result which, in a narrower form, was proposed on the circuit. If the defendant can now shew that that judgment was fraudulent as against him, before he bought it, it is, in law, permitting a party or privy to aver and prove, collaterally, fraud in the judgment. This, I apprehend, cannot be done by the defendant ; for, in the first place, his purchase of the judgment concludes him. As well might a man, having all the means of information before him, say, I bought my own land; it was, therefore, a fraud. But, in the next place, until 'the defendant had vacated the assignment, he could not be allowed to make any such defence; for he is, at law, the plaintiff in the judgment of James S. Col-burn against B. P. Colburn & Co. The defence, if it be any thing beyond a mere shadow, is as clear an equity as ever I have met with. It is, that James S. Colburn was a dormant partner of the firm of B. P. Colburn & Co., and liable therefore, (I suppose) to pay the very debt for which this judgment was confessed, and the debts of which Mr. Matthews was the indorser. At law, that is no fraud; for it may be that, as between the partners, the two who confessed the judgment, ought to pay the other ; but in equity, as a partner, he may be charged to pay Mr. Matthews’ in-dorsement, and this very debt of the defendant be declared liable, as partnership assets, for the same purpose.

I understand some of the court think, that as this matter was pleaded and issue joined upon it, it ought- to have gone to the jury. But surely, if the whole evidence, offered under the plea, made out no legal defence, it cannot be that a Judge is to hear it all, and then tell the jury it is not worth a straw. In our deference to jury trials, we are every day destroying the independence of the judiciary, and, in a short time, it will come to this, that a Judge must hear every thing and decide nothing, and we shall be swallowed up in the great vortex of popular opinion, as indicated in a jury trial. No one venerates the trial by jury more than I do ; no one desires its just preservation more sincerely; but if every matter is to go before them, as is contended for here, because it has been pleaded, I think all its value will be ended, and, in its supremacy, the law will perish.