Whitehead v. Jessup

• Decision Date: 10 February 1896
• Citation: 7 Colo.App. 460,43 P. 1042
• Court: Colorado Court of Appeals
• Parties: WHITEHEAD v. JESSUP et al.

43 P. 1042

7 Colo.App. 460

WHITEHEAD v. JESSUP et al.

Court of Appeals of Colorado

February 10, 1896

Error to district court, Arapahoe county.

Bill by Andrew Whitehead against Alvin L. Jessup and Frederick A Williams. Decree for defendants, and plaintiff brings error. Reversed.

Wells, Taylor & Taylor, for plaintiff in error.

Frederick A. Williams, pro se.

THOMSON J.

This was a suit in equity for a set-off of mutual judgments. The defendants had judgment, and the plaintiff brings error. The cause was submitted to the trial court upon an agreed statement of facts, substantially as follows: On March 20, 1888, the defendant Jessup sold to the plaintiff, Whitehead, all his shares of stock and his entire interest in the Colorado Insurance Company. In consideration of the sale, Whitehead paid Jessup $375 in cash, and agreed to pay the further sum of $625 upon arrangements being made to place Whitehead in possession of the office of the company. The shares of stock which were sold were in the hands of a third party, and the money was paid to Jessup upon his promise that he would not pay it over to the party holding the stock without obtaining possession of it, and that, having received it, he would immediately deliver it to Whitehead. Jessup paid the money but failed to obtain the stock on account of some claim of title made by the holder. The stock never was delivered to Whitehead. Afterwards Whitehead instituted criminal proceedings against Jessup on account of the transaction, in which the defendant Williams was Jessup's attorney. The proceeding resulted in favor of Jessup, and he was discharged. He then commenced an action against Whitehead for malicious prosecution, and on June 6, 1888, recovered judgment for $350. This suit was conducted for Jessup by Williams as his attorney. Whitehead appealed from the judgment to the supreme court, from which the case was transferred to this court, and the judgment was by this court affirmed at its April term, 1892. Whitehead v Jessup, 2 Colo.App. 76, 29 P. 916. While the cause was pending on appeal, Whitehead brought suit against Jessup to recover the money advanced on the sale, with interest, and on February 13, 1890, recovered judgment for $441 and costs. At the time Jessup recovered his judgment, he was insolvent, and remained insolvent. On June 9, 1888, three days after the rendition of the judgment against Whitehead in the suit for malicious prosecution, Jessup assigned the judgment to the defendant Williams. Jessup was indebted to Williams for defending him in the criminal suit, and also for the management of the action against Whitehead for malicious prosecution. After the recovery of judgment in the latter case, Jessup inquired of Williams what was his charge for his services. Williams replied that they were worth at least one-fourth of the judgment. Williams at first "filed a lien" for his services, and an appeal being threatened by Whitehead, and Jessup alleging that he was unable to follow the case into the appellate court, it was agreed that he should assign the judgment absolutely to Williams in consideration of the former services of Williams, and in further consideration that he should defend the appeal and make the outlay of money necessary to the proper presentation of the case in Jessup's behalf in the appellate court. Accordingly, the judgment was assigned to Williams, and he paid Jessup's docket fee in the supreme court, prepared Jessup's brief, and paid for printing it, and gave his personal attention to the case. There was no fraudulent intent in the assignment on the part of either Williams or Jessup, but Williams took it with full knowledge of the transaction between Whitehead and Jessup, although he did not know what course Whitehead would pursue in the assertion of his rights.

No exception was preserved to the judgment in this case, and it is contended on behalf of the defendants that for that reason it cannot be reviewed in this court. Where a cause has been tried without a jury, upon evidence heard, an exception to the judgment is necessary to enable the appellate court to review it upon the evidence; that is, to pass upon the question whether the evidence is sufficient to sustain it. Phelps v. Spruance, 1 Colo. 414; Atkinson v Atkinson, 2 Colo. 381; Patton v. Manufacturing Co., 3 Colo. 265; Law v. Brinker, 6 Colo. 555; Poire v. Transportation Co., 7 Colo. 589, 4 P. 1179. But this rule is applicable only where the facts are in dispute, and the correctness of the finding of the court upon the evidence is brought in question. Where the facts are agreed upon, and there is therefore no question of fact for the court to decide, an exception to the judgment is unnecessary. Clayton v. Smith, 1 Colo. 95; George v. Tufts, 5 Colo. 162. In Lindsay v. Jackson, 2 Paige, 581, Chancellor Walworth said, "There is a natural equity that cross demands should be offset against each other." The doctrine of set-off is of equitable origin, and was acted upon by courts or equity before the enactment of any statute permitting set-offs, in cases where one of the parties was insolvent, and the other was therefore unable otherwise to obtain satisfaction of his demand. After the enactment of the statute, courts of law, by virtue of their authority over their suitors, and proceeding upon the equity of the statute where the case was not within its letter, upon an application made for that purpose, directed the set-off of mutual judgments against each other. Brown v. Hendrickson, 39 N.J.Law, 239: Simson v. Hart, 14 Johns. 63. The jurisdiction of courts of law, derived from the statute, to set off judgments against each other, does not, however, divest courts of equity of their judisdiction in such cases. Courts of law exercise the jurisdiction upon summary application, and courts of equity upon motion or upon bill filed. Where the proceeding is by an application to a court of law, or a motion to a court of equity, the right to a set-off does not exist, unless both demands have been reduced to judgment. A mere indebtedness cannot be set off against a judgment. But it is otherwise in equity, in an original proceeding instituted for the purpose, where there are grounds for the exercise of equitable jurisdiction. Lindsay v. Jackson, supra; Gay v. Gay, 10 Paige, 369; Pignolet v. Geer, 1 Rob. (N.Y.) 626; Marshall v. Cooper, 43 Md. 46; Levy v. Steinbach, Id. 212. In Gay v. Gay, the chancellor said: "The right to set off one judgment or decree against another, by a motion to this court, or by a summary application to the equitable powers of a court of law, only exists in those cases where the debts on both sides have been finally liquidated, by judgment or decree, before the assignment of either to a third party. *** Upon a bill filed in this court for a set-off, the right of set-off does not always depend upon ...