Ellis v. Amason, 17 N.C. 273, 2 Dev. Eq. 273 (1832)

Dec. 1832 · Supreme Court of North Carolina

17 N.C. 273, 2 Dev. Eq. 273

Jonathan Ellis v. Roderick Amason, Blake Little & Elijah Price.

The obligee of a bond in suit having assigned it verbally as a security to a creditor, and given Mm the custody of it, with. authority to conduct the suit, and the obligor with notice of the assignment, having paid the debt to the obligee and taken a release from him: in Equity the interest of the 1 assignee will bo protected, and the obligor enjoined from pleading the release to the action at law.

The bill was filled in Sept. 1830, and charged, that in August, 1829. the plaintiff became surety for the defendant Roderick Jlmason, in a note to one Barnes, for j§400, and that Jhnason becoming soon afterwards embarrassed, the plaintiff applied to him to be counter-secured, and thereupon, Amasan agreed to transfer, and did verbally transfer, to him a claim, which Jlmason then had in suit against the defendant Lilile, in Edge-combe County Court, for $600 ; that the plaintiff prosecuted the suit personally, and at a subsequent term obtained a judgment in the name pf Jlmason, from which an appeal was taken by Little, who had before, and at the trial, notice that the plaintiff claimed the beneficial interest in the suit. The bill then charged the insolvency of Amason, and the payment of the debt to llames by the plaintiff, and that pending the appeal, the other defendant Price, pretended to have an assignment from Jlmason, of the claim on Little, and that he and Little had induced Jlmason to execute a release of the said demand, and to attempt to dismiss the suit. Process was prayed against the three, and an injunction against using the release, or dismissing the suit, or otherwise interfering with the plaintiff’s receiving whatever sum might be recovered at law from Little. The bill did not charge any specific notice given by the plaintiff to Little or Price, or any thing from which it might be inferred, but the plaintiff’s participation in the management and trial of the suit in the County Court.

The three defendants put in separate answers. That of Amasan stated the demand against Little to be on his endorsement of a note made by one' Speight, and admitted the assignment to the plaintiff for the purpose mentioned in the. bill; he added, however, that besides this claim, he transferred to the, plaintiff other notes, which he mentioned ; and that the whole was intended as an indemnity against the debt to Burn.es, and to satisfy certain monies .'about jg300,) which Milis then agreed to pay for Amasan, who had been arrested for that sum on a ca. sa.; that -it court Ellis refused to pay any part of the $300, b-1 surrendered him, and he would have gone to jail, but for the friendship of Price, who advanced the amount for him, and took a written assignment of the demand on Lililc, by way of security for that and other debts, for which he was Amasan’s surety. He admitted that he told Price of the- transfer to Ellis, but stated also that Ellis had refused to perform his part of the agreement, and that he felt himself released from it. Of the assignment to Ellis, he said that he never gave notice to Little, until he understood from him and Price that they had settled, and Price received full payment; and that he then told Little of what had paseed between him and Ellis as lie had represented it to Price.

The answer of Price stated the transaction between Limasen and himself, as set forth in the answer of the former, and said that he took his assignment at February Court, 1830 ; he then applied to Ellis for the note, for the purpose of trying the suit, but he refused to deliver it up, saying that he claimed it under the transfer to himself; upon which Price informed Ellis what Amasan said was the agreement between them for the discharge of the ca. sa. which Ellis admitted to be true, and finally consented that the assignment to Price should be preferred to his, and that he would take the residue after Price’s claims were satisfied. The suit was then tried, and an appeal taken by Little, The answer then averred in positive terms, that Price never at any time gave notice to Little of the assignment to Ellis, or of that to himself, or any intimation that either he or Ellis had an interest in the claim ; but that being about to leave the state, shortly after the judgment, he Little and Amasan got together and.they came to a settlement, upon which, Little paid the full amount of the claim, which was received by Price and an acquittance given by Amasan alone in full discharge of Little, which, he said, vras with no purpose of favoring Little, or taking an advantage of Ellis, but only to secure himself.

