Thomas v. Hearn

| Ala. | Jan 15, 1835

By Mr. Justice Hitchcock :

The bill in this case, charges, that the note upon which the judgment was rendered, was, by agreement, to remain in the possession of Thomas until after the mill dam should be completed, according to contract, and was not till then to be delivered to Plearn and Sanders: that it did remain in the custody of Thomas for some time, but that before the completion of the work, it got by accident or inadvertence, into the possession of Jones, one of the partners in the mill company, who did not return it, but kept it in his possession until his death, and that it never was delivered to Hearn and Sanders, by the complainants Thomas and Harris, or by either of them, by their • consent. It further charges that the work never was completed according to contract; that Sims and Jones were both partners in the mill company; that Sims, and complainants, were joint agents of the company ■ and that the note was given for the benefit of the company; that Sims and Jones were fully apprised of the circumstances under which the note was made, and of the non-performance by Hearn and Sanders of their contract. It avers, that the complainants en» deavored to defend themselves at law, on the ground of the failure of consideration, but were told by the Court, that they must sue on the bond for the performance of the contract. It charges Sims with using his exertions to procure a judgment in favor of the plaintiffs, although he was himself a co-defendant, It charges, that the complainants have heard, and believe, that at the time Jones got the note, Hearn and Sanders were indebted to him and Sims, who were partners in trade, and that, fearing they might loose their debt, they agreed to take the note, either absolutely or conditionally, as payment, although they well knew the terms and conditions on which it was made, and as they believe, with a view to recover the amount of the complainants, and to put the money in their own pockets. They charge a fraudulent and collusive combination between Jones and Sims and Hearn and Sanders, to defraud the complainants. They aver, that Hearn and Sanders are insolvent; that they are liable for damages on their contract, to a much larger amount than the judgment; and pray 'an injunction until the suit they are about to bring, at law, may be decided ; and that, one judgment may [be set off against the other, and for general relief. ¡The supplemental bill states, that they had.obtained judgment against Hearn and Sanders, for two thousand dollars on the bond, thereby establishing a breach of the contract for the erection of the mill dam.

The answer of Hearn and Sanders admits,- that the dam1 was not erected in strict conformity with the contract, but that it was altered by the consent of Thomas, the acting agent of the company. They consider the work to have been strictly and substantially done, according to the agreement, as modified by the consent of Thomas. That if the work has not stood firm, they believe the principal reason to have arisen from the manner of erecting the mill-house, with which they had no agency, and from the modifications made, by consent of Thomas, in the erection of the mill dam. They say they are strangers to any agreement, that the bond or note should remain with Thomas, as stated in the bill; that they are ignorant of the manner in which Jones obtained it; that, however that fact may be, Jones did not shew it to them, until after the completion of the work; that, Jones being a partner in the company might have had access to the papers; that, whether Sims and Jones, or the representative of Jones, are interested in the recovery, they think is immaterial to the complainants ; that, they being the plaintiffs of record, no beneficial interest of Jones or Sims, they think, can 'be noticed. They say they understood that the decision of the Court, in excluding the defence at the trial, at law, is not such as the bill represents; that the only point decided, as it is believed, was, that the issue was too narrow and restricted to admit of evidence to shew, the manner in which the dam was completed; that the only matter put in issue, was the time when it was completed. They say they consider themselves amply able to pay any sum which the complainants may shew to be due; and Hearn Ayers he is not insolvent; and they deny any intention of coercing payment out of the complainants, individually, but. from the property of the company, that being first liable, &c.

Sims, in his answer, admits the contract to build the mill; that he does not know whether it was well built or not; that having disposed of his interest in the company, he had no concern, except to see that the debts contracted while he was a partner, should be paid. He admits, that the note sued on belonged jointly to Jones and himself; that he has learned it was taken in payment for a debt due Jones and Sims, but when it was taken, or on what terms, he does not know; that, as there was no endorsement or other transfer made, as passed such an interest as would enable them to bring suit in their own names, the suit was brought in the name of the payees. He conceives it is not important to the complainants case, what his (Sims’s) interest may be, in as much as it is of an equitable character, the benefit of which could only be obtained by the prosecution of the suit in the name of the payees — one, which presents no barrier to a recovery in the form, in which the suit is brought, and that, even if it were so, it is an advantage which should have been taken at the trial at law. That, from his knowdege of Jones’s character, and from his never having heard from the complainants before the institution of the suit at law, any thing suggested as to the manner in which Jones obtained the note, he cannot but believe that he came fairly by it.

