Case ID: miss_6/html/0043-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Tkotteu", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jones, Appellant, v. The Commercial Bank of Columbus.
    The granting and continuing injunctions, is a matter in the sound discretion of the court. Injunctions may he dissolved before answer filed, or afterwards, or after demurrer.
    When during the defendant’s absence from the state, he was sued on a bill of Exchange upon which he had made part payment; and judgment was rendered for the whole amount, without allowing the payment, and he had no notice of the action, although the sheriff had made a return of service by leaving a copy of the writ at complainant’s residence; it was held that Chancery would interpose, and grant a new trial.
    APPEAL from the superior court of chancery.
    James Jones filed his bill in chancery at the June term, 1839, to restrain a judgment at law obtained against him by the appellees in the circuit court of Lowndes county.
    Jones alledged in his bill, that, in December, A. D., 1836, he borrowed of one Sylvester Pearl, the sum of seven thousand dollars, that said S. Pearl drew a bill of Exchange for that amount on Dyer Pearl, at Nashville, payable four months after date, to the order of Jones, which the latter endorsed and delivered to S. Pearl as the evidence of the debt thus contracted by said loan of money, which he promised to pay to S. Pearl at maturity.
    The complainant further alledged, that about the 28th of January, 1837, before the bill became due, being informed by said S. Pearl that he was still the holder of the bill, he paid Pearl the sum of 1,100 dollars without notice of the transfer of the bill, which sum Pearl promised at the time to credit on said bill of Exchange and accepted the same as part payment. The complainant alledged, that, confiding in the good faith and integrity of said S. Pearl, he did not take any receipt or other written evidence of the payment of 1,100 dollars thus made.
    The bill averred, that, on the 20th day of April,-1837, when the bill of Exchange became due, it was protested for non-payment. That suit was commenced on the same, the seventeenth day ol October, 1837, in the circuit court of Lowndes county in favor of Charles H. Abert for the use of the Commercial Bank of Columbus against said Sylvester Pearl, and the complainant and Francis Leach, the second endorser of the bill. Jones alledged in his bill, that, a capias ad respondendum was directed to the sheriff of Lowndes, against him, during his absence from the state; that said process was never executed on him by the sheriff, or any other person; that no copy ever came to his knowledge, nor was a copy left at his residence, to the best of his belief.
    Complainant alledged, that, he did not have any knowledge of the existence of said suit at law until after judgment, which was rendered in the month of June, A. D. 1838, by default, for want of a plea, against complainant, Sylvester Pearl and Francis Leach for the full amount of said bill of Exchange, together with interest and damages; said Pearl having neglected to make the credit of 1,100 dollars on the bill according to agreement. Complainant stated that, he had always rested under the belief, that said credit had been duly made, and was not advised to the contrary until after the rendition of the judgment, that he then went to the plaintiffs, stated to them the facts, and requested that the credit might be allowed on the judgment, which was refused.
    There was a levy under the execution upon the property of the complainant, which was enjoined by this suit in chancery.
    The bill prayed the injunction of all proceedings, and that the judgment at law might be set aside, and for leave to appear and plead to the suit.
    The defendant below demurred to the bill for want of equity, and, the court subsequently dissolved the injunction, on motion for want of equity, without any order as to the demurrer, which proceedings are assigned for error.
    Howard, for appellant.
    There is no doubt of the power of a chancery court to grant new trials at law and to enjoin judgments when such judgments are against conscience. It is laid down as a general principle that any fact that proves it to be against conscience to execute a judgment and of which the injured party could not have availed himself in a court of law, or, of which he might have availed himself at law, but was prevented by fraud or accident, uumixed with any fault or negligence of his own, will authorize the exercise of the power by a court of equity- 2 Story’s Eq. 174. 1 Cranch, 336. The return of the officer is prima facia evidence only, and may be rebutted. 6 Conn. Reps. 334. 4 lb. 8-424. 9 J. R. 263 11 East, 297. Ohio Supreme Court Rep. 169. 3 Monroe, 351. 3 Randolph, 554. 2 Leigh, 410. In this case there never was any actual service of process on defendant; even if it were true that a copy of the writ was left at the residence of the defendant during his absence from the state, still, it would not be laches on his part, that he did not make his defence at law if he had no actual knowledge of the suit; and if the plaintiff by means of a service thus obtained in his absence and without his knowledge recovered an unjust judgment, which he could not have obtained had defence been made at law, a court of equity will not permit him to enjoy it, when there were no laches on the part of the defendant.
