Case Name: Washington v. Pollard; Same v. Lumpkin
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1849-01
Citations: 5 Gratt. 432
Docket Number: 
Parties: Washington v. Pollard. Same v. Lumpkin.
Judges: 
Reporter: Virginia Reports
Volume: 46
Pages: 432–456

Head Matter:
Richmond.
Washington v. Pollard. Same v. Lumpkin.
(Absent Cabell, P. and Brooke, J.)
J C P, being the owner of a tract of land, executes a mortgage upon it, which he acknowledges before his brother It P, who is the clerk of the County Court, and the deed is duly recorded in his office. TCP sells and conveys the land to H, who sells and conveys it to R P; and R P gives his bond to II for a balance of the purchase money. This bond is assigned by II to W, by W to G, and by G to L. Some time after the assignment to L, R P, in consideration of further indulgence, executes to L a new bond, with J C P as his surety, and takes in and cancels the first bond. L having sued R P on the new bond, R P enjoins the judgment on the ground of the incumbrance on the land, and alleges in his bill, that at the time he pui-chased the land from H, he had no knowledge of, or did not recollect the existence of, the mortgage, and that J C P is insolvent. Held : R P is not entitled to relief.
John Baylor Hill, having purchased from John Camm Pollard a tract of land in King William, sold and conveyed the same to Robert Pollard, for the consideration of 3500 dollars, all of which was paid or satisfied at the time, except the sum of 1000 dollars. For this sum a bond, in the penalty of 2000 dollars, conditioned for the discharge of the lesser sum on or before the 1st January 1834, was given by Robert Pol lard to Hill. This bond was assigned for value, first, on the 30th April 1833, to William Washington; secondly, about the same time, by Washington to James Govan; and thirdly, by Govan, through an agent, to Richardson Lumpkin. Lumpkin held this bond, thus assigned to him, without instituting any proceedings upon or securing the same, for fourteen months after it became due, and until the 10th March 1835, when having applied to Robert Pollard for the payment of the same or for the execution of new security, he arranged with him to give up to be cancelled the original bond, and to take a new bond from Pollard, with John Camm Pollard as his security thereto, for the principal of 1000 dollars, and Robert Pollard's single bill for 60 dollars, the amount of interest due. The new bond, with the security stipulated for, was accordingly given, and the old bond was cancelled by tearing off the name of the obligor, and was taken in by him. This new bond was given, payable on demand, and dated the 10th March 1835, but in reality it was understood and agreed between Robert Pollard and Lumpkin, that upon such new bond being executed, time should be allowed thereon. The substituted bond was held by Lumpkin for some year or more without suit, but was then, together with the single bill for 60 dollars, put in suit, and judgment on both obtained at law. While the tract of land sold to Robert Pollard by John Baylor Hill was owned by John Camm Pollard, the vendor of Hill, he had executed a mortgage thereon to a certain Lucy J. Hoskins, to secure the payment of 2512 dollars 80 cents, which mortgage had been duly recorded in the clerk’s office of the County Court of King William, upon proof by the attesting witnesses before Robert Pollard, who was clerk of the County Court of King William, and the brother of John Camm Pollard, and had been subsequently assigned to Dandridge B. Edwards. Of this mortgage Robert Pollard avers that he had no knowledge, or at least n0 recollection, at the time of his purchase from Hill, and the execution of his bond to him. Proceedings having been instituted by the assignee of this mort§a§e t0 f°recl°se Robert Pollard, after the recovery by Lumpkin of his judgments obtained at law as aforesaid, filed his bill in equity, insisting on the defect jn ^ t;tie 0f ]an¿¡ for plu-chase money of which, in part, his original bond had been given, and praying that said judgments might be enjoined until the termination of the proceedings for the foreclosure of the mortgage. To this suit John Baylor Hill, the vendor of Robert Pollard, and all the assignees of the original bond, were made parties defendants, as likewise was Robert C■ Page., the administrator of John Camm Pollard, who was the vendor of Hill, and the grantor of the mortgage, and who had died in involved and embarrassed circumstances. In this suit, only one deposition, that of John B. Hill, was taken, and that to prove his ignorance at the time of his sale to Pollard of the previous mortgage. The defendant Lumpkin proved by the same deposition, and exhibited the following letter of Robert Pollard to himself:
February 20th, 1835.
"Dear Sir,
Your note of the 10th inst. I received a few days ago, informing me that my bond for 1000 dollars had been passed to you by Mr. Baylor Temple, and saying that if it was not convenient to take it in, you wished it secured by good security. I should feel sorry indeed if I for a moment were to think that my bond for that sum was not perfectly good; but at the same time I feel thankful to you for your kindness in agreeing to wait with me for the money, upon condition that I will execute a new bond, with good security, and pay the interest. This I will do the first time I see you. This bond was given for the last payment due for the purchase of the plantation of Capt. John B. Hill, called Edge Hill, and I flatter myself that by the end of the present year it will be in my power to discharge it.
