Proctor v. Cole
| Decision Date | 29 October 1885 |
| Docket Number | 11,802 |
| Citation | 3 N.E. 106,104 Ind. 373 |
| Parties | Proctor v. Cole |
| Court | Indiana Supreme Court |
J. M Vanfleet, for appellant.
J. H Baker and F. E. Baker, for appellee.
Elliott, J. Mitchell, C. J. did not take any part in the decision of this case.
The appellant's complaint alleges that three promissory notes were by him executed to Henderson Cole, on the 31st day of January, 1880; that, on the 25th day of February, 1880, he purchased of Mrs. S. A. Wells a note executed by Henderson Cole; that at the time he purchased this note he had no notice that Henderson Cole had transferred any of the notes executed to him by the appellant; that, on the same day, he brought suit against Henderson Cole and obtained an order restraining him from transferring any of the notes; that after the order had been served on Henderson Cole he endorsed the notes to the appellee, who received them with knowledge of the appellant's defence and of the restraining order.
The complaint, as originally drawn, charged that the appellant filed a complaint and affidavit against Henderson Cole and the appellee, asserting that they had violated the restraining order; that the parties named appeared and attempted to show cause why they should not be punished; that such proceedings were had that the court adjudged that Henderson Cole and Erastus B. Cole were guilty of a contempt of court in violating the restraining order, and that they should both be placed in custody until they turned over to the clerk the notes or their proceeds. On motion of the appellee, that part of the complaint which sets forth the proceedings relative to the arrest and punishment of the appellee and Henderson Cole was struck out.
It is contended with great earnestness, that the ruling on the motion to strike out part of the appellant's complaint was erroneous. The argument upon this point rests on the assumption that the order of the court adjudging the appellee and Henderson Cole guilty of contempt adjudicated the question of the right of the former to enforce collection of the notes assigned to him. This assumption is groundless. An order declaring a party guilty of contempt is not such a judgment as concludes him from maintaining an action upon a claim asserted against the party at whose instance the attachment for contempt was issued. A proceeding against a party for contempt does not involve the merits of the legal controversy, and it is only where the merits are involved that a judgment will operate as an estoppel. Bigelow Estoppel, 37; Freeman Judgments, sections 325, 326; Wells Res Adjudicata, section 440.
In proceedings against a party for contempt, the controversy between the litigants can not be determined, for there can be no issue formed that will enable the court to pronounce a judgment upon the merits. The jurisdiction to punish contempts is given for the purpose of enforcing the orders of the court and of securing that respect which the law intends that it shall command. The object of punishment is not to adjudicate upon private controversies, but to vindicate the authority and dignity of the court. A party may be guilty of contempt and yet possess a clear legal right, and in adjudging him guilty of contempt the court does not and can not adjudicate upon his legal rights. The investigation in such a case stops when it is ascertained that a contempt was committed, and nothing more is or can be concluded by the order of the court. It is not simply because a proceeding in a matter like that set forth in the rejected part of the complaint is summary or special that a judgment is not conclusive, but because in such a matter no judgment can be rendered that will determine the rights of the parties.
The facts developed by the evidence are substantially these: On the 23d day of February, 1880, Henderson Cole assigned the notes executed to him by the appellant to the appellee. The assignment was not written on the notes, but was contained in a separate instrument. At the time the assignment was written, the notes were in the hands of the attorney of the assignor for safe-keeping, and an order was drawn on the attorney to deliver them to the appellee. The restraining order was issued in a suit brought by the appellant against Henderson Cole to restrain the transfer of the notes, and was served on him on the night of the 25th of February; on the morning of the 26th, before the appellee obtained possession of the notes, he was informed that some sort of a suit had been instituted against his assignor by the appellant. On the day last mentioned, the appellee obtained possession of the notes, and they were then endorsed to him in due form. The appellant, on the 25th day of February, 1880, two days after the assignment of the notes executed by him, obtained from Mrs. S. A. Wells a note executed by Henderson Cole, the appellee's assignor; for the note acquired from Mrs. Wells, the appellant paid one dollar and agreed to give her a sum equal to half of whatever sum he might realize from the note.
On the trial the appellant offered to prove statements made by Henderson Cole, the appellee's assignor, on the 25th day of February, 1880. The court did right in excluding these statements. The declarations of an assignor made after he has parted with title and possession are not admissible against his assignee. In this instance there was a written instrument transferring title, and as the notes were in the possession of an agent, the agent held the notes after the transfer for the person to whom they were assigned. Both title and possession, therefore, passed to the assignee. The case falls fully within the rule that the declarations of the assignor made after assignment are not competent against the person to whom the assignment transferred title. Harcourt v. Harcourt, 89 Ind. 104; McConnell v. Hannah, 96 Ind. 102.
What we have said on the motion to strike out part of the complaint disposes of the question presented by the offer to introduce in evidence the record of the proceedings in the matter of the contempt prosecuted against the appellee and his assignor.
It is argued that commercial notes can not be transferred so as to cut off a bona fide set-off acquired before the maker of the notes had notice of the transfer unless there has been a regular transfer by endorsement. We do not regard the appellant as a bona fide holder of the note transferred to him by Mrs. Wells, for the reason that he had not paid value before notice of the transfer. Our cases have steadily held that in order to constitute a person a bona fide holder of a note, or a bona fide purchaser of property, it must appear that he paid value before notice of the equities of the party who asserts a claim to the note or property. Anderson v. Hubble, 93 Ind. 570 (); Anderson v. Wilson, 100 Ind. 402. The consideration of one dollar is a mere nominal one, and a nominal consideration does not make the person who pays it a purchaser for value. The agreement to pay one-half the proceeds that might be realized is a venture approaching very near a mere wagering contract; at all events, it is not such an agreement as will create a right against prior equities.
The counsel for appellant argues that the appellee must suffer defeat because he was not a purchaser for value and the owner of a legal title to the notes before the appellant obtained the note pleaded as a set-off. So far as the argument assumes that the appellee was not a holder for value, it rests upon an erroneous assumption of fact, and so far as it asserts that unless he was a holder for value he can not defeat the appellant's set-off, it cuts against the counsel with fatal effect. We agree that if the appellee is not a holder for value he can not defeat an equitable set-off, and we accept as correct the doctrine of the cases of Heck v. Fink, 85 Ind. 6, and Murray v Ballou, 1 Johns. Ch. 566; but we do not agree that he did not have a prior equity, for we are clear that he did have an equity that only a set-off acquired in good faith, without notice, and for a valuable consideration, can defeat. The assignment to him was an...
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