Case ID: scl_28/html/0043-01.html
Source: Caselaw Access Project
Author: {"author": "Earle, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Wm. Henderson, Jr. and Wm. H. Dial vs. James H. Irby.
    
    1. I., the holder of a judgment on F., assigned it to D., in writing, with a guaranty of payment, on the 7th February, 1840: which was intended to enable D. to meet a judgment against him and others in favor of G.; I., at the same time taking a confession of judgment from D., which covered the amount of the judgment assigned, together with the amount of a note which 1. held upon D. H., and another, the plaintiffs, alledged that the judgment assigned to D., by I., was assigned to them on the 4th March, 1840. I., a few weeks after the assignment to D., made an arrangement by which the judgment in favor of G. was settled, and had the same transferred to himself. After D. 'had privately removed from the State, about 1st Dec. 1840, the plaintiffs gave notice to L, of the assignment to them. I. afterwards received from F. the amount of the judgment, which he had assigned. It was held, that in an action for money had and received, brought by the plaintiffs against I., he was entitled to avail himself, by way of discount, of his judgment against D., as he might have done, had the action been by D., upon proof that the assignment to the plaintiffs was not hona fide, but colourable and collusive only.
    2. The assignment to the plaintiffs, being without consideration, and intended merely to enable them to recover the funds in their name for the benefit of D., could be regarded only as a power of attorney, and I., the defendant, could not be deprived of his just defence against D., who, in that case, would be the real plaintiff.
    3. If the payee of a negotiable note should transfer it by indorsement or delivery, without consideration, to a third person, in order to sue the maker in another name, and thus avoid a substantial defence which the latter might make, on proof of such collusive arrangement, the defence would be let in.
    4. The title of the plaintiff to the thing in question, his right to sue upon the particular cause of action set forth, must be made out, at least prima fade, by himself; and may always be inquired into, and his proof rebutted, on the part of the defendant.
    
      jBefore Earle, J. at Laurens, Spring Term, 1842.
    Assumpsit for money liad and received.
    The defendant held a judgment against John A. Farley, for 1303 dollars 90 cents, which he assigned to G. C. Dial, on 7th February, 1840, in writing, with a guarantee of payment. This judgment, the plaintiffs allege, was assigned to them in writing, on the 4th March, 1840. G. C. Dial privately removed from the State, about 1st December, 1840, carrying his property with him. After he absconded, leaving many judgments and a large amount of debts unpaid, the plaintiffs gave notice to the defendant of their assignment. He afterwards received from Farley the amount of the judgment, which had been assigned to Dial, and claimed the right to retain the money, which, on demand, he refused to pay to the plaintiffs, and they brought this action. . The claim of the defendant to receive and retain the money, arises out of previous transactions between himself and G. C. Dial.
    There was a judgement for a large amount, in favor of D. Graydon and wife, for the use of M. Johnson, Adrnlr. vs. G. C. Dial and others, which was about to be pressed, and Dial applied to the defendant, to whom he was also indebted by note of hand, for cotton, about 1200 dollars. The defendant agreed to give up to him his note of 1200 dollars, and to assign his judgment against Farley, whieh was then levied on property, upon Dial’s confessing a judgment to him for the amount of the note, and the sum due upon the judgment. This was done, and Dial confessed judgment to Mr. Irby, for 2536 dollars, on 7th February, 1840, who gave up the note, and assigned the judgment on Farley. On the same day, both Dial and Irby informed the sheriff of this arrangement, and Dial stated that the assignment to him was intended to enable him to meet the judgment in favor of Graydon and wife, and instructed him when the collection of this last was urged, to proceed forthwith to collect the other. In the last of summer, he said to Farley, that a judgment was assigned to him, to enable him to meet another debt, and so long as he was indulged, he would not proceed to enforce it.
    A few weeks after this assignment to Dial, the witness thought in February, Mr. Irby made an arrangement with the administrator of Johnson, who owned the judgment of Graydon and wife, by which the amount due upon it was settled with the administrator, who thereupon transferred that judgment to Mr. Irby.
    There were two assignments in writing to the plaintiffs produced, one of which expressed it to be to indemnify Henderson against a judgment in favor of Moates against Dial and him for about 800 dollars ; and the balance to secure Wm. H. Dial for his portion of his father’s estate, in the hands of G. C. Dial, who was the executor. Yet, a large portion of that judgment in behalf of Moates was laid after G. C. Dial went off, by Wm. H. Dial; 200 dol- ' ars by a note of hand, which was proved to be in the lands of G. C. Dial the evening before he absconded. Wm. H. Dial had for a considerable time been the clerk of G. G, Dial; and when the latter absconded, he remained in possession of the books of account, &c. and continued to collect the debts, which however were of small amount. W. H. Dial accompanied G. C. Dial or his family near to the Savannah on their removal. And W. Henderson admitted to one witness, that he was not aware of the assignment, until after the departure of G. C. Dial. It was proved by the ordinary, that the portion of W. H. Dial, in the estate of his father and brother, of which G. C. Dial was executor and administrator, was equal at least to 1500 dollars — and that he was a minor at the time his brother went off, having made no settlement in the ordinary’s office.
    Mr. Irby’s judgment against G. C. Dial was wholly unsatisfied at the time of his departure; and of the sales of property made since, about 800 dollars have been applied to it, leaving near 2000 dollars due upon it. The defendant relied on his demand against G. C. Dial, by way of discount.
    The presiding Judge instructed the jury, if the assignment by Dial to the plaintiffs, of the judgment on Farley, was bona fide, they were entitled to recover in this action; that if it was collusive and without consideration, intended to defraud the creditors generally, or Mr. Irby particularly, then they could stand on no better footing than Dial himself ; and the court would not lend its aid to enforce such a claim. As the assignment to Dial was to enable him to meet the judgment against him in favor of Johnson, and was also in part the consideration of the judgment confessed to Irby for 2500 dollars, if the judgment to Johnson was paid by Irby, with the knowledge and approbation of Dial, it might be considered as money paid for him, on the guarantee, so far at least as to allow Irby to claim that payment, or the balance of his judgment, by way of discount, in any action brought by Dial himself. A transfer by him of that judgment afterwards, would operate as a direct fraud on Irby, and if assigned for that purpose, he should be allowed the same defence against the plaintiff as against Dial himself. Verdict for defendant.
    The plaintiff now moved for a new trial, on the following grounds:
    1, Because the assignment of the Farley judgment was bona fide, and it was admitted that the defendant received the money due on said judgment, after he had notice that it had been assigned to the plaintiffs.
    2. Because his Honor did not charge the jury, that in law and fact there was no privity of contract between G. C. Dial and Mathew Johnson, arising out of the understanding made by G. C. Dial with the defendant, that the money, when collected on the Farley judgment, should be applied inpayment of the Johnson judgment, and that the defendant, by purchasing the Johnson judgment, could not in law entitle himself to retain funds collected on the Farley judgment; the promise by Dial to Johnson, as above stated, being without consideration, (if there was any,) was not transferable to the defendant, and especially when the Johnson judgment was paid off by the sale of G. C. Dial’s property, before the defendant received the money on the Farley judgment.
    3. Because his Honor erred in holding the balance due by G. C. Dial on the $2,500 confession to the defendant, was such a demand as came within the provision of the discount law.
    4. Because the verdict is, in other respects, contrary to law and evidence.
    Sullivan, for the motion. Irby, contra.
   Curia, per

