Court Opinion

ID: 7131285
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:19:05.816692+00
Date Added: 2024-06-11T16:14:28.753357
License: Public Domain

JUDGE HINES
dissents in the following opinion:
Appellant, for a valuable consideration, assigned to appellee two promissory notes for $100 each, for the security of which there was a lien on a certain tract of land. Suit was not brought on either of the notes until some time after they were due, and it is conceded that, by ordinary diligence, an action might have been brought on either of them several terms earlier, and that an effort to enforce the lien on the land .was not made until some time after the maturity of the last note. On the judgment on the first note an execution was issued and returned “no property.” On the judgment on the second note no execution ever issued, and the lien on the land being enforced and it proving to be insufficient to satisfy the full amount of the two notes, the assignee instituted this action against the assignor to recover the remainder. The petition states the several steps taken to enforce payment and alleges that “at the time of the assignment the payor was insolvent, had no property subject to execution, has been since and is now utterly insolvent.” To this petition appellant answered, insisting upon a want of diligence on the part of appellee, but did not deny the allegation quoted as to the insolvency of the assignor.
From a judgment against the assignor for the unpaid balance this appeal is taken, and the only question presented is, whether the admitted insolvency, as charged, excuses appellee from the exercise of ordinary diligence in prosecuting appellant to insolvency.
*201I am of the opinion that the admitted insolvency of the ; payor, existing at the time of the assignment and continuing long after the maturity of the assigned notes, relieved the assignee of the necessity, that would have otherwise existed, of showing, within reasonable time, such insolvency by suit and return of “no property.”
My understanding of the -legal effect of such an assignment is that the assignor assumes to pay the assignee the debt in the event he cannot make it off the payor. That the.assumpsit does not imply that the assignee shall do any specific thing in order to render the assignor liable is manifest both from the reasqn of the law and from adjudged ■ cases. The fact to be established by the assignee to enable him to recover of the assignor is that the claim cannot be made out of the payor of the note or bond, which fact, when established shows the assignment to be without consideration, and for that reason the right of recovery exists. The manner in which that fact is to be established is a question of evidence to the determination of which the ordinary rules of evidence are to be applied. This court heretofore seems to have proceeded upon the conservative idea that the best evidence of the insolvency and inability of the payor to satisfy the demand against him is to show a judgment and return of “no property,” both of which must be obtained with ordinary diligence. That rule ought not to be departed from, not only because of the sanction it has' received by adjudications extending over a period of eighty years, but because of the uncertainty that would result in a determination of the fact of insolvency by the introduction of oral •evidence. The rule is founded upon the familiar principle that the best evidence should in every case be presented. .But when the reason fails the rule must open for excep*202tions. Hence, this court has held that no suit is necessary against the payor when he has left. the state for permanent, residence before the maturity of the obligation, when thepayor has been adjudged a bankrupt, and when it is shown-that the debt was discharged before the assignment. These-exceptions show that the effect of the assignment is not to-bind the assignee to bring suit and obtain judgment and return of “no property,” when such a proceeding would-, clearly be unavailing. The law requires no man to do a-, foolish or a vain thing. Upon no. other principle and upom no other reason can these rulings be reconciled.
The error, that there must be in every case a judgment and return of “no property,” has resulted from confounding the cause of action with the evidence by which it is ordinarily to be established. The cause of action springs from the-fact that the debt cannot be made out of the payor, and when that fact is*admitted, as in this case, no evidence is-necessary; but when an issue is made by the assignor upon-the ability of the assignee- to make the debt the best evidence of that fact-must be adduced, and if the inability grows out of insolvency, the best evidence of the insolvency is a judgment and return of “no property.” The object to-be attained by the introduction of evidence is to establish or to controvert some disputed fact, and when the fact upon, which the right to recover exists is not disputed no evidence is necessary.
It is a familiar rule of pleading that the evidence relied’ upon to make out a cause of action or to sustain a defense • should not be pleaded, from which it follows that in an action, by an assignee against an assignor, the allegations should be-confined to the facts that justify a recovery. As, for instance, in the case of the discharge in bankruptcy of the.*203payor, it is only necessary or proper to allege the fact of the. adjudication and discharge, and not the evidence by which, it is to be established. If, however, an issue is made upon-these allegations the record evidence of the adjudication and discharge must be adduced because that is the best evidence. So, in the case of a removal to another state after assignment of the obligation and before maturity, or of payment before assignment, it is only necessary to allege the fact.
It is not unlike a declaration upon a state of facts that are shown of record. In such case it is not necessary to set. forth the record evidence, but if issue is taken on the existence of the facts the only competent evidence. is the record..
The rule is broadly laid down in Smallwood v. Woods, x Bibb, that a suit is necessary to fix the liability of the assignor, but on examination of that case it will be found that the question here presented did not arise. The only-question at issue there was of diligence. The question as-to whether insolvency existing at the date of assignment and continuing would be sufficient to fix liability on the assignor was not considered. Beside, the opinion in that case, as to-the necessity of a suit to establish the liability of the assignor, is expressly based upon the case of Boals v. McConnel, Sneed (Ky.), 130, which does not tquch the point, and upon Mackie v. Davis, 2 Washington, 281 (Va.), in. which it is expressly said that the only question is, ‘ ‘ Can the assignee of a bond maintain an action against the-assignor without a special undertaking by the latter to-insure the payment?” Mackie v. Davis was followed by the case of Brown v. Ross, 6 Munford, 393, in which the-same judge said: “In the case of the assignment of a note, it is generally necessary for the assignee to sue the drawer in order to charge the indorser. There are exceptions, how*204■ever, from this rule, two of which are thus stated in the •opinion of the Husting’s court, viz: a discharge under the former bankrupt laws or the insolvent law of this state. But these are not' the only exceptions. Another exists whenever the plaintiff can show to the jury that the drawer is, in fact, insolvent, whereby a suit would have been wholly unavailing. “ In this case, like the others, the undertaking •of the assignee to use due diligence to recover the money from the drawer is not infringed by the omission to sue, and this omission, if objected, may be always answered, on the part of th^ assignee, by showing that a suit would have been fruitless on account of the actual insolvency of the drawer.”
