Thompson v. First State Bank

Atkinson, J.

1. The words sans recours (without recourse), so far as we can ascertain, have no exact legal significance, except when they are employed by an indorser to limit his liability upon a negotiable instrument which has been, by the act of 'indorsement, by him assigned to a third person. An indQrsement followed by this phrase relieves the indorser of liability for the payment of such a paper in the event it is dishonored by the maker or acceptor; but in its ordinary legal significance it can not be applied to the assignor of a judgment, for the reason that he assumes no conditional responsibility for the payment of the judgment. It is true that in the assignment of a judgment the assignor impliedly warrants that the judgment is unsatisfied, that he has a legal title, and that it is a valid and subsisting obligation for the sum for which it purports to be, but there is no implied warranty of the solvency of the judgment debtor; and in the event of the failure of the assignee to realize upon the judgment, the liability of the assignor, if any, to the assignee arises not from the act of assignment, unless there be express words in the transfer to charge him, but from the breach of his warranty, and this statement serves to illustrate the proposition that the assignee has no recourse by *699virtue of the judgment upon the assignor, and the use óf the words “without recourse” employed in the assignment of a. judgment could only have-the effect to negative the liability of the assignor to the assignee for damages resulting from the-breach of this implied warranty. In speaking of the title acquired by an assignee under an assignment of a judgment, Mr. Black (2 Black on Judgments, § 948) says, “The cases generally agree that the assignment carries with it the debt or claim on which the judgment was based, and the right to stand in the creditor’s place as regards the means of its collection and enforcement, together with any incidental rights or advantages: existing at the time.” If this be true, and such be the general import of an ordinary assignment of a judgment, the words “without recourse” could not have the effect to destroy any of the incidental rights or advantages existing at the time. It is. not one of the incidents of such an assignment that the assignee should have recourse upon the judgment creditor, and hence the use of such words could not have the effect to divest, the lien of a judgment upon property subject to sale in satisfaction of it. When we come, therefore, to ascertain the meaning of the words “without recourse,” as employed by the parties in the assignment of this judgment, we conclude that the only legal effect produced by the use of them is to relieve the assignor from liability to the assignee on account of the breach of either of the several implied warranties to which we have heretofore adverted.

2. If this be the only significance which attaches to the use of the words “without recourse,” and the assignee of the judgment takes it with all the incidents and advantages resulting from it, it follows, as of course, that where a judgment recovered by the payee upon one of a series of notes given for the purchase-money of land, which is held by the maker of such notes under bond for titles, is assigned, the assignment, even though stated to he “without recourse,” does not divest the-judgment of the lien as for the purchase-money debt. On the contrary, the assignment passes to the assignee this special lien as one of its incidents, which he may set up against the assignor upon the distribution of a fund arising from the sale of *700the land under a judgment afterwards obtained by the assignor upon those notes of the series to which he had retained the title. It is now well settled in this State, that had the notes which were the foundation of the judgment been assigned without recourse before the judgment, the assignee would have taken them without either a lien upon the land or liability of the assignor to him. An assignment of the notes without recourse” would have remitted the assignee to a suit against the maker alone. Assignment to the third person would have destroyed their character as purchase-money notes and left them unsecured. We conclude, therefore, that the court, under the facts of the present case, erred in declining to permit the assignee of this judgment to be paid out of the fund arising from the sale of the land levied upon, and which it held for the purpose of distribution.

Judgment reversed.

All the Justices conewring.