Childs v. Alexander

22 S.C. 169, 1885 S.C. LEXIS 9

• Court: Supreme Court of South Carolina
• Decided: February 24, 1885
• Status: Published

Opinion

The opinion of the court was delivered by

Mr. Chief Justice Simpson.

The facts of this case, so far as is necessary to the proper understanding of the judgment herein, are as follows: George W. Melton, in May, 1876, discounted his note in the Carolina National Bank of Columbia, for the sum of $5,068.75, receiving a net amount of $5,000, the interest for thirty days from date, at fifteen per cent., amounting to $68.75, having been added to and embraced in the note. The note was payable to J. E. Curtis & Co., and was by them endorsed, with the defendant, Alexander, Robison & Atkinson, I. L. Gunhouse, and W. A. Clark as second, third, fourth, and fifth endorsers. This note was afterwards renewed by Melton at thirty days. At the time of the discount, Melton pledged as collateral a bond and mortgage on C. H. Alexander for $5,000, executed by Alexander on the purchase from Melton of a tract of land situate in Chester County and a house and lot in the town of Chester, which property was covered by said mortgage.

Melton died in July, 1876, before his renewal note fell due. On January 3, 1877, W. A. Clark, one of the endorsers on Melton’s note and the attorney of the bank, received from Alexander on the Alexander bond, held as collateral as. above stated, the sum of $2,149, which, after being credited thereon, was applied .to the Melton note, first to the accrued interest and discount amounting to $423.28, and the balance, $1,725.70, to the principal, leaving a balance thereon of $3,274.30. This last note was taken up or renewed by Alexander on March 29, 1877, at sixty days, with interest at 15 per cent., the discount amounting to $77.75, which was paid in cash. This was again renewed on May 3, 1877, maturing July 5 thereafter, on which day it was again renewed at sixty days for $3,274.70, maturing October 6, at 15 per cent., the discount amounting to $126.85, paid in cash.

Several payments were then made by Alexander, when finally it was transferred on November 3,1877, to G. J. Patterson, upon his paying to the bank the balance then due, i. e., $2,400. This payment was made by Patterson, as it appears, out of funds belonging partly to himself and partly to Mrs. S. J. Conner, wife of F. Conner, in the proportion of $828 to $1,572. The note was delivered by the bank to Patterson, for himself and Mrs. Conner, as executrix of her former husband, Richard Springs; but there was no written assignment endorsed or made. ■ Some days after this transfer to Patterson — i. e., on November 10, 1877 — Alexander recognized the transfer, and to secure payment of the note to Mrs. Conner and Patterson, executed to them a mortgage of the tract of land and house and lot embraced in the prior mortgage to Melton, mentioned above, in which it was stated that Mrs. Conner and Patterson had purchased the bank note in the proportion of $828 by Patterson and $1,572 by Mrs. Conner; that Clark had transferred and assigned to Patterson, for himself and Mrs. Conner, the bond and mortgage of Alexander to Melton, held by the bank as collateral, in consideration of which the endorsers had been ' released, and that it was agreed between the parties that payment of the principal of said bank note now held by Patterson and Mrs. Conner should be postponed until November 3, 1879, with interest at 12 per cent, from the day of the purchase, to be paid annually. This mortgage containing these recitals was executed by Alexander and was signed “S. J. Conner, by Patterson & Gaston, attorneys,” and by Giles J. Patterson, all under seal. On the bond and mortgage of Alexander to Melton several endorsements appeared, one from Melton assigning them to W. A. Clark, and others signed by Clark, the first acknowledging that he held them as collateral to the bank note of Melton, one crediting the payments made by Alexander, and a third assigning the papers to Patterson as collateral to the note purchased by Patterson from the bank.

Some time after this transaction, Mrs. Conner died testate, and her husband administered with the will annexed. At the time of her death she was executrix of her former husband, Richard A. Springs. She left surviving her a daughter by her first husband, who some time before her death had intermarried with the plaintiff, Lysander D. Childs. Upon the death of Mrs. Conner, Childs administered with the will annexed on the estate of the said Springs. Some controversy arising between F. Conner and Childs as to the assets of the two estates which they respectively represented, it was finally agreed between them that the papers in the hands of Patterson & Gaston, attorneys for Mrs. Conner in her life-time, should be turned over to Childs; or at least Conner gave to Childs an order on these attorneys for all notes, bonds, and mortgages, and other choses in action, money or other assets belonging either to the estate of R. A. Springs or to that of Mrs. Conner, under which order the note and two mortgages now in suit, with other assets, were delivered to Childs, who soon thereafter instituted the action below, in his name.

