38 Mass. 1 | Mass. | 1838
Lead Opinion
The opinion of the Court (Shaw C. J. and Dewey J. dissenting) , was delivered by
We have bestowed unusual labor and care upon this case, and with our best efforts have found some difficulty in understanding the very complicated state of the facts, and stif more, in applying to them the principles of law by which the rights of the parties should be determined. We have the more carefully investigated the subject, because there has been from the beginning a difference of opinion among the members of the Court. And I regret to add, that with our most earnest endeavours we have not been able to unite in the result which I am now about to announce.
The action is assumpsit for money had and received by the defendant to the plaintiff’s use, and for money paid by the plaintiff for the defendant’s benefit. This is often called an equitable action and is less restricted and fettered by technica. rules and formalities than any other form of action. It aims at the abstract justice of the case, and looks solely to the inquiry, whether the defendant holds money, which ex cequo et bono belongs to the plaintiff. It was encouraged and, to a great extent, brought into use by that great and just judge, Lord Mansfield, and from his day to the present, has been constantly resorted to in all cases coming within its broad principles. It approaches hearer to a bill in equity than any other common law action ; and indeed has many of the advantages, without the artificial formalities and dilatory proceedings, of a chancery suit. Moses v. Macferlan, 2 Burr. 1012 ; Straton v. Rastall, 2 T. R. 370 ; Roland v. Hall, 1 Hodges, 111 ; S. C. 1 Scott, 539 ; Parry v. Roberts, 3 Adolph. & Ellis, 118 ; S. C. 5 Nev. & Manning, 663 ; 1 Leigh’s N. P. 44.
The plaintiff’s claim grows out of a transaction in which all the parties concerned were involved in a series of gross mistakes and errors, which brought upon them great pecuniary suffering. The object of the present suit is to determine, as far as practicable, upon whom the losses shall fall, and how .'hey shall be apportioned. The mistakes were accidental, and
We have therefore to determine who of the innocent sufferers shall sustain a particular loss growing out of the misfortunes of a joint speculation.
It will be impossible to discuss this question without adverting to and examining the claims of a person who is not a party to the suit, who has not been heard and who therefore cannot be bound by our judgment. Lee Claflin has upon the docket an action founded upon the same transaction, and which probably will depend upon the same facts and principles as the case at bar. We cannot therefore proceed in the investigation without canvassing the claims, liabilities and rights of all the persons engaged in the disastrous speculation.
Early in the year 1833, the right in equity of redeeming certain real estate in Milford was advertised for sale on execution. John Claflin, the plaintiff, Lee Claflin, and William Godfrey, the defendant, agreed to become the joint purchasers, provided they could obtain it for a price which they had agreed upon. Accordingly, on February 25, 1833, they bid off the equity for the sum of two thousand dollars, which was paid equally by the three, and took a joint deed of the whole. At the auction the officer represented, that the incumbrances to which the estate was subject, consisted of two mortgages to D. and R. Waldo, one originally given to John Farnum, and one to W. Whitney, upon which less than two thousand dollars were due. But it was afterwards discovered that, instead of two thousand, over ten thousand dollars were due upon the Whitney mortgage. This amount, with the Waldo mortgages, greatly exceeded the value of the estate, so that it became inexpedient to redeem it, and the purchasers lost the whole consideration paid for the equity of redemption. There can be no doubt that, by the principles of law and equity, this loss must fall equally upon the parties. But this was only the beginning of the errors and losses, into which this unfortunate transaction led them.
In 1828, Stephen R. Parkhurst & Co., who were the owners of the real estate aforesaid, mortgaged it to John Farnum to secure the payment of $4500. Farnum assigned
In this state was this mortgage, when the Claflins and God frey agreed to purchase the equity of redemption. It was a part of their agreement, that this mortgage should be relieved from the claim of the Hendon bank by the payment of the note for which it was holden as collateral security ; and that the assignment to the bank, which never had been recorded, should be cancelled, and that Godfrey, who would thus be restored to his rights as holder of the mortgage, should convey to each of the Claflins one third of it, so that the three should become equally interested in it.