    Chancery will relieve by granting a new trial when the judgment has been obtained by surprise, or inadvertence. Fouchee v. Lea, 4 Call’s Rep. 279-5. Ib. Hord v. Ditchman, 279. A judgment obtained as this was, without a knowledge of the existence of the suit, is certainly surprise. “ If the subject matter of the de-fence was not purely legal, or if legal, such as was or could not by ordinary means be known to the defendant, upon the trial, or if through some other uncontrollable circumstance he was deprived of the benefit of his testimony, when it was a legal defence and known to him, it will furnish a just ground for the interposition of a court of equity.” American Ch. Dig. 274. Winchester v. Jackson, 313. In this case, the defendant was deprived of the benefit of his testimony, and also of a trial, because he had no notice of the suit. He did not even know that his rights were in jeopardy.
    “ If a trial at law be final in its nature, and injustice be done to either party, without any default in him, either in pleading or producing proof which it was in his power to produce, equity will then interfere.” Dig. 274; and authorities there cited.
    The statute authorizing the service of process by leaving a copy at the residence of the defendant in his absence, is a dangerous innovation upon the common law method of service. If by means of a service thus obtained, the plaintiff is enabled to obtain an unjust judgment, by default, for want of defence, owing to the fact that, the defendant had no knowledge of the proceedings, it is certainly the province of a court of equity to relieve. It would be difficult to imagine a more obvious ground of equity jurisdiction. A court of conscience will not permit a defendant to enjoy a judgment thus fraudulently obtained. If judgments thus obtained are beyond the reach of a court of equity, there will be no safety for any citizen, who leaves his home, because his substance may be swept away by judgments without merit, obtained in his absence.
    In the case in 5 Call, the Chancellor awarded a new trial, because the production of evidence on the trial was prevented by the sickness of the defendant on his way to the court. This is a much stronger case, for the reason that the defendant had no notice of the action, as is admitted by the demurrer to the bill, and cannot therefore be charged with negligence in not making a de-fence at law, when he did not know that he was sued. He had, therefore, no opportunity of making his defence. Courts of equity have relieved after verdict, where a receipt against the debt upon which judgment had been rendered, was afterwards discovered in the defendant’s possession. Gainsborough v. Gifford, 2 P. Williams, 435.
    Where a judgment has been obtained at law, by fraud, for a sum larger than is justly due to the party upon a mutual understanding of the parties that certain set-offs should be allowed and deducted, a court of chancery will enjoin the judgment to the extent of the set-off. 2 Story’s Eq. 169.
    Under our statute, the plaintiff at law took the bill of exchange subject to all the liabilities which attached to it in the hands of Pearl, and if the judgment were in his favor, the court would not hesitate to enjoin the judgment to the extent of the payment, or to award a new trial. The assignee will not be permitted to derive any advantage from the fraud of the assignor. The equities of the assignee are only such as belonged to the assignor, unless the party has been guilty of conduct calculated to deceive the public. When the indorsee takes a bill, it is his duty to ascertain what off-sets exist against it. See Rev. C. p. 404, as to payments before notice of transfer. Payments and set-offs against a judgment at law, are subjects of equitable jurisdiction, or when the defence was not made at law, equity will relieve. Hughes v. McCann, 3 Bibb, 254. American Chancery Digest, 298.
    Payment before the day is as valid as payment at the day. Cro. Jac. 432. Holmes v. Brochet.
    It could not be laches on the part of the defendant to be. absent from the state at the time the suit was instituted, nor could he be required to keep an agent at his residence in his absence to receive the service of process and defend suits which might be instituted against him. The law does not require such extreme watchfulness in anticipation of law suits.
    It cannot be urged with propriety, that the appellant has a good remedy at law, because he may sue Pearl and recover back the payment. He is entitled to a credit upon the bill for the payment, as a matter of right. It was not laches to neglect taking a receipt, which could only have been evidence of payment, and could not have been used in any event, as the appellant had no knowledge of the existence of the suit; besides, he trusted to the agreement of Pearl to make the credit on the bill. He was not bound to treat Pearl as faithless, and personally see that the credit was made. The law does not contemplate so much distrust and want of confidence between man and man. It does contemplate a proper degree of confidence in humafi integrity.
    In absence of any statute, the court would not turn the defendant round to sue for a recovery of his payment, or set-off, because it is a subject of equity jurisdiction and relief. A court of chancery will even set one judgment off against another; it never does hesitate to give relief, when the party has been prevented making his defence at law.
    The statute of this state is imperative, (Rev. C. 464,) that before notice of transfer, the defendant shall be allowed the benefit of all failure of consideration; discount, set-off, and payments. 1 Howard’s Reps. 584.
    It was error to dissolve the injunction in this case, on motion, while there was an issue in law raised by a demurrer indisposed of. 2 Yesey, 286. See also 31st rule of the chancery court, since adopted, but containing the general rule of practice.
    
