Booth v. Farmers & Mechanics' National Bank

Headnote

Where one member of a co-partnership pays a judgment rendered upon a firm debt against the members of the firm, he cannot keep the judgment alive and enforce it against his co-partners, either in his own name or in that of a third person to whom he may cause it to be assigned; unless, perhaps, under special circumstances disclosing some equity entitling him to hold it as security to the extent of the sum which may be found due to him from his co-partners on an accounting.

jPrima facie, the judgment is discharged by the payment, and in the absence of proof of such special circumstances it will be held to be satisfied.

A promissory note was executed by three of four members of a firm, and indorsed by the fourth, for the purpose of raising money for the firm . business; it was discounted by defendant and its proceeds were so used.

An action was brought thereon against the makers and indorser, judgment was perfected against the makers and subsequently a separate judgment was entered against B., the indorser. B. procured the judgment to be assigned to plaintiff, who had notice of the character of the judgment. Plaintiff paid nothing to defendant for the assignment, but transferred to B. an interest in certain real estate. B., at or subsequent to the time of the assignment, paid to defendant the amount of the judgment. The assignment provided that it should not affect B.’s liability to defendant. Defendant subsequently executed a satisfaction of the judgment which was discharged of record. In an action to recover damages, Tield, that the payment by B. had the same effect as if there had been but one joint judgment against all the partners, and. inured to the benefit of all; that if the' payment was made after the assignment, it none the less operated-to discharge the judgment, and the receipt of it by defendant not being in violation of its contract did not render it liable to plaintiff; nor did the giving of the satisfaction-piece, as he could not have enforced the judgment against any of the partners, at least in the absence of evidence of an indebtedness from them to B. on the partnership accounts.

Appeal from order of the General Term of the Supreme Court, in the fourth judicial department, reversing a judgment in favor of plaintiff, entered upon a verdict. (Reported below, 11 Hun, 258 ; reported on a former trial, 50 N. Y., 396 .)

The action was brought to recover for an alleged wrongful discharge by the Farmers and Mechanics’ Bank of Rochester (a State institution, of which this defendant is the successor), of a judgment in favor of the bank, after the judgment had been assigned to the present plaintiff.

Upon the trial, the following facts appeared; On the 1st of September, 1860, Archibald H. McLean, Hector McLean and Theodore S. Goddard made their promissory note, dated that day, to the order of Charles L. Flint, for $3,400 and interest, payable in sixty days, at the Farmers and Mechanics’ Bank. At that time, the three makers and the indorser were engaged as partners in a venture for the purchase and sale of barley. The note was made and indorsed for the purpose of raising money to buy barley.

In this enterprise all four of the parties to the note were equally interested. Flint procured the note to be discounted by the Farmers and Mechanics’ Bank ; received the money upon it himself; invested the proceeds in barley for the joint account; sold the barley and received the avails of it. In December, 1860, the bank brought suit upon the note against the four parties together. Judgment was taken by default December 29, 1860, against the McLeans and Goddard, upon whom alone the summons had been served, for the amount of the note, interest and costs. On the 22d of February, 1861, a separate judgment was taken by default in the same action against Flint, upon whom the summons had been served in January. On the fourteenth of December following, the bank, at the instance of Flint, and in pursuance of an arrangement between him and plaintiff, executed under its seal and the hand of Jacob Gould, its president, an assignment of the first judgment to this plaintiff, Booth. The assignment transfers to plaintiff the interest of the bank in the judgment, “ always saving and reserving and providing that the said assignee shall not have, nor shall this assignment transfer to him, any rights or claim against Charles L. Flint, who was an indorser on the note on which this judgment was obtained, nor affect his liability to said bank.” Flint paid the debt represented by the judgment to the bank, whether at the time of the assignment or subsequently the evidence left in doubt. Plaintiff had no transaction with the bank in regard to the assignment, but released to Flint, in consideration for it, his interest in some western land which they had previously owned in common ; he knew at the time of taking the assignment of the relation of the judgment-debtors to each other and the character of the debt. Hector McLean died in 1869, having been wholly insolvent ever since the judgment. On April 11, 1864, Jacob Gould, president of the bank, executed satisfaction pieces of the two judgments; and on the following day they were filed and the judgments satisfied of record. In 1866, Goddard received a conveyance of a piece of land of

the value of $400. This he soon after deeded to another who had no knowledge of the facts’ in relation to the discharge of the judgments. The court directed a verdict for the value of the piece of land so conveyed by Goddard, to which the defendant’s counsel duly excepted.

One of several joint judgment debtors who has paid for the whole judgment may keep it alive for the purpose of collecting the proportion due him by having it assigned to a stranger. (Hodges v. Armstrong, 3 Dev. [N. C.], 253; Sherwood v. Collier, id., 380; Bishop v. Church, 2 Ves., 100, 371.) If the payment by Flint had been made before the assignment the defendant would be liable upon its warranty of the title of the judgment it assigned. (Ledurck v. McKin, 53 N. Y., 307 ; Herrick v. Whitney, 15 Johns., 240 ; Ketchum v. Stevens, 19 N. Y., 499 ; Murray v. Judah, 6 Cowen, 484; Sherman v. Johnson, 56 Barb., 39 ; Thrall v. Wewall, 19 Vt., 202 .)

This action at law cannot be maintained against a national bank for the tort of the State bank which preceded it. (National Banking Act, Laws 1865, chap. 97; 6 Edm. Stat., 442, § 2.) The complaint should have been dismissed, because all the defendants in the judgments were partners, and payment by one satisfied the judgments. (Harbeck v. Vanderbilt, 20 N. Y., 395 , 397, 398; Hammatt v. Wyman, 9 Mass., 138 -142; Kellogg v. Ames, 41 Barb., 218 , 223; Champney v. Coope, 32 N. Y., 543 , 550, 551; S. C., 34 Barb., 539 , 544, 546; Eno v. Cooke, 10 N. Y., 60 ; Lancey v. Clark, 64 id., 209 ; Swan v. Saddlemire, 8 Wend., 676 , 681; Carpenter v. Stilwell, 1 Kern., 61; Craft v. Merrill, 14 N. Y., 456 ; Laval v. Rowley, 17 Ind., 36 ; 2 R. S., 362, § 25; Briggs v. Thompson, 20 Johns., 294 .)