Rowan v. Sharps' Rifle Manufacturing Co.

33 Conn. 1 | Conn. | 1865

Hinman, C. H.

When this cause was before us on a former occasion (31 Conn., 1,) we held that the decree of the superior court foreclosing the right of the petitioner and of the government of Great Britain, unless they should pay for the use of the respondents a large sum of money, found to be the loss and damage sustained by the respondents by reason of the acts and defaults of the agents of the British Government in respect to a contract between that government and the respondents, which was wholly separate and independent of the contracts upon which this petition is founded, and on failure of such payment authorizing the respondents to redeem the premises sought by the petitioner to be foreclosed, and to become the owners thereof in fee, by the application and set-off of so much of said loss and damage as amounted to the sum of $33,000, found to be the value of the mortgaged premises ; and further decreeing that on the failure of the petitioner or the British (Government to pay such loss and damage, such application and set-off should be deemed to have been made and assented to, without any further act on the part of the respondents, and the title of the, respondents to the premises should thereafter be absolute as an indefeasible estate in fee simple, was erroneous, because the respondents ha*d not alleged that they had taken or elected to take the premises under the contract by virtue of which they claimed a right thus to appropriate the property, and because they had not shown any attempt or intention so to take the propei'ty, but the contrary was expressly found by the committee ; and because also they had no light to take the premises but ixx a mode prescribed by the coxxtracfc under which they claimed to exercise this right, especially in respect to the fixing of the value thereof, and which mode had not been pux’sued.

The case now comes before us for our advice as to the proper decree to be passed upon the same state of facts which was then before the court, with a slight variation in one or two particulars, which ax’e not material to the questions involved in it; and there is also a question as to the admissibility of certain evidence before the committee on the supplemental hearing, which upon the view we have taken upoxi the merits of the case it is unnecessary to decide. The case is important in respect to the amount involved, and is so extremely complicated in its facts that we have, after hearing it twice ax’gued, felt the necessity of devoting much time to a careful examination of it,which has caused much more delay in the decision of the case than would otherwise have been necessary ; and we have to regret also that we have not at last been able to ax’rive unanimously at the conclusion which is now to be expressed, on all the points ixxvolved in the case.

