Case Name: Williams vs. Hodgson
Court: Court of Appeals of Maryland
Jurisdiction: Maryland
Decision Date: 1806-06
Citations: 2 H. & J. 474
Docket Number: 
Parties: Williams vs. Hodgson.
Judges: The cause was argued before Chase, Ch. J. Buchanan, Gantt, and Earle, J.
Reporter: Reports of cases argued and determined in the General Court and Court of Appeals of the State of Maryland, form 1800 ... [to 1826]
Volume: 2
Pages: 474–483

Head Matter:
Williams vs. Hodgson.
"Whether or nót the answer of one of the defendants to a bill in chancery, is evidence against Another defendant?
A bond given by yme partner for a simple contract debt due from the partners to a creditor, and accepted by him, is by operation of law a release of the other partner, and an extinction of the simple contract debt, at lawuAUn «qmty Y
Ignorance of the law, as to the con» sequences of a creditor’s accepting the bond of one of the partners for a simple contract debt, due from the partner» hip, is not a ground for relief in equity
Such a bond, although not binding on the partner who does not execute it, is obligatory on the one executing it
A complainant is not entitled to relief in chancery against the execu tors ofa joint obligor, who was a surety in the bond* Per uttnsonfihm* , (note)
Appeal frotó a decree of the Court of Chancery. The bill, which was filed tíy the appellee against Williams, (the appellant,) and John Clarke, stated that William§ and Clarke entered into partnership under the name of Jóhn Clarks, <§• Co. During the partnership, Clarice bought goods from the complainant, (Hodgson,) which were delivered to Clarke on account of the partnership, and by him sold. That the belief that Williams was a partner, gave credit to the firm. That on the 7th of July 1797, Clarke settled with the complainant, and the concern was found indebted JPS19 0 5, Virginia currency; and for that sum Clarke gave bond to the complainant, in the names of Clarice and Williams, (jointly and severally,) executed by Clarke alone, sighed John Clarke, & Co. That John Clarice, & Co- being afterwards indebted to the complainant in 1859^ 34, and interest, for goods sold to John Clarke, for andón accoui|Vjf the concern; Clarke, for himself and Williams, on the 18th o'fsNj^ember 1797, gave another bond to the complainant, signed John Clarke, & Co. Thai Clarke is insolvent, &c. That suits were brought on the bonds in the general court against Williams, and were non prossed, because that court were of opinion that one partner could not execute a bond, so as at law to bind his copartner, unless a special authority for such purpose existed. Prayer for a disclosure from the defendants, whether they were partners or not, and that they may be compelled to account with and pay the money due to the complainantj and tor other relief, &c< The answer of Williams stated, that he and Clarke entered into partnership in October 179a, for three years, in the milling and distilling business. Clarke was directed not to purchasa merchandize on Williams’s account, and he believes that Clarke sold goads on his own account. He does not know whether or not Clarke bought goods on the partnership account, and if' he did, the answer insisted that the defen ihnl was riot liable. That he knew nothing of the settlement or execution of the bonds. That suits were brought on the bonds, and non prossed, as stated in the bill, and that Clarke was insolvent. That the partnership was dissolved in 1798. Clarke was the acting partner; and the defendant never bought any goods for the partnership, and he does not know the cunsid'eration of the bonds.
Testimony was taken under commissions issued.for that purpose.
The answer of Clarke, put in after all the proof was taken and returned, admitted all the facts alleged in the bill, ' '
Kn/rr, Chancellor, (February term 1806.) The objects of the bill, as stated therein, were to have a disclosure from the defendants, whether they were partners; to compel tliein to account with the complainant, and pay the money due as charged in the bill, on account of goods sold to them, and to obtain other relief.
As a ground for relief, the complainant states, that during the continuance of the partnership, Clarke gave a bond to him in bis own name, and that of Williams, for a balance due on account of goods sold to them, and aftervyards another bond was given on a similar account, on which suits were brought against Williams in this state, and non prossed, on the ground of such bonds not binding him at law.
