Bank of the Metropolis v. Guttschlick

ERROR to the Circuit Court of the United States for the county of Washington, in the District of Columbia.

This action was instituted by the defendant in error, against the plaintiff in error, on the 31st day of March, 1836. The declaration contained four counts.

1. That on the 9th of November, 1827, the plaintiff bought of defendant a certain lot of ground in the city of Washington, being lot 5, square 489, for the sum of eleven hundred and ninety-one dollars and twenty-five cents, and paid the sum of five hundred and ninety-one dollars and twenty-five cents, and gave his promissory note for the balance of the purchase money; that the defendant, in consideration thereof, agreed through the president and cashier, that it was pledged, when the note should be paid, to convey said lot to plaintiff, his heirs and assigns; that said note was paid at maturity, with the interest: yet the defendant has not conveyed said lot, but to do so has hitherto wholly refused, &c.

2. That whereas, the defendant, by John P. Van Ness, the president of said bank, and Alexander Kerr, the cashier, agents for that purpose, duly authorized by and acting for defendant, did, on the 9th November, 1827, bargain and sell to the plaintiff the said lot of ground, on the terms mentioned in the first count, and did thereupon put plaintiff in possession of said lot; and the plaintiff avers the authority of Van Ness and Kerr to make said agreement; that plaintiff paid the note, and received and continued in possession of the lot, and was obliged to pay, and did pay taxes thereon, from the 9th November, 1827, to 30th December, 1835, when he was turned out of possession by the Patriotic Bank: yet defendant, although often requested, has not conveyed the said lot in fee simple to the plaintiff, but hath hitherto wholly neglected and refused.

3. That whereas defendant, on the 9th November, 1827, by an agreement of that date, acknowledged to have received from the plaintiff the sum of five hundred and ninety-one dollars and twenty-five cents, and the promissory note of the plaintiff, payable six months after date, with interest, and in consideration thereof put the plaintiff in possession of said lot, and undertook and faithfully promised the plaintiff, upon the payment of said note, with interest, to convey to plaintiff said lot in fee simple; that the plaintiff did pay said note, with interest, whereby defendant became liable and bound to convey said lot in fee simple, by a good and indefeisible title, free from encumbrances; and being so liable, undertook and promised, &c.: yet plaintiff says that the defendant was not at the time when, &c., or at any other time after seized or possessed of said lot in fee simple, nor did then or at any other time, although often requested to convey, &c. And the plaintiff further avers, that being in possession of said lot, as aforesaid, he was compelled to pay and did pay the taxes and public dues, amounting to three hundred dollars, whereby, &c.

4. The fourth count was for money had and received, and concluded as follows, 'Yet the said defendants, the said sums of money have not paid to the said plaintiff, nor have they paid any part thereof, but the same or any part thereof to pay to the said plaintiff, have hitherto wholly neglected and refused, to the damage of the said plaintiff three thousand dollars, and thereof,' &c.

There was no conclusion to the three preceding counts in the declaration.

The jury, under the charge of the Court, found a general verdict for the plaintiff for eleven hundred and ninety-one dollars and twenty-five cents, with interest from November 9, 1827.

The counsel for the defendant took four exceptions to the charge of the Court.

The plaintiff in the Circuit Court having given in evidence an account made out by the Bank of the Metropolis, against him, stating that he had bought a certain lot of ground described in the same, from the bank, for the sum of eleven hundred and ninety-one dollars and twenty-five cents, gives a credit for the sum of five hundred and ninety-one dollars and twenty-five cents as 'cash received;' and the balance, six hundred dollars, to be due on the bond of the plaintiff, in the following terms, 'Be it known, that on this 9th day of November, 1827, Ernest Guttschlick, has purchased of the Bank of the Metropolis, lot No. 5, in squeare No. 489, as above described, and as laid down on the plat of the city of Washington, for the sum of eleven hundred and ninety-one dollars and twenty-five cents, and that he hath paid on account of the same, the sum of five hundred and ninety-one dollars and twenty-five cents, leaving due the sum of six hundred dollars, for which he hath given his note to the said bank, payable in six months after date with interest from date, which sum of six hundred dollars, when paid, will be in full for the purchase money of said lot.

