Broome v. Beers

6 Conn. 198 | Conn. | 1826

Hosmer, Ch. J.

I will first put out of the case several objections, that require no discussion.

The title to the land was not in question under the plaintiff’s bill of foreclosure. On a bill of this description, the mortgagee’s title cannot be investigated; but he will be left to pursue legal means to establish it. 2 Pow. on Mort. 1044. Anon. 2 Ch. Ca. 244. The point has often been adjudged in this state; and the jurisdiction ofthe court is unquestionable.

The only parties in interest are before the court. By a former decree of foreclosure, the equity of redemption of Minor and Wright, and the other mortgagees, was taken away ; and the decree of the superior court, can affect the right of the defendant alone.

Whether a larger sum has been found than was claimed, or, on any principle, could be claimed, it is unnecessary to determine. The reversal of the decree, to which result the court has come, leaves this point open for future consideration.

The material enquiries, in this case, are the following; 1st, whether the facts specifically stated by the judge, on the face of the record, were competent evidence before the court; and 2ndly, whether, if they are so regarded, the decree is erroneous.

1. The objection to the competency of the evidence rests on this supposition, that as there was a general hearing of the bill, without plea or answer, a precise issue was formed on the truth of the plaintiff’s allegations ; and that no defence, other than a disproval of the facts averred in the bill, is legally admissible.

By the established practice of this state, coeval with the exercise of chancery jurisdiction, by the judicial courts, on a plea denying the truth of the plaintiff’s allegations in his bill, or without plea, the defendant has been permitted to prove any matter of defence. This practice is not more loose than the one at common law, under the plea of non assumpsit, by which, most matters in discharge of the action, are allowed to be given in evidence. Such are payment, accord and satisfaction, foreign attachment, arbitrament, former recovery for the same cause, a higher security given, and a release; and that these facts are competent proof under the general issue, is unquestionable. 1 Chitt. Plead. 472. The general assembly, at first, took exclusive cognizance of all questions in equity ; and it is universally known, that the proceedings before them were without plea or answer, or much form of any kind. When they delegated this branch of their jurisdiction to the judicial courts, the established mode of proceeding was pursued ; and it has continued to the present time. Pleas and answers in chancery, so far as regards the merits of a claim, have, onsome occasions, been put in. but have never been held necessary, unless on an application made to the defendant’s conscience, for want of better proof; and in such cases, written answers have been required, and until the late statute on the subject, were conclusive. Whether a better mode of practice ought not to be instituted, is an enquiry which need not be agitated. Rules of practice, the supreme court of errors is empowered to establish ; (Stat. 137.) but such rules, when established, ought to be prospective in their operation, or they may produce a very inequitable effect. On the ground of the uniform and established practice of our courts of chancery, the evidence offered by the defendant, and preserved on the record, ought to have been received.

2. Whether the facts found by the court, constitute a valid defence against the plaintiff’s bill, is the only remaining question. The solution of it must depend upon a just view of their import, and of the principles of equity, by which their effect is to be estimated.

It must be assumed, that the court placed on the record every fact, which, in this case, bore on the point of the defence. The object of the special finding, like that of a special verdict, or bill of exceptions, was, to put it in the power of this court, to review the decree in the court below ; and this alone could be effected, by an exhibition of all the material facts, and means of judging, which were displayed before the latter court,