One of the qxxestions ixx the case is, whether the release or quitclaim deed executed by the respoxxdents oxx the 11th of December, 1855, in pursuance of their vote for that purpose, to Robbins & Lawrence, to enable thexxx to make satisfactoxy security to Fox, Henderson & Co. for the $180,000 advanced on the coixtract of the Robbins & Lawrence Company to manxxfacture 25,000 Miixie infles, together with the mortgage of Robbins & Lawrence to Eox, Hexxderson and Company of the property so released, and the circumstances under which the I’espondents wex'e induced to pass that vote axxd execxxte the release, made the respondents, so far as their previous interest in the property thus released is concerned, sureties for the due performance, by the Robbins & Lawrence Co. or by Robbins & Lawrence, of the contract of the 8th of March, 1855, for the manufacture of the 25,000 rifles. And we are of opinion that, in respect to the interest conveyed by this quitclaim deed, the respondents were sureties for the due performance of that contract. That one may become the surety for the payment of another’s debt or the performance of his contract by mortgaging his land or pledging his property for that purpose, as well as by coming under a personal liability for the same purpose, seems to be a proposition too plain for illustration or argument. The liability to be subjected to loss, to the extent of the property pledged or mortgaged, is as great at least as if the party was under a personal obligation ; and if his property is eventually subjected to the payment of another’s debt, at whose request and for whose benefit he thus pledged it, his right to an indemnity would seem to stand on the same footing as it would have done had his obligation been personal. And this has long been held to be so in that class of cases where a wife pledges or mortgages her separate estate for the debts or liabilities of her husband. After the death of her husband she is justly considered in equity as a creditor of the husband’s estate, and entitled to have his assets applied in discharge and satisfaction of claims thus secured in order that the lien upon her separate estate may be discharged. The court, it is said, in such cases looks upon him as the real debtor, and on her land or other estate as only additional security. See the cases on this subject collected in Clancy on Husband and Wife, Book 5, Chap. 12. And the same doctrine is held in this country as in England. Neimcewicz v. Gahn, 3 Paige, 614, and 11 Wend., 318. In Connecticut it does not appear that our courts have ever had occasion to act upon this principle, and yet it is so obviously just that Judge Storrs, in Ayers v. Husted, 15 Conn., 517, speaks of a wife’s land, as standing in the relation of surety in that transaction, seeming to regard the principle as a well understood and recognized one. And the reason of this principle certainly applies with equal force to the case of a stranger who mortgages his property for his friend’s debt, and has accordingly been recognized. Robinson v. Gee, 1 Ves. Sen., 251; Lord Harberton v. Bennett, Beatty Ch. R., 386 ; Loomer v. Wheelwright, 3 Sandf. Ch. R., 155. Indeed the doubt we have entertained on this point has not arisen from any question as 'to the correctness of the principle itself, but it has been merely as to the application of it to the facts in the case. To enable a party to take the benefit of the principle it should doubtless appear that the property pledged or mortgaged for another’s debt was in fact the property of the party so pledging or mortgaging it. If he merely relinquishes some lien he may have upon property to enable the real owner to mortgage or pledge it for -the security of such owner’s own debt, no one would claim that such a release would render the releasor a surety in any sense of the mortgagor ; and the petitioner’s counsel insist that this is a case of that sort. We have come to a different conclusion. Generally everything which is the subject of sale or assignment may be mortgaged or pledged, since a mortgage is only a conditional sale. Hence it follows that a mortgage, including of course the debt secured by it, may itself be the subject of assignment as security for another’s debt. The situation of the respondents’ title to this property was peculiar. They held the legal title by an absolute conveyance, which, though but a mortgage for the purpose oí securing the performance of the contract by virtue of which it was conveyed to them, was, so far as strangers to the title, who had no other knowledge of it than such as the record of their deed conveyed, an absolute and indefeasible estate, and strangers no doubt might safely have dealt with them upon that supposition. As between the parties however, it was merely a mortgage with an optional right of purchase upon certain terms, and this right was secured to them by their absolute deed, as we held when this case was before us on the former occasion. Now had the respondents been willing to surrender their optional right of purchase, and give up their mortgage interest in this propex’ty absolutely for the purpose of enabling Robbins & Lawrence to use it as their own, either to raise money upon it by way of mortgage, or to make satisfactory security to Fox, Henderson & Co., and without any stipulations in respect to their own rights or any attempt to preserve them, their claims upon the property would have been extinguished by their release, and they could not have recalled them, either against Robbins & Lawrence or the petitioner. But by the vote of the company, which was made known to Fox, Henderson & Co., and which was passed at the joint solicitation of all the parties then having any interest in the security, and the terms of which were made known to them all, it appears clearly to have been the intention of the respondents to preserve -their rights to the property released, subject only to the contemplated mortgage to Fox, Henderson & Co. How this intention being known to all the parties, and particularly known to the mortgagees at the time they took their mortgage,- and the mortgagees knowing moreover that the respondents had valuable interests which they intended to preserve in the property, and that the conveyance was made, not to secure their own debt or liability, but tlie liability of the Robbins & Lawrence Co., for whom the respondents were mere sureties in this transaction, Fox, Henderson & Co. the mortgagees must be presumed to have recognized this intention and assented to it, and intended to carry it out in good faith. This intention ought to be carried out provided it can be done consistently with established rules, and it appears to us that this can be done. The whole transaction taken together may be treated as an assignment of such portion of their mortgage debt or claim against Robbins & Lawrence as this portion of the property mortgaged to secure it bears to the whole of the property claimed by the respondents under the same title. Indeed, under the circumstances, this seems to be a fair inference of the intention of the parties, and therefore as properly coming under the maxim requiring a liberal construction upon instruments in order to uphold them if possible, and carry into effect the intentions of parties. If this had been done by a proper instrument of assignment of the debt or -claim, or some portion of it, together with the conveyance of the mortgaged security, no one would doubt that, so far as the interest thus assigned was concerned, the respondents would stand in the position of sureties of Robbins & Lawrence in respect to the contract intended to be secured thereby, and as such would be entitled to the rights of 'sureties in respect to any subsequent transactions between Robbins & Lawrence and Fox, Henderson & Co. or their assignees. The fact that such an assignment must carry with it a portion of the mortgage debt in order to support the conveyance of the land ought not to be permitted to defeat the obvious intention of the parties. Equity looks at the real intention and object rather than to forms, and will always carry out - that intention if it can be done consistently with established rules.

