Case ID: miss_16/html/0787-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice ThacheR.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Peter Goad vs. Thomas J. Hart’s Administrators et al.
    The doctrine that one who signs a note in blank and delivers it to another, makes that other his agent, with authority to fill it up with an indefinite amount, is well settled. But it is equally settled, that if the authority of the agent be limited, and the agent exceed that authority, the note will, in the hands of a party who has received it with a knowledge that the authority was limited, be void as to the excess.
    G. filed a hill charging that he and one P., signed a note in blank as sureties of L., and delivered it to L. with the distinct understanding and agreement that it should not be filled up with a sum exceeding $ 280 ; that L. fraudulently combined with S. H., administratrix of T. J. H., whose estate was indebted to L. in the sum of $ 900, to have the note filled up with the sum of $ 1207, for property purchased by L. at the sale of the estate of T. J. H. by his administrators ; that both S. H. and H. H. H., the other administrator of T. J. H., knew that L. had no authority to fill up the note with any sum exceeding $ 280 ; that suit was instituted on the note as filled up by L. in the name of H. H. H. and S. H., administrators of T. J. H., for the use of the Union Bank of Louisiana ; that the suit was so instituted merely to cover the real character of the transaction, the bank having in truth none, or only a very remote and contingent interest in the note; that judgment was recovered for the whole amount of the note with interest; that the fact of the knowledge of the administrators of the limited authority of L. to fill up the note, was not known to G. until after the trial at law ; and the bill prayed for an injunction, &c.; the injunction was granted, and was after-wards dissolved by the chancellor on motion, for want of equity on the face of the bill. Held, that the decree of the chancellor dissolving the injunction should be reversed, the injunction reinstated, and the cause remanded for further proceedings.
    On appeal from the superior court of chancery ; Hon. Robert H. Buckner, chancellor.
    This was a bill filed in the superior court of chancery by Peter Goad, charging that on the 27th day of November, 1838, he and oné James A. Pugh, who is not now a citizen of the state of Mississippi, became security for one Joseph P. Lavender, of the county of Carroll, Mississippi, on a promissory note, which was signed by complainant and Pugh in blank, with the express understanding with Lavender, that it should not be filled up for a larger amount than about $275 or $280; that the note was made payable to H. H. Hart and Sabra Hart, administrator and administratrix of all and singular the goods and chattels which were of Thomas J. Hart, deceased, at the time of his death, and fraudulently filled up for the sum of $1207. That on the 20th day of February, 1839, Lavender intermarried with Sabra Hart. A copy of the marriage license was made an exhibit to the bill.
    That at the November term, 1839, of the circuit court of Madison county, H. H. Hart and Sabra Hart instituted suit on the said promissory note, for the use of the President, Directors and Company of the Union Bank of Louisiana against Lavender, complainant and Pugh; and at the November term, 1842, verdict and judgment were rendered against complainant and Pugh for $1515 45, and a transcript of the record of the suit at law was made an exhibit to the bill.
    Complainant further charged, that the consideration of the note was property purchased by Lavender at the sale made by H. H. Hart and Sabra Hart, as administrator and administratrix of the estate of Thomas J. Hart, deceased; that Lavender, by way of inducing complainant and Pugh to “stand” security for him, informed them that the estate of T. J. Hart owed him (Lavender) the sum of $900, for services as overseer since the death of Hart; and that the $900 should be deducted from the purchase, which Lavender had made as aforesaid, or if it was not so deducted, “ the note should be credited with the $900,” and that the blank in the note to be filled up with a sum of only about $275 or $280.
    The bill further charged, that by a combination between Lavender and Sabra Hart, administratrix, they fraudulently determined to fill up the “blank” note for the whole amount of Lavender’s bids at the sale, to wit, $1207 45 ; that about the time Sabra and Lavender married, the administrator and ad-ministratrix, paid Lavender the $900, Lavender and Sabra Hart determining to defraud complainant and Pngh out of that sum. That Lavender had made known, as complainant verily believes, the whole transaction to Sabra Hart. Complainant stated that he would have set up this defence at law, but he did not know any person by whom he could prove the above facts. That before the trial he made diligen't inquiry to ascertain the fads, and could not find out anything in relation to them ; but since the trial and adjournment of the circuit court, he had discovered new testimony by which he could prove all the above facts. He charged that the estate of Mr. T. J. Hart was insolvent; that H. H. Hart led complainant to believe that the Union Bank of Louisiana was not the bona fide cestui que use of the note or suit thereon, but only nominally so; that when the money should be collected, it was to be applied to other claims against the estate of T. J. Hart; that if any was remaining after the payment of such other claims, the Mississippi Bank might take it. That H. H. Hart first intimated to complainant that Lavender and Sabra Hart were about to, or had defrauded him, on which suggestion, complainant had been enabled to succeed in procuring the newly discovered testimony since the verdict and judgment were rendered against him.
    Complainant further charged, that he had discovered a few days before that time, several claims against the estate of Mr. T. J. Hart, deceased, probated in Madison probate court, and left by Pugh before he removed from this state, for the sole purpose of having them pleaded as off-sets against the said note, which claims amounted to $5S6. And copies of the claims were filed as exhibits to the bill. Harrison H. Hart, Joseph P. Lavender, and Sabra his wife, and the President, Directors and Company of the Union Bank of Louisiana, were made defendants. The prayer was for a new trial at law, or for a perpetual injunction.
    Upon this bill an injunction was granted by the Hon. John H. Rollins.
    At the June term, 1844, the chancellor dissolved the injunction, upon motion, for want of equity on the face of the bill; whereupon the complainant appealed to this court.
    
