Case Name: James S. Colburn vs. William Matthews
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1846-01
Citations: 2 Rich. 386
Docket Number: 
Parties: James S. Colburn vs. William Matthews.
Judges: Richardson, Evans, Butler and Frost, JJ. concurred.
Reporter: South Carolina Law Reports
Volume: 31
Pages: 386–392

Head Matter:
James S. Colburn vs. William Matthews.
The defendant purchased from the plaintiff a judgment against C D, and gave his bonds for the purchase money. Held, in an action on the bonds, that the defendant might shew that the judgment had been fraudulently confessed, and was therefore void as against the creditors of C D, and that the defendant had been deceived and injured by the false and fraudulent representations of the plaintiff, that the judgment was valid and bona fide.
Before O’Neall, J. at Charleston, Spring Term, 1845.
The report of his Honor the presiding Judge is as follows :
“ This was an action of debt on several bonds of the defendant. The defence stated to me, and as I noted it at the time, was ‘failure of consideration.’
“ H. A. DeSaussure, Esq., was sworn, and proved the execution of the bonds. On his cross-examination, he stated the transaction out of which the bonds arose. He said various notes of B. P. Colburn & Co., were placed in his hands for collection by the plaintiff; that after various negotiations, the firm confessed judgement to the plaintiff, 12th June, 1841, for $51,123 33-100, debt, and $18 75-100, costs. After some time, it was found that this judgment would swallow up all the assets; and then B. P. Colburn and Isaac Mordecai began to contest the mat ter with the plaintiff. Mr. Matthews, also, came into the controversy, and after some time a compromise was effected by Mr. DeSaossure and M.r. Memminger, and Mr. Matthews became the purchaser of the judgment, for, perhaps, eleven or twelve thousand dollars, and gave several bonds of two thousand four hundred dollars each. The judgment was regularly assigned to him. The judgment is unreversed and in full force. The proof proposed to be given, to make out the defence, was, that the judgment confessed by B. P. Colburn & Co. was fraudulent, inasmuch as it was alleged that James Smith Colburn, the plaintiff, was one of the firm. I thought, and so ruled, that the assignee of the judgment could not question its bona fides ; and generally, that a judgment could not be impugned by the parties for fraud, in this collateral way. 1 further thought, that if the allegation was true that James S. Colburn was one of the firm of B. P. Colburn & Co., the assignee of the judgment, if he had any remedy on that account, must have it in another form.”
The jury, under the instructions of the presiding Judge, found for the plaintiff.
The defendant appealed, accompanying his notice of appeal with a statement of what he had proposed to prove. The statement and ground of appeal are as follows :
The defence was, that defendant, being indorser on the notes of B. P. Colburn & Co. to a large amount, purchased a judgment held by James S. Colburn against the said firm, (which had stopped payment,) and which judgment would swallow up all their assets. For the purchase of this judgment, the bonds in question were given. The plea was fraud. That James S. Colburn, being secretly a partner of the said firm, procured himself to be made a judgment creditor, under false pretences; and by aid of this judgment so procured, imposed upon an innocent in-dorser, and induced him to buy the said judgment to save himself as indorser, when, in fact, the plaintiff, as partner, was liable on the very notes which the said indorser had to take up; thus procuring from him bonds without any equivalent consideration. His Honor, the presiding Judge, refused to permit the defendant to go into the proof of the facts, inasmuch as they would impeach the validity of a judgment of this Court. Defendant appeals from the decision of the judge, and asks a new trial, on the following ground:
Because his Honor erred in deciding that the evidence, under the circumstances, was inadmissible.
Rhett and Yeado?i, for the motion.
Mazyck, contra.

Opinion:
Curia, per Wardlaw, J.
The defendant filed two pleas : First, that the bonds were procured by certain fraudulent representations, made by the plaintiff to the defendant : Second, that they were void for fraud generally. A single replication to the two pleas traversed all fraud as alleged, and issue was joined.
In support of the first plea, the defendant offered to prove that J. S. Colburn, the plaintiff, was a secret partner with B. P. Colburn <fc Isaac Mordecai, and that the judgment for which the bonds were given was fraudulently confessed by the ostensible partners to the secret partner.
Now it may be that, upon the second plea, the defendant was estopped by his seal from contesting the consideration of the bonds, and that the only fraud he should have been permitted to shew, was such fraud as made the bonds void ab initio, — that is, fraud in the execution of the bonds, and not fraud in the previous transactions which induced them, (6 Munf. 358; 2 Johns. R. 177,) and it may be that the first plea was bad, and should have been met by a demurrer. (See Cowp. 47; 13 Johns. R. 430.)
But the evidence offered was pertinent to the issue joined on the first plea, and, (without deciding whether a repleafier or a judgment for the defendant should have followed a general verdict for the defendant, upon an issue joined on the first plea only,) it is sufficient to say that, upon the trial of the issue, the evidence should have been heard. (6 Munf. 120 ; 2 Rand. 426.) Of itself, it would not have availed the defendant, but accompanied by proof of the defendant's having been induced to give the bonds by representations that the judgment was bona fide, and of injury that had resulted to him from the misrepresentations, this'evidence might have sustained the affirmative of the issue.
The circuit judge seems to have supposed that it was incompetent to inquire concerning the judgment. No doubt, that judgment was binding between the parties, and was conclusive of the indebtedness of the defendants in the judgment to the assignee of the judgment, as, before the assignment, to the plaintiff in the judgment. But it will be seen that the inquiry, needful in investigating the alleged fraud, and really proposed, was not into the validity of the judgment, but into its money value. A fraudulent judgment, good between the parties, but void as to creditors of the defendant in the judgment, when imposed upon a purchaser as a bona fide jttdgment, is just like a mortgage in similar circumstances. If the purchaser might shew that he had been defrauded by deceitful representations concerning the character and value of the mortgage, so should he be permitted to shew the like representations concerning the judgment, whereby he was induced to purchase, as valuable, that which was worthless and unproductive.
Very difficult questions may hereafter arise in the case: shall any fraud established, sustain the plea, and thereby defeat the whole bonds? — or may there be an assessment of the sum really due on the conditions of the bonds, after abatement for'the fraud ? If the former, shall the defendant, who, by the fraud, has lost something, still retain the judgment, without inquiry into its value? — and, if so, shall this be a total loss to the plaintiff, or may he, by other proceeding, recover back the true value of the judgment ? If the latter, shall the abatement, for loss by the fraud, be absolutely of the whole amount of loss, or only .relatively of that amount, adjusted according to the proportion between the price paid for the judgment and its nominal amount, or between the price paid and the real value of the judgment?
Most of these questions would have been avoided if the defendant, according to our practice, in admitting these equitable defences to actions on bonds, had claimed, by way of discount, damages for the failure of the consideration of the bonds by deceit or otherwise ; and, perhaps, upon some of the questions, a judgment more suitable to the practice of a law court might have been obtained by different pleading on the part of the plaintiff. Having been brought-into this discussion, these questions are now only hinted at, that it may be seen they have not been decided, and that the parties may shape their courses according to the views they may respectively take of them. The motion is granted.
Richardson, Evans, Butler and Frost, JJ. concurred.