#### *Scates v. Wilson and Edmunds.

July, 1838,

Lewisburg.

Assignments — Award and Judgment *lor*Obligor against Assignee — Effect as to Assignor.* — A suit by assignee of a bond against the obligor being referred to arbitration, the arbitrators find the debt to have been discharged by payments to and set-offs against the assignor, and make an award in favour of the obligor, upon which judgment is entered. Whereupon an action is brought by the assignee against the assignor. Hbld, that though the assignor is at liberty to controvert the facts found by the award, and shew that the judgment is erroneous, yet, until the contrary be shewn, the judgment is to be presumed to be right, and is therefore sufficient to establish the liability of the assignor, and support an assumpsit founded on such liability.

Same — When Assignee’s Right of Action against Assignor Accrues* — Case at Bar, — Upon a plea by the assignor that the action against him did not accrue within five years, it is found that though the debt originally due from the obligor has been discharged by payments to and set-offs against the assignor, yet the assignee did not know, until after judgment in his suit against the obligor, that nothing was due; and it is also found that five years have not elapsed since the judgment: Held, that as part of the debt was discharged by a set-off, it was only the judgment which established the set-off as'a payment, and until that judgment was rendered, the action did not accrue against the assignor.

On the 24th of March 1824, William Rice executed a sealed obligation to Zebulon B. Scates for 121 dollars 20 cents, payable the first of August 1825, under a penalty of 242 dollars 40cents. Zebulon B. Scates assigned this penal bill to Joseph D. Scates on the 16th of Eebruary 1825. Joseph D. Scates reassigned it to Z. B. Scates the 26th of October 1827. And Z. B. Scates, on the 10th of March 1831, assigned it to Wilson & Edmunds, for value received.

Soon after this assignment, Wilson & Edmunds brought an action of debt against Rice in the county court of Charlotte. The defendant having pleaded payment, by consent of the parties, the matter in difference between them in the suit was submitted to the determination *of two arbitrators, whose award was to be made the judgment of the court. The arbitrators, *171after hearing the parties and examining the evidence offered, awarded that the bond be credited by 70 dollars, paid on the 11th of December 1826 to X D. Scates, who then held the bond as assignee of *%.*B. Scates. There being a balance of 73 dollars 39 cents, with interest from the 1st of January 1821, due from *%.*B. Scates to Rice on his guardianship account, and this credit, as well as the other, having arisen before the assignment to Wilson & Edmunds, and the two together being more than would pay off the bond, the arbitrators directed that the bond should be credited by so much of the said balance as would, with the first credit allowed, be sufficient to discharge the bond. The award consequently was, that Wilson & Edmunds were not entitled to recover any thing of Rice by their suit. On the 5th of March 1833, the court rendered judgment in favour of the defendant Rice, pursuant to this award.

On the22d of June 1836, Wilson & Edmunds commenced an action in the circuit court of, Smyth county against Zebulon B. Scates their assignor. Their declaration contained two counts. The first, after setting forth the obligation and assignments, stated, that by the assignment to the plaintiffs, the defendant undertook and promised the plaintiffs that the sum of 121 dollars 20 cents, mentioned in the obligation, was justly due and owing by Rice, and in no wise paid off and discharged by offsets against, or payments to, either the defendant or J. D. Scates ; and it then averred that the said sum of money, at the time of the assignment to the plaintiffs, was not due and owing by Rice, but had been paid off and discharged by legal offsets and payments existing previous to and at the time of the transfer to the plaintiffs, and that the same, or any part thereof, was not recoverable at law from Rice. The *second count, after setting forth the obligation and assignments, stated the suit against Rice, the submission of the same to arbitration, the award of the arbitrators, and the judgment thereupon.

The defendant demurred generally to each count of the declaration, and, the plaintiffs having joined in the demurrer, the matter of law was argued, and adjudged for the plaintiffs. The defendant then pleaded non assumpsit, and that more than five years elapsed after the cause of action accrued, before the institution of the suit; upon which pleas issues were joined.

