Court Opinion

ID: 7048141
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:57:12.805676+00
Date Added: 2024-06-11T16:11:37.273391
License: Public Domain

On Petition foe a Rehearing.
Elliott, J.
It is assumed by the counsel of the appellant, that we did not correctly understand or state the effect of the contract between his client and Mrs. Wells respecting the purchase of the note executed by Henderson Cole. The counsel is in error. We did understand, and we do still understand, that the agreement was to pay one dollar to Mrs. Wells and a sum equal to one-half of the amount that mighij be realized directly by collection or indirectly by way of set-off from the note assigned to the appellant. We thought, and do still think, that a real, substantial interest was left in Mrs. Wells. She was the party, not the appellant, who would be the loser of a substantial sum in the event of the failure of his scheme, for all that the latter actually put in jeopardy was the trifling sum of one dollar. It *381is perfectly clear that there was an actual and real interest in Mrs. Wells, since success would yield her a large-sum and defeat keep it from her; while all the actual loss that defeat would entail upon the appellant would be the insignificant sum he had paid her.
The discussion in our former opinion was not addressed to the question of what interest qualified a party to prosecute an action as plaintiff, for no such question was involved. The question we were there discussing was: What interest must the maker of a promissory note, who seeks to defeat an action prosecuted by the equitable assignee of that note, show in a promissory note executed by the plaintiff’s assignor, in order to entitle him to make it available as a set-off? We said in our former opinion that “ We do not regard the appellant as a bona fide holder of the note transferred to him by Mrs. Wells, for the reason that he had not paid value before notice of the transfer.” This was the real point in the discussion, and we do not deem it necessary to again review the authorities' or discuss the question, but adhere, without doubt of its correctness, to our decision upon this point. To our minds it appears incontestably ttue that, as against one who has a prior equitable assignment, a man who has paid a purely nominal sum for a promissory note and agreed to pay a sum equal to the half of the proceeds that he may realize from it, is not a good faith holder of the note. Although the technical title to the whole of the note was. in the appellant, still, in equity, the bstantial interest in one-half of it was in Mrs. Wells, at least as against one possessing such prior rights as the appellee did possess; the only doubt is, whether as against such an equitable assignee as the appellee, the appellant has any interest at all in the note. If, however, one-half interest Avas in the appellant and the other in Mrs. Wells, then, under the authorities cited, the appellant, even if he had been a good faith holder of the one-half, could not have used it as a set-off because of the absence of the essential element of mutuality. The question, as we said *382in onr previous opinion, is not between the maker of the note and the payee, but between the maker and an equitable assignee of the payee, and the material inquiry is, what must the maker show to defeat the prior and superior equities of the assignee ? It seems plain to us that in order to defeat the claim of such an assignee the maker of the note must show, not simply a technical right to the note he asserts as a set-off, but a clear equity or right to all the note. In this respect the appellant fails; he does not show a clear equity to all the note he asserts as a set-off. A court of equity will examine the merits of a transaction, and will give heed to the substance and not the form, and when this is done here it will be found that the appellant is not, in equity, a good faith purchaser of the whole interest in the note, if, indeed, he is a purchaser of any interest at all as against ope claiming through a prior equitable assignment. Reflection has strengthened our confidence in our conclusion that, as against an equitable assignee such as the appellee is, the appellant acquired an interest in the note assigned to him by Mrs. Wells to the extent of only one dollar, and, as this is but a nominal sum, all the interest that he acquired was a nominal one. Of course, we do not mean to say, nor have we said, that-this would be the rule if the maker were defending on the ground of want of interest in the plaintiff; that, as we said in our former opinion, is not the question here; the question here is, what are the rights of one who has paid a nominal consideration for a promissory note as against an equitable assignee ?
It is said by counsel that the appellee paid no consideration for the assignment to him. The evidence is flatly and directly against counsel upon this point. Henderson Cole, the appellee’s assignor, borrowed of h is wife $3,500, and promised to pay it to her children. The notes were assigned to the appellee pursuant to this promise, and to secure a debt of $800 due him. The promise to the wife was undeniably an equitable consideration, and an equitable consideration will *383support a contract. Goff v. Rogers, 71 Ind. 459; Brown v. Rawlings, 72 Ind. 505; Wills v. Ross, 77 Ind. 1, p. 8 (40 Am. R. 279); Sedgwick v. Tucker, 90 Ind. 271, see p. 281. The authorities upon this subject are collected in an article entitled Equitable Consideration, 15 Central L. J. 386, and will, be found to fully sustain our conclusion.
Appellant’s counsel is greatly in error in assuming that a husband may not perform a contract to repay his wife money borrowed from her under an express promise to pay it to her. Equity will not only sustain the husband in performing such a promise, but it will coerce him into performance. Kelly Cont. of Mar. Women, 61, 62; Schouler Dom. Relations, section 191; Sims v. Ricketts, 35 Ind. 181 (9 Am. R. 679).
The wife of Henderson Cole had a right to contract with her husband that the money lent him should be paid to her children. All the elements of a valid contract were present, the consideration, the parties, and the agreement. The fact that the beneficiaries of the promise were the children of the person who advanced the consideration does not change the legal aspect of the case.
Creditors- can not compel a husband to reduce his wife’s dioses in action to possession. Poor v. Hazleton, 15 N. H. 564; Marston v. Carter, 12 N. H. 159; Arnold v. Revoult, 1 Brod. & B. 443; Barlow v. Bishop, 1 East, 432; Dennison v. Nigh, 2 Watts, 90; Skinner’s Appeal, 5 Pa. St. 262; Parks v. Cushman, 9 Vt. 320; Short v. Moore, 10 Vt. 446; Probate Court v. Niles, 32 Vt. 775; Godbold v. Bass, 12 Rich. 202; Arrington v. Screws, 9 Ired. 42; McClanahan v. Beasley, 17 B. Mon. 111; Winslow v. Crocker, 17 Maine, 29; Partridge v. Havens, 10 Paige, 618; Andrews v. Jones, 10 Ala. 460.
This .doctrine is founded on solid principle, and is in close harmony with that declared in the cases cited from our own reports. If the appellant had been a creditor of Henderson Cole at the time the agreement was made by the-latter with his wife, he could not have compelled him to take her money *384from her; and much less reason has h.e for asserting a rig'ht to do so when it appears that he did not become a creditor until after the husband had performed his agreement.
Filed Jan. 20, 1886.
A son may lawfully assist his father in conducting a litigation with his money, his time and his services. Bacon Abridg. Title Maintenance 413; Board, etc., v. Jameson, 86 Ind. 154, see p. 162.
The debt incurred by the father to the son was a just one, and he had a right to repay it. The consideration was a legal and a meritorious one. This consideration would alone have supported the transfer of the notes to the appellee. If the father chose to pay his debt to the son by transferring to him the notes executed by the appellant, he had a right to do so, and the transfer could only be impeached by showing fraud on the part of both the father and the son. No such fraud was shown, and the transfer must stand, for the rule is rudimentary that where a valuable consideration is paid for property, the transfer will be upheld unless it is shown that both the assignor and assignee participated in a fraudulent scheme to defraud creditors or other persons.
Petition overruled.