On the same day, mortgage deeds were given by Hawley to Minor and to Wright; and from the face of them there is no possibility of determining, whether one was delivered before the other, or whether their execution was contemporaneous. The defendant attached the mortgaged premises, as being the property of Wright, and for more than 1000 dollars obtained judgment against him. Hence, it became an important enquiry, whether Wright had any unincumbered estate in the premises ; or whether, by priority of deed, Minor had acquired a lien upon the land, which must be extinguished, before the defendant, by the levy of his execution upon it, or by mortgage, could make it available to the payment or security of his debt. To obtain information on this subject, the defendant sent a special agent to the plaintiff, who had become invested with Minor's title, and who had knowledge of the defendant’s judgment, in order to make enquiry. From this it is certain, that when the conversation took place, between the plaintiff and the defendant’s agent, the former knew it was not casual, or without interest in the result. It is a fair and reasonable presumption, that the plaintiff entertained no doubt, that the enquiry made by a creditor of Wright’s, related to the means of securing his debt; and that it was serious and not accidental, he could not avoid believing, from its having been made by the defendant’s agent. Men sometimes make enquiries thoughtlessly, or from curiosity only; hut no person is at the trouble and expense of an investigation, by an attorney, on a subject in which he has no interest. The plaintiff, undoubtedly, knew, that the question proposed by the defendant’s agent, was one of serious import to him ; and he could have experienced no difficulty in referring it to the real motive. He might have folded his arms, and maintained an obstinate silence, if he had pleased; but in justice and common honesty, he was under an obligation to speak the truth, if he said any thing, by giving a fair representation of what he knew. To the enquiry made concerning the priority of Minor’s deed, the plaintiff replied obsolutely and explicitly, “ that the above deed was entitled to no priority before the deed of Wright ; that said deeds were delivered at the same time; and that said Minor had given a writing to that effect.” Induced by these strong as-severations, the defendant took a mortgage of the premises from Wright. No question was made concerning the above writing ; nor does it appear, that the defendant ever saw it, previous to the reception of his deed. It has occupied too much consideration in this case. It was referred to, by the plaintiff, in confirmation of his assertions ; but the main ground of the defendant’s confidence must have been, the unequivocal declaration, that the deeds were delivered at the same time. This affirmation transcended the writing; and likewise involved the truth of a fact dehors the deeds, which was ascertainable by oral testimony alone ; and that was, the time of their delivery. The whole of the plaintiff’s representation to the defendant’s agent is found to be untrue. The deeds were not delivered contemporaneously ; and the writing referred to as confirmatory evidence, was false and deceptive.

That the conduct of the plaintiff in endeavouring to appropriate to himself the property in question, after having induced the defendant to take a mortgage of the premises from Wright, is, in a moral point of view, incompatible with good conscience, it is impossible to question. In view of morality, every representation or action; deviating in the least from the most exact and scrupulous sincerity and truth, is contrary to good faith.

The insolvency of Minor furnishes no evidence, that the debt of the defendant would not, in someway, have been paid or secured. Buck v Cotton, 2 Conn. Rep. 128. And it is neither justification nor apology, that the plaintiff did not know the precise manner in which his misrepresentation would operate. Sufficient it is, that the enquiry made was material; and that the plaintiff had the means of knowing, that it might, and probably would, have an effect, on the mode of dealing with the judgment, recovered by the defendant against Wright. It is too much to demand, that the precise purpose of a material en-quiry shall be developed, perhaps to the entire frustration of it, or that equity will refuse to administer relief against the injurious consequences of palpable misrepresentation. The defendant, for aught the court can perceive, by reposing on the title of Wright, and intermitting further efforts to secure his debt, has lost it irreparably, if the supposed pledge is taken out of his hands.

It is the common exercise of chancery jurisdiction to give relief in cases of fraud ; and that is sometimes called a fraud in equity, which is not such strictly, but figuratively, there being no moral turpitude in the transaction ; because it is followed with consequences as pernicious, and equally deceives and damnifies the party, as if it were actually fraudulent. Imposition, oppression, undue advantage and neglect, are often comprehended under the general term, frauds, and are susceptible of relief, as such, in a court of equity, when essentially they have that character. And on this subject, redress in which is a favourite object in equity, it was said, by that eminent chancellor, Lord Hardwicke, that chancery will relieve against presumptive fraud ; so that equity carries the rule further than the rule of law; for there fraud must be proved, and not presumed only. Earl of Chesterfield & al. v. Janssen, 1 Atk. 352.

Even at law, there have been cases of relief, where there has been a material mistake, and no obliquity of intention. Such are unintentional misrepresentations, made by the assured to an underwriter, which are false in a material point. Macdowall v. Fraser, Doug. 260. And what is worthy of notice, they are classed under the head of fraud. Park on Ins. 204. 1 Marsh. on Ins. 338. A misrepresentation in a material point equally vitiates the contract of insurance, whether it proceed from fraud, mistake, or negligence. I refer to these principles, not as having a decisive bearing on the subject of present controversy, but as shewing the general spirit of law on such questions, and its inclination, where one of two innocent persons must suffer, by fraud or negligence, to cast the loss on him who gave occasion to it.

