Court Opinion

ID: 8634413
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:42:49.43314+00
Date Added: 2024-06-11T16:55:52.986716
License: Public Domain

MORSELL, Circuit Judge.
The first question to be considered is whether defendant has violated the injunction in the case of Barnes v. Jones and others. Both subpoenas and injunction, by the return of the marshal, were served on all the defendants. The order for the injunction was obtained on 19th June, 1839, as: “Let the injunction issue to restrain the defendants from negotiating or passing away the promissory notes in the bill mentioned until the further order of the court.” It is erroneously stated in Mason’s bill that the injunction was to prevent Jones and others from “suing upon the same.” This is not included in the order of the judge, though it appears to be interlined in the precept of injunction issued by the clerk. That order is in the words above stated, and I think it was entirely correct not to enjoin the bringing of suit by the original party, as the bill charges that the notes were obtained by fraud, the defence would have been available at law, and the party might have suffered great evil from being prevented from suing. He might have lost the security for the pay*1041ment of his debt, which he might have had by a judgment. There might also be other evils occasioned which do not now occur to me. I find it sanctioned by authority (3 Bac. Abr. “Injunction,” 651): “Injunction will be granted to restrain the negotiation of bills of exchange or promissory notes obtained by fraud, and in this case if the plaintiff support his motion by an affidavit of the truth of the facts stated in his bill, the injunction will be allowed immediately upon the bill being filed; but the defendant should, upon intimation of the suit by negotiating the security, defeat its object (in note), “where a motion was made to restrain a defendant either from bringing an action on a promissory note, suggested to have been given for undertaking to bring about a marriage, or to prevent him from assigning it over, the court made an order upon the defendant to keep the note in his possession, and not assign or endorse it, but would not extend the injunction so far as to inhibit the payee himself from proceeding at law.”
Smith v. Aykwell, 3 Atk. 566, Amb. 61: In the case in 3 Atk. the chancellor says: “Here it is not only charged by the bill to be a marriage brokerage agreement, but the fact supported toy an affidavit ahd therefore I will make an order on the defendant to keep the note in his own possession and not assign or endorse it over to any person whatever, but shall not extend the injunction so far as to prevent him from proceeding at law. There being then for the reason, as well as the reasons already given in the opinion of the chancery judge in this case on the subject of allowing the answer to be filed, no violation of the injunction, the objections on that ground cannot avail.”
The reason offered in support of the motion to dissolve will next be considered:
First, as to the jurisdiction. That the circumstances of the fraud ought to be stated in the charge of fraud in the bill, and not ’ in terms only, and that none such are so stated. Second, that the defence might have been made at law, and that it is now too late, there being no clear evidence of fraud or accident, or the act of the opposite party unmixed with any negligence or fault on the part of the complainant. Third, the answer denies the fraud as to himself or Callan. The bill in this case prays that the facts and things stated in Barnes’ bill against this defendant and Cal-lan, and sundry others, may be made a part of this bill, and I supposed it must be so considered. It is objected that the complainant cannot have the advantage of the facts stated in that bill, because they are stated as of the knowledge of others, and complainant does not state in his bill -“that he believes them to be true,” but I suppose it must be understood that they become a part of the bill into which they are invoked according to the usual and common form, which is invariably with those words, and of course that this objection must be answered.
