4 Del. Ch. 198 | New York Court of Chancery | 1871
The 1st exception is to the 3rd interrogatory.
So far as this interrogatory inquires whether Dillon had admitted the existence or making of the agreement referred to, and the time, place and circumstances of such admission, it is unobjectionable though the agreement were in writing. It is with respect to the terms and contents of a written instrument that paroi proof is excluded. The execution of an agreement and the time, place and circumstances of its being made may, for all purposes, be proved by paroi.
The inquiry as to the “terms on which such land “ was held and what was to be done with it or its proceeds,” would be inadmissible, if nothing were in issue respecting the agreement but its contents; for the complainant himself alleges that the agreement was in writing and is in his possession, and sets forth a copy of it in his bill.
The relief sought is not to have the agreement reformed on the ground of mistake or fraud, but to have it enforced precisely as it stands. No paroi proof therefore is necessary or admissible to shew its terms or provisions ; and if the evidence sought could have no other effect than this, these inquries would be stricken out.
But the answer denies that Dillon ever signed such an agreement, and alleges that if he did sign it he was ignorant of its contents and that his signature to it was obtained “ fraudulently and upon false representations by “complainant of and concerning the contents thereof.” To the issues thus raised the evidence is relevant and although by paroi it is admissible because it does not contradict or vary the terms of a written instrument. The alleged fraud is matter in pais collateral to the contents of the paper; and may be either proved or disproved by paroi evidence.
The 3rd exception is to the 5th interrogatory.
The first question is excepted to as leading and as directed to prove by paroi admissions the contents of the paper referred to.
The paper referred to is the agreement by Plunkett and others to purchase certain houses from Dillon, the agreement being annexed to the answer and made part' of the defendant’s case. The inquiry is whether the witness. signed such agreement, it being described by a reference to the property, and price of the houses, and if so at what time. It is not an attempt to prove by paroi the contents of a written paper which has not been produced, for thepaper is part of the case. Nor is there an attempt to contradict the terms of the paper or vary it by paroi evidence: for the interrogatory states the contents of the paper precisely as they appear on its face. The interrogatory, stating the contents merely as descriptive of the paper, inquires whether witness signed it and when. The fact of the signature is matter in pais always provable by paroi; the time in this case may also be proved by paroi,' for the paper does not shew any date. The object of the evidence as suggested is to supply the want of date. That is perfectly legitimate and could not be effected without stating the contents of the paper so as to identify it to the mind of the witness. For complainant cannot produce it to the witness. It would be otherwise were this a paper not already made part of the record—one therefore presumed to be in the complainent’s possession, or in the possession of some third person in which case he
The 4th exception is to the 9th interrogatory.
It is not clear whether the witness is here expected to prove that a settlement was made in his presence or hearing on 20th Nov. ’67 or 28th June ’69, or at some other time, the terms of which the witness is to state from his own cognizance of them ; or whether the object is only to prove that Dillon had admitted to the witness the fact of a settlement previously made and himself stated the terms of it. The former seems most likely to be the meaning and I will so assume.
One ground of exception taken to this interrogatory is that no settlement of November 20, 1867 is in issue. That is true ; and no such settlement .could be admitted in proof as a ground for any relief founded upon its terms or result. But it is possible that the result of a settlement made November 20th, 1867 might tend to sustain some particular of the settlement alleged to have been made June 28th, 1869 which is the settlement in issue, and for such a purpose the evidence sought would be admissible. The object suggested in the argument is to sustain the charge made against Dillon for the note of $615.67 dated November 20th, 1867. This charge might be sustained by proof that upon a settlement of accounts made November 20th, 1867, Dillon was found due to Plunkett, $615.67, and that a note was given for that sum. Any such settlement of November 20th, 1867, if proved at all, would be available to that extent, but not as a substantial ground of relief.
Another ground of exception taken is to that part of the interrogatory which inquires as to the state of the accounts and results of the settlement.
We might require the preliminary questions to be put in the interrogatories filed :—but the sufficiency of the evidence of search or notice would still be necessarily open, so that, in all events, the secondary proof of contents must be taken in the first instance. On the whole, the most convenient course is to let the party proceed in all cases at his peril and if he wholly omits the preliminary inquiries take the certain consequence.
There is another objection to the form of the inquiry as to the fact of a settlement, that it is leading, in suggesting the date of the settlement inquired about. This objection is well taken. The inquiry should be first generally whether the witness was present at any settlement made at any time, and when ? followed by the0 more specific inquiry to be put, if the general inquiry is answered in the affirmative, viz : If you have answered yea, then say whether such settlement was, or was not, made on or about the 20th of November 1867 ? The object is to allow the witness first to answer upon his unassisted ecollection. After that, inasmuch as he might not at rst be enabled to call the date correctly, it may be sugested to him. If the commissioner does his duty he will
The complainant’s counsel will have leave to amend the interrogatory in this particular; and it ought to be amended further so as to shew clearly whether the witness is inquired of about a settlement in his presence or only as to Dillon’s admission of one having been made, the witness having himself no personal knowledge of it.
