Elliott ex rel. Stanard v. Callan

The opinion of the court was delivered by Smith, J. In the court below this was an action of debt, o» a single bill, given by James Callan to James Elliott, dated the 6th. of March, 1820, payable the 1st of July, 1822,- and equitably assigned to Daniel Stanard, the 15th of June, 1822. On the 8th July, 1822, the defendant in person confessed a judgment to the plaintiff for three hundred and thirty-six dollars and thirty-seven, cents. On the 26th September, 1826, a rule to shew cause, why the judgment should not be opened, was obtained,"which on the 17th of March, 1827, was made absolute, the judgment to remain a lien in the mean time. The cause was tried on the 24th of December, 1828, when a verdict and judgment were rendered- for the defendant. On the trial it was admitted that the single bill has been given in part of the consideration of two out lots in the town of Indiana,' sold by Elliott to Callan, and the record of a mortgage, dated the 22d of November, 1819, duly recorded, from Elliott to Joseph Brounson, executor of William Smith, deceased, on the same lots, was given in evidence by the defendant, who contended, that he was not liable to pay the bill, as the consideration of it had failed.. The plaintiff then proved by James Elliott, “ that he went to Callan, and asked him if he had any objection to a transfer of his bill to Daniel Stanard: that on this Callan went with him to Stanard,. and in the presence of'Stanard agreed that he should assign the bill_ to Stanard, and said he had no objections, and would pay it.” Before the cause was submitted to the jury, the plaintiff’s counsel presented certain propositions to the court, and requested them, [29] to instruct the jury, “ That if they believed, that James Callan, at and immediately before the assignment, knew that Daniel Stanard was about to purchase and take an assignment of said single bill, and did then and there inform said Daniel Stanard, that he was willing he sho'uld purchase and take such'assignment, and that he would pay the same, or had no objections to make against the payment of the same — and that therefore in consequence of said declaration, said Daniel Stanard did then and there purchase and take an assignment of said single bill, bona fide, and for a valuable consideration,, said James Callan cannot in this action set up as a defence the fact of an existing mortgage given by James Elliott, on the premises, for part payment of the purchase money of the premises, for which said single bill had been given.” The court thereupon instructed the jury, “ That admitting a valuable consideration did pass, unless they were further satisfied, that when (as it appears from Elliott’s testimony,) the defendant agreed to the assignment, which was executed in his presence, this ought not to be considered as an undertaking to pay the bond at all events, if he were then ignorant of the mortgage.” And the court further instructed the jury, that “ his willingness to the making of the assignment, (or as it is otherwise called in the paper on which the court is requested to instruct the jury,) his' making no objections to the payment of the same, or even saying he would pay it, if ignorant of the mortgage, ought not under such circumstances to avoid the defence now set up.” To this charge the plaintiff excepted, and has assigned two errors arising on the same. If any principle of law can be considered as settled, or ever can remain settled, it Is this — that the assignee of a bond or single bill,, takes it subject to all objections, which the obligor could legally' make. He comes in the place of the obligee, and cannot stand in a different or better situation. So early as 1776, in the case of Whaler assignee of Baynton, v. Huzes’ executors, we find in our earliest reports, 1 Dall. 23, this principle laid down by an able judge and great lawyer. And in our latest books of reports, 14 Serg. and Rawle, 306, the same principle is again recognized; and in a still later case, Rudy and wife v. Wenner, reported in 16 Serg. & Rawle, 18, it was declared that the assignee of a bond, whether the assignment be legal or equitable, takes it at his own peril, subject to every defalcation which might have been made against the obligee by the obligor, at the time of the assignment. But there is-an exception. If the assignee previous to the assignment, applies to the obligor, informs him he is about to take an assignment of the bond, and inquires of him, if the money the bond calls for was due, and the obligor declares it is, he is estopped from denying it afterwards; for the obligor by such or similar declarations, promotes and encourages the assignment, and thereby precludes himself from [30] the benefit of the right he would have had against the bond originally. His admissions operate virtually as a new contract between himself and the assignee. This exception is as well