Case Name: Eno against Crooke
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1854
Citations: 10 N.Y. 60
Docket Number: 
Parties: Eno against Crooke.
Judges: 
Reporter: New York Reports
Volume: 10
Pages: 60–68

Head Matter:
Eno against Crooke.
An assignment of a thing in action is presumed to have been upon sufficient consideration, unless the contrary appear; and in such case no trust results thereupon for the benefit of the assignor.
Where a judgment against the principal is, at the request of the surety, who has paid the debt and is entitled to subrogation, assigned by the judgment creditor to a third person, the legal effect of the transaction is the same as if the surety had taken an assignment to himself, and had then assigned to such third person.
Where, therefore, a bank holding a judgment against A as principal, and another against B as surety upon the same debt, upon'satisfaction of the latter judgment out"o? the property of B, af~his request assigned to C the former judgment, and 0 soon after made a general assignment of his property for the benefit of his creditors; in an action upon the last mentioned judgment by Cjs assignee, it was Held, that in the absence of proof of the terms of the assignment by the bank, or of any consideration therefor between B and C, it was to be presumed that such assignment was made upon a sufficient consideration, and was intended to vest the title in him for his own benefit, and not as a trustee for B; and that the burden rested upon the defendant ofshowing the contrary. "*
Held, also, that as the bank had no beneficial interest in the judgment in suit after satisfaction of the judgment against B, its assignment of the former to C was not within the prohibition (O. 8., 691, § 8) of the transfer by a bank of any portion of its effects, exceeding $1000 in value, without a resolution of the board of directors.
It seems that such a transfer can be impeached only by the corporation, or its stockholders or creditors, for the want of the previous action of the board of directors. Per Allen, J.
This was an action on a judgment for $1392.71, in favor of the Farmers and Manufacturers’ Bank, against the defendant as maker of certain promissory notes, and was commenced in the supreme court in January, 1851. At the trial before Mr. Justice Barculo, a jury being waived, at the Dutchess circuit in June of that year, it appeared that the bank had held also another judgment against one Cyrus M. Smith, as endorser of the same notes upon which the judgment in suit was recovered; that the judgment against Smith had been collected by the bank out of his property; that afterwards, the bank, at the request of Smith, assigned the judgment in suit to one Bonesteel; and that Bonesteel, becoming insolvent, made a general assignment of his property to the plaintiff and one Buggies for the benefit of his creditors. Buggies died, and the plaintiff brought this action as his survivor. ■
The written assignment from the bank to Bonesteel had been lost, and its terms did not appear. The witness by whom it was proved said that he presumed it was executed by the cashier, under the seal of the corporation. There was no evidence as to the nature of or the consideration for that assignment, as between Smith and Bonesteel.
Upon this state of facts, the following objections were taken to the right of the plaintiff to recover: 1. That it did not appear that the judgment was ever assigned by the bank to Bonesteel; 2. That it did not appear that the board of directors ever authorized the assignment to Bonesteel, the value of the judgment being over $1000; 3. That if the judgment was assigned to Bonesteel, it was. in trust for Smith, and could not therefore be assigned by Bonesteel for the benefit of his creditors; 4. That there was no evidence of the assignment of the judgment specifically to the plaintiff and Buggies; 5. That Bonesteel holding the judgment in trust, it did not pass under his assignment; 6. That Smith having paid the judgment recovered against him for the same indebtedness before the transfer of this judgment to Bonesteel, the latter judgment was thereby extinguished, except as to costs. The court refused to dismiss the complaint upon the above grounds, or to decide as requested, and the defendant excepted. Judgment for the whole amount demanded, which was affirmed at general term. The defendant appealed to this court.