Very respectfully,
Your most ob’t servant,
Ro. Pollard.
On the hearing of this suit on the 24th November 1838, the Court perpetuated the injunction to the judgments obtained by Lumpkin at law, and decreed costs against him; but being of opinion that no decree could be rendered between the co-defendants in that suit, on the motion of Lumpkin, granted him leave to file a cross bill, and retained the original cause for that purpose.
Soon afterwards Lumpkin filed his cross bill, disclosing the proceedings had and the facts established in the former suit, and prayed a decree against the assignors of the bond originally given by Robert Pollard to Hill, and assigned through several intermediate assignors to him, and which bond had been, by arrangement between him and Pollard, taken in and cancelled on the giving of new security. The answers of the several assignors resist this pretension, and that of Washington in particular is explicit on the grounds of defence, and among other things insists upon the facts that the original bond had not been prosecuted with due diligence by Lumpkin — had been held up for more than fourteen months after maturity — and that the new bond with security taken by him had also been unreasonably held up; that meantime Hill had become insolvent, although good at the time of the maturity of the bond ; that John Camm Pollard, originally and primarily liable as the vendor of the mortgaged land, and the grantor of the mortgage, who was good at the maturity of the bond, had become insolvent and died; and that the mortgage, which had before been no just impediment to the recovery on the bond, had been dis covered and thrown upon the land. The bill was taken for confessed as to Robert Pollard.
Testimony was introduced as to the circumstances of John Baylor Hill and John Camm Pollard. As to ®rst’ ^ aPPears that he became insolvent in the fall or winter of 1833. John Camm Pollard died in August 1836, and his estate proved to be insolvent. fpfjere was gome conflict in the testimony as to his credit from the fall of the year 1833 until his death. One witness considered his credit shaken as early as that period; others considered it good up to the time of his death.
On the hearing of the second cause in November 1842, it being admitted that John Baylor Hill was insolvent, the Court decreed that Washington should pay to Lumpkin the sum of 1000 dollars, with interest from the 8th of January 1834 till paid; and if the decree against Washington should prove unavailing, a like decree was made against Govan. Washington applied to this Court for an appeal from the decrees in both the original and cross cause, which was allowed.
Morson, for the appellant.
The original bond having been taken in and can-celled, that was an extinguishment of it, and put an end to all liability of any party thereto. Hurlstone on Bonds 122, 9 Law Libr.
If the cancellation did not of itself extinguish the bond, that, with the other attending circumstances, produced that consequence, and amounted either to payment or to accord and satisfaction. Payment need not be made in money; but may be in property, in negotiable notes, and the like. Whether it was a payment, is a question of intention ; and the taking the new bond with new security, a security too who was primarily liable to discharge the mortgage debt, and the cancellation of the old bond, evinced the intention, and shewed that the new was taken in payment of the old one. 2 Stark. Evi. 186; 2 Philips’ Evi. 492, Cow. & Hill’s edition ; Id. 314; Geyer v. Smith, 1 Dall. R. 347. . i If this did not amount to payment, it at least amounted to accord and satisfaction. Lewis v. Jones, 10 Eng. C. L. R. 393.
The original bond having been cancelled, so that no action could be maintained thereon at law, the question is, will equity revive the remedy which at law is lost forever. However this question may be settled here as between Lumpkin and Pollard, the parties to the agreement, there is no principle of equity on which the remedy can be revived against the assignors, who were no parties to the agreement. These assignors are sureties; mere guarantors of the debt, not directly but contingently bound; and their liability could only arise after the holder of the bond had, after using due diligence and exhausting his remedies against the principal debtor, failed to make his money out of him. But where the holder of a bond has eutered into a new contract with the principal debtor and given up the old security, or has given time to the debtor, the sureties will be discharged, even where they are bound at law. The rules on this subject are stated 2 Tucker’s Com. Book 3, p. 482.
Even if the assignor is not to be treated as a surety, he is nevertheless never chargeable unless the assignee has used due diligence to obtain his money from those who are primarily liable. This always involves a judicious course of proceeding, with a view to the recovery of the money; and does not admit any delay or negligence whereby the recovery may be defeated. Mackie’s ex’or v. Davis, 2 Wash. 219; Lee v. Love, 1 Call 497; Drane v. Scholfield, 6 Leigh 386.
In this case Lumpkin waited more than fourteen months without suit, and then took a new bond from the principal obligor without the knowledge or assent of the assignor; and he then delayed to take any steps . . __ __ r to make his money until May 1836. more than two years from the time the old bond fell due. In that time John Qamm p0uar(i and Hill, the parties who were bound t0 save Washington harmless, were in good credit, and were paying all claims presented, though they may have been then embarrassed; and if Lumpkin had used due diligence in enforcing payment of the bond, these parties, who ought to have paid it, would have been compelled to do it.