established, as the rule itself, in the cases above referred to, and in many more. The case cited by the plaintiff’s counsel, (Mr. Baldwin,) from Wash. Rep. 296, Buchner and others v. Smith and others, is strong, perhaps stronger than the one under consideration, and in my opinion is decisive of it. There a bond had been given for a gambling debt, I believe for twenty-five thousand pounds of tobacco. This bond was afterwards assigned, and an action brought upon the bond, and judgment confessed by the defendant after he came of age. The assignee proved that he was induced to accept of an assignment of the bond by the obligor, who assured him that the bond should be punctually paid. And the court there said, “ the principal objection is, that this is a gaming debt, contracted by an infant, which no subsequent act of his, nor any transfer, could make valid. It is in general true, that an assignee of a bond of this sort, can be in no better situation than the obligee, and the cases cited at the bar sufficiently establish the point. But the present case is very different upon principle from those cases, and that difference is produced by the obligor’s conduct, who by his assurances of payment, induced the asssignee to receive an assignment of it. He not only concealed from him legal objections to the bond, but afterwards assumed to .pay it, and when sued, voluntarily confessed a judgment.” This case was, in a great measure, afterwards recognized by the court in Elliott’s executors v. Smack, 390 of the same book. On these principles, we think the court below erred, when they instructed the jury, that admitting a valuable consideration did pass from Stanard to Elliott, for the assignment of the single bill, unless the jury were also satisfied, that when the defendant agreed to the assignment, which was executed in his presence, it ought not to be considered as an undertaking to pay at all events, if he were then ignorant of the mortgage. And they moreover erred in informing the jury that the willingness of the defendants, to the making of the assignment, his making no objections to the payment of the same, or even saying he would pay it, if ignorant of the mortgage, ought not, under such circumstances, to avoid the defence set up. Stanard, the equitable assignee, on the 15th of June, 1822, before he took an assignment of the single bill, and before it was due, asked, the obligor if he was satisfied, he should purchase and take an assignment of the same, and whether he had any objection to make against its payment; he replied, he was satisfied such assignment should be made, and had no objection to the payment thereof, and moreover said he was desirous Stanard should purchase and take an assignment. I would ask, what could Stanard do more? All precedent measures were pursued before the transfer was accepted by [31] him; the party who sealed and delivered the instrument was called on, a full and complete opportunity given to object, if he had any objections; but instead of objecting, answers that he is satisfied, and expresses a wish, that Stanard should take the assignment. It is therefore evident that the assignee was induced by the obligor to take the single bill, and part with his money for it. When Stanard applied to the debtor, he had a right to suppose, that he was cognizant of every thing which had given birth to the obliga-, tion, and that if a defence to it existed, he could and would inform him of it; for this purpose he made the application to him; he is not forbidden by the objector to purchase, but on the contrary is encouraged to do so. Under such circumstances, the obligor’s conduct, whether it procéeded from ignorance or design, must fee considered as an undertaking to pay. If there be a hardship in the matter, (for instance the existence of a previous mortgage unknown to the obligor, as is alleged) the obligor would be bound, for by his solemn assurances of payment, he induced the assignment; by his Concealment of all objections to the bill,, he, in fact, promised anew to pay it, and when sued, voluntarily confessed a judgment. We therefore think the plaintiff in error has sustained his exceptions, and that the judgment of the court of common pleas should be reversed, and a venire facias de novo awarded. Huston, J. Agreed to the general principle, but thought the facts of this case did not probably come within it. Here it was Elliott who went to the defendant to procure him to make the promise to Stanard. Here Elliott received nothing from Stanard; he was indebted to some of Stanard’s clients, and assigned this bond in full for their use, though it was not stated so to be. If the jury should find the -facts to be so, it is still Elliott’s bond, and the money when collected, goes to his use and to pay his debts; and in that case the principle would apply, and the defence was not a good one. Judgment reversed, and a venire facias de novo awarded.