Barnes’ bill, after stating particularly the attending circumstances and the contract and consideration made with Callan, the agent of the company of which the defendant in this case was a member, according to which the cuttings were affirmed and warranted to vegetate and grow, that he had no opportunity of examining and inspecting said cuttings unless they were delivered after the contract of sale. He charges that the whole lot of cuttings so purchased by him of said Callan, as agent aforesaid, was, at the time of sale, dead and utterly worthless except about 2,700 cuttings; proceeds to charge that, at the time of delivering said cuttings, they had not (with the exception just stated) been in the ground or any soil for some time, and were utterly valueless, and that said Callan well knew the same, and did fraudulently misrepresent the condition and quality of said cuttings,’ of which he also charges the other defendants in tho suit had knowledge. And it seems to me that the bill filed in this case reiterates the same circumstances in substance, and charges a fraudulent knowledge of the same by the various parties to the contract, and the fulfillment of Barnes on his part. It appears then that the facts and circumstances of the fraud, and the fraud itself, are positively charged to have been practiced on the part of the defendants. What effect ought to be given to the answer? Admit that at the time stated in the bill, 1838, sundry persons, the names of some of whom are correctly given in said bill, and among wnom were the defendants, united themselves into an association or company for the purpose, among other things, of procuring and selling cuttings and trees of the morus multicaulis, and that they offered the same for sale, and authorized John F. Callan to sell for them, who acted for them in the city of Washington as their agent; it admits the contract made with Barnes, but denies that Callan warranted as the agent of the company as stated. Admits also that Barnes, for the cuttings, gave to Callan his four several promissory notes, made payable to complainant, and endorsed by him and Matthew St. Clair Clarke, but declares and avers that he was personally and wholly ignorant of the said transaction, and was not advised with or consulted in any part of them; nor did he ever know of them until long afterwards and after he had become the sole bona fide holder of the notes hereinafter mentioned (the one mentioned in the bill). But this defendant, on the information he has received from the said John F. Callan, positively, particularly and circumstantially denied that there was any fraud done, or attempted or designed, in the sale of the said cuttings by the said John F. Callan; that he is informed and believes that some part of the cuttings did vegetate and grow; that Barnes, as he is informed and believes, did not follow the instructions; denies that the *1042consideration of the notes entirely failed; admits that the notes were given for the benefit of the said company as a company; admits that an injunction was obtained by Barnes as stated, but that long before the granting of the injunction the said defendant, without any knowledge of any facts, and without having heard anything to cast suspicion upon the said notes, and without any knowledge or information about the consideration for which they had been given, bona fide and in the regular course of dealing and business, received one of the said notes, being the one mentioned in said bill, and gave full value therefor; this was within a few days after its date; that he had received the same from the said Callan as the property of the said company, but that he, this defendant, received it as any other person would have done, relying on the credit of the endorsers thereon more than that of the drawer; excuses himself for a disobedience to the injunction; does not recollect that it was served on him. He did bring the suit, &c., utterly ignorant of the facts with respect to Mr. Marbury, &e., except that he did confess the judgment, &c. That if the facts therein stated are true (which he does not admit, &c.), they are insufficient to give jurisdiction to this court to go behind the said judgment at law, and he prays to have the same advantage as if he had pleaded the same; denies all fraud and combination, &c., and declares and averring that on the 18th April, 1839, he received the said notes bona fide and gave full value therefor in the regular course of business; excuses himself for not having put in his answer earlier, &c. It is objected that this answer does not fully respond to the charges contained in the bill, and that those which are not answered are to be taken as true.
The rule laid down in Young v. Grundy, (6 Cranch [10 U. S.] 51. is: “If the answer neither admits nor denies the allegations of the bill, they must be proved on the final hearing, but upon a question of a dissolution of an injunction they are to be taken to be true.” As to the objection that he does not state what office he held in the company, and what he paid for said note, and whether the proceeds of the said note were for the use of himself and the other persons named in the bill of complaint, &c., and what sum of money did he give for said note, he has answered that he was a member of the company; admits that he received the note; states that without any knowledge or information of or about the consideration for which they had been given bona fide and in the regular course of dealing and business, he received one of the notes, being the one mentioned in said bill, and gave full value therefor; that this was within a few days after its date; that he received the same from the said John F. Callan as the property of said company, but that he received it as any other person would have done, &c. This seems to me sufficient to answer all the material part of those interrogatories.
