Case ID: va_32/html/0030-01.html
Source: Caselaw Access Project
Author: {"author": "CARR, J. *TUCKER, P.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Poore v. Price.
    February, 1834,
    Richmond.
    (Absent Green, J.)
    [27 Am. Dec. 582.]
    Chancery Jurisdiction — Fraud—Reinstating Mortgage Lien Where Release Was Procured by Fraud.* — plaintiff in chancery is induced to release a mortgage of real estate, to defendant, a purchaser of the mortgaged subject, and to take a transfer from him, without his own indorsement, of notes of others negotiable at bank, by defendant’s false and fraudulent representation that the notes were collaterally and amply secured, by an assurance that they were nowise tainted with usury, and by an express promise that if, and so soon as, the parties to the notes should in any way set up the objection of usury to them, defendant would himself immediately pay the contents of the notes to plaintiff ; the notes so transferred to plaintiff, being protested for non-payment, he brings suit on them, and recovers judgment against maker and indorser ; and then maker flies bill in chancery to in join judgment, and for relief onground of usury, and ifappears probable the notes are in fact usurious ; whereupon, plaintiff flies this bill, immediately, praying that defendant be compelled to pay him the contents of the notes, according to his promise ; and that the lien of plaintiff’s mortgage, of which defendant had fraudulently procured his release, be reinstated and enforced; Held, 1. that though plaintiff might have maintained action at law on the promise, yet the promise being part of the fraud, chancellor has jurisdiction to relieve on the ground of the promise ; and 2. that plaintiff has a right to have the lien of the mortgage reinstated, and on this ground also, plaintiff’s case is properly relievable in equity.
    This was an appeal from a decree of the superiour court of chancery of Richmond, dismissing a bill exhibited by Poore against Price. The facts of the case were most earnestly controverted between the parties; but, in the opinion of this court, the following state of facts, alleged by Poore in his bill, was clearly established by the proofs.
    Barrett having mortgaged a parcel of real property in the city of Richmond to Poore, to secure a just debt of above 3000 dollars which he owed him, and this mortgage being an ample security for the debt, and Barrett being at the same time also indebted to Price, Price was desirous "to purchase of Barrett the property he had mortgaged to Poore, and thus to obtain satisfaction of the debt due from Barrett to himself. But Barrett positively refused to sell the property to Price, until the debt for which it was mortgaged to Poore, should be satisfied; and Price, on his part, in order to make the property available to him, in case he should accomplish the purchase of it, was solicitous to relieve it from Poore’s incumbrance, and, at the same time, to controvert into available funds three negotiable notes of which he was the holder, and in which Campbell and Brooks were bound as maker and indorser. Price, therefore, opened a treaty with Poore, to purchase a release of the mortgage he held on Barrett’s property; in which he proposed to transfer to Poore, the three negotiable notes of Campbell and Brooks (whom he represented to be solvent) which had not then come to maturity, one for 1160 dollars, another for 550 dollars, and the third for 253 dollars, and to pay him the balance of the mortgage debt, in other funds. Poore made no question as to the solvency of Campbell and Brooks; he objected, however, that the notes were probably usurious; but this Price positively denied, asserting that they were good, and secured on property of tenfold the value. Poore still declined taking these notes; saying, that he would not purchase a law suit; that, whether the notes were usurious or not, he might be tied up in chancery upon an allegation of usury: upon which Price expressly undertook and promised Poore, that if, and so soon as, any objection should be raised to the payment of the notes on the score of usury, he would himself immediately pay him the contents of the notes. By these representations and this express promise of Price, Poore was induced to accept a transfer • of these notes of Campbell and Brooks, without an indorsement of them by Price, and to release the mortgage he held of Barrett’s property; which Price immediately purchased of Barrett. The representation made by Price to Poore, that the notes were secure'd by ample collateral security, was, in the opinion of this court, clearly proved to be false and fraudulent.
    When the notes came *to maturity, the smaller note of 253 dollars was paid. The other two were renewed for six months; but Price assented to this, and indeed proposed it, saying, that if such indulgence was given, he had no doubt they would be punctually paid. The renewed notes were protested at maturity, for nonpayment; upon which Poore brought suit on them; and thereupon, Campbell exhibited a bill in the superior court of chancery of Richmond against Poore and Price, charging that the consideration of the notes was usurious, — that they grew out of transactions between Price and him, in which Price had practised most grievous extortion upon him; and praying relief from the usury: and when Poore recovered judgments against him at law, he prayed an injunction to stay further proceedings on them; which was awarded. In that suit, a long controversy ensued between Campbell and Price; but Campbell having left the state, and security for costs being required of him and he failing to give it, his bill was for that cause dismissed, before the decree was made in this suit between Poore and Price.
    Immediately after Campbell had brought his suit against Poore and Price, for relief against his notes transferred by Price to Poore, on the allegation of usury, Poore brought this suit against Price, setting forth, in his bill, the facts of the transaction between him and Price, as above stated; praying relief in equity, on the ground of the fraud practised upon him by Price, by which he had been induced to take the transfer of Campbell and Brooks’s notes without Price’s indorsement, and to release his lien on Barrett’s property, and of Price’s promise, that if any objection should be raised, and so soon as it should be raised, to the payment of the notes, on the score of usury, he would himself pay the contents thereof; and praying further, that, as Price still held the property he had purchased of Barrett, the court would restore to Poore the benefit of his original lien on it, of which Price had, by false representations and fraud, procured a release from him.
    Price, in his answer, denied all the material facts alleged in the bill.
    *The chancellor did not, in his decree, intimate the ground on which he dismissed the bill; but, most probably, he thought the case alleged in the bill was not proper for relief in equity; that if the plaintiff had right, he had a complete remedy at law.
    The argument of the cause here, by Taylor and Stanard for the appellant, and Johnson for the appellee, turned chiefly on the controverted questions of fact. The only point of law raised, was the question of jurisdiction.
    
