Fitch v. Stamps

Mr. Chief Justice Sharkey

delivered the opinion of the court

It appears, by the bill and answers in this case, that the defendant, McGehee, placed in the hands of Messrs. Fitch & Paxton, who were partners in the practice of law, a ■ note made by James R. Enloe, for collection,' on which they,brought suit and obtained judgment. Some time .afterwards, McGehee, for a valuable consideration, gave to the appellee, Stamps, an order on Fitch & Paxton for part of the proceeds of the judgment when it should be collected,' which order was presented to and accepted by Paxton, who afterwards died. After the making and acceptance of this order, McGehee transferred the judgment, by separate assignment, to Fitch, for a valuable consideration. The judgment has not yet been paid by Enloe. On this state ,of facts, the chancellor decreed in favor of Stamps. ■ •

It is now contended that the decree 'was erroneous; first — because said order was not a bill of exchange, and that the consideration must therefore be shown, and without such consideration it was revocable at pleasure; and second — that Fitch, being an imm cent assignee for a valuable consideration, must be preferred.

This order was not a bill of exchange, because it was payable out of a particular fund on the happening of a contingency. But the authorities abundantly show that it was an equitable assignment of so much of the fund, and that in equity the assignee is entitled to protection, even though the bailee or debtor had not assented thereto,.and clearly it is such an assignment when he has assented. 2 Sto. Eq. 308, 3ll; 1 Vesey, jun. 280; 3 Swans. 393; 5 Pet. 598. This doctrine is indeed freely admitted by the counsel for appellants, but it is said, and’ as we think very properly, that such assignment must be made on a valuable consideration; and it is also said that the consideration must be proved. If there was no consideration, there could be no equity. On this branch of the subject it only remains to examine whether proof of the consideration should be made, and if so whether it is sufficiently proved. , The statute declares that when orders are drawn by one person on another for any sum of money in the hands of that other, the money therein specified shall be due and payable to the payee, and he may sue the maker, or the acceptor if it be accepted. It has generally been considered that this statute has changed the rule of the common law in this, that instead of requiring proof of the consideration, the onus is changed, and the defendant will be required to show a failure of consideration. Now, if this be an order within the meaning of the statute, equity would follow the law in regard to the proof, and we are inclined to regard it as an order within the meaning of the statute. Suppose Fitch and Paxton had accepted, and an action at law had. been brought, would the plaintiff have been bound to produce proof of consideration? and if he would not at law, why is it required in equity in enforcing the assignment? But as we do not wish to rest the case exclusively on this point, it will be proper to look to the evidence in the record.

The bill alleges positively that a valuable consideration passed for the order. The answer of McGehee admits that it was given as part of the purchase money for a tract of land, to which he also says Stamps had no title. This however was matter in avoidance, and required proof. If this answer is to be taken as testimony against Fitch, the consideration is sufficiently proved; but it is insisted that the answer of one defendant is not evidence against his co-defendant. This in general is true, but the rule is not without exceptions. An exception exists where one succeeds to another, so that the right devolves on the successor; they then become privies, and the answers are admissible against each other. 9 Wheat. 738; Osborn v. U. S. Bank. This was the case here; Fitch claims' to have succeeded to all the rights of McGehee, and the answer of McGehee must be competent to show what and how he assigned, and under this rule we must regard it as proper to show the interest of Stamps.

It is also insisted that Fitch was an innocent assignee without notice. The deposition of Enloe shows that Paxton, one of the partners, had been apprized of the transfer. He stated to the witness that about eight hundred dollars of the judgment had been transferred to Stamps. This proof sufficiently establishes the aliegation that Paxton had promised to pay the amount over to Stamps. He considered Stamps the true owner, and would not stay the execution without his consent. This order was drawn on the firm in reference to a partnership transaction, andvthe acceptance of one partner was binding on the other; and a notice, to. one partner is notice to the other.

The decree must be affirmed.'