The 5th exception is to part
So far as this interrogatory seeks to prove the amount, date and terms of payment of the note inquired about, it is subject to the remarks before made as to proof of contents of a written instrument. Answers to these points may be taken but they will be subject to exception, upon publication of the depositions, for want of the preliminary proof for the admission of such evidence, i. e. proof of the existence of the note, its loss or destruction, or that it has come to Dillon’s possession, with notice to produce it.
There is, however, an objection well-taken to the for. of this interrogatory, that it is leading. It fully describes the! note, stating all its essential contents in the first instanc suggesting, to the witness all the particulars described t be proved, and requiring only a categorical answer, yes This is unnecessary and inadmissible. The witness shouL be first asked whether he was present at the giving of a»j¡ note by Dillon to Plunkett. Then he should be requeste> to state, without assistance, all his knowledge respectin the note, the time, place and circumstances, of the mak ing of it, the date, amount and time of payment. Whei| his recollection has been exhausted and his answer take down, then a more specific interrogatory may be read t him, viz., whether the note, supposing he has proved an was not of such a date, or of such an amount, or of sue
The exception to the form of the interrogatory is allowed with leave to amend.
The 6th and last exception is to the 12th interrogatory.
This interrogatory seeks to prove an indebtedness to Plunkett, by a partnership of which Dillon was a member, for some unspecified sums of money borrowed from Plunkett by Dillon’s copartner on the partnership account.
The interrogatory is inadmissible because the matters inquired about are wholly irrelevant to the issues in this cause ;—both the issues raised by the original bill and answer, and by the cross-bill and answer.
This will appear from one very short but decisive consideration. This whole cause, as it arises, both upon the original and the cross-bills, is one between Plunkett and Dillon individually. Plunkett files his bill against Dillon as sole defendant:—Dillon files his cross-bill as sole complainant,—both bills relating to the same transactions, and those transactions in which the liabilities charged against Dillon by the original bill and the claims, made by him in the cross-bill, were several and not joint with any one else. Now without looking to see what are the allegations of the bills and answers, or the precise blaims made by the respective parties, it may be confidently affirmed that no partnership debt of Dillon and some one else could be properly embraced. The state of he parties alone, Dillon being sole defendant to the bill and sole complainant in the cross-bill, precludes any partnership claims,—unless it were one which Dillon had assumed separately; and had such claims been alleged in the complainant’s bill, his bill would, to that extent, have
We see then, without examining the allegations on record, that the subject-matter of the interrogatory must be irrelevant to any issues that could arise in this cause.
But looking into the papers, there does not appear to be any allegation in either of the bills or answers, to which the matter of the interrogatory can be. relevant. The complainant has not, either in his original bill, or in his answer to the cross-bill, set up against Dillon any claim to which the interrogatory can apply.
What is the complainant’s claim in the original bill ?
It is twofold.:—
1. He claims his share of the proceeds of certain lots sold by Dillon under the alleged agreement of 1864; this claim is embraced in paragraphs 1 to 6 inclusive.
2. He also claims to be paid further sums specified in Par. 7. These are;
1. Certain loans to Dillon to the amount of $954 and upwards, for which due bills were given.
2. $28 for building stone.
3. $341.75 due from Dillon as surviving partner of the firm of Dillon & Plunkett.
4. A due bill of Dillon for $10.
Having stated these as complainant’s claims, the bill proceeds—paragraph 8—to allegó the settlement of 28th June, 1869, as a settlement of all claims between the parties, the result ofwhichwasa balanceo! $334.17 due complainant for which Dillon gave his note. Then the bill, after
Then follows the prayer, which is a double one, in the alternative.
1. That the settlement, if admitted by the answer, may be established with the correction of the mistakes before specified.
2. That if the settlement be not admitted, (the complainant having, as he has before alleged, no evidence of it,) then the defendant be decreed to account,—for what ?
1. For the proceeds of the lots disposed of.
2. For all moneys loaned by complainant to Dillon,— not to any partnership in which Dillon was concerned— particularly the amounts of the due bills, being those referred to in par. 7.
3. For stone or other merchandise purchased of complainant.
4. For “ any other credit to which complainant may “ be entitled in account with him,” Dillon.
We see then that neither the allegations of the bill nor the prayer, taken in either oí its alternatives, undertake to embrace claims against any firm of which Dillon might have been a member, except the claim against him as surviving partner of Dillon & Plunkett.