L. Tremain for the appellant.
I. The assignment to Bonesteel was to a trustee for the benefit of Smith, and Bonesteel was the proper person to bring this action, if any action can be sustained on the judgment. (Code of 1852, ^ 111, 112, 113; Lane v. Columbus Insurance Company, -2 Code 11., 65; Erickson v. Compton, 6 How., 471; 2 R. 3., 450, § 39, sub. 10, 3d ed.; Grinnell v. Schmidt, 2 Sandf. S. C. R., 706.) A judgment is a thing in action arising out of a contract. (Maguire v. Gallagher, 2 Sandf. S. C. R., 402.)
II. The judgment having been assigned to Bonesteel in fact, although perhaps not in form, as trustee for Smith, it did not pass to his assignees, and was not his property within the meaning of the assignment, nor can an action be sustained by the assignee for the benefit of Bonesteel’s creditors. (Winch V. Keeley, 1 Term R., 619; Carpenter v. Marnell, 3 Bos. fy Pul., 40, and cases cited; Viner v. Cadell, 3 Esp., 88.) 1. Such a construction is according to the manifest intention of the parties to the assignment and to the justice of the case. 2. The trust relating tor personal property is not affected by the Revised Statutes prohibiting uses and trusts, except as therein modified. {Gott v. Cook, 7 Paige, 521; Kane v. Gott, 24 Wend., 641; De Peyster v. Clendening, 3 Paige, 295.) 3. The trust is based upon personal confidence, and is not assignable. (Sinclair v. Jackson, 8 Cow., 582; 4 Sandf. S. C. R., 175; 2 John. Ch. R., 154; 4 id., 136, 338; 7 Paige, 103, 521; Sugd. on Powers, 175.) 4. The judgment having been purchased in the name of Bonesteel, and the considera tion paid by Smith, and the transaction being for Smith’s benefit and at his request, a resulting trust was created in law, which need not be evidenced by a written instrument. (4 Kent, 305, 6, and cases cited) 5. If this judgment passed, choses in action then held in Bonesteel’s name in form, but in fact belonging to him as guardian, executor, or mercantile factor doing business in his own name, for others, would also have passed.
III. The judgment having been for more than $1000, its presumptive value was the amount thereof, and it could only be sold in pursuance of a resolution adopted by a majority of the board of directors of the Farmers and Manufacturers’ Bank. (1 R. S., 722, § 8, 3d ed.; 1 Seld., 320.)
IY. Payment of the judgment against Smith, a joint debtor for the same debt, extinguished the judgment against the defendant, except as to costs, and the remedy was an action in favor of Smith, the surety, for money paid. (State Bank v. Fletcher, 5 Wend., 85; 4 John., 473 ; 20 id., 369; 2 Wend., 369 ; 1 Hill, 652; 2 R. S., 706, § 21, 3d ed.)
N. Hill, Jr., for the respondent.
I. The evidence was clearly sufficient to warrant the judge in finding, as matter of fact, that the assignment to Bonesteel was duly made by the bank. 1. The amount of the judgment having been paid by Smith, it was in equity his property, and the assignment of it did not reduce the funds of the bank. The statute, therefore (1 R. S., 591, § 8), has no application to the case. (1.) Smith might have compelled the bank to assign the judgment, at least in equity, he being the beneficial owner. (Clason v. Morris, 10 John., 524; Corey v. White, 3 Bari., 12; White S¡ Tudor's Lead. Cas., 98, 9, Am. ed. [65 Law Lili] ; New-York State Bank v. Fletcher, 5 Wend., 85 ; Cuyler v. Ensworth, 6 Paige, 32, 3.) (2.) What may be compelled by suit is equally valid if done voluntarily without suit. (Lee v. Brown, 4 Ves., Jr , 369 ; Clason v. Morris, 10 John., 539 ; Bath v. Bradford, 2 Ves., Sr., 590; 1 Lewin on Trusts, 413; Comieron v. Irwin, 5 iBZ, 272, 3, 278, 9.) 2. If a consent or resolution of the board of directors was necessary, the presumption is that it was obtained. (1.) The assignment was under the corporate seal, and this is evidence that it was properly affixed. (1 Phil. Ev., 385, 6, 7th Lond. ed.; Cow. fy Hill’s Notes, 1287; Hoyt v. Thompson, 1 Seld., 335; Bank of Vergennes v. Warren, 7 Hill, 91, 95.) (2.) The testimony of the witness as to the mode in which the bank assigned, viz., “ by the cashier, under the seal,” &c., does not tend to show that he acted without authority. (Cases last above cited.) (3.) At all events, the plaintiff’s testimony raised a question of fact on the subject, and the decision of the judge is conclusive ; especially as the defendant had foil opportunity to show that the business was irregularly done, and omitted to do so. (Borstv. Spelman, 4 Comst., 284; Osborn v. Marquand, 1 Sandf. S. C. R., 457-; Bank of Vergennes v. Warren (supra).
