Also known as: judgment debts · judgement debt · judgement debts
Written by attorneys — see sources below.
A monetary obligation created by a court's final determination that one party owes a sum to another. The obligation arises once the judgment is entered and remains enforceable until satisfied or extinguished by operation of law.
James Johnson obtained a $75,000 judgment against his former partner Julia Jensen after a business dispute. Johnson secured a charging order against Jensen's interest in Jackson Mutual, but the partnership made only sporadic distributions totaling less than $4,000 over two years. Because those payments would not satisfy the judgment within a reasonable time, the court foreclosed the lien and ordered the sale of the transferable interest to a third-party buyer.
Jacob Jennings won a $50,000 judgment against Jillian James in a contract action. James later tendered $35,000 in full settlement, claiming the payment extinguished the obligation. Jennings refused the tender and sought to enforce the remaining balance plus interest, treating the original judgment as the controlling debt that required complete satisfaction.
In 1876 Julia Beer obtained a judgment in the High Court of Justice against John Weston Foakes for the sum of £2090 19s. The judgment carried interest at 4 per cent per annum under the statute 1 & 2 Vict. c. 110 s. 17, and by the time of the agreement £113 16s. 2d. in interest had already accrued. On 21 December 1876 the parties executed a memorandum of agreement prepared by Foakes’s solicitor. The recitals stated that Foakes had requested time to pay the judgment and that Beer had agreed to give time on the conditions that half-yearly instalments of £150 be paid until the principal sum was discharged. The operative clause provided that Beer would not take any proceedings whatever on the judgment if Foakes paid £500 down and thereafter £150 on each 1 July and 1 January until the whole sum of £2090 19s. had been fully paid and satisfied. The Divisional Court and the Court of Appeal construed the agreement as preserving Beer’s right to interest and held that she remained entitled to enforce it, prompting Foakes to appeal to the House of Lords.
View caseThe creditor must demonstrate that distributions under the charging order will not pay the judgment debt within a reasonable time. Once that showing is made, the court may order foreclosure and sale of the interest, with the buyer receiving only economic rights and no partnership status.
Supporting sources
No. A judgment entered solely against the partnership binds only partnership assets. A creditor must obtain a separate judgment against a partner or satisfy statutory preconditions such as an unsatisfied execution on partnership property before reaching that partner's personal assets.
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Generally no. A creditor holding only a commercial judgment cannot force distributions from a discretionary trust, even when the trustee has abused discretion, unless the judgment is for support or maintenance of the beneficiary's child, spouse, or former spouse.
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…Appeal. It appears to me that the respondent did not intend to pass, and did not pass, from her legal claim for interest on the judgment debt due to her by the appellant. She undertakes not to take proceedings on the judgment provided the stipulated termly instalments are regularly paid, "until the whole of the said sum of a32090…