Case Name: Armstrong and Wife v. Hickman
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1819-02-17
Citations: 6 Munf. 287
Docket Number: 
Parties: Armstrong and Wife v. Hickman.
Judges: 
Reporter: Virginia Reports
Volume: 20
Pages: 735–739

Head Matter:
Armstrong and Wife v. Hickman.
Decided, Feb. 17th, 1819.
i. Judgment — Second Injunction to — New Matter. — After dissolution oí one Injunction, another was granted to the same Judgment, and made perpetual, upon new matter, not known to the Complainant before the first was dissolved; it appearing that the contract in question, though not tainted with fraud, was founded upon a mistake in relation to the existence of am important fact, of which both parties were ignorant.
Upon a bill of Injunction filed by Adam Hickman against Armstrong and wife executrix of Peter Devietman deceased, and her securities, in the Superior Court of Chancery for the Clarksburg District, Chancellor Carr, on the 16th of October 1816, delivered the following state of the case_. opinion and decree,
*The Bill states, that, on the 10th of September 1803, the plaintiff and P. Devietman entered into a contract, by which Devietman sold to the plaintiff $22,000 of Morris and Nicholson’s Notes at Ss. in the pound; the notes to be delivered in one month; and the plaintiff to pay, at the delivery of the notes, the whole amount, in good property, at cash price, via. horses, cows, hogs, or improved land, at the valuation of two good men if the parties could not agree: that, about the 10th of October, Devietman died: that the defendant Hannah, being left Executrix, qualified, giving bond in one thousand dollars, and the defendants Morris and Davison her securities ; that the Executrix sued the plaintiff at law, on the Covenant; that the plaintiff, for a long time, believed that the Covenant would be set aside, either upon the ground of fraud, or because the parties themselves had subsequently annulled it by a parol agreement; that he was informed by Counsel that this could not be done at law, and therefore suffered a verdict and -judgment against him; pleading, merely for form, conditions performed; that the judgment was for $5500, with interest from the 4th of October 1803: that, in order to set this aside on the grounds before stated, he filed a Bill in the Staunton Chancery Court, which was on the 24th of July 1811 dismissed ; that Court having directed issues at law, and being satisfied, by the verdicts on them, that the contract ought not to be rescinded.
The Bill farther states, that, seeing this can not be done, the plaintiff hopes to have the benefit of the covenants in his favour: that it is contended by the defendants, that Devietrnan’s covenants are complied with., because he had tendered to the plaintiff,, and his executrix brought into the Court of law, upon the trial, promissory notes to the amount of $22,000, signed by Nicholson and endorsed by Morris. The Bill acknowledges the production oí the notes, and describes them; but denies that this was a compliance; because, although they purported to be, they were not in fact such notes as the contract contemplated; but that the facts proving this defect were unknown to the plaintiff at the time of the trial ⅞1 law, and therefore could not then be used by him: that, by the Covenant, the said Devietman was bound to deliver to the plaintiff $22,000 of Morris and Nicholson’s Notes, by which was meant Notes obliging Morris and Nicholson to pay the said sum; Notes in which they should both be liable for the money: that the Notes tendered were drawn payable to Morris, signed by Nicholson, and indorsed by Morris in blank, whereby, under the laws of Pennsylvania, Morris the payee and endorser became as much, and as immediately, liable to the holder, as Nicholson: but that Morris, being a merchant resident in Philadelphia, did, after the 1st of June 1800, and long before the 10th of February 1803, commit an act of bankruptcy, whereupon a Commission under the Act of Congress issued against him, — Commissioners were appointed, he was declared a bankrupt, Assignees were appointed, to whom the proper assignment was made, and the said Morris, having, within the time limited, surrendered himself, and in all things conformed to the directions of the law, became a certificated bankrupt; whereby he was discharged from all debts owing at the time he committed the act of bankruptcy, or which might have been proved under the Commission; of which number were the Notes tendered by the said Devietman in performance of his contract: all which transactions with respect to the bankruptcy were completed and fully ended before the 10th of September 1803, the date of the contract; so that, at the time of said contract, the notes were not negotiable or transferable as the notes of Morris, or in any way binding upon him: of which bankruptcy the plaintiff had no knowledge, either at the time of. the contract, or at the time of prosecuting the suit at law, or at any time prior to the fall of the year 1812.