What the complainant relied on in argument was, the general settlement in par, 7, that complainant had “ at
It may be worth while here to observe how strict is the rule in equity as well as at law that the proofs must correspond with the allegations. Says Daniel, 2 Vol. 992 ; “It is a fundamental maxim both in this court and in “ courts of law that no proof can be admitted of any mat“ter which is not noticed in the pleadings ; this maxim “has been adopted in order to obviate the great inconveni- “ ence to which parties would be exposed if they v/ere lia- “ ble to be affected by evidence at the hearings of the “ intention to produce which they had no notice.” Sto. Eq. PL 28 and 257. It is true a general charge or statement of the matter replied on, is sufficient -the particular circumstances or facts which tend to support the charge, are matters of evidence and need not be stated ;
But there is another rule which ought not to be overlooked,and which would exclude any evidence under mere general allegations of advances or loans to defendant without any specification of them ; such as the general statement of par. 7 relied on, that complainant “ has at “ sundry times advanced by way of loan to defendant “large sums of money.” Such an allegation is too uncertain to raise any issue for proof :—a defendant cannot know what he is called to meet under it. It is demurrable and proof is not admissible to support it. The rule as to what is sufficiently certain in allegations is stated and many illustrations given in Sto. Eq. Pl. 241-2-3-4, 244 a. &c. The example cited from 3 Beavan 18, is similar, where allegations to this effect, that “ certain dealings and trans- “ actions took place between the bankrupt and the defend- “ ant,” that by virtue of certain agreements for leases the bankrupt was possessed of certain leasehold houses which the bill specified ; that the defendant from time to time made certain loans to the bankrupt, &c., were all too uncertain to put the defendant to a discovery by answer. Looking at a case like the present it would be manifestly oppressive to allow a complainant having claims against a defendant which he must know all about, instead of specifying them as to amounts, dates and nature of the claim, whether note, bond or book account, simply to allege a general indebtedness, leaving the defendant to answer and go into his proofs wholly in the dark as to what precisely he is called to meet. Such a defendant would be even worse off in equity where the pleadings are supposed to be specific than in a court of law where they are general, for even then he may protect himself by calling for a bill of particulars.
Looking next into Dillon’s answer, I can find no allegation there to which the 12th interrogatory is relevant? Nor is there any in the cross-bill and the answer to that. These embrace the same matters of controversy and present the same issues as the original bill and answer. The only difference is that, by the cross-bill, Dillon is enabled to pray a decree in his favor for any balance found due to him arising out of the same transactions set forth in the original bill and answer, which he could not do by his answer to the original bill.
The 6th exception is allowed.
.The CASE CAME ON for hearing on October 12, 1871, at the adjourned September Term.
The notice in the list filed must be confined to the account specified. That being an account against the defendant individually cannot include another distinct account against a partnership of which he was a member. It can make no difference that the two accounts happen to be in the same book.
Patterson then asked leave to amend his list of exhibits, by adding, as an exhibit, the account of complainant against Dillon and Plunkett, stating that it had been omitted through a misunderstanding between him and the complainant, that he had supposed the account to be for cash and only understood this morning that it was for matter proper to a book entry.
Objected to by the solicitors for the defendant.
This appears to be one of those omissions resulting from misunderstanding or inadvertence on the part of counsel which the practice of the Court allows to be corrected by amendment where this will work no surprise to the adverse party. In this case the complainant’s claim against Dillon and Plunkett was alleged in the bill and is one of the issues in the cause. No new matter is proposed to be introduced, but only that a defect be supplied in the notice of proof of a matter alleged. If upon the production land proof of the account it shall appear that the defendant will require further time or opportunity to rebut or
objected. No paper requiring more proof as to execution than of mere handwriting can be offered as an exhibit. Nothing more than- the formal proof is admissible. 2 Dan. Ch. Pr. 1026; Blockston vs. Drewit, Prac. in Cha. 64; Harris vs. Ingledew, 3 P Wms. 91; Eade vs. Lingood, 1 Atk. 203; Pomfret vs. Windsor, 2 Ves. Sr, 479; Lake vs. Skinner, 1 Jac. & Walk. 15.
Applying this rule, this paper requires other proof than of handwriting to render it admissible, i. e.,
1. That it was executed on the day of the date of the judgment bond referred to in it, so as to. fix the time of its execution,—the date on its face being blank.
2. It does not appear on its face that Bright was an attesting witness ;—that would have to be proved.
Another objection is that this agreement is impeached by the answer. When the execution of a paper is impeached it cannot be proved as an exhibit. 2 Dan. Ch. Pr. 1028; 2 Gr. on Ev. Secs. 309-10; Barfield vs. Kelly, 4 Russ. 355; Atty. Gen. vs. Pearson, 7 Sim. 290; 1 Barb. Ch. Pr. 310. Book 1. Ch. 10, Sec. 3.