I have always understood that where an innocent party cannot avoid a loss but by putting it upon another party who is equally innocent, a Court of Equity will not aid him to do it; according to the maxim, in equali jure potior est conditio defendentis. Here both Washington and Lumpkin are assignees for value; the former without any notice of the incumbrance. When, then, Lumpkin has discharged Washington at law, by cancelling and delivering up the bond on which he was bound, a Court of Equity will not revive his liability.
Robinson, for Pollard.
When Robert Pollard wrote the letter of February 1835, and in the March following, when he executed the new bond, he was wholly ignorant of the mortgage. If he had been informed of the existence of the mortgage he might have required that it should be discharged before he paid his bond, though it was in the hands of an assignee. Norton v. Rose, 2 Wash. 233. Even if he had known of the existence of the mortgage at the time of his purchase, he was still entitled to have the mortgage discharged before paying his bond, as against both the obligee and assignee. Stockton v. Cook, 3 Munf. 68.
Such were the rights of Robert Pollard up to the date of his letter to Lumpkin, in February 1835. This letter, written after the assignment to Lumpkin, does not divest him of this equity. Ludwick v. Crall, 2 , Yates' R. 464; and the execution of the new bond cannot have that effect unless there was an intention to waive his equity. Picket v. Morris, 2 Wash. 255. But there could not have been an intention to waive an equity, of the existence of which Pollard was ignorant; and what he has done in ignorance of the facts of the case should be vacated, and the parties be restored to their original rights. Buchanan v. Wurtz, 5 Watts’ R. 151.
When an assignee of a note given upon an illegal consideration, with knowledge of the fact, takes a bond for it, he cannot recover on the bond. Amory v. Meryweather, 9 Eng. C. L. R. 173. It will be insisted, that on the same principle an assignee of a note or bond given for a consideration which fails, who with knowledge of that defect takes a bond for it, cannot recover on the new bond. And it will be further insisted, that even if the assignee did not know of the defect until after the new bond was taken, or if both parties were then ignorant of the real facts, yet the contract for the new and the discharge of the old bond should be rescinded, if the parties can be put in the situation they would have occupied if the new bond had not been taken.
It is true, that there is no positive proof in this case that Lumpkin was acquainted with the defect in the title to the land when he received Pollard’s letter. Yet why take a new bond unless he knew it? He had Hill, Washington and Govan bound to him on the old bond ; and these were left off the new bond, aud he took in their place John Camm Pollard, who was then deeply embarrassed, and who died in the August following hopelessly insolvent. If, then, Lumpkin had knowledge of the incumbrance on the land, and Robert Pollard was ignorant of it, the Court will put Pollard in the same condition in which he was before the new bond was given : And even if Lumpkin had no knowledge of the incumbrance, still Pollard is entitled to relief.
It is said by the counsel for the appellant that the taking the new bond was a payment. This might be true if there had been a full knowledge of all the facts of the case; but not so without such knowledge. It is true, that where money has been paid with a full knowledge of all the facts it cannot be recovered back. Martin v. Morgan, 5 Eng. C. L. R. 87. But where this knowledge does not exist or where there has been misrepresentation, there money paid may be recovered back. Milnes v. Duncan, 13 Eng. C. L. R. 293. It is said that Pollard was the clerk in whose office the mortgage was recorded. But this is no proof of actual knowledge ; and if he once had a knowledge of the fact, yet if payment is made under a bona fide forgetfulness of the fact, it may be recovered back. Kelly v. Solari, 9 Mees. & Welsb. 54. If then the new bond was a payment, and though Pollard had once seen the mortgage, if he had forgotten it when he gave the bond, he is entitled to recover it back. Such is the law if Pollard had paid money; and a fortiori having given a mere security, it cannot be enforced. Bell v. Gardiner, 43 Eng. C. L. R. 16. This was the case of a negotiable note ; and the principle is equally applicable to a bond. Whatever relief a Court of law can give against a note, equity will give against-a bond.
The second bond being vacated, Robert Pollard is certainly not bound to pay the first. That was given for land covered by a mortgage, and the mortgagee, John Gamm Pollard, is dead, insolvent, so that the mortgage must be satisfied out of the land.
The second bond being vacated, Lumpkin is entitled to go against the assignors of the first; and the question is, how stands the case as between the assignors and assignees ? Robert Pollard, the obligor in the first bond, is not insolvent; and therefore the question of due diligence does not arise. As where the obligor is insolvent no suit is necessary; so where he is solvent but is released from liability, no suit is necessary. In the case of Mackie’s ex’or v. Davis, 2 Wash. 219, Lyons, J. says, “the agreement by the assignor is, that the assignee shall receive the money.” This case shews the principle on which the assignee recovers from his assignor; and it is not necessary to sue where the obligor is insolvent, or is not bound to pay. Caton & Veal v. Lenox, 5 Rand. 31.