      Hutchinson, for appellant.
    The bill is not to revise the judgment for error. Equity acts only in reference to the merits of the case in order to apply, in the last resort, that justice, which, through fraud, accident, mistake, or a force the injured suitor could not resist, was not administered. In all cases of actual fraud, its jurisdiction is concurrent. 1 Story’s Eq. § 68. Its control over suits and judgments at law, is as ample as it is necessary. It will not assume the determination of legal rights or matters whereon there is ample ordinary remedy; but if the case be one for which the common remedy is not ample, or in any case where the suitor has been prevented from being heard and redressed, without his fault or negligence, the tribunal of the last resort is ever opened to him. Story’s twenty-third chapter is replete with illustrations of this auxiliary jurisdiction.
    In instances of concurrent jurisdiction, such as fraud, if the defence be attempted at law, or where it was known and could have been made, and there is no sufficient reason given for the omission of that opportunity to make it, although the hardship may be very great, chancery may refuse to consider it. Here, however, the defence was not attempted; and indeed could not be made. It was only upon the subsequent disclosures made and discoveries obtained, that the complainant was enabled to allege and prove the fraud; and here it will be noticed, that still he does not seek discovery from those who were concerned in the fraud, but tenders proof! It is only in chancery that Pugh’s claims on the intestate’s estate can be used. The estate is insolvent. Though it is unnecessary, still for the convenience of the court, I cite 4 Johns. Ch. R. 610 ; 3 Dessau. 208, 270; 4 Ibid. 176; 1 A. K. Mar. 500; Phyfe v. War dell, 2 Edw. Ch. R. 47; 1 Rand. 76 ; Sessio?is v. Jones, 6 How. 123; Crisman v. Beasly, 1 S. & M. Ch. R. 561.
    If a bill contains averments of a fraud, it gives the chancery court jurisdiction, and must be answered. Niles v. Anderson, 5 How. 364; Stovall v. Northern Bank of Mississippi, 5 S. & M. 17.
    Where the defence at law was meritorious, and was prevented, &c., equity will grant a new trial. 5 How. 43; Land v. Elliott, 1 S. & M. 611.
    
      Thomas Shackleford, for appellees.
    1st. The first ground for relief insisted upon by appellant is that the note was signed in blank. Appellant could not be protected from liability when the note was in the hands of a bona fide holder without notice. If a person writes his name on a blank paper to be used as an indorsement of a note to be written on the other side, and the paper thus indorsed be obtained from him by fraud, and a different note from the one intended be written on the other side, he will be liable to a bona fide holder for a valuable consideration. Putnam v. Sullivan, 4 Mass. Rep. 45. This principle has been settled by this court, in the case of Johnson v. Blasdale and Grubbs, et al. 1 S. & M. 17; Bank of Alabama v. Hemphill, 5 S. & M, 44.
    2d. The appellant does not pretend to show that the usees of the Bank of Louisiana, knew anything of the “ understanding,” or fraud practised upon him by Lavender. Taking it for granted, that the facts disclosed by appellant about the signing of the note in blank, &c., amounted to a defence to the note, which we do not admit, why did he not make his de-fence at law 1 Let us see what his excuses are; 1st. That he did not set up his defence at law, because he did not know any person by whom he could prove the facts set forth above; “ that he had made diligent inquiry after the facts, but could not find out anything in relation thereto.” See Leggett v. Morris, 6 S. & M. 723, also, Miller v. Gaskins, 1 S. & M. Ch. Rep. 524.
    3d. If he knew no one by whom he could have proved the facts set out in his defence, other than the said Lavender and Sabra Hart, he could have filed his bill of discovery at law before the trial, and obtained the testimony of such parlies as he would have been entitled at law to examine as witnesses.
    
