Court Opinion

ID: 6502570
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:15:11.710096+00
Date Added: 2024-06-11T15:54:39.020073
License: Public Domain

ORMOND, J.
We shall abstain from the consideration of the question, whether Chancery had jurisdiction of this case, from the omission of complainants to make defence at law, or to account satisfactorily for the omission, because, in our opinion, upon the merits, the case is with the plaintiff in error.
The supposed equity of the bill is, that the bills of exchange, *127upon which the plaintiff in error recovered a judgment at law, were indorsed by Mock, upon an agreement with Lathrop, that they should only be employed in the purchase of stock, in the Bank of Rome, Georgia, in which Mock and Lathrop were to be equally interested, and to be paid by them in equal proportions. That with a knowledge of this agreement, between Mock and La-throp, Clapp received the bills of exchange from the latter, in payment of a debt due by one Haynes, to him, Clapp; Haynes having induced Lathrop to believe, that he was the owner of a large amount of stock in the Bank, when, in truth, he did not own any.
It appears very clear, fi’om the proof, that Haynes had an interest in, or control over, a large amount of the stock of the Bank, and that Lathrop had been at Rome, the place where the Bank was located, endeavoring to obtain some of the stock of the Bank before Clapp had visited Rome, or had any connection, or interview with Lathrop.
Clapp was the agent of an estate, having a large claim against Haynes, and went to Rome with the design of getting payment of the debt, and was there informed by Haynes, that he had made a contract with Lathrop, for a sale of his interest in the stock of the Bank, for the purpose of paying the debt, which Lathrop was to pay in Mobile. This appears from the answer of Clapp, corroborated by the deposition of Haynes. It is also corroborated by the bill itself. In the first bill which was filed, an exhibit is made, by which it appears, that on the 12th of April, 1840, which was about a month before the execution of the bills of exchange, Lathrop made a contract with Haynes, for an equal share of his interest in the stock of the Bank at Rome, for $ 12,800, half of which Haynes was to pay back to Lathrop, in one hundred and twenty days. This contract, Haynes, in his deposition, says, was made for the express purpose of obtaining money to pay the debt to Clapp. He also states, as does Clapp in his answer, that Lathrop failed to obtain the money in Mobile, according to his expectation, and proposed to give Clapp bills of exchange. It also appears, by the evidence of Pullum, that Lathrop was in Mobile about this time, endeavoring to raise the credit of the Bank. It is therefore very clear, we think, that the allegation of the bill, that Clapp induced Lathrop to become the pur*128chaser of the stock from Haynes, with a knowledge that the latter did not own any stock in the Bank, is without foundation.
It has already been stated, that Lathrop was at Rome, endeavoring to obtain stock in the Bank, and anxious, as the witness, Pullum says, to have an interest in it, before Clapp, who was a stranger in the country, had been at Rome, to obtain payment from Haynes. It also appears that Haynes, whether the owner or not, had the control of a large amount of the stock of the Bank, which, though standing in the name of other persons, he had powers of attorney to sell and transfer. He swears to the fact, positively, himself, and it appears from his testimony, and that of others, that he subsequently caused to be transferred, on the books of the Bank, to Lathrop, five hundred and eighty-seven shares, on which thirty-three dollars had been paid on each share.
There is not a particle of proof in the cause, that Clapp induced Lathrop to make his purchase of the stock of Haynes. He positively denies it in his answer, and is corroborated by Haynes, who says he proposed it to Lathrop himself; and from the testimony of Pullum, a clerk in the Bank, it appears, that the bills were not delivered to Clapp, until Lathrop, by an examination of the books of the Bank, and by obtaining information from the officers of the Bank, had become satisfied of the extent, and value, of the interest of Haynes in the Bank.
