Court Opinion

ID: 7092960
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:07:53.939738+00
Date Added: 2024-06-11T16:13:08.857734
License: Public Domain

Lowe, J. —
The nature of this controversy, and the result of its determination below, is presented in the statement of the case; in the retrial thereof here, our first inquiry will be as to plaintiff’s indebtedness to Cook & Sargent, including the Mervin judgment. The whole amount, after purging the claim of its usury, was by the court below’fixed at $25,056.43. The correctness of this finding is not seriously controverted, except that it is claimed by the defendants that the Mervin judgment is an indebtedness do John 0. Sargent, instead of the firm of Cook & Sargent. The usury which infected the indebtedness as alleged in the petition, is confessed, and after re-examining the account, and going over the figures and calculations in connection with the evidence bearing upon the same, we have been unable to detect any material error in the amount thus ascertained and fixed upon; as to the Mervin judgment and the equities relating thereto, we will hereafter speak. Whether this amount has been paid by Burtis is a question of more difficulty. Cook & Sargent have received from him, and as. a payment on said debt the avails of six thousand acres of land, but out of this circumstance grow two or three seriously controverted points:
First. Whether they took this land of the plaintiff at a specified price per acre as purchasers under him ?
Second. If not, then in disposing of the land by sale as the authorized agents of the plaintiff, what did they obtain for the same ?
And lastly, if they conveyed the land in payment of their own debts, and received an advance price for the same, because of their reputed insolvency, Gan the plaintiff insist upon the benefit of such advanced price on settlement ?
*199As respects this last point we refrain from the expression of any opinion, for the reason that this feature of the defense is only made in argument, and not set up or alluded to in the answers of the defendants, and more especially, because if it was conceded that equity would deny the plaintiff the right to claim the advance price under the circumstances stated, nevertheless ■ no basis is laid or data given by the evidence in the case, whereby it is possible for us to determine the point in the value of the lands, above and beyond which a higher price was allowed. No allegation of the kind is made in the pleadings. No equitable claim of the sort is or can be predicated of the evidence, it comes simply by way of suggestion on the argument of counsel. The truth is, the theory of the defense is mainly based upon the point first above suggested, namely, that the plaintiff had on or about the 5th' of March, 1860, contracted to sell and did sell, these lands to Cook & Sargent at $8.50 per acre, at which price they were willing to account to him. Now this purchase of the lands is distinctly charged by way of defense in the answer of the defendants, and it devolves upon them affirmatively to establish the same by proof. This they did by the direct testimony of John P. Cook, but which was as positively disproved by the testimony of J. J. Burtis. There were circumstances corroborating each of these witnesses, with no preponderance, however, in favor of the defense.. In this equipoise of the evidence, the contested point was submitted to the determination of a jury, who found the same in favor of the plaintiff, which finding was afterward affirmed by the Court There is nothing in evidence impeaching either of these witnesses. It is a clear ease of misunderstanding, and we are to suppose that each honestly testified to the transaction as he understood it. Without analyzing upon paper the facts and circumstances corroborative of the testimony of each, for the purpose of *200showing our estimate of it, and the grounds of our decision, we propose stating simply, that after reviewing all the evidence bearing upon this point, we have been unable to reach the conclusion that the court and jury below erred in their settlement of this branch of the defense, and will leave it where they did, unsustained by a preponderance of the evidence.
The question, however, still ^remains, what did Sargent, the agent and trustee, in disposing of these lands, get for the same? It is conceded that he sold them to the Washington Bank of Boston, in part payment of a debt due from Cook & Sargent to that institution.
