Bank of the Metropolis v. Guttschlick/Opinion of the Court

This was an action of assumpsit brought by the defendant in error against the plaintiff in error, in the Circuit Court of the United States, in the county of Washington, and District of Columbia.

The declaration contains three special counts, and a count for money had and received. The three special counts are all founded upon an agreement in writing, which, after reciting that the plaintiff in the Court below had bought of the defendant in the Court below, lot No. 5, in square No. 489, in the city of Washington, for which he had paid a part of the purchase money, and executed his note for the residue, contains the following stipulation: 'The Bank of the Metropolis, through the president and cashier, is hereby pledged, when the above sum, (that is, the amount of the note,) is paid, to convey the said lot, viz. lot No. 5, in square 489, in fee simple, to the said Ernest Guttschlick, his heirs, or assigns forever.' Each of these counts avers the payment, at the time agreed, of the amount of the note, and the failure of the bank, on demand, to convey the lot. At the trial several bills of exception were taken, and a verdict was found, and judgment rendered in favour of the plaintiff. To reverse that judgment, this writ of error is brought.

In the argument at the bar, various objection have been urged to the sufficiency of the declaration, which we will briefly notice, in the order in which they were made.

The first objection is, that the special counts have no conclusion There is certainly no formal conclusion to either of these counts. Each of them, after alleging the breach, terminating with the words, 'Whereby, &c.' Whether counts thus concluding, would have been sufficient upon a special demurrer in the Court below, it is not necessary to decide; because we are clearly of opinion, that the thirty-second section of the Judiciary act, would cure the defect, if it were admitted to have been one.

The second objection which was taken, applies to the first count, viz., that the agreement sued on, is averred to have been made by the bank, 'through the president and cashier,' without averring their authorization by the bank to make it. We consider this objection as wholly untenable. The averment in this count is, that the bank, through these officers, agreed to convey the lot. Now even assuming, for the sake of giving the objection its full force, that the making of this agreement was not within the competency of these officers, as such, yet it was unquestionably in the power of the bank to give authority to its own officers to do so. When, then, it is averred that the bank, by them, agreed, this averment, in effect, imports the very thing, the supposed want of which constitutes the objection: because, upon the assumption stated, the bank could have made no agreement but by agents having lawful authority. Nay, it would have been sufficient, in our opinion, that the bank agreed, without the words, 'through the president and cashier:' for it is a rule in pleading, that facts may be stated according to their legal effect. Now the legal effect of an agreement made by an agent for his principal, whilst the agent is acting within the scope of his authority, is, that it is the agreement of the principal. Accordingly, it is settled that the allegation that a party made, accepted, endorsed, or delivered a bill of exchange, is sufficient, although the defendant did not, in fact, do either of these acts himself, provided he authorized the doing of them. Chitty on Bills, 356, and the authorities there cited. This principle has been applied too, in actions ex delicto, as well as ex contractu. In 6 Term Rep. 659, it was held, that an allegation that the defendant had negligently driven his cart against plaintiff's horse, was supported by evidence, that defendant's servant drove the cart. In this aspect of the question, it was one, not of pleading, but of evidence. If, on the contrary, the act were one in their regular line of duty, then, of course, the averment was unnecessary. In the case of Fleckner vs. U. States Bank, 8 Wheat. 358, the Court declare the point to be settled, 'that a corporation may be bound by contracts not authorized or executed under its corporate seal, and by contracts made in the ordinary discharge of the official duty of its agents and officers.'

The next objection which was raised to the declaration applied to the second count, viz., that the averment that the plaintiff was turned out of possession, was insufficient in this, that it is not averred to have been by process of law, or by the entry of one having lawful title. If entry and eviction were the ground of the action, or constituted the gravamen of the count, as in covenant on a warranty, or for quiet enjoyment, then, indeed, a declaration or count would be defective, which omitted to aver, that the plaintiff was evicted by due process of law, or by the entry and eviction of one who, at the time of the covenant, had lawful title to the land; and having such title, entered and evicted the plaintiff; or which did not contain some averment of equivalent import. But upon examining the count in question, it will be found, that although this averment is contained in that count, it is mere surplusage; because the breach alleged is, that the defendant refused, on demand, to convey the land. There is nothing, therefore, in the objection, as applied to this count; because it would be good without averring any eviction whatsoever.