      
       Chancery Jurisdiction — Fraud.—The principal case was cited with approval in Vanbibber v. Beirne, 6 W. Va. 176. See further, monographic note on “ Jurisdiction ” appended to Phippen v. Durham, 8 Gratt. 457; monographic note on “Fraud” appended to Montgomery v. Rose,.l Pat. & H. 5.
    
   CARR, J.

I feel no doubt about the facts of this case: the evidence establishes all the material allegations of the bill, and wholly discredits the answer. [He stated the case as alleged, and, in his opinion, fully proved.] My only difficulty has been on the question of jurisdiction; for I am principled against stretching the doctrines of equity, to take in every case which seems to present hardship. Upon examination, however, I am satisfied, that the bill presents a case proper for relief in equity. It expressly charges fraud in the contract, and prays a decree against Price for the amount of the notes, and a sale of the house and lot in default of payment. Praud is one of the largest and most fruitful heads of equity. In 1 Madd. Ch. Prac. 258, the general proposition is laid down, and many cases cited in support of it, that “in all cases of fraud not penal, a court of equity has a concurrent jurisdiction with courts of law, with the exception as to fraud in obtaining a will.” It will be observed, that the very phrase (concurrent jurisdiction), gives the idea, that equity may act, where there is also a remedy at law; and the cases shew this clearly. Thus, in Colt v. Woollaston, 2 P. Wms. 156, the defendant had invented a project for extracting oil out of radishes, for which he obtained a patent and sold out shares, at ^20. a piece ; the plaintiffs had bought six shares, and paid ¿120. for them; the thing turned out a bubble, and they filed their bill to recover back the

