Ainsworth v. Ainsworth

24 Miss. 145

• Court: Court of Appeals of Mississippi
• Decided: April 15, 1852
• Status: Published

Opinion

Mr. Justice Fisher

delivered the opinion of the court.

The defendant in error brought an action of covenant against the plaintiffs in error, to the May term, 1846, of the circuit court of Simpson county, upon an instrument to the following effect. That Richard Ainsworth had, at the May term, 1843, of the circuit court of Simpson county, confessed a judgment in favor of the said Alfred G. Ainsworth, for $212.50, upon an account for a note payable to one Nancy McDonald or bearer, made by said Richard Ainsworth, on the 10th of March, 1837, and due 1st of January, 1838, for $150, which note had, been lost or stolen from said Alfred G. Ainsworth, and that the said note then appeared to belong to one Hendrick, of Copiah county, who was then owing the said Richard Ainsworth, and was trying to offset Richard’s demand against him with the said note. Then follows this covenant: “ now the true intent of this article is, that if the said Hendrick shall be allowed said note as an offset against said Richard Ainsworth, then and in that case, we promise and agree to pay and refund back to the said Richard Ainsworth, the judgment as confessed in the circuit court of Simpson county, for $212.50, with interest.” The declaration avers that the plaintiff below, on the 29th of February, 1845, paid the said judgment, amounting then to $249.09 It is then averred, that on the-day of-, at the county aforesaid, the said note was allowed to the said Hendrick, as an offset against the demand of the plaintiff, and of all which the defendant had notice. This is in substance the declaration.

To this declaration the defendants below filed three pleas, which were demurred to by the plaintiff, and the demurrer sustained by the court, and leave given the defendant to plead over.

The first question to be examined is the action of the court on the plaintiff’s demurrer to the pleas, and this involves a construction of the covenant upon which the action is founded.. It has already been set out, and we will merely place our construction upon it, without again reciting it. The defendants below undertook to refund to the plaintiff the amount of the judgment confessed, upon a certain contingency, and that was, if the note for $150 should be successfully used as an offset by Hendrick against the demand of Richard Ainsworth. This was in substance a covenant by R. Ainsworth to commence suit against Hendrick, and in the suit thus commenced, if the note on the trial should be adjudged a valid offset, then the defendants were to be liable on their covenant. When the parties speak of the note being allowed as an offset to Hendrick, we must understand them as referring to a tribunal established by law, for the purpose of deciding controversies of this character. This being the plain meaning of the covenant, the declaration should have either averred a judicial determination of the question of offset, or an excuse for not resorting to a judicial proceeding. Under this view of the case, the demurrer should have been sustained as- to the declaration.

This makes an examination of the other questions presented’ by the record unnecessary. There is one question, however, arising upon one of the instructions of the court to the jury, that if Hendrick, in due course of business, became the holder of the note for $150, that he is entitled to collect or use it as an offset against a demand of the maker, upon which we will merely remark that this instruction, as applied to a note payable to bearer, is correct as a general rule of law, but is not correct under the proof in this case. Hendrick did not become the holder of the note till after it was due, and, therefore, took it at his peril. While commercial paper is negotiable after its maturity, yet a party who then takes it, must do so subject to all the equities existing between the original parties; and these equities will apply as well to the right of the payee to receive payment from the maker, as to equities of the maker against the payee. If after the note became due, a third party fraudulently or illegally obtained possession of it, payment by the maker after receiving notice of the fraudulent or illegal title of the holder, would not discharge him.

Many other points are made by the counsel on both sides, but a decision of them is not called for under the state of case presented by the record now before us.

Judgment reversed, with leave to plaintiff below to amend his declaration, and cause remanded.