It appears to us, therefore, that the respondents, in respect to the interest conveyed by their quitclaim deed to Robbins & Lawrence, under the vote which authorized it, must be regarded in the nature of sureties for the performance of the contract intended to be secured to Eox, Henderson & Oo. by the mortgage deed of the same property, under which the petitioner now claims a foreclosure against the respondents. What then is the effect of the subsequent.alterations and changes in the contract thus secured, made by the parties thereto after the execution of this mortgage ? It is said in the text-books that any binding stipulations between creditor and debtor, not communicated to the surety, which are inconsistent with the terms of the contract, or which are prejudicial to his rights therein, will operate as a discharge of the surety, and any act inconsistent with the fights of a surety, if not assented, to by him, will discharge his contract. And on this ground it is held that any new contract between creditor and debtor, without it is assented to by the surety, which is inconsistent with the original contract, will operate to discharge the surety.

We have none of us any doubt that within the spirit of these well known principles some of the alterations and changes in the contract of March 8th, 1855, for the manufacture of the 25,000- Minie rifles, were such as to discharge an ordinary surety for the performance of that contract. There were many changes in that contract without the knowledge or consent of the surety. But it is wholly unnecessary to allude to more than one or two of them, sincé one such material and binding change in the terms of the contract is as effective for this purpose as any number of such changes. We have said that it was the contract for the manúfacture of 25,000 Minie rifles that was secured by the mortgage of Robbins & Lawrence, and ,of course it follows that it is that contract that the respondents secured, or enabled the mortgagors to secure, by the quitclaim deed given to the mortgagors for that purpose. The condition of the mortgage deed shows this; for while it speaks of the repayment of the 1130,000 then and before advanced to Robbins & Lawrence, it goes on to show that the money was not advanced as a loan, but as prepayment for the rifles to be manufactured; and the repayment was to be effected pursuant to the terms of the contract to manufacture them, by a deduction from time to time, as the rifles were delivered, of a portion of the contract price for the rifles as so delivered. And the condition of the deed expressly provides that the contract should be duly performed in all respects, or the deed would become absolute. It was therefore only in case of the non-performanee of that contract that there was to be any repayment of the advancements in money. And it was for the purpose of enabling Robbins & Lawrence to make this satisfactory security for the performance of that contract, and the repayment of the money in case of its non-performance, that the respondents executed the quitclaim deed, and not primarily for the repayment thereof in cash. •

Then were the terms of that contract materially changed after the giving of this security for the performance of it ? The original contract provided for the manufacture and delivery, “ with all possible dispatch,” of these 25,000 rifles. By this stipulation it was doubtless understood that they should be made and delivered within a reasonable time. We are not aware that any question is made by the petitioner as to this being the true meaning of this phrase ; and there certainly appears to be no material distinction between it and a contract by a manufacturer to furnish certain goods “ as soon as possible ” which was held to mean within a reasonable time in the case of Attwood v. Emery, 38 Eng. Law & Eq. R., 176.

Now by a subsequent contract between Robbins & Lawrence and Fox, Henderson & Co., but made on the same day on which the mortgage in question was given, this stipulation was so changed that the Robbins & Lawrence Co. and Robbins & Lawrence agreed that from and after that date they would complete and deliver an average of at least 300 rifles per week up to the 15th of January then next, and an avei’age of at least 600 per week for each succeeding week during which the contract should be pending, and that after the 20th of December, then instant, in order to such completion at the earliest practicable period, they would carry on by night as well as by day all works under said contract which could be performed at night. Now we do not stop to inquire whether these changes, as suggested by the petitioner’s counsel, might not have been for the benefit of the surety. It is enough, we are satisfied, that they were material changes which destroyed the identity of the contract secured, and clearly justified the surety in saying that he never became surety for the performance of the substituted contract. Manufacturers’ Bank v. Cole, 39 Maine, 188; Samuell v. Howarth, 3 Merivale, 272.

It was insisted upon by counsel that these changes of the time of delivery were only a specification by the parties of what in their view was a reasonable time for such delivery. We do not think so. But if this should be assumed it would be necessary to go still further and hold that the subsequent alteration in this respect made on the 14th of January, 1856, by which it was still further stipulated that after the first day of February then next, 650 rifles, completely finished, should be delivered each week, was a still further specification of what the parties at that time considered a reasonable number to be delivered weekly. But it appears to us very clear that a contract to manufacture and deliver a large quantity of any description of goods in a reasonable time, and a contract to manufacture and deliver the same quantity either at a specified time for the whole, or a specific quantity from time to time, monthly or weekly, as the case may be, are materially variant.

