Mr. Justice Clark
delivered the opinion of the court, May 10th, 1886.
The 8th section of the Act of 22d April, 1794 (3 Sm., 181); has no application to this case. The bond in suit was not given for security or satisfaction of moneys lost “in cock fighting, bullet playing, or horse racing, or at or upon any game of address, game of hazard, play or game whatsoever,” within the purview or meaning of that act; if it had, it would in the language of that act, have been “ utterly void and of none effect:” Unger v. Boas, 1 Har., 601. It was given by way of margin, to secure a settlement of differences, in a stock gambling transaction between Newhall and Griffiths; the conideration therefore was void (Elliott for use v. Callan, 1 P. & W., 24), and unless Griffiths is precluded from setting up [528]*528the truth in defence, the law will not lend its aid to enforce the contract: Griffith’s Appeal, 16 W. N. C., 249.
The bond in this case was dated 8th May, 1880, and ivas accompanied by a mortgage. Newhall having arranged to assign these securities to one John V. Sears, Griffiths, on the 8th June, 1880, delivered to Newhall a formal certificate, in writing, declaring that the defendants had no defence whatever thereto; that the assignment to Sears was made with their full knowledge and consent, and that the whole principal sum of $2,000, with the interest, was then due and unpaid. The assignment to Sears was consummated in September, 1881; it is conceded, however, that-Sears was not a purchaser for value; he was the mere nominal holder of the securities for the benefit of Newhall, and never had any title to or interest therein. The bond having been entered in Sears’s name, the mortgaged premises were sold upon a venditioni ex-ponas issued thereon, and were purchased by Newhall, to whom Sears afterwards re-assigned the judgment. The contest now is upon the balance of the judgment entered on the bond.
On the 8th October, 1884, Newhall agreed in consideration of $1,000 payable in thirty days, to sell and assign the judgment to E. J. Records; one hundred dollars only of the consideration was paid in hand, and, on the 27th October following, a rule was granted to show cause why the judgment should not be opened. On the 28th October, 1884, Records, in consideration of $1,400, to be paid to him, assigned the judgment to T. Morris Perot. Mr. Perot drew his check for $1,400, to the order of W. H. Brown, Mr. Record’s attorney ; Brown received notice of the rule and held the check until the rule to show cause was discharged by the Common Pleas, when he presented the check and paid over the money. An. appeal was taken to the Supreme Court, however, where the decree of the Common Pleas was reversed and the judgment opened.
Mr. Records testifies that at the time of his purchase, on the 8th October, 1884, he had no knowledge whatever of the nature'of the transactions between Newhall and Griffiths; that the declaration of no set-off, exhibited to him by New-hall, was the inducement to his purchase, and that on the 28th October, 1884, when he sold to Perot, he had no knowledge of the rule taken on the 27th. Mr. Perot testifies also that at the time of the transfer to him he was informed that the declaration of no set-off existed; that he had no knowledge either of .the original consideration of the bond, or of the entry of the rule, that he gave his check to Mr. Brown for the $1,400, [529]*529on the 28th October, 1884, and that a-few days after that, he was first informed of the rule.
It is contended, on part of the defendant in error, that Records was a bona fide purchaser of the judgment for value, and that as such he is protected by the declaration of no set-off, which was exhibited to him at the time of his purchase. As we said in Griffith’s Appeal, 16 W. N. C., 249, in order that a declaration of no set-off may operate as an estoppel, it must be made to him who acts upon it, who has reason to rely upon it, and who is thereby induced to alter bis condition upon the faith of it. By this it was not meant, of course, that the declaration must be renewed at each successive assignment; the protection which it affords is not confined to the immediate assignee, to whom, or for whose security it was made; any subsequent assignee claiming under him may avail himself of it: Ashton’s Appeal, 23 P. F. S., 153. Such declarations operate in favor of all those whose conduct it may fairly be supposed they were intended to influence; but strangers, casually hearing of them, cannot, by acting upon them, preclude the party from shoudng the truth.