If this proof is excluded, the omission to introduce it at the proper time cannot be supplied. The opportunity sometimes given to make the proof upon interrogatories is an indulgence granted only where the omission is satisfactorily accounted for without any loches. Hood vs. Pimm, 4 Sim. 101; Wyld vs. Ward, 2 Yo. & Jer. 381.
. After the reading of the papers, Patterson, for the complainant, offered to prove as an exhibit, by Wm. Bright the attesting witness, the agreement of August 1864 referred to in the bill and before set out in full
This paper is set forth verbatim in the bill and the list of exhibits was filed Aug. 21, 1871, so that the objection fails upon any ground of surprise. We have been less formal than usual in' these proceedings in consequence of a general disposition on both sides to accommodate the course of the cause toward a speedy and convenient disposal.
In the cases cited justice was sacrificed to an arbitrary rule which should have been relaxed, and opportunity afforded to take testimony essential to the right of the parties, where this could be done without surprise or prejudice to the adverse party such cases are not to be followed.
Our rules provide for taking oral testimony at large in the Court, in a proper case, unlike the English practice. If this proof is inadmissible as an exhibit, the case can be met under rule 45 with full justice to all parties. But this is not necessary. Rule 49 is general, embracing all cases where proof of handwriting only is required, without any qualification excluding a writing because it is impeached. This rule in its broad terms supersedes the English practice as to proof of exhibits.
The rule of the English practice does not apply to this case. That rule contemplates the necessity of proving something more than bare execution. Lake vs. Skinner, 1 Jac. & Walk, 15. (Note 1.)
In the present case bare proof of handwriting makes
The rigor of the English rules excluding testimony at the hearing is relaxed in this country. Barrow vs. Rhinelander, I John. Ch. 559; Consequa vs. Fanning, 2 Johns. Ch. 482-3.
In Hood vs. Pimm, 4 Sim. 101, leave was granted to prove a will upon interrogatories, to remedy the inadvertence of counsel.
The practice of the Court has been uniformly to grant this indulgence. Turner vs. Burleigh, 17 Ves. 354; 1 Barb. Ch. Pr. 308; 3 Greenl. on Ev. Sec. 308-9-10.
Should the paper be inadmissible as an exhibit the Court is asked to take the proof viva voce under rule 45.
A distinct ground why the objection should be overruled is that an inspection of this- paper having been called for and had, it is admissible in evidence for both parties.
I was early notified to file the paper in the Court ; application was made for an order on me. I voluntarily submitted it to the Counsel and they have had it in their possession.
It is the established course of this Court to proceed upon written evidence taken before a commissioner or an examiner. The examination of witnesses viva voce to prove exhibits at the' hearing is an exception, and one sparingly admitted. Such proof has always been confined to a few classes of instruments, of such nature as to require only formal proof without cross examination ; such as ancient documents, which are proved by mere
But it has been a rule strictly enforced, that where the proof of any paper would go beyond these few simple points and involve matter proper for cross examination, such paper cannot be proved viva voce at the hearing, but only under a commission. Hence it is that under the English practice a will would in no case be proved as an exhibit, because more was required to establish it than the ordinary formal proof of attestation. A compliance with the formalities of the Statute of Wills and the sanity with the testator were additionally necessary, and these are proper subjects for cross-examination.
This must be understood to refer to wills of lands, which under the English practice were not the subjects of probate, as were testaments of personal property, but were required to be proved in every controversy as to title under them. In this State the probate of a will before the register of wills is conclusive of all requisites to its validity, both as to real and personal estate ; and hence the record or a duly certified copy must in all cases be admissible as an exhibit at the hearing. Harris vs. Ingledew, 3 P. W. (93); Eade vs. Lingwood, 1 Atk. 203; Niblett vs. Daniel, Bunb. 310. So, although a deed might be proved as an exhibit by the attesting witness, if he were living and produced, yet if the witness were dead or beyond the jurisdiction, inasmuch as these were facts to be
To this last class this present case belongs. The paper offered to be now proved as an exhibit is the agree■ment alleged in the bill as the basis of the relief sought. The defendant by his answer utterly denies having ever signed it, and avers that if he did sign it he was induced to do so by fraudulent misrepresentations as to its nature and contents ? Such a paper ought not to be admitted on bare proof of handwriting without opportunity for full and deliberate cross-examination and for adducing counter evidence at large. It should therefore take the regular course of proof under a commission.
In the argument for the complainant much stress was laid upon the broad language of the rule of Court (the 49th) by which it is provided, that “proof may be made of exhibits of deeds, receipts and other instruments of writing by the instrumentary witnesses or evidence of handwriting.” But all that is practicable by such a rule is to define generally what instruments are of the nature of exhibits without attempting to enumerate the exceptions and qualifications which are recognized in practice. These are to be ascertained only by the practice of the Court under the rule. The rule in question is, by no means anew one,though so treated by the complainant’s counsel. It is an exact copy of the old and long established rule on this subject. It was without doubt originally adopted as a general expression of the English practice, according to which therefore it is to be construed and applied.
