Opinion
09-11-1872
WARTMAN & als. v. YOST.
Effinger and Michie, for the appellants. Liggett and Woodson, for the appellee.
1. Y brings an action of debt upon a bond against W and two others, W being the principal in the bond. The defendants seek to set off a judgment recovered by P against Y, which had been assigned to W. HELD:
1. Under the statute, Code ch. 172, §4, the judgment is a good set-off to the bond, though the debt sued for is against W and two others, and the judgment is assigned to W; and though the plaintiffs' claim is legal and the claim of W is equitable.
2. See the opinion of Moncure, P. for the difference between the English statute of set-off and that of Virginia.
An action of debt was brought in the County court of Rockingham county, by S. M. Yost against John H. Wartman, Giles Devier and H. T. Wartman, on a joint and several single bill obligatory, executed by the defendants on the 15th day of July 1868, for the sum of fifteen hundred dollars, with interest from date, payable on the first day of January 1869. The defendants pleaded payment, on which issue was joined, and also filed an account of set-off, which they desired to prove upon the trial. A verdict was found for the debt and interest aforesaid, on which judgment was accordingly rendered. Two bills of exceptions were tendered by the defendants, and allowed and signed by the court, to opinions given by the court upon the trial, but it will be necessary to notice only one of them; from which it appears that on the trial of the cause, the plaintiff gave in evidence the bond, upon which the action was founded, which was read in evidence to the jury; and thereupon the defendants offered in evidence a copy of the record of a judgment rendered in the County court of said county at its July term in the year 1867, in the name of William S. Perry against Samuel M. Yost, which copy is set out in the bill in words and figures, showing that the judgment was for twenty-two hundred and fifty dollars, with legal interest thereon from the 15th day of July 1867, till paid, and costs; and also offered in evidence a copy of the record of the proceedings in said cause, resulting in said judgment. The defendants also offered to prove an assignment of said judgment to the said John H. Wartman, one of their number, in accordance with the following paper writing, purporting to have been made by the said William S. Perry, viz:
" In the County court of Rockingham county, July term 1867, William S. Perry v. Samuel M. Yost, judgment on award for $2,250, with interest from 15th of July 1867, till paid, and costs $4.48.
For value received, I assign the above described judgment to John H. Wartman, August 10, 1868.
WILLIAM S. PERRY."
The defendants also offered evidence tending to show that they stand in the relation of principal and sureties, as to the subject matter of the action, and that the one of their number, John H. Wartman, claiming to be enentitled to the set-off or payment mentioned, is principal. But the plaintiff objected to the introduction of the testimony offered by the defendants, upon the ground that it did not tend to prove either a payment or set-off, which the defendants were entitled to have allowed to them; and the court sustained the objection of the plaintiff, and refused to permit the defendants to introduce all or any of the evidence for either purpose: to which action of the court the defendants excepted.
To the said judgment of the County court a supersedeas was awarded by the judge of the Circuit court of said county; by which latter court the said judgment was affirmed. To the said judgment of affirmance of the Circuit court, a supersedeas was awarded by a judge of the late District court for the Sixth district, holden at Winchester; and as the case was pending in the said District court when the present constitution took effect, it was transfered by law to the Supreme court of Appeals; and being such a case as the said court of Appeals has jurisdiction to try, it was deemed proper by the said court to be tried at Staunton; and it was ordered accordingly. Thus came the case before this court.
Effinger and Michie, for the appellants.
