| Miss. | Oct 15, 1857
Lead Opinion
delivered the opinion of the court.
This bill was filed in the Superior Court of Chancery, on the 7th November, 1849, by the appellant, alleging that on the 25th September, 1848, he had recovered a judgment at law against Andrew Knox and Ambrose Knox, for the sum of $7725 36, with interest and costs, and that an execution, issued thereon, had been returned by the sheriff “ nulla bona.” The bill charges that the
At the return time of the process, Ambrose Knox filed a demurrer to the bill, which appears to have remained undisposed of until February, 1856, when it was disallowed, and an answer required; and on the 3d June, 1856, he filed his answer, denying that the deeds mentioned in the bill were executed for the fraudulent purpose therein charged, and alleging that they were made for the purpose of preferring certain creditors, and undertaking to explain them.
The answer further sets up, as a ground of defence, that the respondent, Ambrose Knox, was merely a surety for Andrew Knox, in the judgment sought to be enforced; and alleges that on the 5th February, 1850, certain articles of agreement were entered into between the complainant and Andrew Knox, by which it was agreed, that Andrew Knox should pay the judgment, with interest, in four equal annual instalments (after deducting a bill of exchange for $1500, drawn by Andrew Knox on Payne and Harrison, and by them to be accepted), from the 1st January, 1850 ; and that if the said instalments should be paid as they became due, the residue of the judgment should not be attempted to be coerced; and when all of the instalments should be paid, the judgment was to be entered satisfied. And the answer alleges that, in addition to the draft for $1500, received by the complainant, Andrew Knox drew his draft, on the 1st January, 1851, on Payne & Harrison, for $1680 84, in part payment of the judgment, which was accepted and paid, and by means thereof further time was given to Andrew Knox to pay the residue of the judgment, and that in like manner the sum of $1590 was paid by accepted drafts, drawn by Andrew Knox, on the 13th June, 1853. The answer charges that this time of
The agreement referred to in the answer, and made an exhibit to it, is signed by the complainant, through his attorney, and by Andrew Knox. After reciting the judgment at law, and that the complainant had filed this bill to enforce it, and that Andrerv Knox was willing to pay it by instalments, to which the complainant acceded, it states, that the parties had agreed that Knox should pay the judgment with interest (after deducting therefrom a bill of exchange for $1500, drawn by him on Payne & Harrison, and to be by them accepted), in four equal annual instalments, from the 1st January, 1850; and, if Knox should pay the instalments as they respectively fall due, either by money or satisfactory acceptances, &c., that complainant should not attempt to coerce the payment of any further part of the judgment, for the year when such instalment should be so paid; and when all of the instalments should be fully paid, that the judgment should be satisfied; and should any of said instalments not be paid when they became due, that the complainant should have power to collect the part of the judgment then remaining due, by execution or otherwise; the judgment and this suit in chancery to stand, with any right or Hen existing under either of them, unimpaired against any of the parties thereto, as a security for the bill of exchange and for the instal-ments. It was further agreed, that Knox should confess a judgment in the Circuit Court of the United States at New Orleans, at some early day thereafter, for the amount of the judgment, after deducting the bill of exchange, as a further collateral security for the payment of the several instalments.
The only testimony in the cause is that of Thomas A. Marshall, Esq., who made the agreement, as attorney for the complainant, with Andrew Knox. He states that Ambrose Knox was not joresent when the agreement was entered into, it being made by deponent and Andrew Knox; that deponent shortly afterwards wrote to Ambrose Knox, advising him of it, and desiring his consent to it in writing, to which application he never received an answer; that the drafts of 1st January, 1851, and 18th June, 1853, mentioned in the answer of respondent, were received and paid, but that no
Upon the hearing, the bill was dismissed, and from that decree this appeal was taken.
The first question for consideration is, whether the agreement made between the appellant, through his attorney, and Andrew Knox, the principal debtor, had the effect to discharge the appellee, his surety, by giving time of payment without the consent of the surety.
