Court Opinion

ID: 4927893
Source: CourtListenerOpinion
Date Created: 2021-09-24 00:59:22.278107+00
Date Added: 2024-06-11T08:13:29.585329
License: Public Domain

The following dissenting opinion was delivered by
Shepley J.
Certain persons associated under the name of the Wayne Scythe Manufacturing Company, became indebted to Messrs. Jonathan Hyde & Son, who brought a suit against them, and recovered judgment against the plaintiff, the defendants, Asa Gile, and several others. Upon an execution issued thereon, the judgment debtors, with the exception of one, were arrested and gave bonds according to the provisions of the statute. These bonds were forfeited; and the judgment had been partly paid, when Gile, one of the judgment debtors, applied to the judgment creditors to obtain an assignment of the judgment and execution to him or to some person for his benefit. To this they assented, and in writing gave their attorney authority to make such an assignment upon payment of the amount due to them. Gile, in accordance with this arrangement, paid and secured to their attorney that amount, and took an assignment in writing. of the judgment and execution to Edwin E. Tuttle for his own benefit. There can be no doubt, that it was the intention of all parties to make a sale and purchase of the judgment, and an assignment and not a payment of it; and that intention should be carried into effect, if it be competent for a judgment debtor to make a purchase of a judgment against himself and others. May not one of several makers of a negotiable promissory note, or bill of ex*65change, before it becomes due, lawfully purchase and make sale of it ? What legal principle is violated by it ? It is not perceived, that there could be any legal objection to one of several makers becoming the equitable owner by purchase of a promissory note not negotiable. There might be some difficulty in the complex transactions of business in determining, whether the note was paid or purchased; but it would have - reference to the fact and not to the law of the case. Such a purchase would not deprive the other parties to the paper of any legal right. Their rights upon a payment of the whole, or more than their proportion, wmuld remain unaltered. And the original holder might, as well as the purchaser, compel any one of the makers to pay the whole. The form in which the debt may exist would not seem to make any difference respecting the right of purchase and sale. The collection of a judgment assigned must be enforced in the name of the creditor, who might, without an assignment or sale, agree with one of the judgment debtors to collect it partly or wholly of one or more of the debtors, according to the pleasure of that one. By making an assignment to him he would but enable him to accomplish the same purpose. The jury have found under instructions sufficiently favorable, on this point at least, to the defendants and upon testimony fully authorizing them, that the money was paid in pursuance of an agreement for an assignment of the judgment, and not in payment of it, and that it was assigned accordingly. The decision in the case of Dunn v. Snell, 15 Mass. R. 481, sanctioned an assignment by a verbal agreement to an officer, who, having neglected his duty, paid the debt to the creditor to obtain the benefit of the execution. The cases of Hammatt v. Wyman, 9 Mass. R. 138; and Brackett v. Winslow, 17 Mass. R. 153, were cases of payment by one of the judgment debtors without any sale or assignment by the judgment creditor as the consideration for the payment. That of Stevens v. Morse, 7 Greenl. 36, was of a like character, except that the payment was made by a third person, out of what was regarded as the property of one of the debtors. And there is a strong implication in the *66reasoning of the opinion, that an assignment by the creditor would have been considered as good. If an assignment to a judgment debtor could not have been good, it would seem to have been unnecessary in all these cases to have labored to prove the transactions, constituted a payment, and not an assignment. In the case of Nickerson v. Whittier, 20 Maine R. 223, a surety was permitted by an agreement to acquire the beneficial interest in a judgment against himself and the principal.
The transfmio unius creditoris in alium of the civil law is usually denominated subrogation. When the relation of debtor and creditor subsists between two persons only, and the debtor pays with his own money, the claim is extinguished. When a .third person pays the debt, he is entitled to be subrogated to the rights of the creditor. Inst. Just. c. 3, tit. 29; Dig. c. 36, 39. When the debt was due from several persons, their rights in this respect were regulated by the civil code of France, which declared, that a joint debt due from several debtors would not be necessarily extinguished by a payment made by one of them from his own funds, but that he would be entitled to a subrogation of the rights of the creditor. Code civil, liv. 3, tit. 3, <§> 11, art. 1250, 1251. When one of several joint debtors stipulates before payment for a cession of the rights of the creditor to a third person for his benefit, he does but effect by agreement, what by the French law he would obtain without it in a more direct form to himself. The other debtors are not injured by such an arrangement; and there can be no technical difficulties in the common law to prevent its being effectual; for in such case the rights of the creditor and debtor do not become united in the same person.