The evidence itself showed a proper and allowable set-off, and it is difficult to discover from the record upon what ground the court rejected it. The Code uses the most comprehensive language on this subject,--no words could be more so: " Any payment or set-off" may be proven. Code 1860, page 716, §4. The set-off, under our own statute and practice, may be acquired at any time anterior to trial. That a judgment in favor of the defendant against the plaintiff may be set off by the defendant in the plaintiff's action against him, will not be denied. See 5th Rob. Practice (new), p. 963, note †. Can it be pretended that a judgment assigned to the defendants before trial, and properly brought forward in the pleadings, cannot as well be used by them for this purpose as a note or single bill assigned under similar circumstances, and presented for the same purpose? Where judgments are in the same court and between the same parties, it is every day's practice for the court to order them to be set off upon a rule. When an assignment has intervened, the mode of doing it may have to be varied. Imaginary difficulties may be suggested, but they are easily surmounted. They were suggested in the case of Ford v. Stuart, 19 John. R. 342; but the court said: " We think the case of Tuttle v. Bebee, 8 John. R. 118, is decisive of the right to set off this judgment in favor of the assignee. The only difference is that in that case a bond was assigned, and in this a judgment. Is a judgment a chose in action which in Virginia is not assignable? A domestic judgment upon which execution may issue can scarcely be called a chose in action at all. A foreign judgment, upon which suit must needs be brought for the purpose of enforcing collection, might perhaps be thought to resemble a chose in action. Kent's description of a chose in action is, 2 Com. 351 side 413 top, 7th edition, that it is a personal right not reduced to possession, but recoverable by suit at law. Money due on bond, note or other contract, damages due for breach of contract, for detention of chattels, or for costs, are included under this general head or title of things in action."
Nor does the assignment of domestic judgments come within the reason of the common law rule forbidding the assignment of choses in action. It was supposed that such assignment " would be the occasion of multiplying of contentions and suits, and great oppression of the people." But this bugbear of maintenance no longer subsists in Virginia. The multiplicity of suits, it is true, is an evil, and one against which this very law of set-offs, carried so much further in this country than in England, is directed. So effectually have we gotten rid of the common law rule touching assignment of choses in action, that the revisers of the Code of 1849 did not think it necessary to continue the statutory provision rendering them assignable. We have indeed the provision which assumes their assignability, that " the assignee of any bond, note or writing not negotiable may maintain thereupon any action in his own name which the original obligee or payee might have brought." These words doubtless were designed to include, and do include, judgments, domestic as well as foreign. But it may be said that the assignee of a judgment has not the legal title, but only an equitable right. If this be true, still it would not prevent the set-off of the judgment by the assignee. The assignee of a bond since the Code of 1849, as well as before its adoption, though he may sue in his own name, has not the legal title. The " legal title," says Judge Moncure, in Davis v. Miller, 14 Gratt. 1, 13," still remains in the assignor, in whose name the suit may be brought." Garland v. Richeson, 4 Rand. 266, is the leading case on the subject. But since the adoption of the Code of Virginia, as well as before, the assignees of bonds have met with no difficulty in the courts of Virginia in setting off bonds assigned to them. The assignee in either case is the beneficial owner; a payment to him would discharge the obligation, and consequently he may set it off. The courts of law and equity are both open to him; he can enforce by such payment to himself; and is a set-off anything more or less than a cross-action?
It is not necessary to cite authorities in Virginia to show that the assignee of a bond, though he has not the legal title to it, may set it off against another demand against him. It is sufficient to refer to Clopton's adm'r v. Morris, 6 Leigh 278. The only question in that case, as in all others, was whether or not the beneficial interest was in the assignee, who sought to set off the bond. It is the beneficial interest that is looked to. See 8 Bac. Abr. set-off C, §2.
The case of Arnold v. Hickman, 6 Munf. 15, is one in which the validity of an assignment of a judgment was fully recognized.
In Glazebrook's adm'r v. Ragland's adm'r, 8 Gratt. 332, under peculiar circumstances an assigned judgment was held to be not a good set-off; but it is a noticeable fact that in the two opinions delivered arriving at the result above given, there is no intimation of the existence of any such rule as renders the assignment of a judgment not good in law, and therefore not good as a set-off.
The difficulty in the mind of the court in the case at bar could not have been that the demand of Yost was against all the petitioners, and the judgment sought to be set off by them had been assigned to but one of their number; for the petitioners offered to prove that they occupied the relation of principal and surety, and that John H. Wartman, the assignee of the judgment, was the principal, and the others but his sureties; thus bringing the set-off within the statutory provision touching such matters, on page 716, Code of Virginia 1860, §4. Indeed, the relation of the petitioners rendered the set-off a matter of right, and the petitioners, Giles Devier and Henry T. Wartman, could have by bill in equity compelled the plaintiff, Yost, to permit, and the petitioner, John H. Wartman, to make, this set-off, upon the principle of marshalling securities; but petitioner, John H. Wartman, assenting and offering the set-off, there was no necessity to resort to a court of equity to compel him to do so. The separate debt is paid in such a case. Story's Eq. Jur. 1437; Stephenson v. Taverners, 9 Gratt. 394.