It was objected, that if aggrieved, *they had a plain remedy at law; but the bill was sustained, and a decree rendered. On the point of jurisdiction, the court said, ‘ ‘It is no objection, that the parties have their remedy at law, and may bring an action, for money had and received to the plaintiff’s own use; for in cases of fraud, the court of equity has a concurrent jurisdiction with the common law, — matter of fraud being the great subject of relief here. ” Stent v. Bailis, Id. 220, is a case of the same kind, where the same objection received the same answer. I consider these cases exactly in point. But it seems to me, there is another ground of equity. Poore had a lien on Barrett’s property (I do not speak of the equitable lien — he had an actual incumbrance by deed) and this he was induced to release, by that false and fraudulent representation, which Price made as to the notes, and which formed a part of the very contract, by which Price obtained the property. Now, we know, that fraud or covin (as is said in Permor’s case 3 Co. 77, and repeated by lord Mansfield, in Bright v. Eynon, 1 Burr. 395), may, in judgment of law, avoid every kind of act; and we know also, that, in such cases, it is the peculiar province of equity, to place the parties as nearly as may be in their former situation. Price still holds this property, and the bill prays that the plaintiff’s lien on it may be revived, and that in default of payment of the notes by Price, there may be a decree for the sale of the property. And this seems to me clearly just. We do not know what may be the circumstances of Price, nor can this make any difference in the principle: but suppose him insolvent, except as to this property, would it not be very unjust, that he should hold it clear of the lien which he had, by his own fraud, induced the plaintiff to give up?

I think, therefore, that the decree should be reversed and a decree entered here, for the amount of the notes, with interest, to be paid within a given time; and, in default of such payment, that the property be sold to raise the money.

CABEUB and BROOKE), J., concurred.

*TUCKER, P.

The case alleged in the bill is completely proved. The bill sets forth a detail of facts, out of which arise two substantive reasons for charging the defendant. That, indeed, on which the draftsman of the bill seems to have principally relied, was the promise of Price to pay the notes, if the defence of usury should be set up. But it is also alleged, that Price, when he transferred the notes of Campbell and Brooks, stated them to be perfectly good, the payment being secured upon property of tenfold the value. Now, if this was not true; if Campbell and Brooks were insolvent; if Price’s indorsement of the notes was dispensed with, so that there was to be no responsibility on his part on the ground of insolvency; and if, obviously, this was all done in consequence of Price’s assurance that Campbell and Brooks were good, and these notes well secured; it is very clear, that this allegation is all important, and that if the waiver of Price’s own responsibility as an endorser, was the consequence of these false representations made by him, such release of Price must be considered void, and he regarded as bound for the demand. There are, then, two foundations for the claim to relief: 1. the agreement to be responsible upon the plea of usury being resorted to; and 2. the fraud of Price, in represent ing the paper as well secured, and absolving himself from liability by transferring the notes without indorsing them.

The last of these grounds is amply sufficient to sustain the jurisdiction of the court; for Poore could not make Price responsible at law for the insolvency of Campbell and Brooks, since his name does not appear upon the notes, and it was understood that there was to be no responsibility on the ground of insolvency. But in equity, he is made responsible, by reason of the fraud and misrepresentation.

The first ground may also be maintained in a court of equity, under the circumstances of this case; a suit being at that time in progress between Campbell on the one part, and Poore and Price on the other, in relation to the same transaction. This suit gave the court of equity cognizance of the controversy, and there could be no doubt of the right *of Poore to file a cross bill, asking relief in case the usury should be established. But he claimed to charge him as soon as the defence of usury should be set up. Here, then, were two grounds, upon which Price might be chargeable, on the last of which Poore might fail; and even though it should’ be admitted that Poore might have asserted his right, as to either, in a court of law, yet, as the court of equity clearly had jurisdiction as to the former, as incidental to the suit already depending there, it was proper that the other matter should be also brought before it, instead of having two litigations,- before different tribunals, in relation to the same transaction. But if this be not so, still as Poore was induced to take the paper by false representations, equity has cognizance to relieve against the fraud, to set aside the contract, and place Poore in the situation he held before it; that is, as a creditor having an express lien for his debt, upon the property purchased by Price. In all these various points of view, I think the court had jurisdiction, and instead of dismissing the bill should have decreed for the plaintiff.

This decree, I think, should have - been, in the first instance, personal against Price with liberty to Poore, if it proved unavailing, to resort to his lien, in the same manner and to the same extent (but no farther), as if that lien had never been released; for, in my opinion, upon setting aside the fraudulent transaction, Poore should be reinstated in his rights, in the same extent as if the contract never had been made.

Decree reversed.