Case ID: tenn_33/html/0330-01.html
Source: Caselaw Access Project
Author: {"author": "MoEjNNEy, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jacob A. Clodfelter vs. H. Cox, ad’mr, et al.
    
    1. Assignment. Of Judgment. Notice to the Debtor. An assignment of a chose in action is not complete, so as to vest the title absolutely in the assignee, until notice of the assignment to the debtor ; and this is so, not only as it regards the debtor, but likewise as to third persons. So, an attachment by a creditor in the period intervening between the assignment and the notice, will have preference over such assignment.
    2. Same. Same. Same. To perfect an assignment of a chose in action, not merely as against the debtor, but also as against creditors and subsequent bona fide purchasers, notice must be given to the debtor, and as between successive purchasers or assignees, he is entitled to preference who first gives such notice.
    3. Garnishment. Judgment in the Circuit Court. Jurisdiction of Justice of the Peace. A judgment in the circuit court cannot be reached by a garnishment before a justice of the peace.
    PROM DAVIDSON.
    This bill of interpleader was filed in chancery at Nashville, by the complainant Clodfelter, upon the state of facts fully given in the opinion. At the May Term, 1853, Chancellor Brien decreed in favor of respondents Oox and Loftwick, from which Langley, another respondent appealed to this court.
    
      HoustoN for Langley, with whom was Cabl'os DimicK who said :
    1. Is Langley’s right to the fund in controversy, defeated by his failure .to give Glodfelter notice of the assignment to him ?
    None of the English cases,- except those in bankruptcy, go the length of requiring notice as against creditors and volunteers, and these turn upon the peculiar wording of' the bankrupt law of 21 James I, and are not authority for the rule- contended for in this case, and I respectfully ask the court to distinguish between these and the other eases to which I shall allude. 2 White & Tudor’s Leading Cases, 235.
    The first case in which the question of notice was raised as between different assignees of the same fund under contract, was Cooper vs. Fewmore, 3 Russ., 60. 3 Con. Eng. Ch. Rep., 295, in which it was held that notice was not necessary, and the weight of authority in the United States, is decidedly that way. 2 White & Tudor’s Cases, 236. But since the cases of Dearie vs. ÍIáll,_ and Loveridge vs. Cooper, 3 Russ., 1. 3 Con. Eng. Ch. Rep., 266, it is now settled in England that .notice is necessary. But in all - the English cases, where notice has been held necessary, rights of third parties, rights created by contract had intervened, and they go no farther than to fix the rights of successive purchasers or incumbrancers of the same fund. These cases as well -as the subsequent cases in England, rest upon the negligence of the first assignee affecting the rights of innocent third parties; negligence - in consequence of which the original assignor was enabled to commit a fraud. See tbe principle of these cases and tbe reasoning of tbe court. 2 White & Tudor, 211. Now, do tbe facts of tbe case under consideration disclose any such negligence? What innocent third parties’ rights are to be sacrificed by such negligence, or has Langley’s negligence enabled Gilman to commit a fraud upon any one?
    Gilman was indebted to Langley ; be and Smiley bad become bound for Gilman as endorsers, and to pay the notes endorsed by them or secure tbe payment, Gilman wished to assign to them bis judgment against Clod-felter. Other creditors of Gilman were ready to seize upon tbe same fund. As soon as tbe judgment is rendered, Clodfelter is before Esquire Green as a garnishee, probably by a previous agreement, and judgment is rendered against him for this amount of Cox’s debt against Gilman. But Langley was a little before him, and while tbe jury were yet in tbe box, tbe assignment was made and entered in tbe minutes of tbe court, so that tbe very record Clodfelter would have to refer to, to ascertain tbe amount of his indebtedness, would inform him of tbe assignment. Is here any negligence on tbe part of Langley ? In fact, before Langley, by ordinary diligence, could have served Clodfelter with a notice of tbe assignment to him, tbe assignment was defeated by Cox’s • judgment. All tbe cases cited require,- is, that notice should be given in a reasonable time. But if Langley was guilty of negligence in not notifying Clodfelter of the assignment to him, where is tbe innocent third party who is to suffer by bis default? It is not material to Clodfelter, whether tbe fund in controversy be decreed to Cox or Langley. He has brought tbe money into court, and it can be no matter to him whose equity is adjudged tbe best. Then this is not a propel* case for the application of the rule as laid down in Dea/rle vs. Sail, and the other English cases, which had been decided without reference to the English bankrupt law.