Liggett and Woodson, for the appellee.
It will be perceived that the contest here must be as to the legal assignability of this judgment, so that it could constitute a set-off. If it was not susceptible of assignment at law, it was not a set-off at law.
Now choses in action at common law were unassignable, and it is only by virtue of statutory enactment that they became so.
Is a judgment under the statute specified among the list of choses, that may be assigned, or on which suit may be brought in name of the assignee?
The Code of Virginia, 1860, reads: The assignee of any note or writing not negotiable may maintain thereupon any action in his own name which the original obligee or payee might have brought, but shall allow all just discount, not only against himself, but against the assignor before the defendant had notice of the assignment. Page 630, sec. 14.
But the counsel for appellants have intimated that a judgment was not a chose in action. The authorities assume otherwise.
Blackstone, in discussing property in things personal, says: Property in chattels personal may be either in possession, which is where a man hath not only the right to enjoy, but hath the actual enjoyment of the thing, or else it is in action where a man hath only a bare right without any occupation or enjoyment. Chitty's Blackstone, 1, p. 313, chap. 25.
Again, same author, p. 318: " Money due on a bond is a chose in action, for a property in the debt vests at the time of forfeiture mentioned in the obligation, but there is no possession till recovered by due course of law." A judgment for money is no more the possession of money than is the bond on which the judgment is obtained--it is one stride, perhaps, nearer possession, dependent on the condition of the debtor's pecuniary affairs--but is merely the record of the court that the debtor must pay the money he owes, and how much-- an order that the chose in action shall become a chose in possession through the instrumentality of the court's officers. If a judgment is a chose in possession, whence the necessity of executions, making sales thereunder, and returns? Not until the judgment order is paid cash in hand is it a chose in possession. See 1 Tucker, p. 346-7, on assignments, where emphatically is asserted the position we assume.
Appellants' counsel suggest that a judgment may be a set-off at law, though not an equitable set-off. Such is not our understanding of the relative powers of the two forums. Equity, when it has hold of a subject legitimately can recognize not only facts of off-sets that the legal tribunal can, but may recognize those which a legal tribunal could not. Equity, as a general rule, follows the law in its recognition of set-offs--and can go further--but never since the chancery tribunal has seized on the subject of set-offs, has the legal had the power to allow anything to be off-setted which the equitable could not allow. Where there is adequate remedy at law for the assignee, equity will not and cannot have jurisdiction (Code 630, 1860), but where there is not--and chancery assumes jurisdiction by reason of inadequacy--then, all the pleas of set-off allowable at law prevail in chancery.
In order that a set-off may be used as a defence in a court of law, it must be a claim for which the defendant might sue in his own name--it is in effect a cross-action. The forms of the plea of set-off, 1 Chitty on Pleading, page 570; 2d Tucker, p. 105 to 111, and note at page 111. And this is the idea conveyed by the 9th section of chapter 172 of the Code of 1860. Under that section, a defendant who files a plea of set-off, is deemed to have brought an action against the plaintiff, and is entitled to a judgment against the plaintiff for any excess. How could that be done in a case of this sort, and in whose name would the execution issue?
Upon the subject of set-off we refer the court to 2 Tucker, page 106; Trimyer v. Pollard, 5 Gratt. 460; Turner v. Satterlee, 7 Cow. R. 480; Mason v. Knowlson, 1 Hill, N. Y. R. 218.
Appellants contend that the word writing in section 14, Code 1860, p. 630, comprehends judgments. The word writing here evidently refers to a writing originally constituting the basis of an action and recognizing indebtedness. It will be observed that the law reads " note or writing not negotiable." Negotiable paper was already safe in this regard, and there are other writings which are neither bonds or notes and not negotiable, that may be made by a debtor, and signed by him--an order not payable at bank for instance. This objection hardly requires notice.
