Case Name: Terry v. Wooding
Court: Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1856-01
Citations: 2 Va. (Patt. & Heath) 178
Docket Number: 
Parties: *Terry v. Wooding.
Judges: Absent, Tyler, J., ana Gilmer, J. — (Gilmer, J. had been counsel in the cause in the court below.)
Reporter: Virginia Reports
Volume: 2
Pages: 711–715

Head Matter:
*Terry v. Wooding.
January Term, 1856,
Richmond.
Absent, Tyler, J., ana Gilmer, J. — (Gilmer, J. had been counsel in the cause in the court below.)
Bonds — Assignment — Case at Bar. — A. purchased land of B., and for the purchase money executed four bonds, payable at different dates. B. shortly afterwards became insolvent, and assigned three of the bonds to G., and subsequently assigned the bond first payable, upon which a considerable balance remained due, to D. A. paid the balance due on the bond assigned to I)., and G. recovered judgments against A. on two of the bonds assigned to him. Upon a bill in equity by A. to injoin the execution of these judgments to the amount of certain equitable set-offs to which he was entitled against B. — Held :
i.Same — Same—Application of Equitable Set-Offs.— That under the circumstances, A. wasnotbound to apply these set-offs to the bond first payable but last assigned, as it was the intention of A. and B., at the time of the execution of the four bonds, that the bond first payable should be considered a cash payment, and that the set-offs should be applied to the other bonds.
2. Same — Same—Notice to Obligor. — The record of a deed of trust, by which bonds are assigned, does not constitute notice to the obligor of the assignment.
3. Subrogation — Set-Off — Equitable Rights. — The right of a vendee of land, who has been decreed to pay the amount of a judgment against his vendor, which was a lien upon the land, to be substituted to the rights of the judgment-creditor. and to set-off the amount of the judgment against a bond given for the purchase money, are equitable rights.
4. Equitable Set-Offs. — What are equitable set-offs ?
5. Same — May Be Set Up in Equity after Judgment at Law. — A defendant is not required to plead his equitable set-offs at law, but may come into equity, after a judgment at law, to establish his set-ofts and enjoin the judgment.
6. Forfeited Forthcoming Bonds — From What Time a Lien. — A forfeited forthcoming bond is a lien upon land from the date of its return to the clerk’s office. (Jones v. Myrick’s ex’ors, 8 Grat-tan, accord.)
On the 29th August, 1843, Jacob T. Coles and Thos. W. Wooding entered into a contract under seal, by which Coles agreed to sell to Wooding a tract of land, at the price of eleven dollars per acre, the land to be*surveyed and a good title made to Wooding, who was to pay one-half the purchase money on the first of November following, and the residue in three equal installments, payable respectively on the first day of June in the years 1845, 1846 and 1847.
The survey was made, and on the 22d September, 1843, Jacob T. Coles and wife executed a deed to Wooding for the land, and Wooding executed his four bonds to Coles for the purchase money, payable according to the terms of the contract — the first payable on the 1st November, 1843, for the sum of $4,202 34, and the others each for the sum of $1,400 78.
Coles being in embarrassed circumstances, and desiring for his further relief to obtain an advance on his growing crop of tobacco, applied to Wooding to become his surety in a bond for one thousand dollars to one Richard Tyree, a commission merchant of Lynchburg, who was willing to make the advance on the crop, to be consigned to him at Lynchburg for sale, provided additional security was given, Wooding became the surety in this bond, which was dated the 29th September, 1843, it being understood between him and Coles, that if the tobacco crop proved insufficient to discharge it, Wooding might indemnify himself out of Coles’s money in his hands. In pursuance of this arrangement, Coles afterwards, on the 6th of January, 1844, conveyed his crop of tobacco to Richard Tyree, in trust, to indemnify Wooding for his said suretyship.