The principles involved in this inquiry have been the subject of frequent adjudication in this court, and the rules governing it are as well settled as any branch of the law. The only doubt that can arise in such cases is, with regard to the facts, and whether the particular acts of the creditor amount in law to a new and valid agreement, upon a new and sufficient consideration, to give time to the principal, without the knowledge or consent of the surety. The rule is firmly settled, that in order to cause the discharge of the surety, there must be a new contract between the creditor and the principal, founded upon a new and distinct consideration, extending the time of payment, or otherwise varying the terms of the original obligation to the surety’s prejudice, and without his consent, whereby the creditor is bound in law not to proceed against the principal, according to the original obligation; and in consequence of which contract .the surety is debarred of the right, to satisfy the obligation which he contracted, and to be sub-rogated to the creditor’s rights against the principal, as they stood by the terms of the original contract. Newell & Pierce v. Hamer, 4 How. Miss. 684; Wade et al. v. Stanton, 5 Ib. 631; Payne v. Commercial Bank, 6 S. & M. 24; Union Bank of Tennessee v. Govan, 10 Ib. 344; Roberts v. Stewart, 31 Miss. 664" court="Miss." date_filed="1856-10-15" href="https://app.midpage.ai/document/roberts-v-stewart-8257066?utm_source=webapp" opinion_id="8257066">31 Miss. 664.
In the present case, there is no question but that the agreement for indulgence in paying the judgment, was made by the appellant with the principal debtor; and there being no sufficient evidence to show that this was done with the knowledge or consent of the surety, it must be regarded as having been done without his consent. But it is insisted, in behalf of the appellant, that the agree
The arrangement made between the parties was simply this. Andrew Knox proposed to pay the judgment which Hunt held against him, by instalments, paying fifteen hundred dollars, in part of the judgment, at the time, by an acceptance of third persons for that sum, and paying the residue of the judgment in four equal annual instalments ; and upon his prompt payment of each instalment, execution was to be stayed for the residue of the judgment until the next instalment became due, and so on until the whole judgment was paid; but in default of payment of any of the instalments, the balance of the judgment then due should be collected by execution, or otherwise. These terms were accepted, and the agreement was accordingly made by Hunt, and Knox paid the sum of fifteen hundred dollars by an accepted draft at the time, and subsequently paid two of the instalments by accepted drafts. It was also further agreed, as part of the transaction, that the judgment and the suit in chancery should remain unimpaired as to Hunt’s rights against all the parties thereto, as a security, and that Knox should confess a judgment at an early day in New Orleans, for the balance due on the judgment, as a further collateral security for the instalments. But the judgment was not confessed, and if the defence set up by the answer be true, Andrew Knox failed to take the proper steps to preserve unimpaired the rights of the creditor upon his judgment, by obtaining the consent of his surety to it.
The consideration for the agreement, therefore, rests upon the acceptance for fifteen hundred dollars paid at the time, and the two instalments of the debt subsequently paid. And it is clear that those payments do not constitute a new and distinct legal consideration for the agreement. They were made as instalments and part payment of the debt already due, and which Knox was bound
It does not appear that any benefit was derived to the appellant from the mode in which the payments were made, that is, by means of accepted drafts. The acceptances were given, not as a new security, with any additional benefit to the creditor, but as a mode of payment which, it is to be presumed, was specified for the convenience of the debtor; for the acceptance given when the agreement was made, was given as a payment, and the right to pay the instalments thereafter, either in money or acceptances, was expressly reserved to the debtor. It is, therefore, to be presumed that in making the payments he adopted the mode most convenient to himself, and did not act with a view of giving an advantage to his creditor greater than he would have had by the payment of actual money.
In legal effect, therefore, the agreement is nothing more than a gratuitous promise by the creditor that he will give his debtor time to pay his debt, and will not coerce him by law, if he will pay it by instalments at certain specified times. According to the principles held in the cases above cited, and indeed in the entire current of authorities, this is not such a binding contract in law, as will tie up the creditor’s hands and prevent him from proceeding upon his demand against his debtor as it stood before the agreement was made. The creditor might have proceeded upon his original claim, notwithstanding the agreement; and consequently, Ambrose Knox had the right to go forward and pay the debt and be subrogated to the rights of the creditor against his principal, which were unaffected by the agreement.