      Evans and Harrison, contra.
    
   Mr. Justice Tkotteu

delivered the opinion of the court.

The appellant assigned two errors in the decree. 1st. It was made on motion, and before any answer filed. 2nd. That there was an issue in law undisposed of, which was raised by the demurrer, which had been previously filed.

It is a well settled rule of chancery practice, that the granting and continuing of injunctions, rest in the sound discretion of the court, to be governed by the nature of the case. 2 J. Ch. R. 204. 4 do. 173. Hence it is clear that the injunction may be dissolved in any stage of the progress of the cause, either before the filing of the answer, or afterwards, or after demurrer. 2 Maddock, 211, 352, 362. There exists no doubt, therefore, of the regularity of the order, and of the power of the chancellor to dissolve the injunction; and it only remains to inquire whether there is such a want of equity on the face of the bill as to authorize the decree which was pronounced. The doctrine that courts of chancery have the power to grant new trials- at law, or to restrain the execution of judgments which are against conscience, is too well settled to require the aid of authority to support it. We take it to be a principle also, no less sanctioned by authority and the great principle of justice, that a party can never be held bound by a proceeding against him, of which he had no notice. If it were otherwise, the most intolerable oppression and injustice might readily be practiced by the unscrupulous, the fraudulent, and the dishonest. Hence in all judgments it must be shown that the party had notice of the suit, and an opportunity to contest the validity of the title of the plaintiff. If the record furnishes evidence that the judgment was upon an ex parte proceeding, it affords no proof of the liability of the defendant, and is itself a nullity. If notice is shown by the record, it is still competent for the party to show that the judgment has been obtained by fraud, or that by some unavoidable circumstance he was prevented from making his defence. Therefore it has been determined, that if a party has a good defence at law, but has been prevented from using it by fraud or accident, unmixed with any fault or negligence on his part, a court of equity will relieve him by granting a new trial, or by a perpetual injunction. 2 Story’s Equity, 174. Thus when judgment has been obtained, and the defendant has after-wards found a receipt for the debt, he has been afforded relief in chancery. 2 Story’s Eq. 179. In this case, the appellant had no notice of the suit at law. This allegation is positively and distinctly made, and would seem to bring this case within the general rule that no one shall be held bound by a proceeding without notice. As the appellant avers his absence from home at the time the writ purports to have been served, it is not necessarily contradictory of the return of the officer, to say that he had no notice. The statute authorizes service of the writ by leaving a copy at the residence of the defendant, if he is absent. It has been held in many cases, that the return of the officer is only prima facia evidence against the defendant. 4 Conn. Rep. 426. If this be so in cases where personal service is reqtiired, it should for much stronger reasons be so held in this state, under the mode of serving writs under our statute. A man might otherwise be ruined by an unjust and fraudulent proceeding against him in his absence.

Let the decree of the court below be reversed, and the injunction reinstated.