The other point presented by tire exceptions arises out of the instructions respecting the amount, which the plaintiff might be entitled to recover. He owned only one out of forty shares, into which the capital of the associates was divided, when the debt due to the Messrs. Hydes was contracted; and there were then ten associates. It is contended, that the plaintiff is entitled to recover of the defendants only one *67fortieth, or at most, one tenth part of what he was obliged to pay on account of the neglect to pay the debt. And that he must look to his associates for the remainder. After the debt was contracted the plaintiff sold his share to one of the defendants, or rather appears to have transferred it to him for the purpose of obtaining an indemnity against all liabilities on account of it; and received therefor an obligation in the following words: — “ Know all men by these presents, that I, Allen Fiske of Wayne, County of Kennebec, State of Maine, as principal, and Ezra Fiske and Moses Hubbard, do covenant and bind ourselves in the sum of three hundred dollars to B. L. Lombard of said Wayne, to clear him from all liabilities, tax, or assessment, that have or may arise from said Lombard’s one share in the scythe factory in said Wayne. Given under our hands this 20th July, A. D. 1839.” If it should be considered to be the intention of the parties to relieve the plaintiff only from the payment of any tax or assessment, which must be made equally upon all the shares, the word “liabilities” would have no effect or influence upon the contract, which also contemplated a relief from past as well as future liabilities by the use of the words, “ that have or may arise.” The language of the contract is not only sufficiently comprehensive to include all liabilities, to which the plaintiff might in any legal manner be subjected by reason of his having been the owner of that one share, but effect cannot be given to the whole of it by a more restricted construction. The intention appears to have been, that Fiske should assume the position and rights of the plaintiff, and be subjected to all his liabilities, as one of the associates ; and that the plaintiff should be free from them. As one of the associates, the plaintiff might be compelled to pay all their debts, and to look to them for repayment. And this would seem to furnish sufficient cause to induce him to surrender the share to be relieved from that responsibility. If he obtained an indemnity for only one fortieth part of the risk, the object would be greatly defeated; and the purchaser would pay nothing for it but its equal share of all assessments. There does not appear to be any ground, *68on which the position can be sustained, that the design was to indemnify the plaintiff against one tenth only of any payments, to which he might be subjected.
Ten persons appear to have become- associates in business under a company name. The capital or stock was divided into shares, and was held by them in unequal proportions. By the terms of their association any one might sell his share and retire from the association, and the purchaser, if not already a member, might be admitted with all the rights and subject • equitably, as between the associates, to all the habilites of the retiring member. Without any stipulation therefore between the seller and the purchaser it would be the duty of the purchaser and his associates to apply the capital to the payment of all preexisting debts. This contract, therefore, does no more than to compel the performance of that duty, if there was sufficient capital, and to save the seller from harm by reason of his liability to the creditors of the company. If there was not sufficient capital to pay the debts, it would require the purchaser to become responsible for them, and to relieve the seller from being injured by his liability to pay them. With what justice or propriety then can the purchaser in this case, who was already a member of the association and liable as such, insist, that the seller should pay the whole debt, and then only call upon him to pay simply the amount, which the holder of one share ought to pay ? And do this, when his own contract with the plaintiff declares, that he shall clear him from liabilities, that have or may arise from that share ? And with what justice does he complain of the amount recovered against him, when by his neglect and by a violation of his contract he allows a suit to be brought against the plaintiff, and his body to be arrested on an execution issued on the judgment recovered in that suit, and leaves him to relieve himself from actual imprisonment by procuring a statute bond, and then on its forfeiture to pay the money due, to discharge the debt and costs, to save his own property and that of his sureties from being sold on execution ? The plaintiff claims to recover only the amount, which he was legally obliged to pay without any *69compensation for the trouble and vexation occasioned by an arrest. And the purchaser now insists, that the plaintiff should collect of each other member of the association, his just proportion of that debt, before he can resort to him on his contract of indemnity. But this association is but a partnership, and if the plaintiff is to be considered as yet a partner as between themselves, so far as respects transactions occurring before his sale, he can maintain no suit against each copartner for his proportion of a debt due from the partnership; nor any suit against the partnership, until the partnership concerns have been adjusted. If on a sale of his stock or share, he ceased to be a partner by the consent of his former associates, then, by a payment of a partnership debt for the benefit of the association, he could maintain a suit against all the members of the association to recover from them the money so paid for their use. And could recover the amount now claimed of those defendants, who were members of the association, if he had not taken a contract of indemnity. But to turn the plaintiff over to such remedy is to deprive him of all substantial benefit from his contract. It is said, that the defendants, if the plaintiff should collect the amount of them, could not obtain their indemnity from the association. Two of them are sureties for the other, anti like other sureties their claim will be upon their principal; who was a member of the company, and as such will have all the same rights and remedies, which he would have liad, if he had, as a member of the company, paid the debt to Hyde & Son, without entering into this contract, with the plaintiff; that is, the full rights of a partner, who has paid the debt of the firm. Complaint has been made, that the plaintiff suffered a default to be entered in the suit upon his bond and a judgment to be entered up for interest on the debt at the rate of twenty-four per cent, without notice to the defendants. It appears, that the principal defendant was a debtor in the same execution, on which the plaintiff was arrested, and that he also was arrested and gave a poor debtor’s bond. The return of the officer on that, execution was open to inspection. If that defendant had paid the debt,, the plain*70tiff would have been relieved from the performance of the condition of his bond. It will therefore be perceived, that the principal defendant must have been discharged by taking the poor debtor’s oath, or must have forfeited his own bond. These proceedings cannot be supposed to have taken place without his becoming fully informed, what proceedings had taken place in respect to his joint debtor, whom he had engaged “ to clear from all liabilities.” It is not perceived, that there can be any other foundation for the suggestion of collusion between the plaintiff and Gile, than the suffering a default and judgment to be entered as before stated; and it does not appear, that the plaintiff could have made any legal defence in that suit. And he might reasonably expect that judgment would be legally made up by the Court, or its officers, for the amount due, as that amount was disclosed by the papers in the case. And the payment on the execution appears to have been-made on it after he had been arrested, and not by himself ; and he being no longer interested in the company could not be expected to be informed of payments made by it. Under such circumstances the rights of the plaintiff cannot be justly affected by such a suggestion without some direct proof of it. The interest at the rate of twenty-four per cent, was a penalty imposed by law, from which the plaintiff could not escape without a performance of his bond. From that and all other trouble arising from the company debts, it was the duty of the principal defendant to have relieved him; and it ill becomes him to blame the plaintiff for consequences resulting from his own neglect and breach of contract.