In pursuance of this agreement, “on the 17th of June, 1833, the Claflins each paid to Godfrey one third of the amount due ” to the bank, and the whole being paid the note was taken up and delivered to Godfrey, and the assignment to the bank cancelled. The mortgage having, as the parties supposed, revested in Godfrey, he made an assignment of two thirds of it to the Claflins, thereby vesting in each of the three an equal interest in the mortgage.
The payment to the bank was made, in the first instance, by three equal notes, for the amount, given jointly and severally by the three parties. When these notes became due, each party paid one of them. So that the payment is not to be deemed a joint act of the three, but a several payment by each, of one third of the amount. And the three notes should be considered as the several notes of the parties, two, in each case, being sureties for the other.
Soon after this transaction, it was ascertained, and decided by this Court, in a bill in equity between Whitney and their assignees, that the payment to Farnum of the debt which the
The conveyance by Godfrey to the Claflins having entirely failed, it would seem that they ought to recover back the consideration which they paid. They parted with their money, fc r what all parties, at the time, supposed to exist and have value. But it proved to be valueless ; to be, in fact, a nonentity. Godfrey parted with nothing of any value. He re ceived the money of the Claflins, and the plainest principles of justice require that he should restore that which he received without having given any thing in return. Fowler v. Sheaver, 7 Mass. R. 31 ; Bond v. Hays, 12 Mass. R. 34 ; Lazell v. Miller, 15 Mass. R. 207 ; The Union Bank v. Bank of United States, 3 Mass. R. 74 ; Haven v. Foster, 9 Pick. 112.
The general principle, that when the whole consideration fails, when the title is entirely nugatory, so that nothing passes by the conveyance, the purchase money may be recovered back, is unquestioned. And if no other ingredients entered into this arrangement between the parties, the plaintiif’s right to a repetition of his money would be too plain to admit of doubt.
The report finds, in express words, that the Claflins paid Godfrey two thirds of the amount due to the bank. The manner in which it was done is then explained, and it is argued that it does not show a payment to Godfrey, but to the bank. It seems to us, that inasmuch as Godfrey was the person liable to the bank, — as he was to receive back the mortgage, — and he, and not the bank, was to assign it to the Claflins, the transaction should be viewed in the light of a .payment to Godfrey and by him to the bank. But we do not attach great importance to this view of the subject. For we think that the plain-ti/F’s claim is equally good, whether we consider the payment to have been made to Godfrey or, by his request, to the bank, in satisfaction of his note due there. It, in both cases, would operate equally for his benefit.
But it is further contended with plausibility, if not force,
Nor can we perceive that the relation which the defendant bears to the bank debt, affects the respective rights of the parties. It is true Godfrey had signed the note only as surety It was for the debt of Parkhurst & Co. ; but he was bound to pay the debt. And it can make no difference to the Claflins, whether he had incurred this liability on his own account or for another.
But it is further contended, that the Claflins and Godfrey contracted with Stephen R. Parkhurst to purchase in his right to redeem from the sale of the equity as well as from the mortgages ; and that a part of the consideration of this purchase, was the agreement to pay the above note to the Mention bank ; that the conveyance having been made upon this consideration, Godfrey was deprived of his remedy over against his principals, and also against his co-surety for contribution. This objection certainly has great weight and constitutes the principal difficulty in the case. But we think it is not insuperable.
The facts in relation to this point appear to be the following. The Claflins and Godfrey, after the purchase of the equity of redemption, at the sheriff’s sale, in pursuance of their original plan to become the owners of the Milford estate, and to perfect their title to it, agreed to purchase of Parknurst ail his
We do not doubt that the real consideration of the release of the equity was the payment of the note as well as the cash. As to the money paid, there can be no ground for contribution. It was a payment upon a joint speculation, and if it turned out to be a bad one, the loss must be borne equally by the parties. If they have any remedy, it must be against Parkhurst, to recover back money paid to him under a mistake ; but neither can have a right to throw upon his associates an undue proportion of the common loss.
Does the payment to the Mention bank stand on the same footing ? If the parties, without misapprehension and with a knowledge of all the facts, had made this contract, although in its operation it had relieved Godfrey at the expense of the Claflins, it would unquestionably have been valid and have laid no foundation for a repetition of the money paid, nor for a contribution between the sufferers. It would have stood upon the same ground as the contract with Parkhurst, and the purchase at the sheriff’s sale. If this agreement with Parkhurst to pay the bank debt was an obligatory one, it would discharge the Parkhursts from their liability over to Godfrey. And if Godfrey was deprived of his right to recover of his principals and co-surety, it would be very unjust to throw upon him the loss incurred by the joint acts of the three, and to relieve the other two of their share of the common responsibility.
