Case ID: ark_15/html/0389-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice Wateces", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Herndon vs. Higgs, ad.
    Under the statute of assignments; the mailer of anote or obligation, being sued by am assignee, and having notice that one or more of the assignments are forged, ought,, for his own justification, and the protection of the rights of the real owner, to interpose the defence..
    But his position may be a hazardous one, and the defence- at law not being .complete, or adequate, he may elect to submit to judgment, and obtain, relief in equity, by-bringing all the parties in interest before the court.
    And in such case, if the- obligor has in good faith paid the debt to an intermediate-assignor or holder of'the instrument, he may pray for and obtain alternative relief^ that the amount so paid be refunded to-him in case it was wrongfully claimed anck received by tbe person, to whom he paid it..
    After dissolution, of an injunction) the complainant has the right to.proceediwith hfe suit to final hearing; and, upon a motion to dissolve, it is a gross irregularity for the-court to render a final decree against the complainant, granting affirmative relief to. a defendant who. has filed no-cross bill in the cause.
    
      Appeal front/ Lafayette Cvrcmb O'owvt im, QTicmeery.
    
    Hon. Sheetoh WatsoN, Circuit Judge, presiding..
    Pros & OumMINS, for appellant.
    After a cause is set for bearing and before a bearing, a party cannot by motion dismiss a* bill for want of equity, because there- may be a remedy at law.. 14ANA.358..
    • Nothing but tbe facts- on face of tbe-bib can-be- considered'here,. and these facts show jurisdiction.. 1- Sto.. Eg., see._28,. 33, 65,71..
    CabletoN, for appellee^
   Mr. Chief Justice Wateces

delivered' tbe opinion of the-Court..

Tbe bill of complaint exhibited by tbe appellant, sets- forth a-case of this description; That being-indebted to- one Hardy High;tower, be bad executed bis obligation for tbe same payable to bim; and in order to secure tbe payment of it, bad made bis deed of trust, to John 0. Hightower, of certain slaves and land in Lafayette ■county, to wbicb John O. and Hardy were parties, containing various stipulations, and tbe trustee, John 0., was authorized to sell tbe property upon tbe contingency, and in tbe manner prescribed, and apply tbe proceeds of tbe sale, first, to ££ extinguish tbe debt in question.” That tbe writing obligatory, along with tbe deed'of trust, bad been left in tbe custody of John 0. High-tower, the trustee; and be afterwards dying, it was found among Ms papers, purporting to be endorsed in blank by tbe payee, H. Hightower, and also by one James B. Hightower. That tbe endorsement of Hardy Hightower was a forgery, and tbe writing obligatory in truth belonged to biin. That tbe defendant, Higgs, as administrator of John 0. Hightower, claiming title under tbe successive assignments from Hardy to James B,, and from James B.- to tbe intestate, bad brought an action at law upon it against tbe complainant, who pleaded thereto denying the assignment from Hardy Hightower, and tbe action was dismissed. That tbe complainant bad paid and satisfied tbe amount of tbe obligation to Hardy Hightower, and taken a receipt from him wbicb was produced. That tbe defendant, Higgs, bad brought another action at law upon tbe writing obligatory, in tbe name of Hardy Hightower for Ms use, as administrator of John O., wbicb suit was pending. Tbe administrators of John O. aud Hardy Higb-towex’j were made defendants to tbe bill; upon tbe latter of whom process was not served, and no subsequent steps, by order of publication or otherwise, appear to have been taken against bim* The bill prayed for an injunction to restrain tbe administrator from prosecuting tbe action at law, and in tbe alternative for a deqree, making tbe injunction perpetual, and requiring tbe writing obligatory to be given up and cancelled, or if tbe complainant should be adjudged liable to pay tbe amount due upon it to tbe administrator of John O., then a decree that Hardy High-tower refund tbe amount, wrongfully received by bim, to tbe complainant; and for discovery and general relief. An injunction was granted in accordance with tbe prayer of tbe bill. Higgs, tbe' administrator of John 0., answered, to tbe effect, that, according to-bis information and and belief, tbe endorsement of Hardy Hightower was genuine, and for a good or valuable consideration to James B., and be bad assigned tbe same to John 0., in part payment of a quantity of land and some negroes bought of him, so that tbe writing obligatory came to be tbe individual property of bis intestate, John O. That John 0. and James B. were brothers, being tbe sons of tbe defendant Hardy Hightower. That James B. was tbe first administrator of-John O., and inventoried tbe writing obligatory in question, as part of tbe assets of bis estate, and defendant avers that complainant made a partial payment upon it, and took receipts of tbe administrator for tbe amount so paid. That James B. dying, tbe defendant was appointed administrator de lords non of John O., and tbe writing obligatory came to bis band in that capacity. He denies tbe alleged payment by tbe complainant to Hardy Hightower, and avers that such payment, if any, was made by giving a new note or obligation for tbe money, which remains unpaid; that tbe transaction between them was colorable merely, and collusive, with intent to defraud the creditors of John O., by withdrawing, from bis estate, a large amount of assets; which would otherwise be appropriated to tbe payment of them claims; and, by way of reserving tbe benefit of a general demurrer to tbe bill, insisted that tbe complainant bad an adequate remedy at law.