This first bond'given by Wooding to Coles for the purchase of the land was considered by the parties as a cash payment, and Wooding paid $1,359 thereof prior to the 1st November, 1843, and had reduced the amount due on that bond to the sum of $1,753 60, when, on the 6th February, 1844, it was assigned by Jacob T. Coles to Robert T. Coles. This bond was finally paid off on the 24th May, 1845.
Jacob T. Coles, on the 6th January, 1844, having become insolvent, conveyed by deed to Jos. M. Terry, *the appellant, with other property, the other three bonds of Wooding given for the land, in trust, to secure certain debts to John Coles and others.
Subsequently, and during the year 1844, Wooding paid for hauling Coles’s tobacco crop to Lynchburg for sale, the sum of $120, the overseer’s share thereof, being one-eighth, $35, and also, on the 31st July, 1843, paid one Claiborne the sum of $211 48, the amount of rent due him for the land on which part of the tobacco had been made, and for which he had caused a distress warrant to be levied on the crop. The proceeds of the sale of the tobacco were insufficient to satisfy Tyree, and on the 5th September, 1845, Wooding paid him $209 46, the balance due on Coles’s bond.
Jacob T. Coles, in the year 1842, had become surety for Linn & Patton in a delivery bond, to Daniel Price, upon which execution issued against Coles on the 23d October, 1843, but which had been returned forfeited several months previous. The land purchased by Wooding of Coles was, by a decree of the Circuit Court of Pittsyl-vania, on the 29th May, 1845, subjected to the lien of Price’s judgment against Jacob T. Coles, as the surety of Linn & Patton, and the said lien, amounting to $512 72, was discharged by Wooding on the 2d day of June, 1845.
In 1847, Terry obtained judgments against Wooding on two of the bonds assigned to him by Jacob T. Coles. Wooding exhibited his bill in the Circuit Court of Pitt-sylvania county,' setting forth the above facts, and praying an injunction to the said judgments to the amount of the above payments made by him on account of Jacob T. Coles, and also to the amount of $16 66, paid by him the 1st Jan’y, 1844, for completing a barn on the land purchased of Coles, which Coles had contracted to finish, and the value of eleven acres of the land, to which John Coles claimed title, and to recover which he had instituted suit. To this bill he made Tyree, Jacob T. Coles, Joseph M. Terry, John *Coles, and other creditors secured by the trust deed of the 6th January, 1844, parties defendant. The injunction was granted.
Jacob T. Coles and Terry answered. Terry insisted that the set-offs claimed by Wooding should have been pleaded at law; that Wooding had notice of the assignment to him for the benefit of John Coles as early as 23d December, 1843, and before the assignment of the first bond to Robert T. Coles; that these claims should have been reserved out of that bond; that the payments for hauling the tobacco, to Claiborne, and to the overseer, were voluntary on the part of Wooding, and not at the request of Coles; that the decree in favor of Price, subjecting the land in the hands of Wooding, was erroneous; and that, at all events, it did not bind them, as they were not parties to it.
Upon the hearing, the court perpetuated the injunction as to the amount of the following sums paid by Wooding, viz: $120 for hauling the tobacco to market, $35 paid the overseer, $21148 paid Claiborne’s attachment, $209 46 paid Tyree, $512 72 paid Price’s judgment, and $16 66 paid for completing the barn — and dissolved the injunction as to the residue of the judgments.
From this decree Terry, in his own right and as administrator of John Coles, appealed to this court.
Bouldin, for the appellant:
Equity has no jurisdiction. The set-offs claimed by Wooding should have been pleaded at law, and no excuse has been shewn for not pleading them. George v. Strange’s ex’or, 10 Grat. 499; Slack v. Wood, 9 Grat. 40; Allen, Walton & Co. v. Hamilton, 9 Grat. 255; Hudson v. Kline, 9 Grat. 379. This is true, although there might originally have been concurrent jurisdiction at law and in equity. See opinion of Baldwin, J., in White v. Washington’s ex’or, 5 Grat. 645. Every item of set-off claimed by the appellee might have been asserted by him at law. He might have' brought assumpsit *in each case against the assignor of the appellant. The money was paid by Wooding under a duty or right, and therefore assumpsit would lie. If there was no duty or right, then the payments were without authority, and therefore no ground of set-off. The money paid under the decree in favor of Price, was paid as surety, and might have been recovered by motion on the judgment.