The next objection to the declaration applies to the third count, and it is this; that the plaintiff, in that count, treats the agreement as importing an undertaking on the part of the bank to convey the lot in fee simple, by a good and indefeisible title, free from encumbrances. In the view which we have taken of this subject, it is unnecessary for us to decide whether the agreement does, or does not, import such an undertaking, on the part of the bank, as is ascribed to it in this count of the declaration. This count contains an averment that the bank was not at the time of the agreement, or at any time after, seized or possessed of the lot in fee simple. We have seen that the language of the agreement is, that the bank was to convey the lot in fee simple, to the defendant in error, his heirs, or assigns forever. Now it appears from the record, that the bank claimed under a deed from Alexander Kerr, who sold the lot as trustee, under a deed of trust from Orr, the former owner, made to secure certain debts therein stated, which deed of trust was executed on the 8th of September, 1819. But Orr had previously, to wit, on the 6th of August, 1818, conveyed the same lot, in fee simple, to Joseph Elgar, as trustee for the purpose of securing certain debts therein stated, and with power to sell, in certain events therein mentioned; one of which was, that Samuel Lane, who was endorser of a note of three thousand dollars, secured by this last deed, should be sued, which event occurred as early as the year 1820. Now from this state of facts, it is apparent that at the date of the agreement, the bank was not seized of the fee simple which it contracted to convey. If the deed of trust to Elgar be considered as a mortgage, then the moment it was executed, the legal estate in fee simple was in Elgar, subject to be defeated upon the performance of the condition, and so continued in him, from that time down to the year 1835, when, under the trust deed he sold and conveyed the lot to the Patriotic Bank, which purchased at the sale. The interest of the mortgagor, according to the common law, is not liable to execution as real estate. 8 East, 467. 5 Bos. and Pull. 461. It is treated as equitable assets, 1 Vesey, 436. 4 Kent, 154. In conformity with this doctrine, this Court decided, 12 Peters, 201, that the wife of a mortgagor was not dowable; and in 13 Peters, 294, that the equity of redemption could not be taken in execution under a fieri facias. If this be so, in the case of a mortgage, the principle applies more strongly in case of a deed of trust, because the interest of the mortgagor, such as it is, is so far protected by a Court of Equity, that the mortgagee cannot foreclose, without a decree in equity; and even in that decree a short time is allowed to the mortgagor, within which to redeem by paying the debt: whereas, in the case of the trust, unless in case of some extrinsic matter of equity, a Court of Equity never interferes; and the only right of the grantor in the deed is the right to whatever surplus may remain after sale, of the money for which the property sold. There was then a good cause of action, on the ground that the bank had not the fee simple which it contracted to convey.

We think, then, that the declaration is not liable to any of the objections which have been urged against it.

Nor have we any doubt but that the action well lies against the bank. For although the agreement is under seal, it is not the seal of the corporation, but that of the president and cashier. It was decided in the case of Randall vs. Vanvechten, 19 Johns. Rep. 60, that covenant would not lie against a corporation, on a contract not under their corporate seal; but that an action of assumpsit would lie: and that it makes no difference, in regard to a corporation, whether the agent is appointed under seal or not, or whether he puts his own seal to a contract which he makes in their behalf, the doctrine of merger not applying to such a case. This doctrine we approve, and it is decisive of the objection.

We come now in order to the exceptions taken at the trial.

The first was, to the Court's admitting the agreement declared upon, to be given in evidence, until some evidence was previously given, showing the authority of the parties who executed it, to sign it.

Assuming, argumenti gratia, as we have before done as to this point, that the transaction was such that an authority was necessary to be proven, the objection resolves itself simply in a question of the order in which evidence was to be given.

We think that there is nothing in it. It was as competent for the party to prove the authority after, as it was before, giving the agreement in evidence.

The second exception was taken to the Court's admitting in evidence a letter from defendant in error to plaintiff in error, and the testimony of a witness that he had examined the records for the purpose of tracing the title of the defendant in error to the lot in question; and also a deed purporting to be executed by John P. Van Ness, president of the Bank of the Metropolis, to the defendant in error. The letter was merely to inform the plaintiff in error of the sale then advertised to be made of the lot in question, under the deed of trust from Orr to Elgar. The examination of the records made by the witness, was made for the purpose of enabling the defendant in error to decide what course to pursue in relation to the property. We see nothing objectionable in the admission either of the letter or the testimony of the witness. The plaintiff in error certainly was not injured by its admission. The property which the defendant in error had bought being about to be sold, he causes an examination to be made, that he might know what ground he stood on; then, out of abundant caution, he wrote the letter giving notice of the sale, so that the other party might pursue whatever course they thought best for their safety. The most that can be said of it is, that he thereby proved that he had done more than he was bound to do. For if he had chosen, he might have rested upon his contract, without troubling himself either in examining records or giving the other party notice. Nor have we any doubt as to the admissibility of the deed; some of the counts in the declaration charged as a breach of the agreement, the failure of the other party to make a deed; a paper having been executed having the form of a deed, it was altogether proper then to give it in evidence, to show that being sealed, not with the corporate seal, but with that of the president of the bank, it was no deed; and thus sustain the allegation; that no deed had been made. It is clear, beyond doubt, that a paper such as this, not under the corporate seal, is not the deed of the bank, in contemplation of law.