The Bill farther states, that the defendant Hannah, together with the defendant William Armstrong, with whom she intermarried, did, in 1807, remove to the State of Maryland, where they have ever since resided; lhat they say they have fully administered the assets of the testator; and the plaintiff is fearful, if obliged' to sue them at law, that they would in the meantime enforce *their Judgment against him, and then meet him with the plea of fully administered. The records of the proceedings in the action of Covenant and the Bill in Equity are made part of the Bill.
To this Bill the defendants Morris and Davison, the securities of the Executrix, have demurred. The defendants William and Hannah have pleaded the Judgment at law, and the Decree in Equity: — they also rely on the Statute of Eimitations. By way of Answer, they deny that the Contract of September 10th 1803, was made at the solicitation of the said Peter, but in the manner set forth in their answers to the former Bill of the plaintiff, to which they refer as part of this answerthat, with respect to the bankruptcy of Morris, they knew nothing at the time of the contract, nor do they now know any thing, but what they have learnt from the Bill: — that, at the trial of the issues directed oy the Court of Chancery, they believe it was in proof that, in 1803, Morris and Nicholson were considered insolvent, and their paper worth little or nothing; but they admit that, at that trial, there was no proof that Morris had been declared a bankrupt and discharged under the laws of the United States; and they insist that, unless it can be shewn, (which is not alledged) that Devietman knew of the bankruptcy, and concealed it from the plaintiff, it furnishes no ground of relief, or of evidence as to fraud in the Contract. They aver that the said Peter became possessed of the notes fairly; and they submit, that the question, whether a recovery on those notes was so barred, as that they did not come within the description contained in the agreement? has been already decided in the action of Covenant brought by the defendant Hannah against the plaintiff. They then give an account of the assets of the said Peter, and aver that they have paid out to his creditors more money than they have received, or expect ever to receive, from his estate.
After presenting this view of the case, I will consider the points growing out of it.
1st. Does the judgment in the action of Covenant, preclude us from enquiring into the bankruptcy of Morris? *It is contended that it does; on this ground, that, by the articles of agreement, the delivery of Morris and Nicholson’s Notes was a condition precedent to the payment for them; that, therefore, in the action of covenant brought to enforce such payment, it was necessary to aver, and at the trial to prove, a delivery, or tender at least, of such notes; that the recovery in that action is conclusive evidence that this tender was made, of such notes as the Covenant required; which evidence can not be contradicted or impeached, while the verdict and judgment stand. It is certainly true, that a Verdict and Judgment, unre-versed, shall be final between the parties; that the same point shall not be a second time litigated. But it must be the same point; the same case. If, in a trial at law, a party has been unable to bring his cause fairly and fully before that tribunal; if he was then ignorant of important facts, which afterwards came to his knowledge; it can not be supposed, that this imperfect trial should prevent him from bringing his new case before a Court of Equity. Our books are full of such cases. Ambler v. Wyld, 2 Wash. 36, Ross v. Pines, 3 Call 568, Cochran v. Street, 1 Wash. 79, Eee v. Foushee, cited 1 Call 553, Pickett v. M|orris, 2 Wash. 255, and Branch v. Burnley, 1 Call 147, are all ] of this kind. In the last case, Judge Roane, who was opposed to the opinion of the other Judges, and against relief, yet lays down the general doctrine thus: — “I hold it to be a clearly established principle, that a Judgment of a Court of common law, though erroneous, given on a legal question, shall never be disturbed in equity, upon grounds which were proper for the consideration of the common law Courts, and which, therefore, we must suppose such Court to have decided upon ; unless the applicant to the Court of Equity can shew some particular circumstances to have taken place, operating as an impediment to his availing himself of those grounds, upon the trial at law.”