„ But it was argued with much earnestness that with us the stringengy of the English practice is needless because the proof of exhibits viva voce is here taken at the bar of the Court in the presence of counsel and subject always to cross-examination ; and not, as in England, before the register, without the attendance of the counsel. Still, it may be questioned whether for all purposes, cross-
The conclusion is that the- objection to the proof of this agreement as an exhibit is well taken. But the question remains whether leave shall be granted to prove the paper under a commissioner, the cause meanwhile to stand over.
It has been the settled practice of the court in its discretion to grant leave to supply evidence inadvertently omitted to be taken in the regular course, when it may be material to the justice of the cause and the omission has
In the present case the omission to prove the exhibit in question under a commission was caused by a misapprehension of the complainant’s solicitor as to the effect of the rule of court. The rule in its general terms would authorize the proof of the paper as an exhibit at the hearing, which is now excluded because the Court considers the rule to be qualified by the English practice, there having been no decision before settling the practice,—at least none known. The solicitor has acted in good faith and without loches ; and the omission can be supplied without surprise or detriment to the defendant. Leave is therefore granted to prove this exhibit under a commission, the cause meanwhile to stand over.
Afterwards proof of the exhibit was admitted by conent and the hearing of the cause proceeded.
The agreement of August, 1864, is sufficiently proved, and establishes either a partnership or a trust. In either ease we are entitled to relief under our alternative prayer.
With respect to the alleged want of mutuality in the contract, an agreement founded upon an executed consideration is valid though binding on one side only. Add. on Cont. 22-3.
The real defense here is matter of avoidance and not direct denial, and must be proved by defendant and is not established by the answer. 2 Cow. & Hill’s notes to Ph. on Ev. 285-6-7.
The allegation that the agreement is unconscionable is not of itself a ground of relief but only where it is found to be demonstrative of fraud, imposition, undue advantage, incapacity or the like. This case presents no such features.
There may be a community of profits without a partnership. Sto. on Partn. Sec. 32.
We deny that the execution of the alleged agreement is proved and its validity if proved.
1. It is void for usury, being upon a fair construction! for a loan of money to be repaid at all events and morel than six per cent, executed while the principal is not at! hazard. Com. on Usury p. (22) (30) (119); Leigh N. P. 483.
The cases of usury in contracts of partnership are fevl because of greater license allowed but the application o|
2. Even if not void for usury the contract is so hard and unreasonable that it cannot be enforced in equity. 1 Fonb. Eq. B. I. Ch. 2, Secs. 12 & 13.
It is not mutual, not binding on complainant and conferring no advantage on defendant. Add. on Cont. 22.
This case has a long history, one too familiar to counsel to need any detailed statement of it; suffice it to say, that its present position, standing as it does upon the original bill and answer, and the cross-bill and answer,' is equivalent to a reference to the Chancellor of the mutual demands of the parties for the purpose of obtaining a final decree in favor of the one party or the other, for such balance as may be found due to him, and at the same time for such disposal of the suits at law now pending as the result of this investigation may render proper. I proceed then in the first place to state what are the demands made on either side: and first as to the claim of the complainant. The complainant’s claim as set forth in the original bill, is two-fold.
1. He claims an interest in certain lots, the title to which was conveyed to Dillon by deed from Ferris & Garrett, dated August 10th, A. D. 1864, alleging that the purchase of these lots was made, on the joint account of the parties, pursuant to an agreement between them, the evidence of which is a written acknowledgment or declaration purporting to be signed by Dillon and which is in these words :
Wilmington, Del., August A. D. 1864.
This is to certify and show that P. Plunkett of the City of Wilmington, New Castle County and State of Delaware, and I, Patrick Dillon of the same city and State, pur*228 chased from Ferris & Garrett three hundred and seventy-five (375) feet of land fronting on Madison street from Second to Third streets, and in depth ninety-seven (97) feet, Philip Plunkett paying for the same the sum of three thousand dollars, ($3000,) for which I receive the deed for the same. But I acknowledge and agree for myself and my heirs that said Plunkett is to be paid back his three thousand (3000) dollars with interest, and receive as his share of the profits if any there shall be, two-thirds, and I one-third, and if a loss should be sustained, we are to bear it in the said proportion. In consideration of my receiving the deed, I executed this day a judgment bond for three thousand (3000) dollars for which I hold myself accountable until the property shall be sold, when the proceeds of such sale shall go to pay off said bond. Witness my hand the day and year above written.
(Signed) PATRICK DlLLON.
Wm. Bright.