Another material alteration of the original contract which the parties made by the contract of December 11th, 1855, was that Fox, Henderson & Co. were to retain from the price of each rifle to be delivered under the original contract, five dollars instead of four, as provided for in the original contract. This one dollar on the whole number of rifles to be delivered might have been the means of enabling the Robbins & Lawrence Co. or Robbins & Lawrence, to complete their contract and thus have saved the surety harmless. And as the respondents pledged their property for the performance of the contract as it originally stood, it might also have been the inducement, and doubtless was to some extent an inducement to them, to part with their interest in the mortgaged premises in order to enable Robbins & Lawrence to mortgage them. These, with several other alterations of the original contract which we do not think it necessary particularly to allude to, made material changes in the original contract, the effect of which was to destroy its identity, and in equity discharge the respondents’ liability as surety. And as there is no difference between a contract secured by the personal obligation of the surety and one secured by the pledge of his property, in respect to the acts of the parties to it which will exonerate the surety, we have no doubt, as already remarked, that in equity the surety was discharged in this case, so far’as the interest in the property conveyed by the quitclaim deed'’is concerned.

We are brought now to the effect which the discharge óf the respondents’ interest in the mortgaged premises frorffany liability to pay the mortgage debt, so far as the respondents are concerned, has upon the result of this case. The legal title to the premises was undoubtedly passed to Fox, Henderson & Co. by that mortgage ; and whatever may be the nature of such a title elsewhere, with us it may without doubt give to the party holding it, even in a court of equity, an important advantage -which he would not- otherwise possess, since it is a well settled rule that where the equities are equal the legal title will prevail. Smith v. Vincent, 15 Conn., 1; Gregory v. Savage, 32 id., 250. Robbins & Lawrence, by the quitclaim deed of the respondents, became for the time the absolute owners in fee simple of this property. There were no other persons at that time who had any interest whatever in it. And this title of course passed to Eox, Henderson & Co. by the mortgage to them. And this leads to the remark that the contest in this case is in reality what is sometimes called a scramble, between creditors of the hopelessly insolvent corporation of the Robbins & Lawrence Co. and some of its equally insolvent shareholders, for what there is left of the property of these insolvent debtors. It is quite obvious that both parties are in danger of losing some portion of their respective claims. In a general sense, therefore, the equities between the parties are precisely equal, since to give a preference to either of them implies the absurdity of making a distinction between creditors of the same insolvents in respect to their respective rights to the payment of their debts. Who then has the better title to the property in dispute ? The petitioner seeks to foreclose the respondents’ interest in the premises. But as against them he has no equity, because those under whom he claims have so altered the contract that was secured by the original mortgage as to destroy it, as a security for the contract it was intended to secure. His bill of foreclosure should therefore be dismissed, or be postponed to such decree as may be rendered in favor of the respondents upon their cross-bill. What interest in the property have the respondents set up in their cross-bill and established by their proof ? Originally they had, as we held when the case was before us on the former occasion, (31 Conn., 1,) a mortgage interest with an optional right to purchase, in a mode prescribed by the parties in the contract by which this right was created. And by the terms of their vote under which they parted with these interests to Robbins & Lawrence, they were to have from Robbins & Lawrence a mortgage to secure their indebtedness, subsequent to and stibject to the petitioner’s mortgage. This mortgage, though never executed in fact, it is agreed should be treated as if it had been. And the respondents having parted with their title, such as it was, as the sureties of Robbins & Lawrence for the due performance of the contract of March 8th, 1855, and the alterations in the terms of that contract operating to discharge this suretyship, the effect is simply to postpone the petitioner’s mortgage to the mortgages of the respondents. But the respondents having no absolute title, but in equity a mortgage title only, coupled with their independent right to purchase, (which right however it does not appear that they intend to exercise, and it need not therefore be noticed in this connection,) the effect as we think is to postpone the petitioner’s mortgage to the mortgage that was to have been executed to the respondents, as well as to their previously executed mortgage interests. But as the respondents’ last mortgage was to have been executed on the 11th of December, 1855, it can only stand as a security for the indebtedness of Robbins & Lawrence to them at that time. And as Robbins & Lawrence had an .ultimate equity of redemption, 'which passed to the petitioner’s assignors, by the mortgage executed on the 11th of December, 1855, and as this was a good mortgage as against Robbins & Lawrence, though inoperative as against the respondents in consequence, of subsequent acts, the respondents regularly are entitled to a decree of foreclosure against the petitioner, unless he pays whatever is due the respondents from Robbins & Lawrence of the indebtedness which existed on the 11th of December, 1855. The amount of this mortgage debt still remaining due to the respondents is found by the committee to be so small that the respondents, probably fearing that a decree in their favor foreclosing the petitioner unless that debt is paid may be prejudicial to them in other respects, specially disclaim any intention to take a decree of foreclosure for that sum alone, and express a preference rather for the dismissal of both the bill and cross-bill; and the court therefore would not undertake to advise the superior court to grant them this measure of relief, if they continue to refuse to accept it; unless, as jurisdiction of the cross-bill has been obtained by tbe court, it may be 'necessary in order to do complete justice in tbe case that such a decree should be made.