Nor is the circumstance that the Parkhursts were and are entirely insolvent, any answer to this view of the subject. It cannot he known that they will not become able to reimburse Godfrey. But further, the legal rights and liabilities oí parties do not depend upon their pecuniary ability to perform their contrac ts And if this arrangement operated so as to deprive
But a majority of the Court is of opinion that such was not the legal effect of this transaction. All the parties acted under a total misapprehension of all the material facts in the case, as well as of their own legal rights and liabilities. No fraud enters into our consideration ; every thing was perfectly fair ; but all the persons concerned in the several contracts were equally misinformed and acted under the same errors in relation to the principal subjects of the negotiations.
In making the contract to purchase the last right of redemption, the Claflins and Godfrey on the one side, and the Parkhursts on the other, fully believed and acted on the conviction that Whitney’s incumbrance was less than $2000, whereas it exceeded $10,000 ; and what is more important, that the Farnum mortgage was a valid lien upon the estate, taking precedence of Whitney’s mortgage, and being certainly worth its face, whereas, in fact, it had no legal existence and had no value. Now had these facts been known to the parties at the time, they never would have made the contracts they did. It is impossible to suppose that the Claflins would have agreed to pay several thousand dollars for what they knew had no validity or value and could in no event be of any avail to them.
The whole basis of the contracts having failed, the contracts themselves must fall, and the parties, as far as practicable, be placed in statu quo. They should be remitted, as far as the existing state of things will permit, to all their former rights. The purchasers of the last right of redemption may recover back the money paid for it. Godfrey may have the same remedy against his principals and co-surety which he might have had if he had made no agreement for the purchase of the equity. And the Claflins should be placed in the same situation they would have been in had they never become parties to •.he agreement. Had Godfrey alone purchased the equity of the sneriff, made the contract with the Parkhursts, and paid the Mendon bank note, as the three have done, we think it extremely clear that the mutual misapprehensions would have
Had the Farnum mortgage been holden by a stranger instead of Godfrey and the contract been with him for the assignment of it, the consideration undoubtedly might have been recovered back. It would have been like the purchase of a forged mortgage or counterfeit bank bills. There would have been an entire failure of the contract. Or had the Claflins made a contract with the bank for the purchase of two thirds of the mortgage and had the bank assigned to them, we cannot doubt that they might have recovered back the consideration which they paid for it. And we can perceive no reason why the principle should not apply to the case at bar, unless the arrangement under consideration operated as a discharge of the Parkhursts from their liability over to Godfrey. This we have endeavoured to show was not the case. If Godfrey intended to discharge the Parkhursts, or if he supposed that such would be the legal effect of these acts, it was because he believed that he received something of value from them. But inasmuch as he received nothing, no discharge can be implied, nor is there any consideration which would support an express one.
It was undoubtedly the clear understanding of all the parties, that the plaintiff should receive and become the legal owner of one third of the Farnum mortgage. This was the consideration for which he paid his money. But contrary to the honest belief of all, this proved to be a legal nullity. The plaintiff acquired nothing. He paid his money and for it received nothing in return. Upon the plainest principles of right, therefore, the consideration should be restored to him. Nor would this operate unjustly upon the defendant. He supposed that he had something of value, and undertook to transfer it to the plaintiff. But it turned out that it had no legal existence, and that he had transferred nothing. Having, by misapprehension, got something without parting with any thing, why should he not restore ? He not only conveyed nothing, but he lost nothing. If he restores what he received, he will be in as good a situation as if he never had received it. He has paid, with the aid of the Claflins, a debt which he would h ive been
It cannot properly be objected to this view of the case, that the parties contracted with a full knowledge of all the facts, and that the mistakes arose altogether from a misapprehension of the law. We shall not here enter into a discussion of the vexed question, whether money paid by mistake of law can be recovered back, because we'do not think that the doctrine, if sound, applies. See Haven v. Foster, 9 Pick. 112. Here was a total misapprehension of every thing material to the subject of negotiation. The plaintiff strives to reclaim the consideration of a contract which never had any legal force or effect. The general principle is well settled, that when the consideration totally fails, where nothing passes by the attempted transfer or conveyance, the amount paid may be recovered back. And the application of the principle does not at all depend upon the question, whether the failure arose from ignorance of law or of fact.