      4th. By an examination of the record of the trial at law, exhibited in the bill, it will be seen that the appellant relied upon his plea in abatement, and did not rely upon his pretended merits, and did not plead the general issue, until the demurrer to his plea was sustained, and the case ready to go to the jury. It is well settled that in all cases proper for law, a man must defend himself by legal pleadings, and a court of equity will not relieve either his pleading, or where there is neglect and want of a plea or no proper plea put in at the time, for it is his own fault. 1 Fonbl. 140. A court of equity will not interfere in favor of a party who omits to avail himself of his remedy in due time. Drury v. Barnes, 3'Russel, 94; 3 Cond. Chan. Rep. 311. If the facts constituting a legal defence to an action at law, can only be established by a discovery from the plaintiff, and the defendant can by the aid of such discovery, avail himself of such defence at law, he should resort to that mode. The general rule is that matters constituting a defence at law must be used there; and if the party omits to do so, chancery will not relieve. Norton v. Woods, 5 Paige, 249. Chancery will not relieve against a judgment at law, unless the defendant was ignorant of the fact, or it could not be received as a defence. Lansing v. Eddy, 1 John. Ch. Rep. 49. A party will not be aided by a court of chancery after a (rial, unless he can impeach the justice of the verdict, on grounds of which he could not have availed himself at law, or unless he was prevented doing so by fraud or accident, or the act of the opposite party, unmixed with negligence or fault on his part. McMaken v. Williamson, 2 Mil. Law Rep. 181; 8 Martin, Law Rep. N. S. 513; 3 Yerg. 131, 132; 3 Monroe, 296; 3 John. Ch. Rep. 351, 356; 7 John. Ch. Rep. 286; 4 lb. 320.
    5th. So, if the party has not used due diligence at law in making his defence, in going to chancery to assist him by discovery, he cannot be relieved from a verdict as against him. Barkin v. Elkins, 1 John, Ch. Rep. 465.
   Mr. Justice ThacheR.

delivered the opinion of the court.

Goad’s bill in chancery, complains that on the 27th of November, 1838, he, and James A. Pugh, became the security of Joseph P. Lavender, upon his promissory note. The note was signed by them, in blank, with an understanding with Lavender, that it should not be filled up for more than about $280, and was drawn, payable to Harrison H. and Sabra Hart, administrator and administratrix of Thomas J. Hart, deceased. The note was given by Lavender, for the purchase of certain property at the estate sale of Thomas J. Hart, which purchase amounted to the sum of $1207, and the inducement held out to the complainant to allow himself to become security upon the note, was the representation of Lavender, that the estate of Hart was indebted to him in the sum of $900, that that amount should be deducted from the amount of the purchase-money, and that, at all events, the blank in the note should be filled with no more than the sum of $280. The sum of $900 was due to Lavender, for services as overseer, after the death of Thomas J. Hart. On the' 20th of February, 1839, Lavender intermarried with Sabra Hart.

The bill likewise charges a fraudulent combination between Lavender and Sabra Hart, to fill up the note for the full amount $1207, with the intention on the part of Sabra Hart to pay Lavender the amount of $900 due him, which was actually done before their intermarriage. The bill, also charges that Harrison H. Hart, the administrator, was acquainted. with the circumstance of the combination between Lavender and Sabra Hart, and that he first acquainted the complainant with the facts upon • which he relies, as well as with the fact that the action which subsequently was instituted upon the note for the use of the Union Bank of Louisiana was so instituted nominally, and that the bank had in fact but a remote and contingent interest in the suit. The bill is filed to enjoin a judgment at law, obtained by Harrison H. and Sabra Hart, administrators, and for a new trial at law, or a perpetual injunction; and sets up as a reason for not having made the defence of fraud upon the trial at law, that the fact of the knowledge of the plaintiffs in the suit at law, of the time upon which the note was signed by the complainant, did not become known to him until after the rendition of the judgment at law.

The doctrine that one who signs a note in blank, and delivers it to another, makes that other his agent, with authority to fill it up with an indefinite amount, is well settled. But it is equally well settled, that if the authority of the agent be limited, and the agent exceeds this authority, the note will, in the hands of a party who has received it, with a knowledge that the authority was limited, be void as to the excess. Hemphill v. The Bank of Alabama, 6 S. & M. 44.

In the present case, the allegation is explicit, that the authority of Lavender to fill up the blank in the note, was limited in amount. It is charged that the administratrix conspired with Lavender to fill it up with a greater amount, with knowledge that the note was not to be filled up with a sum greater than $280. It appears also by the bill, that the administrator was acquainted with the circumstance of the limited authority of Lavender, because it alleges that he first communicated to the complainant, that a design was on foot to defraud the complainant through the means of the note.

The bill likewise charges that an attempt was made to conceal the real character of the transaction, by causing the Union Bank of Louisiana to be made the usee in the suit at law, when in reality the bank was not interested in the suit, but in a very remote and. doubtful contingency. Such an attempt would certainly be entitled to be received in a court of equity. Stovall v. The Bank of Missisisppi, 5 S. & M. 17.

The bill in this case was considered by the court of chancery to present no ground of equity upon its face, and the injunction against the judgment at law directed to be dissolved, but the view of the allegations in the bill does not seem to warrant that conclusion and decree, and it is therefore directed that the decree of the chancellor be reversed, the injunction reinstated, and the cause remanded for further proceedings.