The certificate which Griffiths gave, although made in contemplation of an assignment to Sears, was in the most general terms, and as in the case of Hutchinson v. Gill, 10 Norris, 253, was, in effect, an agreement that the mortgage might be negotiated. The purpose of the-certificate was to make the mortgage an available means of raising money, by the sale of it, and Sears was the medium through which that was to be effected. There is no suggestion of fraud in obtaining the certificate, or that the certificate was given any greater effect than was intended by the parties.
But, in order that the declaration of an obligor may operate as an estoppel, in favor of an assignee of his bond, the-latter must show that he or some prior assignee, was a bona fide purchaser for value upon the face of it: Weaver v. Lynch, 25 Penn. St., 449; Ashton’s Appeal, 73 Penn. St., 153. An assignee, of a bond, with notice of the illegality of the contract, which forms the consideration, will not be protected by a declaration of no set-off. Duquesne Bank’s Appeal, 74 Penn. St., 426. “The ground of this equity,” as this court said in Edgar v. Kline, 6 Barr, 327, “is the loss which must fall upon an innocent party; and it is incumbent upon him who would have advantage of it, to show that he paid or gave value for the chose in action he seeks to recover, for without this no loss to him can happen. Where this has not been done, he (the assignee) is a bare donee, with no other rights than those which appertained to the original holder of the security assigned, and [530]*530of course open to every defence which might have been made available against him.”
But not only must there be in fact a valuable consideration for the assignments, but that consideration must have been actually paid before notice of the adverse and prior right; where part of the price only has been paid before notice, the purchaser is entitled only to the position and protection of a bona fide purchaser pro tanto. Pomeroy’s Eq., sec. 751. Therefore a purchase of a trust estate, without notice of the trust, was held to be protected only to the extent of his payments made before notice: Beck v. Urich, 1 Har., 636. So in Juvenal v Jackson, 2 Har., 519, where an assignee of a ground rent received notice from the purchaser of the land subject to the ground rent, of an equitable defence to the payment of the rent, after he had made partial payments to the vendor, but before payment of the whole purchase money, the assignee was held to be affected by the notice, and this court said, if he had paid the whole purchase money, when notice was received, he would have been protected for the whole; if he had paid part only, he would have been protected for so much, and if he had paid nothing, he would be protected for nothing. The principle is one of general application, and governs alike in the transfer of property and in the assignment of choses in action.
Free access — add to your briefcase to read the full text and ask questions with AI
Mr. Justice Clark
delivered the opinion of the court, May 10th, 1886.
The 8th section of the Act of 22d April, 1794 (3 Sm., 181); has no application to this case. The bond in suit was not given for security or satisfaction of moneys lost “in cock fighting, bullet playing, or horse racing, or at or upon any game of address, game of hazard, play or game whatsoever,” within the purview or meaning of that act; if it had, it would in the language of that act, have been “ utterly void and of none effect:” Unger v. Boas, 1 Har., 601. It was given by way of margin, to secure a settlement of differences, in a stock gambling transaction between Newhall and Griffiths; the conideration therefore was void (Elliott for use v. Callan, 1 P. & W., 24), and unless Griffiths is precluded from setting up [528]*528the truth in defence, the law will not lend its aid to enforce the contract: Griffith’s Appeal, 16 W. N. C., 249.
The bond in this case was dated 8th May, 1880, and ivas accompanied by a mortgage. Newhall having arranged to assign these securities to one John V. Sears, Griffiths, on the 8th June, 1880, delivered to Newhall a formal certificate, in writing, declaring that the defendants had no defence whatever thereto; that the assignment to Sears was made with their full knowledge and consent, and that the whole principal sum of $2,000, with the interest, was then due and unpaid. The assignment to Sears was consummated in September, 1881; it is conceded, however, that-Sears was not a purchaser for value; he was the mere nominal holder of the securities for the benefit of Newhall, and never had any title to or interest therein. The bond having been entered in Sears’s name, the mortgaged premises were sold upon a venditioni ex-ponas issued thereon, and were purchased by Newhall, to whom Sears afterwards re-assigned the judgment. The contest now is upon the balance of the judgment entered on the bond.
