Lewis v. Holdrege
| Decision Date | 20 October 1898 |
| Citation | 56 Neb. 379,76 N.W. 890 |
| Parties | LEWIS v. HOLDREGE ET AL. |
| Court | Nebraska Supreme Court |
OPINION TEXT STARTS HERE
Syllabus by the Court.
1. A sale of transfer of property in fraud of the rights of creditors of the vendor is valid between the parties thereto; and it is void as to such creditors only to the extent that they are prejudiced thereby.
2. The assignee of a nonnegotiable chose in action takes it subject to all equities existing between the original parties.
3. “He who seeks equity must do equity,” and come into court with clean hands.
4. A plaintiff who does not stand in conscientious relations towards his adversary, with reference to the claim which is the subject of the action, is not entitled to the aid of a court of equity, and will be denied affirmative relief, although such claim does not arise out of an illegal transaction, and is not tainted with actual fraud.
5. If the plaintiff or his assignor has been guilty of any misconduct in connection with the transaction out of which the claim in suit arose, so that the enforcement of such claim would be harsh, unconscionable, and oppressive, a court of equity will either decline to grant any relief whatever, or grant it on such terms as may be just and equitable.
On rehearing. Affirmed.
For former opinion, see 75 N. W. 549.Tibbets Bros., Morey & Ferris, L. C. Burr, Cobb & Harvey, and Lamb, Adams & Scott, for appellant.
J. W. Deweese, F. E. Bishop, and G. M. Lambertson, for appellees.
This case is now before us on rehearing. In the former opinion (75 N. W. 549) it was held that the transfer of the fund and property here in controversy, by C. W. Mosher to the Western Manufacturing Company, was made in fraud of Mosher's creditors. To that conclusion we still adhere. The transfer, being fraudulent as to creditors, was void as to them, but only to the extent that it was prejudicial to their rights. Between the parties the assignment was valid and effective. Baldwin v. Burt, 43 Neb. 245, 61 N. W. 601;Richardson v. Welch, 47 Mich. 309, 11 N. W. 172;Freeman v. Auld, 44 N. Y. 50;Songer v. Partridge, 107 Ill. 529.
The transfer by the Western Manufacturing Company to Lewis was made in the ordinary course of business, for a valuable consideration, and without notice of the fraudulent character of his assignor's title. Under these circumstances, Lewis took the fund and property free and clear of the general claims of Mosher's creditors. By virtue of his garnishment proceedings, Hayden, as receiver, had, prior to the assignment, obtained a specific lien on a small portion of the fund assigned. To the extent of this lien the assignment is not effectual; in all other respects it is. Consequently, the claims of creditors constitute no bar to this action.
The appellees, however, insist that a court of equity will not lend its aid to the enforcement of so unconscionable a claim against them. We will now inquire into the merits of this contention. The assignee of a nonnegotiable chose in action, in the absence of special circumstances, takes it subject to all equities existing between the original parties. He cannot enforce it unless his assignor could. The transfer does not strengthen the claim. In other words, the debtor loses nothing by reason of the assignment, and is in no worse position than if the assignment had not been made. 2 Am. & Eng. Enc. Law (2d Ed.) 1080; Clark, Cont. 536; Roberts v. Clelland, 82 Ill. 538;Bank v. Burch, 141 Ill. 519, 31 N. E. 420;Wing v. Page, 62 Iowa, 87, 11 N. W. 639, and 17 N. W. 181;Warner v. Whittaker, 6 Mich. 133;Willis v. Twambly, 13 Mass. 204;Callanan v. Edwards, 32 N. Y. 482;Littlefield v. Bank, 97 N. Y. 581.
The rights of Lewis against Holdrege and his associates are therefore no greater than those which Mosher would possess were he, in the absence of an assignment, attempting to prosecute the action. How would Mosher stand as plaintiff in the case? The primary purpose of the suit is to determine the plaintiff's right, as assignee of Mosher, to a one-tenth interest in the sum of $4,451.83, deposited by Holdrege, as trustee for the syndicate, in the Capital National Bank, and which was lost by the failure of that institution. A further and subordinate end sought to be attained is a decree establishing the validity and general effectiveness of the assignment. The money was deposited in the bank at the instance of Mosher. As president of the bank, and without the knowledge of his associates, he diverted more than a half million dollars of the bank's funds to his own use, and so completely wrecked it. In other...
To continue reading
Request your trial