It is suggested by the counsel for the petitioner that the small balance of the mortgage debt to the respondents is not secured by the mortgage of September, 1853, but only by the new mortgage which was to have been executed after the mortgage under which the petitioner claims, because the mortgage debt was to be secured, it is said, solely by that contemplated mortgage, and not by the reconveyance provided for by the vote of December, 1855, which reconveyance, it is claimed, referred solely to the performance of the contract of January 9, 1852, and the title acquired under that contract. Such a construction may no doubt be given by adhering literally to the language of the vote. Still we can not doubt that the intention was to restore to the respondents all their rights, whether arising under the contract of 1852 or the mortgage of September, 1853. Their rights were of the same nature under both of these instruments, except in respect to the optional right of purchase; and we do not think the circumstance that they had their origin under separate instruments of any importance in respect to the reconveyance contemplated on the performance of the contract for the manufacture of the 25,000 rifles. The respondents, we think, stand in the condition of sureties in respect to the whole mortgage debt or liability, however arising, previous to their release.

The views which we have thus far expressed are in accordance with those which were intimated in our statement of the points on which we wished a re-argument; and we will only say that the very elaborate and able re-argument which we have heard has not altered our previous impressions upon them. We expressed our conviction on the first trial of this case on the motion in error that the right of purchase, if still an existing right, could not affect this case, because, among other reasons, no foundation for its exercise was laid in the allegations of the cross-bill.

We come now to the claim of the respondents for relief, arising out of their independent claim against the British Government. That they have an equitable claim of that sort arising out of an independent contract by them with the agents of that government for the manufacture of arms, which claim amounts to more than the value of the disputed premises, as found by the committee, but is much less than the petitioner’s claim against Robbins & Lawrence, there can be no doubt. Can the premises in dispute be in any way legally and equitably appropriated to the payment of that claim ? The respondents’ counsel insist that they can be. They say that the petitioner’s bill is a bill to redeem, in substance, and must be so, because it is found that the petitioner stands only in the position of a second mortgagee, and that in order to redeem he must first do equity by paying the first mortgagee his mortgage debt, and all other legal debts which the respondents have against the petitioner, who in this case merely represents the British Government, and therefore must pay that government’s debt to the respondents. We have not been able to see how this position could materially aid the respondents if it were correct. When a petitioner seeks to redeem mortgaged premises he may no doubt be denied this ordinarily equitable relief unless he will do the respondent the equity of paying also an independent debt of the mortgagee as well as the debt secured by the mortgagé. And, as we suppose, this is always imposed as a condition, upon the performance of which alone the petitioner will be entitled to the relief he seeks. If he pays both debts he obtains his relief, but if he does not pay them both he takes nothing by his decree, and the rights of the parties to the premises sought to be redeemed would remain the same as if no relief had been sought. But in this case we have already disposed of the petitioner’s bill by dismissing it on other grounds; and it can hardly be supposed that the petitioner, if this condition was imposed upon him here, would be willing to pay a claim so much larger than the whole value of the premises in dispute, in order to obtain a perfect title to the property. But we do not think that the petition can be turned into a bill to redeem against the wishes of the petitioner himself. The prayer for the removal of a cloud upon the petitioner’s title, if ever insisted upon for any purpose, is abandoned now, and has been ever since the case has been pending in this court, and is claimed to have been so abandoned before the facts were found by the committee. We think, therefore, that it should be treated now as a mere petition for a foreclosure. And consequently it is upon the respondents’ cross-bill that they are entitled to relief if at all. We think, moreover, that the case upon the cross-bill is the same substantially as it would be upon an original bill of the respondents seeking the same or similar relief to that now claimed on the cross-bill. Now, looking at the cross-bill as an original bill for relief, it is very difficult to see, upon any ordinary equitable principles, how the respondents can be entitled to relief. It is said that the reconveyance contemplated on the performance of the contract for the manufacture of 25,000 rifles will be viewed by a court of equity as having been done when the respondents’ suretyship ceased by the changes in that contract, because it ought then to have been done. That it may be so treated for certain purposes is doubtless true, but we think it a misapplication of an equitable principle to so treat it here on application of these respondents for independent relief growing out of a «transaction wholly independent of any thing sought or asked for in the original bill. The legal title, as we have before said, in fact is in- the petitioner,- and the respondents are obliged to resort to a court of equity to obtain it. They must show, therefore, that their equity is superior to the equity of the petitioner to entitle them to relief. It appears to us that this must preclude the granting of any relief to the respondents on their cross-bill, on any ordinary equitable principles, for ■ their independent claim on the British Government. They might, as we intimated on the former hearing of this case, be permitted to use it by way of set-off to the petitioner’s claim against Robbins & Lawrence, on principles somewhat peculiar to the case, arising from the circumstance that one of the parties is a foreign government, which otherwise might be permitted to withdraw funds in the hands or from the control of the respondents which ought to be appropriated to the payment of the debt of that government; but beyond such an application or set-off as this we are not aware that any case has gone.

