Furniss v. Ferguson — 26 N.Y. Super. Ct. 269

Majority

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Timothy H. Furniss, plaintiff, vs. John Ferguson et al. defendants.

Headnote

Where a sum of money had been paid on account of a judgment, to the original owner, before an assignment thereof to subsequent assignees, and without their knowledge; and such assignees assigned to a purchaser, for a consideration, not only the judgment itself, but also “ all sums collected thereon,” and all collateral securities therefor held by them or their attorney, or any one for their benefit, and in cas^of its prior payment, discharge or transfer, the proceeds or price of any settlement or sale of the same; but warranted to the purchaser their title thereto and power to transfer it to the extent of the consideration paid, only; and all their responsibility arising out of such assignment and warranty was to end in ninety days, unless within that time notice of the ground of their liability was given to them ;

Held 1. That the second assignee could recover of the assignors the same proportion of the consideration money paid by him, and interest, as the amount paid to the original plaintiff in the judgment, on account of it, bore to the amount due on such judgment, and interest, but no more.

2, That this was an equitable rule, analogous to that applied to a purchase of a particular piece of real estate by measurement, when it falls short of the supposed area—being a case of mutual mistake, admitting of compensation, rather than a failure of title, or any internal and secret defect in the commodity sold.

(Before Robertson, Ch. J., and Garvin and McCunn, JJ.)

Heard February 17, 1865;

decided May 27, 1865.

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This action was brought to recover damages sustained by reason of the sale and assignment by the defendant to the plaintiff of a judgment obtained by a third party (Brown) against another person (Wyman) in the state of Alabama, after the collection by the plaintiff in such judgment against the defendant therein of nearly a thousand dollars, without disclosing the fact of such collection. The judgment was for a considerably larger 'sum ($6575) and recovered in the year 1838; in which year such moneys were also so collected. The judgment remained under the control of the attorney by whom it was recovered (Mr. G-oldth waite) to the time of its assignment to the plaintiff. In the year 1852 the plaintiff in such judgment (Brown) assigned it to the present defendant and a deceased partner (Ogden) composing the firm of Ogden, Ferguson & Co. In August of that year one of such firm, (the defendant Ferguson,) on behalf of the-firm, sold and assigned the judgment,' for a considerable sum ($2576.) The instrument of assignment, which was signed by him alone, contained a recital of the recovery of such judgment; its assignment to the defendants and its being in such attorney’s hands for collection. A transcript of it, certified by the clerk of the court in which it was recovered, in which certificate was included a statement that it was unsatisfied, was annexed to such instrument of assignment. The instrument assigned not only the judgment but “all sums collected thereon, and all securities for the same, held as collateral” by the defendants, or such attorney, or by any one for their “ benefitand in case of the prior payment of such judgment, or' its discharge or transfer, “ the proceeds or price of any settlement or sale of the same.” Such assignment was by its terms subjected expressly to any prior contracts made by such attorney for the benefit of the defendants, by their authority, and also to the payment of his charges. The intention of the defendants was declared therein to be to substitute the plaintiff in their place and transfer to him all their rights to or growing out of such judgment.' The defendants warranted thereby their title to such judgment and their power to transfer it only to the ex

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tent of the consideration paid, and after ninety days all responsibility arising out of such assignment was to £( end unless notice was given within that time specifying the ground of such liability.”

The foregoing facts are alleged in the complaint, which also avers the delivery by the plaintiff within ninety days of a notice to the defendants specifying the grounds of their liábility, and the payment by him of the costs and charges of such attorney, and alleges the legal rate of interest in Alabama to be eight per cent. The answer takes issue on the payment of such costs, the collection of such amount upon the judgment, and the rate of interest in Alabama.

A former judgment of dismissal of the complaint in this action upon a trial was reversed by the Court of Appeals by whom it was sent back for a new trial, (15 N. Y. Hep. 437.) Subsequently a verdict for the plaintiff, on a second trial, was set aside by this court at a general term ; because the recovery was for the full amount of the moneys collected. And the verdict on which the present judgment was entered was for an amount of damages according to the rule established at such general term.

A motion made on the last trial,' before any evidence was introduced, to dismiss the complaint, was denied. It was established in evidence that a certain sum had been collected by the attorney of the plaintiff in the judgment ($988.85) before the 9th of April, 1839, part of which ($113.85) had been retained by him for services in other cases, and part ($43.75) for commissions in collecting part of such sum ($875.) Such attorney also had a claim for a commission upon the amount of such judgment, for recovering it, which was paid by the plaintiffs and was proved to be a proper charge.

The defendants’ counsel offered to prove facts tending to show entire ignorance by the defendants of the collection of any moneys on such judgment before their assignment thereof to the plaintiff, their good faith and innocence of fraud, the making by the plaintiff of inquiries relative to such judg

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ment, before its purchase, and his reliance therein; which offer was excluded, and an exception was taken to such refusal.