The answer of Little stated, that he was sued to November sessions, 1829, and that in January following in a conversation with Ellis, he informed him that he should be pleased if he could get the suit settled, to which Ellis replied, that if he would pay the debt to Barnes, for which Ellis was surety for Jlmason, he thought lie could get clear : hut that he gave him at that time no notice of an assignment to himself; that at February term, Price gave him notice of the transfer to himself, and shewed him the written assignment, ami shortly before the trial came on. Price and Ellis were in private conversation Together, and in a little while Price informed him, Little, that he and Ellis had come to an understanding that the suit was to be tried, and Price was to be first satisfied out of the recovery, and account for the surplus to Ellis; and Price further informed him, that he had engaged Ellis to attend to the trial, as he was best acquainted with the facts. This defendant denied that Ellis then gave him notice of any interest in the claim, and averred, that from the transfer to Price in writing, he supposed him to own it exclusively. lie then stated the nature of the agreement between Jlmason and Ellis, as set forth by the other defendants, as he had since understood it from them. It was then admitted, that on the 26th March, 1830, a settlement took place between him, Little, and Price and Jlmason, when he discharged the whole debt by paying $554 to Price, and the balance of 3 5 or $ 20 to Jlmason himself, and took bis receipt, which he intended to use on the trial of the suit. lie denied all intention to defraud the plaintiff, and said, that he never conversed with Jlmason upon the subject of the claim until the settlement, and Jlmason then averred, that Ellis had no interest in it. He further stated, that Price -was sued as surety for Jlmason for another demand, and that a recovery would probably be effected against him for about $ 200, which Little, as the agent of Price, (who had removed,) was to pay. The insolvency of Jlmason was fully admitted.

The depositions of several witnesses proved the ac-Iaiowledgments, atvarious times of Jlmason in No vein her, 1829, and thence on to the succeeding February, that he made a verbal assignment to the plaintiff of the note endorsed by Little as a counter-security for his responsibility for the debt to Barnes. None of them spoke of any further payment to be made for Jlmason on the m. sa. oí’ otherwise, but confined the purpose of the assignment to the debt due Barnes, which EUis proved lie had paid.

Several witnesses were examined as to the notice to Little. One of them proved, that after hearing Jimason in November, 18¿9, acknowledge the assignment to Ellis, he also beard Little. during the same week, say that Jimason had made such a transfer, and'that he thought he should get clear of paying any thing. Another swore, that after the trial at February, 1880, Little said, that they had got judgment against him, and Ellis took an an active part in the management, but that lie had appealed, and thought he should cast them. A. third proved, that in the spring, Little came to Jimason'’s and asked for him, and upon some person’s enquiring what he wanted of him. he replied, that he wished to see him about the debt he had transferred to Ellis, and that he know they could work Ellis about it; and a fourth, that Little shewed him Jhnason’s receipt, and stated that the suit should be dismissed, and Ellis was not as safe as he had thought himself. He then observed, that Jimason had made a verbal transfer of the debt to Ellis, if lie would become liis surety, hut as soon as he got him to court he had surrendered him, and then he, Jimason, was obliged to apply to Price, to whom he gave a written transfer, am! that the three, Jhnastm, Price and Little had made a settlement, upon which he got a receipt.

Devercux and Mordecai, for the plaintiff.

The Attorney General and Gaston, contra.

RueeiN, Judge.

The first observation called for by the case is, that the statements in the answers, that it formed a part of the contract between the plaintiff and Jimason, that the former should discharge the latter from execution, is entirely unsupported. No. witness speaks of it, and the answers themselves as to that, go out of the ehargesof the bill, and bring this matter forward as a new and substantive defence. The defendants ought therefore to prove it. They have not been able by any body but themselves, and their answers arc not evidence for, any more than against each other. The gross contradictions between them, (to he accounted for perhaps, by the circumstance, that Price’s answer was drawn at his present residence in Alabama,) may be the reason, and it seems to be a good one, why they have not respectively taken each other’s depositions to that and other parts of the case. At present, their case is without evidence on this point.

As the answers of the defendants respectively, are not evidence against the others, each can be charged only on his own answer and the depositions.

The fact of the assignment to the plaintiff, is distinctly proved by several witnesses, as early as November, 1829, and this is evidence which affects all the defendants as to that fact, and as to the purpose of the transfer.

The answer of Price, contains a distinct acknowledgment of notice of this assignment, qualified indeed by stating other terms besides those alleged by the plaintiff, but without any support as to that qualification. And the whole is put beyond a doubt as to him. by the fact, admitted by him, that Ellis had the paper in his possession, which no doubt, caused him to be so anxious to obtain a written assignment, though advised by counsel that a verbal one would be equally good against Jhnascm.— Under these, circumstances, the subsequent receipt of the money, charges him to the full extent of the plaintiff’s demands; that is, for the debt paid by him, and interest and reasonable expenses incurred, or to be incurred, in the prosecution of the suit at law, of which an account must be taken. Price is thus chargeable, whatever may be the issue of the suit against Little; for he cannot say that Little did not owe the debt, though Little himself may. Price has received it, and he received it in trust for Ellis. But as that may not be an effectual security to the plaintiff, he has also aright to proceed at law against Lillie, notwithstanding the payment to the others, if made with notice of Ellis’ rights, and in bad faith.

