Opinion
No. 35428.
October 25, 1943.
ATTORNEY AND CLIENT.
Where attorney agreed to prosecute claim for unliquidated damages for a contingent fee of one-third of recovery, and a judgment was recovered, attorney's interest in judgment took precedence over judgment debtor's claim of set-off, notwithstanding that a written assignment to attorney had not been filed in the case in which judgment was rendered in compliance with statute (Code 1930, sec. 507).
APPEAL from chancery court of Forrest county, HON. J.K. TRAVIS, Special Chancellor.
F.M. Morris, of Hattiesburg, for appellant.
The main question for determination by this court in this cause is whether the interest of C.C. Smith, intervener, appellee herein, is superior to the right of the set-off of said judgment by the appellant.
Appellee herein relied successfully in the court below upon the case of Harris v. Hazlehurst Oil-Mill Manufacturing Co., 78 Miss. 603, 30 So. 273. This case is not applicable for two reasons. First, the above case was an equitable assignment to an attorney for a fee before a suit was begun and was governed by equitable principles which were uncontrolled by statutory laws. Second, the above case is not applicable to the facts of this case and to the law of this case for the reason that the decided case was based upon an equitable assignment before the filing of suit and not upon any right growing out of the judgment and was not, therefore, based upon a judgment but upon an equitable assignment of a cause of action before suit was begun and before judgment which equitable assignment was limited only by the amount of the judgment whereas in the instant case if the intervener, C.C. Smith, appellee herein, had any equitable assignment orally from his client, it was after the suit was begun and was governed exclusively by Section 507 of the Mississippi Code of 1930, which requires a written notice to be filed with the clerk and filed in the papers of said cause, which was not done. Therefore, the intervener, appellee herein, does not rely upon his equitable assignment as shown by his petition of intervention together with exhibits thereto in which there is a copy of the assignment in writing of the judgment showing that his claim of intervention is based upon an assignment of a one-third interest in the judgment of the circuit court of Perry County, Mississippi, and assigns one-third of whatever amount might be recovered by reason of said judgment.
This is not a case where the equitable assignment of an attorney merges into the judgment, it is by operation of law a case where the intervener, appellee herein, elected not to rely upon his equitable assignment by his failure to comply with the statutory law and by his positive act of acquiring fifteen days after the rendition of the judgment an assignment of a one-third interest therein to himself as attorney's fee.
Many courts have held that the acceptance of security of a written assignment of a judgment waives and releases any equitable lien theretofore acquired.
Fulton v. Harrington, 12 Del. 182, 30 A. 856; Hinesley v. Stewart, 139 Ga. 7, 76 S.E. 385; Stearns v. Wollenberg, 51 Or. 88, 92 P. 1079, 14 L.R.A. (N.S.) 1095; Renick v. Ludington, 16 W. Va. 378; In re Norman, 1 Ch. 199; In re Taylor, 1 Ch. 590; Balch v. Symes, Turn. R. 87, 12 Eng. Ch. 87, 37 Reprint 1028; Cowell v. Simpson, 16 Ves. Jr. 275, 33 Reprint 989; Whitehead v. Jessup, 7 Colo. App. 460, 43 P. 1042; Dodd v. Brott, 1 Minn. 270, 66 Am. Dec. 541; McDonogh v. Sherman, 138 App. Div. 291, 122 N.Y.S. 1033; Bishop v. Garcia, 14 Abb. Pr. NS. (N.Y.) 69; Cantrell v. Ford (Tenn.), 46 S.W. 581; 6 C.J. 777, par. 382.
Our own court has said that a court of equity will be guided by the intent of the parties in changing the form of an obligation and if the circumstances attending the change indicate that the parties intended to rely only on the new security, and to extinguish the lien, effect will be given to that purpose.
Lewis v. Starke, 10 Smedes M. (18 Miss.) 120; Howell v. Bush, 54 Miss. 437; Cansler v. Sallis, 54 Miss. 446.