The respondents make another claim which is stated in the points assigned for re-argument as follows:—

“ Assuming it to be’true that the respondents have a valid but independent claim against the British Government — that they are our own citizens — that the British Government own in fact the land in question, and have no other property in our jurisdiction — that it is doubtful whether an original action at law in favor of the respondents will lie to appropriate it, and clear that if it will, the title being in Rowan, a resort to equity must ultimately be had to perfect the title— that the British Government are pro hac vicé embodied in the person of the petitioner as ordinary suitors, and in court making answer to the cross-bill in respect to their rights in the property, and as to that property are subject to our own decree — may we not advise the superior court, in order to prevent a failure of justice, and in accordance with the doctrine that every man’s property shall be made available to pay his debts, that on an amended cross-bill, a sale of the property and a payment of the debt by the respondents thei’efrom may be ordered ? Or may we not advise the superior court that, upon an amended cross-bill, it will be competent for them, if they find a right of purchase in Sharps’ Rifle Company, to provide for an appraisal, and decree the title, applying the debt due from the British Government in payment ? ”

The respondents’ counsel insist that the relief suggested in this statement can and ought to be granted, and the petitioner claims that it can not be done consistently with established rules. The assumption that the claim on the British Government is an independent one, pre-supposes that the claim is wholly independent of any matter set up in the petitioner’s bill. And the respondents’ claim on the British Government we have already said is of this description. It is not a claim on this particular property, as distinguished from any other property belonging to that government which happens to be within the jurisdiction of the court, any further than this, that the respondents have been brought before the court through the petitioner, acting on behalf of that government, in reference to a title, but an independent and distinct one, to that property. Nor do we consider the circumstance that the litigation is between our own citizens and a foreigner, or a person representing another government, of any importance in itself, in respect to the title to the property. The only importance there can be in this circumstance must arise wholly from the fact that the petitioner, or the government he represents, can in no other mode be made to pay the debt of the respondents. And the assumptions that the British Government is before the court making answer to the cross-bill, and that the property is subject to our decree, are not intended for any thing more than that the case is before us, and the property is subject to such decree as, according to the rules of a court of equity, we may consider proper to be made under the circumstances.

It being assumed that this claim against the British Government is wholly independent of the matter se,t up in the petitioner’s bill, we think it follows that, unless there is some distinction to be made between this and a case between ordinary suitors, it is not in the aspect in which it is here presented the subject-matter of a cross-bill. All the writers on this subject speak of a cross-bill as setting up matter either touching the matter in question in the original bill or as in aid of the defense to the original bill, or, as expressed by Judge Swift in his Digest, Vol. 2d, p. 218, “ as brought against the plaintiff by the defendant in a suit respecting the matter in question in that bill.”

