Artcher v. Zeh — 5 Hill & Den. 200

Majority

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Artcher vs. Zeh.

Headnote

In a suit by the assignee of a chose in action against the debtor, if it appear that the assignment was by way of collateral security for the payment of a demand due from the assignor, he is not a competent witness for the plaintiff without a release.

If in such case the assignee be defeated on the merits, this will bar a subsequent action by the assignor. Per Cowen, J.

In general, a plaintiff in error cannot avail himself of objections which he omitted to raise in the court below.

To bring a contract within the statute of frauds relating to parol agreements not to be performed within a year, it must appear to be necessarily incapable of performance within that time.

Accordingly, where by the terms of a verbal promise it was to be performed as soon as the promisor received the amount secured by a mortgage which he had against a third person; held, that the promise was valid, though the mortgage did not become due until more than a year thereafter.

A parol contract to sell a chose in action for the price of fifty dollars or more is void by the statute of frauds, unless the evidences of the demand or some of them be delivered to the buyer, or he pay a part of the purchase money.

The object of the statute was to have something pass between the parties beside mere words; and hence, to constitute a payment of purchase money, within the spirit of the provision, the buyer must part with something of value by way of consideration.

Accordingly, though in consideration of a verbal assignment of a demand against a third person of over $50, the assignee promise to credit the amount on a precedent debt due him from the assignor, this will not be deemed equivalent to part payment of the purchase money.

So, semble, even if the assignee expressly agree to receive the assignment in discharge or satisfaction of so much of his debt, unless a written credit be given at the time. Per Cowen, J.

An arrangement to take a claim against a third person and apply it upon a precedent debt due from the assignor to the assignee, will not operate as an absolute payment, unless there be an express agreement that it shall so operate.

• Error to the mayor’s court of the city of Albany, where Zeh sued Artcher in assumpsit for money had and received. The facts upon which the plaintiff relied were proved by Angus McDuffe, and were substantially as follows: Artcher agreed to sell certain land to McDuffe, but, in consequence of the latter’s

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inability to pay the purchase money, it was agreed between them that if McDuffe would find another purchaser, Artcher would convey to him and account to McDuffe for whatever the land brought over $1403,19. In pursuance of this arrangement Artcher conveyed to Wright & Wells on the 30th of October, 1839, for the sum of $1640,87, taking their mortgage for the amount, payable in two equal instalments on the 1st of June and 1st of December, 1840. Zeh held a note against McDuffe for more than the difference between $1403,19 and the sum for which the land sold, and the latter agreed to transfer his interest in such difference to Zeh, who remarked that, if Artcher would assent to the transfer, he (Zeh) would credit or endorse the amount on the note. McDuffe accordingly called on Artcher and obtained from him a promise to pay over the sum claimed by the former when the mortgage should be paid. This was immediately after the mortgage was given. The mortgage was paid to Artcher about the time it fell due, but he refused to fulfil his engagement by paying any part of the money to Zeh, who thereupon commenced this action in the court below. At the close of McDuffe’s examination, he was objected to by the defendant’s counsel as an incompetent witness for the plaintiff, and a motion.was thereupon made to have his testimony stricken out of the case. The motion was denied, and the defendant’s counsel excepted. It was not shown that any of the transactions or agreements testified to by McDuffe, except the deed and mortgage, were reduced to writing; nor did it appear that Zeh had actually credited McDuffe with the claim against Artcher, endorsed it on the note, or given a receipt for it in satisfaction or in any other form.

The defendant’s counsel moved for a nonsuit, on the ground, 1. That inasmuch as the assignment from McDuffe to Zeh was not in writing, nor the note extinguished thereby, the assignment was void by the statute of frauds; 2. That Artcher was shown to be a trustee of McDuffe’s interest in the mortgage moneys, that such trust was void under the revised statutes, and that the agreement between Artcher, McDuffe and Zeh was therefore also void; and 3. That Artcher’spromise to pay the money

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to Zeh was not to be performed within a year, and was, for that reason, void by the statute of frauds. The court below denied the motion, and the defendant’s counsel excepted. Verdict and judgment for the plaintiff. The defendant sued out a writ of error.

R. W. Peckham, for the plaintiff in error.

H. G. Wheaton, for the defendant in error.

McDuffe having been examined in chief, the whole case of the plaintiff was disclosed, and his claim sought to be sustained by McDuffe’s testimony. I do not think McDuffe made out, in any view, more than an assignment as collateral security for what he owed Zeh. Could he have sustained the assignment, therefore, and Zeh had recovered and collected the money, it would have benefitted the witness to the amount of the recovery. A failure to recover would, of course, have been his loss to a corresponding extent. There needs no authority to show that the assignor of a chose in action, by way of collateral security for his own debt, cannot be a witness for his assignee without a release. The demand being assigned, and the assignee being defeated on the merits, this would conclude McDuffe against an action on a subsequent re-assignment to him.

