Charles Lane, Pl'ff in Error, vs. David Romer, for the use of William M. Cunningham, Def't in Error

Charles Lane, Pl’ff in Error, vs. David Romer, for the use of William M. Cunningham, Def’t in Error. ■Where A vends chattels to B, and takes from him in payment a promissory note which is made payable to,the wife of A, but not ne-gociable, and at the time of the purchase, a chattel mortgage had been executed by A to a third person, which was recorded or filed in the proper office, and was a lien upon the chattels sold, and B subsequently to the purchase and sale and the giving the note, pays off and discharges the mortgage — held, that in a suit brought upon the note for the use of tí¡é holder, B may set off against the claim of the plaintiff, arising upon the note, the sum paid by him to satisfy the mortgage.. Held also — that such set-off was admissible in the plea of the general issue and general notice of set-off appended thereto. Hold also — that the fact that the mortgage was filed or recorded in the proper office, at the time of the giving the note, did not prevent the set-off. Error to the Circuit Court of Milwaukee County. This was an action .brought by Romer, the plaintiff below, for the use of Cunningham, against Lane, the defendant below, upon a promissory note made by him, payable to Mrs. Romer, dated September 1, 1846, for #100, and not negotiable. The defendant pleaded the general issue and gave a general notice of set-off. At the trial the note was read in evidence, and in de-fence the defendant, Lane, proved that on the day of the. date of the note, he purchased of Romer the cabinet furniture in his shop in the city of Milwankee, and gave him^ therefor #100 and the note; that he afterwards paid on , the note #35, and that the furniture did., not exceed in. value $200, and, in the 'opinion of witness, was not worth that. The defendant below then offered to prove that at and previous to the sale, there were three chattel mortgages duly recorded or filed in the Office of the Clerk of the Common Couucil, of the City of Milwaukee, where Homer resided at the time of their execution, which were executed by Romer to one Lyman P. Swift, upon the identical furniture sold by Romer to Lane. That Swift, a few days after the sale, by virtue of the mortgages, took possession of the furniture, and that then Lane paid Swift #100 m satisfaction of the mortgages, and that the said sum of #100 was then due and unpaid on said mortgages and the notes in their conditions mentioned. The Court refused to permit the testimony to be .given, and Lane excepted. The question here is : did the Court err in refusing such testimony 1 JT. Downer, counsel for the plaintiff in error, made and forgü'éd the following points: 1st. The testimony, if admitted, would have proved a «■payment of the note sued on. It is a general principle of law that when one person owes a debt which is a lien on another^ property, and the latter, either to retain or obtain possessión of his property, pays such debt, that suck payment, (being fo'r the benefit of the pe2-son who is personally liable,) is by operation of law, a payment pro tanto to him of any demand -frhich he might have against the party so paying, that originated in, or is connected with, the property sold on which such lien existed. The case of Partridge vs. D.College, 5 JV*. H. Rep., 288, and the authorities there cited, sustain the principle above stated. That was an "action for the purchase- money of dumber, on which one Olcott had a lien for sawing, and refused to deliver the lumber to the vendee until the 'amount of his lien, #261, was paid. The vendee paid Ol-cott the #261, and when sued by the vendor for the purchase money, paid into the Court all but the #261, and claimed the payment of that amount to Olcott as á payment to the vendor. — The Court say— “ The payment which the defendants made to Olcott; cannot be considered a voluntary payment, but was a payment they were compelled to make m order to obtain the boards.' And we are of opinion that it must be considered as a part payment' to the plaintiff of the price of the boards. Carter, v. Carter, 5 Bing. 406» Taylor v; Zamira, 6 Taunt. 524. Stubbs v.- Parsons', 3 B.■ S/ Jlr, 516. Andrew v. Hancock, 1 5. f i. 37. Sapsford v. Fletcher, 4 P. fy E. 511.” And gave judgniemt for the defendants. In the present case, the nofe shed on being given for part of the purchase money of the identical property mortgaged, and the .money being paid by Lane to Swift to discharge the mortgage lien, such payment was, according to the above authorities, payment pro tanta to Romer. 2d. The amount paid to discharge the mortgages might have been proved as a set-off, being specially set out in the notice; and the testimony offered and ruled out, was competent for that purpose. Indebitatus assumpsit would lie by Lane against Romer for the money paid to remove the incumbrance of the mortgages, Wells v. Porter, 7 Wend.', 120; and when indebitatus assumpsit will lie on..a demand, it may be pleaded as a set off. U. S. Dig., Set-off, 19'7. Sup. U. S. Dig., Set off, 40. In the case af Sheldon v. Simonds, Wright, 724, (U. S. JQig., Set off, 43,) it was decided that where one buys land and gives, his note, and an incumbrance is afterwards discovered, he may pay off the incumbrance and set it off on the note. We see no reason why the same principle would not apply to a sale of chattels, especially as there is an implied warranty of title in all sales of chattels. Defreeze v. Trumper, 1 Johns, 274. Story on Contracts, §(535. The fact that Lane paid the full value of the furniture, rebuts any presumption that he had any knowledge of the mortgages at the time he purphased the furniture, or that he took it subject to tl\em. 3. The consideration of the note entirely faped. For if Lane purchased the goods of Romer for $200, and paid him one-half and gave the note for the .other, and afterwards the consideration failed to the extent of $100 —that to that part.of the consideration which has. not failed, the money paid must apply; and