Earle, J.

The defendant received a sum of money due upon a judgment originally in his own favor, which he had assigned to G. C. Dial, and the latter had assigned to these plaintiffs. The defendant had notice of this last assignment before the receipt of the money, and therefore became liable in this action to the plaintiffs for so much money had and received to their use, if in fact they were the assignees of G. C. Dial. But if the assignment to them was not bona fide, but collusive and colorable only, it would seem to follow that the money when received was received to the use of G. C. Dial. If he had brought assumpsit to recover it, it is not to be doubted that the defendant might have availed himself, by way of discount, of his own judgment against Dial, the consideration of which was in part the judgment against Farley, on which the money was paid to the defendant. The title of the plaintiff to the thing in question, his right to sue upon the particular cause of action set forth, must be made out, at least prima facie, by himself; and may always be inquired into, and his proof rebutted, on the part of the defendant. It therefore became a suitable subject of inquiry, whether the assignment to the plaintiffs, under which they claimed the funds in the hands of the defendant, was really and bona fide executed by G. C. Dial, for the purpose of transferring his interest in the judgment to the plaintiffs 1 If such had been the fact, the jury were instructed to find for the plaintiffs. But if, on the contrary, the assignment was without consideration, collusive and colorable, intended merely to enable the plaintiffs to recover the funds in their name for the benefit of G. C. Dial, then it should be regarded only as a power of attorney, and the defendant should not be deprived of his just defence against G. C. Dial, who, in that case, should be the real plaintiff. If the payee of a negotiable note should transfer it by endorsement or delivery, without consideration, to a third person, in order to sue the maker in another name, and thus avoid a substantial defence which the latter might make, on proof of such collusive arrangement the defence would be let in. The verdict of the jury has established that such was the character of the assignment, by G. C. Dial, of the judgment in question, to the plaintiffs. The payment of this judgment had been guaranteed to Dial by the defendant; and if the judgment against Dial and others, in favor of Johnson, which the former was intended to enable Dial to pay, was satisfied by the defendant, with the knowledge and approbation of Dial, it certainly strengthens the ground on which he claims to retain the funds, and to set off his judgment against Dial, to the demand of the latter on the judgment against Farley. The evidence was abundantly sufficient to sustain the conclusion of the jury, that the assignment to the plaintiffs was a mere pretence; and a majority of the court are of opinion that it was entirely consistent with the rules of law that the defendant should be allowed to resist the action as if brought by G. C. Dial himself. The discount exceeded the demand sued for; as the action was not in the name of G. G. Dial, there could only be a verdiet generally for the defendant, which the court does not perceive any sufficient reason to set aside ; and the motion is refused.

Richardson, O’Neall, Evans and Butler, JJ., concurred.

Wardlaw, J. — absent at the argument.