    I have already stated that the .English decisions commencing with By all vs. Bowles, 2.Yes. Sr., 348, turned upon the peculiar wording of the act of parliament, 21 James I, and consequently cannot be referred to as authority in this case; and that they are the only class of English decisions which go the length of requiring notice of the assignment . as against creditors of the assignor. Nor did this court go that far in Fields vs. Marshall et als, decided at the December Term, 1851, of this court. In that case, Fields had been guilty of great negligence, in consequence of which Marshall had got hold of the money in controversy, under a decree of a court of chancery; and Fields came into this court as a complainant, asking for relief against his own laches, and so in the cases of Dea/rle vs. Sail, and loveridge vs. Gooper, 2 "White & Tudor, 212. That is not this case. Here Langley is not seeking the aid of this court, but is merely acting on the defensive, while the other party is seeking to enjoin him from pursuing his legal rights. The same distinction is' taken in Fvcms vs. Bichnell, 6 Yes., 173, and in Johnson vs. Irby, 8 Humph., 654, the right of the assignee was recognised as against the attaching creditor, no notice appears to have been given.
    2. Another point is perhaps worthy of consideration, and that is, that the English decisions were made principally in reference to the sale and transfer of annuities, and I believe in none of the cases has' the question been discussed in reference to the assignment of a judgment. And would not notice of the transfer of one be much more important to tbe rights of third parties than the other. Take, for instance, the case of Decuria vs. Hall, where the annuity transferred was created upon real estate, and the legal holder merely a trustee holding for the use and benefit of the cestwí que trust, and bound to appropriate according to the directions of the beneficiary. He' would, therefore, be the proper person to go to for information in regard to the property, for which the beneficiary could not be relied on. But how different is the case of a judgment. The judgment debtor usually has but little to do with his creditor, and in the ordinary transactions of life, would be the last person a man would go to for information in regard to the transfer of a judgment. The sheriff usually manages the collection ; the money is paid to him, he satisfies the execution and pays over the money to the proper person, the judgment debtor having no control over the appropriation or disposition of the money, and it seems, therefore, upon principle, if notice were required to be given to any one, it should be given to the sheriff. It has been assigned as the reason of -notice being required to be given to the debtor, in cases of the transfer of debts, that such system is equivalent to delivery; that the debt is thereby placed' beyond the assignor’s control, the debtor from the time of the notice becoming a trustee for the assignor. 9 Ves. Bep., 408. But is this the case in regard to a judgment debtor? Suppose A transfer a judgment to B, who thereupon notifies 0, the judgment debtor of the assignment, is not C still bound to pay the money to the sheriff who has the execution, and when paid can he direct the sheriff to whom he shall pay the money, or will he be responsible in any manner for its appropriation ? Certainly he would not; and then" would it not be idle, in such a case, to require notice to be given to the judgment debtor?
    3. The proceedings before the justice of the peace were void and consequently created no lien upon the .fund in controversy. A judgment of the circuit court cannot be subjected to the-payment of the judgment creditor’s debts, by merely bringing the judgment debtor before the justice of the -peace as a garnishee. It can only be done by attachment in the chancery court, where all the parties can be brought before the court, and when the judgment of the court may be perpetually enjoined. Any other practice would be inconvenient and ''in many cages oppressive to judgment debtors. The magistrates, upon giving judgment against a garnishee in such a case, could- not enjoin the collection of the execution from the circuit court, and consequently the garnishee might be compelled to pay both judgments, or at least be compelled to incur the trouble and expense of a chancery suit to relieve himself from liability on both judgments. Such a practice was never contemplated by the Legislature. The act of 1843, ch. 65, § 1, would seem to be a legislative construction of the law upon this subject. That law provides for cases, where the original judgment against a garnishee was rendered by a justice of the peace, but makes no provision for cases where the original judgment was in the circuit court, which is an implied denial of the right of garnishment in such cases. Eor the above reasons, I think the money in controversy should be decreed to Langley and Smiley.
    