The complainant claims to be entitled under this agreement, first to the payment out of the proceeds of the real estate, of a balance alleged to remain due on the bond for three thousand dollars and interest; next, to a share, being two-thirds of the net profits of certain parcels of the land which the bill alleges that Dillon has sold and with regard to which he has not as yet accounted for Plunkett’s full share of profits ; and lastly, that Dillon shall also account to the complainant for his share under the agreement of the value of a portion of the land alleged to remain still unsold.
2d, The other branch of the complainant’s claim embraces four particulars which are wholly unconnected with the real estate transaction. These are, 1st, Certain loans of money alleged to have been made to Dillon to the amount of nine hundred and fifty-four dollars and up
Having thus set forth in the bill his original claims against Dillon, the complainant alleges that on the 28th of June 1869, the parties made a settlement between them of all accounts to that date, including the real estate transactions and others, which settlement resulted in a balance due Plunkett of $334.17, for which Dillon gave his note. The complainant, however, does not hold himself to the result of this settlement, but proceeds to allege specifically sundry errors in it. These errors relate chiefly to the proceeds of sale of certain of the lots which had not been included in the settlement. In addition to these the only other error specified was the omission to carry into the settlement the balance of account ($341.77) alleged to be due from Dillon as surviving partner of Dillon & Plunkett. The prayer of the bill is in the alternative depending upon whether the answer should admit or deny the alleged settlement. If the settlement should be admitted by the answer, the bill prays that it be established, but subject to correction of errors in it, and particularly of the errors specified in the bill. But if the settlement should be denied by the answer, then the complainant, having before admitted that he has no proof of the settlement except such as a discovery might afford, prays that Dillon may account at large for the proceeds of the lots sold, for the value of such as may remained unsold, also for all loans or advances in money made to him, also for stove or other merchandise furnished him by complainant, and general
The answer denies in toto that there was any agreement giving Plunkett an interest in the real estate; it alleges that Dillon purchased it on his own account and became under the deed the sole owner; that the $3000, paid to Ferris & Garrett for the purchase money, was borrowed from Plunkett as an ordinary loan upon the security of Dillon’s judgment bond for that amount, the bond to be paid as his individual debt, and not as alleged in the bill to be reimbursed out of the proceeds of the real estate as an advance made by Plunkett on joint account. That consequently for all sums of cash paid over by him to Plunkett out of the proceeds of lots sold and for the securities resulting from said sales which had been assigned by him to Plunkett, he claims full credit in any settlement of accounts between them, Plunkett not being, as alleged in the bill, entitled to any share or interest in these cash sums or securities, and that he the defendant is entitled to a decree for such balance as may be found due to him upon the settlement of their mutual indebtedness on this basis. With respect to the settlement alleged by the bill to have been made on the 28th of June 1869, showing a balance of $334.17, due the complainant on that day, the answer though relied upon by the bill to prove such a settlement by discovery fails to do so. The complainant by his bill in the 10th paragraph states that with respect to this settlement he “is wholly without proof except by defendant’s “confession, which it is one purpose of the bill to seek.’’ And the interrogatories relating to this settlement are
We proceed then to the first material inquiry, and the one which formed the main subject of controversy, viz: whether Plunkett is entitled to credit for two-thirds of the net profits of the real estate which has been sold, and to the like share of the real estate remaining unsold. Plunkett’s claim to such share rests upon the ground that he was a joint purchaser with Dillon of the real estate, for the purpose of re-sale in lots at advanced prices on joint account ; Plunkett to advance the purchase money as capital, Dillon to give his personal attention and labor, the profits and losses to be shared in the proportions of two-thirds by Plunkett and one- third by Dillon ; that Dillon took the title in his name only for the more convenient conveyance of lots to purchasers ; that the $3,000 secured by the bond was not a loan to Dillon but an advance on the joint account, to be repaid out of the gross sales before any division of profits, in short that the arrangement was a partnership, and Dillon with respect to the land and its proceeds, a trustee for the partnership. The evidence of this arrangement chiefly relied upon, is the alleged written acknowledgment of Dillon of August 1864. Connected with this paper as evidence tending to show the arrangement under which the real estate was purchased there are in proof certain declarations made by both Dillon and Plunkett. These declarations, however, are conflicting and inconclusive. Several witnesses, Megarity, Ellen B. Plunkett and James A. Plunkett, understood from Dillon’s talk with them, that Mr. Plunkett took an interest in the property ) on the other hand Messrs. Cause, Capelle, and Simmons, in the discussion of the claims of these parties at the time of the attempted settlement, as clearly understood Mr. Plunkett’s claim to be, not that he had advanced the $3,000 on a joint purchase, but as a loan to be repaid with interest and additionally a share of the profits. The true view of this
