Buffington ex rel. Mitchell v. Bernard & Hoopes

Mr. Justice Woodward delivered the opinion of the court, It was most unfortunate for the two ladies who are the plaintiffs in interest here, that through a long term of years they trusted implicitly to the resources, business ability and good faith of their brother-in-law, in whose family they resided. On the 1st of April 1862, Levis Bernard, as principal, and Cyrus Hoopes, as surety, executed and delivered to Richard Buffington a bond for $2000, with a warrant of attorney attached to it. Judgment was entered on this bond on the 14th of April 1862. In the spring of 1866, the amount of the judgment was paid to Buffington. Bernard appropriated towards the payment $1600, belonging to Mary and Sophia Mitchell; and on or about the 28 th of March 1866, an [67] assignment of that sum to them was endorsed on the bond. The judgment, however, was never marked to their use, and the assignment was never filed. For some unexplained reason,»the judgment was satisfied by Bufiington on the 1st of May ,1866. The record remained in this situation until the 11th of January 1877, when it was revived by an amicable scire facias^ signed only by Bernard, who, having become hopelessly embarrassed, made an assignment for the benefit of his creditors the next day. At the trial of the issue, Bufiington said he had no recollection of the assignment, and could not recall the circumstances under which the judgment had been satisfied. It did not appear affirmatively that the Misses Mitchell ever had possession of the bond, or that they knew it had been assigned to them. It is probable that Bernard procured the satisfaction of the judgment by some representation that was plausible enough to give assurance to Bufiington, in order to subserve some business exigency of the hour. And it is probable also that he used the moneys of his sisters-in-law in full confidence in his ability to account for it when an account should be required. That is of course. Trust money is always applied in the first instance to the personal purposes of the trustee, with the most upi’ight intention at the right time to make it right. He paid the interest on the $1600 from year to year until the 1st of April 1876. And it was not until his insolvency was certain that he made the abortive attempt to secure the misdirected and wasted fund to his cestuis que trust by a revival of the original judgment against himself. Hoopes was the surety of Bernard. He testified that he ascertained in 1867, that Buffington had satisfied the judgment. This was in the course of a search for liens against himself required in order to obtain a loan of $12,500 from his brother. He said he did not know until 1877, that any part of the judgment had been assigned. And Bernard said in his testimony: “I have no particular recollection of any conversation with Cyrus about the assignment. * * * I do not know that he knew that I had money of the estate (of Andrew Mitchell) due Mary and Sophia Mitchell. I cannot say that I told Cyrus how I paid this bond. I told him I had paid Richard Buffington.” In the meantime, in June 1875, Hoopes raised $1800 for Bernard. Of this sum $1000 was paid on account of an existing judgment against Bernard, receiving an assignment of that amount. For the remaining $800, Bernard gave him a fresh judgment, on which he suffered a loss of $706.34 in the sale and distribution of Bernard’s estate. Upon the trial, however, he asserted the right to be discharged from the whole amount of the Buffington judgment. He alleged that if it had remained open, or if it had been marked to the use of the plaintiffs in interest, or if he had in any way received notice of the assignment, he could have protected himself by having the lien obtained [68] in 1862, preserved against the property of Bernard, by requiring the plaintiffs to collect it, or by paying it and reviving it himself. The jury found that he was misled, and that, with notice of the true state of the record, he could and would have been able to make himself secure. A general verdict in his favor was returned. Whilst intimate personal relations existed between the assignees and Bernard, yet so far as this judgment was concerned, their relations in a legal aspect were adverse. In disposing of the question brought up for review, therefore, the rights of the parties must be adjusted by settled legal rules. It was decided in Bury v. Hartman, 4 S. & R. 176, and in Brindle v. McIlvaine, 9 Id. 74, that where a bond has been assigned under the Act of the 28th of May 1715, a payment made by the obligor to the obligee before notice was good. In Bury v. Hartman, Gibson,' J., dissented, but as Chief Justice, he delivered the opinion of the court in Fisher v. Knox, 1 Harris 622, in which.it was ruled that “if the assignee of a moiety of a judgment does not have his interest therein marked on the docket, the bond being subsequently in the possession of the obligee, who assigns all his interest in the judgment bond, without notice being had by the second assignee of the former assignment, and the assignment to the second assignee is marked on the record, the first assignee will be postponed in favor of the second.” These authorities were followed in Campbell’s Appeal, 5 Casey 501, and in Fraley’s Appeal, 26 P. F. Smith 42. An analogous principle was enforced in Brown v. Simpson, 2 Watts 233. Exceptions to the rule have been found in cases where the second assignee has received the judgment as a collateral security, and not for a consideration paid at the time of transfer: Pratt’s Appeal, 27 P. F. Smith 378; Coon v. Reed, 29 Id. 240. In Gaullagher v. Caldwell, 10 Harris 300, a judgment was assigned, but no note of it was made on the docket, and no notice was given to the defendant until more than twelve years after the assignment. A release obtained in the meantime by the defendant from the plaintiff for a valuable consideration, was held valid against the assignee. If the principal obligor in a bond obtain a release by fraud, and the obligee suffer several years to elapse, without bringing suit or giving notice to the surety, during which period the principal becomes insolvent, the surety is discharged in equity: Gordon v. McCarty, 3 Whart. 407. The principle of the last case is decisive of the present question. These assignees made no inquiry as to the disposition of their money for eleven years. They asserted no claim to the judgment. They gave no notice to the surety, who was excused from vigilance by the action of Buffington and Bernard. They cannot call on him to make good the loss which in legal contemplation wa the consequence of their own default. Judgment affirmed.