Guerry v. Perryman ex rel. Dennard

By the Court. Warner, J. delivering the opinion. Three grounds of error are assigned upon the record in this case, to the judgment of the Court below: 1st. Because the Court erred in admitting evidence going to show that the decree against Perryman was for too large an amount. 2d. Because the Court erred in not charging the Jury as requested by complainant’s counsel, and charging them as stated in the record. 3d. Because the Court erred in deciding that the defendant’s counsel in the Common Law action, and counsel for the complainant in the bill, should open the argument to the Jury; and that the counsel for the plaintiff in the Common Law action and counsel for the defendant in the Equity cause, should conclude the argument. There are several specifications of error made on the record*, [123] but they are all embraced in the three foregoing grounds of exception taken to the decision of the Court below. [1.] When this cause was before us on a former writ of error, we held that the decree against Perryman was conclusive against him ; that it was conclusiva evidence of his indebtedness to Guerry, the amount specified in that decree. 2 Kelly, 65. Suppose the suit on the notes had been instituted by Perryman, the payee, against Guerry, the maker, instead of Dennard, the assignee of Perry-man, could this decree in Guerry’s favor, against Perryman, have been allowed as a set-off against the notes ? Most certainly — and why ? Because the decree furnishes conclusive evidence that Perryman is indebted to Guerry the sum of money specified in the decree; nor would it be competent, in a suit on the notes by Perryman against Guerry, for Perryman to introduce evidence to impeach the decree, when offered in evidence by Guerry as a set-off, or to show that it was rendered for too large an amount. Dennard, who derives his title from Durham, and Durham from Perryman, to these unnegotidble notes, can no more impeach this decree, or show that it was rendered for too much, for the purpose of defeating Guerry’s equity, arising under that decree, than Perryman, their assignor, could do. In relation to the equities which existed between Perryman and Guerry, at the time the decree was rendered, the same attach now in favor of Guerry, against the notes in the hands of Perryman’s assignees. The record does not show that Perryman’s assignees, either Durham or Dennard, ever gave notice to Guerry, the maker of the notes, that they were the assignees thereof, or that they had any other equity growing out of such assignment, than what existed between their assignor and the maker. The rule, with regard to the assignment of ehoses in action, not negotiable, we understand to be, that every person who takes an instrument, not assignable by the terms of it, must take it principally on the credit of him from whom he receives it, for it is always liable to be defeated by equitable circumstances subsisting between the original contracting parties, being taken legally subject to all the equities of the original debtor. Willis vs. Trambly, 13 Mass. R. 206. Chamberlain vs. Gorham, 18 John. 144. Hatch vs. Greene, 12 Mass. R. 201. Murray vs. Lylburn, 2 Johns. Ch. R. 441. In Brashear vs. West, et al. (7 Peters, 609,) the Court settled this principle, in regard to the assignment of ehoses in action in Equity. If subsequent to the assignment being [124] made, and before notice of it, any counter claims be acquired by the debtor, these claims may unquestionably be sustained; .but if they be acquired after notice, Equity will not sustain them. [2.] So far from the equitable right of Guerry to have the decree against Perryman set off against the notes, having been acquired by him after notice of the assignment of the notes to Durham or Dennard, by Perryman, there is no evidence whatever, that they, or either of them, ever gave him any notice of such assignment. The counsel for the complainant requested the Court to charge the Jury, that if Dennard, the holder of the notes, had purchased them for a valuable consideration from the payee, yet, in order to recover on said notes, divested of the equities between the maker and the payee, it should appear that such equities arose after such purchase, and after notice of such purchase to the maker ; which charge the Court refused to give, but on the contrary, charged the Jury, among other things, to the effect that the doctrine of notice, as requested by the complainant’s counsel, was not applicable to the facts of this case. For the reasons already stated, we think the Court ought to have charged the Jury as requested; and that it was error in refusing so to charge; and that the charge, as given, was erroneous in point of law. These notes not being negotiable, although Dennard may have paid a valuable consideration for them, without notice of the existing equity between Perryman and1 Guerry, at the time of the assignment of the notes; yet he holds them subject to that equity. Chamberlain vs. Day, 3 Cowen’s R. 353. The law which governs and must control this case is, that the decree in favor of Guerry against Perryman, is conclusive evidence of Perryman’s indebtedness to Guerry, the amount of money specified in the decree. Guerry had the equitable right to set off the amount due him by the decree from Perryman, in a suit on the notes by Perryman against him. Dennard having derived his title to the notes from Durham, and Durham from Perryman, they, as the assignees of Perryman, stand in his shoes, and the same equities attach to the notes in their hands in favor of Guerry, as would have attached to them in the hands of Perryman, had the suit been instituted on the notes by Perryman. There being no notice to Guerry, of the assignment of the notes by P erryman, to the assignees, or either of them, prior to the rendition of the decree against Perryman, in favor of Guerry, or at any other time, [125] G-uerry is entitled to have the full amount of the decree rendered against Perryman, in his favor, set off against the notes now in suit, in the name of Dennard as the holder thereof; and extrinsic evidence is not admissible to impeach or reduce the amount of that decree. [3.] Some confusion appears to have been produced in the trial, in consequence of both suits having been submitted to the Jury at the same time. As the Court of Chancery had acquired jurisdiction of the cause, it would, in our judgment, have been more regular for that Court to have proceeded, and to have made a final decree in the cause, definitely settling the rights of the parties, without blending the Common Law suit and the suit in Equity, together; for it is nothing more or less than a suit in Chancery, to enforce the equities of G-uerry against the notes in the hands of Dennard. It was a distinct and independent suit on the Chancery side of the Court, and we have not been able to perceive any reason why it should not have been treated so at the trial, or why the trial should have been embarrassed with the Common Law suit which had been enjoined by the interlocutory order of the Chancellor. Viewing the suit as a proceeding in Chancery exclusively, the solicitor for the complainant in the bill was entitled to open and conclude the argument to the Jury, and'not the counsel for the plaintiff in the Common Law action which had been enjoined. Let the judgment of the Court below be reversed.