Court Opinion

ID: 6314490
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:22:06.611273+00
Date Added: 2024-06-11T08:59:12.570167
License: Public Domain

Rogers, J.
(after stating the case) delivered the opinion of the court, as follows:—
We agree fully with the court, that this case must be taken divested of all considerations arising from the allegation of fraud. The inability to pay the notes, as they became due, was not evidence of fraud, nor, on the other hand, was fraud fairly inferable from proof of the fact, that at the time the mortgage was executed the property was previously encumbered to an amount which reduced the value of the security below five thousand dollars. The parties must be supposed to have entered into the contract with a knowledge of all the circumstances, and if they intended to insist on fraud, some evidencé should have been given other than the written testimony which was submitted to the jury. If the defendant intended to insist on fraud in fact) it should have been charged in his notice of special matter, otherwise the plaintiff might be taken by surprise. It is not sufficient to allege facts, from which an inference of moral fraud may be drawn, as has been heretofore decided by the court. The object of special notice is to put the plaintiff on his guard, that his attention may be drawn to the defence, on which the defendant relies. There is nothing in this notice by which the plaintiff cbuld be *35apprised that the defendant intended to charge him with fraud. We think with the District Court, that the defendant’s point could not fairly arise under the notice of special matter. This, however, is a minor defect, which might be easily remedied on another trial.
The only difficulty arises in the charge of the court, on the three first propositions of the defendant’s counsel, all of which may be properly considered under one head.
I cannot say that I exactly comprehend the meaning of the court, when they declare, that they consider the payment of the notes but part of the consideration. This is not explained in the charge, and we have to regret that we have not a more full report on this head, as this appears to be made the hinge upon which the whole cause turns. If this had been the case,-when part of the considerations failed and part did not fail, the mortgage would not be void. When a covenant goes only to part of the consideration on both sides, and a breach of such covenant may be paid for in damages, it is an independent covenant, and action may be maintained for a breach 'of the covenant on the part of the defendant, without averring performance in the declaration. 1 Saund. 320, note 4.
The bond, and mortgage, and agreement, being executed at the same time, and in reference to the same- subject-matter, must be taken as one covenant. 2 Vern. 459, and 17 Sergeant & Rawle, 115. To discover the intention of-the parties concerned, is the chief object, and in effecting this we have not to encounter any technical difficulties. For covenants, &c. are to be construed to be either dependent or independent, of each other, according to the intention and meaning of the parties and the good sense of the case; and technical words should give way to such intention. 1 Saund. 320, noted. On the 31st August, 1822, the time the agreement was made, MCrelish was indebted to Pray, five thousand one hundred and seventy dollars, for which he had given him his notes, of different dates, different amounts, and payable at different times. It was a business transaction ,• the ordinary case of debtor and creditor. MCrelish was under no obligation, legal or moral, to give additional security for payment of the money due. We are then to seek for the motive which induced MCrelish to give Pray, or if you please, the holders of the notes, such security for the money,- and this reason, which forms the consideration of the contract, is given in the agreement itself. M'-Crelish agrees to give to Pray the mortgage and bond in question, and the sum of one hundred and seventy dollars and forty cents, in consideration whereof Pray stipulates that he will pay off and take up all the notes, as they become due, and deliver the same to MCrelish. It is not denied that M‘ Crelish performed all his part of the contract to the letter; that is, he gave his bond and mortgage, and paid the money, according to contract. The plaintiff sues out a scire facias on the mortgage, which is in substance calling on the defendant to shew cause why the property should not be sold for payment of the notes, which it was intended to secure, and the *36single question will be, whether the plaintiff has performed his part of the contract. Are the covenants, in the agreement, conditions, and dependent, in which the performance of one depends on the prior performance of the other, and therefore, till the prior condition be performed, the other party is not liable to an action on his covenant ? Kingston v. Preston, referred to in 2 Doug. 689. Or are they mutual and independent, where either party may recover damages from the other,for the injury he may have received by a breach of the covenants in his favour, and where it is no excuse for the defendant to allege a breach of the covenants on the part of the plaintiff? That no particular words are required to create either a covenant or a condition, is perfectly clear; and it is also immaterial in point of construction, whether the clause be placed in the instrument prior or posterior to others. There are indeed some words, on which conditions precedent usually arise, such as, for instance, ita quod, sub conditione, quod si contingat. Lock v. Wright, 1 Str. 569.—S. C. 8 Mod. 40. Peeters v. Opie, 2 Saund, 350. Co. Lit. 204 a, 203 c, 2 L. Ray. 766. Com. Dig. title, Condition. And in some instances the words shall b'e construed to be both a covenant and a condition; as if one leases for years by indenture, provided always, and it is covenanted and agreed, that the lessee shall not alien. This is a condition by force of the provision, and a covenant by force of the other words; Co. Lit. 203, b. 2 Mod. 74. 