There is another view of this agreement which shows that Andrew Knox could not have set it up as a binding contract, staying execution, in case Hunt had thought fit to proceed upon his judgment.
It was made by Andrew Knox, as this defence alleges, without the privity or consent of his surety, and he stipulated that the judg
Nor was the agreement to confess a judgment, a sufficient consideration to make it a binding contract. It was executory, and was never performed. Being founded on no sufficient legal consideration executed, it was within the power of Hunt to disregard and abandon it, at any time before the judgment was confessed.
We are of opinion, therefore, that the agreement in this case and the acts of the parties under it, do not operate in law to release the surety, and that the decree cannot be maintained on that ground.
The next question is, whether the relief sought by the bill is barred by the Statute of Limitations.
It appears by an exhibit to the answer of the appellee, that a period of more than seven years had elapsed since the date of the issuance of the first execution, and before the issuance of a second execution, upon the appellant’s judgment. It is, therefore, contended in behalf of the appellee, that although this bill was filed before the judgment was barred, yet the complainant could have no further relief under it, than to have the alleged fraudulent conveyances set aside, to the end that his execution at law might be levied of the property fraudulently conveyed, with the fraudulent obstructions removed; and, inasmuch as the execution is barred, that the relief which can only have reference to the execution at law, and is
The record shows, that while the complainant’s judgment was in full force, he filed this bill for the purpose of subjecting the property of the defendant in the judgment, to the payment of his debt; alleging that it was fraudulently conveyed, so that it could not be fairly subjected to an execution at law; praying an account of the amount due on the judgment, and a decree for the sale of the property for its payment.
We do not agree with the position taken in behalf of the appel-lee, that a judgment creditor whose execution is obstructed by means of fraudulent conveyances, can have no further relief in equity than to have the conveyances set aside, and that he must then proceed at law for the execution of his judgment. It is true, that this is the extent of the relief most usually granted in such cases in equity, the reason of which is, that generally it is all that is necessary. But it cannot be questioned that a court of equity has jurisdiction of cases of fraudulent conveyance of property, and though it is concurrent with a court of law, it is much more competent, by reason of its peculiar mode of proceeding, to! administer full relief in such cases, than a court of law. It is a familiar principle, that when courts have concurrent jurisdiction, the court which takes jurisdiction of the subject-matter, settles it conclusively, and renders complete justice. Upon principle, therefore, no reason is perceived why a court of equity, having taken jurisdiction, at the instance of a judgment creditor, to annul fraudulent conveyances of property, should not grant full relief to the defrauded creditor, by decreeing a sale of the' property for the payment of the debt. And this course is well sanctioned by precedent. Hadden v. Spader, 20 Johns. 554" court="None" date_filed="1822-11-15" href="https://app.midpage.ai/document/hadden-v-spader-6145240?utm_source=webapp" opinion_id="6145240">20 John. Rep. 554; Edmeston v. Lyle, 1 Paige Ch., 637" court="None" date_filed="1829-11-16" href="https://app.midpage.ai/document/edmeston-v-lyde-5547771?utm_source=webapp" opinion_id="5547771">1 Paige, 637; Thurmond v. Reese, 3 Kelly, 449; Trippe v. Lowe, 2 Ib., 306; Planters’ & Mec. Bank v. Walker, 7 Ala. 946. In Edmeston v. Lyle, Chancellor Walworth says, “ The principle being established that every species of property belonging to the debtor may be reached and applied to the satisfaction of his debts, the powers of a court of equity are perfectly adequate to carry that principle into effect.” 641. It is also supported by considerations of justice and right; for otherwise, a junior judgment creditor might bear the en
But in addition to this, there are plain considerations of equity in this case which call for the relief prayed for in the bill.