In the complaint it is stated that Patterson having refused to unite as plaintiff, was therefore made a defendant. It was also stated that the interest of S. J. Conner in the bond and mortgage/sued on had been duly assigned, transferred, and delivered to the plaintiff, Childs, as administrator, and that he was the legal and real owner thereof. It was further stated that the plaintiff and Giles J. Patterson were the owners and holders of the bond and mortgage which had been held by W. A. Clark, as collateral to the Melton note, and which had been assigned by Clark to Patterson, and the plaintiff demanded judgment against the defendant, that both mortgages be foreclosed, that the premises be sold and the proceeds be applied to the payment of the note and costs, and in case said proceeds proved insufficient, then that execution issue in favor of the plaintiff and the said Patterson against the said O. H. Alexander for the balance. - Patterson failed to answer.

The case was referred to A. G-. Brice, special referee, whose report was excepted to by both sides. At the trial, testimony -was offered by the plaintiff to prove that the funds of Mrs. Conner used by Patterson in the purchase of the note sued on belonged to the estate of her former husband, Bichard A. Springs, and that the purchase was an investment by her as executrix-of said estate. This testimony was objected to by the defendant as contradicting the recitals in the mortgage of Alexander to Mrs, Conner and Patterson, which, as we have stated, had been signed by all of the parties.

The defendant relied upon the following defences: 1st. That Lysander D. Childs, as administrator de bonis non of Bichard A. Springs, had no legal title to either of the bonds and mortgages mentioned in the pleadings, but that Patterson was the legal owner, holding as trustee of an express trust for the benefit of Mrs. Conner during her life, and after her death for her daughter, Mrs. Childs, her legatee, and that he alone could sue. 2d. That the note sued on, as well as the original note from which it sprang, was usurious, and that C. IT. Alexander had been sued for dower in the house and lot purchased from Melton, which suit was then pending; and he demanded (1) that the complaint be dismissed, but failing in this, that then John J. McLure, administrator of Melton, should be made a party ; (2) that the amount of the usurious interest in the notes be ascertained and deducted from the recovery; and (3) that the defendant be allowed the right to set off any recovery that may be decreed against him by the Probate Court in the pending dower suit, and for such other and further relief as shall be meet.

Upon hearing the report of the referee, with the exceptions thereto, the Circuit judge held that the action as brought with Childs as plaintiff and Patterson as defendant could be maintained. He further held that the testimony introduced by plaintiff as to the investment by Mrs. Conner of estate funds was competent, and upon the merits he ruled that whether the notes were usurious or not, yet the alleged usurious interest having been paid to the bank, could not now be set up against the assignee of the bank; relying on Driesback v. National Bank and Stark v. National Bank, 104 U. S., 52. He also ruled that the pending dower suit could not be interposed; and he ordered and adjudged that the report of the referee, so far as it affected the rights of the plaintiff Childs and the defendant Patterson, be confirmed; that the mortgaged premises be 'sold by the sheriff, the proceeds to be applied, after payment of costs, to the claims of the plaintiff and the defendant Patterson, according to the amounts found due them respectively, the balance, if any, to be paid to the defendant Alexander. The appeal assigns error to these rulings and holdings, with the additional ground that his honor erred in ordering the land to be sold by the sheriff instead of the clerk.

Did the plaintiff have the right to maintain the action as brought ? is the first question. At common law actions on contracts could be brought only by the person having the legal title thereto, and as a contract at common law, was regarded as a mere right to go to law, and as that law forbade the sale of a mere light to sue, it followed that no one but the party with whom the contract was made could enforce it by action; and therefore in general, upon all contracts, whether express or implied, whether by parol, or 'under seal, or of record, the action, if action was necessary, had to be brought in the name of the original payee or obligee, whether the contract .has been assigned or not. True, in negotiable paper payable to order or bearer, an apparent exception was made allowing the action to be brought in the name of the endorsee or bearer; this, however, was allowed, not so much as an exception, but rather in accordance with the original rule, because when the note in its terms was made payable to order or bearer, whoever became endorsee or bearer, became at the same time the promisee, and consequently the legal owner. But notwithstanding this common law rule which was invariably enforced in the Courts of Common Pleas, yet the practice in equity was always different, and the rule prevailed there that the assignee, who was regarded as the real party in interest, could sue in his own name. And by special act in certain contracts the action might be brought in the name of the assignee or assignor as the parties might elect, even in the Common Pleas.

Thus stood the law in our state when the code was adopted in which it was provided (with certain exceptions) that every action must be prosecuted in the name of the real party in interest. What was the intention of this provision ? It was certainly not the intent that in all the cases where the real and beneficial interest was in one and the legal title in another, that the action must, or even could, be brought in the name of the real party in interest. Because if such was the imperative requirement in every such case, as Mr. Bliss says, great inconvenience would often arise, and representative and express trusts might be practically destroyed. For example, as he further says : “An administrator has less interest in collecting the assets than a creditor or distributee, yet he must bring the action; and there are many other cases where if the beneficiary, who is the real party in interest, could bring the action in his own name, he might, against the will of the trustee, and contrary to the objects of the trust, be able to control the property and destroy the trust.”