Upon the question of notice, the court concurs with the counsel for Little, that it ought to be plain, positive and direct information. A rumor, or that which might pnt men upon enquiry in ordinary cases, will not do to affect a debtor with notice of the assignment of a chose in action. Debtors are bound to seek their creditors, but they are not bound to search the woidiljdiijt may pay the original creditor, unless distinct notice of the rights of tlie assignee be brought home. B.ut that need not be by proof of such notice from the assignee personally, though xn general, it is satest and would be required except in those cases of palpable collusion' to arrange the . . ° demand with the sole intent ot defeating the assignment, Such conduct is in itself evidence that a personal demand has been made, or whatever is necessary has been done, If, for instance, the original creditor inform the debtor that he has made a parol assignment, and for .that reason, he cannot give up the note which he delivered to the as-signee, and, in order to defeat it, seeks and obtains payment, it is a case of plain fraud, which carries conviction with it, ami dispenses with further proof of notice.

Notice of the as-bond, should be direct> hi “cierto gor with a wrong-fuI payment of it; but notice maybe proved otherwise *an by aperson-tionfiom the as.-slsnee-

Such I conceive this case to be. The witnesses speak precisely to Little’s declarations o,f his knowledge of the plaintiff’s assignment, and of his efforts to get a receipt from Jhnason. expressly with the view to defeat it, and boasting that he had done it. And although his answer affects to deny notice, bis own statements corroborate the testimony. The denial is special, that Ellis did not give him notice, but not that he bail none from any other person, lie admits too. that when Price shewed him his assignment, (which Price says he never even informed him of,) he understood that Ellis had a prior claim, but that Price and Ellis had come to some arrangement between themselves ; and he admits, that the latter conducted the trial. But above all, the circumstances of the settlement are convincing. He says, that he settled in March, within a few weeks after taking the appeal, which he had expressed such strong hopes of prosecuting successfully, and that he paid the full amount of the former recovery. This is most unusual conduct in a person who has been harrassed at law. So unusual as not easily to he credited, unless in making the settlement with that ■person, he was gaining some advantage which he could not expect, if made with another, or with the view of particularly accommodating the individual with whom the.settlement was then made, or defeating another. I doubt but little, that all these motives concurred upon this occasion, for Price seems to have left the state immediately, and Little admits himself to be his agent; and the purpose was to put, or pretend to put into Price’s hands the whole sum, that it might be out of the reach of Ellis — all thinking that Amason’s receipt would defeat .the suit, and consequently defeat Ellis. They settled upon terms to suit each other, and Jhnason got his share, though a small one. Little repeats, that Jhnason then told him, that Ellis had no interest. How came he to make that enquiry? Or the other to volunteer the information? But v iiy did he not ask for the note on which he had given bis endorsement or guaranty? That would Inn o been a much more effectual discharge than a release, and would have disposed of the suit without the trouble of pleading and calling witnesses. The circumstances seem conclusive to establish his perfect knowledge of the plaintiff’s claim, and of the dishonest purpose to embarrass and frustrate him. He well knew, that those men, with whom he was settling, had not the rigid ; and he ought not to use the acquittance-obtained from them. The injunction must therefore be continued, and the parties be at liberty to move for further directions after the trial at law, and in the mean while, an account be taken of the plaintiff’s demánd.

Per Curiam. — Declare, that the assignment mentioned in the pleadings to have been made of the note also mentioned in the pleadings to the plaintiff, is established ; and that the defendant Price had notice of that assignment, when he took one to himself, and that his subsequent receipt of the money due upon the note from the defendant Little, makes him a trustee thereof for the plaintiff. Declare further, that the defendant" Little, had notice of the assignment to the plaintiff, at the time he made the payment mentioned in his answer, and that said payment was made in bad faith, and with the fraudulent intent of defeating the plaintiff of the benefit of the assignment made to him, and that the plaintiff hath a eight, notwithstanding the said payment, to prosecute the action at law, for the purpose of indemnifying himself out of the judgment for ills suretyship, and the costs of prosecuting the said suit, unless he be paid the amount of the said note by the defendant Price. Direct an account to be taken of the amount due the plaintiff, and let the injunction heretofore granted be continued, and let the defendant Little bo restrained from pleading or offering in evidence upon the trial of the said suit at law, the release obtained by him from the defendant Amasan, and reserve the cause for further directions.