Case Name: H. G. Burkett, for Assignee, vs. F. J. Moses
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1858-05
Citations: 11 Rich. 432
Docket Number: 
Parties: H. G. Burkett, for Assignee, vs. F. J. Moses.
Judges: Wardlaw, Whitrer and Glover, JJv concurred.
Reporter: South Carolina Law Reports
Volume: 45
Pages: 432–439

Head Matter:
H. G. Burkett, for Assignee, vs. F. J. Moses.
Assignment — Ohose in Action — Discount—Notice.
An instrument not under seal, by which A agreed in the event of a recovery in a pending action of trover, to pay B a certain proportion of the verdict, is not assignable under the Act of 1798.
Where a chose in action, not assignable under the Act of 1798, is assigned, the debtor may avail himself of any discount against the assignor, ac~ quired by the debtor after the assignment and before notice of it.
BEFORE GLOVER, J., AT SUMTER, SPRING TERM, 1858.
The report of his Honor, the presiding Judge, is as follows:
“Pending an action of trover, brought by the plaintiff against John C. Khame, the defendant executed the following agreement, January 6th, 1855: “ In consideration of the transfer this day made to me by H. Gr. Burkett, of all his rights and claims to the case above stated, I do hereby agree in the event of a recovery for plaintiff in said case, to the amount of five hundred dollars or over, to pay the said H. Gr. Burkett, two hundred dollars, and in the event of a recovery of a sum of four hundred dollars, or between four and five hundred, or less than four hundred dollars, to pay him one third of such sum so recovered — and in the event of no recovery for the plaintiff, I am in no way held or bound to said H. Q. Burkett for any amount whatsoever.”
“ On this agreement, H. Gr. Burkett made the following endorsement, 24th March, 1855: “Por value received, I assign, transfer and set over to A. J. Moses, my right, title and interest in the within document as collateral.”
“ The action is brought on this agreement by H. Gr. Burkett, for bis assignee, A. J. Moses, to wbieb tbe defendant pleaded tbe general issue and offered in evidence, under a notice of discount, two due bills given by H. Gr. Burkett to E. J. & M. Moses for professional services, dated in 1852 and 1854, and for an amount exceeding tbe plaintiff’s claims under tbe agreement.
"Before tbis suit was commenced, tbe two due bills were transferred to E. J. Moses by tbe firm of E. J. & M. Moses; and Mr. Montgomery Moses, wbo proved tbis transfer, stated that be knew nothing of tbe transfer by Burkett to A. J. Moses of tbe agreement, when tbe two due bills were transferred to E. J. Moses. He also stated that E. J. Moses once proposed to Burkett, to deduct these due bills from tbe amount of tbe agreement, and that Burkett assented.
“ Conceding that tbe instrument sued on was assignable under tbe Act of 1798, Ibeld that tbe discount maybe allowed, and especially, if tbe defendant bad no notice of tbe transfer from Burkett to A. J. Moses until after tbe due bills were assigned to him.
“ Tbe verdict was for the defendant.”
The plaintiff appealed and now moved tbis Court fór a new trial on tbe grounds,
1. That the instrument sued on was assignable under tbe Act of 1798, and that no discount purchased or acquired after tbe execution of tbe assignment was admissible; whereas bis Honor charged tbe jury to allow tbe discount if defendant became tbe owner before notice.
2. That even if tbe instrument sued on is not assignable under tbe Act of 1798, still tbe Court will protect tbe equity of a Iona fide assignee and allow no payment or discount made or acquired after the assignment to prevail against tbe assignee except under circumstances wbicb do not exist in this case.
3. That a debtor can in no case be allowed a discount purchased or acquired after assignment and before notice, unless be can show that he occupies the position of one, who, according to the doctrines of the Court of Equity, is a purchaser for valuable consideration and without notice, and the defendant does not occupy that position.
Spain, Bichcwdson, for appellant.