if so, the consideration of the note entirely failed, and evidence thereof might have been given under, the general issue, and thp Court erred in rejecting such evidence. Am. U. S. Dig. 1847, Promissory Note, 142, 143.' A Hyatt Smith, counsel for the defendant in error, made and-argued the following points: 1st. That, for aught that appears in the case, theN plaintiff in error, at the time of the' purchase of the property in question, knew of the existence of ,the mortgages. executed by the defendant to Swift, and that they were liens upon it. That the presumption arising from the evidence given in the case, fairly was that he had such knowledge; but, if not, still the mortgages were recorded or . on' file with the proper officer, and that, in law, made evidence of the.fact, of which he was bound to take notice. Frost vs. Beékman, 1 John. Ch. R., 288; Parkhurst vs. •Alexander, same hook. "2d, The law being, that -all incuihbrances t>f record, upon property sold,’was ncitice to the purchaser, and óf which he wá’s bound to táke notice; and it not appearing that any representations were made by the vendor, that the property'was'not incumbered; there was no'fraud fin law; and the plaintiff in'error took no precedence by the purchase over the mortgage incumbrancer. 3Ü. Th’at there bei'ng an ’inctimbrance upon the property, within the knowledge of the purchaser, he took, it subject to hll such liens, 'as respects Which he was charged in the law with knowledge; and that the implication would necé'ssarrlyarise, that he made the purchase -subject to such liens, 6 Paige’s Rep., 189. [MAJORITY — Hubbell, .11] By the Coúrti Hubbell, .11 A'sale of chattels, fof ‘a •sound price, carries with it an implied warranty of title, in the vendor. This‘is old law. (Chandelor vs. Lopus, 2 Croke, 2. Seixas vs. Woods, 2 Caine’s R., 48.) And to this extent,'the rule óf itavedt emptor does'not apply, in s'ale's of pe'rson&l property. The rifle is different, in respect to ‘real property, where a warranty must be expressed, or the Courts hdld that none was intended. Subject to this rule,'Romer sold his stock-in-trade in the Cabinet Shop to Lane. And the first question is, whether the vendee is protectéd from' cháttefiihoftgage's ‘üpoñ the property, executed b'y the vendor prior to the sale, and recorded in conformity 'to the Statute 1 Clearly, Romer •hpd not a perfect title at the time he sold; and inasmuch as the Record-notice only protected third persons and did pot apply between the parties, Romer was bound, as between himsel,( and Lane, to make good the title. This ¡¡suit is brought upon a note, not negociable, given for a part of the purchase money; and the same right of de-fence exists a,s if Romer owned the note. Had the defence arisen upon a notice of special matter, accompanying the plea of general issue, I should have had little doubt of the defendant’s right to recoupe to the amount of the chattel-mortgages. Nor do I doubt that an action would lie on the implied warranty. But there is no notice whatever of,' the facts which make out this defence. The defendant pleaded the general issue, with the common notice of set-off; and on, the trial, offered proof of payment of the mortgages, as a set-off to the plaintiff’s demand op the note. This proof, I then deemed Inadmissible, and ruled it opf. The defendant alsp offered to show payment of the note?i by proving payment of the mortgages; whiph w;as also ruled out. The principal set up is, that the vendee of a chattel) under his implied warranty from, the vepdor, may pay any. sum, he d.epms necessary to clear the vendor’s title; and: Afterwards, not only show such payment as a set-off in a suit for the, purphase money, but bring assumps.it against the vendor, for,money paid and advanced for his use, for assumpsit will lie, e converso, where a s,et-off is maintain-; ablq. On a careful examination of the authorities, a map jprity of my brethren ar,e disposed to hold the ruling in, the Court below, erroneous, on both points. Carter vs* Carter,' (5 Bingham, 406), is a case similar in principle. was at paymgtit by thp. tenan,,t?i of ^round-rpn.t b^ the landlord, after demand upon the latter and his neglect to pay. The tenant paid to avoid a distress upon his pro-* perty on the premises; and was allowed to set ijt up, as. a payment of rent to the landlord. The peculiar, condition and liability of tenants, at common law, may, however, have induced this and like decisions. Partridge vs. Dartmouth College is a case more in point. (5 A. H. Rep., 288.). The defendants were vendees of a quantity of lumber, in possession of one Olcott, who had a lien on it, for sawing. Being unable to obtain possession 'of the lumber, without satisfying the lien, they paid the amount due to Olcott and afterwards, in a suit by the vendor, were allowed to show it, as a payment of the purchase money., The Court say: “ The payment which the defendants made to Olcott,, cannot be considered, a voluntary payment, but was a payment they were compelled; to make in order to obtain the boards. And we are of opinion that it must be considered as a part payment to the plaintiff, of the price of the boards.” And they cite Carter vs. Carter, 5 Bing., 408. Taylor vs. Zamira, 6 Taunt., 524. Stubbs vs. Parsons, 3 B. & A., 516. Andrews vs. Handcock, 1 B. & B., 37. Sapsford vs. Fletcher, 4 D. & E., 511, all cases between landlords and tenants.. After all, the learned Court of New Hampshire is the only one,which has sustained a case anywhere nearly like the present; and the fact that the possession could not be obtained, without satisfying the lien, gives, it a shade of difference. Wells vs. Porter, (7 Wend., 119), cited by th$ defendant’s counsel, does not sustain the principle. The payment by one partner, or- by one tenant in eom-.spon, of a sum necessary to protect the property, in which, ihey have n.joinf interest, is quite; different from paying ton an assumed or implied warranty. 'But authority must govern, and I cheerfully yield my own views to those of my brethren. Judgmentvreversed with costs.