Lyon v. Summers

Daggett, J. It is not easy for any intelligent judge to look at this case, and not suspect, that this note was executed to enable the holder to practice a fraud. It is true, that the note is not negotiable, not being payable to order. By the rules of the common law, therefore, it cannot be assigned so as to vest the legal interest in any other person. Still the assignment of such a note, transfers the equitable title, which will be recognized in a court of equity, and also in a court of law, and fully protected. It must be sued in the name of the promisee, and is liable to all the equity which subsisted between the original parties. Thus far and no farther, it is a note to Andrew Lyon, jr. These principles are peculiar to our courts, and were considered and well illustrated, in the case of Colbourn v. Rossiter, 2 Conn. Rep. 503. Our late statute, May 1822, page 19. is designed to give effect to this doctrine. It appeared, that on the 2d of November, 1824, the defendant made the note ; — that the promisee was then “ in low circumstances in point of property, much in debt, and destitute of pq-, [407] cuniary creditthat it was Lyon’s wish to raise money on the note, to relieve himself from his embarrassments, and that_ known to the defendant; that Sanford, by virtue of the statute above cited, prosecutes the suit for his benefit, in the name of Lyon ; and that both he and Sherwood, who took the note of Sanford by assignment, were ignorant of the defeasance set up. But a defeasance is set up ; and that with the facts pleaded,are said to constitute a bar to the suit. Here, an honest mind naturally inquires, why was not the defeasance annexed to the body of the note 1 Why did it not assume the shape of a condition ? It is difficult to answer the question, without impeaching the integrity of the transaction. But let us come nearer to the points made by the counsel for the defendant. Here, it is urged, that the charge of the-judge does not present for the decision of the jury, the facts put in issue by the pleadings. Let us examine this position. The facts in issue are, substantially, whether A. Lyon, jr., being in low circumstances and destitute of credit, and that well known to the defendant, obtained this note to raise money and relieve himself from embarrassment: and whether the defea-sance was fraudulently executed, to the end that it might be set up as a bar to a suit brought thereon, by any owner thereof. The court finds, as a fact agreed by the parties, that Lyon was a bankrupt, and the defendant knew it. The charge then proceeds, if the jury were satisfied from the testimony, that the defeasance was not to be annexed to the note, but kept by the defendant, so that Lyon might show an unconditional note to his creditors, to deceive and delay them ; or with the intent that he should raise money thereon, by a sale thereof; and that the defeasance should be set up to defeat a recovery on the note ; then the transaction was not honest, but iniquitous ; and in that case, their verdict should be for the plaintiff. The strength of the objection lies in this, viz. that the charge is in the disjunctive ; — either the note was made and the de-feasance concealed to deceive creditors, or to enable Lyon to sell the note as unconditional, and the defeasance to be set up to prevent a recovery. Now, it is said, that by the pleadings, the latter-fact only was put in issue, viz. whether the note was made unconditional to enable Lyon to sell it, and the jury might not have foundjthat fact consistent with the charge, but simply the fact that it was made unconditional to deceive and delay creditors. [408] The answer to this objection, is, that the defeasance was frauclulent and ought not to prevail, if either of the purposes was to be effected. This is not denied in argument. But this objection cannot now prevail, because this motion finds, that testimony was introduced, by the plaintiff, in support of both alternatives; and the controversy between the parties was, whether either of them was proved. To this testimony there was no objection. If the defendant had supposed, that from the state of the pleadings, any testimony was irrelevant to the issue, he should have objected to it; or, if Casually introduced, he ought to have prayed the court to instruct the jury, that it did not bear on the issue. This is an obvious course. But is it to be endured, that when parties have been fully heard upon a material point, (for it is conceded that each of the alternatives was material, and, if found affirmatively, sufficient to destroy the defeasance) they are at liberty, on the ground of some technical rule, to try their cause again ? In my view of the charge and the issue, the jury have found a fact sufficient to warrant a recovery for the plaintiff. Besides, to prevent such an evil as would be let in, by a practice of this kind, this Court adopted a rule, in 1826, (6 Conn. Rep. 327.) in these words : “ In all motions for a new trial, the precise point made by the party, and the precise opinion expressed by the court, shall appear upon the face of the motion.” No point like that now made, was made in the court below. Moreover, the great question was, whether the defeasance was fraudulent: — if so, it ought not to protect the defendant. That question is directly answered by the verdict. Another ground alleged íor a new trial, is, that the plaintiff is not entitled, on any principle, to recover the whole face of the note, but only the sum which he has paid ; but that the court instructed the jury, that if they should find for the plaintiff they ought to find the whole amount of the note. On a recurrence to facts, it appears, that when Sanford, the real plaintiff bought the note of Lyon, he paid him for it, by his own note, 474 dollars, and the residue in money ; and that he is a man of abundant property. The note for 474 dollars was given to A. Lyon, jr., and by him immediately thereafter sold to John Sherwood, who paid Lyon the full value thereof; and on the 26th of November, 1824, the real plaintiff kpaid on the note 165 dollars, both Sanford and Sherwood being ignorant of the defeasance. The only reason alleged why Sanford should not [409] recover the whole sum promised in the note to be paid, is, that he will not be obliged to pay any part of what now remains due on the note, if sued therefor. Suppose he does, it then follows, that the loss is thrown from one innocent man {Sanford) on to another (Sherwood), and that too by him who gave the note, and fraudulently attempted to avail himself of a private defeasance, taken and pocketed by the defendant, who aided Lyon in practising the fraud. This cannot be law, nor equity. “ In all cases,” says Chief Baron Comyns, “ where a man has a temporal loss or damage, by the wrong of another, he may have an action upon the case to be repaired in damages.” That principle would authorise a recovery in favour of Sherwood against the defendant, for the money paid to Lyon, through the fraud of the defendant. If so, I see not why Sanford should not recover it of the defendant, in this action on the note ; and in that case, he doubtless must pay his note to Sherwood. In this way, complete justice is done. It seems to me, also, that no principle of analogy will uphold this claim of the defendant. If A. were to sue B. for fraud in the sale of a horse, it would be a bald defence, that A. sold the horse for a full price to C., even though C. took the horse at his own risque. If the fraud, in such case, was proved, there must be a recovery to the extent of the injury. The motion for a new trial must be denied. Hosmer, Ch. J. and Williams, J. were of the same opinion. Peters, J. having been absent when the case was argued, and Bissell, J. having been of counsel in the cause, gave no opinion. New trial not to be granted,