Boyce's Executors v. Grundy (28 U.S. 210)

APPEAL from the decree of the circuit court of West Tennessee.

A bill in chancery was filed in that court by the appellee, Felix Grundy, against the appellants, the executors of James Boyce, to enjoin a judgment at law which they had obtained against him for four thousand seven hundred dollars, and to rescind a contract made between James Boyce and himself, on the 3d of July 1818, by which Boyce sold and agreed to convey to the complainant, Grundy, nine hundred and fifty acres or arpents of land on the Homochito river, in the state of Mississippi, and for which Grundy agreed to pay him twenty thousand dollars; two thousand of which were to be paid in hand, and the balance in yearly instalments of two thousand dollars. A deed of general warranty was, by the written agreement of the partners, to be made to the purchaser in four years.

Grundy having failed to pay the amount of the instalments due January 1820 and 1821, Boyce's executors commenced suit upon the contract for the two first instalments, in the circuit court for the district of West Tennessee, and recovered judgment for the same with interest. On the 30th of August 1823, Grundy filed his bill, praying an injunction against the judgment at law, and a rescision of the contract.

The grounds of equity stated in the bill and relied on, were the fraudulent and false representations of Boyce, in making the sale of the land.

1. In regard to an island in the river, part of the land purchased, containing two hundred and sixty-five acres, not being subject to inundation, except a very small part, easily prevented; and of the quality of the land on said island.

2. In showing and selling a body of good and level land, as part of the tract, which is not included within its limits. And representing that a quantity of bad and hilly ground was not within the tract, which is included.

3. In representing that he had a good title to the land; having no title, and not being able to make a good right.

The answer of the defendants in the circuit court denies the allegations charging fraud and misrepresentation by James Boyce, and avers Grundy's information as to the true state of the title, the quantity and quality of the lands; and alleges that they have been prevented from obtaining the legal title by the failure of Grundy to pay the instalments due upon the contract, and which were necessary to enable them to obtain a conveyance.

Depositions were taken on the part of the complainant and the defendants; which with other testimony were exhibited in the circuit court on the hearing of the cause. The testimony exhibited on the part of the complainant in that court, fully established the allegations in the bill, to the satisfaction of the court. The whole evidence is referred to, and the facts of the case are sufficiently stated in the opinion of this court.

The circuit court perpetuated the injunction, and rescinded the contract between Boyce and Grundy; and decreed that the money paid by the complainant to Boyce should be refunded with interest. The defendants appealed to this court.

Messrs Ogden and Wickliffe, for the appellants, contended:

1. That the charge of fraud and misrepresentation as set forth in the bill, in reference to the title, quantity, boundary, and overflowing of the land, is not sustained by proof.

2. That the court below erred, in decreeing a rescision of the contract, upon the grounds assumed in the decree. That the court erred in refusing to continue the cause for the reasons stated in the exceptions filed by the defendants. The court erred in admitting, as evidence in this cause, the papers and parts of depositions referred to in the several bills of exceptions.

3. The testimony in this cause, the matters of fact involved, were of a character which imperatively called upon the chancellor to direct an issue at law, to try the controverted facts.

4. The court should have referred the cause to a commissioner, with directions to report upon the title.

5. The decree should have been interlocutory, and not final. Time should have been given defendants to make the title and tender it, upon the payment or tender of the purchase money.

The counsel for the appellants, after full argument on the facts, as to the law of the case, said, that the bill filed in the circuit court was to rescind a contract on the ground of fraud. In all cases of fraud, courts of equity in England, and chancery courts in the United States, have concurrent jurisdiction with courts of law. Mad. Chan. 258. 6 Johns. Rep. 110. It is a well settled principle of law that fraudulent representations will vitiate any contract. 1 Comyn on Contracts, 38. In case a contract is obtained by such representations, it will be vitiated and destroyed in its binding force. If money has been paid under such misrepresentations, it may be recovered back. If a suit be brought at law upon the contract, the fraudulent representations may be set up as an effectual defence at law. If the vendee takes possession of the property, he may abandon it and consider the contract as not binding on him.

Thus there is at law an adequate and a competent remedy, and full relief can be obtained at law from the effects of such a contract.

Has then a court of the United States jurisdiction in the case? By the judiciary act, the equity powers given to the courts of the United States are not to be exercised when there is a full and adequate relief at law.

2. Fraud cannot be alleged in most cases where the agreement has been reduced to writing. It is an argument of great force against fraud, Sugden on Vendors, 129, upon the principle that all the allegations and representations of the parties will be presumed to have been embodied in the writing. 4 Taunt. 785.

3. They also contended that after a judgment has been obtained in a suit in which the alleged fraud might have been set up as a defence, no injunction will lie, 3 Merivale's Rep. 225, 226. Chit. on Contracts, 113. Cited also, Sugden on Vendors, 129. To show that the case was not one for a court of equity, were cited, Hepburn vs. Dundas, 1 Wheat. 179. 5 Cranch, 502. Morgan vs. Morgan, 2 Wheat. 290. Dunlop vs. Dunlop, 12 Wheat. 576. 10 Ves. 144. 3 Bro. Ch. Cases, 73. 16 Ves. 83. 9 Ves. 21. 1 Bro. Ch. Cases, 546. 1 Ves. & Beames, 355, 356. 1 Barn. & Cress. 623. 5 Dowling & Riland, 490.

Mr Isaacks and Mr White, for the appellee, contended, that the evidence on the record fully established the allegations of fraud in the bill, and that the decree of the circuit court was in harmony with the weight of that evidence. A fraud had been committed both as to the quality, the quantity, the situation, and the title of the land.

They argued that the case was one which came fully within the jurisdiction of a court of chancery. The construction of the act of congress, which would limit the chancery powers of the courts of the United States to cases only in which there is no concurrent legal remedy, is contrary to that which it has constantly received since the organization of the court under that law.

The case made out in the complainant's bill is one peculiarly within the jurisdiction of a court of equity; and the relief which such a court can afford, is the only adequate means to protect the complainant from gross injustice and fraud; to restore him to the situation in which he was before the contract was made. Without this remedy he would be exposed to a multitude of suits, and subjected to heavy expenses, for which he could not be reimbursed. Fraud and trusts are peculiarly within the command of the chancery courts. In support of these principles, the counsel for the appellee cited, 1 Mad. Chan. 262. 3 Cranch, 280. 9 Ves. 21. 1 Jacob & Walker, 19. 5 Johns. Ch. Rep. 174. 2 Cowen, 129. 2 Johns. Ch. Rep. 596. 6 Munford, 283. 4 Price's Rep. 131.

Mr Justice JOHNSON delivered the opinion of the Court.