Then arises the question, whether the stipulations for a share of profits, in addition to interest on the loan is such as a Court of Equity ought to enforce. Several distinct objections were taken to it. First, it is objected that the stipulation is usurious. This objection when made at a former stage of the cause, on the motion to dissolve the injunction for want of equity in the bill, was overruled, because on such a motion the Court was bound to assume as true the allegation of the bill that the purchase of the real estate was joint, and that the $3000 was not a loan but an advance of capital on the joint or partnership account; but upon the present hearing, which is on the bill, answer and proofs, the transaction is to be treated according to its real nature, as that shall appear upon the evidence ; and in my opinion already fully expressed, the real transaction was not an advance of capital, but a loan of money. This aspect of the case opens for consideration the question of usury, which, on the motion to dissolve, was closed by the allegations of the bill. It does not, however, necessarily follow, that because the $3000 was a loan the stipulation for a share of profits is usurious. It is an acknowledged exception to the statute, that where the principal is put at risk, more than the legal rate of interest may be received ; the excess, in such case, being allowed as a consideration of the risk of the principal in addition to the interest which is the consideration for the forbearance of the debt. Such are loans upon bottomry and respondentia, and post obit bonds ; and the principle may be considered a general one, not limited to these special cases, which are the ordinary instances of such loans. But it must be here particularly observed, that the risk of principal to come within this exception to the statute, must be a substantial one, i. e. it must be such a risk as a
In the case before us the question of usury turns upon the operation of that clause in the memorandum of August 1864, which provides that Plunkett should receive the $3000, advanced by him with interest, out of the proceeds of sale ; also, that if a loss were sustained the parties should bear it in the same proportion in which they were to share the profits, i. <?., Plunkett two-thirds, and Dillon one-third. I assume that the effect of this provision, as was argued for the complainant, did make the $3000 pay
First then, there was in point of fact no possibility of a depreciation in these lots. The purchase was of a large lot or tract of land situated in an improving part of Wilmington, a city advancing rapidly in population, wealth and business. This tract was to be divided into city lots for immediate improvement and sale when improved. This was a process morally certain to enhance the value of the lots. The result demonstrates this. Dillon gave for the whole tract $8 per foot, on the 10th August 1864. Eight days afterward, on the 18th of August he sold to Wm. Dougherty 16 feet at $12 per foot; and on the same day to Thomas Curley 32 feet at $12 per foot, an advance of fifty per cent, upon the cost; a profit accruing from the mere division of the larger tract into smaller lots, and the prospect of the erection of buildings on the remaining lots. Two years afterward in July 1866, Dillon sold to Philip C. Hearn in one body 101 ft.- 8 inches of this land unimproved at a fraction over $14 per foot, being an advance of 75 per cent, upon the cost. Thus much as to the lots sold unimproved. With respect to the improved lots which Dillon sold for gross sums, a large body of estimates made by witnesses were submitted by the complainant, the result of which was to fix the valuation of the improved lots at a considerable advance, the estimates on the lots ranging from $20 to $30 per foot. Altogether the sales of the unimproved lots and the valuation upon the improved lots lead to this conclusion ; that the advance in value of the lots was not in
In the second place, Mr. Plunkett evidently meant to take no risk in this business. He was careful to stake nothing upon the improvements to which the only hazard of losses could attach. He was content to share the profits in the land, which were certain, and in doing so to share also the chance of loss on the land alone, which is clearly nominal as the profit was certain. Just at the point where the question of profit and loss became one of substance he stopped. It is certain that help to build houses as well as to buy the land must have been acceptable to Dillon, and it is quite as certain that it would have been given to him by the formation of a real and substantial partnership in the whole enterprise, instead of a mere loan for the purchase of the land but for the consideration that in the building operations there were real risks, while in the value of the land there were none worth consideration.
Then we come to a third feature of the case, which strongly indicates that the memorandum of August 1864 was colorable, that is, its purporting to set forth a joint purchase or partnership, contrary to what the acts and transactions of these parties demonstrate to have been the real arrangement between them. This inconsistency between the memorandum and what the evidence discloses
And now a last fact concurring with those before stated against the assumption that the share of profits was in consideration of any risk to Mr. Plunkett’s capital, is his own statement of the ground on which he claimed these profits made to Mr. Cause at the time of the attempted settlement. He claimed that “ on account of his having “furnished this money ($3000.) to Dillon, he was to have “a certain share of the profits, two-thirds.” These are his words. The claim to profits was not here made for risk, but for the accommodation in raising the money.
