Rufe v. Commercial Bank of Lynchburg

SIMONTON, Circuit Judge (after stating the facts as above). Both parties in this appeal claim under F. M. Threadgill. It is evident that Threadgill, up to the trial in December, 1897, had made no assignment of his claim against the express company to Rufe. He had professed and promised, and was liberal in expressions of future intentions. But no act was done carrying the professions, promises, and intention into effect. This is manifest from the letter óf Mr. Blackford of 21st September, 1897, and by Mr. Rule’s own action of attachment in New York. "An agreement to pay out of a particular fund, however clear in its terms, is not an equitable .assignment. A covenant in the most solemn form has no greater effect. The phraseology employed is not material, provided the intent to transfer is manifested. Such an intent and its execution are indispensable. The assignor must not retain any control over the fund, any authority to collect, or any. power of revocation.. If he [653] do, it is fatal to the claim of the assignee. The transfer must be of such a character that the fund holder can safely pay, and is compellable to do so, though forbidden by the assignor.” Christmas v. Russell, 14 Wall. 69, 20 L. Ed. 762; Removal Cases, 100 U. S., at page 477, 25 L. Ed. 600; Story, Eq. Jur. § lOS'Sa, note 1. The course taken by Threadgill’s counsel at the trial, in December, 1897, just before verdict rendered, would have vested the verdict in Bufe, if it were then under the control of Threadgill, or if he had not assigned it to some one else. This depends upon the right of the bank. Their case is this: After repeated declarations and promises from Threadgill, with regard to the protection of the debt to the bank out of the express company’s claim, he executed the instrument set out above. That instrument, dated January 22, 1897, consists of three parts. It appoints Mr. Charles M. Blackford his attorney in fact, as well as at law, to collect from the United 'States Express Company the amount of the judgment of April term, 1895, of $54,371. And this power of attorney is declared irrevocable. It thus transfers from Threadgill the dominion and power over the judgment, and vests these absolutely in Mr. Blackford. It then declares the interest coupled with the power which made the latter irrevocable. It makes it the duty of the said Charles M. Blackford, upon collecting the judgment, or so much thereof as may be collectible, first to pay the late firm of Kirkpatrick & Blackford their fee as per contract, next to pay the Commercial Bank of Lynchburg the fixed sum of 88,259 and interest thereon, and next any sums the bank may have paid on-life policies of said Thread-gill. It thus constituted Mr. Blackford a tiustee for these purposes. And, finally, it declares that this assignment shall in ho wise control the judgment of that legal firm in the management of the case, or in their power to compromise it, which they had before tbis assignment was made. Thus, the attorney was invested with an interest in the judgment itself, with the power to control it. This being the case, the instrument operated as an assignment. As is said in Hunt v. Rousmanier’s Adm’rs, 8 Wheat. 205, 5 L. Ed. 597: “If Hie interest passes with the power, and vests in the person by whom the power is to be exercised, such person acts in his own name. The estate, being in him, passes from Mm by a conveyance in his own name. He is no longer a substitute acting in the place and name of another, but is a principal acting in Ms own name, in pursuance of the powers which limit Ms estate.” See, also, Taylor v. Benham, 5 How. 269, 12 L. Ed. 147. It is contended that the irrevocable power of attorney did not give Mr. Blackford any interest in the judgment, hut only in the proceeds of the judgment. The judgment is nothing but the adjudication of the court In respect to the cause of action. McNulty v. Hurd, 72 N. Y. 521. It furnishes the means of enforcing the collection of the debt. “It is impossible to separate them. The judgment would be barren, nor can we conceive of its existence without the debt.” Pattison v. Hull, 9 Cow. 747. The debt is the principal thing. By whatever terms the assignment was made, if the debt passed all rights and remedies for its collection also passed with it. The right to the debt, as evidenced by the judgment [654] against' the defendants, cannot exist in the hands of different persons. One cannot hold the judgment, and another the debt. They are inseparable.' Bolen v. Crosby, 49 N. Y. 183. So, when the instrument passed the whole sum evidenced in the judgment, and devoted it, in the hands of Mr. Blackford, to certain specified uses, with that passed also “all the rights and remedies for its recovery and collection”; that is to say, the judgment and its incidents. See, also, Institute v. Kauffman, 18 Wall. 154, 21 L. Ed. 776. In Hunt v. Rousmanier’s Adm’rs, the borrower agreed to secure the lender. To this end a power of attorney was executed by the borrower, authorizing the lender to sell two vessels, property of the borrower, and to apply the proceeds of sale to his debt. The question was, was it such a security as was agreed upon? The court held that it did operate as a security, and that it was as complete as a mortgage would have been, only not as safe; this because, not being