Lunvpkin was certainly entitled to recover from Go-van, his immediate assignor. He was bound to pay, without regard to the previous assignors. At common law the assignee had no right of action against them. Mandeville v. Riddle, 1 Cranch 190; Dunlop v. Harris, 5 Call 16; Hooe v. Wilson, 5 Call 61. It is only by virtue of the statute, 1 Rev. Code, ch. 125, § 6, p. 484, that an assignee has a right of action against his remote assignor. This statute does not impair the right of the assignee against his immediate assignor; but is only cumulative. If, therefore, Hill had been solvent, it did not impair Lumpkin’s rights against Govan. Govan’s remedy was to restore to Lumpkin the money he had paid, and to proceed himself against Hill; as was done in Goodall v. Stuart, 2 Hen. & Munf. 105. But in fact, Hill’s condition was not changed after the first bond became due. He was insolvent prior to that time; and the delay therefore could work no injury to Govan.
Govan could not defend himself on the ground that Lumpkin had agreed to give time to Robert Pollard. If the second bond was invalid, the agreement to give time to Pollard was also invalid, and not binding on any party to it. No agreement to give time releases a surety, unless it is upon a consideration which makes it binding. M’Lemore v. Powell, 12 Wheat. R. 554 ; Philpott v. Bryant, 15 Eng. C. L. R. 288; Norris v. Crummey, 2 Rand. 823; Hunter's adm’rs v. Jett, 4 Rand. 104. Lumpkin then has a perfect right of recovery from Govan; and Govan has the same against Washington ; and, since the act of 1806, Lumpkin may have the right to recover against Washington.
It may be said, Lumpkin has his remedy at law ; and therefore that he has no right to come into equity for relief. But the statute is cumulative ; Winn v. Bowles, 6 Munf. 23; aud the assignee has still the right to come into equity, and bring all the assignors or endorsers before -the Court. Riddle v. Mandeville, 5 Cranch 322. And this is an answer to the argument of the counsel for the appellant, as to the equal equity between the parties. The legal liability of the assignor is in full force. If asked why not then proceed at law ? the answer is, because the remedy at law is obstructed. Lumpkin could not have proceeded at law until the second bond was put out of the way; and the only question is, whether the Court, after setting aside this bond, should then have left Lumpkin to his legal remedy. In determining the question as to the validity of the second bond, it was necessary to consider the question of his right to recover, and therefore, certainly it was proper to give him relief. This, upon the principle that a Court of Equity having rightfully gotten possession of a case, will proceed to end it, and give full relief, might have been done as between co-defendants; but with still less doubt might it be done upon a cross bill.
Griswold and Claiborne, for Govan.
In Norton v. Rose, 2 Wash. 233, Judge Roane says, at page 251, that an equity existing against a bond “ may be lost by length of time or other circumstances.” Such circumstances, it would seem, should embrace any acts, on the part of the obligor, calculated to mislead the assignee into a belief that no such equity existed. Ask ing indulgence — promising to pay — giving new bond with security,- áre such circumstances. These exist in this case. They are sufficient to bar Robert Pollard’s equity. If done with knowledge of the existence of the equity, it is well settled that they are a bar. Hoomes v. Smock, 1 Wash. 389. It is difficult to believe that Robert Pollard had no notice of the mortgage when he gave the new bonds. He does not allege ignorance in his bill. Nor does Lumpkin in his bill. The answers, particularly Washington’s, require strict proof. None is offered, even so much as to raise a presumption of his ignorance of the mortgage. There are facts in the case, raising a strong presnñiption that he had knowledge of it. He was the brother of John Camm Pollard, the mortgagor, and familiar with his affairs. He was clerk of the Court in which the mortgage was recorded. It was actually acknowledged and proved before him, as clerk, in Court, only a few years before the new bonds were given. He must, then, in the absence of any allegation to the contrary, be presumed to have known of the mortgage, when he gave the new bonds.
This doctrine should apply very strongly in a case, where, by reason of the acts of the obligor, the assignee, misled by them, suffers a loss which he might have avoided had the equity been disclosed at the time notice of the assignment was given.
Here, had Robert Pollard disclosed the equity when first informed by Lumpkin of the assignment, Lumpkin and his assignors might have secured themselves out of John B. Hill, or certainly out of J. C. Pollard, who was in good credit, and continued to pay up to the time of his death. Now they cannot, and he should bear the loss. The assignees, innocent holders for value, have lost their remedy in consequence of his acts, and the law is with them. Even if R. Pollard was ignorant, he was so from his own sheer negligence, and he only should bear the consequences.