The equity set up in the amended bill, is, that Clapp knew of the agreement, between Mock and Lathrop, and of the condition upon which the latter indorsed the bills; that they were only to be used in the purchase of the stock of the Bank. This is positively denied by Clapp, who states, that after Lathrop had failed to obtain the money in Mobile, to pay him, as he had agreed with Haynes, on the 12th April, 1840, to do, he, Lathrop, proposed to pay in bills of exchange, which Clapp agreed to take, if a responsible indorsor was procured. That upon Mock being proposed, he made inquiry, and agreed to take him; whereupon Lathrop went to obtain it. That he never saw Mock, and always supposed he was a mere accommodation indorser. This denial of knowledge of the true character of the indorsement of Mock, is supposed to be contradicted by the testimony of Haynes, but it does not appear to us, that there is any contradiction between the answer of Clapp, and the testimony of Haynes. Haynes was re*129quired to answer, whether Clapp knew, before he obtained the bills, the purposes for which they were made. In answer to this, he says, that Clapp, “did know that the bills were executed for, and in consideration of purchasing stock, in the Western Bank of Georgia.” Now, this, by no fair interpretation, means, that Clapp knew, that Mock was to have any interest in the stock. Clapp himself, distinctly admits in his answer, that he knew, that Lathrop was purchasing stock from Haynes with the bills, at the same time that he expressly denies, knowing any thing of Mock’s interest in the transaction, or the character of his indorsement. It appears from a previous deposition of Haynes, that he did not know, that Mock had any interest in the stock. He says, he became the drawer of the bills, at the request of Lathrop, and that Lathrop did not inform him, that Mock had any interest. He is therefore, in the answer above quoted, speaking of the bills, and not of the indorsement on the bills. Nor indeed, was the question calculated to elicit any other answer. If it had been intended to inquire of the witness, as to Clapp’s knowledge of the contract between Mock and Lathrop, by which the former became indorser on the bills,it should not have been framed in this ambiguous manner, but the attention of the witness should have been directly pointed to it. We cannot understand by his answer, that he intended to affirm Clapp’s knowledge óf a fact, of which he, a party to the bill, was ignorant. The plain, and evident meaning of the witness is, that Clapp must have known, that the bills were for the purchase of stock, because, as he says in his answer, Clapp had by letter informed him, that Lathrop had failed to pay the money in Mobile, as he had agreed to do, and had promised to pay in bills of exchange. This is a corroboration of the answer, rather than proof to the contrary.
The answer, expressly denying all the material allegations of the bill, and there being no proof in contradiction of the answer, but the evidence which it was admitted Lathrop would give, if competent to testify, it is unnecessary to consider, whether he, a complainant in the bill, could be examined as a witness for his co-complainant, with, or without an order from the Chancellor; the rule being clearly established, that the answer of a defendant responsive to the bill, of facts within his own knowledge, cannot be overthrown by the testimony of one witness, unless it be aided by other corroborating circumstances. None such exist in the *130case. The answer is clear, explicit^ and probable. On the other hand, the case made by the bill originally, and that set up in the amended bill, are essentially dissimilar, if not incongruous. The equity set up in the first bill, is, thatClapp and Haynes fraudulently induced Lathrop to believe, that Haynes was the owner of stock in the Bank, and thus induced the latter to become the purchaser of stock, which had no existence — whilst in the second, it is the knowledge of Clapp, of the agreement between Mock and Lathrop, by which the former agreed to indorse the bills of exchange, in the purchase of stock. There is nothing then, to relieve the case from the operation of the rule.
It appears to have been supposed, that if Haynes was not the owner of stock in the Bank, the bills of exchange would bo invalid, in the hands of Clapp. This is certainly incorrect,unless Clapp could bo implicated in the fraud of Haynes, which has been shown not to be the case. Clapp, as it appears, was-a stranger in the country, endeavoring to collect a debt from Haynes, who, whether the owner of Bank stock, or not, was certainly in possession of large means, and wielding a large amount of money — Lathrop, by his own act, in procuring the bills to be drawn, induced Clapp to relinquish the pursuit of Haynes, to take the bills in payment of the debt, and to discharge him from the debt; and it would be extreme injustice, to visit upon Clapp, the consequence of the imprudence of Lathrop, or the fraud of Haynes, if fraud there was. Nor can Mock be in any better condition, than Lathrop. He entrusted the latter with his name, and if an improper use has been made of it, the consequence cannot be visited upon one ignorant of the facts.
It is, however, by no means certain, that Haynes was not able to comply with his contract with Lathrop. Whether he had stock in his own name or not, it is very clear he had the control of a large amount, He swears that he had the control of more than two thousand shares, more than half of which belonged to himself, and upon which thirty-three per cent, had been paid: and it is certain, that subsequent to his contract with Lathrop, he did cause to be transferred to him, five hundred and eighty-seven shares. Upon this stock, a certificate issued to Lathrop, to be delivered to him, on his paying $10,000 in cash, and executing his note for $9,000 more, and upon his failure to comply, the stock became forfeited to the company.
*131We are not informed, why this forfeiture was permitted to take place, nor what the value of the stock was in its then condition. If one-third part, had been paid on it, as appears to be the inference from Haynes’ testimony, it was still of value sufficient, supposing the stock to be at par, to satisfy the bills of exchange.
If, however, Lathrop was the dupe of Haynes, as perhaps may be inferred from Pullum’s testimony, where he says, that “Haynes had control of a sufficient interest in said Bank at that time, (the time of the transfer of the stock,) to have secured Lathrop, if he had not wished to put him off upon the Bank, and thereby secure to himself, the interest held by him, which interest he afterwards forfeited, by becoming indebted to the Bank,” it would only shew the ability of Haynes to comply with his engagements to Lathrop, when it was made, and that by a subsequent fraudulent contrivance, he overreached him. On what principle of equity, could this be visited upon Clapp, who was neither a party to the contract, or a participant in the fraud.
From every view, which we have been able to take of this case, the Chancellor erred in the decree made by him, enjoining the collection of the judgments, upon the bills of exchange; his decree must therefore be reversed, and a decree be here rendered, dismissing the bill