That there may be a fraud in the view of a court of equity, which is not so at law, has long since been declared. Trenchard & al. v. Wanley, 2 P. Wms. 166. And of this legal truth, the determinations in chancery give the most abundant confirmation.

The grossest cases of fraud are those where there is allegatio falsi wilfully, or suppressio veri with interested views ; and this vice in the efficient motives of a transaction, will generally hold to make it void, or lay the foundation of redress, in favour of the party imposed on, or misled by his ignorance of the thing concealed. Carter v. Boehm, 3 Burr. 1910. Jervois v. Duke, 1 Vern. 19. Broderick v. Broderick, 1 P. Wms. 239. Hence, if any instrument is obtained from persons ignorant of their rights, but whose rights are known to the party obtaining the instrument, equity will relieve. Broderick v. Broderick, 1 P. Wms. 239. Jervois v. Duke, 1 Vern. 19. Cann v. Cann, 1 P. Wms. 727.

In the spirit of the preceding determinations, it frequently has been decided, that where a person stands by, and by silence only, has contributed to an injury, he shall be compelled to remedy the mischief his fraudulent silence has occasioned, Hunsden v Cheney, 2 Vern. 150. Draper & al. v. Borlace & al. 2 Vern. 370. Ibbotson v. Rhodes, 2 Vern. 554. Pilling v. Armitage, 12 Ves. jun 85. Dann v. Spurrier, 7 Ves. jun. 231. Bill v. Kingston, 2 Atk. 82. Trenchard & al. v. Wanley, 2 P. Wms. 167. This is approaching a step further than in the former cases cited, in the maintenance of moral principle, and the redress of damage resulting from the non-performance of a moral duty.

In Evans v. Llewellyn, 2 Bro. Ch. Rep. 150., a conveyance was set aside, where there was no fraud or imposition, but as having been improvidently entered into. If, upon a treaty for a contract, a person makes a false representation, whether knowingly or not, by means of which he puts the party bargaining under a mistake upon the terms of the bargain, it is a fraud, and relievable in equity. 1 Bro. Ch. Rep. 546. Evans v. Bicknell, 6 Ves. jun. 174. 183. Burrowes v. Lock, 10 Ves. jun. 475. De Manneville v. Crompton, 1 Ves. & Bea. 355, 6. Here an advantage has innocently been obtained, to retain which would be against good conscience ; but when, by a like misrepresentation, a person has been subjected to irreparable damage, if the claim of the person who misrepresented is allowed in equity, why should there not be a refusal of such aliowance, and that equitable redress, of which the nature of the case admits ?

I now come to the consideration of the merits of the case before us; and on the general principles already stated, I experience no difficulty as to the equitable result.

It will be universally admitted, if the plaintiff had knowledge of his own title, at the time of his conversation with the defendant’s agent, that he committed an actual fraud. He must have known, on this supposition, that the deed of Minor was first delivered, and that it had unquestionable priority. There is nothing in the case to repel the inference of the plaintiff’s knowledge, if, on the principles of equity, it ought to be presumed ; and that it ought, I think, cannot admit of a reasonable question. It was said, by the learned and able Chancellor Kent, in Storrs v. Barker, 6 Johns. Ch. Rep. 169. : “ The presumption is, that every person is acquainted with his own rights, provided he has had reasonable opportunity to know them ; and nothing can be more liable to abuse, than to permit a person to reclaim his property, in opposition to all the equitable circumstances which have been stated, upon the mere pretence, that he was, at the time, ignorant of his title. Such an assertion is easily made, and difficult to contradict.’ This presumption, resting on the interest of the plaintiff, and easy means of information from Minor, of whom he purchased, is supported by stronger foundations than many others which have been admitted in equity. Newland on Cont. 504. & seq. Sugd. Vend. 492. & seq.

If, however, the plaintiff was unacquainted with his title, how can he avoid the imputation of gross neglect ? With equal propriety may it be said of him, as was said, by the Lord Keeper, of the defendant, in Hobbs v. Norton, 1 Vern. 137. “It was a negligent thing in him not to inform himself of his own title, that thereby he might have informed the purchaser of it, when he came to enquire of him.” Between the equitable effects, resulting from wilful misrepresentation, and misrepresentation through gross neglect, there is no difference.