At the trial, the only evidence introduced by the plaintiffs to support their action was the record of the proceedings and judgment in the suit against Rice. Whereupon the defendant asked the court to instruct the jury, that if they should believe, from the evidence, that the defendant did not consent to, the reference or arbitration mentioned in the second count of the declaration, and had at no time sanctioned the same, and that he had never expressly promised or agreed to pay the claim demanded in that count, and had never acknowledged that the said claim or demand was due from him to the plaintiffs, then the plaintiffs were not entitled to recover upon the second count; which instruction the court refused to give, and the defendant excepted to the refusal.

The jury returned a special verdict, finding that at the date of the assignment to the plaintiffs, viz. on the 10th of March 1831, nothing was due on the obligation, but the same had been fully paid to J. D. Scates a former assignee, and to the defendant; finding also that this fact was unknown to the plaintiffs until after the rendition of the judgment in the suit against Rice, the record of which was set forth at large ; and finding that more than five years had elapsed since the assignment to the plaintiffs on the 10th of March 1831, before the institution of this action, but that less than five years *had elapsed between the rendition-of the judgment in the suit against Rice, and the institution of this action. The circuit court adjudged the law upon the special verdict to be for the plaintiffs ; and a supersedeas was allowed to the judgment.

Watson for plaintiff in error.

B. R. Johnston for defendant in error.

*

See monographic *note*on "Assignments” appended to Ragsdale v. Hogy, 9 Gratt. 409; monographic *note*on “Arbitration and Award” appended to Bassett v. Cunningham, 9 Gratt. 684.

PARKER, J.

(after stating the facts of the case, as above detailed), said: The plaintiff in error seeks to reverse the judgment, because, as his counsel contends, the defendants in error had no right to submit the suit brought by them against Rice to arbitration, and because the act of limitations is a bar to the action. The demurrers and the instruction moved are but different modes of raising these questions.

The declaration alleges the assignment, the suit, brought, the agreement to refer, the award that the bond had been discharged by payments and offsets claimed by the obligor, and the judgment thereon. Erom these facts it infers the liability of the assignor ; and, as I think, rightly infers it. Whether the award bound him or not, the judgment of the court is to be presumed to be right until the contrary is shewn. This was a sufficient foundation for the assumpsit, unless the defendant could controvert the facts found by the award, and shew that the judgment was erroneous. The assignees had a right to submit the case to arbitration, even though the award might not bind the assignor, or be evidence against him ; and the judgment was binding, unless he could make it appear that the facts stated in the award, upon which the plaintiffs lost the cause, did not exist. These facts he was at liberty to controvert, and I presume he did controvert them before the jury, who distinctly reaffirm them in the special verdict.

*Then, as to the act of limitations. Admitting, for the sake of argument, that if a bond is paid and then assigned, an action accrues to the assignee against the assignor from the date of the assignment, in analogy to the doctrine asserted in Rice v. White, 4 Leigh 474 ; Battley v. Faulkner, 3 Barn. *&*Ald. 288 ; Short v. M’Carthy, Id. 626, and Howell v. Young, 5 Barn. & Cres. 259, and that the noninstitution of a suit for 5 years .from that date bars the assignee, the doctrine does not apply to this case. Here, a part of the payment consists in an offset claimed by Rice against the assignor, which *172was unknown to the assignees, and might never have been claimed by the obligor. It was only the judgment which fixed it as a payment; and therefore the action did not accrue against the assignor, until that judgment was rendered. Until suit brought, it was quite uncertain whether Rice would claim that offset, or bring his action against his guardian on his bond ; nor was its justice and legality finally ascertained until the judgment. Previous to this time, the defendants in error could not have asserted their rights under the assignment; for it could not appear that Rice would plead or claim the offset, and it was their duty to ascertain this fact before they sued the assignor. If any part of the debt was due from Rice, they could not have excused themselves from suing him ; and if, upon this state of facts, they had instantly sued the assignor, alleging that 70 dollars had been paid to Joseph D. Scates, and that, for the balance, Rice had a legal offset against Zebulon, they must have failed in their action.

The judgment must therefore be affirmed.

The other judges concurred. *Judgment*affirmed.