#### Robert A. Jones v. John T. P. Yeargain.

*From Johnston.*

Where'a purchaser of goods transfers without endorsement, a note in payment, he thereby guaranties that the sum expressed in the note is due, and constitutes the seller his agent to sue for the same in his name, and if suit be fairly brought and duly prosecuted, and a set off is established by the maker, the seller may resort to the purchaser for the price of the goods sold.

Assumpsit for money had and received, and goods sold and delivered. On the trial, it appeared that the Defendant, a resident of Johnston, bought a horse of the *421Plaintiff, a resident of Surry, and in payment delivered him a note made by one *Hill,*then residing in Wilkes, but before that time, in Johnston. The note was payable to the Defendant, and was handed by hirn to the Plaintiff without endorsement, with a request by the Defendant, to take out process against *Hill,*and if he could not pay the note, his mother-in-law probably would.

The Plaintiff produced a warrant issued by a Justice of the Peace for the county of Surry, at the instance of the Defendant to the use of the Plaintiff, against *Hill,*who had acknow ledged service thereof, and on the same day a trial was had, upon which a set off was established by *Hill’s*oath, and a judgment given for a small balance. The Plaintiff sought to recover, in this action, the amount of the set off.

The Defendant offered to prove that in fact no set off existed in favor of *Hill',*but bis honor Judge Martin, rejected the testimony, and held the Defendant to'be bound by the judgment, unless he could impeach it for fraud in the Plaintiff in relation to it. The Counsel for the Defendant, admitted that he had no such evidence to offer, and a verdict was taken for the amount of the set off, and judgment rendered accordingly, from which the Defendant appealed.

*Devereux,*for the appellant,

cited 1 *Starkie*186 *to 205*— Gilbert’s *L. E.*SO, *31*— Bull. JV*. *P. 232*— Paynes *Coles,*1 *Mum. 373, Roan’s opinion*— Ward v. *Wilkinson,*4 *B.*& *Jl.*410 — 6 *Ser.*& *Low.*465, *S.*C.,

*Manly,*contra,

contended that there was authority to *Jones,*both implied from the nature of the transaction, and express from the direction given him, to use *Feargain’s*name in the warrant against *Hill*— that if he acted fairly and a set off was established by which the amount of the claim was reduced, he had a right to resort to *Yeargain.*As an agent of *Yeargain,*he was re-*422quircd to use good faith only, aud it was admitted by the Defendant in the Court below, that there was no fraud, and therefore the Plaintiff was entitled to recover.

Henderson, Judge.

The question, which arose on the trial of this cause, I do not think was the abstract one, whether ju this contest with *Jones, Yeargain*was bound by tin* estoppel, arising upon the judgment in his suit with *Bill.*.We are therefore relieved from expressing an opinion upon the effect of the declaration on the face of the warrant, that *Yeargain*sued for the use of *Jones.*Possibly that might have so connected *Jones*with the transaction, as to have bound him by the estoppel, and upon that ground only can *Yeargain*be bound iii this contest with him j for estoppels must operate mutually, or not at all. Upon the exchange of the horse for the note, *Yeargain*became bound, (unless there was an express agreement to the contrary, and there appears to have been none,) that the sum called for in the note was due, and *Jones*was authorised byr the nature of the transaction if necessary, to sue for it in the name of *Yeargain.*It necessarily followed, that a reduction of the sum called for in the note by way of a set off *or otherwise,*would *be*a violation of the guarantee made by *Yeargain ;*that the whole was due. These were the obligations which the nature of the transaction imposed upon *Yeargain,*and obligations of a correspondent nature were imposed ori *Jones,*growing out of the relationship which he assumed to *Yeargain ;*that as his agent in using his *(Yeargain’s')*name, he would act fairly on those points, in which he was interested. If. is therefore necessary that we should ascertain that in this warrant, so far as regards the set off, in which *Yeargain*was certainly interested, *Jones*acted as a faithful agent, at least to see if it does not appear that he acted otherwise.. A short time after the exchange, a warrant is taken out in the name of *Yeargain,*to the use of *Jones*against *Hill.*The service is acknow-*423Iedged by *Hill,*they went to trial on tiie same day, and the Justice found a set off to the amount of sixty dollars. The note calls for about ele\on dollars more, including interest, for which ajudgoient was rendered, and *HUl*paid up that sum, at least he obtained a receipt upon the judgment for it. It does not appear that *Fear-gain*was at all apprized of the Defendant’s claim to a set off, or that any attempt was made to continue the cause, until he might enable his agent Jones, to resist it. In fact it is quite apparent, that *Jones*went to trial with his owieconsent, nay, required a trial; for it is well known, that only in cases where there is a friendly understanding between parties, and where the Plaintiff takes an acknowledged service, instead of an arrest by an officer and a holding to bail, the Justice would, without the consent of both parties, proceed to trial on the same day, and especially when one was acting as agent for a principal residing at the distance of one hundred and twenty miles at least, and the Defendant offered evidence so vitally affecting the interest of that principal. The tiling carries upon its face a faithless *agency;*an agent entirely regardless of his principal’s rights.. But when to this is added that by having the set off established, *Jones*exchanged an insolvent for a solvent debtor. *Hill*for Yeargain, if is full proof of the character of the transaction. 1 say an insolvent for a solvent debtor, for it appears that *Hill’s*solvency was not much relied on ; for *Yeargain*told Jones, when the exchange was made to push *Hill,*and probably his tno-ther-m-iaw would pay, if *Hill*could *not;*a thing by the way, not much in favor of *Yeargain,*to extort from the mother-in-law, the debts of her insolvent son-in-law. I think therefore, the Judge had abundant evidence, that the finding of the Justice was not conclusive b-tween these parties, that the judgment was impeached for fraud if that was necessary, and that *Yeargain*ought to be let into proof, that in point of fact, there was no set off— *424which he was entitled to show before the Justice, but of which his agent *Jones,*deprived him.