To the same effect is Coiner v. Hansbarger, 4 Leigh, 452, and Smith v. Triplett, 4 Leigh, 590.
The Virginia cases go so far as to admit oral evidence upon the issue of insolvency, and in considering the weight to which these cases are entitled it is well'to remember that our statute making bonds, notes, and bills assignable, so as to vest the title and the right of action in the assignee, is ■substantially a copy of the Virginia statute.
I will not undertake to review in detail the decisions in this state, but confidently express the opinion that no reported case can be found in which the exact question here presented, is passed upon. In man)? cases expressions may be found that appear to indicate that there can be no recourse unless there has first been suit and return of “ no property;” but, on examination, it will be seen that the question here presented did not arise. Such expressions áre purely dicta ■wherever found.
Upon these questions I cite, in addition to the cases mentioned: Clay v. Johnson, 6 Mon., 645; Wood v. Berthoud, 4 J. J. M., 304; Stapp v. Anderson, 1 A. K. M., 541; *205Clair v. Barr, 2 A. K. M., 256; Roberts v. Atwood, 8 B. M., 210; Emmerson v. Clay well, 14 B. M., 19; Graves v. Tilford, 2 Duvall, 109; Tucker v. Fogle, 7 Bush, 294; Carroll v. Carroll, 16 Howard, 287; Wells’ Res Adjudicata and Stare Decisis, chapters 39 and 40.
Since I prepared and read in consultation the foregoing views in regard to the law of this case I have heard read the opinion of the majority of the court, in which I cannot concur. What I have already said I propose to let stand without modification, -but will add, by way of elaboration, some additional suggestions.
The cardinal error in the opinion of the majority of the court grows out of the assumption that the implied obligation resulting from the assignment is, that the assignee will pursue the payor to insolvency by suit. I have already stated that the contract of assignment does not imply such an obligation and that no reported case can be found in which it has been so decided. The conclusion of the majority of the court upon this point is drawn from dicta only. It matters not how often the court may assert the law to be one way or the other, the repetition does not establish the law. That can only be done in a case where the declaration is in reference to a point directly in issue. Of course I admit that as between parties to an action the rule is different. Then the party complaining must present his whole case, and any question that might have been made on appeal, or that is incidentally decided, becomes res adjudicata as between the parties. But when we come to consider how far an opinion is the law of the land, in controlling the rights of those not parties to the particular case, the rule is. *206•different. Chief Justice Marshall, in Carroll v. Carroll, 10 Howard, pertinently said:
‘ ‘ It is a maxim not to be disregarded that general expressions in every opinion are to be taken in connection with the case in which those expressions are used. If they go beyond the case, they may be respected, but ought not to •control the judgment in a subsequent suit, where the very point is presented.” .... “ No opinion can be relied on •as binding authority unless the case calls for its expression. 'Its weight of reason must depend on what it contains.”
The opinion of the court, to be correct, must be based upon reason or authority — one or both. That this opinion is not supported by reason, I submit, is clear, nor do I under- ■ stand the majority of the court to so insist, and that it is not sustained by authority, I have already asserted, and still so insist. In every case, where the rule insisted upon in the opinion is found, the issue was as to negligence or no negligence, and not as to solvency of the payor or inability ■on the part of the assignee to make the debt out of the payor.
It is suggested in the opinion that that portion of the petition alleging continuing insolvency is demurrable. In •order to reach that conclusion, the court assumes the existence of the very question of law in issue, and that is, whether the law implies from the assignment an undertaking in all •cases to prosecute to insolvency, or whether the obligation of the assignor is to pay in the event the assignee is unable ' to enforce payment from the payor or maker. If the assumption of the majority of this court is correct, then ■nothing will excuse a suit and diligence in its prosecution, •and what then comes of the exceptions already mentioned?
*207It has also been suggested that my position leads to an absurdity when I hold that the petition presents a frima facie case, and that the assignee is entitled to recover unless its allegations are controverted ; but that when controverted, no evidence of the fact of insolvency is; competent except execution and return of “no property.” It is said I have a cause of action which I am not permitted to prove. In this the error consists, as said in the first part of this opinion, in confounding the cause of action with the evidence necessary to establish it. I am permitted to prove my cause of action, but, as in every other case, I must do it by such evidence as the courts have held to be competent. In addition to the case already referred to of an action based on facts provable by record, I may give, in illustration, a suit to recover the possession of land on the ground of title in the plaintiff. The allegation of title and the right of possession, if undenied, is taken as confessed, but if issue is taken upon title or no title, then the question arises as to the character of evidence admissible to establish the claim. Many other illustrations might be given, but the principle that the facts necessary to a recovery must be alleged and not the evidence by which the facts are to be established, if controverted, is too familiar to require discussion.
' If there is any defect in the allegation of the petition in regard to insolvency, it is one of form and not of substance, not to be reached by demurrer, but by motion to make more definite, and such a motion not having been made, the defect, if any, is waived. (Posey v. Green, 78 Kentucky.)
I am of the opinion that the judgment should be affirmed.