With reference to the intentions of the parties as to the effect which the written assignment should have over any equitable lien, the court below found that whatever right the intervener possessed by reason of his alleged oral contract for a contingent fee was merged into the judgment not by the operation of law but by the act of the intervener in accepting a written assignment for one-third interest of the judgment on April 5, 1941, and this finding is conclusive by the court fixing the interest to accrue to the intervener from the date of the written assignment rather than from the date of the rendition of the judgment so that from all of the above it is positively illogical and reprehensive to reason to conclude that the intervener, appellee herein, possessed any right in said judgment by reason of his equitable lien or at any other time until the execution of the assignment for two reasons, to repeat briefly: First, he did not comply with the statutory law to give effect to his equitable lien if any. The intervener, appellee here, did not assert or rely upon an equitable lien in the court below. Second, if any such lien existed it was waived and relinquished by his acceptance of the written assignment and the filing of the petition of intervention is predicated on this assignment of the judgment to the exclusion of any other right therein.
Therefore, we submit that the intervener's right in this cause must rest wholly upon whatever right he may have acquired by his written assignment from Tell Harrison on April 5, 1941, fifteen days after the rendition of the judgment.
Appellant here was owed as of the date of the replevying of the truck in question in November, 1940, and prior to any equitable assignment to the intervener, appellee here, and certainly prior to any judgment rendered by the circuit court of Perry County, Mississippi, on March 20, 1941, and, of course, prior to the assignment of the judgment and since the intervener must rely upon his assignment of the judgment executed in writing fifteen days after the rendition of said judgment, he took such assignment subject to any and all infirmities existing in said judgment from its inception.
J.W. McNees Motor Co. v. Brumfield, 157 Miss. 132, 126 So. 898; Canton Exchange Bank v. Yazoo County et al., 144 Miss. 579, 109 So. 1; Duke v. Clark, 58 Miss. 465; Cox v. Palmer, 60 Miss. 793; Railey v. Bacon et al., 26 Miss. 455.
An assignee's right against the obligor is subject to all set-offs and counterclaims which would have been available against the assignee if he were the original obligee.
Code of 1930, Sec. 2853; Restatement of the Law, "Contracts," par. 167.
Any right of set-off acquired by the obligor before notice of assignment can be availed of by him against the assignee.
Riggs v. Dyche, 2 Smedes M. (10 Miss.), 606; Hunt v. Shackleford, 55 Miss. 94; Peyton v. Planters' Compress Co., 63 Miss. 410; Illinois Cent. R. Co. v. First National Bank, 110 Miss. 676, 70 So. 831; 5 C.J. 962, par. 150; 5 C.J. 978, par. 172.
A judgment was not a negotiable instrument and could not, therefore, be transferred by delivery.
Parker v. Bacon, 26 Miss. 425.
Since our own court has so definitely and for such continued length of time alined itself with the great majority of other courts in holding that the assignee of a judgment acquired no greater right as against the judgment debtor than the assignor had and since by statutory law the assignee of a judgment stands as the assignor subject to the defense of set-offs, then it must follow that the intervener having acquired an assignment of a judgment which is subject to set-offs, as held by the chancery court, acquired no right in said judgment except the right to stand in the place of the judgment creditor, Tell Harrison, and that, therefore, as to adjudication of the judgment in favor of the intervener, C.C. Smith, the decree of the court below must be reversed and since all necessary matters were heretofore adjudicated by the court below a final judgment rendered here by the appellant.
E.C. Fishel and Geo. W. Currie, both of Hattiesburg, and C.C. Smith, of Richton, for appellee.
We respectively submit that this case must be affirmed for three reasons.
1. That no set-off was pleaded by complainant in his bill of complaint, whereby he was or could have been permitted to set-off any claim against Tell Harrison; therefore, whatever Tell Harrison might have done with the judgment, of which he was the owner, he was at liberty to do.
2. That at the time this injunction suit was filed, C.C. Smith, the intervener, was the owner of one-third of the judgment, rendered in the circuit court of Perry County, Mississippi. First, by reason of the equitable assignment made him before the rendition of the judgment; and second, because on the 5th day of April, 1941, he had complete legal assignment of this judgment, C.C. Smith became the owner of one-third interest of said judgment wholly and completely and the question of whether Tell Harrison owed Stribling Motor Company an indebtedness was not in any way involved and could not affect in any way the validity of this assignment and the Stribling Motor Company was not a subsequent creditor or purchaser.
3. The judgment was assignable and C.C. Smith could maintain a suit therein in his own name, under Section 505, Mississippi Code of 1930.
Section 507 of the Code is not applicable in the matter of the assignment of judgments, and the filing of the assignment with the papers in said cause is not necessary.
Pigford Grocery Co. v. Wilder, 116 Miss. 233, 76 So. 745.
