Hoxie v. Bryant , 131 Cal. 85 ( 1900 )

In May, 1894, the defendant was the owner of a promissory note and mortgage made by one Lewis to him for the sum of five hundred dollars. The maker of the note was insolvent, and the lands described in the mortgage were of small value, not to exceed one hundred dollars. Defendant went to plaintiff, and by false representations in regard to the value of the land mortgaged and by taking plaintiff and showing her different lands, representing that he was showing the lands mortgaged, succeeded in selling the note and mortgage to plaintiff for its face value, five hundred dollars. As soon as plaintiff discovered that she had been deceived and defrauded she brought the present action in the superior court to rescind the sale and to recover of defendant the amount paid him with interest. The judge of the court below found the transaction on the part of defendant fraudulent, fully stating the facts constituting the fraud, and adjudged that the sale be rescinded, that plaintiff recover the amount paid to defendant, with interest and costs, and that the note and mortage, which had been filed with the clerk of the court, be delivered up to defendant upon his paying the amount so adjudged to be due plaintiff. This judgment was entered October 27, 1897, and has become final. The defendant has never paid the judgment, and it does not appear that plaintiff can in any way obtain satisfaction of the same.

On the eleventh day of March, 1899, the plaintiff filed a petition setting forth, among other things, that the note and mortgage had been filed as exhibits at the trial, and were in the clerk's office; that the judgment had never been paid, and that the note and mortgage would become barred by the statute of limitations on the fifth day of April, 1899, and praying for an order permitting the sheriff to levy an execution in the action upon the said promissory note and sell the same thereunder. The court made an order as prayed for in the petition, and authorized the clerk to deliver up the said note and mortgage to the sheriff, for the purpose of permitting execution to be levied thereon.

In pursuance of the order the sheriff levied upon the note and mortgage, took them into his possession, and after notice sold them to plaintiff, who was the highest bidder therefor. On April 4, 1899, the day before the statute would run against the note and mortgage, plaintiff filed a complaint for the foreclosure thereof, which action is still pending. On April 12, 1899, the defendant made three motions: 1. To set aside the order of court authorizing the levy on the note and mortgage; 2. To set aside the levy and sale and recall the writ of execution; 3. That the judgment in the action be declared paid, satisfied, and discharged.

These motions were each denied, and defendant has appealed from the orders by three separate appeals, which are brought up in the same transcript. The first two motions involve practically the same proposition, and may be considered together.

The main question involved and discussed is as to whether or not the sheriff may levy a writ of execution upon a promissory note, and sell it as personal property capable of manual delivery. If the note could be so levied upon and sold, it is immaterial whether done by order of court or otherwise. The order probably was unnecessary, but it did no harm. There is no question here involved as to the right of the sheriff to take possession of a promissory note in the hands of the judgment debtor. Neither is there any question as to the rights of any other creditor, except the plaintiff, who had the execution issued upon her judgment. The question, then, is simply as to the right of the plaintiff to levy an execution upon a promissory note in such position and custody that the sheriff may peaceably take the actual possession of it. The promissory note was personal property. (Code Civ. Proc., sec. 17, subd. 3.) Property may be attached or taken on execution in like manner as upon writ of attachment. (Code Civ. Proc. sec. 688.) Personal property capable of manual delivery must be attached by taking it into custody. (Code Civ. Proc., sec. 542, subd. 3.)

In the case of Davis v. Mitchell, 34 Cal. 81, the matter was fully considered, and it was held that under the provisions of the practice act, which are similar to the provisions of the code on the same subject, that a promissory note is subject to seizure and sale under execution. This case was cited with approval inDonohoe v. Gamble, 38 Cal. 352,⁴ and has never been overruled, and we see no reason for changing the rule as therein laid down. This court in McBride v. Fallon, 65 Cal. 303, refers to the case of Davis v. Mitchell, supra, and says: "We could not with our present views assent to the doctrine of that case"; but the court was discussing the question as to whether or not a judgment could be levied upon and sold under execution as personal property capable of manual delivery. The question here presented was not in any way involved in the case. In Dore v. Dougherty, 72 Cal. 235,⁵ it was held that a judgment was not subject to levy and sale under execution as personal property capable of manual delivery. The distinction between a judgment and a promissory note is plain. The judgment is a matter of record. It is the record evidence of the debt due by the judgment debtor. It is not capable of being taken out of the book where it is recorded and personally delivered. The sheriff cannot seize the judgment, take possession of it, and sell it. But a promissory note, negotiable in form, which passes in the commercial world by indorsement and delivery and is subject to sale, is quite different. The owner of such promissory note cannot refuse to pay a just judgment against him and claim the note as exempt from execution. If it, in any way, can be found and seized by the sheriff on execution, it may be sold and delivered to the purchaser.

A similar statute exists in Louisiana (Code of Practice, sec. 647), and it is held in that state that promissory notes may be levied upon and sold. (Fluker v. Bullard, 2 La. Ann. 338; Stockton v. Stanbrough, 3 La. Ann 390; Nugent v. McCaffrey, 33 La. Ann. 271.)

In Iowa an execution may be levied upon a promissory note and the note sold by the sheriff. (Iowa Rev. Stats. sec. 3272;Earhart v. Gant, 32 Iowa, 483.) And so in Indiana. (2 Rev. Stats. 1876, sec. 438, p. 208; Bay v. Saulspaugh, 74 Ind. 399.)

In Freeman on Judgments, third edition, section 112, the author in stating the rule says: "There are many choses in action, which from their intangible character, seem to be incapable of being made the subjects of direct levy and sale. Of this character are all debts and credits not evidenced by writing or by something capable of being seized and taken into possession or in some manner made to bear witness to a change in their ownership." He then enumerates both accounts and judgments as being such property. In a late case decided by the supreme court of New York(Kratzenstein v. Lehman, 46 N.Y. Supp. 71 19 N.Y. App. Div. 228), in speaking of the authority given by the code of New York to levy upon a promissory note, the court said: "While they do not always pass by delivery, but sometimes require an indorsement to transfer a complete title, yet they are usually paid or payable only to the person who has them in his actual possession; and the possession itself is ordinarily required as satisfactory evidence of the right to recover the money which is to be paid by their terms. While they are in a techinal sense, choses in action, yet practically the paper itself is property, is regarded as such, and is dealt with like other tangible personal property."

The motions were, therefore, properly denied. Aside from the main point the defendant is not in position to complain. He does not appear to have paid the judgment or to have in any way attempted to get the promissory note and mortgage. He made no attempt to prevent the note from becoming barred by the statute, and when he made these motions the statute, but for the act of plaintiff, would have run. If the motions had been granted the promissory note and mortgage barred by the statute would probably be worthless. It seems that defendant intends, as appears by this record, not only to leave plaintiff's judgment unpaid, but to attempt to keep plaintiff from selling the mortgaged lands which the court found to be what is known as "wash land and worthless." While defendant is entitled to his legal rights, yet his position here certainly does not command him to the favorable consideration of a court of equity.

It follows that the orders, and each of them, should be affirmed.

Haynes, C., and Chipman, C., concurred.

For the reasons given in the foregoing opinion the orders, and each of them, are affirmed.

McFarland, J., Henshaw, J., Temple, J.

Hearing in Bank denied.

⁴ 99 Am. Dec. 399.

⁵ 1 Am. St. Rep. 48.