To this answer, replication was entered, and tbe cause- was set down for final bearing, with leave to either party to take depositions. At the succeeding term, the defendant, Higgs, moved to dissolve tbe injunction, because the bill disclosed no equity, and tbe complainant might have bad a remedy at law. He also moved for a final decree in bis favor, upon a suggestion, verified by affidavit and admitted to be true, that tbe complainant bad, in tbe meantime, removed bis property beyond tbe jurisdiction of tbe court, leaving no effects out of which tbe amount due upon the writing obligatory could be made on execution, and no security dor it except that upon tbe injunction bond. Tbe Circuit Court ¡sustained tbe motion, and proceeded to render a final decree, in •tbe cause, dissolving tbe inj unction with damages for delay, and-•decreeing that tbe complainant pay to' tbe defendant, as administrator of John 0. Hightower-, tbe amount of principal and interest ascertained by-computation to be due upon tbe writing obligatory in question.

Tbe proceedings disclosed upon this record, have been remarkably irregular. On tbe face of tbe bill, no reason is perceived why James B. Hightower was not a proper party defendant, and, on tbe coming in of tbe answer, it appeared that bis representatives, if any, were necessary parties, and tbe complainant should have been required to amend tbe bill. An injunction should not have been granted in tbe first instance, if, at tbe time of filing tbe bill, an action was pending,'unless tbe complainant would first submit to a judgment at law, upon wbicb tbe injunction would operate as a release of errors; so that, upon dissolution, tbe defendant could be remitted to bis execution at law. Although if tbe successive assignees took a beneficial interest in tbe assigned instrument, it is difficult, -since tbe decisions following Block vs. Walker, (2 Ark. 4,) to understand bow tbe administrator could sue again in the name of tbe payee for bis use, disregarding tbe assignments, and tbe defendant at law might have defeated that particular action, yet, if be choose to resort to equity, to have tbe rights of all tbe parties finally settled, tbe case was clearly one where it would be tbe proper practice to let tbe plaintiff at law proceed to judgment. (Conway vs. Ellison, 14 Ark. 367.) Without some showing of accident or other excuse, wbicb might authorize tbe court, in tbe exercise of its discretion, to extend the time, tbe motion to dissolve tbe injunction should regularly have "been made at tbe coming in of tbe answer on or before tbe second day of tbe return term. {Digest, title Injunctions, sec.'28,) And though irregularly made, it could -ohly have operated upon tbe injunction, because it was tbe right of the complaniant to have the cause progress to final bearing witb or without an injunction. Without a cross bill, the defendant could not have obtained any fl.-ffirma.ti ve relief, by decree against the complainant, for the payment of the debt in controversy. The carise appears to havebeen brought on for hearing upon the distinct' ground, that the bill disclosed no equity, and also that the complainant had removed his effects. The cause having been regularly set for hearing, that proceeding was a surprise upon the complainant, unless desiring to adduce evidence at the hearing he was in default for not having procured depositions. Nor does it appear that the bill was dismissed because of the delay of the complainant in taking the proper steps to bring the other defendant, Hardy Hightower, before the court; otherwise, he had a right to an answer from that defendant, or to a decree by confession against him for indemnity, if, upon the final hearing, the court should be of opinion that the money rightfully belonged to the administrator, and also of opinion that the complainant had paid it in good faith, and, as he believed, to the real owner of the writing obligatory.

In the most favorable aspect of the case for the appellee, that is, upon the question of jurisdiction, the court below should have proceeded to adjudicate the cause. Supposing it stood upon bill, answer and replication, the denials in the answer were upon information, and the averment according to'belief, except so far as the defendant may have had a knowledge of the fact of a partial payment to the preceding administrator! Being tested by the allegations contained in the bill, it would be substantially a case cognizable in equity. True, the defendant might have successfully resisted an action at law, upon plea under oath, denying the assignment. But chancery would also have jurisdiction, if the remedy at law was doubtful, inadequate, or hazardous; and the right to resort to chancery was not waived by any. attempt to defend the second suit at law. In the construction of the statute concerning assignments, see Dickinson vs. Burr, decided at the present term, this court has held that- the obligor or maker of .assignable paper, being notified that one or more of the assignments, through which a plaintiff deduces his title to the instrument, are forged, ought, for his own justification, and protection of the rights of the real owner, to resist payment of it, and interpose the defence; and this he may elect to do by plea at law. But it is obvious that his position, defending at law, may be a hazardous one, unless he defends upon indemnity from the real owner, who is not a party to the record, or bound by the decision. If the debtor voluntarily makes payment to either claimant, he may be said to take upon himself the responsibility of the act. But the case can be considered as though the complainant was resisting the demand of the holder, without having made payment to a third person claiming the debt; though the fact of such payment might, as we have seen, if made in error and in good faith, entitle the debtor to recover against such person wrongfully obtaining the money. The case had become complicated by the alleged fraudulent dealings of a trustee or agent, creating adverse interests between different parties, which could only be settled in one litigation, by bringing all Of them before a court of equity. It is not intended to intimate any opinion upon the facts or merits of the case. It will remain for the chancellor to decide, upon the evidences, which may be adduced before him, which of the parties has been guilty of the gross fraud by each one imputed to the other.

The decree appealed from, will be reversed, and the cause, under all its peculiar circumstances, remanded, with the following directions: That the complainant submit to a judgment at law; that he amend his bill so as to bi'ing the representatives of James B. Hightower before the court, or show some excuse for not doing it; that he take steps to obtain service of process, or notice by publication, against Hardy Hightower, and to compel an answer from him, or subject him to a decree; or, in default thereof, that the bill be dismissed; that the injunction.be continued until the dismissal or final hearing; and the security afforded by the injunction bond retained as a guaranty for the diligent prosecution of his suit by the complainant; and that the cause, in other respects, progress regularly to final hearing.