The instrument sued on was assignable under the Act of 1798, 5 Stat. 330; Folk vs. Cruihshanlts, 4 Rich. 243; Waring vs. Cheeseborough and Campbell, 4 Rich. 243, note; Cay vs. Q-alliott, 4 Strob. 482. The assignee is the legal owner, (Thorn vs. Myers, 5 Strob. 210,) and may sue either in his own name or in the name of the assignor, (Coachman vs. Hunt, 2 Rich. 450; Mixon vs. Jones, 1 Rich. 395,) and his rights are the same whether he sues in the one name or the other, (Thorn vs. Myers, Mixon vs. Jones) It is well settled that no defence, whether by discount or otherwise, arising after notice of the assignment, is admissible, {Mixon vs. Jones; Morris vs. Peay, 1 Hill, 35,) and the appellant submits that the Act was intended to place all instruments, assignable under its provisions, on the foot ing of negotiable instruments (bills or notes) transferred after due. If that be the correct view, then no discount purchased or acquired after the assignment is admissible; and the onus is on defendant who must show that he held the discount at the time of the transfer, {Cain vs. Spann, 1 McM. 260; Thorn vs. Myers) If the instrument be not assignable under the Act, still it is submitted that whatever formerly may have been the rule, modern decisions show that the Court will protect the equitable rights of the assignee, and that there is now no substantial difference between assignments of contracts not assignable at law, and assignments under the Act of 1798 and other Acts, and tbe transfer of negotiable instruments after due —all now standing, so far as tbe rights of tbe assignee or transferee are concerned, pretty much on tbe same footing, Tibbetts vs. Weaver, 5 Strob. 144 ; Morris vs. Peay; Mixon vs. Jones. Assuming that a note transferred to defendant after assignment and before notice may be pleaded as discount, then it is submitted that in such case, defendant must show that be bolds as purchaser for valuable consideration and without notice, according to tbe doctrine which prevails in Courts of Equity, to this extent at least, that is, he must show that he paid a valuable consideration for the note, or that he is bound by contract from which he cannot be relieved if he fails to establish- the discount, to pay value. Eor the rule in Equity see Ellis vs. Woods; 2 Sug. on Vend. Ch. 24, § 7 m., p. 1069; Snelgrove vs. Snelgrove, 4 Des. 287.
Kaynsworih, Bellinger, contra,
cited Wilson vs. JDargan, 4 Rich. 546 ; Act 1816, 6 Stat. 33 ; Maybin vs. Kirby, 4 Rich. Eq. 105.

Opinion:
The opinion of the Court was delivered by
Mtjnro, J.
In this case two questions are presented for our consideration by the grounds of appeal.
1. Whether the instrument sued on, was assignable under the Act of 1798.
2. Whether the assignment of a chose in action, without notice to the debtor, is sufficient to exclude any defence the latter may acquire against the assignor subsequent to the assignment.
If the action had been brought in the name of the assignee, the question raised by the first ground as to whether or not the instrument sued on was assignable under the Act of 1798, might properly have been made; but as the assignee has chosen to bring the action in the name of the assignor, whose right to maintain it, whether the cause of action be assignable or not,, can hardly admit of doubt; it is difficult to perceive why the question has been made at all, unless it may be considered as in some degree affecting the other question made in the case, namely, the necessity of communicating notice of the assignment to the debtor in order to exclude a subsequently acquired defence against the assignor.
Be that, however, as it may, it is sufficient on this branch of the case to say, that in the opinion of a majority of the Court, the instrument sued on, does not answer to the description.of either of the classes of choses declared to be assignable by the Act of 1798 ; consequently, it is not such an instrument as the assignee by assignment can acquire a legal interest therein.
This brings us to the consideration of the remaining question in the case, as to whether the assignee of a chose in action without notice to the debtor, can exclude any defence the latter may acquire, against the assignor, subsequent to the assignment.
