Klase v. Bright

The opinion of the court was delivered, by Williams, J. The settlement, shown to have been made by the defendant with Dye, for whose use this action was brought, gives rise to the principal question in the case. The plaintiff alleges that it was collusively made after notice to the defendant that the note in suit belonged to him, and that Dye had no interest or property in it. The defendant denies that he had any such notice when he settled with Dye, and for this reason insists that the settlement is valid and binding on the plaintiff. The positive testimony given on the part of the plaintiff, and the circumstances under which the settlement was made, strongly tend to show that the defendant made it with full notice of the plaintiff’s ownership of the note; and if the case turned on the answer to the question, whether he had such notice or not, it should undoubtedly have been submitted to the jury for their determination as a matter of fact. As the evidence was conflicting, the court could not determine the fact without trenching on their province. But as it respects the validity of the settlement, it seems to us that the case does not turn on the fact of the alleged notice. It might, if the defendant had been prejudiced by the settlement in any way; but it is manifest that he was not. It is clear beyond all doubt that the note belonged to the plaintiff at the date of the settlement,- and his right to it is not questioned by the defendant. Dye had no interest in it, and never had any. Its endorsement to him was merely colorable, and was not intended to pass the property; and long before the settlement he had formally retransferred it to the plaintiff. He was examined as a witness in relation to the settlement, and did not pretend that he had any right or claim to the note, and the only excuse which he gave for not informing the defendant of its transfer to the plaintiff was, that he did not think of it at the time. He did not have possession of the note, and it [192] was not surrendered to the defendant when the settlement was made. It was in the hands of the plaintiff’s attorney, by whom the suit was brought. The defendant did not release any right, or give anything of value to Dye in consideration of the settlement. It is true, that he handed to L’Velle, who acted as Dye’s attorney in the transaction, his note at ninety days for $600, but it is still held by L’Velle upon notice not to deliver it to Dye until the rights of the parties have been determined. Why then should the defendant be allowed to set up the alleged settlement with Dye as a defence to the note against the plaintiff? What if the suit was brought for the use of Dye ? If he was not the real owner of the note, he had no right to settle or compromise the suit, and if the defendant was not prejudiced by the settlement, as he clearly was not, he has no right in equity or justice to set it up as a bar to the plaintiff’s action. If he had released any right, or paid anything of value as a consideration of the settlement, the case would be different. He might then say that the plaintiff had misled him to his prejudice by bringing the suit for the use of Dye, and that having settled with him in good faith, and paid him a valuable consideration, the plaintiff was estopped from denying his right to make the settlement. But as it is, he. has no foundation for such an estoppel. If he was misled, it was not to his hurt, for he has not parted with anything of value. The note which he gave to L’Velle is still in his hands abiding the result of this controversy. To allow the defendant, under the circumstances, to set up the settlement as a defence to the plaintiff’s action would contravene the plainest principles of equity and justice. Even if a judgment had been obtained against the defendant for the amount of the note before the settlement was made, and it had been satisfied of record by Dye’s attorney, a court of equity, on proof of the facts, would order the entry of satisfaction to be stricken off, and compel the defendant to pay the plaintiff the amount of the judgment : McClurg v. Wilson, 7 Wright 439. There was then no error in the refusal of the court to charge that if the jury believed that the settlement made by the defendant with Dye was without notice of the plaintiff’s ownership of the note, or of its re-assignment to him by Dye, it was a defence to this action. The question next to be considered is, was there error in rejecting the defendant’s offer to show the payment of over one thousand dollars of partnership debts for the purpose of defalking the plaintiff’s half thereof against his demand on the note. There can be no pretence that the defendant was entitled to set off one-half of the amount 'which he had paid on account of the partnership indebtedness, if the plaintiff was not indebted to the partnership by reason of such payment. Whether he was indebted or not, could only be ascertained by a settlement of the partnership accounts, which could not be made by the jury in this action. The only [193] mode provided by law for the settlement of partnership dealings is by a bill in equity or by an action of account render. The offer, therefore, was clearly incompetent, as it would have involved an inquiry into the state of the partnership accounts, which it was not competent for the jury to make, and the evidence was rightly rejected. Nor was the defendant entitled to any deduction or abatement, on account of the alleged failure of title to the lath-mill. If Mc-Ginley had any interest in it as a partner or joint owner, which, so far from being clear, is very doubtful, the fact must have been as well known to the defendant as to the plaintiff when he sold his interest in the partnership property. Besides, the plaintiff, as the written contract shows, sold only “his right, title and interest” in the lath-mill, and consequently the defendant took the mill subject to whatever interest McGinley had in it. The other questions raised by the assignments of error were not pressed on the argument, and there is nothing in them that calls for discussion. Judgment affirmed.