Steiner v. Scholze , 114 Ala. 88 ( 1896 )

HEAD, J. —

On June 3, 1890, Herman Scholze recovered a personal judgment, in the city court of Birmingham, against Emil Lesser, from which Lesser appealed to this court, the complainants ’ in the present bill becoming his sureties on the appeal and supersedeas bond. In June, 1891, this judgment was affirmed, this court rendering the usual personal judgment upon the bond, against the appellant and his sureties. On June 16, 1890, Herman Scholze entered upon the record adjacent to the minute entry of the'judgment of Scholze v. Lesser, the following transfer: “For and in consideration of my indebtedness to Robert Scholze in the sum of five hundred dollars, evidenced by my promissory note to him, I hereby transfer and assign to the said Robert Scholze the judgment for $322.30, rendered in this case on the 3rd day of June, 1890.” Dated June 16,1890 ; signed by H. Scholze, and attested by the clerk. Robert Scholze' was then in Tennessee, where he resided.

Prior to this, to-wit, September 5, 1889, Alien & Taylor had recovered a personal judgment against Herman Scholze, for $105.67, and, on June 20, 1890, Lesser purchased that judgment, for the purpose of using it as a set-off to the judgment Herman had recovered against him. At the time. of this purchase, Lesser had no knowledge or notice of the transfer of the judgment against him to Robert Scholze, or of any prior agreement between Herman and Robert Scholze that it should be so transferred, unless the said registry of the transfer on the record of the city court, aforesaid, constituted notice.

Both Lesser and Herman Scholze were insolvent, and Robert Scholze being about to coerce payment of the affirmed judgment, by execution, from the complainants —Lesser’s sureties on the appeal bond — they filed this bill to set off the Allen ■& Taylor judgment, purchased and owned by Lesser, as aforesaid, against the judgment so being sought to be enforced against them.

There can be no doubt that the rule is general, that a debtor, whose obligation is not governed by the law-merchant, is protected against the assignee of the obligation, in all payments, sets-off, discounts or other defenses held, owned or acquired by him against the original creditor — the transferror — prior to notice of the transfer. It is so, both under the general law and our statute. — Code of 1886, § 1765. That section manifestly intends to include all actionable obligations (including judgments), except such as are governed by the commercial law, and paper issued to circulate as money. There are no citations in brief for appellees to the contrary, and we suppose they do not intend to dispute these propositions. If authorities are wanting they may be found on the brief of appellants’ counsel. The chancellor was of opinion that the entry of the transfer on the record of the judgment constituted constructive notice of the transfer to the defendant in the judgment. Certainly this can not be true upon any principle of the general law, and we have been referred to no statute, and know of none, which makes such an entry constructive notice. It is an easy and .simple matter for the transferee of a judgment to give the defendant notice of the transfer, if he desires to prevent the acquisition by the defendant of equities and defenses against the plaintiff in judgment, which would prevail against him. The defendant knows no owner of the judgment other than him who obtained it, and is not called upon to inquire whether others have acquired rights to it, unless by sufficient facts made known to him he is put upon, such inquiry. Can it be supposed that a defendant, paying to the plaintiff, who obtained it, a judgment against him, pays in his own wrong, as against a transferee, of whose rights he has no notice, unless he makes general inquiry whether there has been a transfer or not, or goes to the court-house to ascertain whether or not a transfer has been there registered, howsoever remote he may reside from the court-house? No authority, we apprehend, can be found anywhere for such a requirement. Of course, if there was a statute (such, for instance, as the statute for the registration of conveyances), authorizing transfers of judgments to be made upon the records of the judgments, and declaring their effect to be to give notice to the defendants of such transfers, defendants would be compelled, at their peril, to examine the records before paying to the plaintiffs in judgment, or otherwise acquiring equities or defenses against them; but in the absence of such a provision, the entry of the transfer upon the record amounts to absolutely nothing, so far as notice to the defendant is concerned, unless he is actually notified of it, or of facts which would put him on inquiry, which if followed up would lead to actual notice.. As well might the transfer be entered upon a record of the probate court, or elsewhere, for which there is no authority of law.

There is a statute, found in the chapter of the Code regulating the revival of judgments and executions thereon, (Code of 1886, § 2927), which provides that, “If the assignment of a judgment or decree is made or indorsed on the execution docket, or on the margin of the record of the judgment or decree, and is attested by the clerk, register or judge of probate, the assignee may have execution thereon, in the name of the plaintiff, for his use, whether the plaintiff be living or dead.”

It is obvious, upon the mere reading, that the only declared effect of the entry of the transfer, under this provision, is to confer upon the assignee a legal right to sue out execution on the judgment, in the name of the plaintiff, for his use, whether the plaintiff be living or dead. In legislative intent, the provision was germane to the revival of judgments, dormant by the death of the plaintiff or other causes, which was specially treated of and provided for, in the chapter in which it is found. Previously, no execution could issue at all upon a judgment, after the death of the plaintiff therein, notwithstanding the judgment had been assigned. The rights of the assignee were entirely equitable, and his remedies were equitable. Prior to the death of the plaintiff, the assignee had a right to control the judgment, and execution issued thereon in the name of the plaintiff, for his use, would have been a valid process. The design of the statute was to render that process valid although the plaintiff be dead, and, it may be, to give the assignee a legal, as distinguished from an equitable right, to control and enforce the judgment, even though the plaintiff be living, to the entire displacement of the plaintiff’s legal right to control the same. It never occurred to the legislature that it was providing, by this enactment, a means of notice to the defendant of the transfer of the judgment, requiring him to look out for transfers, before he should deal with the plaintiff or otherwise act with reference to the judgment. If such had been the purpose the statute would have said so in plain terms, as other statutes do which provide registration as a means of notice.

This is enough to dispose of this case; but, upon the undisputed evidence, the transfer in question was, in contemplation of law, fraudulent and void as against the creditors of Herman Scholze, as alleged in the bill. The transfer, as we have seen, was absolute in form and effect, vesting, if valid, the absolute property in the transferee, and discharging the indebtedness which constituted its consideration. ' The undisputed evidence shows that it was, in fact, for the security merely of the indebtedness. It is well settled in this State that in such cases, there is a reservation of a benefit to the assignor, which renders the assignment void as to creditors. See Birmingham Dry Goods Co. v. Roden & Co., 110 Ala. 511, where the subject is fully discussed, and the authorities collected and commented upon.

Reversed and remanded.