So much, supposing there was a valid assignment of any kind. I think there was not; and that the witness himself failed to prove one, for reasons I shall give in their place. Yet he was interested to fix the defendant with a debt, and show that it was assigned. The legal bias upon his mind was none the less for that reason. The plaintiff assumed certain facts to exist which would benefit the witness directly, if they could be made out by him; and a failure would be equally detrimental to him. These facts the plaintiff proposed to make out by his testimony. I think he was interested. It is no answer to say he showed a debt which would fall to himself if he failed to- swear it into the pocket of the plaintiff, and so his interest was equal. He was called to show the existence of that very debt.

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The objection, below, that Artcher’s trust was void by the revised statutes, is not now taken. It is said, however, that Artcher’s agreement fdr the sale of the land to McDuffe was void because by parol. The objection in this form might perhaps have been available, but it cannot be considered here. Had it been raised below, a writing might have been proved. If the agreement for the sale was valid, then the subsequent arrangement by parol that McDuffe should sell the land, and that Artch- or should hold that part of the purchase money which was equitably due to McDuffe in trust for him, was not objectionable under the revised statutes as to. trusts. It related to a trust in personal property—the equitable interest of McDuffe in the mortgage moneys. (Kane v. Gott, 24 Wend. 641 , 659, 661.) That the agreement by which the trust was raised related to an interest in lands, and was therefore void by the statute of frauds, was not made an objection below; nor is it urged now.

Artcher was to pay Zeh so soon as the mortgage moneys should be paid to him, (Artcher.) That might have been within a few days or months, if he and the mortgagors had chosen so to arrange the matter. The share belonging to McDuffe would, in such an event, by the terms of the agreement, have been due. To bring a contract within that part of the statute of frauds relating to the time of performance, the contract must be necessarily incapable of performance within a year,^[1]

But the first objection taken on the motion for a nonsuit should have been allowed. By the 2. R. S. 70, 2d ed. § 3, in order to pass the interest in a chose in action, where the price exceeds $50, there must be a writing, or the evidences of the debt or some of them must be delivered, or some part of the purchase money be paid; otherwise, the transfer is void. It is supposed that here was something equivalent to part payment of the money, because the terms of the agreement were such as to extinguish fro tanto the debt due from McDuffe to Zeh; in other words, that the transfer was accepted as a payment, and

(a) (a) See Lockwood v. Barms, ( 3 Hill, 128 , 130, note (a)).

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per se worked a satisfaction. McDuffe agreed with Zeh that Artcher should pay him, and Zeh stipulated that if Artcher would agree to pay him, he would give McDuffe credit for the sum; or would endorse it on the note. But it never was credited, endorsed or receipted in any form; at least nothing of the kind was shown. It need not be denied that a promise to endorse or credit Artcher’s agreement to pay, in satisfaction or payment of so much as the sum amounted to, would operate as an extinguishment; ‘ or, in other words, that an agreement to give an absolute credit would have that effect. But the agreement leaves it equal whether the endorsement or credit was not to be the usual conditional one, to become absolute on the assigned claim proving available. Such is the legal construction of an arrangement to take a claim against a third person, to be applied upon a precedent debt; and the law will not hold it to be an absolute payment, unless there be an express agreement to take it as, per se, a satisfaction. In the absence of such an agreement, the law will not compel the creditor to apply it in discharge till the money be actually received. Here are no such words as absolute payment, absolute satisfaction, absolute discharge, or the like, to indicate that the credit ivas to differ from the one usual in such cases. Even the transfer of a negotiable note against a third person would not have been a satisfaction on the terms here used. But we are not left to implication. If this plaintiff really . intended to work an extinguishment of his claim against McDuffe, why did he not endorse Artcher’s promise as so much money paid on the note, or credit, or give a receipt for it as such ? Down to the very time of the trial he had done neither. He left his note to speak the same language as it did before the arrangement was made; at least we are to intend that he did, for his counsel do not pretend that he had applied the demand said to have been transferred, in any form, absolute or conditional. In refusing to apply it absolutely, I admit he acted according to the legal inference of what was intended; but the omission strengthens that inference. It took away all doubt of what the parties intended, and left no question for the jury.

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Suppose this action had been against McDuffe, and it had appeared that the money had never been paid by the mortgagors and was never like to be, or that Zeh had failed to collect of Artcher for any cause not imputable to Zeh; clearly the mere arrangement between him and McDuffe could not be allowed as a bar.

Since the revised statute of frauds putting equitable transfers of choses in action on a footing similar to that on which sales of goods stand, if there be no writing and no delivery, the assignee must pay something, at least part with something of value. The statute requires that he should pay some part of the purchase money. No doubt it must be taken, in its spirit, to mean any thing or part of any thing given, by way of consideration, which is money or money’s worth. But the object Avas to have something pass between the parties beside mere words; some symbol like earnest money. (2 Black. Com. 448.) Here, every thing lies in parol; and even if there had been the express agreement which is set up—an agreement for absolute credit—I should doubt whether the statute would be satisfied without something more; at least some absolute endorsement or written credit at the time. One object of the statute was to prevent perjury. The method taken was, to have something done; not to rest every thing upon mere oral agreement. Here, even the agreement is not direct; but rather sought to be raised by way of construction on an equivocal conversation.

Taken in any view, therefore, I think the assignment was void within the intent, as it is clearly within the words of the statute of frauds.

The judgment must be reversed; a venire de novo to go from the court below; the costs to abide the event.

Ordered accordingly.