In the case of Harris v. Hazlehurst Oil-Mill Mfg. Co., 78 Miss. 603, 30 So. 273, this court decided in behalf of appellee therein every point presented for adjudication.
Bank of Monticello v. L.D. Powell Co., 159 Miss. 183, 130 So. 292; Humphreys County v. Cashin, 136 Miss. 476, 101 So. 571; Abernethy v. Savage, 163 Miss. 789, 141 So. 329; Holly v. Cook, 70 Miss. 590, 13 So. 228; 34 C.J. 637, Sec. 977; 34 C.J. 639, Sec. 982; 34 C.J. 641, Sec. 987; 35 C.J. 645, Sec. 992; 15 R.C.L. 226, 227.
The fact of the lack of notice could not prejudice the appellant, because he made no expenditures and no equities arose in his favor, subsequent to the rendition of the judgment in the circuit court of Perry County.
Bank of Monticello v. L.D. Powell Co., supra.
Argued orally by F.M. Morris, for appellant.
Harrison had a judgment against the Stribling Motor Company in the sum of $1,380. The foundation of the judgment was unliquidated damages. C.C. Smith was Harrison's attorney in the prosecution of that cause and the recovery of the judgment. Harrison agreed orally before suit to pay Smith for his services a contingent fee of one-third of the recovery. After judgment was recovered Harrison transferred in writing and filed in the cause an assignment to Smith of that interest in the judgment. Harrison was insolvent. At the time that action was begun and when the judgment was rendered Harrison was indebted to the Motor Company in a larger sum than his judgment against that company. Harrison was proceeding to enforce his judgment against the Motor Company by means of an execution. The Motor Company filed the bill in this cause setting out that the execution should be enjoined because Harrison was indebted to it in a sum larger than the judgment and, therefore, one should be set off against the other to that extent and Harrison enjoined from enforcing his judgment in full. Smith, Harrison's attorney, intervened by leave of court in order to claim and enforce his one-third interest in the Harrison judgment. The chancellor held, and we think rightly, that Smith's interest in the judgment was superior to and took precedence over Stribling's claim of right of set-off and enjoined the execution of Harrison's judgment less the one-third interest belonging to Smith.
Harris v. Hazlehurst Oil Mill Fertilizer, 78 Miss. 603, 30 So. 273, is decisive of this question in favor of the holding of the chancellor. It is directly in point. In that case the Oil Mill was complainant and Harris the defendant. The Oil Mill had a judgment against Harris and the latter had a judgment against the Old Mill, which was the smaller of the two. The object of the bill was to have Harris' judgment satisfied by a credit on the Oil Mill judgment. Harris was insolvent. Harris judgment was recovered through the services of his attorneys to whom he agreed to pay for their services forty percent of the amount of the recovery. His attorneys knew at the time the suit was brought that the Oil Mill was claiming a larger amount against Harris on open account, which it afterwards sued for and reduced to judgment. The court held that the attorneys in an action for unliquidated damages brought by them on an agreement with the plaintiff that their fees should be part of the recovery "have an equitable assignment of the recovery to the extent of such share" and that the Oil Mill had no right to set off its judgment against Harris to the extent of the forty percent interest of his lawyers.
The Motor Company contends that decision is not in point because at that time Section 507 of the Code of 1930 was not in existence. That statute provides, among other things, that "any chose in action or any interest therein, after suit has been filed thereon, may be sold or assigned the same as other property, whether such cause of action or any interest therein was heretofore assignable under the laws of this state or not. Such sale shall be evidence by writing signed and acknowledged by the party making the same, which shall be filed with the papers of such suit." There is no merit in this contention; that statute was in force in 1917 (Section 718, Code of 1906) when the case of Pigford Grocery Co. v. Wilder, 116 Miss. 233, 76 So. 745, was decided. The court held, quoting the second paragraph of the syllabi: "When judgment has been rendered all rights of litigants are merged in the judgment, and such judgment is assignable without any requirement to file a written assignment in the papers in the case in which the judgment was rendered."
The Motor Company was not led into taking any action to its prejudice on account of the failure to comply with this statute. When Harrison employed Smith the rights of both parties had already been fixed by law, although such rights had not been fixed by judgment of the court. The Motor Company had no lien on Harrison's judgment against it, giving it the right to set off its judgment against Harrison's in a sufficient amount to discharge Harrison's judgment in full.
Affirmed.