The answer of Williams denies the partnership to the extent alleged by the complainant, and does not admit the purchase of the goods by Clarke; the settlement or execution of the bonds. It admits that Clarke is insolvent, and that suits were brought on the bonds, and nan.prossed as stated in the bill.
The defence set up is, that the remedy, (being for the price of goods sold,) is at law, and that it is not a case for relief in equity, and that the bonds relied on as a ground of relief by the complainant, are not proved. And it is also contended that an issue ghonld be tried as to the partnership, &c. and that the question of [aw ¡should be submitted to the judges.
The counsel for the complainant relies on the facts disclosed in the case, W support the jurisdiction and the re lief prayed for; and also contends that the demand being against the defendants as partners, gives the court of equity a concurrent power with a court of law; and so as to the prayer for a discovery.
Upo.n this question of jurisdiction, the case is attended with considerable difficulty, and the authorities on the subject have been carefully examined with a view to its decision.
The position laid down by the complainant is certainly too broad. A prayer for a discovery, which is made a part of every bill in calling on the defendant to answer, cannot give a jurisdiction in every case, nor can the circumstance of the defendants being partners give such jurisdiction in a case purely determinable at law.
If therefore the complainant had merely stated a sale, and delivery of goods, and had brought his bill to recover the price, or if instead of a bond, a note unsealed had been given by Clarke, the complainant would not have been so ill advised as to have prayed for relief in this court, or if he had, would have failed to obtain it.
.But there are circumstances in this case which, under the principles recognized by courts of equity, incline the chancellor to think that the jurisdiction may be sustained.
It is certainly desirable that the boundaries between the courts, as to their jurisdiction, should be prescribed, but they are not in all cases to be clearly discovered, and a writer of eminence observes, that ‘‘to strike out the distinguishing principle upon which courts of equity in such cases have proceeded, would be indeed extremely useful, but that after having given considerable attention to the. subject, he found himself incapable of reconciling the various decisions on it.”.
, In addition to the maxim, that matters of account, fraud accident and mistake, are proper objects of a court of equity, there are other principles which require to be considered in viewing this case. Although a court of equity will not generally give relief where the party hag a remedy, or. the matter is properly determinable at law, yet to prevent such relief, it must be a case which pan be fully investigated, and receive a complete and effectual decision in a, court of law, and the remedy there mpst be clear and certain. ’
In many cases a court of equity will exercise jurisdiction, although a remedy might he had in a court of lav/.
There are some cases in which, although the complainant might have a remedy at law, a court of equity having obtained jurisdiction for the purpose of discovery, will retain the suit for the purpose pf giving relief; and if this rule was more general than it is, it would only be an extension of the principle in bills for account of assets, which are stated to have been originally only bids for discovery, which could not be had without an account, but ou which the courts of equity have made complete decrees, and given the party his debt likewise.
Equity jurisdiction is exercised to put a bound to vexatious and oppressive litigation, and to prevenía multiplicity of suits,
It is exercised where the courts of ordinary jurisdiction are made instruments of injustice.
A court of equity will lend its aid whenever by fraud or accident a person is prevented from effectually asserting, in the courts of ordinary jurisdiction, rights founded on principles acknowledged by those courts, and where parties by contract have given a right, but have not given a, sufficient remedy, and in the case of defective securities for money.
The present case may not perhaps come under the scope of all these principles, but there are some of them which appear to be applicable to it.
Without stating particularly the evidence in the cause, the chancellor is satisfied of the existence of the partnership, as alleged by the complainant, and of the liquidation of the balance due for the goods sold, the execution of the bonds as stated, and the event of the suits on them. With regard to the answer of the defendant, Clarke, it is considered, that the partnership being proved by of iter testimony, his admissions are evidence in the saíne manner as his acts would be in the exercise, of the joint business of the firm. Ami it may here be observed, that the responAbility of one partner for the acts of another, is not, as stated by the defendants’ counsel, a principle, of sheer mercantile law', but is founded in justice and necessity, and is inseparable from the nature of partnership transactions.
It appears that Clarke executed the bonds with a view of ascertaining, and perhaps of securing in some degree, the balance dug for goods sold to the company; and these bonds were taken by the complainant from a misapprehension of ignorance of their legal effect.
