Board of Commissioners of Jefferson County vs. Fox & al.

Board of Commissioners of Jefferson County vs. Fox & al. A bond for tbe absolute payment of money is a negotiable instrument. In suit on such bond by assignee, tbe defendant cannot avail of payments made to obligee before assignment, unless he prove that plaintiff had notice of such payment before assignment. And assignee is not bound to give notice of assignment to obligor in order to cut off obligee’s right to receive payment. The maker of a negotiable instrument cannot be made liable on a garnishee process unless that instrument has become due, and is proved to be in the hands of the defendant. This case came before the District Court on petition and summons under the statute of Iowa. Judgment for the plaintiffs below, who are the defendants here. The bond on which suit is brought had been assigned by tbe obligee to Fox & al. the plaintiffs, after partial payments made, and balance due thereon $150. Before the obligors were notified of the assignment they were summoned as'garnishees of the obligee. The court below decided that the bond was negotiable, and tbe plffs. in error not liable as garnishees. Judgment for plffs. below, and appeal. A more particular statement of the case is giyen in tbe opinion of the court. Wooes and Learned, for the plaintiffs in error. Henry W. Starr, for the dfts. in error. For the plffs. it was contended, 1st. That the court- below erred in the judgment rendered because the notice of the assignment was concealed from the defendants below, at the time when the judgments were rendered against them as garnishees, by the laches of the garnishees, and was a fraud upon the garni-Bhees — who were bound-by the judgment of the magistrate in the premises, and were not bound to appeal from that judgment. 2d. The court below erred in the judgment rendered, because the sum of $45,50 for extra work, was not affected by the assignment, and the plaintiffs in error had a legal right to apply that sum to the extinguishment of the balance of $82,37 paid to Olney (obligee) after judgment against them as garnishees, and notice of the assignment had been given them, as a credit to themselves 3d. The court below erred in the judgment rendered, because if the plaintiffs below were entitled to any judgment, the same should have been rendered for the sum of $36,87 only, instead of the sum of $150, as appears of record. For these reasons the judgment below ought to be reversed. For the defendants. By the statutes of Iowa this is negotiable paper. Negotiable paper cannot be garnisheed, nor taken in execution. Mich. Laws p. 207 — 1 Swift’s Big. 796. Learned for plffs. in reply. The bond is conditional, not for the absolute payment of money. The work was not finished when the bond was assigned, and when the garnishee process was served, and it is therefore not certain how much was due, if any thing, when it was assigned. It was sufficient for the County Commissioners that they had to pay this money in pursuance of the judgment of a competent tribunal. Fox et al. might have appealed. The party-paying may make the application and direct on what it shall be credited. We don’t question that whatever rights Olney would have under the bond would accrue to the assignee. [MAJORITY — Mason, Ch. Jus.] By the Court Mason, Ch. Jus. From the facts agreed upon in this case in the court below, it appears that the plaintiffs in error made a contract with one William Olney for building a court house, and gave him their writing obligatory by which they bound themselves to pay him the sum of $650, on or before the 15th day of November, 1839. Partial payments were made upon this bond, but before the time of payment therein specified, and while $150 remained unpaid, it was assigned by Olney to the defendants in error. Before the obligors were notified of the assignment, they were summoned as garnishees in three several suits against Olney, and judgments thereon were rendered against them amounting to $113,13. At the time of the rendition of this judgment the County Commissioners were indebted to Olney to the amount of $45,-50 for extra work, and after they had received notice of the assignment of their obligation, they paid him not only this amount but also the balance which they admitted to be due on the bond, amounting in all to the sum of $82,37. The court below decided that under the provisions of the statute of Iowa in relation to promissory notes, which took effect on the first day of March 1839, this bond was a negotiable instrument, and on that account the plaintiffs in error were not liable as garnishees in any action against Olney, and that whatever was adjudged against them in that capacity would not prejudice the rights of the defendants in error. A judgment was therefore rendered against the County Commissioners for $150, together with interest and costs. To reverse that judgment the case is now brought into this court. The main question seems to.be whether the bond on which this suit was instituted was negotiable under our statute. This extends to all notes, bonds due bills, and other instruments of writing for the payment of any sum of money, or articles of personal property, &c. It is contended that this instrument is conditional, and not for the absolute payment of money: and on that account is not reached by the provisions of the statute just referred to. It is true the bond states that the amount therein specified is to be paid for the building of a court house, but we find nothing in it which can be called a condition. The obligors bind themselves absolutely to pay William Olney the sum of $650, on or before the fifteenth day of November 1839, and the instrument then goes on to state the consideration for which the money is to be paid. We therefore conclude that the bond in question is a negotiable instrument, the legal interest of which vested at once in the assignees. It may well be urged that the maker of a bond should have the privilege of executing an instrument which would not be assignable in such a manner as to prevent him without hazard from making a payment to the obligee at any time before he received notice of the assignment. Our statute however, declares otherwise. The fourth section of the act in relation to promissory notes, already mentioned, leaves no doubt on the subject, if the first section of that act were not sufficiently explicit. It declares that if any such note, bond, bill, or other instrument of writing shall be endorsed before the day the money or property .therein mentioned became due and payable, and the endorsee shall institute an action thereon, the defendant may give in evidence at the trial any money or property actually paid on the said note, &c., before the same was endorsed or assigned to the plaintiff, by proving that the plaintiff had sufficient notice of the siad payment before he accepted or received, such endorsement. This section fully negatives the position that the assignee is bound to give notice of the assignment to the obligor before the obligee’s right to receive payment is cut oif. The ob-ligor can only set up such payment in his defence by proving that the plaintiff had sufficient notice of the same be/ore the note was assigned No notiee of this kind seems to have been proved irt the present ease, and the payment as garnishee is not distinguishable in this respect from an ordinary payment. The maker of a negotiable instrument cannot be made liable on d garnishee process unless that instrument has become due and is shown to be then in the possession of the defendant in the suit. The decision of this point obviates the necessity of examining the others. Judgment affirmed.