Ely v. Cook

By the Court.—Daly, F. All the defendants in this case were entitled to judgment. The equitable relief which the plaintiff asked was this: That the discharge granted to the defendant Cook, as an insolvent, should be declared void; that the judgment which he, the plaintiff, had obtained against Cook by confession, should be set off against the judgment recovered by Cook against the plaintiff to the extent of the latter judgment; that the latter judgment should be adjudged to be satisfied and can-celled of record, and that the plaintiff should have judgment for what would remain due upon the former judgment, after allowing the set-off. Two things were sought to be accomplished by the action : first, to get rid of the discharge which stood in the way of the plaintiff’s judgment; and then to have the set-off allowed. The judgment which Cook recovered against the plaintiff was exclusively for Cook. The action was brought by the plaintiff against Cook and others, to set aside an assignment which Cook had made for the benefit of creditors, and the plaintiff having failed in the action, Cook, as one of "the defendants, recovered judgment against him for $382.42 costs. Upon the trial in this suit, it was proved that after the commencement of that action, and before an answer was put in, an arrangement was made between Cook and his attorneys, the Messrs. Sherwood, to the effect that the costs'-of the defence of the action should belong to the attorneys. Mr. John Sherwood swore that Cook came to them, the attorneys, and told them that he had no means to carry on the suit; that he had failed, made an assignment, and had gone through the two-thirds act; that the witness told him that he would succeed in the action, that the suit was frivolous, the complaint would be dismissed; that they would go on and defend the action, and that they would get a bill of costs out of the plaintiff for their services, which would belong to them, the at [376] torneys; and that Cook said, “ Certainly, that’s all right,” or other words expressing assent to the agreement or arrangement. The attorneys went on, paid all the disbursements, and defended the suit, which was a proti’acted litigation, having been carried by the plaintiff to the Court of Appeals; and when judgment was rendered in Cook’s favor for the costs above stated, he assigned the judgment to them. The judge below found that, after the commencement of the suit and before the trial, an arrangement and agreement was made between Cook and the Messrs. Sherwood that the costs to be recovered were to belong to them ; and I think that he was warranted by the facts in so finding. This agreement was made before the defence of the suit was undertaken by the defendants Sherwood, and the service which they agreed to render and did render was a good consideration for the making of such an agreement. The question of an attorney’s lien, so much discussed in the various stages of this1 case, does not, in fact, arise. By the long-established practice of the courts, the attorney has a lien upon the judgment for his costs, subject, however, to the equitable right of the parties to set off one claim against another; and if the parties settle in fraud of the attorney’s lien, the judgment will be enforced to the extent of the lien. But the defendants Sherwood did not call upon the court to protect a lien which they had upon the judgment for costs, or interpose any such lien, as against the plaintiff’s right of set-off. They are the assignees and owners of the judgment, which has been assigned to them by Cook in consummation of an agreement which he made with them, when they undertook the defence of the suit, that the costs should belong to them. Their right is founded, primarily, upon a transfer or equitable assignment by Cook to them of a thing in expectancy, which was valid, and will be sustained by the court. “ Whatever doubts may have existed heretofore,” says Wells, J., in Field a. The Mayor, &c., of Few York (2 Seld., 187), “ the better opinion now is, that courts of equity will support assignments, not only of things in action, but of contingent interests and expectations, and of things which have no present actual existence, but rest in possibility, provided the agreements are fairly entered into, and it would not be against public policy to uphold them.” Before these costs were created, and .before it could be known that Cook would ever be entitled to any: [377] when the matter rested in mere expectation and possibility, they made this agreement, that they were to have the costs for their services as attorneys; and if any doubt existed before the" Code as to the right of an attorney to make such an agreement, none can exist now—the Code having repealed all laws restricting or controlling the right of a party to agree with his attorney for his compensation. They gave their services and paid the disbursements in the long course" of the litigation. Their expectation was realized ; the plaintiff failed in his suit, and when a judgment was rendered in Cook’s favor for costs against the plaintiff, as the costs, by the previous agreement, belonged to the Sherwoods, Cook assigned the judgment to them. The defendants Sherwood, therefore, cannot be regarded as assignees taking subject to the plaintiff’s right of set-off, but as assignees of a judgment nominally in the name of Cook, but the whole interest in which belonged to them when the judgment was rendered. This case, consequently, is distinguishable from The People a. Manning (13 Wend., 649), which was also a judgment for costs assigned to the attorney, for there no such prior agreement existed ; in addition to which, that case is of no authority, as it was subsequently reversed. And the case before us is equally distinguishable from Ricoll a. Ricoll (16 Wend., 446), in which the attorney, relying simply upon his lien upon the judgment for his costs, was not allowed