If notes had been given by Clarke, without seal, as in the case of Ilkldh , and the partnership had been proved, they would have been obligatory on the defendant, Williams, at law. The bonds cannot be considered in equity as less solemn and obligatory than the notes, but the remedy sought for on the bonds was, defeated by what was indeed a sheer principle of law. For if it be proved, as the chancellor conceives it to be, that the defendant, Williams, was, liable, and might have been bound by notes, without seal, for the same amount, the defence set up to the bonds was not ?,n equitable or conscientious on,e.
In this respect then the court of law, or (as expressed in one of the principles above stated,) the court of ordinary jurisdiction, has been made the instrument of injustice. Ey the accident,, as it may be termed, of the balance due being secured by bouds, the complainant was prevented; from asserting in a court of law the right of recovering money due to him on principles acknowledged by all courts.
The parties who purchased the goods have, by the authorised acts of one of them, given (by their contracts,) a right to the money admitted thereby to be due, but have given a remedy insufficient at law, by securities, in that respect, defective.
It is alleged, by the, counsel for the defendants, that the complainant, if the money is due to him, has a full and adequate remedy at law; and to prove this, he contends that the bonds are not an extinguishment of the original contract. If the bonds were obligatory on Ckivke, (which seems to be admitted,) it is difficult to say how the original contract, which was a joint one, remains unimpaired, or how Clarke, if solvent, would be liable on both.
If an absolute decision on this question was necessary, it would appear consonant to reason that an unliquidated claim, sounding in damages, would be extinguished by the acceptance of an instrument of a higher nature, which, fixed the amount, Eut supposing this to be left in doubt, has the defendant succeeded in showing that the complainant’s remedy, (supposing him entitled,) would be clear and certain in a court of law, or tTiat U would there be fully investigated, and receive a complete and effectual decisi- . 0 1 ons* h , ,
If equity jurisdiction may be exercised to ptit a boittid to vexatious and oppressive litigation, and prevent a multiplicity of suits, it is not necessary to send a party to a court of law, where the remedy, if td be attained, would be the same; and in this case it may be inferred from the evidence of J. Riddle, that if instead of bonds, notes unsealed had been given, the same recovery would have been had as in Riddle’* case. And the same principle, iu addition, to the discietionary powers of this court, will account for the chancellor’s not applying to a court oí law, as was suggested by the defendants’ counsel.
The complainant has already tried his remedy at law, which has failed, as much at least through the fault of the defendants as his own; and it is not clear but that a suit0 in this court might have been originally sustained on the ground of Williams not being bound in law by the bonds, though in that case the opinion of the court or the judges, as to the law, might have been resorted to.
In the case of a joint bond it is a constant practice, in case of the insolvency of the surviving obligor, to commence a suit in chancery against the representatives of the other party; and although this arises in part from the acknowledged jurisdiction, as to administrators, &c. yet it is grounded also on the situation of the parties rendering the remedy of the law ineffectual.
With regard to the part of the bill praying for a discovery, it may be further observed, that as the binding of Williams, by the bonds of Clarke, is alleged to have depended at law on the assent of JViüiams, art acknowledgment of such assent might, have been expected by the complainant on filing his bill, which might have been a reason for filing it.
The chancellor has stated his reasons at greater length than may be usual or necessary in such cases, on account of the doubts which he entertained at die trial. These doubts have been removed by the further consideration which he has given to the subject; and his opinion is groundfid on the principles which he has staled, and on his determination, that where the merits appear to be with the complainant, ke will not dismiss a bill on an allegation of the want of jurisdiction, or any other similar objection,- unless it is clearly and positively established. Decreed, that the defendants pay to the complainant the sum of £1023 15 ft current money, with interest thereon, &c. and ibe costs of this suit. From this decree the defendant, Williams, appealed to this court.
The cause was argued before Chase, Ch. J. Buchanan, Gantt, and Earle, J.