There were four bonds. The three last due were assigned to the appellant. By analogy to the principles established in McClung v. Beirne, 10 Leigh, 394, and the cases there cited, the credits to which the obligor was entitled should have been applied to the bonds last assigned. Ta3'lor v. Spindle, 2 Grat. 70, 71.
Payments were made by Wooding to an insolvent obligee, after notice that the other bonds had been assigned.
Since the petition of appeal in this case, it has been decided by the Court of Appeals, that a forthcoming bond is a lien upon the lands of the obligors from the date of its return to the clerk’s office forfeited.
Grattan and Patton, for the appellee:
Price’s judgment was a lien upon the land prior to the purchase by Wooding. Jones et al. v. Myrick’s ex’or, 8 Grat. 179. The debt to Tyree was contracted in 1843, and was intended to be paid out of the .growing' crop of tobacco, which could not be got to market until 1844. It was to be delivered to Tyree, at Lynchburg, for sale, and it could not have been gotten there, unless Wooding had contracted to pay for its transportation, the liens for the overseer’s share, and of the distress warrant. The balance on the bond to Tyree was paid by Wooding on the 5th September, 1845. The first bond was fully paid on the 24th May, 1845. Wooding could not have had notice of the assignment to Terr3, as contended by the appellant, in December, 1843, because no assignment is proved earlier than the 6th January, 1844, the date of the deed of trust. That *deed was not notice to Wooding, who was neither a creditor nor a subsequent purchaser, but a debtor. There is no proof of notice to Wooding of the assignment to the appellant prior to the institution of suit on the bonds. The decree in favor of Price was not made until after Wooding had discharged the first bond, which had been assigned to Robert T. Coles. Until that decree, he did not know that he should have that debt to pay. So as to the balance to Tyree, until the tobacco was sold in September, 1845, Wooding did not know that he should owe Tyree anj’thing. As to the question of jurisdiction : The case of Allen, Walton & Co. v. Hamilton violates plain principles of equity. There the judgment was obtained by fraud, and a court of-equity should have relieved against it. So of Slack v. Wood. But, after all, they merely establish, that where a defendant has a legal defence, it must be made at law. Here the defence of the ap-pellee was equitable. These set-offs were purely equitable claims. Wooding was entitled to recover, from Coles, the amount of the decree paid by him, upon the principle of subrogation, which is a doctrine of equity. Wayland v. Tucker, 4 Grat. 267. A party is not bound to plead an equitable set-off at law. Ragsdale v. Hagj, 9 Grat. 409.
These items of set-off were matters of which a court of law could not properly have disposed. All the payments by Wooding, on account of the tobacco, merely conferred on him a right to be substituted to the rights of Tyree. They were all in execution of the trust, which Tyree was bound to execute, and in which Wooding had an interest. John Coles well knew that the first bond for the land was intended as a cash payment. Of what avail would the advance of Si,000 have been to Coles, if it was immediately to be reserved out of the first bond due from Wooding? These matters could not have been property considered in a court of law. All the parties interested in the several bonds must be convened before the same court.
*Bouldin, in reply:
It is proved in the record, that Wooding had notice of the assignment to Terry as early as December, 1843. He does not deny notice in his bill. Wooding had ceased to be the debtor of Jacob T. Coles on the last three bonds, prior to the assignment of the first bond to Robert T. Coles. And, in this view, it is unimportant, whether these claims were equitable or not. Against whom was the equity of Wooding, but against the last assignee? Taylor v. Spindle, 2 Grat. 70. Suppose these claims to rest upon the principle of substitution, they are against Jacob T. Coles and his last assignee. All these claims, however, were plain money demands, upon which assump-sit would lie. Judge Baldwin’s opinion, in White v. Washington’s ex’or, is affirmed in Hudson v. Kline, 9 Grat. 379.
