Lachner v. Myers , 121 Wash. 172 ( 1922 )

Hovey, J.

Defendant, Goddard & Company, a corporation, in March, 1917, executed and delivered to respondent a note for $8,000, secured by a mortgage on certain real estate then owned by it. In August, 1917, one Edwards recovered judgment against Goddard & Company in the sum of $877.65, and costs, which judgment became a lien upon the real estate subject to the mortgage. In March, 1918, default having been made in the payment of interest upon the mortgage debt, an agreement was made between Goddard & Company and respondent by the terms of which the former conveyed by warranty deed to the latter the mortgaged real estate, subject to the $8,000 mortgage and another and prior mortgage for $2,000, and covenanted and warranted against all other liens and incnmhrances, respondent paying Goddard & Company $1,000 in cash as a part of the transaction. The deed was dated March 25, 1918, and was filed for record at the request of the grantee on April 2, 1918.

In the meantime, in December, 1917, Goddard & Company, being indebted to appellant Myers, who was its attorney, for services rendered in about the sum of $400, advised with him as to how it could be protected against efforts to enforce the Edwards judgment. It was then able to pay that judgment, but was unable to pay both the judgment and the amount due to appellant. Appellant was unwilling to have Goddard & Company use all of its available funds to pay the judgment, leaving his claim unsatisfied, and upon his so stating, it was agreed that Goddard & Company should pay appellant $95 on account and furnish to him in addition thereto the amount then due on the Edwards judgment, with the understanding that he should pay over the money so furnished to Edwards or his attorney and should take from Edwards an assignment of the judgment to himself, which he should hold as security for the balance due him. This was done, and an assignment of the judgment to appellant, executed by Edwards, was taken, dated December 12, 1917, which assignment was not filed or in any way made a matter of record until May 1, 1918. On January 10, 1918, appellant, relying upon the assignment of the judgment as security therefor, advanced to Goddard & Company an-additional sum of $311 in cash, and now claims an actual investment in the Edwards judgment of upwards of $600, besides interest.

At the time respondent agreed to purchase the real estate from Goddard & Company, an abstract of title was furnished which showed the Edwards judgment in full force and unsatisfied, but of course did not show that it had been assigned. The abstract was examined for the respondent by the attorney who had been the attorney for Edwards' in procuring the judgment. He testified that he forgot, for the time being, the execution of the assignment, although he had witnessed Edwards ’ signature thereto, and being informed by Goddard & Company that the judgment had been paid and that a release and satisfaction of record could and would be procured, he so certified in his written opinion upon the title, whereupon the deed was accepted and the cash consideration paid.

The judgment not having been satisfied of record, respondent brought this action, seeking a cancellation of the lien of the judgment upon the land conveyed to him. From a decree perpetually enjoining each of the defendants from claiming any right, title or interest in the real estate mentioned by reason of the Edwards judgment and its assignment, Myers and wife have appealed.

Respondent relies upon the rule that the payment of a judgment by one primarily liable will extinguish it, and this seems to be the general rule if the judgment debtor and judgment creditor are the only parties to the transaction. On the other hand, the law gives to the acts of people the result which they intend, unless there is some legal reason forbidding it. It is not claimed in this case that any payment was intended, but, on the contrary, the parties intended to continue the lien of the judgment as security for a bona fide debt. No fraud was intended nor effected.

It is stated in 17 Am. & Eng. Ency. Law (2d ed.), 862:

“In the absence of any statute to the contrary, the payment of a judgment by one primarily liable to pay the same is an absolute satisfaction, and the assignment of the judgment to him, or to another for him, will not prevent its extinction. ’ ’

When the cases cited are examined it will appear that the first part of this paragraph is modified by its latter portion. The judgment debtor will not be allowed to keep a judgment alive solely for his own benefit, but where the assignment is made for the benefit, of a third person a different situation is presented, and the cases cited do not cover the latter situation; many of them are cases where one is seeking to do an illegal thing, such as an attempt by one joint tort feasor to keep the judgment alive for the purpose of enforcing it against the others, or for the purpose of defrauding creditors. In no case cited was the assignment held ineffective where the assignee had any actual interest in the judgment assigned and was not himself responsible for the debt.

In 17 Am. & Eng. Ency. Law (2d ed.), 862 is also cited Peirce v. Black, 105 Pa. St. 342, where a judgment was enforced after it had been once paid and a satisfaction handed to the judgment debtor which the latter retained for a time, saying that he might wish more money, and subsequently returning the satisfaction to the judgment creditor received an advance of $200. The present case is of simpler solution, for no satisfaction of the judgment was ever intended. The rights of no third person were involved at the time, and when others came subsequently to deal with the property, the unsatisfied judgment stood of record. If the satisfaction of the judgment had been obtained from the then record owners and without knowledge of the assignment a different question would be presented.

The distinction, is recognized in Black on Judgments (2d ed.), § 991, where it is stated:

“If a debtor pays his judgment-creditor a sum equal to the amount of the judgment, and thereupon causes the judgment to be assigned as a payment to another of his creditors, the transaction does not discharge the judgment, but the same continues valid in the hands of the assignee.”

To the same effect is Patterson v. Clark, 96 Ga. 494, 23 S. E. 496.

The judgment is reversed, with directions to dismiss the action without prejudice to the rights of respondent as to any rights which he may still have by virtue of the mortgage formerly held by him upon the premises.

Holcomb, Fullerton, Main, Bridges, and Mackintosh, JJ., concur.