The bill was rendered necessary by the alleged fraudulent acts of the appellee. The complainant pursued the only remedy which could afford him adequate relief, in due season, and whilst his judgment was in full force, and would have been satisfied but for the alleged fraudulent acts of his debtor. Before the controversy is terminated, the remedy at law is gone, not by any laches of the creditor, hut in consequence of the unconscientious conduct of the^ defendant, which prevented the enforcement of the execution at law. These circumstances, instead of showing that the creditor should be debarred of all relief in equity because his remedy at law would be barred, furnish a strong reason why equity should grant relief, if it can be done consistently with the powers of that court. His claim is just, and having been prevented from enforcing it by the conduct of the defendant, he has proceeded in the only court where he could obtain adequate relief, in due time. His claim to relief is'to be referred to his right, at the time of filing his bill, and if it was well founded and in full force at that time, but his legal right has become barred by lapse of time, during the pendency of the bill, the very fact that he would be without remedy at law, entitles him to relief in equity.
We, therefore, think that the defence of the Statute of Limitations is not available, and that the decree cannot be justified on that ground.
It only remains to inquire whether the conveyances mentioned in the bill are to be held as fraudulent in law as to the creditors of Ambrose Knox.
The hill alleges, in substance, that in September, 1840, Ambrose Knox conveyed to his brother, Andrew Knox, about seventy slaves in trust and for the alleged purpose of securing to one Davis, his brother-in-law, the sum of $6377 84, stated to be due him, and to indemnify him as surety for Ambrose Knox to the amount of
The answer of Ambrose Knox admits that he has continued in
It is apparent that the answer is silent as to several of the most material allegations of the bill showing the evidences of fraud; such as, that the sale to Davis was made for a grossly inadequate price, that it was made at a most unusual season of the year, during the midst of the cultivation of the crop; that Ambrose Knox remained in possession during the whole time after the execution of the deeds, treating the property as his own, as before the execution of the deeds, having it assessed as his property and paying the taxes; that he was indebted to Davis but little or nothing at the time of the sale, and that the slaves were not delivered to Davis after the sale. But the possession of the property, which is inconsistent with the deeds, and the use of it for his support, are admitted; the first deed provides that the surplus, after paying a comparatively small amount, shall be paid to the grantor, and the deed to Blackburn expressly reserves the benefit, of having his family expenses paid by means of the property, before the proceeds of it were to be applied even to the specified debts.
Besides the other circumstances appearing 'by the record, and tending to show that the deeds and proceedings under them were fraudulent, as to the creditors of the appellee, the reservation of
It follows from the views of the case, that the decree is erroneous and must be reversed.
But as the defendant Davis was not made a party to the suit by service of process or by publication, and no appearance was entered for him, the decree which would follow from the foregoing views cannot be rendered, and the cause must be remanded for further proceedings after notice given to the defendant Davis.
Dissenting Opinion
delivered the following dissenting opinion.
Having arrived at a conclusion in this case different from that resulting in the opinion of the majority of the court, the law requires the reasons for such conclusion to be stated.
The facts, as stated by the majority of the court, may, as to all substantial matters, be conceded. The statement is, perhaps, not sufficiently comprehensive in my view to present the ’ case’ in its true light, as to the point relating to the decree; but as this is not material to the main point which I propose to consider, I will not at present attempt to enlarge the statement made by the court.
The first point to be considered is, whether the agreement entered into on the 5th of February, 1850, between Hunt, the creditor, and Andrew Knox, the principal debtor, was so far binding upon the parties as to have the effect of releasing Ambrose Knox, the in-dorser of the note upon which the judgment was recovered. It will be borne in mind that, by the terms of this agreement, Andrew
The first question is, was there a sufficient consideration for the agreement ? I respond in the affirmative to this question. The judgment being of record in the Circuit Court of Washington county, Knox was only bound to pay there, where the proper entry of satisfaction could he made upon the record. By the new arrangement, he either undertook to pay in Louisiana, where the contract was made, or, if this be not so, to seek his creditor, and make payment wherever he might be found; and, in either view, this was to some extent a modification of the liability imposed by the judgment, because the debtor assumed upon himself the trouble incident to 'this new mode of making payment, and trouble, loss, or inconvenience may be a sufficient consideration for a contract, and this principle being found in all the elementary books on this subject, I will not cite authority to sustain it.