It is brought, says Judge Story, either to obtain a necessary discovery of facts in aid of the defense to the bill, or to obtain full relief to all parties touching the matters of the original bill; and it is held that it can only be sustained on matters growing out of the original bill. Slason v. Wright, 14 Verm., 208. And we are referred to nothing contrary to this except in the single case of set-off, which we have before intimated might properly be allowed here if the respondents desire it. If this is so, and it is also true that the matter set up in this cross-bill is wholly independent of the matter set up in the bill, and does not touch or relate to that matter, either for the. purpose of defense to it, or for any disclosure relating to it, but is merely set up for the purpose of laying the foundation forc some independent relief, it seems quite obvious upon authority and principle that, for the purpose of any such independent relief as is asked for, the cross-bill should be dismissed ; unless indeed the fact that the petitioner is the representative of a foreign government which owns the property in dispute, which government is indebted to the respondents, and this debt can in no way be secured or payment of it obtained except by a sequestration and appropriation of this property for that purpose, varies the case in this respect. Is there then, as the respondents claim, any such principle as this recognized by courts of equity; and if so, is this principle so broad as that, while a party can not sue a foreign government or cite it before a court, still, when such government for any purpose appears before a court to enforce a claim of its own, the party sued may then, because he has that government in court, compel it to make answer to any matter or claim that he can establish against it and submit to any decree touching that matter or claim that the court may make; and that such decree can be enforced by an appropriation of any property in relation to which there is a contract or controversy, notwithstanding the claim against the government is wholly foreign to and independent of the claim it is endeavoring to enforce ?

The respondents’ counsel, as we understand them, claim this to be so. At least they lay down the proposition that, as the Rifle Company have a valid claim against the British Government, they have in equity a right to have this property condemned, or in some way sequestered and appropriated to the payment of the debt.

And it must have been for the purpose of sustaining this position that counsel have cited and read to us so many cases where property has been sequestered, either to compel an appearance or to punish a party for some contempt in not obeying an order or decree of the court. No doubt the process of sequestration against privileged persons to compel an appearance is sometimes resorted to in England, and we suppose that contempt in not obeying a decree of a court of equity may be enforced in this way as well as by the commitment of the party in contempt. But cases of this sort certainly have but a remote, if any, analogy to an attempt to enforce the payment of a debt against a government that can not be sued or summoned before a court, whenever for any purpose the claimant may happen to have that government as a party before the court. If this can be done against a foreign government it would seem that it might be against any of the states of the Union or even against the general government itself, and so, whenever the bond of a postmaster or other officer is put in suit, or any other debt a government has against an individual, any valid claim against the government that individual may have may be set up as a defense to the suit. A majority of us think the statement of such a proposition carries its own refutation upon the face of it, since it is believed, if it was attempted to be carried into effect in any court in this country in reference to any claim against our own government, (and there are very many such claims since our late domestic troubles,) it would seem too manifestly absurd to be met by serious argument. It is enough to say of this class of cases that they do not apply in support of the position contended for with much more force, as we conceive, than would a reference to the doctrine of outlawry as it is understood and practiced upon in England in both civil and criminal cases. The British Government are not before the court for the purpose of making answer to independent claims upon it, not growing out of or incident to the mortgage of Robbins & Lawrence to it or to Box, Henderson & Go. for its benefit. Nor is this land before the court except for the purpose of determining the respective rights of the parties growing out of their respective mortgage or other titles to it. If the respondents have a valid claim on the British Government growing out of an independent contract for the manufacture of arms for it, the presumption is that on a proper application for that purpose the debt would be liquidated and paid. Counsel would hardly contend that, if the respondents were the owners of enough of the recognized public debt of that government, so that the interest or principal due upon it would be sufficient to enable them to absorb the whole of this land in obtaining payment, they could obtain payment by setting it up in a cross-bill to-this claim of the petitioner for a foreclosure. And yet the claim set up in this case is just as independent of the mortgage to Fox, Henderson & Co. as that would be. The only difference that we can perceive is that one would be an acknowledged and recognized liability, while the other is wholly unliquidated. But this surely makes no difference in principle in respect to the use that may be made of them for the purposes of defense against a claim which the government is attempting to enforce. There is no principle known to a court of equity which will enable a party to seize and appropriate the property of his debtor to the payment of his debt, merely because the debtor is privileged from liability to be sued. Such a process would itself be a suit, and it would be a fraud upon the privilege itself to use the appearance in court of such privileged party for another distinct purpose, as the occasion for making him respond to a claim that otherwise he would not be bound to answer. The nearest approach to such'a principle that we are aware of, is in the case of a married woman who has a separate estate, and contracts debts upon the strength and credit of it, and thereby charges it with the payment of such debts. But this arises from her inability to bind herself personally. She can not make a personal contract and therefore she is allowed to supply her necessities by creating a lien upon her separate estate; and then it follows, of course, that a court of equity will enforce a lien so created. But here the respondents claim no lien upon this property for any purpose whatever, except such as we recognize and are willing to enforce, that is to say, the lien arising from their being in fact prior mortgagees of Robbins & Lawrence. We are aware that the respondents in their brief, and in argument, speak of a lien upon this property for the payment of this independent debt, but when it is considered that the contract out of which the respondents’ debt arose was not made until March, 1856, several months after the mortgage under which the petitioner claims a foreclosure, we think it fairly to be inferred that the lien contemplated by them is only that which we have been alluding to as a claim to appropriate this property to the payment of their debt because they have no other remedy. If this is not their meaning then it must arise out of their claim of tacking it to their mortgage debt, and forcing the petitioner to pay it, on the ground of his petition being a biil to redeem, which we have said it is not. The cases cited by the respondents in support of their claim are cases of set-off, which we have several times intimated might be allowed in this case. It is true the respondents’ claim was primarily against Robbins & Lawrence, and as against them it is unliquidated, and perhaps it might be said that, as against them, the exact sum of five dollars per gun would not be the rule of damages ; for although they took upon themselves the risk of the British inspection, they did not agree to pay five dollars per gun for the failure to deliver by the stipulated time. But they were manufacturing the guns for the respondents in order to enable them to fill the British Government order. And this was known to the agents of that government, and' the interference of these agents in effect wrongfully prevented the respondents from performing their contract and ought therefore to estop the British Government from claiming the forfeiture. And as that government is seeking to foreclose the respondents’ interest in this land, we may say we will not allow this to be done, and this land to be taken from the respondents’ hands, except upon the terms of allowing this debt to go in reduction of the petitioner’s claim upon the land, that is, as a set-off. This is as far as any of the cases cited have gone, and is quite analogous to what was done in the case of The King of Spain v. Hullett, 7 Bligh, 387, which we think is the strongest case for the respondents that we have been referred to. We know of no other case than that of set-off where matter foreign or not touching or relating to the matter charged in the original bill has been allowed to be set up as a ground of relief in a cross-bill.

