Rice v. . Jones

Merrimon, J. (after stating the facts). It appears that the promissory note sued upon w'as indorsed to the plaintiff before it matured, and that he was the owner thereof. He was, therefore, entitled to recover the balance of the money due upon it — more than two hundred dollars — in this action, unless, as contended by the appellants, the proceedings had) affecting the maker thereof, in the proceeding supplementary to the execution mentioned, interfered with and obstructed the plaintiff’s right to maintain the action. Hence, it is necessary to ascertain what relation the maker of the note sustained to this proceeding, how he was affected by it, and how, through him, it affected, indirectly, if at all, the rights of the plaintiff. Now, John S. Rice was the payee of the note sued upon, and he was also the judgment debtor and defendant in the proceeding supplementary to the execution. The maker of *231 this note, as his supposed debtor, was required to appear before the' proper Court at a time and place specified, to answer concerning his indebtedness to the payee thereof, as allowed by the statute (The Code, §490). The purpose of such appearance and answer was to ascertain whether he owed such judgment debtor the note mentioned, or any sum of money. If it appeared that he did, then the Court might have ordered that such indebtedness, or so much thereof as might have been necessary, should be applied to the satisfaction of the judgments against the judgment debtor, as allowed and required by the statute (The Code, §493). If, however, he denied in his answer that he owed the judgment debtor the note, or any sum of money, then the receiver appointed, or to be appointed in the proceeding against the judgment debtor in such cases, as prescribed by the statute (The Code, §494), might have brought .his action to recover the money alleged to be due upon the note or otherwise* Coates v. Wilkes, 92 N. C., 376; Coates v. Wilkes, 94 N. C., 174; Turner v. Holden, ibid., 70; Vegelahn v. Smith, 95 N. C., 254. In an action thus brought by the receiver, he could not recover, against an alleged debtor, money alleged by him to be due upon a promissory note, unless he should allege and prove that the note outstanding was still due and owing, at the time he brought his action, to the judgment debtor because, as the note was negotiable, it might, in good faith? have passed into the hands of some other person before the order forbidding the transfer of the judgment debtor’s property. Indeed, this would be so as to any debt that might be assignable by indorsement or otherwise. The receiver could only recover debts due and owing to the judgment debtor, and the burden is upon him to show that the debt he demands judgment for is so due, whether the same be due by promissory note or otherwise. If the maker of such note is sued upon the same by a receiver, he should be careful not to admit, incautiously, that it is due and owing to the *232 payee thereof, or the judgment debtor, because, it may be that the latter has sold it to some other person, and he is not bound to give the maker notice that he has done so. If the maker should make such admission, and judgment should be obtained against him by the receiver, it would not at all protect him against a recovery on the same account by the owner of the note in an action brought by him for that purpose, unless he was a party to the action of the receiver. The real owner of the note could not be prejudiced, much less concluded, by a judgment against his debtor founded upon his note, in an action to which he was not a party, nor do orders of restraint or injunction affect him, unless in some way he is a party to it, except so far as to prevent him from interfering with property of any kind in custodia legis. The maker of the note (the subject of this action), who is the intestate of the defendant and appellant J. R. Jones, administrator, in his answer, made in his life-time, in the proceeding referred to, did not deny that he owed the note in question to the judgment debtor therein; on the contrary, he, in substance and effect, admitted that he did owe it to him, and, thereupon, the Court made an order applying so* much of the money due upon it, or as was necessary to the satisfaction of the judgments against the judgment debtor specified in the proceedings. He made such admission at his peril. He seems to have done so, supposing that the Court could and would protect him at all events against the plaintiff and the real owner of the note, whoever he might be. This was a serious mistake. The cautionary course open to him was to put the ownership of the note in issue by his answer, and in that case no order could have been made to his prejudice, but the receiver would have been driven to his action, as allowed by the statute (The Code, § 497), and to prove that the judgment debtor was the owner of the note as pointed out above. The maker of the note, when required to answer, was to a large extent affected by *233 the principles of law applicable to and much on the footing of a. garnishee in attachment proceedings. Myers v. Boeman, 9 Ired., 116; Ormond v. Moye, 11 Ired., 564; Shuler v. Bryson, 65 N. C., 201; Ponton v. Griffin, 72 N. C., 362. Th,e plaintiff was not a party to the proceeding mentioned, and was not bound by it in any respect, so far as appears. The mere fact that he was required to answer concerning his indebtedness to the judgment debtor, did not make him a party— he was not required or summoned to appear for such purpose; nor was he required or expected to take notice of what others might answer or do in the proceeding. Indeed, it was not the purpose of the proceeding to litigate the rights of persons required to appear and answer, as to property of the judgment debtor and debts alleged to be due to him, .and this denied, by the alleged debtors; this could and should be done in proper actions, brought by a receiver, appointed, in part, for that very purpose. The Gode, §§ 494, 497. The order directing the maker of the note to apply so much of the money due upon it as might be necessary for that purpose, to the satisfaction of the judgments specified in the proceeding, and forbidding him to pay such sum “to any other person,” applied to him, and was founded upon his admission that he owed the note to the judgment debtor; it did not purport to apply to the present plaintiff, or to prohibit him from asserting any