Smithman v. Gray

Brooke, J.

(after stating the facts). When a suit upon a foreign judgment is brought in the courts of this State that judgment may be impeached for lack of jurisdiction in the foreign court to render the same; irrespective of the recital of jurisdiction contained in the record of judgment. Marshall v. R. M. Owen & Co., 171 Mich. 232; Farrow v. Protective Ass’n, 178 Mich. 639. It is asserted by the appellee that the appellant is precluded from interposing such affirmative defenses as are raised by his plea, citing Mutual Fire Ins. Co. v. Furniture Co., 108 Mich. 170 (34 L. R. A. 694, 62 Am. St. Rep. 693); Dunlap v. Byers, 110 Mich. 109. There can be no doubt, however, that any defense which goes to the jurisdiction of the court pronouncing the foreign judgment may be urged collaterally.

In the case of the First Nat. Bank of Danville v. Cunningham, 48 Fed. 510, it is said:

“Assuming that the judgment was void for want of jurisdiction over the defendant, three remedies were open to him: He could make application to the court rendering the judgment to set it aside; or he could invoke the aid of a court of equity to restrain its enforcement and to vacate it (Landrum v. Farmer, 7 Bush. [Ky.] 46; Caruthers v. Harts field, 3 Yerg. [Tenn.] 366 [24 Am. Dec. 580]; Johnson v. Coleman, 23 Wis. 452 [99 Am. Dec. 193]; Connell v. Stelson, 33 Iowa, 147), or he could await suit thereon, and attack its invalidity collaterally. Until there was some adverse action against him on the question, he could not be estopped from taking each of the foregoing remedies. The abandonment of either or both of the first two modes of attack by leave of court, before adverse action on the question, would not estop or preclude him from adopting the third mode, by way of defense attack, as has been pursued in this case.”

It is settled law that a warrant of attorney to confess judgment contained in a promissory note must be strictly construed. First Nat. Bank of Danville v. Cunningham, supra; National Exchange Bank v. Wiley, 195 U. S. 257 (25 Sup. Ct. 70). So construed it is the contention of the appellant that the power of attorney here under consideration did not authorize confession of judgment in favor of a remote assignee of the note. In support of this proposition much reliance is placed upon the case of Overton v. Tyler, 3 Pa. St. 346 (45 Am. Dec. 645), where it is said:

“A warrant to confess judgment, not being a mercantile instrument, or a legitimate part of one, but a thing collateral, would not pass by indorsement or delivery to a subsequent holder; and a curious question would be, whether it would survive as an accessory separated from its principal, in the hands of the payee for the benefit of his transferee. ' I am unable to see how it could authorize him to enter up judgment, for the use of another, on a note with which he had parted.”

We are of opinion that under the later decisions of the Pennsylvania courts the decision announced in Overton v. Tyler, supra, has been repudiated and that a warrant of attorney couched in unlimited terms may be exercised in favor of the assignee, where, as in the case at bar, the note is made payable to the order of the payee and was assigned by the payee to the Citizens' Banking Co., or order, and later assigned by the banking company to the plaintiff. See Cooper v. Shaver, 101 Pa. St. 547; Vietor v. Johnson, 148 Pa. St. 583 (24 Atl. 173); Champlin v. Smith, 164 Pa. St. 481 (30 Atl. 447); Fritz v. Morten, 243 Pa. St. 187 (90 Atl. 58).

Defendant by his plea set up:

“That at the time said note was taken up and paid instead of having said note canceled said payee and plaintiff caused the same to be assigned and transferred to plaintiff herein and thereafter said plaintiff, without notice to defendant, and with knowledge that said note was no longer the valid obligation of defendant, fraudulently caused the judgment in plaintiff’s declaration mentioned to be procured; that more than six years elapsed after said note matured and before said judgment was obtained.”

—and in the course of the trial offered,

“to prove each and every one of the facts set forth in our special defenses.”

Fairly construed, we think the plea and this offer put in issue the question of payment. Assuming then that the note in question was paid and as charged in the plea instead of being canceled and destroyed was fraudulently assigned to the present holder thereof, can that defense be urged in the present suit upon the judgment. In the case of First Ntat. Bank of Danville v. Cunningham, supra, the action was in Kentucky on an Illinois judgment. The defense was that the note itself had been paid and its payment was fraudulently concealed from the Illinois court. The court said:

“It admits of no question that the warrants of attorney attached to the several notes sued on in the Illinois court were only made to secure the payment of such notes; that they were ‘irrevocable’ only while the notes remained unpaid; and that, upon the payment and discharge of said notes, the authority conferred by said warrants of attorney thereby ceased and terminated, both in fact and law, especially as against a holder of the notes who knew the fact that such notes were satisfied and discharged. No other construction can properly be placed upon said warrants of attorney, which, in dispensing with notice and all opportunity to be heard by the makers thereof, the courts treat with little favor — interpret strictly — and require to be followed to the letter of the powers conferred.”

See, also, National Exchange Bank v. Wiley, supra, at page 268.

It appears from the affidavit of the defendant filed in support of a motion for a new trial that in 1911 the Riverside Engine Co., the payee of the note in question, was consolidated with another business owned by one A. A. Holbeck under the name of the Holbeck-Riverside Gas Power Company and it is asserted that the new company took over all the assets and assumed all the liabilities of the Riverside Engine Co. It is further asserted in said affidavit that plaintiff told defendant that all the obligations of the Riverside Engine Company on which defendant was liable had been fully paid and that'there were no outstanding claims of any kind against defendant. Under the authorities cited we are of opinion that the court should have permitted defendant, if able, to show payment of the note and if such payment was shown beyond question to have directed a verdict in favor of the defendant.

Judgment is reversed and a new trial ordered.

Ostrander, C. J., and Bird, Moore, Steere, Fellows, Stone, and Kuhn, JJ., concurred.