to interpose it against the appellant’s statutory right to his set-off. The defendants Sherwood, then, being the parties who had the sole interest in this judgment when it was rendered, through their previous agreement with Cook, the plaintiff had no claim to set off his judgment against it; and, having failed in this, I do not see that he could be entitled to any judgment. I know of no authority entitling him to maintain an equitable action to have Cook’s discharge as an insolvent declared null and void, unless that discharge was an obstacle to the attainment of some right to which the plaintiff was entitled. If the judgment recovered in Cook’s name for costs belonged to him, and the plaintiff would have an equitable right to set off against it his judgment against Cook, if that judgment was not affected by the discharge granted to.Cook, upon the ground that the discharge was null and void, then the validity of the discharge would be connected with the equitable remedy of the right of set-off. But [378] having no right of set-off, the validity or invalidity of the discharge becomes immaterial; or if this was an action upon the judgment, the invalidity of the discharge would be material, for, if valid, he could maintain no such action; but it is not an action upon the judgment, but an equitable action to compel a set-off, which, if allowed, is to be followed by a judgment for the balance due, after allowing the set-off. If the set-off is not allowed, then the action fails; for what was asked, in addition, was dependent and contingent upon the granting of the set-off; or, if he sought to set the discharge aside upon the ground of fraud, the case might be different; but the objection to the discharge is, that the judge who granted it never acquired any jurisdiction, and, as that appeared upon the face of the record, the discharge interposed no obstacle to the plaintiff enforcing his judgment. If he brought an action upon the judgment, or issued ' an execution upon it and levied it upon the property of Oook, the discharge would be unavailable to Cook. An exhibition of the record upon which it was founded, would show it to be worthless. There was no ground, therefore, for invoking the equitable aid of the court. The plaintiff had an ample rernedy, or, rather, was not in want of any equitable remedy, and judgment should have been given for all the defendants. This view of the case dispenses with the necessity of considering the question raised, as to the sufficiency of the statement upon which the judgment was entered by confession. But I agree that the statement did not come up to the requirement of the statute; and I agree, also, that even if the answer could be regarded as admitting the existence of a valid judgment, that the plaintiff, having shown the fact to be otherwise, is bound by it. If the defendant means to rely upon any fact as a defence, he must set it up in his answer, that the plaintiff may be duly notified, and come prepared to meet it; but if the fact is shown by the plaintiff himself, this reason does not apply, and it does not lie with him to object, after he has shown the court that he has no cause of action. The rule upon this subject is stated by the Master of the Rolls, Sir John Leach, in Stanley a. Robinson (2 Mylne & Craig, 527): “The distinction is this: a defendant is not permitted to avail himself of a defence which appears only upon his evidence, and was not stated in his answer, so that the plaintiff could be prepared to repel it. But if it appears upon [379] the plaintiff’s own case that he is not entitled to the relief prayed, the court will not assist him.” But I do not agree that Cook could avail himself of the insufficiency of the-statement. It was an objection available to Cook’s creditors, or to a subsequent purchaser; but as against Cook, the party who swore to the statement with the design and object that a judgment upon his confession should be entered in favor of the plaintiff, the judgment is conclusive and valid. (Beekman a. Kirk, 15 How. Pr. R., 231 ; Griffen a. Mitchell, 2 Cow., 548 ; Moody a. Townsend, 3 Abbott’s Pr. R., 375, note of the case upon appeal ; Nusebaum a. Kein, 7 Abbott’s Pr. R., 23; Kendall a. Hodgins, Ib., 309 ; Chappell a. Chappell, 2 Kern., 215 ; Dunham a. Waterman, 17 N. Y. R., 9.) Hilton, J. I think the judgment in this case, so far as it relates to the defendants Sherwood is right, and should be affirmed; although I do not assent to the conclusion arrived at by Judge Brady in respect to the validity of the plaintiff’s judgment. It may be that its validity was not denied by the defendants in their answers; but the plaintiff did not choose to rest his case upon the admission which he now insists the answer’s contain. The judgment under which he claims, was entered by the clerk of the Supreme Court upon the confession of the defendant Cook, and the record containing this confession was produced and read in evidence at the trial, on the part of the plaintiff, notwithstanding the defendants’ objection, and their exception to its admission. It thus became evidence in the cause, and the court was therefore bound to respect it, to determine as to its validity as a record, and as to whether the statement or confession contained in it, was sufficient in law to warrant the clerk in entering the judgment upon which the plaintiff’s right of action depended; because if it was not sufficient, and did not show a concise statement of the facts out of which the indebtedness alleged in it arose {Code, § 383), it followed that the judgment was entered by the clerk without legal authority, was not merely irregular, but void (Chappell a. Chappell, 2 Kern., 215 ; Van Beck a. Sherman, 13 How. Pr. R., 472 ; Bonnell a. Henry, Ib., 144), and could, therefore, form no ground for the plaintiff’s recovery. The first item of indebtedness men [380] tioned in the statement is the sum of $1500, for cash borrowed