Bonds. — On matters pertaining to bonds, see mon-ographic note on “Bonds' appended to Ward v. Churn, 18 Gratt. 801.
Assignments. — See monographic note on “Assignments” appended to Ragsdale v. Hagy. 9 Gratt. 409.
Forfeited Forthcoming Bonds -From What Time a Lien. — See foot-note to Jones v. Myrick, 8 Gratt. 179; monographic note on "Statutory Bonds” appended to Goolsby v. Strother, 21 Gratt. 107.
Equity Practice — Land Conveyed with Warranty against Incumbrances — Rights of Grantee. — See principal case cited in Johnson v. Young, 20 W. Va. 683; foot-note to Ragsdale v. Hagy. 9 Gratt. 409.

Opinion:
CLOPTON, J.
The appellee, on the 29th of September, 1843, purchased of Jacob T. Coles a tract of land, and executed a bond, payable on the 1st of November, 1843, for $4,202 34, being one-half of the purchase-money ; and, for the other half, he executed three other bonds, in equal sums, payable respectively on the 1st day of .Tune, in the years 1845, '46 and '47. By the agreement and understanding of the parties, the large bond, although a few days were given for its payment, was to be considered as a cash payment. The vendor, Jacob T. Coles, was in failing circumstances, and, to relieve himself from the pressure of immediate demands, he sold his land for one-half of the purchase-money in cash ; and in addition to this, for his further relief, he obtained from Richard Tyree, a commission merchant in Lynchburg, an advance of $1,000, to be repaid out of his crop of tobacco made in 1843, which was to be consigned to the merchant for that purpose; but the commission merchant refused to make the advance without additional security. In consequence of this, the appellee, Wooding, became the surety of Jacob T. Coles, in a bond to Tyree, for $1,000, dated 29th September, *1843, and the tobacco was conveyed to Tyree, by deed, on the 6th of January, 1844. Although this bond was made payable on demand, yet it was agreed and understood between the parties, that its payment was not to be demanded until the crop of tobacco could be sent to market in the following year; and Wooding became the surety, upon the express agreement with Coles, the principal, that if the proceeds of the tobacco should be insufficient, that he would be perfectly secure, having the means of Coles in his hands to save him harmless. These means were what he owed for the purchase of his land, as he was not indebted to him on any other account.
The bond due on the 1st of November, 1843, was not paid at maturity, but was reduced to a comparatively small balance, by payments at several times, some of which were before maturity, when, on the 6th of February, 1844, Jacob T. Coles assigned it to Robert T. Coles, who, on the 10th of February, 1844, gave written notice of the assignment to Wooding, who finally discharged it on the 24th of May, 1845. In -the meantime, Jacob T. Coles had, on the 6th of January, 1844, by deed, assigned the three last bonds for the purchase-money, to Jos. M. Terrj', the appellant, for the benefit of John Coles. The crop of tobacco consigned to Tyree, for the discharge of the bond due to him, proved insufficient for that purpose; and, on that account, Wooding, before he paid the balance due on the bond assigned to Robert T. Coles, had paid, for getting the tobacco to market, the rent of the land on which it was made, the overseer's share of the crop, and the balance due to Tyree, sums amounting in the aggregate to $575 94. He had also paid a small sum for finishing a tobacco barn, which Coles, his vendor, had agreed to pay for.
On the 29th of May, 1845, by a decree of the Circuit Court of Pittsylvania, the lands purchased bj Wooding of Jacob T. Coles were subjected to the .lien of a judgment, in favor of Price against Jacob T. Coles, as surety for Ifinn & Patton in a delivery bond, which lien, ^amounting to $512 72, Wooding discharged on the 2d day of June, 1845.
Terry having obtained judgments on two of the bonds assigned to him by the deed of January 6th, 1844, Wooding applied for the injunctions awarded in this cause, asserting in his bill the right to set-off the demands before mentioned against the judgments. Upon the hearing, the set-offs were allowed, and the injunctions perpetuated; from this decree, this appeal was allowed.