There is a general consideration that weighs very strongly with me in treating this as an usurious arrangement. It is that the case is in a court of equity where such a decision operates less severely upon the complainant. In a court of law usury operates as a forfeiture of the debt, and subjects the lender additionally to the penalties of the statute. In this Court the whole effect of adjudging a loan to be usurious is to relieve the borrower from the exaction of more than lawful interest. The lender is permitted to receive his debt with the interest. In a court of law where such consequences are to follow, the onus may well be upon the borrower to establish a clear case of usury ; but in a court of equity, where the lender is at all events to get- his money with interest, he should be justly held to satisfy clearly the conscience of the court in allowing him a larger exaction. Here precisely is the ground of my conclusion : I am not sat - isfied that the mere chance of the immediate depreciation of these lots, while under the very process of im
Leaving now the question of usury, we cometo another fatal objection to Plunkett’s claim to a share of the profits ; that is, that the claim is, under the circumstances, grossly inequitable, such as even, were it not usurious, a Court of Equity will refuse to enforce. What is this claim ? It is to a share of profits for the creation of which, Mr. Plunkett has neither risked his money, nor given his personal labor. The utmost extent of his connection with this enterprise was to loan Dillon $3000, to enable him to purchase the land, the repayment of which money with legal interest was secured to him to his satisfaction at least. This is not like the case of a partner who upon an advance of capital to his firm may in addition to his advance with its interest, justly receive a share of profits, because there the partner’s capital is at substantial risk, and he himself additionally is liable for the partnership debts. So here, if Mr. Plunkett had become a bona fide partner in the whole enterprise of purchasing, improving and selling the land, thus subjecting his capital to real risk, and assuming the substantial liabilities of a partnership, his claim to a share of profits as well as interest on capital would be equitable. But instead of a partner he was plainly but a money lender, and certainly if one person who lends his money at interest to help commence an enterprise, may without sharing its real hazards, equitably exact a portion of the anticipated profits, another person may with equal equity upon a further loan to help prosecute the enterprise to completion, exact the residue of the profits; thus between them leaving as a return for the labor and skill of the adventurer all the risk and none of the profits. The practical effect of such arrangements is to place labor in a condition of absolute servitude
Now with respect to the principles upon which this Court deals with what are usually termed hard and unconscionable bargains; they have been settled so clearly and authoritatively as to need little more than a statement of them. The rule is this; where the contract has been already executed, or the party having the advantage under it can enforce it at law without the aid of a court of equity, this Court will not interfere to set the contract aside, or to restrain a party seeking his legal remedy under it, on the mere ground that the contract is hard or unreasonable, where there has been no fraud or mistake, or the party hardly dealt with, is not mentally incompe
The objection now under consideration, that is the gross inequitableness of the claim to profits in addition to interest, is fatal, whatever view we may take of the arrangement between these parties. Even treating them as joint purchasers upon the theory of the bill, and that the $3000 was an advance of. purchase money, the stipulation, for almost the whole of the profits on the lots received, without either risk or labor to be incurred by Mr. Plunkett or anything done by him but advance his money at legal interest, was an unreasonable and exorbitant arrangement, which although if executed, a court of equity might not disturb, yet it will decline to enforce.
There is a broad and fundamental maxim of equity which reaches into this case, and which is alone decisive of it; that is, that he who seeks equity shall do equity. Mr. Plunkett has sought the interposition of this Court to effect a settlement of these transactions even to the extent of withdrawing the controversy from the courts of law. In such case the course of the Court is to adjust between the parties all the equities arising out of their transactions, requiring that the complainant do, as well as receive, equity. It is precisely on this principle that when a borrower of money on usurious interest comes into a court of equity for relief against the lender, it will oblige him to repay the debt with lawful interest, upon being relieved of the usurious excess. So here, upon the like principle, the Court will oblige Mr. Plun- • kett to relax an unconscientious claim to a share of the profits, even supposing such share to have been stipulated for, at the same time decreeing the repayment of the money loaned by him with the lawful interest. After much and anxious reflection upon the whole case, I am
After the announcement of the opinion of the Chancellor and of the allowances and disallowances made by him in the accounts of the parties, the counsel agreed upon a statement based upon the decision, and showing in conformity therewith a balance due from Plunkett to Dillon of $4626.10, for which a decree was entered under the cross bill; the decree also perpetually enjoined the collection of the $3000 judgment, and ordered the canceling and delivery up of the due bill of June 28, 1869 for $334.17, and for costs. Upon the original bill a decree was entered dismissing the bill with costs and dissolving the injunction heretofore issued against the suits at law.
Note. From both decrees an appeal was taken by the complainant in the original bill. The Court of Errors and Appeals differed with the Chancellor as to the effect of the evidence upon the question of partnership, holding that the proof was of a contract of partnership and not of an usurious loan. The decree was accordingly modified by the allowance to Plunkett of ¡63230.82 as the two-thirds of the profits claimed leaving due to Dillon the sum of ¡61.532.53. As to all other matters determined the decree was affirmed. See. 4 Houston's Del. Rep. 338.
See 3 Del, Ch, 497,