If the foregoing views are correct, and the law is well defined appertaining thereto, and the authorities clear, concise and concurrent, the decision of the courts below must be sustained.
Numerous authorities are cited by appellants, all of which either fail to be applicable to this cause, by reason of a failure of analogy in existent facts, or in having no relation whatever to the subject matters considered.
MONCURE, P. delivered the opinion of the court. After stating the case, he proceeded:
That this case should have been decided as it was, both by the County and Circuit courts, must, at the first view of it, strike the mind with some surprise. That the defendants should have a right to set-off in the action, a judgment assigned to one of them, and he the principal debtor, against the plaintiff, would seem to be just and reasonable. To be sure, there would formerly have been a technical objection to such right of set-off, arising from a want of mutuality, which was always necessary to the existence of the right; the set-off being a claim of one of several defendants against the plaintiff, whereas the claim for which the action was brought, is a claim of the plaintiff against all the defendants. But such an objection, so far as it could apply to this case, has been completely removed by statute; it being provided by the Code of 1849, chapter 172, section 4, that " although the claim of the plaintiff be jointly against several persons, and the set-off is of a debt, not to all but only to a part of them, this section (being the one which gives the right of set-off), shall extend to such set-off, if it appear that the persons against whom such claim is, stand in the relation of principal and surety, and the person entitled to the set-off is the principal." Now that is precisely the case here, in regard to the want of mutuality, and therefore no objection on that ground can be sustained.
The ground on which the objection taken to the set-off in this case was sustained, no doubt was, that the defendant, who claimed to be entitled to the benefit of the judgment sought to be set-off against the plaintiff's claim, was only the equitable, and not the legal, owner of the judgment, and could not bring an action at law thereon in his own name.
Even under the statutes of set-off in England, it was held in the celebrated cases of Bottomley v. Brooke and Rudge v. Birch, cited in 1 T. R. 621-2, that a debt due from the equitable owner of the claim for which an action was brought in the name of the legal owner, might be set-off in such action. See Winch v. Keiley, Id. 619. These cases, it is true, were afterwards questioned, and at length overruled, by the courts of that country. See the cases cited and commented on in 5 Rob. Pr. p. 980. But this course of decision in England, in regard to the cases of Bottomley v. Brooke and Rudge v. Birch, is due entirely to the peculiar phraseology of the statutes of set-off existing there; as plainly appears from the recent case of Isbery v. Bowden, 8 Welsb., Hurl. & Gor. 852, decided by the court of Exchequer in 1853; in which the cases on the subject were reviewed and the judgment of the court delivered by Martin, B. after the case had been fully argued, and held under advisement during a vacation. " The statute (2 Ga. 2, c. 24, § 13), enacts," said the court, " that where there are mutual debts between the plaintiff and the defendant, one debt may be set against the other. This is the whole enactment, as applicable to the present case, and upon its true construction the question depends. If the words of the statute had been, that where there were ‘ mutual debts,’ the one might be set against the other, the argument of Mr. Mellish (counsel for the defendants), would have had more weight; but those are not the only words, for the debts are to be, mutual debts between the plaintiff and the defendant, and there is no debt here due from the plaintiff at all; and except the words, ‘ between the plaintiff and the defendant,’ can be excluded, the plea cannot be maintained." After reviewing the cases cited by counsel, the court further said: " In this case the party whom the defendant agreed to pay was the plaintiff, but the plaintiff was not the party who agreed to pay the defendant the debt sought to be set-off; and we think that, looking at the plain words of the statute, we best give effect to the true rule now adopted by all the courts at Westminster, for its construction, by holding that, inasmuch as the debts are not mutual debts between the plaintiff and the defendant, the one cannot be a set-off against the other. This is acting upon the rule as to giving effect to all the words of the statute, a rule universally applicable to all writings, and which, we think, ought not to be departed from, except upon very clear and strong grounds, which do not, in our opinion, exist in this case."