In the assignment of error, and in the argument, several principles have been contended for: One is, that the set-offs were applicable only to the first bond, and that Wooding was bound so to apply them. On this question, the court is of opinion, that they were not applicable to the first bond, because so to apply the sums paid on account of the bond to Tyree, would violate the agreement between Jacob T. Coles and Wooding at the time he became surety. The bond to Tyree was to be paid out of the tobacco, which could not be in market before 1844. The first bond to Jacob T. Coles was intended to be as cash, for the relief of the vendor, who, in addition, and for his further immediate relief, obtained the advance from Tyree. To suppose, then, that J. T. Coles, when he agreed that Wooding should be secured out of his means in Wooding's hands, intended that security to apply to the first bond, his object of obtaining additional relief would have been defeated; for the payment of the first bond, at least to some extent, would thereby have been postponed until the result of the sales of the tobacco was known; of which agreement or understanding between Wooding and Jacob T. Coles, John Coles was apprised before and at the time of the assignment to Terry for his benefit; and, also, because there is no sufficient proof in the record that Wooding had notice of the assignment to Terry, before he had notice of the assignment of the first bond to Robert T. Coles. The only evidence referred to, as tendng to prove that he had notice of the ^'assignment to Terry, is his silence in his bill upon the subject, and the evidence of Pannill, who says that Wooding informed him, on the 25th of 'December, 1843, that John Coles informed him (Wooding) that Jacob T. Coles had transferred to him (John Coles) all the bonds except one. This could not have referred to the assignment of Terry; for the deed had not then been executed. The bonds are not in the record, and they do not appear to have been assigned otherwise than by the deed of the 6th of January, 1844, and the judgment at law was in the name of Jacob T. Coles, who sued for the benefit of Terry, trustee. And as to the amount paid in discharge of Price's judgment against Jacob T. Coles, the decree, which fixed the lien of that judgment upon the lands in the hands of Wooding, was not rendered until after Wooding had fully paid off the first bond assigned to Robert T. Coles; and Wooding, until he discharged that lien, on the 2d of June, 1845, had no right of set-off against any one; and he then only became entitled to be subrogated to the rights of Price, the judgment creditor.
Another ground of error is, that the payments on account of the tobacco were voluntarily made by Wooding. Upon this question, the court is of opinion, that, as the tobacco was specially pledged by deed to Tyree, he might and ought property to have, made the payments, as they were charges for which the tobacco was primarily liable, to wit, the landlord's lien by distress levied, the overseer's share of the crop and the charges of transportation, and charged the sums paid ag'ainst the proceeds of sale in the account of sales; and as Wooding was surety in the bond to Tyree, and thus bound to make good any deficiency, he had an interest and a right to look to the proper application of the subject ; and having paid those sums, and thus, pro tanto, increased the amount of the proceeds' of sale credited on the bond, he is entitled to be substituted to the rights of Tyree.
Another ground of error is, that the set-offs are legal, *and cannot be set up in equity. Upon this question, the court is of opinion, that the set-off claimed for the payment, in discharge of Price's lien, is purely equitable, arising from the doctrine of substitution — the creature of equity; and that the other, arising out of the bond to Tyree, is also equitable; for although the balance paid on the bond, had it stood alone, was a legal set-off, yet, as it was connected with the other payments made by Wooding for Tyree, the creditor, on account of the subject pledged, and involved the necessity of settling the accounts before the balance could be ascertained, Wooding is entitled to be substituted to the rights of Tyree in equity.
The last error assigned was abandoned, under the influence of the decision of the Court of Appeals, in Jones, &c. v. Myrick's ex'or, 8 Grat. 179, and the small set-off for finishing' the barn is not controverted.
The court is, therefore, of opinion, that there is no error in the said decree, and that it should be affirmed with costs.
FIELD, P., and THOMPSON, J., concurred.