      
      ~W. F. Coopee, for Herman Cox administrator.
    1. Hpon reading Gilman’s own deposition in tbis case, taken by Langley, it is difficult to resist the conclusion that the pretended transfer to Langley of the judgment against Clodfelter, was merely colorable, and intended to hinder and delay Gilman’s creditors.
    2. Be this as it may, the proof satisfactorily establishes that the garnishments wei’e served upon Clodfelter, and judgments rendered thereon, before Clodfelter had any notice of the supposed assignments to Langley. Clodfelter is a perfectly disinterested witness, having paid the money into court before Ms deposition was taken, and swears distinctly and unequivocally that he never heard of said assignment until about the first of September after the judgment was rendered against him. Gilman’s testimony upon re-examination, was manifestly made up to cover the case. He is interested in feeling, if not to such an extent as to render him incompetent as a witness, at least so far as to induce the court to take his statements with some grains of allowance. And his previous deposition is not su.ch as to give him a commanding status in court. Besides, the conversation with Clodfelter, admitting that it actually occurred as stated, was not intended as a notice to Clodfelter, but a mere casual remark made in the course of a conversation upon a different subject. If the courts require notice of an assignment to be given to a debtor, it must be a formal notice, coming from the assignee, and intended as such to perfect his right to the chose assigned, and to put the debtor upon his guard. That the assignment of a chose m action is only perfected by notice to the debtor, and that a subsequent assignee with notice will be preferred to a prior assignee without notice may now be considered the settled doctrine of this court. Having twice before argued this very question before this court, it is scarcely necessary, I presume, to do more than refer to the adjudged cases. Ma/rshall vs. Fields, decided at the December term, 1850, and T. L. Me Gee et als. vs. Nelson et als., decided at the December term, 1851. In the last of these cases, the decree in which is filed with this brief, the very point raised in this case, is expressly decided. That was the case of a contest between a creditor attaching a debt due by decree of the court of chancery, and an assignee claiming the same by previous assignment in trust, and duly registered, but of which no actual notice had been brought home to the debtor. The court held that the attaching creditor was ■ entitled to be first satisfied.
   MoEjNNEy, J.,

delivered the opinion of the court.

This was a bill of interpleader. The case as presented by the pleadings and proof, is briefly this. On the second day of June, 1852, one Gilman recovered a judgment in the circuit court of Davidson, against the complainant for the sum of $467 68. Instantly, upon the verdict being announced,- and perhaps before the jury had retired from the box, Gilman, by a writing-under seal, assigned and transferred the said recovery and judgment to the defendant Langley, for the indemnity of himself and one Smiley, as the endorsers of Gilman on a note for $500, which liability was incurred upon the faith of an assurance that such an assignment would be made when judgment was recovered. This assignment was spread upon tbe minutes of tbe court, but no notice of tbe assignment was given to tbe judgment debtor.