The next and last objection is, “that a case of fraud has been charged in the bill, and the answer does not meet it to the extent of it.” The answer, besides the general denial of all fraud and evil practice and all combination, &c., says: “But this defendant, on the information he has received from the said John F. Callan, positively, particularly and circumstantially denies that there was any fraud done, attempted or designed in the sale of the said cuttings of the said John F. Callan, and he sufficiently denies it as to himself by showing his entire ignorance of all the circumstances,” &c. The question is. what weight is due to the denial merely upon information of Callan and his belief, without any knowing? The charge is, that Cal-lan as agent of the company was guilty of the fraud. Is the charge fully met?
The hills are injunction bills, and filed on oath. It is true the answer of the defendant is on oath, but it is not of facts from his own knowledge. He declares he was altogether ignorant of them. His answer is. therefore, nothing more than his belief of what another has informed him. I do not think such an answer ought to have the weight of a full and positive denial of the facts respecting the fraud as stated m the bill. The principle will be found established in the cases of Clark’s Ex'rs v. Van Riemsdyk, 9 Cranch [13 U. S.] 153; Union Bank of Georgetown v. Geary, 5 Pet. [30 U. S.] 111. In the last case the judge, in delivering the opinion of the court, says: “It is to be borne in mind that the bill does not charge the agreement to have been made with the bank, but with their attorney. The denial by the bank is not, therefore, of any matter charged to have been within their own knowledge. They could, therefore, only speak of their belief, or from information received from their attorney, and not from their own knowledge of the transaction." This was also the case of an injunction bill. It has been contended, however, that the defendant in this case, being the holder of an endorsed negotiable promissory note, before the same became due for a bona fide and valuable consideration, and without notice, cannot be affected by the fraud. This, as a general proposition, is unquestionably true. Do not the circumstances, however, of this case show the principle inapplicable? It is admitted that at the time of the transaction the defendant was a member of the company; that Callan was the authorized agent to make the sale and contract of sale, and that he acted for them in the contract with Barnes for the 125.000 cuttings; who gave his several promissory notes drawn by said Barnes and endorsed by Mason and Clarke to Callan as such agent, for the benefit of the company, as such company; one of which notes some few days after the date was delivered by said Callan to him, the defendant, as the *1043property of said company. Was he not, therefore, fully affected by the actings and doings of Callan in the transactions as much as any other member of the company, and as much so as if he had in fact known and been cognizant of all the facts and circumstances charged as fraudulent, and although he received it under the circumstances stated by him? If so, the principle relied on by him, above stated, is not applicable.
The next part of the case presents a question of more difficulty. It is in relation to the equity jurisdiction of this court in a case which has already been before it as a court of law between these same parties, and where the complainant could have availed himself of the matter set up in this case and had full and ample justice done to him, yet did not even attempt it, but, on the contrary, confessed a judgment to the defendant for the amount of the claim. The rule is that when a party has a good defence at law and omits to make it, he cannot afterwards upon the same ground have relief in equity. Gott v. Carr, 6 Gill & J. 312. In the court of appeals, the judge in stating the opinion of the court says: “The well settled general rule being that a court of equity will not relieve against a recovery in a trial at law, unless the justice of the verdict can be impeached by facts or on grounds of which the party seeking the aid of chancery could not have availed himself at law, or was prevented from doing it by fraud or accident or the act of the opposite party, unmixed with any negligence or fault on his own part,” and the principle is the same where at law there is a confession of judgment. Many other cases might be here stated establishing the same rule, but I really do not think it necessary. The question then is, has there been any such circumstances of fraud or accident or the act of the opposite party, unmixed with any negligence or fault on his (complainant’s) own part? To show this it has been said that the injunction granted by the court in the case of Barnes had the effect to lull him into security, &c., and, secondly, that Mr. Marbury, instead of Messrs. Brent & Brent, by mistake and accident was employed as the attorney in the ease, and, not knowing there was a defence, confessed the judgment. With respect to the judgment,' it was granted in a case in which the complainant was no legal party, and, as I have before said, the judge made no order inhibiting the defendant in that case to sue on-the note, and the service of the writ in the case was amply enough to warn the complainant that the defendant did not consider himself thereby restrained from suing on the note, and the additional circumstances, which he states, of his having sometime before sued Kinsman on three of the notes given for the same contract, and feeling it necessary to attend to them in person, fully proves this excuse not to be sound. As to the mistake in employing Mr. Marbury, let the circumstances be considered proved as stated by the complainant himself. The suit was brought against him on the 10th of February, 1841, and in the usual course progressed until March, 1842, when the judgment was confessed, being the regular trial court; that, not being able to attend to the case in person, he applied to a friend to enter special bail for him and to employ counsel, and that his special bail through mistake entered the appearance of Mr. Marbury, attorney at law, instead of Brent & Brent, who alone were acquainted with the facts of the case and of the defence, and to whom the complainant had spoken; that if sued as an endorser on said notes, &c., he wished the said Brent & Brent to attend to the cases for him, of which he (the complainant) would inform them; that he was never informed by his said special bail that he had directed Mr. Marbury to appear for him, nor did he know the same until after judgment had been rendered against him, and not then did he know that any judgment was obtained until after a ca. sa. had been served upon him.
