U.S. Supreme Court Welch v. Mandeville, 14 U.S. 1 Wheat. 233 233 (1816)
Welch v. Mandeville
14 U.S. (1 Wheat.) 233
ERROR TO THE CIRCUIT COURT FOR THE
DISTRICT OF COLUMBIA FOR ALEXANDRIA COUNTY
Where a chose in action is assigned by the owner, he cannot interfere to defeat the rights of the assignee in the prosecution of a suit brought to enforce those rights.
This was an action of covenant brought in the name of Welch (for the use of Prior) against Mandeville and Jamieson. The suit abated as to Jamieson by a return of no inhabitant. The defendant, Mandeville, filed two pleas. The second plea, upon which the question in this Court arises, states that on 5 July, 1806, James Welch impleaded Mandeville and Jamieson in the Circuit Court of the District of Columbia for the County of Alexandria in an action of covenant, in which suit such proceedings were had that afterwards, to-wit, at a session of the circuit court on 31 December, 1807, "the said James Welch came into court and acknowledged that he would not further prosecute his said suit, and from thence altogether withdraw himself." The plea then avers that the said James Welch, in the plea mentioned, is the same person in whose name the present suit is brought, and that the said Mandeville and Jamieson in the former suit are the same persons who are defendants
in this suit, and that the cause of action is the same in both suits. To this plea the plaintiff filed a special replication protesting that the said James Welch did not some into court and acknowledge that he would not further prosecute the said suit and from thence altogether withdraw himself, and avers that James Welch, being indebted to Prior, in more than $8,707.09, and Mandeville and Jamieson being indebted by virtue of the covenant in the declaration mentioned in $8,707.09 to Welch, he, Welch, on 7 September, 1799, by an equitable assignment, assigned to Prior, for a full and valuable consideration, the said #8,707.09 in discharge of the said debt, of which assignment the replication avers Mandeville and Jamieson had notice. The replication further avers that the suit in the plea mentioned was brought in the name of Welch, as the nominal plaintiff for the use of Prior, and that the defendant Mandeville knew that the said suit was brought, and was depending for the use and benefit of the said Prior, and that the said suit in the plea mentioned, without the authority, consent, or knowledge of the said Prior or of the attorney prosecuting the said suit, and without any previous application to the court, was "dismissed, agreed." The replication further avers that the said James Welch was not authorized by the said Prior to agree or dismiss the said suit in the plea mentioned, and that the said Joseph Mandeville, with whom the supposed agreement for the dismissal of the said suit was made, knew at the time of making the said supposed agreement
that the said James Welch had no authority from Prior to agree or dismiss said suit. The replication further avers that the said agreement and dismissal of the said suit were made and procured by the said Joseph Mandeville, with the intent to injure and defraud the said Prior and deprive him of the benefit of the said suit in the plea mentioned. The replication also avers that the said Prior did not know that the said suit was dismissed until after the adjournment of the court at which it was dismissed, and further that the supposed entry upon the record of the court in said suit that the plaintiff voluntarily came into court and acknowledged that he would not further prosecute his said suit, and from thence altogether withdraw himself, and the judgment thereupon was made and entered by covin, collusion, and fraud, and that the said judgment was and is fraudulent. To this replication the defendant filed a general demurrer, and the replication was overruled. It appeared by the record of the suit referred to in the plea that the entry is made in these words: "This suit is dismissed, agreed," and that this entry was made by the clerk without the order of the court, and that there is no judgment of dismissal rendered by the court, but only a judgment refusing to reinstate the cause.
STORY, J., delivered the opinion of the Court.
The question upon these pleadings comes to this whether a nominal plaintiff, suing for the benefit of
his assignee, can by a dismissal of the suit under a collusive agreement with the defendant create a valid bar against any subsequent suit for the same cause of action.
Courts of law, following in this respect the rules of equity, now take notice of assignments of choses in action, and exert themselves to afford them every support and protection not inconsistent with the established principles and modes of proceeding which govern tribunals acting according to the course of the common law. They will not, therefore, give effect to a release procured by the defendant under a covenous combination with the assignor in fraud of his assignee, nor permit the assignor injuriously to interfere with the conduct of any suit commenced by his assignee to enforce the rights which passed under the assignment. The dismissal of the former suit stated in the pleadings in the present case was certainly not a retraxit, and if it had been, it would not have availed the parties, since it was procured by fraud. Admitting a dismissal of a suit by agreement to be a good bar to a subsequent suit (on which we give no opinion), it can be so only when it is bona fide, and not for the purpose of defeating the rights of third persons. It would be strange indeed if parties could be allowed, under the protection of its forms, to defeat the whole objects and purposes of the law itself.
It is the unanimous opinion of the Court that the judgment of the circuit court overruling the replication to the second plea of the defendant is erroneous,
and the same is reversed and the cause remanded for further proceedings.