The case of Hobbs v. Norton, before cited, decided in the year 1682, and never overruled to the present time, is an authority in point, and upon facts less favourable for relief in equity, than those which constitute the present case. The younger brother of Sir George Norton, having an annuity of 100 pounds charged on land by his father’s will, contracted with Mr, Hobbs for selling to him his annuity He applied to Sir George Norton, and gave him information, that he was about to buy the annuity of his younger brother, and enquired whether he had a good title. Sir George Norton replied, that he believed his brother had a good title to it, and that he had paid him the annuity for twenty years ; but likewise told him, that he had heard there was a settlement made of his father’s lands before the will, and that it was in the hands of Sir Timothy Baldwin ; that he had never seen it, and therefore could not tell him what the contents of it were ; but he encouraged him to proceed in his purchase. Afterwards, Sir George Norton got the settlement into his hands, and would avoid the annuity. The bill of Hobbs was to have the annuity decreed, or repayment of the purchase money. The Lord Keeper decreed the payment of the annuity, purely on the encouragement Sir George gave Hobbs to proceed in his purchase, and his neglect to make enquiry concerning his own title. The differences between this case and the one under consideration are altogether in favour of the latter. In Hobbs v. Norton, the declaration was of belief only ; here it was absolute, that the deeds were contemporaneously delivered. In the former, the settlement was referred to; the claim, by virtue of it, ignorance of its contents ; and the person was named, who had it in possession ; and if it had been inspected by Hobbs, he never would have purchased, In the case before us, the writing was mentioned, and no doubt or ignorance expressed concerning its contents, but they were declared to be confirmatory of the plaintiff’s assertions ; no person was denoted, who had it in possession ; and if it had been seen, it would, so far as it went, have established the plaintiff s affirmations; the presumption, that the plaintiff had knowledge of his own title, was not repelled, as it was in Hobbs v. Norton; and the neglect of obtaining knowledge, if it existed, was equally great.

Upon the strength of this, and other determinations, the case of Storrs v. Barker, before cited, was decided by Chancellor Kent, in which the equitable title of the plaintiff was admitted, and the defendant enjoined from pursuing his action of ejectment.

In this case, undoubtedly, there are some ingredients for the exercise of equity jurisdiction, that are not to be found in the one under discussion; but from the principle stated and enforced, that every person is presumed to be acquainted with his own rights, if he has had a reasonable opportunity to know them; and that it is deemed an act offraud for a party, conusant of his own title, to suffer another party ignorant of his right, to go on, under that ignorance, and purchase the property ; it is indisputably clear, that on this ground the case was in favour of the plaintiff. Storrs v. Barker, 6 Johns. Ch. Rep. 168. 169. And likewise from the citation of Hobbs v. Norton, with approbation, and other cases, to some of which I have already recurred, there can be no doubt, that the learned chancellor would have come to the same result as he did, had the turning point been exclusively, the observations made by the defendant concerning his tille.

On the whole, I cannot entertain a particle of doubt, that against the presumed knowledge in the plaintiff of his right; against his gross neglect, if he really was ignorant of it; against his encouragement of the defendant to consider the title of the property in question, as being vested in Wright, equally with himself; it would be contrary to the first principles of equity, often recognized and applied, to give success to the plaintiff’s bill of foreclosure.

Lanman, J. was of the same opinion. Peters, J.

The plaintiff in error has taken several exceptions to the decree in question.

1. The first is, that the suit was not brought in the proper county. The title of land is not in question ; and such suits have always been considered transitory. 2 Swift's Dig. 197. Pow. Mort. 1043. Anon. 2 Chan. Ca. 244. Owen v. Granger, cited arguendo 2 Day 477. Owen v. Mather, Superior Court, Hartford county, 1816. Stat. 34. tit. 6. c. 1 s. 6. (ed. 1808.)

2. Another is, that Minor and Wright were not made parties, Their equity of redemption was extinguished by the decree of 1819.

3. Another is, that too large a sum was found due to the plaintiff This does not appear of record ; and for aught we know, the notes were executed in New-York, or some other country, where a higher rate of interest is allowed than here ; as the decree might have been founded on such evidence; which would have been admissible. It ought now to be presumed, that such facts were proved, at the trial, as would warrant the finding, unless the contrary is apparent. Pettibone v. Pettibone, 5 Day 324.

