Board of Chosen Freeholders v. President of State Bank

38 N.J. Eq. 36

• Court: New Jersey Court of Chancery
• Decided: February 15, 1884
• Status: Published

Opinion

The Chancellor.

James Short recovered a judgment in the Middlesex circuit court, April 24th, 1877, against the receiver of the State Bank at New Brunswick, for $312.99 damages, and $66.33 costs, in an action of assumpsit brought against him by the bank before the appointment of the receiver. The suit was pending when the receiver was appointed, and he was substituted as plaintiff. Short’s judgment was upon his set-off in the suit. The petitioner was his attorney in that suit. In May, 1877, Short gave to the petitioner, for the amount of his counsel fee ($175) and costs ($66.33) in that suit, and his fee ($30) for his professional services in a foreclosure suit brought by Joseph Fisher against him, his note, dated the 31st of that month, for $221.33, payable at two months from date. Within a few days after the recovery of the judgment, and before the giving of the note, it was agreed between the petitioner and Short that the former should hold the judgment as collateral security for his whole claim against the latter (the items first mentioned), and .that if he should be able- to collect the money due thereon he should retain the amount due him (unless he should have previously received it from Short), and should pay over to Short the balance. Short died intestate June 19th, 1877. He never paid’ the petitioner’s claim nor anything on account of it. When the judgment was recovered there was pending in this court a foreclosure suit (the one before mentioned), brought by Joseph Fisher against Short, on a mortgage given by the latter to the bank and assigned by it to Fisher merely for the purpose of foreclosing it in his name. In that suit a final decree for foreclosure and sale of the mortgaged premises was made February 19th, 1877. The decree also contained the usual decree for the-payment of deficiency by Short. Execution for the sale of the-mortgaged premises was issued April 20tb, 1877, and the property was sold under it November 13th, 1877. The deficiency was not ascertained until August 19th, 1878, when an order was made establishing it at $3,685.36, and directing that execution issue against Short to collect it. Short died, as has been stated, in June, 1877, which was long before the deficiency,was ascertained. His administratrix, under the order of this court to-limit creditors in this cause, in August, 1877, presented to the receiver her claim, under oath, to the money due on the judgment in the circuit court, subject to (he petitioner’s claim. It is understood that though the receiver has paid dividends to the creditors whose claims have been allowed, he has paid none on the Short claim, but has retained the dividends thereon in his own hands to await the judicial determination of the questions which are now before me. The petitioner insists that he is entitled to receive from the receiver the amount of the costs of the'judgment in full, with the lawful interest thereon, and also dividends at the same rate as those paid to the other creditors upon the rest of the amount of the judgment. The receiver, on the other hand, claims that he has a right to set off so much of the decree for deficiency as is necessary for the purpose, against the judgment, and that under the circumstances the petitioner has no claim or equity superior to his.

The assignee of a judgment, who acquired his title to it before the recovery of a judgment by the defendant in the assigned judgment against the plaintiff therein, has an equity superior to such defendant’s claim to set off the one judgment against the other. The agreement between debtor and creditor that the latter shall have a claim on a specific fund for the payment of his debt operates as an appropriation of the fund pro tanto to jihe payment of the debt, and as an equitable assignment of the fund to that extent. And the assignment of a chose in action may be by parol. In the case in hand it was agreed between Short and the petitioner that the latter should have a lien upon the judgment for the amount due him from the former. At that time the receiver had no judgment against Short; for the decree for deficiency in the foreclosure suit had not the force and effect of a judgment at law until the time when the amount of the deficiency was ascertained, which was not until August, 1878. The equity of the petitioner is superior to that of the receiver. He is entitled to payment of the costs of the judgment in full, with interest thereon from the date of the recovery of the judgment. They are costs which were awarded against the receiver in a suit prosecuted by him for the benefit of his trust, and were payable at once and in full. The petitioner is entitled to the dividends on the rest of the amount of the judgment, or so much of them as will be sufficient to pay the balance due him from Short’s estate on the note. In view of the fact that the assignment was by parol, merely, and therefore the receiver could not safely recognize the petitioner’s rights without the direction of the court, no costs should be allowed to the petitioner.