2 Co. 72, a. Cromwell’s case. Cro. E. 242, Simpson v. Tetterell. But the courts at the present day disregard technicalities, and notice such words so far only as they disclose, and are evidence of the intention of the contracting parties. Platt on 'Covenants, 72. It is said, that this is a suit brought by the assignees of Pray, under the special clause in his assignment for the benefit of the holders of the notes. It may be safely admitted, that they stand in the place of Pray, but surely no person can • contend, that they are in a better situation. Whether the parties to the agreement were particularly anxious about the security of the holders of the notes, admits of doubt. Pray had an eye to his eventual liability, in case the drawer should be unable to take up the notes at maturity. This was bis motive; but be this as it may, the court would give the language of the agreement an extended signification, so as to embrace the holders of the notes, and give them the advantage of the security. I am willing to allow the plaintiffs the benefit of the position, that the parties are substantially the holders of the notes. It is in truth a contest for the fund, between different classes of creditors, and in this view equally meritorious in the eye of the court. Still the question recurs, what is the meaning of that part of the contract, in which Pray agrees to pay off and take up all the said notes as they become due, and deliver the same to M‘Crelish. It is not pretended that Pray, or any other person, paid the notes as they became due. On the contrary, the notes were regularly protested for non-payment, and on one of them suit was brought and prosecuted to judgment. It is not alleged that the notes were delivered to M’Crelish, nor was *37there an offer to deliver them, until the time of trial. It is, however, said, that the mortgage, &c. were given to raise money for the purpose of paying the notes as they became due, and that the failure in payment arose from a deficiency in the value of the property. But this is said without any evidence whatever, and in opposition to the common sense of the transaction. I can perceive no motive which could induce Or dish to make such an arrangement. If the intention was to raise money on the mortgage, so as to meet the notes when they became due, this could have been as well efleeted, for any thing that we know, by MCrelish as by Pray, and that without the risk to which he must be exposed by placing in the hands of Pray the whole amount raised on the mortgage, which Pray might, or might not, faithfully apply to the objects of the trust. They could not have looked to a sale of the property, as that could not be done under the mortgage, until after all the notes became due. Besides, if such was the intention, as has been contended, it does not appear that any effort was made to raise money on the security of the mortgage. If we understand this agreement as providing Pray with a real security, and- as securing to MCrelish the punctual payment as they became due, we have considerations presented sufficiently powerful to account for the arrangement. M'Crelish's credit depended on the payment of the notes at the day. The dishonour of the bills necessarily destroyed his credit. And so certain was this effect produced, that M‘Crelish shortly after assigned for the benefit of his creditors.' To prevent this, was the principal reason for entering into the contract. But, it is said, that in equity, time is not material, and in general it is not. But when it is the obvious intent to make time material, equity will not relieve, and that is the case here. The injury arising from a non-payment at the day, of these negotiable securities, it may be difficult to estimate, nay, in some instances, impossible. In a mercantile community, punctuality is of the utmost importance, and the covenant might be viewed in relation to the subject-matter, and under all the circumstances attendant upon it. Although the agreement contains a stipulation for an indemnity, this wás intended to give a remedy, when the injury was of such a nature as to require a larger compensation in damages than the amount of the value of the notes. The clause may also be relied on to shew the importance which MCrelish attached to a punctual performance of the contract at the day. It must be borne in mind, that no one of the notes was ever paid, and whether if such a payment had been made, it would have been in part performance of the contract, it is unnecessary to decide. Although it has been intimated', in some of the cases, that time could not be made of the essence of the contract, even by a positive stipulation of the parties, there has been no decision to that effect; but in other, and in later cases, it has been admitted that parties may make time of the essence of the agreement, and whether- they have done so must depend on all the circumstances. 1 Russel, 377; 1 Simon & Stuart, 590. In Benedict & *38Lynch, Chancellor Kent, with his usually perspicuity, reviews all the cases in this branch of equity. He adopts the opinion of Lord Loughborough in Lloyd v. Collit, 4 Bro. 489, who observes, that there is nothing of more importance, than that the ordinary contracts between man and man, which are so necessary in their intercourse with each other, should be certain and fixed, and that it should be certainly known, when a man is bound and when not. There is a difficulty to comprehend how the essentials of a contract should be different in equity and at law. It is one thing to say that time is so essential, that in no case in which the day has.by any means been suffered to elapse, the court would relieve against it and decree performance ; the conduct of the parties, inevitable accidents, &c. might induce the court to relieve. But it is a different thing to say, the appointment of a day is to have no effect at all, and that it is not in the power of the parties to contract, that if the agreement is not executed at a particular time, they shall be at liberty to rescind. This is not, it is true, the case of an express stipulation to rescind the contract, provided the notes were not taken up and delivered at the day, yet there is no mistaking the intention of the parties to provide for the faithful, literal, and punctual compliance with the contract. It was an object of the greatest importance to MCrelish to preserve his credit, which could only be done by preventing the dishonour of his bills. Had the notes been paid at the day, but not delivered, that would have been a case of a part performance, and the failure to deliver the bills might have been compensated in damages. But not so where there has been an entire failure on the part of the plaintiffs. The principle seems to be firmly established, that time may be a circumstance of decisive importance, but that it may be waived by the conduct of either party; that it is incumbent on the plaintiff, whether at law or in equity, to shew that he has used due diligence in the performance of his part of the contract, or that if he has not, his negligence arose from some just cause, or has been acquiesced in; that it is not necessary for the defendant to shew any particular inconvenience; it is sufficient if he has not acquiesced in the negligence of the plaintiff. It is not pretended that the plaintiffs performed their part of the contract at the time, nor has it been shewn that the negligence arose from any just cause, or that it has been acquiesced in by the defendant. They seek every benefit from the contract, without any thing being done on their part from which MCrelish could receive the slightest possible advantage. His notes have been dishonoured, and he has been compelled to assign his property for the benefit of his creditors.
Judgment reversed, and a venire- facias de novo awarded.