In the present attitude of the records and pleadings in the case, and in view of the express terms of the contract creating the trust, to the effect “ that all lands sold by sqid Sargent should be accounted for to said Burtis at the price for which they are, or may be sold,” we suppose whatever credit Cook & Sargent obtained from said bank, on their indebtedness, in consideration of a sale of those lands to it, the same credit should be allowed on Burtis’ indebtedness to them. This would only be effectuating the terms of the contract in force between the parties at the time the lands were sold to the bank. But just what this amount or credit should be, is not rendered clear, explicit, or even satisfactory by the evidence. We can only arrive at it approximately by calculation, founded upon certain figures and data furnished by the witnesses. For instance, it appears from the facts disclosed, that Cook & Sargent’s indebtedness to the bank aforesaid, was $93,975, that they proposed, through Sargent, the acting agent, to sell in liquidation of this debt, 12,483 acres of land, at a certain price per acre therein specified, which, in the aggregate, would amount to that sum. ' Among these were the Burtis lands, which, with 40 acres subsequently added, amounted in round numbers, to 6,000 acres, and were offered by Sargent at $34,891. *201The residue of the 12,483 acres were the lands of Cook & Sargent, these were offered at some $59,084, more or less. The proposition thus made was declined by the bank, but they did consent and agree to credit Cook & Sargent, in consideration thereof, with $67,242, which was finally accepted. This made a gross reduction in the price of the lands of some $26,749, or about $2.14 per acre. Now, Sargent, in his original proposition of settlement with the bank, offered some of the Burtis lands at $8.00, others at $6.50, and others again at $5.00 per acre, so that the average price at which they were put in when thus received, was about $4.17 or $4.18 per acre, and in consideration of which, Cook & Sargent obtained a credit on their account with the bank of some $25,065, more or less. It is conceded that this estimate or calculation is, to some extent, conjectural, yet with the data before us, we could think of no other method of arriving with greater accuracy at the facts of the case. Its uncertainty consists mainly in the circum-’ stance, that before the negotiation was fully completed between the parties, some of the Cook & Sargent lands embraced in the first offer, were exchanged for city property in Des Moines, which property is claimed to have been put in at $9,000; what effect, if any, this should have upon our calculation based upon the gross reduction at which the lands were put in, it is impossible to say. We believe, however, from the light we have, that the conclusion arrived at in the court below, as to the amount which Cook & Sargent realized from the Burtis lands, is as near the truth of the matter as can well be attained.
Assuming, 'therefore, the debt and credit to be &s thus found, it follows that Burtis’ liabilities to Cook & Sargent are all. extinguished, including the Mervin judgment, unless the latter is protected from the equities of Burtis, in favor of John O. Sargent, who claims to be the owner thereof by assignment, for value, and without notice of *202such equities. Granting that the assignment was taken in the manner stated, it nevertheless becomes a very grave question, whether in law or equity he is entitled to protection, especially under the circumstances of this case. Let us see what there aré. In August, 1858, Burtis conveys his lands aforesaid to George B. Sargent, in trust, to secure his indebtedness to Cook & Sargent, with authority to sell not below a minimum price, fixed by Burtis, and to account for the same at the price for which they may be sold. In November, 1859, Cook & Sargent became the owners, by assignment, of the Mervin judgment. On the 24th of March, 1860, they (Cook & Sargent), sold the Burtis lands at figures covering said judgment and all other indebtedness. On the 18th of April following, they rendered their account to Burtis, which set forth the items of their claim against him, among which was the full amount of this judgment; and crediting him with the proceeds of the land at $3.50 per acre. After this, namely, on the 18th day of May, 1860, this judgment was assigned to John 0. Sargent, who claims to be an innocent purchaser, without notice. But all the authorities agree, that a judgment is a mere chose in action; and whilst it is assignable, it does not, in its negotiation, occupy the place of unmatured negotiable paper, in which the assignee is allowed to claim a greater interest than was possessed by the assignor.' This is exceptional, and results from motives of policy, to promote the interests of commerce and- trade, in giving the requisite currency to their paper. Not so, however, with judgments or unnegotiable paper, in the transfer of which, the assignee takes the exact position of his vendor, who, neither in law or logic, is capable of imparting to the assignee any greater interest than he himself possessed at the time of the transfer; and thus, in obedience to the principles of natural justice, as the case at bar very well illustrates. Fifty or more days before John O. Sar*203gent obtained an assignment of this judgment, it had been fully paid to Cook & Sargent. The fact that they did not apply the payment or the proceeds of his land thereto, by entering satisfaction of record, does not alter the rights of Burtis. Cook & Sargent could not have enforced this judgment against Burtis whilst they had in their hands the avails of his lands, to the full amount thereof, as a set-off. If they attempted it, a court of equity would compel the allowance of the set-off, and enjoin the execution. Now, John 0. Sargent, their assignee, whether with or without notice, occupies no better position than they did, for this class of choses in action are not entitled to the protection of commercial paper.
By the express provisions of the statute, § 1796 of the Revision of 1860, all instruments in writing, for the payment of money or property, without words of negotiability, are assignable; and it further provides, that the assignee shall take them “ subject to any defense or set-off, legal or equitable, which the maker or debtor had against any assignor thereof, before notice of his assignment.” Now, no question is made of the non-assignability of judgments, they are like the above instruments, choses in action, and as they do not contain words of negotiability, it follows that the same rules must govern their transfer.as those of unnegotiable paper. This provision of the Code, coupled with the law of set-offs, which is made very broad under the statutes of this State, show the legislative intent, that if a judgment debtor or maker of one of these instruments has a set-off or equity, that equity should not be to him a barren right, or an exile to our courts of justice. Indeed, we have recently had occasion to recognize and settle this principle in the ease of Hurst v. Sheets & Trussell, 14 Iowa, 822, which was a bill in equity to compel a set-off of mutual judgments after one of them had been assigned, and we again repeat the remark then suggested as having been made by *204Lord Mansfield, that “natural equity, says that cross-demands should compensate each other, by deducting the less sum from the greater, and that the difference is the only sum which can be justly due.”