II. There is no evidence, nor is it the fact, that the judgment was assigned to Bonesteel in trust for Smith. 1. The case is the same as if Smith had first taken the assignment to himself and then assigned to Bonesteel; it appearing that the bank acted under his authority. 2. If the assignment was in trust, the defendant might have shown it by inquiring as to its contents; but he avoided all inquiry on that subject.
III. The defendant has no right to raise either of the above questions; Smith and the bank, and all who could be injuriously affected, having acquiesced. (Bank of Vergennes, §c., supra; Rust v. Morse, 2 Hill, 655, 6, 7.)

Opinion:
Allen, J.
The first and second propositions presented by the counsel for the appellant upon the argument were based upon the third, fourth and fifth objections taken upon the trial on the motion to dismiss the complaint, and were, in substance, that Bonesteel took the judgment under the assignment from the bank as trustee for Smith, that it did not therefore pass to his assignees, and that the action should therefore have been brought in his name. If Mr. Bonesteel did take as trustee, the positions of the counsel are doubtless well taken. But, 1. The judge decided the question of fact upon which the legal propositions are founded adversely to the appellant, and from the decision of a question of fact in a common law action or an action under the Code, an appeal does not lie to this court; and, 2. There is not a particle of evidence to warrant the inference that Bonesteel took as trustee. The legal effect of the transaction is the same as it would have been had Smith taken an assignment of the judgment from the bank to himself and had then assigned to Bonesteel. In that case the law would presume the assignment to Bonesteel to have been made upon a good consideration, and no trust would have resulted for the benefit of the assignor. The substance of the transaction and the legal presumption are now the same, and more especially as there was no necessity for the intercession of a third person to take the legal title to the judgment for Smith. Separate judgments having been recovered against the defendant and Smith as maker and endorser of the same notes, no one could doubt that Smith could legally take the assignment to himself without endangering the validity of the judgment.
The next position taken in behalf of the appellant is that the judgment, having been for more than $1000, its presumptive value was the amount thereof, and it could only be sold in pursuance of a resolution of the board of directors of the bank. There are several conclusive answers to this proposition: 1. Upon the payment of the debt by Smith, the endorser, he became entitled to be placed in the same situation in which the bank was placed in respect to the debt as against the defendant, the maker of the note, who was principally liable for its payment, and to be subrogated to all the rights and remedies, of the bank, and to all the securities held by it against him. The equitable doctrine of subrogation is favored and the rights which grow out of it are recognized and protected as well at law as in equity. The judgment in suit became, and was, in legal effect, the property of Smith and might have been enforced for his benefit, or a formal transfer to him might have been compelled. (New-York State Bank v. Fletcher, 5 Wend., 85; Clason v. Morris, 10 John., 534; Corey v. White, 3 Barb., 12; Cuyler v. Enswortli, 6 Paige, 32.) The bank, after the payment of the debt by the sale of Smith's property, had no legal interest in the judgment, and only held it as trustee for Smith. The statute (1 R. S., 1115, §8, 4th ed.) only prohibits the transfer of the real estate or effects of the bank without authority by previous resolution of the board of directors. It was designed for the protection of creditors and stockholders, and to guard against the diversion of its effects, and does not extend to property or means held in trust for others. 2. None but the corporation or its stockholders or creditors can impeach a transfer of property by the corporation for the want oí the previous action of the board of directors, and then only by direct action brought for that purpose. Strangers, the debtors of the bank, and others, have no interest in the question, and cannot go back of the assignment and collaterally impeach the transfer for the want of the formalities which have been imposed by statute for the benefit and protection of others. 3. If a resolution is necessary, as against the debtor, the law will presume that such resolution was passed by the board of directors, and that the cashier was, by such resolution, duly authorized to execute the assignment under the corporate seal. (Hoyt v. Thompson, 1 Seld., 335, per RUGGLES, J.; Bank of Vergennes v. Warren, 7 Hill, 91.) It may be added that the bank .cashier, having only done what a court of equity would have compelled him to do, the presumption of the proper formal authority to perform the act will be more readily indulged than in ordinary cases. (Lee v. Brown, 4 Vesey, 362.)