Again, in the same case, he says, “Far be it from me to impeach the power of a Court of Equity to give relief against a Judgment at law. My position however *is, that, when such relief is granted, it is on the ground of some unconscientious conduct, on the part of the party enforcing that Judgment; or on the ground of some vice in the judgment itself, arising from circumstances, other than an erroneous opinion, in point of law, of the Common law Court, in that particular case.” Here we find this distinguished Judge, while opposing the jurisdiction of Equity in the particular case, admitting that it may properly interfere where the applicant shews that there was some impediment to his availing himself, before the law Court, of the grounds stated in his Bill; or where the vice in the Judgment arises from circumstances other than an erroneous opinion in point of law.” The new feature in his case, by which the plaintiff would support the jurisdiction of this Court, is the bankruptcy of Morris, existing at the time of the contract, and affecting, as he contends, the negotiability of the notes, but of which he could not avail himself on the trial at law, because he was then, and for a long time after-wards, ignorant of the fact. The weight of this circumstance in the question of final relief, I shall discuss presently: — it is sufficient to say now, that I think it gives the case so far a new aspect, as to remove the verdict and judgment out of the way, and authorise this Court to take jurisdiction.
The remarks on this point apply with equal force to the Bill in Chancery. That Bill sought relief on two grounds: — 1st, fraud in the original contract, by misrepresenting the value of the notes, and by making the plaintiff drunk, and dealing with him in that situation: — 2dly, that the first contract was annulled by a second parol one. To ascertain the truth of these charges, the Chancellor directed issues at law, which were found against the plaintiff, and his Bill dismissed. It is admitted by the defendants that, at the trial of these issues, no evidence of the bankruptcy was given. That, indeed; formed no part of the Bill. Suppose A. were to enter into a Covenant with B., by which he engaged to deliver him, in one month, a sound healthy negro, and B. engaged to pay, on the delivery, $600: — A., at the proper time, tenders the slave. — B. refuses to receive him: — A. *brings Covenant, and re covers the §600: — B. files a Bill for relief, stating that he was made drunk by A., and, in that condition, entered into the contract; also, that the negro, instead of being sound, was affected by a disease which rendered him of no value. Upon trial, these facts are found against B., and his Bill is dismissed. By this time, he has discovered what he did not know before, that the slave, instead of belonging to A. was, at the time of the contract, and still continued, the property of D. Can it be supposed that the door of Equity would be closed against this new ground of relief, because the party had before sought to destroy' the contract on ground which he could not support? Surely not.
The next point is the Statute of Limitations, on which the defendants rely. It will be recollected, that the Statute does not take in proceedings in lOquity: it enumerates certain actions at law, and prescribes a time within which they shall be commenced; but it says nothing of bills in equity. Courts of Chancery have, however, adopted the provisions of the Statute, and apply' them by analogy. For example, the Statute says, that1 ‘actions of account, and upon the case, (other than accounts between merchants,) and actions of debt upon any contract without specialty, ” shall be brought within five years and not after. If there should be a claim, which, at law, must have been prosecuted by one of these actions, but which particular circumstances rendered it proper to bring into Equity, that Court, if the Statute was yelied on, would look to the nature of the claim, and apply the Statute, unless there were some feature in the case, which would render such application contrary to good conscience. What would be the effect of the Statute upon the case before us, according to this rule? The Bill is founded on an agreement evidenced by a sealed instrument. If the plaintiff had sued on it at law, what would have been his action? Covenant. — And our Statute has prescribed no period, within which an action of covenant must be brought. Courts of law, indeed, have laid it down as a general rule, that the lapse of twenty years, "without any step taken by the obligee, or acknowledgment by the obligor, shall raise a presumption of payment: and there is no doubt that Courts of Equity, after the lapse, even, of a much shorter time, would refuse their aid, unless the party could shew such reasons for the delay, as would acquit him of the charge of negligence. But this is not under the Statute: it flows from a rule, adopted by those Courts long anterior to the existence of that law, under which they have always refused their aid to stale demands, where a party has slept upon his right, and acquiesced for a length of time. See 3 Bro. ch. cases, 639. —In the case before us, there were only about ten years, from the date of the contract to the commencement of this suit: during almost the whole of this time, the claim was in litigation between the parties ; for the judgment obtained by the defendants in the Court of law in 1807, was immediately injoined; and that injunction only dismissed in 1811. In 1813, this suit was brought; and the plaintiff states in his bill, and has proved, as well as a negative of that kind can be proved, that he did not become acquainted with the bankruptcy of Morris (the foundation of the present Bill,) ’till the fall of 1812. Nor do I know that his ignorance of this fact ’till so late a period, can be imputed as laches to him ; for it took place in another State, at the distance of 4 or S00 miles, in the great commercial City of Philadelphia, where it might not excite much attention, as there were, probably, hundreds of similar cases, under the Bankrupt law. Erom this view, it seems to me, that the Court ought not to apply the Statute of Limitations to the case.