'The Bank of the Metropolis, through the president and cashier, is hereby pledged, when the above sum shall be paid, to convey the said lot, viz. lot 5, in square 489, in fee simple, to the said Ernest Guttschlick, his heirs or assigns, forever.

'In testimony whereof, the said president and cashier, by order of the board of directors, have hereto set their hands and seals this ninth day of November, eighteen hundred and twenty-seven.

'JOHN P. VAN NESS, [SEAL.]

'President of the Bank of Metropolis.

'ALEXANDER KERR, Cashier. [SEAL.]

'In presence of GEO. THOMAS.'

With evidence that he, the plaintiff, had paid the sum of six hundred dollars to the bank: the defendants excepted to the admissibility and competency of the same, until some evidence should be given, showing the authority of the parties who executed the same to sign said paper.

The Court overruled the objection.

The defendant's second bill of exceptions stated, that the plaintiff proved that in December, 1835, witness, at the instance of the plaintiff, examined the records of deeds in Washington county, for the purpose of tracing the plaintiff's title to the lot in question, and, after such examination, wrote for the plaintiff his letter to the bank, dated 17th December, 1835; that when he wrote that letter, a deed, purporting to be executed by John P. Van Ness, president, &c., to the plaintiff, was before him, and is the deed referred to in said letter, having been handed to him by plaintiff. The said deed was duly recorded on the 13th of May, 1828, and appears to have been delivered in August, 1828. Statements were made by counsel, and the plaintiff offered to read in evidence said deed; which being objected to, the Court overruled the objection, and defendant excepted.

The third bill of exceptions stated, that the plaintiff, in order to maintain the issue on his part, offered in evidence the proceedings of the Circuit Court of the District of Columbia, for the county of Washington, in a certain suit brought by the Patriotic Bank against Samuel Lane, for the purpose of showing that Samuel Lane had been in fact sued upon the note for three thousand dollars, one of the notes mentioned in the deed from B. G. Orr, to Joseph Elgar, dated 21st of August, 1818; to the competency and admissibility of the same to prove the said fact, the defendant objected; but the Court overruled the objection, and permitted the same to go to the jury. To the admission of which testimony the defendant, by his counsel excepted. The deed from B. G. Orr, referred to in the exception, was a deed of trust, executed on the 21st day of August, 1818, and duly recorded, to Joseph Elgar, by which Orr conveyed to Elgar certain lots of ground in the city of Washington, in trust, that if Samuel Lane should be sued, or put to any cost, trouble, damage, or expense, by reason of his having endorsed certain notes drawn by B. G. Orr, negotiable at the Patriotic Bank, the trustee should sell and dispose of the property conveyed by the same, and out of the proceeds discharge the notes, or such as may have been substituted for them, and to indemnify the said Samuel Lane, &c.