When a party is ignorant because of his own culpable neglect, the same principle applies, as when he acts with full knowledge. Although ignorant, yet if the means of knowledge are fully within his reach, and he fail to avail himself of them, he will be treated in the same manner as if he had full knowledge. If money be paid with a full knowledge of the facts, it cannot be recovered back. Neither can it, if the party paying it have the means of knowledge within his reach, and fail to avail himself of them. 1 Leigh’s N. P. 57; Elliott v. Swartwout, 10 Peters’ R. 137; Martin v. Morgan, 5 Eng. C. L. R. 87; Milnes v. Duncan, 13 Eng. C. L. R. 293. The means of knowledge were fully in Robert Pollard's power — in his own office — under his eyes every day. He was culpably negligent not to avail himself of them.
Judge Roane says an equity may be lost “ by length of time.” The delay of Robert Pollard in asserting his equity in this case may not of itself be sufficient to defeat his equity. But, taken in connection with the “other circumstances;” his relation to J. C. Pollard, his acquaintance with his affairs, and his culpable negligence in not ascertaining the existence of his equity, and making it known to Lumpkin in time for him to secure himself, it is sufficient, and should defeat him in favour of innocent assignees for value. He does not seem to have asserted any equity until judgments were about to be rendered against him upon his bonds, more than twelve months after the dale of the new bonds, and more than three years and four months after the execution of the original bond. In the mean time, J. C. Pollard died insolvent, and the remedy of the assignees is gone. Nor will he be permitted to say that J. C. Pollard was not solvent at the date of the new bonds. He himself offered him as good security.
No doubt he thought him good, and was willing at that time to look to him to exonerate the land, by dis charging the mortgage debt. Equity will not relieve him at the expense of innocent assignees, with the law in their favour.
To affect the assignees of this bond with any equity R. Pollard may have had against the obligee, such equity must be made to appear clearly and manifestly, he having promised payment to Lumpkin. Mayo v. Giles's adm'r, 1 Munf. 533. R. Pollard has not made his equity appear clearly and manifestly. If he had notice of the mortgage when he gave the new bonds, then he has no equity. Hoomes v. Smock, 1 Wash. 389. If he had the means of knowledge within his power, and failed to avail himself of them, he has no equity. 1 Leigh’s N. P. 57; Elliott v. Swartwout, 10 Peters’ R. 137; Martin v. Morgan, 5 Eng. C. L. R. 87; Milnes v. Duncan, 13 Eng. C. L. R. 293. To say the least, it is a question of great doubt whether he had notice of the mortgage or not. It is quite certain he had the means of knowledge fully within his power and neglected to avail himself of them. But even conceding his ignorance, without fault, still, unless he was compelled to liquidate the mortgage debt, he has no equity. If J. C. Pollard's estate was sufficient to extinguish the mortgage debt, or if it did actually pay it, then his equity is gone. Upon this point the proof is deficient. It is not clear and manifest that J. C. Pollard's estate was insufficient, nor indeed that it did not pay the debt. Evidence of its general insolvency, (even if there were such evidence,) of its inability to pay all his debts, is no evidence of its inability to paya specialty debt secured by specific lien. But there is no evidence even of a general insolvency of J. C. Pollard's estate. Robert Pollard, then, has utterly failed to make his equity clear and manifest.
If vendee of land pay money to assignee upon his bond for the purchase money, he cannot recover it back in equity. What vendee pays voluntarily, assignee has a right to retain. Crawford v. M’Daniel, 1 Rob. R. 448; opinion Allen, J., other Judges concurring, p. 455, 6. In this case R. Pollen'd has paid the bond given for the purchase money. He has given new bonds, with security, upon a new and valuable consideration, and taken in and cancelled the old bond. This amounts to payment in law. If debtor give to his creditor in payment of a precedent debt, either his own note, or that of a third person, and it be given and received as payment, it is absolute payment, and the original contract is extinguished. Tobey v. Barber, 5 Johns. R. 68; Johnson v. Weed, 9 Johns. R. 310; Sheehy v. Mandeville, 6 Cranch’s R. 253, 264. Nor does it make any difference that the precedent debt is evidenced by a contract of the same dignity as the note received in payment. Tobey v. Barber, 5 Johns. R. 68; Burdick v. Green, 15 Johns. R. 247. If it were expressly agreed that the new bonds should be payment of the original one, then they were payment. Such agreement is conclusively shewn by the surrender and cancellation of the old bond. It was taken in— extinguished — paid, by the agreement of both parties. When the giving of a note is not payment, the original contract may be sued upon at law. The original bond can never be sued upon. Its vitality is gone.
If Robert Pollard intended to waive his equity when he gave the new bonds, he cannot now assert it. Such intention may be presumed from the acts of the parties. Norton v. Rose, 2 Wash. 233. If he knew of the mortgage, he must also have known that giving the new bonds was a waiver of his equity. He will be presumed to have intended to waive it. For a man will always be presumed to intend the legal consequences of his act. If facts be shewn to justify the presumption that he had knowledge of the mortgage, they will fully sustain the presumption of his intention to waive his equity. Such facts exist in the case. They have been already adverted to. In addition, it may be said, that when he gave the new bonds, he considered his brother, J. C. Pollard, the mortgagor, perfectly solvent — he offered him as good security for 1000 dollars — the mortgage debt had been reduced to 1256 dollars 40 cents, with two years’ interest, and it may very reasonably be presumed, that he was perfectly willing to rely upon J. C. Pollard to discharge the mortgage debt, and exonerate the land from the incumbrance.
