Clute v. Potter , 37 Barb. 199 ( 1860 )

Hogeboom, J.

As a general proposition, the collection of a judgment will not be restrained which has been obtained without fraud or mistake, upon issue joined, and as the result of a vigorous litigation between parties.

To entitle a court of equity to interfere for such a purpose, it must clearly appear, ,1; That to allow the judgment to be executed would be contrary t.o equity and good conscience ; and 2. That the facts which render it thus inequitable were not available as a defense in the action in which the judgment was recovered. (2 Story’s Eq. Jur. § 688. Willard’s Eq. Jur. p. 356.)

I think the plaintiff fails in establishing either of these grounds for relief. If the note in question was not valid and available against Potter, then Potter should not have been allowed for it, by the referee. It was error to allow it, and the error was susceptible of being corrected in that suit; and we must assume that it would have been, in one of the three legal tribunals to which the case was submitted, if the point had been properly taken. The plaintiff, therefore, had an ample remedy in such case, in that suit. If the plaintiff is right in the proposition that neither he nor any other person ever had a cause of action upon the note, against the defendant, then, as I have just stated, its allowance by the referee, to Potter, was error, and should have been corrected in that suit. We are not advised of the grounds upon which the judgment of the referee was affirmed at the general term and in the court of appeals. It would strike me as a matter of first impression that the allowance of the note was erroneous, or at least premature, inasmuch as the holder of the note was not a party to the suit, and his equities could not therefore be properly adjudicated. But the general term, and the court of appeals, probably, and as we must assume, correctly, came to a different conclusion.

If the referee properly allowed the note to the defendant Potter as being in the hands of a bona fide holder, then as it was allowed to him for that purpose upon his motion, or with his assent, he was bound to pay it, and could not, I think, object to do so, even when it came again into the possession of Clute; because Potter was allowed for it upon the single and only ground that he was bound to pay it to the legal holder, whoever he might be. He had no longer any valid defense to it.

This being so, the plaintiff might and should have prosecuted the defendant upon it at law; and could have recovered. That was his proper forum, and he had abundant time to do so. If, instead of doing so, he has waited till the nóte became outlawed, he cannot now be entitled to the equitable relief sought, when his legal remedy was ample and perfect. The right of Potter to this judgment has been fully established, after a long litigation, and cannot be any longer questioned. If Clute has lost his' right to collect the note, by lapse of time, it is his misfortune, and not Potter’s fault. The statute of limitations is to him a perfectly legal and available defense.

If the statute of limitations has not yet run, against the note, or if by reason of the allowance of the note by the referee and the adoption of his report by Potter, a new cause of action from that time arose in favor of Clute against Potter, then that note must be prosecuted, or that cause of action enforced. That has not been done, in this action, nor any thing resembling it; nor was any proposal made, to assimilate the case, by amendment, to such a form of action.

I think, therefore, the case was properly disposed of in the court below, and that the judgment of the circuit court should be affirmed, with costs.

[Albany General Term, May 7, 1860.

Peckham, J. concurred in the result of the foregoing opinion.