right he might have against the maker of the note, nor, indeed, could it affect him, if so intended, as he was not a party to the proceeding The Court had not jurisdiction of himself, nor control of his note, the subject of this action. Moreover, the statute pertinent (The Code, §§ 494, 497) did not authorize the Court to make such order applicable to and embrace property other than that of the judgment debtor. It is not its purpose to interfere with the property or rights of persons other than such debtor, or to delay or obstruct the enforcement of their rights, unless incidentally, in cases where the Court had *234 taken jurisdiction of the property and placed it in custodia legis. Of course, a person claiming property properly alleged to be that of the judgment debtor, would interfere with it in the face of an order of the Court forbidding interference with it, at his peril. If his claim were unfounded he might be treated as in contempt of the Court, and he would also be exposed to an action by the receiver appointed, or to be appointed, in the proceeding, in aid of its purposes. We can see no just reason why the plaintiff is not entitled to interest on his debt. The note sued upon was his and he was in no default. The maker of it, when required to answer in the proceeding, should not have admitted that he owed the judgment debtor ; he did so at his peril, and it was his folly that he did ; he should have put the ownership of the note in issue, and if the Court had, in that case, made unwarranted orders, he should have appealed to the proper Court and had the errors corrected. In case of an action by the receiver as pointed out above, he might have required the present plaintiff to be made a party and had his rights settled and him concluded; and besides, in that case, the Court could and would, if need be, have afforded the maker of the note ample protection in some way allowed by law. The máker of the note seems to have thought, that inasmuch as he was required by the Court to answer in the proceeding against the judgment debtor, the Court could and ought, in any case or contingency, to afford him protection in all respects against the owner of the note, whoever he might be. This was a mistaken view of his right, liability and duty. It was his duty to himself to require judgment creditors in the proceeding, in the way prescribed by law, to establish his indebtedness to the judgment debtor, and it was his default if he failed to do so. Pending the litigation, he continued to have the money not yet paid — it was his, and if he failed to use it profitably, it was because of his neglect or his misfortune, and the plaintiff should not be prejudiced by *235 bis default or neglect as to interest. It is a part of the burden of every debtor to pay his debts certainly to him to whom it is due and entitled to have the money in discharge of the same. If sometime, in the complicated course of business, he finds it difficult and troublesome to ascertain to whom it is due, and to get a valid discharge of it, this may be his misfortune and a necessary evil incident to business transactions. Any incidental loss is his, if the creditor is in no default. In the present case the creditor was in no default — the maker of the note had notice of who he was, and instead of paying the debt to him, improperly admitted that the debt was due to the judgment debtor, believing, no doubt, the order of the Court would be his sufficient protection. And so it would be in the case presented, but it could not be in another and very different case. The Court is faithful, true and just in the enforcement of its orders and judgments in every case, but the extent and compass of these orders and judgments, and their effects, depend materially upon the facts upon which they are founded and rest. If the facts admitted or made to appear from evidence produced, are, indeed, not facts,then the Court cannot make the order on judgments apply to and embrace other and different facts or cases. Nor was there the slightest reason why the plaintiff was not entitled to costs, tie had a good cause of action, and was properly allowed to recover — no sufficient reason was shown why he should not, and he was entitled to costs, as a lawful consequence. An issue of fact, by consent of parties, was irregularly interjected into the case and tried, but the finding upon it was in favor of the plaintiff. So far as appears, there was nothing in this that deprived the plaintiff of costs in the regular course of the action. We think that the numerous authorities cited and relied upon, in the interesting brief of the counsel for the appellants, are not applicable to this case. Those of them deemed most *236 nearly pertinent are cases where the property in question was certainly in the custody of the law — there had been levies upon it in attachment proceedings. In some such cases the owner of the property could not be allowed to interfere with it pending such custody, unless in some cases he might intervene, by appropriate proceeding. In this case there was no levy upon the property; nor was the note, the subject of this action, in the custody of any party to the proceeding; nor did or could the appropriate order of the Court in the proceeding against the judgment debtor apply to persons who did not have property of the latter; nor did or could it properly forbid the owners of promissory notes, properly and in good faitli indorsed by the judgment debtor when he might do so, from suing upon the same,_ certainly not, unless such persons were in some way made parties to the proceeding. Perhaps, the plaintiff might have intervened in the proceeding mentioned. Perhaps, he might have been brought into it in some way that might have brought about a settlement of his rights, or have concluded him as to the note, but he was not bound to assert, his rights in and by it. He had possession, and was the owner of the note sued upon in this action, and there was no imperative reason why he should seek his remedy against his debtor in the proceeding, simpty because the latter had been required to appear in it and answer as to his indebtedness to the judgment debtor. It was the duty of the maker of the note, to himself, to take care in the proceeding, and be sure to require the receiver to establish his indebtedness to the judgment debtor, or fail in his action. There is no error, and the judgment must be affirmed. No error. Affirmed.