But we submit, that R. Pollard has entirely failed to prove any equity. Washington's answer called for proof of the allegations of the bills. None is offered, of the subsistence at the time of the decree of any incumbrance upon the land. Non constat, but that the mortgage debt had been paid by J. C. Pollard's adm’r. It certainly does not appear that R. Pollard, ever paid the mortgage debt, nor that the land was ever sold to satisfy it. The presumptiou is altogether adverse to any such supposition. R. Pollard in his bill refers to the proceedings in the suit to foreclose the mortgage, and Lumpkin refers to them as an exhibit with his bill, and yet no record or other evidence of those proceedings appears any where in this record. This omission is not a little remarkable. And in the absence of all proof that R. Pollard was compelled to pay the mortgage debt, or that the land was sold to pay it, or that proceedings had been instituted to foreclose the mortgage, or that the mortgage debt was outstanding and unpaid at the time of the decree, we insist that he had no equity. For want of such proof at the hearing, both bills should have been dismissed. This view shews the inapplicability of Stockton v. Cook, 3 Munf. 68, to this case.
Daniel, for Lumpkin.
Lumpkin being an assignee for value without notice of any equity against the bond, is entitled to have his money from somebody. And first as to the liability of Robert Pollard. It is said he knew nothing of the incumbrance on the land for which the bond was given when it was executed. As to this, it would not be dift0 shew that he had notice at least when the new bond was given. But it is further insisted, that he is not liable, though he had notice. This is a proposition wbjcb jt would be difficult to maintain. Certainly it is not sustained by the case of Stockton v. Cook. In that case the deed to the purchaser contained a warranty against fraud and incumbrances; and the assignee had notice before he took the bond.
If Pollard had notice when he gave the new bond, and Lumpkin had no notice, how can it be maintained that Pollard is not bound to pay it? Then did not Pollard have notice at that time ? His bill says he was ignorant of the incumbrance at the time he purchased the land. The bill goes no further, and we must presume he goes as far in his denial of notice as he could go with truth: qui facet clamat. Again : in Lumpkin’s cross bill he called upon Robert Pollard to answer; and yet he is silent, and allows the bill to be taken for confessed. But still further: the person giving the mortgage, John Camm Pollard, was his brother, and they were obviously intimate and confidential relations, and he was the clerk who took the acknowledgment of the mortgage, and it was recorded in his office. These facts lead, in the language of one of the cases cited by Mr. Robinson, to the irresistible conclusion that Robert Pollard knew of the existence of the mortgage. On the other hand, there is not one iota of evidence that Lumpkin knew of its existence; nor is there a fact from which a rational inference of such knowledge can be drawn. Can Robert Pollard, then, come into a Court of Equity, and insist that both these bonds are void in the hands of Lumpldn, who he has induced to indulge him ?
It is said that there has been no waiver of his equity by Pollard. The argument on this point is founded on the assumption that Pollard was not conusant of the mortgage at the time he executed the bond to Lumpkin — an assumption wholly unsustained by the proof.
The proposition that Pollard is not liable, though he had notice of the mortgage at the time of executing the bond to Lumpkin, is only applicable upon the supposition that Lumpkin also had notice. If, before taking an assignment of the old bond, Lumpkin had applied to Pollard to know if he had any equity or objection to the bond, and had been told that there was none, the cases in this Court fully settle that Pollard would be concluded from setting up any such equity against it. In this case time is given to Pollard upon his giving security. And whilst Lumpkin is thus lulled into security, the assignors fail, and then can Pollard go into the old transaction to the injury of Lumpkin ? Can he do this after he has destroyed the assignee’s remedy against the assignors of the bond, which he has taken in and destroyed for his own benefit alone ?
But if this Court shall hold that Pollard is discharged, then the question arises: What is the condition of the assignors? If Lumpkin is repelled by the obligor, he is entitled to recover from the assignors, unless he has done something to release them. It is said, that what is due diligence is not well defined. The true test is, has Lumpkin done aught to prejudice the condition of the assignor ?
Cases have been cited to prove that the first bond cannot be set up at law, because it has been cancelled. That is true, and that is the ground for coming into a Court of Equity to set it up. It is also said, that the giving a new bond may be a payment, or accord and satisfaction. That is true likewise, if it was so intended, and all the facts were known.' But if Pollard is discharged, it must be on the ground of a mutual ignorance of the facts by himself and LunvpMn ; and that, therefore, the second bond is void. 1 Story’s Equ. Jur. ch. 5, <§> 141. And if the second bond is destroyed the old one must be revived. This is the case, certainly, between the parties to the second bond; and must be the case as to the assignors, unless they have been injured by the taking of the new bond. How, then, have they been injured? Their liability arises out of the defect in the title to the land. The equity of Pollard, founded on that defect, applies equally to both bonds: and the fact which relieves him, subjects them.
