Smallwood v. Woods

• Decision Date: 30 October 1809
• Citation: 4 Ky. 542
• Parties: Smallwood v. Woods.
• Court: Kentucky Court of Appeals

4 Ky. 542

Smallwood v. Woods.

Court of Appeals of Kentucky.

October 30, 1809

Responsibility of assignor where there is no special agreement, and the instrument not negotiable according to the law merchant.

Due diligence is a question of law to the Court.

The facts on which due diligence or negligence depend, are for the jury to decide.

Assignee to use every compulsory process of the law against the debtor; and all the incidental remedies to compel payment except where obligor is out of the commonwealth, and such absence was not contemplated by assignor and assignee.

To omit to demand bail where bail was of right demandable, in case the ca. sa. should be returned non est inventus, would be negligence.

Where bail was given, the assignee must proceed against the bail upon non est inventus against the principal.

Due diligence by suit having failed to coerce payment of the instrument assigned a contract implied, to refund the consideration received for the assignment, is that upon which the assignor is responsible to the assignee.

OPINION

BIBB Chief Justice.

SMALLWOOD declared, as indorsee of an obligation against Woods, as the indorser, that he had sued on said obligation and recovered judgment, and, having used due diligence, had failed to receive satisfaction, of which Woods had notice, etc.; and the said Woods " then and there assumed upon himself to pay the said sum of £ 30, together with the sum of 1 dollar five cents, the amount of the damages and costs that the said plaintiff, by the indorsement aforesaid, ought to recover from the said Clay" (the obligor in said assigned obligation), whenever he should be thereunto afterward required. Nevertheless, etc. He also counted against Woods for money had and received.

Upon non-assumpsit, the jury found " that the plaintiff has used the several steps and proceedings against the said Samuel Clay, in the declaration mentioned, which are set forth in the record of the suit in Jessamine between said plaintiff and said Clay, defendant, a copy whereof is filed herewith, and that he hath used no other steps to recover the money of said Clay, or his special bail; and if the steps and proceedings amount to due diligence on the part of the plaintiff, they find for him 44 dollars 33 cents in damages but if they do not, etc., they find for the defendant." Upon this verdict, the Court gave judgment for the defendant; to which the plaintiff prosecutes this writ of error, assigning for cause " that the Court erred in giving judgment for the defendant on the special verdict,--when the law was for the plaintiff, and judgment should have been rendered for him."

The assignment does not question the sufficiency of the special verdict; and the parties in this Court have made no other questions, as growing out of the record, alluded to by the jury than these:

Ought the plaintiff to have taken a capias ad satis faciendum against Clay; and if the sheriff had returned thereto, non est inventus, should the plaintiff have proceeded against the bail, to have made out a case of due diligence, whereby to entitle him to recourse against the assignor?

If the liability of the assignor of an obligation or promissory note by contract implied by law from the insolvency of the maker, was a new subject, to be settled for the first time by this Court, we should have great difficulty in making out such liability, where there had been no unfairness or misrepresentation.^[a1] But considering the decision of the Court of Appeals of Virginia, in 1796, between Mackie's executor and Davis, etc. ^[(a)], and the decision of our own Court in April, 1802, between Boals and M'Connell ^[(b)] , together with many others, where the liability of the assignor was assumed, and decisions given, which, otherwise, would have been useless and irrelevant to the cases, we think that his liability has become a settled rule, by which men govern their contracts, and therefore it ought not now to be changed. We mention the case in Virginia, not as of binding authority here, but as a leading case to which public attention was attracted. It was the first decision upon assignment under their statute, from which ours was borrowed; and it has been followed (upon the main point) by the decisions of our Courts. The idea of the assignor's being responsible by his assignment, has been long and generally prevalent, strengthened and confirmed by these decisions, insomuch, that if at first erroneous, the maxim, " communis error facit jus, " if applicable to any case, may now be well applied to this. The responsibility of the assignor may indeed be now embraced by a rule of ethics, that the expectation of the one party to an agreement, known, and silently indulged by the other party, ought to be fulfilled in the same manner as if it were expressed.

But it is necessary to a decision upon the question of due diligence, to trace the responsibility of the assignor to its source, and find out the general principle upon which it is bottomed by those decisions. It is agreed that this responsibility is to accrue after due diligence by suit. It cannot be maintained upon the doctrine of implied warranty upon sales, because that warranty is annexed to the title only of the personal thing sold, and not to the quality or value of the thing sold; upon the sale of real estate the law annexes no warranty by implication. But if the implied warranty upon the transfer of and obligation is not to be confined to the bare undertaking that the obligation so assigned is bona fide due, but to be extended also to the circumstances and ability of the obligor, that is to say, to the intrinsic value of the thing sold, yet this warranty, according to principles of law, does not extend beyond the time of the sale. The law does not imply a warranty that the thing will be of a particular value at a future period. Upon the doctrine of implied warranty therefore, the liability of the assignor ought to be tried and tested by the circumstances of the obligor in the bond assigned at the time of assignment, not that the assignor warrants the debtor would be solvent, notwithstanding all imprudent bargains, sales or contracts he might make between the date of assignment and the suing of execution, after the dilatory process and pleadings in Court. Neither is this responsibility referred to the doctrine of diligence, according to the lex mercatoria. According to that law no suit was necessary; demand of payment (and a protest of foreign bills), and notice of non-payment, where due diligence...