The fourth bill of exceptions stated, that the plaintiff, to sustain the issue on his part, gave in evidence the articles of agreement signed by John P. Van Ness, President of the Bank of the Metropolis, and Alexander Kerr, Cashier of the Bank, with the plaintiff, for the sale of the lot; and then, having proved that B. G. Orr was seized in fee of the premises mentioned in the agreement, gave in evidence the deed from Orr to Elgar, referred to in the third exception, and then gave in evidence a deed from B. G. Orr to Kerr, authorizing the sale of the lot, for the purpose of discharging certain notes, drawn by Orr, and discounted at the Bank of the Metropolis, and a deed made by Kerr to the Bank of the Metropolis, in pursuance of the trust, dated July 1st, 1825, under which deed the bank entered into possession of the lot; and then gave in evidence the proceedings in the Circuit Court, in the case of the Patriotic Bank against Samuel Lane, as stated in the third bill of exceptions, and proved by competent testimony, that B. G. Orr had died in 1823, and Samuel Lane, in the year 1822, both insolvent; and that in the year 1835, said Elgar, at the instance and request of said Patriotic Bank, advertised the property mentioned in said deed to him for sale, in manner following, and that pursuant to said advertisement, he did, on the 21st day of December 1835, enter on the premises and expose to sale, and did sell, said lot No. 5, in square No. 489, and the said Patriotic Bank, by its cashier, became the purchaser, and said Elgar executed to said bank a deed for the same, and that the nett proceeds of said sale of said lot, was carried on the books of the said Patriotic Bank to the credit of said B. G. Orr's note for three thousand dollars, mentioned in said deed from said Orr to Elgar, still leaving, as appears by the said books, a balance due on the said note; and then gave in evidence a letter addressed by said plaintiff to said defendant, and then proved by competent testimony, that the said lot was vacant, and unenclosed, and unimproved; and that after said sale and conveyance to said Patriotic Bank, the cashier of said bank went on to said premises, in company with the attorney of said bank, and then and there declared that he took possession of the same; and that in the year 1824, the said lot was assessed on the books of the corporation of Washington, as the property of said Orr; and that from the year 1825 to the year 1828, both inclusive, the same was assessed to said defendant, who paid the taxes thereon; and that from the year 1829 to the year 1835, the same was assessed to said plaintiff, who paid the taxes thereon, and continued in possession till the year 1835, and from that time, the same has been assessed to said Patriotic Bank; and further proved that said plaintiff was duly notified by the cashier of said Patriotic Bank, of his intention to take possession of said lot, in the manner and at the time of his said entry as aforesaid, that that said lot still remains and has constantly remained open, vacant, unimproved, and unenclosed; and further proved that said plaintiff had paid to said defendant the whole consideration money for which said lot was sold to him, and taken up at maturity as part of said purchase money, the note mentioned in the agreement aforesaid, signed by said Van Ness and Kerr; and that the said Orr and Kerr, during their lives, and the said Elgar, the Bank of the Metropolis, and Patriotic Bank, were all in the city of Washington from 1818 till after 1835.

The defendant moved the Court to instruct the jury, they upon this evidence the plaintiff was not entitled to recover upon the first, or second, or third, or fourth counts in the declaration; which instructions the Court refused to give; to which refusal the defendants excepted.

The defendants presented this writ of error.

The case was argued by Mr. Coxe, for the plaintiffs in error, and by Messrs. Semmes and Bradley, for the defendant.

Mr. Coxe contended that the Circuit Court had erred in each and all the instructions given to the jury.

He argued that the proceedings under the deed from Orr to Elgar, under which the Patriotic Bank claimed title to the lot sold to the defendant in error, were irregular and void. Eighteen years had elapsed between the execution of the deed of trust by Orr to Elgar; and if the Patriotic Bank could come forward in 1835, to claim under a note given in 1819, they should have gone into a Court of Equity before they could call on the trustee to sell. The deed of trust gave only a naked power; and after the elapse of so many years, no sale could be made under it. He had exceeded his authority. Deeds of trust have the same effect as common law mortgages. In 1835, when Elgar undertook to execute the trust, there was no debt due to the Patriotic Bank. A Court of Equity, as well as a Court of Common Law, would have presumed its payment.

There is no evidence that Samuel Lane had been sued upon the notes, or had ever suffered damage, or been put to expense. The judgment of the Patriotic Bank on the notes was obtained in 1823, against the administrator of Lane.

By the law of Maryland, a judgment becomes inoperative after twelve years; and this judgment was therefore invalid in 1835. The statute of limitations had created a complete bar to all claims on the notes of Orr, or on the judgment. The Patriotic Bank had no rights under either the judgment or the notes.

The Bank of the Metropolis had therefore become entitled, completely and exclusively, under the deed to Alexander Kerr, to the lot; for if no proceedings could be had against Lane, how could the deed of trust from Orr to Elgar be put in force? No evidence could be introduced to show the right of Elgar. It was at an end from time.