■ This doctrine of equities and set-offs is abundantly supported by authorities, a few of which are here referred to. Green v. Hatch, 12 Mass. R., 195; Bank of Niagara v. McCracken, 18 Johns. R., 498; Ford v. Stewart, 19 Johns., 342; McJilton v. Love, 13 Ill., 486 : Covel v. Tradesman's Bank, 1 Paige Ch., 130; Webster v. Wair, 1 Paige Ch., 319; Utica Insurance Co. v. Power, 10 Paige, 365; Gay v. Gay, 10 Paige, 367; Merrill v. Souther, 6 Dana (Ky.), 305; Ainslee v. Boynton, 2 Barb., 258; Bush v. Lathrop, 22 N. Y. (8 Smith), 535; Chamberlain v. Day, 3 Cow., 353; 6 B. Monr., 119. Some of these are exceedingly pertinent to the case at bar. Take the following cases, McJilton v. Love, 13 Ill., supra, where it was held that a judgment could not be transferred so as to vest the legal interest in the assignee. It is a mere chose in action, and the beneficial interest only passes by the assignment, the assignee takes it, subject to all the defenses that existed against it, in the hands of the party from whom he received it. In Merrill v. Souther, 6 Dana, 305, it was held, that, when cross-demands exist, and one of the parties is insolvent, the. other has an equitable right of set-off which cannot be divested by an assignment of the demand against him. 'A court of equity has jurisdiction to decree a set-off, when either of the parties are insolvent or non-resident, notwithstanding the demands are in the form of judgments.
The' supposed distinction between latent equities, as they are sometimes termed, and those existing between the original parties to the instrument was very well examined and discussed by Judge Denio, in the case of Bush, Adm., v. Lathrop, 22 Barb., 535. The facts were these: Noble, the plaintiff’s intestate, was the owner of a mortgage of *205$1,400, originally executed by one Addis to one Cole. He assigned tbe same as collateral security for tbe payment of $268, wbicb be owed to one Preston, wbo agreed to return tbe same on tbe payment of tbe debt thus secured. Tbe assignment was written on tbe back of tbe mortgage, and expressed a consideration of $268; and it contained a covenant, that $1,400 was due on tbe same; in other respects, it was absolute in its terms. Noble, died in November following, and Preston, in January after that, assigned tbe mortgage to Smith & "Warren, wbo assigned it to tbe defendant, Latbrop, for tbe full value of its face paid. The plaintiff soon thereafter learning what bad been done with tbe mortgage, immediately tendered to tbe defendant tbe amount of tbe principal and interest due on bis intestate’s note, and demanded a reassignment of tbe mortgage, wbicb was refused. Upon tbe subject of tbe bonafides of tbe several assignments, there was nothing to impeach tbe same, unless tbe smallness of tbe consideration expressed in tbe assignment from Noble to Preston did so.
In this state of case, tbe legal conclusion of tbe Court was, that tbe plaintiff bad a redeemable title to tbe mortgage, and could demand a reassignment of tbe same. This decision not only recognizes and ascertains tbe general doctrine, that tbe assignee of a chose in action takes it subject to all equities existing at tbe time in favor of tbe debtor against tbe assignee, but goes further, and bolds that tbe equities existing between an assignor and an assignee of an unnegotiable instrument, attend tbe title transferred to a subsequent assignee for value, and without notice. It fully indorses Lord Thurlow’s rule, that a purchaser of such a security must always abide by tbe case of tbe person from whom be buys.
It also very satisfactorily answers one of tbe defendants’ objections to tbe plaintiff’s equity in this case, to tbe effect *206that it was only available between the original parties to the judgment, and did not accompany the judgment when it passed into the hands of a subsequent assignee; and his counsel cited some authorities, tending to support this principle, a few of which Judge Denio reviews, and insisted that they never obtained sufficient root in the jurisprudence of New York to be followed as judicial precedents.
Our remarks upon this case have already become too much extended to notice by name, or in detail, the various authorities relied upon by the defense. We do not think, however, that they shake the rule or principle under discussion, as laid down in the later decisions to which we have referred.
The case of Davis et al. v. Milburn, 3 Iowa, 170; 8 Mass., 454; 2 Johns. Ch., 442 ; 5 Mason, 214; 2 Sumn., 411, and others, are cited to sustain the defendants’ view of this case; but they most all turned, and were decided upon other questions. It is true some of them contained dicta proving the defendant’s side of the case, but these ought not to prevail over adjudications, made directly upon the question in dispute.
Upon the whole, our conclusion is, that the judgment below should be
Affirmed.