So that the code, in our opinion, when it provided and enacted in general terms that “every action must be prosecuted in the name of the real party in interest,” except as otherwise provided therein (§ 132), was intended to apply principally to the cases of assignments of contract, or rather to rights of action capable, of assignment, and in that way to meet the difficulty which existed at common law, where, as we have seen, the assignee, although after assignment to him he was in truth the real and only party in interest, yet could not sue in his own name. In other words, this section of the code was intended to adopt in all the courts the practice which formally prevailed in the Court of Equity on this subject. The code, however, has not gone to the extent of making things legally assignable which were not so before, but it simply declares that when a transfer or an assignment has been made, which in equity has the effect of making the assignee the real party in interest, that then such assignee must sue. Whether such an assignment has been made or not in a special case is always a question of fact, which may be evidenced by a written endorsement or assignment on the paper, or it may be shown by other, competent testimony. It may be made, too, on a separate paper, by a verbal sale, or by manual delivery.

' Now apply these principles to the facts of this case with reference to the note of C. H. Alexander, purchased by Patterson, and the mortgage subsequently executed by Alexander to Mrs. Conner and Patterson to secure the same. There was no written assignment of the note by the bank to any one. It appears, ■however, from the testimony that it was purchased by funds which belonged respectively to Mrs. Conner and Patterson, and that it was delivered to Patterson for himself and Mrs. Conner, thereby making Patterson and Mrs. Conner the real parties in interest, and therefore under the code entitled to sue in their own names; and they were named as the obligee and promisee in the ■mortgage of Alexander to them. Had the action then been commenced in the life-time of Mrs. Conner, unless brought in the name of the two,-it would have been defective and demurrable, except that if either one refused to unite as plaintiff, the party refusing might have been made a defendant under the code.

But Mrs. Conner died before suit brought; what was then the interest of the parties ? Under the old practice and authorities there can be no doubt that upon the death of Mrs. Conner the whole interest survived and became vested in Patterson, who, at common law, could alone have been recognized as entitled to recover, with a responsibility thrown upon him to settle with the representatives of the deceased. Such being the case, the representative character of neither Childs nor F. Conner would give either of them the right to unite in the suit with Patterson ; because, supposing that the funds invested by Mrs. Conner in thenote and mortgage to have belonged to her personally, or as executrix of Richard A. Springs, her death severed her connection and left Patterson as survivor, the holder of these papers.

• Childs, however, does not claim by virtue of his representative character. True, he sues as administrator of Richard Springs, but he claims by assignment to him as such administrator of the interest of Mrs. Conner. Has he shown such an assignment ? The evidence on that subject is, that the bank note, with the. mortgage, were delivered to him as administrator de bonis non of Richard Springs, by Patterson & Gaston, attorneys of Mrs. Conner, under an order from F. A. Conner, administrator of Mrs. Conner. After this delivery the action was commenced, Childs alleging in his complaint that he is the owner of the interest of Mrs. Conner and of the interest of Richard Springs,the same having been duly assigned and transferred to him as administrator de bonis non; and Patterson in his testimony admits the right of Childs as claimed. This seems to be sufficient evidence of the assignments, but then it is an assignment of only a part of the note and mortgage, i. e., 'Mrs. Conner’s portion.

Under this state of facts, a question arises, what is the effect of a partial assignment of a contract, note, or mortgage, as to the right of action in the parties interested ? Can the contract be split in this way so as to make the debtor liable to two or more actions and against his consent ? We think not, nor could, under the old practice, the partial assignee, so to speak, have joined in the suit with the assignor, and this principle is still adhered to in some of the states, even where the code has been adopted. Cable v. St. Louis Marine Railway & Dock Co., 21 Mo., 133. But in equity such an assignee was regarded as having an equitable interest, which, under the equity practice, could be enforced in the courts of equity, the assignor and debtor both being made parties, just as, before the code authorized the real party in interest in assignments of an entire contract to sue at’ law, equity had allowed such assignee to sue in equity. We see no reason, then, why under the code, since all distinction between law and equity as to the mode of procedure has been abolished, a partial assignee may not join with the assignor, in pursuit of his partial interest, as well as to sue alone when the whole contract has been transferred to him, especially as one of the objects of the code, in establishing but one mode of procedure, was to bring into operation the equity practice as far as practicable in all courts and actions.

This seems to be the law in some of the states where the code has been adopted, notably in Indiana and California (Lapping v. Duffy, 47 Ind., 51; Grain v. Aldrich, 38 Cal., 514; Bliss, Code Pl., § 65), and we can see no legal objection to it, and it is applicable as well to the Alexander-Melton mortgage embraced in the suit, as to the other papers, all of them having been delivered by Patterson to Childs under the same circumstances.