by the defendant Cook of the plaintiff", from time to time, and for which he holds the defendant’s note, dated November 12, 1850, payable six months after date. This was clearly insufficient. It should have specified the several amounts which went to make up the indebtedness, and the different times when the money was loaned. This was so held in Stebbins a. The East Society of the Methodist Episcopal Church, Bochester (12 How. Pr. R., 410). The second item of indebtedness alleged is still less explicit. It is, that the plaintiff had assumed for the defendant Cook the payment of $2000, for which he had given the plaintiff two notes for $1000 each, made payable at sixty and ninety days. This is certainly not “ a concise statement of the facts out of which the indebtedness arose.” The nature and origin of the indebtedness assumed, to whom it was owing, and in what manner it was assumed by the plaintiff should have been stated. All this the law required, and as the statement did not furnish such information, it was not such a one as authorized the entry of a judgment upon it.* [381] For these reasons I think the judge at special term erred in finding as a conclusion of law that the plaintiff’s judgment was good and valid. He should have found it to he the reverse; and the argument that its validity can only be questioned by a former judgment-creditor, seems to me inapplicable to a case like the present. The plaintiff sought in this action to enforce what he claimed to be a legal right acquired under a judgment entered upon the confession of the defendant Cook. If he recover, it must be upon the strength of his own case, and the evidence he has adduced in support of .it, and not upon the weakness of his adversary. He attempted to show that he was the owner of a valid judgment, which he was entitled to set off against a judgment actually belonging to the defendants Sherwood. Failing to show this, it follows that he has no cause of action, and, therefore, is not entitled to the relief he has demanded. The defendants did not come into court asking to have hig judgment vacated or declared void, they simply relied upon the inherent weakness of his claim, and asked that his action be dismissed, because he failed to show himself entitled to any relief whatever. This, in my opinion, they had a right to do. [382] Upon these views the plaintiff was not a judgment-creditor of the defendant Cook, and therefore was not entitled to have the court declare his insolvent discharge, void. In my opinion the judgment at special term improperly passed upon that question, and this judgment given in respect to it should be reversed. Judgment in favor of the defendants Sherwood affirmed, with costs. Judgment in'favor of the plaintiff against the defendant Cook reversed, without costs. Footnotes [*] Rae a. Lawser (Supreme Court, First District; Special Term, October, 1859).—This was a motion made by S. F. Righter, a subsequent judgment-creditor of Lawser, to vacate a judgment confessed by Lawser to Rae. Sutherland, J.—Upon the question of fact referred to the referee to take proofs upon, whether the sum of $700, or any other sum was paid by Lawser upon the notes, to secure Rae’s liability upon which the judgment was in part confessed, it is probable, on the proofs before him, the referee came to a correct conclusion, that as between Rae and Lawser, the parties to the judgment sought to be set aside, the $700 paid by Lawser to Rae was not a loan, but, in fact, a payment on account of the notes, and operated as a payment of so much of the judgment. But Rogers took the assignment of the judgment from Rae, and paid him $1250 for it, in good faith, without notice of such $700 payment, or any other payment on the judgment, supposing no part of it had been paid ; and before he took the assignment and paid his money, Rogers called upon Lawser, told him Rae was desirous of selling the judgment to him, asked Lawser if it was all right, and whether any part of the same had been paid ; and Lawser in reply stated that the judgment was all right, that no part of it had been paid, and that the whole amount thereof was due. These facts are not disputed, and there is no doubt that Rogers bought the judgment, and took the assignment and paid $1250, relying on such statements of Lawser. Lawser could not, as against Rogers, set up the payment of the $700, as a payment and discharge of so much of the judgment; nor do I think that he could [381] enable Righter to attack the judgment, in the hands of Rogers, on account of such payment, by confessing a judgment to him, Righter. This motion then must he decided irrespective of the question of fact so referred to the referee, and of the proofs and the opinion of the referee thereon. The statement on which the judgment was confessed to Rae is clearly sufficient, except as to the last note mentioned, dated March 28, 1855, and the $238.69 for moneys-paid by Rae for Lawser, and the $103.39 for goods sold and delivered by Rae to Lawser. As to these items, under the decisions, which are certainly conflicting, I should think the statement insufficient and defective. The amount for which the note was given is not stated, and the time or times when the goods were sold and delivered, and the moneys paid is not stated. Nor is it stated to whom the moneys were paid. But the statement on which the judgment was confessed by Lawser to Righter is equally, if not more defective. In setting out the consideration of the notes, the time or times when the moneys were loaned, and the goods, &c., sold, is not stated. (Feligh a. Brink, 16 How. Pr. R., 273; Chappell a. Chappell, 2 Kern., 215; Dunham a. Waterman, 17 N. Y. R., 9.) The statement on which Righter's judgment was entered being defective, he cannot avail himself by this motion of the defects in the statement on which the judgment to Rae was confessed. The motion of Righter must be denied, with $10 costs.