The judge before whom the action was tried charged the jury, that the plaintiff could recover the same proportion of the consideration money paid by him, and interest, as the amount paid over to the original plaintiff in the judgment in question, on account of it, was of the amount due on such judgment and interest, but no more. Both parties excepted to the charge so given, and appealed from the judgment entered on the verdict.

- On the trial the plaintiff claimed to recover the whole amount of the moneys collected for the original plaintiff, less his commissions, with interest at eight per cent according to the law of Alabama, for over twenty-three years, being from the time of collection to the trial, and his counsel requested the court to charge the jury that he was entitled to recover it, and for a refusal so to charge he excepted. He also excepted to the charge as given, for not so instructing the jury. The defendants' counsel also made various requests to charge, founded mainly upon the principles, 1st, That a warranty of title to a judgment did not include warranty of the amount due on it, or the non-collection of any sums thereon. 2d. That if a sum equal to the amounts collected on such judgment was not collectable on such judgment after the assignment, the plaintiff was only entitled to nominal damages ; and that he could not recover any thing more than the excess of what was collectable thereon after the assignment, if such previous payments had never been made beyond the difference between what could have been collected at any time and the amount of such payments. 3d. That the assignment in question did not transfer any sums collected on such judgment previous to the assignment, unless they had been collected for the benefit of the defendants ; all of which the presiding justice refused to charge, and the defendants’ counsel excepted to such refusal.

The jury rendered a verdict for nearly $530, under the charge of the judge, to which the plaintiff's counsel excepted. How such sum was made up did not appear by the case; but

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no error therein was pointed out in case the charge of the court was wrong.

Both appeals were heard together.

C. A. Peabody, for the plaintiff.

J. Larocque, for the defendants.

An inquiry into the grounds of the decision of the Court of Appeals in favor of the liability of the defendants, when this case was formerly before them, ( 15 N. Y. Rep. 437 ,) is only profitable or material in order to determine the proper measure of damages, which would vary according to the mode in which the defendants are made liable, if, upon a warranty of title, they are not to be made so beyond the consideration paid, which becomes virtually thereby a standard. But their title to the judgment, as a subsisting one, has not failed at all, although their right to collect the whole amount apparently due on it is gone. . This consideration may have induced the learned justice, who delivered the opinion in the court of last resort, to assimilate the position of the defendants to that of the creator of an article, whose internal defects he may be presumed as matter of fact to know. In such case, the seller, if liable at all, either upon the ground of warranty or fraud, would be liable for the whole injury to the buyer by reason of the inferiority of the article sold to its description, without regard to the price paid therefor. In this ■case, that would be the whole amount of money collected, and interest, possibly, at the rate allowed in the state of Alabama. The limitation of liability in the assignment being only in case of a failure of title, would not reach such a warranty of quality, and the defendants would be liable for that amount. A charge of fraud would lead to the same result; but being based upon a presumption as a fact, and not as matter of law, of knowledge by the defendants of the collections made, the evidence of ignorance and good faith offered would have been admissible to repel it.

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But this court has already held at general term, that if the defendants were liable at all, they were only liable for the same proportion of the consideration money paid which the amount collected was of the whole judgment. This is an equitable rule, and would be similar to that applicable to a purchase of a particular piece of real estate by measurement, where it fell short of the supposed area ; a case of mutual mistake, admitting of compensation, which, in my view, the present case resembles much more than either a failure of title or an internal and secret defect, in the commodity sold, and in which there would be no necessity of presuming fraud, even technically, against respectable and innocent parties.

Possibly, also, as the plaintiff agreed to limit his right of recovery in case the title of the defendants to the whole judgment and their authority to assign it failed, to a mere recovery of the consideration, the court of last resort may have considered that as determining the standard of damages for any short coming in the judgment itself. But there is something in the opinion delivered looking at the liability of the defendants for the whole amount of such collection. It was therein held that the assignment in question, by expressly assigning not only the judgment but all sums collected thereon, and all securities for the same held as collateral by “ the defendants or their attorney for their benefit,” and “ all proceeds or price of” any “ settlement or sale,” in case of any payment, discharge or transfer of such judgment, created an implied warranty to transfer all sums paid upon such judgment, either before or after such assignment, or that the whole amount was due except so much as had been paid to them or for their benefit. If that be the rule of damages, that adopted in this case was clearly erroneous. In the opinion delivered by this court at the general term, no notice is taken of such view, nor is any reason given for adopting the measure of damages now allowed. This court may have considered- itself at liberty'to disregard it, as not being entertained by all the members of the Court of Appeals who concurred in the decision, and that the question of damages was still left open. At all events, we are not now at liberty to

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depart from the rule so adopted by this court, until admonished of error by a higher tribunal.

The judgment must be affirmed, with costs to each party against the other, upon the respecive appeals of his or their adversary.