On the 8th October, 1884, Newhall agreed in consideration of $1,000 payable in thirty days, to sell and assign the judgment to E. J. Records; one hundred dollars only of the consideration was paid in hand, and, on the 27th October following, a rule was granted to show cause why the judgment should not be opened. On the 28th October, 1884, Records, in consideration of $1,400, to be paid to him, assigned the judgment to T. Morris Perot. Mr. Perot drew his check for $1,400, to the order of W. H. Brown, Mr. Record’s attorney ; Brown received notice of the rule and held the check until the rule to show cause was discharged by the Common Pleas, when he presented the check and paid over the money. An. appeal was taken to the Supreme Court, however, where the decree of the Common Pleas was reversed and the judgment opened.
Mr. Records testifies that at the time of his purchase, on the 8th October, 1884, he had no knowledge whatever of the nature'of the transactions between Newhall and Griffiths; that the declaration of no set-off, exhibited to him by New-hall, was the inducement to his purchase, and that on the 28th October, 1884, when he sold to Perot, he had no knowledge of the rule taken on the 27th. Mr. Perot testifies also that at the time of the transfer to him he was informed that the declaration of no set-off existed; that he had no knowledge either of .the original consideration of the bond, or of the entry of the rule, that he gave his check to Mr. Brown for the $1,400, [529]*529on the 28th October, 1884, and that a-few days after that, he was first informed of the rule.
It is contended, on part of the defendant in error, that Records was a bona fide purchaser of the judgment for value, and that as such he is protected by the declaration of no set-off, which was exhibited to him at the time of his purchase. As we said in Griffith’s Appeal, 16 W. N. C., 249, in order that a declaration of no set-off may operate as an estoppel, it must be made to him who acts upon it, who has reason to rely upon it, and who is thereby induced to alter bis condition upon the faith of it. By this it was not meant, of course, that the declaration must be renewed at each successive assignment; the protection which it affords is not confined to the immediate assignee, to whom, or for whose security it was made; any subsequent assignee claiming under him may avail himself of it: Ashton’s Appeal, 23 P. F. S., 153. Such declarations operate in favor of all those whose conduct it may fairly be supposed they were intended to influence; but strangers, casually hearing of them, cannot, by acting upon them, preclude the party from shoudng the truth.
The certificate which Griffiths gave, although made in contemplation of an assignment to Sears, was in the most general terms, and as in the case of Hutchinson v. Gill, 10 Norris, 253, was, in effect, an agreement that the mortgage might be negotiated. The purpose of the-certificate was to make the mortgage an available means of raising money, by the sale of it, and Sears was the medium through which that was to be effected. There is no suggestion of fraud in obtaining the certificate, or that the certificate was given any greater effect than was intended by the parties.
But, in order that the declaration of an obligor may operate as an estoppel, in favor of an assignee of his bond, the-latter must show that he or some prior assignee, was a bona fide purchaser for value upon the face of it: Weaver v. Lynch, 25 Penn. St., 449; Ashton’s Appeal, 73 Penn. St., 153. An assignee, of a bond, with notice of the illegality of the contract, which forms the consideration, will not be protected by a declaration of no set-off. Duquesne Bank’s Appeal, 74 Penn. St., 426. “The ground of this equity,” as this court said in Edgar v. Kline, 6 Barr, 327, “is the loss which must fall upon an innocent party; and it is incumbent upon him who would have advantage of it, to show that he paid or gave value for the chose in action he seeks to recover, for without this no loss to him can happen. Where this has not been done, he (the assignee) is a bare donee, with no other rights than those which appertained to the original holder of the security assigned, and [530]*530of course open to every defence which might have been made available against him.”