irrevocable, the death of the borrower would revoke it. So the power of attorney operated as an assignment. The circumstances of the case at bar strengthens this view. Threadgill, being indebted to the bank, had made repeated promises, and had as repeatedly declared his intention, to secure it by this judgment. So strong were his assurances that the bank officers speak of it as a complete understanding to this effect. Finally, he is induced to act, and, carrying out his promises, he executes this instrument. Its language denotes its purpose. Twice in the paper itself it is spoken of as “this assignment.” When the instrument was executed, Mr. Kirkpatriók, one of his attorneys, was present, strongly objecting to it, and doing everything he could to prevent Threadgill from executing it. He realized its effect on Bufe’s claim, and he believed that Threadgill was bound to protect Bufe. Threadgill, however, declared that he had pledged his word as a Christian gentleman to carry out his verbal contract with the bank when called on to do so, and that whether it ruined Mr. Bufe or himself or the express company or anybody else he was going to carry out his pledge to the bank, and thus he'signed the paper. This instrument, therefore, being an assignment, what is its effect? Was it defeated because the judgment of April term, 1895, was set aside, and another judgment obtained on the same cause of action, — the judgment under which $6,000 was recovered? At the time this power was executed, the judgment recovered in April, 1894, was in great jeopardy. It was threatened by two formidable modes of attack, — the writ of error in the supreme court, and the bill in equity in the circuit court. Threadgill’s counsel, in a letter written in 1896, speaking of it, says that Threadgill incurs a strong chance of losing the greater part, and possibly every dollar, of his claim. For this reason, manifestly, the last clause was inserted in the power of attorney reserving to these ge fiemen their full power of managing the cause and of compromising the same. The assignment of the judgment carried with it the claim which was the cause of action. George v. Tate, 102 U. S. 564, 26 L. Ed. 232; Pattison v. Hull, 9 Cow. 747. “The assignment of a judgment which was void, because in excess of the jurisdiction of the court, has been [655] held to transfer the debt for which the judgment was entered. And it seems that the assignment of a judgment necessarily carries with it the cause of action on which it is based, together with all the beneficial interest of the assignor in the judgment and all its incidents.” Freem. Judgm. (Ed. 1886) § 431; Brown v. Scott, 25 Cal. 189. This being so, no act of Threadgill taken after the execution could affect the rights of the bank, nor can the declaration of his attorneys, made in open court, have any effect, that the proceeds of the verdict then about to be taken were the property of Bufe. They could only have done this under instructions from Threadgill. It has been suggested that the last clause in the power of attorney saving to Messrs. Kirkpatrick & Blackford the right to exercise their judgment in the management of the said cause, and the same power to compromise the same which they had before this assignment was made, in effect nullified the preceding parts of the instrument, and gave them full power to compromise by paying Bufe, and disappointing the bank. Even if the construction of this clause was doubtful, such a construction would violate the rule, “Ut res magis valeat, quam pereat.” It would defeat the purpose of the instrument altogether, and operate a fraud on the bank. But the clause is not of doubtful construction. The judgment was seriously threatened by two formidable modes of attack. Messrs. Kirkpatrick & Blackford were uncertain — perhaps, we may say, were apprehensive — of the result. Experienced and able management of the cause —of the whole cause, and not of this incident only — was necessary. Who could better be intrusted with this management than these able counsel? In its result Threadgill, these gentlemen, and the bank were vitally concerned. Therefore there was to be no change of counsel in meeting the dangers of the future. They retained a power to compromise, because, from the circumstances surrounding the cause, a compromise was inevitable, perhaps was necessary, in order to escape total defeat. But what sort of a compromise? Clearly, it must be one affecting the interests of those interested in the cause and its judgment, — a sacrifice of a part of their interest to secure the rest of it, not an abandonment or destruction of it, or a transfer of it to some one else. Mr. Blackford was, to all intents and purposes, a trustee for the bank. He could never have entertained the idea of taking their interest and of giving it to another. It has been finally suggested that inasmuch as the verdict was only for $6,000, and as Kirkpatrick & Blackford had the first lien on it for a fee of $10,000, they had the right, if they chose, to give a part of their verdict to Bufe. But the record shows that these gentlemen, with great generosity, voluntarily reduced their claim to $2,000, leaving the remainder to be disposed of as right should appear. This ends the contention on that point. The decree of the circuit court is affirmed, each party paying his own costs in this court.