Case ID: tenn_26/html/0299-01.html
Source: Caselaw Access Project
Author: {"author": "Reese, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Lishey vs. Smith.
    1. Where two persons sign a note as payors, courts of law and equity have concurrent jurisdiction to investigate and determine the relation which such payors bear to each other in regard to the discharge of such note.
    2. When courts of law and equity have concurrent jurisdiction, and a judgment is obtained in a court at law, and the plaintiff atlaw answers the defendant’s bill without objection to the jurisdiction, the objection to the jurisdiction is waived, and the court will do justice in the premises.
    This bill, filed in the Chancery Court at Nashville, charges that the complainant was a merchant in Nashville some years since, in partnership with Gould. That whilst such merchant he married the daughter of defendant, who was then a widow. That the defendant was a man of considerable property, and able to provide amply for his daughter. That after the marriage, plaintiff being embarrassed, and his partner dying, he made a deed of trust to defendant of all his property, including the notes of one Robert A. Burton. That plaintiff owed about $14,000, and amongst other debts one of $2,600 to his father, which were partially secured in the deed. That after the execution of this deed, plaintiff and defendant being both anxious to release plaintiff from his liability on these debts, it was agreed between them, that if plaintiff’s father would release his debt in the deed, defendant, as an advancement to his daughter, would agree to give his own notes for $1,250 each, at one and two years, and the notes of R. A. Burton, specified in the deed, to the balance of the creditors, as an inducement to them to release plaintiff from his liability to them. This proposition was made and accepted by the creditors. The release of the debt, of complainant’s father was also procured; but the plaintiff and defendant having quarrelled in the interim, the defendant refused at first to comply with his part of the proposition, and at length only complied on condition, that plaintiff would sign the $1,250 notes with him. Plaintiff finally agreed to sign with him, on the express understanding, that he was tobe in noway liable on the notes to the defendant, but that the defendant was the primary debtor on the notes, and that complainant merely signed them to show how the transaction originated. That the defendant has paid the first note, and instituted suit against plaintiff. The bill prays for an injunction.
    The answer admits all the facts except these, to wit: It denies the validity of the debt to complainant’s father, and impeaches it for fraud. It denies that the notes of the defendant were to be executed as an advancement to plaintiff’s wife, but says, they were to be given in consideration of the assignment by plaintiff and wife to defendant, of a legacy due them in Alabama, which he insists complainant refused to do at the time the notes were signed, and this was the cause of the refusal of defendant to sign the notes unless they were also signed by plaintiff, he therefore insists plaintiff is liable to him. The proof sustains the plaintiff’s bill. The Chancery Court, Cahal presiding, dismissed the bill, on the ground of a want of jurisdiction, and complainant appealed.
    
      A. Ewing, for complainant.
    The circumstances make out the case of principal and surety between Smith and Lishey. When Lishey’s father agreed to release his debt on consideration, that Smith would execute these notes, and this contract was carried into effect, Lishey was absolutely released from any liability to Smith, and if he signed the notes, it was as security for Smith, who by virtue of the consideration advanced by Lishey’s father, became the primary‘debtor. See Chitty on Contracts, 54 and 59.- If this is so, why then Chancery Court has original concurrent jurisdiction, and although there is a remedy at law, relief will be granted in equity, when real principal sues surety at law. See 2 Paige, 497. It is like the case of a joint obligor suing the surety at law, and the defendant filing a bill, alledging that the pretended co-surety, induced him to become such on his credit, which is a common case. -
    The waiver of the defendant of jurisdiction by his answer is conclusive, for this is unlike the case in 5th Hump. 414. In that case, the question was partnership in execution of note, and jurisdiction exclusively at law, but in this case, where the court has original jurisdiction and the jurisdiction at law may have attached, the answer is a waiver.
    On the ground of fraud, there is also jurisdiction. For it is alledged and proved, that Smith persuaded Lishey to sign these notes under a representation, that he would not hold him liable, and although he might defend at law, the fraud would give a court of equity jurisdiction. See 5th Munf. 219.
    
      Meigs, for defendant.
    
      Trimble, for complainant.
   Reese, J.

delivered the opinion of the court.

If in a Court of Chancery, there is jurisdiction to grant'the relief prayed for, it is not insisted in argument, that the facts proved upon the record do not entitle the complainant to that relief. The relations between the parties are these, to wit: The defendant claims, in his action at law, to recover from the complainant upon the ground that he had been compelled to pay money as the surety of the complainant, while, in this court, the complainant alledges and proves that in the transactiions referred to, although bound to others as a party to the instrument, jointly executed by him and defendant, yet, as between themselves, defendant was not only primarily, but exclusively liable; and he seeks, upon this ground, to restrain by injunction, the defendant’s action at law. The question presented is, therefore, one originally, of equitable cognizance;' in modern times, the jurisdiction is concurrent between a Court of Chancery and a Court of Law. The defendant does not demur upon the ground that the complainant could have made his defence available at law; he does not insist upon this point in his answer; he in no way questions the jurisdiction of the court. He fully answers: proofs are taken, and the cause regularly brought to a hearing.

In a cause of such a character, so fit for equitable cognizance, the court should not at the hearing, mero motu turn the complainant round upon the objection, that he might have defended himself at law.

The defendant having submitted himself to the equitable jurisdiction, the exercise of that jurisdiction, on the part of the Court, would have been altogether proper. Such is the principle decided in the case of Marsh vs. Haywood, 6 Hump. R. 212. Upon the principle of that case, the jurisdiction to grant relief in the present case, is free from all doubt and difficulty. We have not deemed it necessary, therefore, to enquire, whether upon the ground of fraud, of the discovery obtained, or other ground, the jurisdiction could be maintained. We think it, however, very probable that it would. His Honor, the Chancellor, took a different view of the case. His decree therefore, must be reversed; and this court will decree to the complainant a perpetual injunction and his costs at law and ip equity.