Ragan v. Echols ( 1848 )

By the Court.

Warner, J.

delivering the opinion.

This hill was filed in the Court below, against Ragan and Key, by the-complainant, to-enjoin the defendants from collecting a promissory note, given by the complainant to Ragan, and by him, indorsed to Key. The complainant charges in his hill, that the note was fraudulently procured from him by Ragan, and that Key purchased it after due. The record discloses, that Key had no participation in the fraud whatever, in procuring the note fronijthe -complainant, nor any actual knowledge of it when he purchased the paper, and is only chargeable with constructive ncftice, in consequence of having acquired his title to the paper from Ragan, subsequent to its maturity.

The whole equity of the complainant’s bill, is founded on the alleged fraud of Ragan, in procuring the note from the complainant.

[1.] On the trial, the complainant proposed to examine Ragan as a witness, (having first obtained an order for that purpose,) against Key. The counsel for Key objected to his being examined as a witness against him, as Ragan was the principal defendant in the cause. The Court overruled the objection, andThe witness was examined, whereupon the counsel for the defendant Key excepted, and now assigns the same for error here. The record shows that the complainant orally waived any decree against Ragan, but did not move to strike his name out of the record, for the rea.son, as we suppose, if he had done so, his whole case would have went out. According to the case, as made by the complainant’s bill, when he orally waived any decree against Ragan, he virtually waived his case out of Court — for Key can only be affected, by first establishing the alleged fraud on the part of Ragan. When Ragan’s fraud shall be established, then Key’s title to the note is affected, because he derived it from Ragan, after it became due. Without the allegation offraud, on thepart of Ragan, the Court would have had no jurisdiction of the cause, and to our minds it would present rather a novel spectacle, in a Court of Equity, for the complainant to orally waive a decree against the only party to his bill, whose fraudulent conduct alone, gave to the Court jurisdiction of his cause. If the complainant had moved the Court to strike out of the bill, the name of Ragan, and the charges made against him, which alone entitles him to a decree, the whole case would had been out of Court; but to avoid this consequence, the complainant is permitted to make an oral waiver of a decree, against the principal defendant, who perpetrated the fraud, and whose fraudulent conduct alone, entitled him to a decree against the other party, who derived title to the paper, through him. Where defendants have been made parties to a bill, for mere form’s sake, and against whom no decree is prayed in the hill, they may be examined as witnesses, if necessary. Gresley’s Eq. Evidence, 243—4. 2 Madd. Ch. Practice, 415.

[2.] The true rule, as applicable to this case, is stated by Mr. Maddock. “ If a plaintiff chooses to examine a defendant as a witness, he cannot have a decree against him, and if from the nature of the case, that defendant would be primarily liable to the plaintiff, and another defendant only in a secondary degree, the plaintiff loses his remedy altogether.” 2 Mad. Ch. Practice, 417. Thompson vs. Harrison, 1 Cox’s cases, 344. In Lewis vs. Owen, 1 Iredell’s Eq. Rep. 290, the same rule is recognized. In that case it washeld, if the defendant examined as a witness be the cmo primarily liable to the plaintiff and the other defendant only secondarily liable, the plaintiff, necessarily gives up his claim against both, by the examination of the former. The same rule is supported by Ch. Walworth, in Bradley vs. Root, 5 Paige’s Rep. 636. Ragan; as we have seen, is the party primarily liable for the fraud, the actual perpetrator of it. Key, the other defendant, had no actual participation in the frand of Ragan, in procuring the note, and as the record shows, had no actual knowledge of it, at the time he received it from Ragan; consequently, his liability to be perpetually enjoined from collecting it is secondary, depending on the establishment of the fraud of Ragan, through whom he derived his title to the note, after its maturity. By examining Ragan as a witness, who was the actual perpetrator of the fraud, and primarily liable therefor, the complainant precluded himself from having a decree against him ; and it follows, as a necessary consequence, under the rule laid down, that he could not have a decree against Key, the other defendant, who is only affected by constructive notice of the fraud, by purchasing the note after it was due.

Let the judgment of the Court below be reversed, and a new trial granted.