Case ID: la-ann_10/html/0482-01.html
Source: Caselaw Access Project
Author: {"author": "Slidell, 0. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Same Case on a Re-hearing.
    
      ElUs was the creditor of Fisher^ Burgess & Co. The firm of King <& Fisher was the creditor of ElMs. The firms of Fisher, Burges* <& Co. and King <& Fisher, are in legal contemplation two distinct ideal persons. Up to the date of the plea of compensation, there was no assignment by K. & F. to F., 13. & Oo., or other act by which the ownership of the debt due by ElMs was divested out of the firm of Kmg <& Fisher, and became vested in F., B. & Oo. Compensation did not take place by mere operation of law. By issuing executions on their respective judgments, the parties considered the debts as not compensated, by mere operation of law.
    Should it be conceded that King & Fisher assented that • Fisher, Burgess <& Co., of which firm ' they were partners, should treat the claim as their own, such assignment, resting only upon implication from the plea, must take date from the filing of the plea.
    The notification of the assignment of the judgment by Filis to Milbanh & Co. having taking place before the filing of the plea, Fisher, Burgess & Co. have no right to plead in compensation against MübaAih <fb Co., a claim against Ellis, acquired after ElUs made his assignment.
    The assignment to MUba/iih c& Co., although made with the understanding that they should credit ElUs, the transferer, with whatever they could collect, is not unlawful.
    
      Milbanh <& Co. having previous to the assignment seized the judgment obtained by ElUs v. F. B. & Co., and having caused it to be advertised for sale, the amicable transfer to prevent a sacrifice, does not constitute an unjust preference.
    The mere factthat.E$& confessed judgment in favor of Milbanh & Co., is not conclusive, though it might be considered, with other circumstances, as an indication of fraud.
    
      Wheeler was a member of the firm of Wheeler & ElUs, and was called on as a witness by Stone and F., B. & Oo. to establish that the judgment due by Wheeler SElUs had been extinguished, by a payment by Ellis, his partner. Reid: That on the score of interest, he was not a competent witness.
    from the Fourth District Court of New Orleans, 8trawbridge, J.
    
      Hunton & Bradford, for plaintiff.
    
      Bonier, for defendant and appellant.
   Slidell, 0. J.

This case is rendered difficult of examination by the complicated state of the facts to which the principles of law are to be applied.

There were two commercial firms, composed and domiciled thus : King & Fisher, of Missouri, composed of H. S. King and W. F. Fisher—Fisher, Burgess & Co. of New Orleans, composed of W. P. Fisher, V. Burgess and H. S. King.

On the 29th of January, 1850, Ellis obtained a judgment againt the firm of Fisher., Burgess & Go.. and the three partners thereof. On the llth February, 1850, Ellis assigned this judgment to Milbanh & Oo. On the 4th of June, 1850, due notice .of this assignment was given to Fisher, Burgess & Oo. This assignment was made after'Milbanh & Go., upon execution of a judgment against ElUs, had seized the latter’s judgment against Fisher, Burgess <& Oo. ; and this amicable transfer seems to have been the result of a desire to prevent the expected sacrifice of the property by a Sheriff’s sale. In November, 1850, the judgment in Ellis v. Fisher, Burgess & Co., was affirmed on appeal. A writ of fieri facias was then issued, which was returned nulla Iona in January, 1851; and then a rule, which is the matter of the present controversy, was taken by Milbanh & Go., as assignees, upon Stone, the surety in the appeal bond. In his answer, Stone denied the reality of the transfer; alleged that if a transfer had been made, it gave a fraudulent preference to Milbanh & Oo., one of the creditors, and was prejudicial to Fisher, Burgess & Go. and their surety. He also pleaded that Fisher, Burgess & Oo. had obtained a judgment against Ellis, and that the judgment held by the plaintiffs was extinguished by compensation. He also pleaded compensation.' In this answer and plea, the firm of Fisher, Burgess & Go. appeared by the 'same attorney, and joined the surety in his defence.