The defendant in error did not show on the trial a right to recover against the Bank of the Metropolis. He has no right of action. He should have shown that he had tendered a proper deed to the bank, to be executed: but this is not shown, or averred. He should have proved that a power to sell the lot had been given by the bank to the president and cashier: but the Circuit Court did not require this.

The defendant in error was barred from sueing, by his holding the deed for the lot, although it may have been defective; and by his holding possession under the deed, until he had demanded a better one from the Bank of the Metropolis.

All the counts in the declaration are defective but the fourth and last, as they have no conclusion; and the conclusion to the last count is inapplicable to the preceding three.

Messrs. Semmes and Bradley for the defendant in error.

It is extraordinary, that after the pleadings were made up in this case, a trial had, and the plaintiffs in error had taken four bills of exceptions, objections to the declaration should be first made in this Court. The party thus objecting is too late: he has waved all right to take such exceptions. All defects in the declaration are cured by the verdict and by the statute of jeofails.

So if the defendant in the Circuit Court had an objection to the form of the action, he should have taken it by a plea. The contract is set out in the declaration. It is a contract for the sale of the lot by the officers of the bank; and it has been held that the accredited agents of the bank have a right to bind it by their contracts. Hatch vs. Barr, 1 Ohio Reports, 390.

It is certain that the Bank of the Metropolis made the contract set out in the record, and did not keep it with the defendant in error. At the time they assumed the right to sell the lot, the bank could not legally convey it; nor has a legal title to it been made at any time by the bank. There was an existing encumbrance on the lot which the bank did not remove, and which has, subsequently to the sale to the defendant in error, been enforced; and he is entirely divested of the property. He has paid the full consideration stated in the contract, and he now seeks to recover the same back from the bank. This is resisted, and this is the question in the case. On the part of the defendant in error every principle of equity and justice is in full force. The bank would exempt itself from its obligations upon legal and technical grounds. But no objections on such grounds to the recovery of the defendant in error will be found to exist. 20 Johns. Rep. 15. 20. Sugden on Vendors, 6. Encumbrances on property are objections to a valid title. 11 Johns. Rep. 525. 2 Johns. Rep. 613. 12 Johns. Rep. 190. 8 Wheat. 338. 12 Wheat. 64.

The authority of the agents of the bank to sell may be inferred from the acts of the parties. The money of the defendant and his note were given to the bank for the property, and this property was acquired by the bank from one of its debtors for the payment of a debt. This is authorized by the charter.

This was a contract on the part of the bank to sell the lo., free from all encumbrances. Cited on this point, 1 H. Black. 270. 280. 3 Bos. and Pull. 162. 4 Espinasse's Rep. 221. 2 Esp. Nisi Prius. 639, 640.

Was there an outstanding legal encumbrance on the lot, superior to the title of the Bank of the Metropolis, at the time they made the sale to the defendant in error?

It must be admitted that any one interested in the trust given to Elgar, might call on him to execute it; and if he was willing to do his duty, there was no necessity to call in the aid of a Court of Chancery. The Patriotic Bank was the holder of the notes endorsed by Lane; it was the cestui que trust. The bank was not barred by time. Their judgment was interlocutory, and was not affected by he statute of limitations of Maryland. The object of the deed of trust was to pay the notes, and thus to indemnify the endorser. The bank had a right to avail itself of the trust whenever it became known to them. 3 Johns. Ch. Cases. 261.

The purchase of the lot by the Bank of the Metropolis was made subject to the deed of trust to Elgar. That deed was on record, and was notice, from its date, to all the world. Nothing but actual fraud can divest a mortgage properly on record, and that fraud must be proved. Cited, the Recording Act of Maryland, 1815. 1 Johns. Ch. Cases, 298. 394.

Another objection has been made. It is said, that although the length of time which had elapsed before the sale by Elgar, would not bar a mortgage, but it would bar a judgment. But to make a judgment a bar, the statute of limitations must be pleaded. It is not void, but may be made so by pleading the statute. There was no plea of the statute in this case.

Mr. Justice BARBOUR delivered the opinion of the Court.