Shaaff and Magruder, for the Appellant,
contended, That there was no legal proof of a partnership between the appellant and Clarke. 2. That if the appellee had any right to recover against the appellant, his remedy, from the proof in the case, was at law, and not in equity; and 3. That the appellee had no right, either at law or in equity,, to recover against the appellant.
On the first point they contended, that the answer of one defendant was not evidence against another defendant, and cited 1 Harr. Chan. Pr. 36, 4Í.
On the second point, they cited Dorsey’s Ex’x. vs. Dorsey’s Ex’rs. . They also contended, that there was not giiflicient proof of the execution of the bonds stated in the bill; that the originals ought to have been produced. Peake's Evidente, 96. Wymark's case, 5 Coke, 74. 2 Com, Big. tit. Pleader, (P. 1). Harper vs. Hampton, 1 Harr. Harr & Johns. 710; and Desobry vs. Terrier, (ante 219).
On the third point they contended, that the execution ol the bonds extinguished the simple contract debt, both as to, Williams and Clarke. They cited Bac. Ab. tit. Release, (G.) Bull. N. P. 155. Chitty’s Plead. 155. Clement vs. Brush, 3 Johns, Cas. 180. Pierson vs. Hooker, 3 Johns. Rep. 70. 4 Vin. Ab. 387. 1 Fonbl. 117, (note.) 2 Com. Dig. tit. Chancery, 476, 330, 331; and Tom vs. Goodrick, 2 Johns. Cas. 213,
. Key, And Johnson, (Attorney General,)
cited Watson on Part. 40, 337, 458. Higgins's case, 6 Coke, 46. Abbott vs. Smith, 2 W. Blk. Rep. 950. Maddox vs. Jackson, 3 Atk 406, Darwent vs. Walton, 2 Atk. 510; and Blk. Com. 436.
Chass, Ch J. delivered tlie opinion of the court. The court have considered the bill; Answer and proof, in this case, the argurhents of counsel, and the decree of the chancellor; and Admitting the proof to be sufficient to establish a partnership between Williams and Clarke in this extent charged id tlie bill, in opposition to the answer of the defendant, and admitting also that the bonds mentioned in the bill, as executed by Clarke, under the signature of Clarke fy Co. have been fully proved, it appears to the court that the complainant is hot entitled to any relieF in equity, ami that the decree of the court of chancery ought to be reversed.
' It is a principle recognised by the courts of law and equity, that a bond given by one partnér for a simple con- . tract debt due from the partners to the creditor, and accepted by him, is by operation of law a release of the other partner, and an extinction of the simple contract debt.
It is also established by the courts of law and equity, /that ignorance of the law, as to the legal consequences resulting from such a bond, cannot excuse or form a ground for relief in equity, on the suggestion and proof that the party was mistaken as to the legal effects of such a bond, imagining at the time that it could not operate as a release to the other debtor, and that his responsibility still existed.
,,The court are also of opinion, that the bonds set forth in the bill, although not binding on Williams, are obligato- • ry on Clarke,
On these grounds the court decide, that the decree of the court of chancery ought to be reversed.
CaJlle brought a suit at law on such a note executed by Clarke & Co. against Williams, and recovered judgment.
~aj The case of Dorsey’s Ex’x. vs. Dorsey’s Ex’rs. in tlicr court of chancery at February term 1794, appears to be this: R. T. with J. I). his surety, executed their joint bond to E. 1). in 1768, payalilo in 1769, and in 17S8 a joint suit was brought against them at law upon the bond. During- the pendency of the suit, J. D. died. Ills death was suggested, and judgment by confession was rendered against R. T. in 1790. The suit continued against J. D. and in 1791 it was entered abated. 11. T. obtained a discharge under the jnsolvent law in 1788, and his trustee sold property belonging to the insolvent, on a credit, more than sufficient to pay all his debts. R. T. was always able to pay the debt sued for, until and after 1786, but no measures were taken for its recovery until the above suit was brought. The executors of J, D. had fully administered and paid away all the assets of the deceased; but they had notice from E. D. and a demand of payment was made of them within one year after the death of J. D. A bill was filed in chancery in 1792, by E. 1). (and on his death revived in the name of his executrix) against the executors of J. D. to be paid the- debt due on the bond. The defendants, among other things, in their answers, relied upon the act of limitations.