On tbe same day, and very shortly after tbe foregoing assignment was made, tbe defendant Oox, as administrator of one Tooney, with, tbe view of obtaining satisfaction of judgments recovered against Gilman, before a justice of tbe peace of Davidson, on tbe seventh of February, 1852, one for $201 43,. and tbe other for $202 23, caused a garnishment to be served upon tbe complainant, summoning Mm to appear before tbe justice on tbe same day, at tbe hour of 2 o’clock. In obedience to this process, Olodfelter, tbe complainant, appeared 'before said justice, who rendered judgment against him as garnishee, for the amount of said two judgments with interest and costs. These judgments against tbe garnishee were stayed by him for the period of eight months. Before tbe expiration of tbe stay of execution upon tbe justice’s judgments against tbe complainant as garnishee, an execution issued against him upon tbe circuit court judgment, for tbe full amount thereof, which was levied upon bis property, and thereupon, be brought this bill of interpleader, offering to pay tbe money into court, . and praying the court for bis safety,'to decree to which of said parties tbe same properly belonged. Tbo chancellor held that tbe right of Langley was not perfected, on tbe ground of want of notice of .the assignment to tbe debtor, and decreed that tbe money should be applied to the satisfaction of the justice’s judgments on the garnishment.

1. If there were no other question in tbe case than that upon which the chancellor based his decree, wo should hold that his conclusion was correct. There is 'an irreconcilable conflict of authority upon this subject. The weight of American authority seems to be, that the assignment of a chose m action is complete in itself, and vests a perfect title in the assignee, as against third per-sons, without notice of the assignment to the debtor. But the contrary of this, is 'the settled doctrine of the English, as well as of some of the courts of this country,at the present day. The latter we consider as the more reasonable and safe practical rule, and have accordingly held, on more than one occasion, that the assignment of a chose m action is not complete, so as to vest the title absolutely in the assignee, until notice of the assignment to the debtor; and this not only as regards the debtor, but likewise as to third persons. And, therefore, as "between successive purchasers or assignees of a chose in action, he is entitled to preference who first gives notice to the debtor, although his assignment be subsequent to that of the other. To perfect the assignment not merely as against the debtor, but also as against creditors and subsequent Iona fide purchasers, notice must be given. Hence it follows, that an attachment by a creditor, in the period intervening between the assignment and the notice, will have preference.

This doctrine furnishes a definite rule for determining between opposing equities; and places the rights of the assignee of a chose in action upon a footing of security altogether unattainable under the opposite rule. See the cases English and American. White & Tudor’s Leading Cases, vol. 2. part 2, 209 to 240.

2. But another question is presented. Can the proceedings by garnishment be maintained in a case like the present? "We are aware of no decision upon this question; but it seems to us that upon no sound exposition of our statutory proceedings upon this subject, can the remedy by garnishment be held applicable to a case like the present.

It is true, that neither in the act of 1815, nor in any other of the statutes relating to this mode of proceeding, .is there any distinction made as to the character of the debts liable to be reached by garnishment. But there would be a palpable incongruity in giving such a construction to these statutory regulations, as would subject a debtor, whose liability has been already ascertained and fixed by the judgment of a court of record, to a second judgment for the same indebtedness, before a tribunal so constituted as, (all other objections aside) to possess no power by injunction, or in any other mode, of protecting such debtor from his existing liability upon the previous judgment in court, and thus leaving him exposed to executions upon both judgments. The act of 1843, ch. 65, provides a remedy against this mischief, so far as relates to judgments rendered before a justice of the peace, but it goes no further. It cannot well be supposed, that the Legislature intended that the solemn judgments of courts of record should be embraced in this proceeding by garnishment before justices of the peace, and we are not inclined to go in advance of legislation, in extending their jurisdiction in any case.

In cases like the present, the jurisdiction of a court of equity is equally ample and well established; there is the less reason, therefore, for a forced construction of our garnishment laws, in order to support the jurisdiction of justices in such cases. To this length we are not at present prepared to go. The force of this reasoning is not lessened, because the garnishee debtor may be protected by a bill in equity, or supersedeas in the court of law; it is unjust to Mm, to subject Mm to the necessity of this expense and trouble, when the mischief can be altogether avoided by the usual mode of proceeding in the proper forum.

In this view the decree is erroneous, and will be reversed.