Hai*, Judge.

Laying out of this case, the question raised relative to the set off, the only enquiry would be, Whether the Defendant is at all liable to the Plaintiff.— He purchased a horse with *Hill’s*note, instead of money. The horse, and tiie note, without endorsement, were both delivered, the one for the other; and if this was done with good faith, it would seem that their liabilities extended no farther. This would be unlike the case of a note received on account of a prior debt, as a mean to raise the money due, in discharge of *it;*if the money was not collected, the debt would still be due, unless it should be otherwise stipulated.

In this case it must have been the understanding of the parties, that the money was due by *Hill,*and that tiie Plaintiff was at liberty to use the Defendant’s name to collect it. It appears that *Hill*was warranted, and on the trial before a Justice of the Peace, a set off was allowed him ; it does not appear that there was any fraud in the transaction. The question is, whether the Plaintiff or Defendant must bear tiie loss.

If *jHill*was entitled to the set off, there can be no doubt that the Defendant should bear the loss j because he impliedly, if not expressly guarantied that *Hill*owed the money. On the trial, it appears that the Defendant offered to show that *Hill*in point of fact, was not entitled to a set off. Opposed to this was the judgment rendered by the Justice of the Peace, to which the Defendant was a nominal party. This brings us lo a point of difficulty, to be cleared up only by the circumstances of the case.

It is a circumstance to be kept in view, that whatever the dealings between the Defendant and *Hill*were, which led to the giving of the note by *Hill,*they were known to themselves, but not to the Plaintiff,* and the probability is, that admitting that *Hill*was not entitled to the *425set *off,*there was some foundation or color for it. This is evident from file fact, that the Justice of the Peace allowed it. It cannot.be presumed, that it was claimed and allowed without a shadow of right. If there was any foundation for it, this was known to the Defendant, and it was his duty to conceal nothing, but to make a full disclosure to the Plaintiff, when he passed the note to him.

It is said that the Plaintiff should have, given the Defendant notice of the trial. This would have been very proper; but the parties live a considerable distance apart. Perhaps the Plaintiff had not time to do so before the trial, after he knew that a set off was claimed.

I am however inclined to think that it would tend to the better understanding of the case, if the Defendant was permitted to give testimony as to the set off. Although the Defendant is a party to the judgment, yet he was not privy to it, when it was obtained. It is possible that he may show such a state of things as will enable the Jury to decide as the relative merits of the parties require. My brethren seem to think without doubt, that a new trial should be granted, and I am willing that the rule should be made absolute.

Per Curiar:. — Judgment reversed.