Under this view of the case it is unnecessary to discuss the competency of the testimony excepted to, as whether the funds invested by Mrs. Conner belonged to the estate of her husband or to herself, makes no difference. But even if this testimony was materia], there can be no reason growing out of the doctrine of estoppel, or any established rule of evidence, why such testimony should be excluded.

Next, as to the usurious interest. The Circuit judge declined to discuss this question, holding as he did, under the cases referred to, 104 U. S. Reports, that the interest alleged to be usurious having already been paid'to the, bank, the defence of usury could not now be set up against an assignee of the bank. The cases relied on by the Circuit judge seem to be clear and definite on this point; it is needless therefore to prolong this opinion by a discussion of the question of the fact of usury.

Finally, an abatement is claimed on account of the pending suit for dower before eviction. We need not do more in reference to this than to cite the case of Whitworth v. Stuckey (1 Rich. Eq., 409), where Chancellor Harper, in delivering the opinion of the court in a similar defence before eviction, said: “The law courts will not grant an abatement of price in such case, in a suit for the purchase money. I have no doubt,” says he, “that the decision of the law courts was perfectly correct, but with proper deference, I think the dicta of some of the judges that such relief will be afforded in equity are founded on a mistaken view. Relief is to be afforded in no court, because there is no grievance.”

The last exception assigns error to the sale of the premises ordered to be made by the sheriff, the appellant contending that the clerk should make the sale. In the General Statutes, chapter entitled “County Sheriff,” the following sections are found: “Sec. 691. All judicial sales shall b.e made by the sheriff, unless otherwise provided by law,” &c. “Sec. 692. In all sales by said sheriff under the order of Courts of Common Pleas, or under the order of the Courts of Probate, the fees of said sheriff shall be the same as now fixed by law for sales under executions issuing from Courts of Common Pleas.” The phrase in the above section “judicial sales” certainly meant other sales than those by execution, because many of the foregoing sections in this chapter in prescribing the duties of the sheriff, had already provided for sales by execution, and these two sections, if they stood alone, in the absence of any other act providing otherwise, would be construed to mean that all sales made by direct order of the court (and in that sense judicial), would be made by the sheriff.

In the code, however, are found other sections, which certainly leave the question in considerable doubt, if not producing absolute uncertainty. Section 307 of the code provides, “that in all sales under order of the court, where the title is to be made by the clerk of the court, such sales shall be made by the clerk; all other judicial sales shall be made by the sheriff.” And “in those counties where the office of master exists, the master shall make all sales ordered by the court in cases granting equitable relief, conformable to the practice of the Circuit Courts or to the practice of the Courts of Equity of this State before said courts were abolished.” Now, section 691 of the General Statutes, supra, providing as it does that all judicial sales shall be made by the sheriff, unless otherwise provided by law, evidently intended and supposed that in such sales (judicial) the legislature might make other provisions; but until this was done the sheriff should sell.

Section 307 of the code, supra, has made other provision, but to w.hat extent has it changed the previous act ? Section 691 is the difficulty. It says first, that in all sales ordered by the court, where title is to be made by the clerk of the Circuit Court, the clerk shall make the sale. Second, that all other judicial sales shall be made by the sheriff, as now provided by law. And third, that in counties where masters exist, the master shall make all sales ordered by the court, in granting equitable relief. The change made, then, consists in requiring the clerk to sell where the clerk is to make the titles, and the master to sell where a sale is ordered by the court in a case granting equitable relief. In all other judicial sales, the sheriff is to sell as now provided by law, i. e., as provided in section 691, General Statutes, supra. The question of the sale by the master is not involved here, as there was no master in Chester County, but the difficulty arises upon the change above which declares that the clerk shall make the sale where he is to make the titles.

When is the clerk to make titles? We know of no distinct class of cases in which by positive law the clerk is required to execute the titles. If there was such a law, and it covered a case of this kind, a sale under foreclosure proceedings, then it would be clear that the order of the judge directing the sheriff to sell would be error, but in the absence of such a law it would seem as if the sheriff was bound to sell under section 691 of the General Statutes, as that section expressly declares that in all judicial sales, unless otherwise provided by law, the sheriff should sell. We suppose it would be competent for a Circuit judge to order titles to be made by the clerk, in any sale made under a Circuit decree, and in such case the clerk should make the sale under section 307 of the code, supra ; but in the absence of such order as to titles, and of any law defining when the clerk shall make, titles, as matter of law, it would seem that the sheriff is the proper officer to make the sales in counties where the office of master does not exist. The Circuit judge did not direct the clerk to make titles below. The best that we can make, therefore, of the sections of the acts applicable to the question discussed is that there w;as no legal error in his ordering the sale to be made by the sheriff.

It is the judgment of this court that the judgment of the Circuit Court be affirmed.