We have come to the conclusion, that compensation did not take place by mere operation of law ; because, so far as the evidence informs us, there was not that mutualitji of indebtedness which is the indispensable basis of that legal fiction. Ellis was the creditor of Fisher, Burgess & Go. The firm of King & Fisher was the creditor of Ellis. Fisher, Burgess & Go. and King & Fisher are, in legal contemplation, two distinct ideal persons. Up to the date of the plea of compensation, there is no assignment by King & Fisher to Fisher, Burgess & Go., or other act proved, by which the ownership of the debt due by Ellis, was divested out of the firm of King & Fisher and became vested in Fisher, Burgess & Go. It remained, for aught that appears to the contrary, an asset of the firm of King & Fisher, down to the time of filing the plea.

There is not then a case of compensation by, mere operation of law, and it is natural here to observe, that the parties themselves considered the debts as not compensated. Their proceedings are in direct antagonism to such a theory, for they were both, as we have shown, striving to execute their respective judgments. It was only after the execution against Ellis was returned unsatisfied, that Fisher, Burgess & Go. took the ground of compensation by uniting in Stone's defence.

There being no compensation by mere operation of law, the question of compensation rests upon the plea of compensation.

Whether the plea of compensation is technically well made, is a point not free from difficulty ; for it is the plea of the firm of Fisher, Burgess & Go., not of its individual members; and no assignment by King & Fisher to Fisher, Burgess & Go. is alleged in the plea. But let it be conceded that as Fisher and King, who composed the former firm, are partners of the latter, their assent that Fisher, Burgess & Go. should treat the claim as their own by pleading it in compensation, may be implied, and by consequence that an assignment of this partnership asset of Fisher & King to the partnership of Fisher, Burgess & Go., may be implied; yet such assignment, resting only upon implir cation from the plea, must take date from the filing of the plea.

But the transfer to MiTbank & Go. by Ellis, and the notification thereof took place long before the filing of that plea. If therefore the assignment tq MiTbank & Go. was valid, Fisher, Burgess & Go. have no right to plead in corm pensati.on against MiTbank & Go., a claim against Ettis- acquired after Ellis. made his assignment. It seems to us, therefore, that it is indispensably ta inquire into the validity of the assignment. If it was valid, the plea fails ; if invalid, then only can the plea be sustained,

The transfer made by Ellis to MiTbank, seems not to have been an assign* ment in absolute payment of the debt, but an assignment with the understand* ing that MiTbank should credit Ellis with, whatever he could collect. There is nothing unlawful in such an assignment, and after it was notified to Fisher, Burgess & Go., they could not acquire a set off available against their creditor’s assignee.

It is said the-assignment was made in fraud of creditors for the purpose of giving MiTbank & Go. a preference. The District Judge has negatived this, proposition, and we do not think the evidence authorizes a different conclusion. Before this assignment was made, MiTbank had issued execution against Ellis,_ and had seized the judgment obtained by him against Fisher, Burgess & Go. ; it was advertised for sale, and to prevent a sacrifice, Filis offered to make an ■amicable transfer, which Milbarilc <& Go. accepted. The mere fact that Filis confessed judgment in favor of Milbanlc, is not conclusive of fraud, though it might be considered in connection with other circumstances, as an indicium.

We think the witness, Wheeler, was properly rejected on the score of interest. The object of his testimony was to assist in establishing the defence, to wit, that the judgment debt due by Wheeler & Filis, had been extinguished by a payment by Filis, his partner. Now, if the defence were not sustained, he would remain liable in solido for the whole debt due to the judgment creditor, and would have to look to his partner for his contributive share. But if the defence should he sustained, he would he no longer liable to his judgment creditors and would be only left liable to his partner, Filis, for contribution of one-half.

It is therefore decreed, that the judgment rendered by the Supreme Court be set aside, and that the judgment of the District Court be affirmed, with co.sts.