4. But the exception principally relied on, is, that the facts found by the court, precluded the plaintiff from claiming the priority for Minor’s deed.

The plaintiff in his bill avers, that on the 12th of February, 1812, Hawley mortgaged the land in question to Minor, and afterwards, on the same day, mortgaged the same land to Wright; and the court found all the facts stated in the bill, true. This made an end of the case, and entitled the plaintiff to a final decree. I lay out of the case the subsequent finding of the court; because, first, the facts found are not within the issue; secondly, they neither prove nor disprove, the facts alleged; and thirdly, the facts so found are insufficient to bar the plaintiff’s claim to priority from the facts previously found.

It is a well settled rule in chancery, as well as at law, that whatever is intended to be proved, must be put in issue; otherwise it cannot be given in evidence ; for the court pronounce the decree secundum allegata et probata; and the reason is, that the adverse party may be apprized against what he has to defend. Coop. Eq. Pl. 7. “ The same rule,” says the late Chief Justice, ‘‘ has been adopted as at law, respecting the evidence admissible under the general issue ; that is, that proof of no facts should be admitted but such as conduce to prove, or disprove, the facts stated in the bill; and that all special matters, which do not deny the truth of the bill, but admit and avoid it, should be expressly stated in the answer, so as to give the plaintiff notice of the nature of the defence. It has accordingly been decided, that proof cannot be admitted with regard to facts not alleged in the bill or pleadings ” 2 Swift's Dig. 248. This rule has been adopted, by the court for the correction of errors, in New-York, and by this Court. In James v. McKer-non, 6 Johns. Rep. 543. 559 Spencer, J. thus expresses the unanimous opinion of the court: “ It is an invariable and universal rule of the court of chancery to found its decrees on some matter put in issue between the parties, by the bill and answer.” In Gaylord & al. v. Couch, 5 Day 223. 230. it was said, by Smith, J., in delivering the opinion of this Court, that “ the facts stated in the petition, and the rights and duties resulting from these facts, are, and must be, the only basis of the decree; and any finding of the committee relating to notes of hand not stated in the petition, must stand for nothing.” The same rule was recognized in Baldwin v. Norton, 2 Conn. Rep. 161.

The fact found is insufficient to postpone the plaintiff; for the written declaration of Minor stands for nothing. Though admissible under a proper issue, it was properly explained away, by other testimony. Beers v. Hawley, 2 Conn. Rep. 467.

The only fact remaining is the declaration of the plaintiff, that the deeds to Miner and Wright were simultaneous, and that the deed to Minor was entitled to no priority. Had the defendant made known the object of his enquiry, he would have been entitled to a candid answer. But, for aught the plaintiff knew, the enquiry was impertinent. And it is a rule in equity, that “ if a subsequent mortgagee apply to a prior incumbrancer, to know if he has any incumbrance on the estate, upon which he intends to take a security, and he denies it, he will thereby lose his priority. But, in this case, it will be necessary for such subsequent mortgagee, or his agent, to inform the prior incum-brancer, that he is about to lend the mortgagor money, or otherwise he will not, on denial, lose his priority ; for he is not bound to answer, unless he knows of such intentions, as the question may be put merely to satisfy an impertinent curiosity.” 2 Swift’s Syst. 433. 2 Swift’s Dig. 185. Pow. Mort. 471, 2. Ibbotson v. Rhodes, 2 Vern. 554. Peter v. Russell, 2 Pern. 726.

But admitting that Beers was bound to answer truly, and that his declaration was properly received in evidence, Broome has no reason to complain; for he has sustained no injury. He had a lien, by attachment, on all the property of Wright; and he secured, by mortgage, a more beneficial interest, at less expense, than he could have obtained, by the levy of an execution. His loss is, therefore, damnum absque injuria ; which is not a ground of relief in law or equity ; for the gist of his complaint is the injury done to him. 1 Fonb. Eq. 162. Pasley v. Freeman, 3 Term Rep. 51.

I am, therefore, of opinion, that there is no error in the decree complained of.

Brainard, J. was absent, and Daggett, J. gave no opinion, having been of counsel in the cause.

Decree reversed,