In relation to the payment to Godfrey of one third of the amount due from the Parkhursts to him, all llie Court are of opinion that the plaintiff is entitled to recover. This was not included in the agreement with the Parkhursts. It was a part of the consideration paid by the plaintiff for his part of the Farnum mortgage. And as he received nothing for the money paid, and as the transaction can have no unfavorable effect upon Godfrey’s claim upon his debtors, we think that he must recover this sum. And notwithstanding the many circumstances which tend to distinguish the two grounds of claim, a majority of us are of opinion, that when thoroughly sifted and placed upon their true merits, they both i est upon the same equitable basis, and are alike compatible wrh sound principles of law.
There is also another short and general view of the subject, which we think fairly and clearly exhibits the substantial justice of the plaintiff’s claim.
The two Claflins and Godfrey engaged in a joint enterprise,
The defendant is to be defaulted and judgment is to be entered for the plaintiff for both sums, with interest from the time of payment.
It is with regret that I find myself constrained to dissent from the opinion, to which a majority of the Court have come in the present case; but after a good deal of discussion and consideration, not having been able to concur with them in that opinion, I have thought it best briefly to state the grounds, upon which my own has been formed. After all, however, it will probably appear, that the difference of opinion arises more from the difference of views taken of the evidence, and of the facts which that evidence establishes, than respecting the rules of law applicable to those facts, when fully understood.
But so numerous and complicated are the facts and so various the names, dates, and particular circumstances enumerated as
Had there been no mistake in regard to the amount of Whitney’s mortgage, and had Godfrey and the two Clafiins proceeded to redeem, according to their original intention, when they purchased the equity at the sheriff’s sale, and procured of Parkhurst a release of his right to redeem, the above transaction, between Godfrey, the Clafiins, and the bank, would in effect have been but the payment of their own. debt, or the extinguishment of an incumbrance, which they had a common and equal interest in extinguishing. For, as they had purchased the equity, subject amongst other incumbrances, to the Farnum mortgage held in effect by Godfrey, the interest being his, though at the time pledged to the bank for security, the Clafiins would have been estopped to deny, that as between Godfrey and them, this was one of the securities to be re deemed, in order to obtain a title to the estate.
Had the effect of the agreement between Godfrey and Parkhurst been, that he Godfrey being already surety on the $4000 note to the bank, should take it up himself, by which he would have become re-invested in his title to the note and mortgage, and then as an independent transaction he had sold two thirds of this security to the two Clafiins, and they had paid him for it, and it turned out to be a void security, the money must be regarded, as money paid on a consideration which had failed, and an action would lie to recover it back. And this, I am aware, is the view of the subject taken by the majority of the Court. They consider that Godfrey took up the $4000 at the Mention bank, as surety, that thereupon they cancelled the assignment of this mortgage, which he had assigned to them as collateral security, and that the transfer of two thirds of this mortgage, to the two Clafiins, was a subsequent and an independent transaction. But according to my vie*" of the subject, the transaction will not bear this construe
In regard to the one third of $756, the case stands upon a very different footing. When the note was surrendered up by the bank to Godfrey, it amounted nominally, including interest, to more than the note due the bank, and also the $756. As against the Claflins, Godfrey had an interest in it, to that amount, after it had been redeemed of the bank. Each paid him one third of $756, and he assigned to them two thirds of the note and mortgage, as a valid security, to which he claimed and supposed he had good title. But it subsequently appeared that he bad no title. The money was paid by each of the Claflins directly to the defendant, not in extinguishment of the mortgage, but for an assignment and as upon a purchase. The consideration failed, and therefore I am of opinion that the plaintiff is entitled to recover it back in this action. As the Claflins paid each one third of this sum, the payments were several, and the plaintiff may maintain a separate action, for the sum paid by him. But conformably to the opinion of a majority of the Court, judgment is to be rendered for the larger sum.
Concurrence Opinion
concurred in the opinion of the Chief Justice-
Defendant defaulted.