Again, Knox was, by the terms of the contract, to confess a judgment at an early day in the Circuit Court of the United States for Louisiana, as a collateral security for the balance due upon the judgment. By this part of the agreement he assumed upon himself the trouble and expense of attending court, besides the costs incidental to the proceedings in court. Here was not only additional trouble, but additional pecuniary responsibility imposed, and both imposed for the benefit of the creditor; because the-object of the judgment was to create a lien upon the debtor’s property in the State of Louisiana, and in this way to create a new security for the debt. Or if there was no property to which a lien coiild attach, it would make no difference, as the creditor agreed to subject himself to the rules of a new jurisdiction, whose laws might even restrain him of his liberty if he failed to make payment. He agreed to concede to the creditor such additional power over him, the debtor, as the laws of Louisiana would confer in virtue of the judgment; and whether it be, in point of fact, a new security, or an additional remedy, or worth but little to the creditor as either, it was something, to which the parties attached value at the time; and the courts, in pronouncing upon the action of the parties themselves, have no right to set their judgment asidej unless it shall
Having viewed the consideration moving from Knox to Hunt, I propose noticing the consideration moving from Hunt to Knox; and, viewed in this light, I submit that the case is perfectly conclusive. I presume if Hunt had sued Knox upon any one of the instalments, supposing him to have been in default, no difficulty would have existed as to recovering a judgment. I take it for granted, upon plain principles of reason, law, and common justice, that he could not have resisted a recovery against him. The fact that Hunt had, at the request of Knox, divided the judgment, I may say into five instalments, and had entered into an agreement to receive payment in this way, that in addition to this he had not only suspended his legal and equitable remedies to enforce his judgment, but had virtually abandoned these remedies, would certainly be held a sufficient consideration to bind Knox to Hunt.
Now, if it be true that Knox was bound, the law favoring reciprocity in all contracts, Hunt would also be bound. The promise of one, was the consideration for the promise of the other, and hence one could not be bound without the other being equally bound; and if both were bound, then there was a contract, fully consummated on the day it was entered into between the parties.
It is, however, said, that Andrew Knox undertook to procure the consent of Ambrose Knox to the arrangement, and failing to do so, the contract was never completed. In the first place, the court are mistaken as to the fact that Andrew Knox undertook to procure this consent; for Mr. Marshall, Hunt’s agent, who transacted the business, says that he undertook to perform this duty, and no doubt supposed that he had done so, but he has failed to show that the indorser’s consent was obtained. There is, therefore, no reason for holding that Andrew Knox undertook to perform this duty. But I am willing to admit, for the purposes of this case, that he did so undertake, and that he even failed to take any step to procure the indorser’s consent.
Again, it is said that Andrew Knox failed to confess the judgment, as promised, in“the United States Court in Louisiana. There is no proof either way on this point. It is true that Mr. Marshall says that the judgment was not confessed, to his knowledge; and I submit that this is but another mode of saying that he knowrs nothing on the subject. The proof is, indeed, exactly such as every person profoundly ignorant of the fact to be proved might perhaps venture to make. But be this as it may, it was a stipulation in the contract, exclusively for the benefit of Hunt, that the judgment should be confessed; and being for his benefit, he could of course waive the advantage to accrue to him under such judgment ; and did he do so ? He received two instalments under the contract, after the time for confessing the judgment had elapsed, thus admitting the full operation of the contract for nearly two years after the alleged default of Knox. But the claim upon which the confession was to be made, being under the control of Hunt, he was bound to bring it into court, in some manner, before Knox could act in the matter.
This, however, is not a very material point in the case. It is clear that the judgment was not to be confessed until the meeting of the court; and if the contract was ever operative for even a day, the security was discharged. It is clear that the contract was to take effect before the judgment could be confessed, and this being the case, the remedies to enforce the Mississippi judgment were suspended at least until a breach of the contract. Knox had a right to say to Hunt, Your hands are tied until I violate my contract, and I cannot violate it until the time of performance arrives. Here, then, wras most clearly a binding contract for some period of time,
For the purpose of illustrating the points just considered, suppose Hunt had sued Knox upon- this agreement, could the latter have defended, on the ground that he had failed to procure the consent of Ambrose Knox, and that he had also failed to confess the judgments. Most certainly not; and why ? Because Hunt could say, these are matters for my advantage; I have the power to waive them, and I elect to do so. Now, if he took, after these omissions of Knox, the advantages of the contract, must he, Hunt, not be held to have waived what he most clearly had the power to waive, without affecting the liability of Knox ?