It is said the assignors have been prejudiced by the delay. This is, certainly, not correct as to any party who comes after Washington; and not so as to him. The principle, that the holder must pursue the obligor with due diligence, only applies where the obligor is insolvent, and that is not the case here. Directly Pollard was shewn to be released, suit might have been brought against the assignor. This argument of delay is as between Washington and Hill; and Hill is proved to have been insolvent before the first bond became due.
It is said that the assignors are sureties; that the first bond was cancelled, whereby the remedy at law was lost; that the equities of the assignors and assignee are equal, and that therefore the law must prevail. I take issue with the counsel on all these points. The assignors are not sureties. They have received the money of the assignee upon a consideration which has failed; and therefore it is, upon the familiar maxim, that they are bound to return it. It is on this principle that they are held to be guarantors of the debt, and they are guarantors upon a consideration. They are therefore not sureties in the legitimate sense of that term; and they have no equity at all against the assignee.
Morson, for the appellant,
in reply.
If Pollard was not entitled to relief, then Washington was not liable ; because it is agreed Pollard is able to pay the debt. Was Pollard entitled to relief against Lumpkin? There is no precedent in the books for such relief. Relief to purchasers against incumbrances is more extended in Virginia than in England. But no case is known where there was relief by injunction to a purchaser who had accepted the deed, and taken and held possession without an eviction; and where there is no covenant against incumbrances. In England the rule is, that a party who has accepted a deed, must look to the covenants of his deed for protection. He may sue on the covenants and recover damages, but he cannot enjoin the purchase money.
The application to enjoin the recovery of the purchase money on the ground of an incumbrance on the property, is in the nature of a set-off; and Pollard could not have set up such a set-off at law. It could only be set up in equity, where otherwise it would be lost. The demand is for unliquidated damages; and therefore equity would not allow it any more than law, unless the debtor was insolvent. In 2 Tuck. Com. book 3, p. 473, there is a reference to cases in which this Court has given relief in such cases; and that relief is limited as I have stated.
Then, as between Pollard and his vendor Hill, he could have obtained an injunction only on the ground that those primarily liable were insolvent when the new bond was executed. This is the latest period; and if then, those who were primarily bound were able to pay, nothing occurring afterwards could release Pollard. Now he is concluded as to Camm Pollard’s ability to pay the amount of the bond, as he gave him as the “ good security” he had promised in his letter to Lump-kin. Robert Pollard had no right, therefore, even as against Hill, to enjoin the purchase money. Hill had purchased of Camm Pollard without notice of the mortgage. He was not first first bound for that debt, but it was the debt of Camm Pollard.
When a bond is assigned, the obligor, as soon as notified of the assignment, should inform the assignee of any equitable defences which he has to it. Scott v. Jones, 1 Brock. R. 244. Upon the facts in this record it must be taken that Robert Pollard had notice of the mortgage at the time he had notice of the assignment. His denial of notice is confined to the time of the purchase, not to the time of the assignment.
Mr. Robinson has pressed the rule as to notice between assignor and assignee to the extremest verge. The other extreme may be found in the case of M'Farlane v. Griffith, 4 Wash. C. C. R. 585, in which it was held that an assignee without notice was not bound by an equitable set-off which could not be set up at law. But although this case may be questionable law, as I think it is, yet where an obligor sees his bond sold and omits to disclose his equitable defence to it, he cannot set up the defence against the assignee. Buchanan v. Taylor, Addison’s R. 155; Davis v. Thomas, 5 Leigh 1; Danson v. Franklin, 1 Barn. & Adol. 142. And it is held both in England and Virginia, that if an obligor promises the assignee to pay the debt, he may sue on that promise in his own name. Tiernan v. Jackson, 5 Peters’ R. 580; Fairlie v. Denton, 15 Eng. C. L. R. 246. Upon -these authorities I may insist that when the obligor, after the assignment, comes under a new agreement to pay, founded on a consideration of value, he is precluded from any equity he may have against the bond. The letter -of Robert Pollard says the new bond is to be given in consideration of indulgence. On this new consideration the old bond with the names of the assignors upon it was given up, and the new bond executed.
