Cox v. Palmer

Cooper, J., delivered the opinion of the court. In the year 1878 Dobson & Co., a commercial firm, doing-business in the county of Rankin, executed a deed of assignment for the benefit of their creditors to one Enochs, as trustee. The deed conveyed all the goods and chattels and choses in action of the firm, which were to be converted into money by the trustee “by a sale for ready money f and the proceeds were to be distributed among the creditors joro rata. At this time there waspending in the Circuit Court of Rankin County a suit in favor of Dobson & Co. against oue John I. Palmer, in which a judgment was rendered in November of that year. In April, 1878, Enochs, the trustee, with the assent of a portion only of the creditors of Dobson & Co., sold and assigned to two of the members of the former firm of Dobson & Co. all the assets which had been assigned to him by said firm, in consideration of their agreement thereafter to pay to the creditors of said firm thirty per cent of their demands. The purchasers from the assignee went into possession of the property, and then offered the thirty per cent to the creditors on condition that they would give a release of the balance of their debts to said firm. This proposition was accepted by some of the creditors, and to those the thirty per cent was paid. Others declined the offer, and they received nothing. The conveyance from the trustee to the purchasers from him was by a written instrument and afterwards by successive transfers, all of which were in writing. The property passed to the appellant, Mrs. Cox. In May, 1882, Messrs. Buchanan & Miller, attorneys at law, suggested that the appellee was indebted to the defendant in said judgment, and a writ was served upon him to appear and answer as garnishee. At the return term the garnishee moved to dismiss the garnishment, because the attorneys who.had caused the writ to be issued, were not the attorneys of the plaintiff in the judgment. On this motion evidence was introduced to show that the proceeding was being prosecuted for the benefit of Mrs. Cox, and all the trans [798] fers under which she derived title were introduced for the purpose of proving that she was not the owner of the judgment; and the court sustained the motion. While it would have been more in conformity with the rules of practice for the garnishee to have pleaded that the proceedings to collect the judgment were being conducted by Mrs. Cox, and that she was not the owner of the judgment, yet, as under the motion the parties really tried her right to the judgment, the same result has been reached as would have been under-more formal pleading. The question then is, has Mrs. Cox by the transfers acquired property in the judgment against Palmer in favor of Dobson & Co.?" The title which the trustee took was held by him only on the terms and for the purposes declared in the deed. He held the legal title, but the equitable interest in the property was in the creditors of the assignors first, and subject to their prior right in the assignors themselves. The deed of assignment transferred the title, but it also imposed limitations and restrictions upon the trustee and provided the manner and conditions upon which the powers conferred should be exercised. He was not absolute owner, having the right to deal with the property at his will, but was owner for the purposes, and subject to the will, of the assignors, as expressed in the deed under which his title was acquired. He was authorized to sell the assigned property for no other consideration than ready cash. A. sale on credit was beyond his power, because not authorized by the deed, and an unauthorized sale could uot confer title on the purchaser. The rule of caveat emptor applies to the purchaser of a judgment as well as to those of other classes of personal property. The purchasers from the trustee obtained no title to the judgment in this case, aud having no title could convey none to their assignee. Mitchell v. Hockett, 25 Cal. 539 ; Clarke v. Hogeman, 13 W. Va. 718. It is unnecessary to decide whether the garnishee would [799] have been protected by a judgment rendered on his answer, admitting such indebtedness, since the question involved is not whether he must, but whether he may defend, by showing-want of interest in the person at whose suggestion he has been called to respond. It must be true that the defendant himself would not be protected by payment made to one who claimed to be, but was not, the assignee of the judgment. As to the fact of indebtedness from the defendant to the persons in whose favor the judgment was rendered, both he and the garnishee are concluded, because that matter has been adjudicated between the parties to the judgment, but the fact of the assignment is something which has occurred since the rendition of the judgment. Its effect and validity is now for the first time put in issue, and neither the defendant nor the garnishee are precluded from showing that the pretended assignee of the judgment in fact has no title to it, but is a mere interloper in the suit. The judgment is affirmed.