I will not, however, dwell longer upon this branch of the case, but will proceed to notice that part of the opinion which relates to the decree to be pronounced in this case. The property of the debtor being unincumbered, the question is whether this court, pronouncing such a decree as the chancellor should have pronounced, shall do more than leave the complainant to his remedy by his execution at law ? The majority of the court have decided that a decree for the balance due upon the judgment must be rendered in this court, and a commissioner must be appointed to subject to sale the property of the debtor, if he should fail, to pay this decree by a particular day. I cannot forbear expressing my strong and decided disapprobation of such a decree. Let us for a moment glance at the facts of the case. Ambrose Knox is the judgment debtor, and the proposition is first to render a decree against him upon this judgment. Secondly, there is no claim of any kind whatever by any person set up to his property named in the bill. And the next proposition is, that this property so situated shall be sold by a commissioner for the purpose of paying this decree, when there is not even a shadow of a lien pretended to exist against the property. I admit that there would at least be some foundation for such a decree, if the property was in the possession of or claimed by a third party, or if the object of the bill was to subject equitable assets, which could not be reached at law.
In the case of a third party claiming the property, the court would ascertain the amount due, so as to enable him to pay off the incumbrance if so disposed, without a sale of the property. The
But here there is no claim, title, or possession adverse to Am-brose Knox, and consequently, no impediment from this source, to an execution at law. The case comes to the simple proposition to render a decree upon a judgment at law, to be satisfied out of the general property of the debtor; and if such decree be rendered, why not let it .be executed as any other purely money decree, by a writ of fieri facias, as provided by the statute ? for, to give jurisdiction over the property, so as to decree a sale, it must appear that the bill was filed rather to enforce a lien, or to reach the property in the hands of a third party. It is true the bill intimates that it is probable such third party might assert a claim, but it turned out before the trial and at the trial, that no such claim was or would be interposed. The debtor’s title was virtually confessed, and the remedy at law, if the judgment existed, shown to be unobstructed. As no third party is to be charged by the decree, no lien to be enforced against the property, I again repeat that it is virtually rendering a decree upon a judgment at law, to be satisfied out of any estate of the debtor subject to execution on such decree.
But the court cite authorities to sustain their position. They all establish what I have admitted, that when a third party is to be charged, or the bill is to reach equitable assets, the court will make a decree applicable to the case. The case in 20 Johnson, 554, was to subject bank stock and equitable assets to the payment of a judgment. The same may be said as to the case in 1 Paige’s Reports, 637. The case in 3 Kelly, 449, was to have an account taken as to the amount due upon a mortgage, and to have the balance of the mortgaged property applied to the complainant’s judgment. The case in 7 Ala. I have not been able to find, but I presume it is not different from the rule I have admitted. I am willing, however, to trust the case at bar upon admitted principles of equity. The judgment being a legal demand, cannot, as a general rule, be the foundation of a decree in equity. A court of equity will only decree on such demand, when there is no adequate legal remedy, or when there is
But the true reason for the decree, and I am willing to admit that it is the best reason that can be given, is that, if the complainant he left to his execution, he would be without remedy, because his judgment is barred by the Statute of Limitations. To relieve himself from such a defence, he must show that it is one which the debtor ought not in conscience to make; and if this showing is made, it is difficult to perceive why it could not be made in every conceivable case.
The debtor has done nothing to prevent the creditor from issuing his execution at any time; and surely it will not he said, that the agreement with Andrew ICnox, which might he disregarded by the creditor at any time, according to the opinion of the court, could be treated as an obstacle to an execution on the judgment. ' But this agreement was at an end on the 5th of February, 1854, and the bar did not become complete until the 20th of November, 1855, nearly two years after the agreement had expired by its terms. It is then simply a case of negligence, where the party slumbered of his own will upon his rights for more than seven years.
My opinion is that the decree ought to be affirmed.