Hanson, Chancellor. On every application to this court, not grounded on positive law, when it appears, that no former decision is in all.points, applicable to the present case,, the principles, on which the comi was originally instituted, are to be considered. Its jurisdiction, from the beginning, has been exercised in preventing’ men from taking unconscientious advantages of law, in obliging them to discharge trusts, and to perform reasonable _ engagements of every kind, either express or implied, and in relieving against fraud, or accident. But it never yet has been the professed business of this court-to compel men to- do that, which neither they, nor the persons whom they represent, have engaged to perform, which the positive laws of the land do not enjoin, and whicli equity and good conscience do not demand. In some cases, indeed, which did not appear to come under known established principles, or to be embraced by former decisions, chancellors have exercised their ingenuity in raising agreements by construction; provided nevertheless, that the yierformance of the thing, thus supposed1 to be contracted for, might fairly and reasonably be demanded. Hence it is that the condition of a bond to pay money has been construed an agreement, which equity ought to enforce, after tile obligor lias been discharged from the penally at law. How far the first deci« sion in such case was right, is perhaps questionable; for tills plain reason, that the obligor was not, and could not be apprized of this power, which equitj would afterwards assume, of compelling him to do that, which he never in any manner contracted to perform; the operation of a joint bond at law being this, that during the life of both obligors it is binding on both, and, after the death of one,, the obligee can have recourse to the other only. However, the determination in the case of Bishop and Church, 2 Ves. 371, cited by the counsel on each side, must now recognized as a law or rule for this court; and whether that case applies sufficiently to tins present is to be examined.
The two cases appear to agree in every point, except one; but that one point, in which they differ, is important. In the former case, executors of a joint obligor were called on to pay money lent to the testator and the other obligor, who were partners in trade, and the constructive agreement of the testator, was on a substantial consideration. But, in the present case, the executors» are called on to pay money which never was, or intended to be, participated by their testator. The constructive agreement therefore, on which alone this court could decree against them, was voluntary, and such as, without special circumstances, ¡ought not to he enforced. What then are the special circumstances of this case? To say nothing of the lapse of time, and the neglect of the complainant." He has it still in his power to obtain the debt from the trustee of the surviving’ oblig-or. In short, it appears to the chancellor, that a decision in favour of the complainant would go for beyond any former determination, and that former determinations, with respect to joint obligors, have gone quite far enough,, On the point relative to the act of limitations, it is not necessary to decidc~~I)ecreed, that the bill be dismissed,

Opinion:
Buchanan, J.
I consider the partnership, alleged in , this case to have existed between the defendants below, as sufficiently established to the extent charged in the bill, and that the delivery of tlie goods, and merchandise, said to have been sold to Clarke, as acting partner, is fully-proved.
But if the bonds charged iu the bill to have been passed by Clarke, in behalf of Williams and himself, were exeeuied by him for the amount of tiróse goods, the simple contract debts were not thereby severed, and continued open as to Williams, and destroyed as to Clarke, (ou whom such bonds would be obligatory;) but being respectively joint, they became in law extinguished as to both. And though equity will interpose its aid where a remedy is wanting at law, the demand continuing, yet it cannot revive a debt which in law is extinguished.
If, however, such a bond could be construed to extinguish a simple contract debt as to the party signing it only, leaving it open as to the other partner for the interposition of a court of chancery, yet in this case the complainant has failed in proof to lay a foundation for a decree against Williams; for, as against him, the bonds in question which are set up in the bill as the very ground of the relief prayed, are not proven by any legal evidence exhibited in the record; and it cannot be seriously contended, that in the absence of such proof, the chancellor could hold jurisdiction over the case; for if no such bonds were executed by Clarke, the simple contract debt remains unimpaired, and the proper remedy is in a court of law.
Upon the whole, I am of opinion that the chancellor'» decree, however consonant to strict justice, ought to be reversed.
¡DECREE REVERSES,