Having disposed of these points, we come to the merits. And here I will observe, that I rather think the Bill is unskillfully drawn in one particular; that is, the mode in which it seeks relief; by a performance of the contract on the part of the defendants. I am disposed to think it would have been better to have sought relief from the contract. As, however, the effect would be the same, whether the Court injoin the Judgment at law, or decree in favour of the plaintiff an equal sum, and set it off *against the judgment; I do not suppose that this (if an error) would be considered so material, as to defeat the plaintiff’s claim to relief, if, upon the merits, he should seem entitled to it.
On the 10th of September 1803, Deviet-man contracted to deliver to the plaintiff, in one month, 322,000, of Morris and Nicholson’s notes, for which, on delivery, the plaintiff engaged to pay, in property, five shillings in the pound. On the 28th of July, 1801, a Commission of bankruptcy issued against Robert Morris: on the 31st of that month, he was declared a bankrupt; and on the 4th of December 1801, he obtained his certificate; by which, he was, under the law, absolutely discharged from the payment of all debts which might have been proved under the commission ; which may be said to include that whole class of paper known by the name of “Morris and Nicholson’s notes;” for it is not pretended, on any hand, that notes of this kind issued after the bankruptcy. By the Act of Congress, there are to be three meetings for the examination of the Bankrupt, within forty-two days after notice given by the Commissioners; at which time, the creditors are notified to come forward, prepared to prove their debts. By the same Act, there are to be two dividends; the first within twelve, the last within eighteen months after issuing the commission; at either of which dividends, those creditors who have not before done so, may appear and prove their debts: but, after this, there can (as I understand the law,) be no proof of debts: nor can there be, after eighteen months, a dividend made, if there has been none declared within that period, as was the case here. On the 4th of September 1803, therefore, when the contract for the delivery of Morris and Nicholson’s notes was made, there were none of those notes from which Morris was not absolutely dis charged; nor could any holder of those notes, at that date, prove them under the commission against Morris. But it appears that the parties to the contract were, at the time of making it, (both buyer and seller) entirely ignorant of the bankruptcy of Morris; and, of consequence, both considered the notes legally binding on *him, whatever they might have thought of his ability to discharge them. It is therefore contended by the Counsel for the plaintiff, that, both parties being under the mistake arising from their ignorance of the bankruptcy, this Court ought to relieve against the contract. On the other hand, it is insisted for the defendants, that, fraud being negatived by the verdict on the issues, the contracts must be taken as fair and bona fide, and therefore this Court ought not to interfere. But can not a Court of Equity interfere upon the ground of mistake, where there is no fraud suggested? On this subject, I have examined the books, and Will cite some authorities.
In 2 Pow. on Contr. 196, it is said, “an agreement may be set aside by reason of mistake in the parties making it; if the point misconceived be the clause of the agreement: for, if an agreement be entered into upon the presumption, by one of the parties, of a fact, that is really not so as that party believed, the agreement, as to him, is of no force; because he did not give his assent to what is agreed upon, absolutely, but upon such and such conditions which were not verified by the eyent. ” In Newland on Contracts, 432, it is said, Equity, in rescinding contracts, does not confine its relief to cases of fraud. Cases, likewise, of plain mistake or misapprehension, though not the effect of fraud’ or contrivance, are entitled to the interference of that Court.” In Pothier on Obligations, p. 14, it is said, Error is the greatest defect in Agreements; for agreements are formed by the assent of the parties, and there can be no assent where the parties have erred as to the object of their agreement. Non videntur qui errant consentiré. Error annuls the agreement, not only when it falls on the thing itself, but also when it falls on the quality of it, which the parties have chiefly in view, and which constitutes the substance of the thing.” In 1 Call 316 — 17, JollifFe v. Hite, Judge Eyons says, “the general rule, as laid down by Civilians, is, that, if there be not a full knowledge of all the circumstances, it is ground for avoiding the contract. 1 Vern. 32; 2Vern. 243. And the reason is *because the buyer proceeds upon the supposition of a quality, which if the thing does not contain, the contract should not oblige the party who contracts under a misapprehension : — ■ for, in this case, the party is not conceived to have agreed absolutely, but upon the supposai of the presence of a thing or quality, on which, as on a necessary condition, his consent was founded; and, therefore, the thing or quality not appearing, the consent is understood to be null and ineffectual; which is equally true whether the seller knew of the defects, or not; for he ought not to reap the advantage of an apparent value, which the thing sold seemed to have, and had not.”