Lastly, it is urged, in behalf of the appellant, that payment of the judgment against Smith extinguished the judg ment against the defendant, except as to costs, and that the remedy was by action in favor of Smith, the surety, for money paid. There can be no doubt that if Smith occupied the relation of surety for the defendant, an action for money paid would have laid at his suit upon the payment by him of the debt, and there can be just as little doubt that upon the payment of a note or bill of exchange by a party thereto, who is not primarily liable for its payment, he becomes entitled to the possession of the bill or note, and may maintain an action upon it against any or all the prior parties thereto who have been properly charged; and if the contract of the party liable is merged in a judgment, the right of the person paying is to the judgment, as, but for the merger, it would have been to the bill or note. The payment by an endorser does not extinguish the liability of the maker or acceptor, and the endorser may take an assignment of any judgment which may have been recovered by the holder, and enforce it for his own benefit. (Harger v. McCullough, 2 Denio, 119; Clason v. Morris, supra; In the matter of McKinley, 1 John. Cas., 137; Corey v. White, supra.) The cases of The Ontario Bank v. Walker (1 Hill, 652) and The Bank of Salina v. Abbot (3 Denio, 181) were decisions made at special term, under the act of April, 1832, authorizing a joint action against all the parties to a promissory note or bill of exchange, and as to the effect of a joint recovery upon the right of subrogation between the several parties; and, if they can be recognized as law at this day, which is more than doubtful, do not affect the question in this case, as the judgments against the defendant and Smith were several judgments.
. The judgment of the supreme court should be affirmed.
Gardiner, Ch. J.
The judgment which constitutes the cause of action in this case was paid by Smith, and at his request assigned by the.bank to Bonesteel, and by the latter to the plaintiff. A paid judgment constituted no part of the effects of the corporation, and of course no resolution of the board of directors was necessary to authorize an assignment, according to the provisions of the 8th section of 1 R. S., 591. The contents of the assignment from the bank to Bonesteel do not appear. It is spoken of as an assignment, and, in the absence of other proof, must be held to have conveyed, in form at least, the whole legal and equitable interest in the judgment to the assignee. The consideration moving between Smith and Bonesteel is not proved. The presumption must be that it was sufficient to sustain an unqualified assignment in the form in which it was made, by the request of Smith. If Bonesteel was a naked trustee for the endorser, that should have been proved by showing the contents of the assignment or some memorandum or oral declaration, establishing the trust and showing its true character.
The whole controversy resolves itself into the question : Upon whom rests the burden of proof? I think that when the plaintiff has given evidence tending to show an absolute assignment, at the request of the owner of the judgment, it was incumbent upon the defendant to prove any qualification of that transfer upon which he might insist as essential to his defence.
The judgment of the supreme court should be affirmed.
The whole court concurring,
Judgment affirmed.