What then upon the whole case should be the decree of the superior court ? The respondents have a valid mortgage of the premises which in equity is prior to the petitioner’s mortgage, and they are entitled to a decree of foreclosure against the petitioner unless the debt secured by it is paid within a time to be limited by the court. The amount due upon that mortgage debt is found by the committee to have been only $174.30 at the time the report was made and some interest has since accrued upon it. If this debt should be paid by the petitioner within the time limited by the court, then the petitioner will stand as the only party having any incumbrance upon the property, and will of course be entitled to a decrée of foreclosure in his favor for the full amount of his claim, less the amount of the respondents’ claim against the British Government for damages growing out of the contract of the 26th of March, 1856, as found by the committee, but including with the petitioner’s other claim the amount he may pay or may have paid on the decree in favor of the respondents; and if the petitioner should, not redeem by paying the balance due to the respondents within the time limited for that purpose, the petitioner should be decreed to convey the legal title to the premises to the respondents, op the same should be vested in them by the decree as fully as if the same were so conveyed. Such certainly would seem to be the only proper course in ordinary cases. But there is not a majority of the court in favor of this disposition of the case under its peculiar circumstances. Some members of the court think that, as this course would enable the petitioner to reap most of the benefits, while he would avoid all the liabilities incident to a petition to redeem, and would thus avoid payment of any portion of the large' sum found to be due to the respondents from the British Government, while availing himself, for the benefit of that government, of this property, there is no equity on the part of the petitioner that requires us to advise the superior court to pass such a decree in this case. They think therefore that under the circumstances of the case it is rather our duty to accede to the request of the respondents’ counsel not to advise the passing of any decree in their favor for the small balance due them, but, on the contrary, that we should leave the parties as we found them, by advising that both the bill and cross-bill be dismissed, without prejudice to the bringing of other suits as the parties may be advised, and without cost to either party. And as a majority of the court are unable to agree upon any'other result, we must either take this course or send it back to the superior court without any advice whatever. We think it better upon the whole to dismiss the bill and the cross-bill altogether; and we therefore so advise the superior court.

In this opinion Dutton and Park, Js., concurred. Butler, J., dissented. McCurdt, J., did not sit.

Case Details

Case Name: Rowan v. Sharps' Rifle Manufacturing Co.

Court Name: Supreme Court of Connecticut

Date Published: Sep 15, 1865

Citation: 33 Conn. 1

Court Abbreviation: Conn.