In the case of a usurious bond, where the assignee is , . r ignorant of it, and takes a new bond, the defence of usury cannot be set up to it. 1 Wheat. Selw. 467; Cuthbart v. Haley, 8 T. R. 390; Jackson v. Henry, 10 John. R. 185. So in the case of forged papers, where a party ought to satisfy himself, and yet he pays, he cannot recover back the money from an innocent holder. 1 Leigh’s Nisi Pri. 58; Price v. Neal, 3 Burr. R. 1354; Smith v. Mercer, 1 Eng. C. L. R. 312; Cox v. Masterman, 17 Eng. C. L. R. 517. So, where payment has been made by mistake. 1 Leigh’s Nisi Pri. 57; Davis v. Watson, 28 Eng. C. L. R. 377. These last cases are cited to meet Mr. Robinson’s cases on this point. Those cases are correct under the circumstances. There the recovery was against a party who, by mistake, had gotten possession of money he was not entitled to. But where the debt has passed from the original party to an innocent holder for value, if he receives the money it cannot be recovered back. This is obvious from the remedy. That is assumpsit, and is rested on the ground that the defendant is not entitled to the money. But where the defendant ex equo et bono may retain it, the action cannot be maintained; upon the universal rule both at law and in equity, that where a loss must fall on one of two innocent persons, and no blame attaches to either, the maxim is, in equali jure melior est conditio defendentis. Bailey, J. in East Ind. Co. v. Tritton, 1 Eng. C. L. R. 79.
In none of the cases cited by Mr. Robinson, was the action against an innocent holder of the money; and in all the cases there was no other redress for the party injured. In both these instances they are unlike the present case. Lumpkin is an innocent holder of the debt, and Pollard had another remedy.
If a vendee pays all the purchase money and is evicted, or is compelled to pay off incumbrances on the land, his remedy is not a suit to recover back the purchase money, or the amount of the incumbrances, but it is upon the covenants in his deed. Robert Pollard could not have maintained an action for money had and received against Hill, and much less against Lumpkin, an innocent holder, for value.

Opinion:
Baldwin, J.
If by agreement between the obligor an¿| assjgnee 0f a bond, the obligation is destroyed or cancelled, and a new one taken for the same debt, from the obligor, by the assignee, payable to himself, all right of action at law founded upon the original instrument, is completely lost, not only as against the obligor therein, but also as against any assignor thereof, whether immediate or remote. Nor in such a case can the original instrument be set up in equity by the assignee against his immediate or any remote assignor; for the responsibility of an assignor is conditional upon the use of due diligence, and a judicious course of proceeding, on the part of the assignee, and the latter, by such agreement and cancellation, has disabled himself from using any diligence, or adopting any proceeding, upon the original contract, from which was derived the responsibility of the assignor; and the assignor, by the abrogation of the original contract, and the creation of a new one, has been lulled into security, and prevented from adopting any measures to obtain indemnity or security from the obligor, or any assignor prior to himself, and from resorting to any collateral security which he might otherwise have made available. And the assignee having by his own voluntary act, without the concurrence of the assignor, affected the legal position of the assignor in regard to the subject, a Court of Equity will not permit the latter to be involved in a controversy upon the question, whether he has sustained actual prejudice from such intromission.
And the obligor being a party to such cancellation and substitution of a new obligation, by which the as signee has lost all recourse against his immediate or any . in • . remote assignor, cannot thereafter set up any pre-existing equity against the assignee, of which the latter was then ignorant; for, if the obligor had knowledge of such equity, at the time of such cancellation and substitution, he thereby waived and renounced the same; or if he had no such knowledge, then a Court of Equity has no motive for interposing between two persons equally innocent, for the benefit of the one, and to the injury of the other.
It was therefore incumbent upon the appellee Robert Pollard, to entitle him to relief in equity, to make out a case, in which the Court should be satisfied, that at the time of the cancellation of his original obligation, and the substitution of his new one to the assignee Lumpkin, he Pollard had no knowledge of the equity now asserted by him, and moreover that Lumpkin had actual notice thereof. He has failed in both aspects. His execution of the new obligation was an admission of the justice of the debt, and thereafter he had no right to throw upon his adversary the burthen of proving that he, Pollard, had knowledge, at the time, of the equity now asserted; and the circumstances of the case furnish a strong probability that he was not ignorant of the mortgage executed by John Camm Pollard, which is made the foundation of that equity. He was the clerk of the Court in which the mortgage was recorded, and the brother of John Camm Pollard, whom he gave as security in his substituted obligation, and to whom he may have looked for its payment as a consequence of the duty of the latter to remove the incumbrance. As to Lumpkin, there is no evidence, probability, or even allegation, that he had any notice of the incumbrance, at the time of the cancellation of the old and substitution of the new obligation.
Without therefore relying upon the evidence rendering it highly probable that the appellant Washington has sustained actual prejudice, in consequence of the cancellation of the original obligation, of which he was a remote assignor, by a change in the pecuniary circumstances of John Baylor Hill, the obligee aud first as-; signor, and of John Camm Pollard, the original vendor, who was bound to remove the incumbrance, I am of opinion that no equity has been shewn by Robert Pollard against Lumpkin, nor by Lumpkin against Washington.
Allen, J. concurred in the decree of this Court, which reversed the decrees of the Court below, dissolved the injunction and dismissed the bills.
Daniel, J. dissented.