Now, the language of our statute of set-off is very different from that of the English. We have seen what that of the latter is: " Where there are mutual debts between the plaintiff and defendant, & c., one debt may be set against the other," & c. The language of our statute is: " In a suit for any debt, the defendant may at the trial, prove, and have allowed against such debt, any payment or set-off which is so described in his plea, or in an account filed therewith, as to give the plaintiff notice of its nature, but not otherwise." Code, ch. 172, § 4. Nothing is there said about " mutual debts between the plaintiff and defendant, " as in the English statute. In Allen, & c. v. Hart, 18 Gratt. 722, this court had occasion to notice the material difference between the statutes of the two countries, and the different constructions which had been put upon ours; and the court, in conclusion upon this subject, said: " This course of decision in this State shows, that the statute of set-off has been liberally construed, with a view to the furtherance of its obvious policy, which is to prevent multiplicity of suits, and as far as conveniently can be done, to effectuate in one action complete justice between the parties." Id. 729. Our courts, in this respect as well as others, look to the real, and not the nominal parties to the suit. In Pates v. St. Clair, 11 Gratt. 22, this subject is fully noticed by the court. And by the Code, ch. 185, § 9, p. 768, it is provided that " when the suit is in the name of one person for the benefit of any other, if there be judgment for the defendant's costs, it shall be against such other." It thus appears to be the tendency, as well of our Legislature as of our courts, to regard the real, rather than the nominal parties to the suit. That it is the policy of our Legislature to give courts of law cognizance of equitable defences, and thus to prevent multiplicity of suits, is further illustrated by sections 5 and 6 of the chapter 172, concerning " payment and set-off," in the Code, page 716.
In the courts of the other States of our Union the course of decision in England, in regard to the statute of set-off, may generally be followed; but in none of them, perhaps, in all respects. In some of them Bottomley v. Brooke and Rudge v. Birch have been regarded, as in England, to be incorrect decisions. In others, those decisions have been recognized as sound, and the principle of them has been followed: as in Kentucky in Long v. Carlyle, 1 A. K. Marsh. R. 401; Ward v. Martin, 3 T. B. Monr. R. 18. So also the Supreme court of the United States in Winchester v. Hachley, 2 Cranch's R. 342, Chief Justice Marshall, delivering the opinion of the court, held that a creditor upon open account, who has assigned his claim to a third person with the assent of the debtor, is still competent to maintain an action at law in his own name against the debtor for the use of the assignee; but the debtor is allowed to offset his claim against the assignee. The diversity in the decisions of the courts of the different States on this subject, no doubt, arises from the diversity in the language of their respective statutes of set-off, most of which probably conform substantially, if not literally, to the English statute; and therefore, the construction put upon the latter by the English courts has been generally put upon similar statutes in this country by the American courts. But this remark does not apply to our statute, which, as we have seen, is materially variant from the English. Our statute on the subject has, we believe, been substantially the same, so far as this case is concerned, ever since the first statute on the subject was enacted in the colony of Virginia-- at all events, since the act of 1705, which was before there was any statute of set-off in England. In regard to this whole subject, we refer to 5 Rob. Pr. pp. 955, 1012, where all or most of the cases are collected.
We are, therefore, of opinion that the testimony offered by the defendants in the court below, as mentioned in their first bill of exceptions, did tend to prove a set-off, which they were entitled to have allowed them; that the said court erred in sustaining the objection of the plaintiff to the said testimony, and in refusing to permit the said defendants to introduce the same; and that the judgment be reversed, the verdict of the jury set aside, and the cause remanded to the said court for a new trial to be had therein; on which new trial the said testimony, if again offered, is to be received.
The judgment was as follows:
The court is of opinion, for reasons stated in writing and filed with the record, that the said judgment is erroneous. Therefore, it is considered that the same be reversed and annulled, and that the plaintiffs recover against the defendant in error their costs by them expended in the prosecution of their writ of supersedeas aforesaid here. And it is ordered that the verdict of the jury be set aside, and the cause remanded to the said Circuit court for a new trial to be had therein; on which new trial the testimony offered by the defendants in the said court on the former trial, as mentioned in their first bill of exceptions, if again offered, is to be received. Which is ordered to be certified to the said Circuit court of Rockingham county.