John E. Leonard's Appeal , 94 Pa. 168 ( 1880 )

Mr. Justice Sterrett

delivered the opinion of the court,

The learned auditor, after careful consideration of the testimony, found that the transaction in April 1871, between the appellant and Rees Davis, as attorney for the assignee, was in reality a payment of the judgment. While this finding of fact was not reversed by the court, it was considered somewhat doubtful and open to controversy whether the transaction was understood by the parties to be a payment or a purchase. We have no means of satisfactorily solving the doubt except by what appears upon the face of the report itself. The testimony on which the auditor based his conclusions is not before us. It is a safe rule, and one that should be adhered to, that the facts found by an auditor should be accepted as true until the contrary is clea2’ly shown; and we are unable to say that this has been done in the present case. If the transaction was in fact a payment, as the auditor found, .the appellant has no reason to com plain. But, assuming the auditor was mistaken, and instead of being a payment, it was, as appellant contends, a purchase of the judgment, how would the case stand? If the appellant received the full amount of his judgment in cash and a note of $4.00, as the auditor finds, and surrendered the original judgment-note with an assignment of the judgment in blank, he of course ceased to have any interest in the claim. It belonged exclusively to his assignee, who was then in a position to accept payment from or make terms with the obligor or any one on whom the duty of discharging the obligation devolved. The mattet- stood in this condition for over two months, when the appellant negotiated for a .re-assignment of the note and judgment to himself. In taking the re-assignment he claimed that he had procured a certificate of no defence from the appellee, Lewis Davis, but the genuineness of that paper was disputed, and the auditor found that it -was not established. In approving this finding, the court says: “We agree with the auditor tliat an unbiassed view of all the testimony fails to satisfy the mind that Lewis Davis signed the paper intentionally or otherwise.” The certificate of no defence being thus properly out of the case, there was not a particle of testimony to show that any effort was made by appellant, or any one on his behalf, to ascertain from either the obligor or the trustee of his assigned estate whether there was any defence to the payment of the judgment. It cannot be doubted that it was his duty to make such inquiry: Eldred v. Hazlett, 9 Casey 307; Ashton’s Appeal, 23 P. F. Smith 153. As a general rule, inquiry of the obligor is sufficient; but where, as in this case, he has assigned all his property for the benefit of his creditors, and the assignee, by accepting the trust, has undertaken to pay them, as far at least as the assets in his hands will reach, inquiry should be made of him also. The reason of this is so obvious that a bare statement of the proposition is sufficient. He has not only the right, but it is his duty, to discharge the obligations of his assignor, and, as a general rule, to make any defence that might be interposed -by the latter. The appellant was fully aware that the appellee was the person to whom he had to look for the payment of his judgment before he assigned it; and the fact that, in taking a re-assignment of it two months thereafter, he claimed to have procured from- him a certificate of no defence, which he sought to use for his own protection, shows conclusively that he understood both the duty and importance of making inquiry, and arming himself with evidence that would estop the trustee from setting up any defence to the payment of the judgment. Having failed to prove the genuineness of the paper, he was left without any evidence of inquiry or proof of facts that would estop the trustee from interposing any defence he might have. Where inquiry becomes a duty, the party who neglects to perform it should be visited with at least constructive notice of the facts that probably would have been brought to light if it had been duly made. Applying this rule to the appellant, what would have been the result if before taking a re-assignment of the judgment he had gone to the trustee, Lewis Davis, and inquired of him whether he had any set-off or dtefence to its payment ?• In view of the facts found by the auditor it is reasonable to conclude he would have been informed that, in the early part of April preceding he had furnished money to his son, Rees Davis, to take up the claim, and that the latter had done so ; that he had recently given the note to Rees-for the purpose of presenting the claim before the auditor, and obtaining a credit or dividend to which, as trustee, he was entitled, and that Rees had no authority whatever to otherwise dispose of the claim thus intrusted to him.' This would have terminated the negotiation with Rees Davis, and averted the unpleasant controversy that has ensued. As between Rees Davis and his father, it is very clear that the former never had any right to the judgment or its proceeds. He was furnished with money for the express purpose of taking up the claim, not for his own benefit but for his father, and it was of little consequence whether it was done in the form of a purchase or by actual payment. If the proper inquiry had been made by appellant he undoubtedly would have obtained information on which he could have acted with safety to himself and others. Having neglected to do so he is responsible for the consequences. But it is strenuously contended that, having b.ut a short time before sold and transferred the judgment to Rees Davis, and finding the papers in his possession, in the same condition they were when delivered, there was no necessity for further .inquiry. This position is clearly untenable. There was nothing in the relations between Rees Davis and his father, or anything else in the case to relieve the appellant from the duty of making the usual inquiry; and the fact already adverted to, that he claimed to have procured a certificate of no defence shows that he not only recognised the duty, but fully appreciated its importance.

We are satisfied that the conclusion reached by the court was correct, and the appeal should he dismissed.

Decree affirmed, and appeal dismissed at the cost of the appellant.