But not only must there be in fact a valuable consideration for the assignments, but that consideration must have been actually paid before notice of the adverse and prior right; where part of the price only has been paid before notice, the purchaser is entitled only to the position and protection of a bona fide purchaser pro tanto. Pomeroy’s Eq., sec. 751. Therefore a purchase of a trust estate, without notice of the trust, was held to be protected only to the extent of his payments made before notice: Beck v. Urich, 1 Har., 636. So in Juvenal v Jackson, 2 Har., 519, where an assignee of a ground rent received notice from the purchaser of the land subject to the ground rent, of an equitable defence to the payment of the rent, after he had made partial payments to the vendor, but before payment of the whole purchase money, the assignee was held to be affected by the notice, and this court said, if he had paid the whole purchase money, when notice was received, he would have been protected for the whole; if he had paid part only, he would have been protected for so much, and if he had paid nothing, he would be protected for nothing. The principle is one of general application, and governs alike in the transfer of property and in the assignment of choses in action.
Nor is it sufficient that the consideration has been secured by contract, bond, or mortgage; equity will protect the purchaser against the payment of it; lie may thoroughly protect himself, although he has accepted the deed or assignment, and given his bonds, and must therefore be considered a volunteer so far as he has not paid the purchase money: Union Canal Company v. Young, 1 Wh., 431; Rodgers v. Hall, 4 Watts, 362; Hoffman v. Strohecker, 9 Watts, 183; Wilson v. Howser, 2 Jones, 116.
It is admitted that Records only paid $100 in hand, and that before payment of the balance, he had full notice of the proceedings to open, the judgment, upon the express ground, that the consideration of the bond was illegal and void. Excepting as to the $100, therefore he must be treated as a volunteer, he is not entitled to the protection of a bona fide purchaser, as to the residue. What may appear as to the $100, in another trial, we do not know, we speak of the case as it is now presented.
The rule to open the judgment, was-entered in the Common Pleas as we have said on the 27th October, 1884; on that day, therefore, notice was spread upon the record of the judgment itself, which was the subject of the sale; not only so, but a written notice of the fact was given to the attorney of record for Mr. Newhall, then the actual owner of the judgment.
[531]*531How does the case stand as to Mr. Perot? The purchaser of a judgment is ordinarily charged with the inspection of the record of that judgment, and is therefore, in general, affected with notice of any rights which it plainly discloses. Therefore it has been repeatedly held, if an assignee of a judgment fail to have his assignment noted upon the record, he will be postponed to a subsequent assignee for value, without notice; but if the first assignment be noted, the subsequent assignee will be affected with notice of the fact: Fisher v. Knox, 1 Harris, 622; Campbell’s Appeal, 5 Casey, 401. For says Chief Justice Gibson in the case first cited : “ Though no law requires such an assignment to be docketed, the practice to mark the judgment to the use of the assignee is universal, and it ought to have been pursued here; for no prudent purchaser of' a judgment invests his money in it before the record has been inspected. From what else could he derive information? He has nothing for it but the honor of the assignor ; and any one' who leaves it in the power of another to deceive may be said to collude with him beforehand.”
If Mr. Perot had searched the record of this judgment, on the 28th October, 1884, he would have found full notice of the defendant’s alleged defence, as set forth in the petition, then on file and noted on the record. If it be said that the certificate of no set-off dispensed with this duty, it may be replied, that Perot did not even see the certificate ; he seems to have relied wholly upon the words and warranty of Records; indeed it does not appear that the certificate was the inducement to his purchase.
But even if there was no duty on the part of Perot to inspect the record of the judgment, under the special circumstances of this case, we are of opinion, that the delivery of the check cannot be considered actual payment of the consideration. The application to open, as we have said, was made and noted upon the record on the 27th October, 1884, and on the next day he gave his check to Brown. He was afterwards informed by Brown that a defence had been taken against payment of the judgment, on the express ground of the illegality of the consideration. He took no steps to stop payment of the check, he made no request that the check be returned ; instead of that, he agreed that Brown might hold the check until the rule was discharged, and that it might 'then be presented for payment. . Brown did exactly as he agreed; the rule was discharged and the check was presented and paid. The check might have been, but in fact was not negotiated. He might have stopped the payment, or had the negotiation of it enjoined, but did neither, it was presented and paid with his approval.
[532]*532Under the admitted facts of the case, neither Records nor Perot, excepting as to the $100, paid in hand, can in the law be regarded as purchasers for value without notice.
The judgment is therefore reversed, and a venire facias de novo awarded.