There can be no doubt as to the general doctrine, that the assignee of a chose in action, although without notice, takes it subject to all subsisting equities against the assignor ; but whether the assignee without notice of the assignment to the debtor, can be affected by any transaction between the assignor, and the debtor, subsequent to the assignment, is the question we are now called upon to decide.
As the claim of an assignee of a chose in action is one which is purely equitable, and constitutes a branch of the jurisprudence which is administered in another forum, it is proper that we should resort to the adjudications of that tribunal, in order that we may see how transactions of this sort are treated in that jurisdiction to which they appropriately belong.
In the case of Ryall vs. Rowles, 1 Ves. 348, it is said, that debts are ebattels, and tbát wbicb is equivalent to delivery of moveables, is in tbe case of a debt, an assignment and delivery of the security, and notice to the defendant of the assignment; and again — "In the case of a chose in action, yon must do every thing towards having possession which the subject admits; you must do that which is tantamount to obtaining possession, by placing every person who has an equitable, or legal interest in the matter, under an obligation to treat it as your property. Por this purpose, you must give notice to the legal holder of the fund ; in the case of a debt for instance, notice to the debtor, is, for many purposes, tantamount to possession.' — -If you omit to give that notice, you are guilty of the same degree of neglect, as he who leaves a personal chattel to which he has acquired a title in the actual possession and control of anothersee the whole doctrine discussed in the 2d vol. of White & T. L. 0. p. 594, et seq. In the case of Holbrook vs. Colburn, 6 Rich. Eq. 289, Ch. Wardlaw remarks, " In every administration of well regulated equity, when the assignee conceals his interest and permits the assignor to remain in possession of the instrument of debt, and thus acquires a delusive credit to the prejudice of innocent parties, he loses the advantage of priority in favor of such parties. Notice, however, is exacted for the protection of the debtor, and third persons dealing with him in transactions subsequent to the assignment, and not for the disturbance of fixed pre-existing equities."
This, then, we perceive is the doctrine which is held by the Court of Equity, in relation to the .assignment of choses in action, and the obligation which it imposes upon, the assignee to communicate to the debtor, notice of the assignment ; a doctrine which strongly commends itself to our approval, not less by the sound reasoning by which it is sustained than by the high standard of good faith which it inculcates. Let us for a moment reverse the picture, in order that we may contrast it with'the doctrine contended for. A single example will suffice.
A creditor assigns an open account against his debtor — the latter without the slightest knowledge of the assignment, pays up the debt to the creditor. Would not such payment by the debtor be in perfect conformity with Ms original undertaking ? And will it be said, that the assignee of such a claim, who wilfully withholds from the debtor all knowledge of the existence of his assignment, has a higher equity, and one more entitled to the protection of a Court of justice than has the debtor ?
Bather than incorporate into the jurisprudence which is administered in this Court, a doctrine which has little else to recommend it, than its tendency to encourage almost every species of covinous combination, it would be infinitely better for Courts of law to repudiate the whole doctrine, and leave it to be administered in that tribunal to which it appropriately belongs, and again fall back upon the antiquated doctrine of the common law.
" The great wisdom and policy of the sages and founders of our law, (says Lord Coke, 10 Co. 48,) have provided, that no possibility, right, title, ñor thing in action, should be granted or assigned to strangers, for that would be the occasion of multiplying of contentions and suits, of great oppression to the people, and the subversion of the due administration of justice." «
There is another ground however upon which the verdict may very well be sustained. I allude to the agreement between Burkett the creditor, and the defendant, by which the former consented to deduct from the demand sued on, the amount of the due bills which constitute the present discount. This it was perfectly competent for him to do, notwithstanding the discount consisted of co-partnership demands, upon the authority of the case of Dargan vs. Wilson, 4 Rich. 546. A majority of the Court however prefer to rest the decision of tbe case, upon tbe broad ground of tbe want of notice to tbe defendant, of tbe existence of tbe assignment.
Wherefore tbe motion is dismissed.
Wardlaw, Whitrer and Glover, JJv concurred.