Prom these authorities, it is clear that a Court of Equity may interfere on the ground of mistake, notwithstanding the absence of fraud; but the mistake must be a plain one, and one which affects, in an important degree, the subject matter of the contract. It is evident, (as I have before stated,) that the parties were ignorant, at the time of the contract, of the Bankruptcy of Morris; that they supposed, the one that he was selling, the other that he was buying, notes which imposed on Morris a legal obligation to pay. It is equally clear, that, at the time of the contract, there was no-legal obligation on Morris to pay those Notes; that he was as much released from them as if he had actually paid them; nay, in a better situation: for, under the law, he might, if sued, appear without bail, plead the general issue, and give the bankruptcy in evidence. There was, then, a plain mistake: — but was it an important one? The notes purported to bind Morris and Nicholson; but Morris was released from them. Here was one chance of recovery lost; one prop to their credit fallen; and that, too, I believe we may say, the principal prop: — for Morris was known to-every one, as a man of great talent, particularly for speculation; as having, at one time, possessed immense property, and resources almost unlimited; and it was still hoped by those unacquainted with the extent of his embarrassments, that he might, by some lucky effort, retrieve his fortunes. This hope, his Bankruptcy totally ^destroyed. It must have gone farther, and not only destroyed the hope of payment from Morris, but most materially have injured the credit of Nicholson, who was so intimately connected with him; for one of these Giants in speculation never falls alone; all connected with him feel the shock: — and those within his immediate vortex are generally drawn down along with him. Suppose, at the moment of the contract, it had been told to Hickman that Morris had been declared a Bankrupt two years before. Can any one believe that he would have gone on with the contract? that he would have bound himself to pay $5500 for the Notes of a Man, who was released from them by his bankruptcy; and whose bankruptcy could hardly fail to involve his partner in one common ruin? It is not credible. I therefore consider this a mistake affecting in an important degree the subject matter of the contract.
But it is said, that this was a speculating contract, with which this Court ought not to interfere. I can not see how a practicable line of discrimination can be drawn between this sort of commerce, and that which we see every day carried on in Bonds, Bills and Notes. A man wanting to raise money takes these evidences of debt, as he would any other species of property, to the market, and sells them for what they will bring ; sometimes more, sometimes less* and these sales, if there be no feature of fraud, are recognized by Courts of Equity as fair. Again, it is objected, that these Notes were known to be a depreciated paper, floating in the market; constantly passing from hand to hand; and that, from these circumstances, we must conclude, that the seller merely sold the paper, without any idea of recourse; and the buyer took upon himself every possible risk. I must again compare this case to the sales of Bonds, Bills, &c. ; remarking, that I can discover no more difference between them, with respect to the last objection, than the former. When a man sells bonds, it is either with, or without assignment: —if he assigns, (except it be without recourse, ) he guarantees the solvency of the obligor: — If he passes them without assignment, *the transferee takes upon himself the risk of insolvency: this, at least, is, I believe the general idea ; though, upon the reasons given by Judge Roane in Mackey v. Davis, I think it may be well maintained, that, even without assignment, the transferee, having used due diligence, may come upon the transferrer, in case of the insolvency of the obligor. But, however this may be, I have always supposed it a question clear of doubt, that, without any assignment, the buyer of a bond, or note, might come upon the seller, if it should turn out that the bond was not the bond of the obligor, or that he had paid it, ,or was in any way discharged from the payment of it, when the transfer took place. Now we have before seen that, at the time of the transfer in our case, Morris was absolutely discharged from the payment of these Notes.