It appears, then, that Mr. Mason gave no directions to his bail, who he employed as counsel for him, or that he (the bail) knew that the Messrs. Brent were, nor does it appear that he ever inquired of his bail who he had employed, or that he ever informed the Messrs. Brent and requested them to appear. The suit was depending the usual time of twelve months, without any attention on the part of the complainant in the preparation for the trial; no order to summon -witnesses; no reasonable and proper endeavor to procure evidence, but a total indifference. He must have known when, by the rules of the court, the trial court would be. Suppose Brent & Brent had been employed, could he think that it would not be necessary to have his proofs of the fraud ready to enable them to make the defence? instead of which he does not make any inquiry of them about it. Can it be said that this is the case of accident unmixed with any negligence or fault on his part? On the contrary, does there not appear to have been gross negligence?
But although the court has no jurisdiction to try and determine the question of fraud, for the reasons already stated, has it not the power and would it not be proper to continue this injunction to await the final decision of the case of Barnes against the defendant, with a number of other defendants herein-before mentioned? There is enough to show that that suit is to try the validity of. the same contract with which the note in the case is connected, notwithstanding the erroneous description of the notes mentioned in that bill. It is true that after the liability of the endorser becomes fixed by judgment, as in this case, he is to be considered as a principal, so decided in the case of Creath’s Adm’r v. Sims, 5 How. [46 U. S.] 206, and Prout v. Lennox, 3 Wheat. [16 U. S.] 520: *1044“That the endorser of a note who has been charged by due notice of the maker’s default is not entitled to the aid of a court of equity as a surety.” But can we shut our eyes to the most unjustly oppressive and iniquitous effect which the complainant in this case would be made to suffer if he is not permitted to have the benefit of the rescission of the contract, if such should be the event upon the trial of that case?
That suit was brought on the 39th June, • 1839, and, according to the return of the marshal, the defendants were all served with subpoenas. But no answers, I believe, have yet been filed. The delay in bringing it to issue has been certainly very great, but the case is still depending and undisposed of. It may be added that the defendants in this case cannot be said to be free from blame in occasioning the delay.
Fraud being the ground upon which relief was sought from the obligation of the contract , this might be availed of either in a court of chancery or of common law. In such ease the rule is, “The court which first has possession of the subject must determine it conclusively, and has a right to retain it exclusively of the other.” Smith v. M’Iver, 9 Wheat. [22 U. S.] 535. Chief Justice Marshall, in delivering the opinion of the court, says: “In all cases of concurrent jurisdiction, the court which first has possession ,of the subject must decide it.” Again, at 536: “Admitting, then, the concurrent jurisdiction of the courts of equity and law in matters of fraud, we think the cause must be decided by the tribunal which first obtains possession of it, and thus each court must respect the judgment or decree of the other.”
The court of chancery had first possession of the contract in connection with this note, and had an exclusive right to retain it until the case was disposed of. Is that not a sufficient reason for this court to hold up the injunction until the other case has been disposed of, or at least until this defendant has done everything in his power to bring it to a final action?