Lane v. Smith

• Decision Date: 01 October 1883
• Citation: 103 Pa. 415
• Parties: Lane, to the use of Williams <I>versus</I> Smith.
• Court: Pennsylvania Supreme Court

103 Pa. 415

Lane, to the use of Williams versus Smith.

Supreme Court of Pennsylvania.

April 23, 1883.

October 1, 1883.

April 23d 1883.

Before MERCUR, C. J., GORDON, PAXSON, TRUNKEY, STERRETT, GREEN and CLARK, JJ.

ERROR to the Court of Common Pleas of Bucks county: Of January Term 1883, No. 282.

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G. & H. Lear, for the plaintiff in error.—An assignee who takes a bond for a valuable consideration cannot be affected by a verbal agreement between the original parties, of which he had no notice, by which the collection of the bond is restricted to a particular property; the secret equities which can be set up as a defence against an assignee being those only which relate to the quantum or existence of the debt, which may be proved for the purpose of ascertaining how much shall appear to be due at the time of the assignment: Davis v. Barr, 9 S. & R. 137; Frantz v. Brown, 1 P. & W. 257; Beckley v. Eckert, 3 Barr 292.

The court submitted the question of the verbal agreement to the jury upon insufficient evidence to reform a specialty, and without proper instructions as to the relative value of parol and written evidence. The evidence in this case fell far short of the standard: Spencer v. Colt, 8 Norris 314; Rowand v. Finney, 15 Norris 192: Thorne v. Warfflein, 12 W. N. C. 425; Penna. Canal Co. v. Harris 12 W. N. C. 433. This agreement was made in New Jersey and is to be governed by the laws of that state. Under its laws and decisions thereon, the obligor cannot avail himself of this secret agreement against a bona fide purchaser for value, and even if he could, the evidence in this case was insufficient to establish the equity: Chetwood v. Brittan, 1 Green Ch. 438; S. C., 3 Green Ch. 334; S. C., 1 Halstead Ch. 268.

[MERCUR, C. J. Did you raise the question of lex loci in the court below?]

We did not.

G. F. Gilkeson (Geo. Ross and L. L. James with him) for defendant in error.—The case of Davis v. Barr, 9 S. & R. 137 upon which the plaintiff chiefly relies, has been practically overruled by Frantz v. Brown, 1 P. & W. 257; from Wheeler's Assignee v. Hughes, 1 Dallas 23, down to the case of Williams et al., to use v. Wood et al., 1 W. N. C. 412, it has been held that the purchaser of a chose in action not negotiable, takes it subject to the equities which the debtor may then have; and from the case of Irwin v. Shoemaker, 8 W. & S. 75, wherein it was held, that where a mortgage and bonds were given to secure the purchase money of land sold, it was competent in an action on one of the bonds for the vendee to prove that it was part of the contract, that the vendor was to look alone to the property sold for payment of the said purchase money, down to the case of Hoopes v. Beale, 9 Norris, page 82, wherein the same doctrine was held, the law has been settled in accordance with the ruling of the court below.

The question as to lex loci was not raised in the court below and cannot be assigned for error now: Dorman v. Turnpike Co., 3 Watts 126; Pitt Twp. v. Leech, 2 Jones 33; Uplinger v. Bryan, Id. 219; Wright v. Wood, 11 Harris 121. Besides this, there is nothing on the record or in the evidence to show that the contract was in point of fact made in the state of New Jersey.

Mr. Justice TRUNKEY delivered the opinion of the court, October 1st 1883.

Both parties to the bond testify that it was given for part of the purchase money of real estate in Trenton, New Jersey, and was secured by a mortgage on said real estate; that they agreed at and before the execution of the bond and mortgage that there should be no personal liability thereon, but be collectible out of said real estate only; and that the obligor refused to buy the property and give the bond, except upon such agreement. The obligee assigned the mortgage and bond to Williams, who, having caused the mortgaged premises to be sold at sheriff's sale, now seeks to recover a personal judgment on the bond against the obligor.

The first three assignments of error relate to the same question, namely, whether the assignee of the bond can be affected by the verbal agreement between the obligor and obligee, set out in the offer of testimony which is the subject of the first assignment. At the argument the plaintiff contended that such agreement could not avail to relieve the obligor from personal liability, even as against the obligee. But this point has been settled in Pennsylvania, in Irwin v. Shoemaker, 8 W. & S. 75, wherein it was decided that in an action on a bond secured by a mortgage given for purchase money of land, the defendant may prove that it was part of the contract that the plaintiff was to look alone to the property sold for payment. As a general rule the assignee of a bond takes it subject to every equity which...