Dot us, for a moment, view this case in another light. Perhaps It is only a different illustration of the same facts and principles. By the contract, Devietman covenanted to deliver to Hickman, notes of Morris and Nicholson; that is, (as every one would say at a glance,) notes legally binding Morris and Nicholson to pay their amount. Now, has he ever complied with this Covenant? Centainly not: — for the Notes which he tendered were not binding on Morris: — he had been discharged from them. Could Devietman or his representatives, without a compliance on his part, call upon Hickman for payment? No: — for Hickman was to pay upon the delivery of the Notes. And, if the fact of Morris’s bankruptcy had been proved to the Court of law, I can have no doubt that it vrould have defeated the recovery of the defendants. But it was Hickman’s misfortune to be at that time ignorant of the fact. As it appears, from this view of the case, that Devietman has not complied with his covenant, it occurred to me that it might be doubtful whether this case was not like Pollard v. Patterson, 3 H. and M. 80, and whether the plaintiff here ought not to be left to prosecute at law, on the Covenant. But I think there are some important distinctions between the cases. If Hickman were to bring Covenant, at law, he might be met by the verdict and judgment, on the same *agreement, in favour of the defendants. How far this might operate as a bar, X shall not, sitting here, undertake to decide. But it is a hazard to which I see no reason for subjecting the plaintiff. Again, he charges, that, since the judgment at law against him, the defendants have removed out of the State, and are still non-residents, so that he can not sue 1hem; but that, if he could, they would, during the progress of such suit, force from him the amount of their judgment, pay it away in discharge oE other debts, and meet him with the plea of “fully administered.” Another charge in the Bill is, that the defendants have wasted the assets, and, to conceal that fact, have failed 1o return an inventory; and they are called on for a discovery on this head. Their Answer acknowledges that they have not hitherto returned an inventory which they file with the Answer. Upon all or some of these grounds, I have no doubt that it was proper for a Court of Equity to take jurisdiction of this cause; and, having done so, for what should they now send the party to law? Is it to establish the breach of Covenant? But this court has all the evidence before it: there is no contradiction, or clashing, in it; and it may certainly be decided here, whether there has been a performance or not. Is it to ascertain the damages, which the plaintiff has sustained by the breach? But he claims none. He only seeks to be released from those which the defendants have recovered of him. It is, in principle, like this case. A.- sues B. at law, and has a judgment:— B. injoins:- his injunction is dissolved on the coming in of the answer, but he continues it as an original. A.’s Execution being let loose, he makes the money: but, on the final hearing in Equity, B, proves to the satisfaction of the Court, that, in equity and good conscience, there ought to have been no recovery against him at law. Will not the Court decree that the money paid under this iniquitous judgment, shall' be refunded? So, in this case, if the plaintiff had paid to the defendants the amount of the judgment at law, I would decree to him the same amount against them. But, as it appears that he has not yet paid the judgment, the same *relief will be given, the same end answered, by injoining the defendants perpetuallj' from proceeding on their judgment at law; which is decreed and ordered accordinglj', with costs of suit to the plaintiff. The bill is dismissed against the securities; but without costs ; for it was not improper to make them parties, as, in the event of proceedings on that part of the Bill which charges waste, they would have been interested.
Thus have I, in as narrow a compass as I could, given my views of this difficult, embarrassing and complicated case. Though my opinion is the result of much and anxious reflection, I am by no means confident oí its correctness; and should be well pleased to see it tested by an appeal.
Erom this decree, Armstrong and Wife appealed.
The cause was argued, on the Ifitb, 16th, and 17th days of December 1818, bj' Stanard for the appellants, and Wickham for the appellee.
Judgments -hajtanctions. — See monographic note on "Judgments" appended to Smith v. Charlton, 7 Gratt. 425; monographic note oil “Injunctions” appended to Claytor v. Anthony, 15 Gratt. 518.
Contracts — Rescission-Mistake.—On this subject, sen foot-note to preceding case. The principal case was cited on the point in Tucker v. Cocke, 2 Rand. 66; Thompson v. Jackson. 3 Rand. 507; Crislip v. Cain, 19 W. Va. 511. The principal case is also cited in Ferrell v. Allen, 5 W. Va. 45.

Opinion:
February 17th 1819,
JUDGE ROANE
pronounced the Court's opinion, that the Decree be affirmed.