Jones v. East Society of Methodist Episcopal Church , 21 Barb. 161 ( 1855 )

By the Court, Johnson, J.

The first objection raised by the appellant is, that Draper, the plaintiff’s assignor, was improperly admitted to testify as a witness upon the trial. The decisions upon this question have been conflicting, but we are of opinion that he was a competent witness. The suit was not for his immediate benefit. It is true that a recovery would add to a fund which the assignor had set apart and transferred to the plaintiff for the payment of the debts of the assignees. But he had no control over the fund after the assignment, and no claim to any portion of it, unless there should remain something after the debts were paid.

The action is for the more immediate benefit of the cestuis que trust. And yet I do not see how they could be excluded, since the decision of the court of appeals in Montgomery Co. Bank v. Marsh, (3 Seld. 481.) The assignor of a demand as a collateral security for the payment of his own debt, was always, prior to the code, a competent witness in an action by the assignee, upon the execution of.a release. (Artcher v. Zeh, 5 Hill, 200.) The interest of an assignor in such an action is nearly, if not entirely, identical with that of the assignor in this. If before the code he would have been rendered competent by a release, he is now without it, by force of the statute.

The next question is, whether the declarations or admissions of the assignor, made before the assignment, should have been received as evidence upon the trial. They were offered by the defendant and excluded, and in this I think the referee was right. The rule here is well settled, that the declarations of the owner of a chose in action are not admissible to affect the rights of one subsequently deriving title from him. (Paige v. Cagwin, 7 Hill, 361. Stark v. Boswell, 6 id. 405. Beach v. Wise, 1 id. 612. Whitaker v. Brown, 8 Wend. 490. Kent v. Walton, 7 id. 256.) The rule is different in several of the sister states and perhaps in England. But the rule as established here, seems to me to rest upon the most solid foundations of reason, policy and justice. The assignor being himself a competent witness, and not a party, his declarations are mere hearsay, and upon that ground should never be allowed. Evidence of what a party has said, although competent from the necessity of the case, has always been justly regarded as the most uncertain and unreliable of all evidence, and it would be impossible to afford any reasonable protection to the rights of assignees if the mere hearsay of the assignor were allowed to have the force of admissions by a party to the action. I concede that our courts have as yet gone no farther than to exclude the admissions or declarations of an assignor, where the assignee holds as purchaser, and the title of the former is extinguished. But the principle and the reason of the rule must extend to a case like this. It is clear, I think, that it would extend to the case of an assignment by way of collateral security. And I see no good reason why it should not to a case like this. In either case the title passes to the assignee for the immediate benefit of others, whose rights are entitled to protection, and the assignor has no interest remaining in the subject of the assignment, other than a residuary or defeasible one. It was conceded by the very learned and able counsel for the defendant in error, in Paige v. Cagwin, that the declarations of an assignor might be admitted when he was identified in interest with the party; when the party upon the record held in a representative character merely, between whom and the declarant there was a community of interest in the event of the suit. And this seems to have been conceded by Senator Lott, who delivered the very able opinion in the court of last resort in that case. I agree that where there is a complete identity and community of interest between the assignor and the party, where the party merely represents the assignor, and the latter is the person for whose interest and benefit, primarily, the action is brought and carried on, in short where the action is for his “immediate benefit,” so that he is not competent as a witness, in all such cases his admissions are proper. But it does not follow, merely because a party holds and sues in a representative capacity, that the admissions of the assignor may be used as evidence. The true criterion must be, is the action for his immediate benefit, or is it for the more immediate benefit of others 1 This, I apprehend, will be found to be the only rule which will protect fully the rights of all parties, while it preserves that cardinal feature of the law of evidence, that the best evidence must always be given. The declarant should be substantially the party, as contradistinguished from one having an interest in the question or in the event of the action merely.

The next question is, was this demand barred by the statute of limitations 1 The referee has found that the $2000 was borrowed for the defendants ; that $3000 was borrowed by-Draper—$1000 for himself and- the residue for the society. That this amount was secured by a bond to the lender, signed by said Draper and several others who were trustees of the society, and also by Draper’s mortgage upon his farm in Monroe county. This was in October, 1842. Draper was authorized by the corporation to make the loan on the best terms he could. He immediately credited the defendants this $2000 and disbursed it for them, in the progress of the erection of their church, as agent, crediting himself with the sums respectively, as they were disbursed. His accounts were audited by a committee of the society, on the 3d of December, 1844. The debt was paid to the lender by a foreclosure, and sale of Draper’s farm upon the mortgage, on the 30th of September, 1846. The referee having found that Draper was authorized to borrow money on the credit of the society, and that he did borrow this $2000 for them, which was secured in part by the bond of the trustees of the corporation, and that the money was credited to them and paid out in their business, as their funds, the law will presume that the defendants were the principal debtors, and that the mortgage given by Draper was given as collateral security merely. This being so. Draper was the surety of the defendants, and could have no right of action until he paid the debt. It is perfectly immaterial who received and disbursed this money for the defendants, after it was obtained. In that Draper was only acting as the defendant’s agent, and the auditing of his accounts as such agent, did not in any respect change or affect his character as surety. The action was brought within six years after the foreclosure.

It is also contended, on behalf of the appellants, that Draper has never paid this debt, inasmuch as the mortgage upon the farm was not foreclosed until after his right and title to the premises mortgaged had been sold upon judgment and execution against him. The argument is, that at the time of the foreclosure Draper had no right or title to the premises, and that neither his property nor his money has been applied to satisfy the debt, However specious this may seem, it is unsound. At the time of making the mortgage he was the owner, and then conveyed or pledged so much of his property to the defendants’ creditors, for their benefit. The purchaser under this subsequent judgment and execution, took the premises, subject to the payment of this mortgage. And the premises in his hands became in equity the primary fund for the payment and satisfaction of their mortgage debt. It was the fund Draper had provided for its payment; so that the mortgage, and consequently the defendant’s debt, was in fact paid with Draper’s funds. It is quite immaterial how Draper has paid this, whether in property or money. It was a money debt, and whatever was taken in satisfaction of it, will be regarded as money, if that is material.

[Monroe General Term, December 3, 1855.

The points were all properly disposed of by the referee, and the judgment must be affirmed.

Welles, Selden and Johnson, Justices.]