The third exception was taken to the Court's receiving in evidence the record of a suit by the Patriotic Bank against Lane, for the purpose of showing that Lane had been sued upon a note for three thousand dollars, mentioned in the deed from B. G. Orr to Elgar, dated August 20th, 1818. We think that this record was properly admitted. For one important question in the cause was, whether the occasion had occurred which justified Elgar, the trustee, in the deed of trust from Orr, to sell the lot in question. Now one of the provisions of that deed authorized him to sell, whensoever Lane should be sued on the note for three thousand dollars, given by Orr to the Patriotic Bank and endorsed by Lane, and to pay off that note to the bank. Now this record proved that Lane had been sued, that therefore the casus fedoris had occurred; that the land was rightfully sold; and therefore we think was admissible for the purpose for which it was offered. But it was argued, that the note stated in the deed of trust as the one endorsed by Lane, purported to be negotiable at the Patriotic Bank, and that the note declared upon in the record did not purport to be negotiable at that bank, and that there was therefore a variance. If the question had been raised in the suit brought upon the note, it might have been considered a misdescription; but in this case it was offered in evidence to the jury to prove the fact that Lane had been sued; it was a question for the jury to consider, whether this evidence was sufficient to satisfy them that it was the same debt as the one described in the deed from Orr to Elgar; and therefore the principle of law, that the allegations, in the parties' pleadings, and their proofs, shall correspond, has no application.

The last exception, after setting out certain evidence given by the plaintiff, without even stating that it was all the evidence, states that the defendant prayed an instruction, that upon that evidence, the plaintiff was not entitled to recover either upon the first, or second, or third, or fourth counts in the declaration, which instruction the Court refused to give: and we think very properly. Whether evidence is admissible or not, is a question for the Court to decide; but whether it is sufficient or not, to support the issue, is a question for the jury. This Court said, in the United States vs. Laub, 12 Peters, 5, 'It is a point too well settled to be now drawn in question, that the effect and sufficiency of the evidence, are for the consideration and determination of the jury.' And this proceeds upon this obvious principle. It is the province of the jury to decide what facts are proven. It is competent to them, to draw from the evidence before them, all such inferences and conclusions as that evidence conduces to prove. If the Court were to tell them, that upon a given state of evidence, the plaintiff could, or could not recover, then they must in the assumption of what facts were proven, either discard from their consideration such inferences as the jury might draw, or they must themselves deduce them. The first course would injure the party offering the evidence; the second would be an usurpation of the office of the jury. The only case in which the Court can make such inferences, and pass upon the sufficiency of the evidence, is by a demurrer to evidence. This would be the case, even if the bill of exception professed to state all the evidence; but the one which we are now considering does not profess to do this, and we cannot assume that it was all. For aught that appears on this record, there was other evidence; it is enough, however, that it does not appear that the evidence stated upon which the instruction was asked, was all.

Having now finished our examination of the several exceptions, we will very briefly notice some points which were pressed upon the consideration of the Court. It was said that the deed of trust from Orr to Elgar, under which the lot in question was sold, was made to indemnify Lane as endorser of Orr's note; that the Patriotic Bank had no right to call upon the trustee to sell it; that its only right was in a Court of Equity to ask to be substituted to the rights of Lane: but upon examining the deed of trust, we find in it a provision, that upon Lane's being sued, the trustee shall sell the lot, and after paying the expenses of the sale, apply the proceeds to the discharge of the notes of Orr, endorsed by Lane, of which the note on which the suit was brought against Lane, was one; so that this agreement fails in its foundation. We entirely concur with the doctrine laid down in 1 Johns. Chan. Rep. 205. 3 Johns. Chan. 261, that where a trust is created for the benefit of a third party, though without his knowledge at the time, he may affirm the trust, and enforce its execution. The truth is, that although the object of the deed of trust was to secure Lane, its provision, that, in the event which happened, of his being sued, the property should be sold, and the notes which he had endorsed, should be paid, was the most effectual means of attaining that object: these notes were due to the bank, were held by it, and in paying them, therefore, the money must be paid to the bank. Hence the trustee was authorized to sell at its instance, and to pay it the amount.

It was also argued, that the judgment against Lane was barred by the act of limitations, and that, therefore, the trustee was not authorized to sell for the purpose of paying a debt which could not be enforced; the provision of the deed which we have already referred to, furnishes an answer also to this objection; for even if it were barred, the claim was in full force, under the trust in the deed. For, although the judgment extinguished the right of action upon the note, yet upon well-established principle, it did not operate at all, by way of extinguishment of the collateral remedy under the deed of trust, though it had relation to, and was intended to secure the payment of the same note. The result, then, of this state of things is, that the property bought by the defendant in error, of the plaintiff in error, was legally sold under an elder subsisting lien; and thus he was utterly divested of all title, so as to show an entire failure of the consideration for which he paid his money, and to enable him to maintain an action for money had and received, to recover it back. We think that there is no error in the judgment; it is, therefore, affirmed with costs.

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the District of Columbia, holden in and for the county of Washington, and was argued by counsel. On consideration whereof, it is ordered and adjudged by this Court, that the judgment of the said Circuit Court, in this cause be, and the same is hereby, affirmed, with costs and damages at the rate of six per cent. per annum.