Banks, executor of Jones, denies all knowledgé of the transaction, except from rumor — sets up no claim to the money, and demurs to the bill, as do all the defendants.

All the matters charged in this bill, wdiich relate to the manner in which Jones obtained possession of the note, or bond; the consideration, if any, upon which it passed to Jones and Sims; the failure of Hearn and Sanders to comply with the contract to build the mill dam; and the refusal of Sims to unite in the de-fence of the suit, were within the full and perfect knowledge of the complainants before the rendition of the judgment at law, and however forcibly they might have presented themselves to the breast of a chancellor, on an application for a bill of discovery, to be used on the trial at law, (and the Court aro constrained to say, they present very powerful considerations) yet it is an inflexible rule, that a Court of Chancery will not relieve against a judgment, after a party has been heard at law, even where the fraud goes to the whole judgment, unless the party were ignorant of the facts pending the suit, or they were such as °°uld not have been received as a defence at law.^a

In this case, the ignorance of the party is not alleged ; neither is it averred that the party could not have proved all the facts set forth in the bill, by testimony aliunde, at the trial at law.

The grounds set up for going into chancery, are the facts, that the Court refused to permit the party to give evidence of a partial failure of consideration. The rule of decision being, at the time of the trial, it is alleged, opposed to the admission of such evidence; and the fact of the alleged insolvency of Hearn and Sanders.

Whether that rule of decision be correct, or whether later decisions have relaxed or modified it, it is equally clear that the party cannot now come into chancery and urge it as a reason for relief against the judgment at law. The matter was passed upon by a Court of competent jurisdiction, and no point rvas-reserved for revision before a higher tribunal. To allow it to be again brought before a Court of Chancery, would open a door to endless litigation, which would destroy the distinction between the two courts, and the Common Law Courts would ultimately be swallowed up in Chancery.

As to the question, whether the alleged insolvency of Hearn and Sanders can be urged to enable the party to off-set the claim for damages, which has since been reduced to judgment, it may be remarked, that the judgment having established the right of recovery, in favor of Hearn and Sanders, and excluding, as it has been shewn we are bound to do, every thing relating to the manner of the transfer of the note to Jones, and admitting, as the bill does, the indebtedness of Hearn and Sanders to Jones and Sims, is there any thing in the case which will defeat their right to the benefit of the judgment, or in other words, will the alleged insolvency of Hearn and Saunders, at the time of the transfer, admitting it to be true, have that operation. It is admitted, that a man in failing circumstances, may prefer one creditor to another, and in the aspect in which this case appears, does it present any other principle ? If it does not, what peculiar objection is there to prevent Jones from availing himself of it, in this case. His relation to the company could not preclude him from securing his own debt, and.that of his partner, or from doing any tiling which any other person who stood in the relation of creditor to Hearn and Sanders, might have done. It cannot be doubted, that Hearn and Sanders could have rightfully transferred the note to any bona fide creditor, not belonging to the mill company, and it will not be pretended, that in such hands, this set-off could be allowed — ’more especially when the set-off is a claim sounding in damages, and the suit not yet brought. But admitting, that since the judgment for damages has been recovered, the equities are equal; the claim of Jones and Sims, is prior in time to that of the complainants, and upon every principle, must be preferred.

That Sims refused his aid in the defence at law, cannot avail the complainants in this stage of the proceedings, whatever it might have done, on a bill filed in reference to the manner in which Jones obtained possession of the note. The defence having been so conducted as to preclude that investigation, he was not bound to defeat the recovery at law.

The only point then, left open for consideration, is, whether the bill can be entertained, so far as to compel Sims to contribute one third of the judgment and costs of the suit at law, on the ground of his original liability, as one of the obligors to the note or bond. On this point the Court has had some difficulty, as it would seem, that this could be recovered at law. But, under the circumstances of the case, and as the jurisdiction of a Court of Chancery is concurrent with a Court of Law, in matters of contribution — as the money has been received by Sims, to save delay and multiplicity of actions, as each of the complainants might have to sue for his share of the'amount paid by him, we think the .bill should be retained for that purpose.

On this ground then, the decree below must be reversed, and a decree rendered here, in favor of the complainants, against the defendant Sims, for one third of the judgment, interest, and costs, of the suit at law in favor of Hearn and Sanders, computing the interest from the time of the rendition of the judgment in the Court below, together with the costs of the proceedings in Chancery, in this Court, and in the Court below. .

a 1 Johns. Ch. Rep. 98-320. 6 ib. 87.