Erwin v. Parham

THIS was an appeal from the Circuit Court of the United States for the District of Louisiana, sitting as a court of equity.

It came up upon a demurrer to a bill filed by Andrew Erwin, which demurrer was sustained by the court, and the bill dismissed with costs. The facts set forth in the bill, arranged in chronological order, were as follows:

In the year 1839, James M. Wall, a citizen of the state of Mississippi, appears to have been in possession of two plantations in Louisiana; and on the 16th of November, in that year, sold them, together with the stock and slaves upon them, to William S. Parham, for a sum amounting very nearly to $300,000. Of this consideration, $35,200 were in cash, and the residue in thirteen promissory notes, each for the sum of $20,369.23, payable on the 1st of January, 1842, 1843, 1844, 1845, 1846, 1847, 1848, 1849, 1850, 1851, 1852, 1853, 1854. These notes were drawn in favor of Wall, made payable and negotiable at the Citizens Bank of New Orleans, and were indorsed ne varietur by the notary before whom the deed was acknowledged, and secured by a mortgage of the property. It was further stipulated in the deed, that Parham was to settle all claims against the property, and have a credit upon the notes for whatever sums he might pay. A list of the mortgages outstanding upon the property was waived by the parties, because, as was stated in the deed, 'Parham was advised of the mortgages existing on said property.' The list nowhere appeared in the record.

In 1842 Wall, being a resident of Mississippi, was sued in the Circuit Court of the United States for that district, by one William M. Beal, a resident and citizen of Louisiana; and a judgment was recovered at the May term in said suit for $2,365.13. An execution was issued upon this judgment against Wall, which was returned 'nulla bona.'

On the 1st of August, 1842, Parham conveyed to his mother, Elizabeth Jane Parham, who was also the mother of Wall, all the property which had been conveyed to him by Wall on the 16th of November, 1839. The consideration for this deed was, that the grantee should pay the thirteen promissory notes above mentioned (except the sum of $18,000, which was stated to have been paid on account of them); that the grantee should also pay to one W. Ford, Jr., $6,986.52, which Parham owed in three separate notes, and should also pay sundry small debts, not exceeding in the whole five thousand dollars.

On the 20th of November, 1845, Beal filed a petition in the Ninth District Court of the State of Louisiana, setting forth the judgment which he had recovered against Wall in the State of Mississippi, and praying that it might be made executory in Louisiana. An order of seizure and sale was accordingly granted, and, on the 19th of January, 1846, a writ of fieri facias was issued to the sheriff of the parish of Madison, commanding him to seize all and singular the property movable or immovable, rights and credits of Wall within his parish.

On the 24th of January, 1846, the sheriff levied this execution upon the thirteen promissory notes above described.

On the first Saturday, in May, 1846, the said sheriff, after having carefully and strictly observed and complied with and performed all the solemnities and formalities required by the law and the statute in such case made and provided, sold two of the thirteen promissory notes, viz., the two which were due on 1st January, 1846 and 1847, to Andrew Erwin, the appellant, and one John W. Nixon, as equal proprietors, for the sum of $300, that being the last and highest bid, and conveyed the same to the purchasers in due form of law.

On the same day, and after the above sale, the sheriff exposed to sale the remaining eleven notes, which were purchased by Erwin alone, and a deed executed for them by the sheriff.

On the 31st of January, 1846, between the seizure and sale, Wall acknowledged, before a notary public, that he was indebted to Dick and Hill in the sum of $35,979.53; that he had given them his promissory note for that amount, due on 1st April following; and that, to secure the payment thereof, he, on that day, pledged, transferred, and delivered to said Dick and Hill, two of the thirteen notes above mentioned, viz., those which were due on 1st January, 1845 and 1846, respectively.

In the mean time, but when the record did not show exactly, Elizabeth Parham, the mother, died, leaving Parham and Wall her heirs at law.

At some period subsequent to the above transactions, but when the record did not show, Dick and Hill got possession of the rest of the thirteen promissory notes, two of which had been pledged to them by Wall, as above stated.

On the 2d of January, 1847, Dick and Hill, being thus in possession of the notes, caused the mortgaged property, for the purchase of which the notes were given, to be levied upon and seized by the sheriff of the parish of Madison, and exposed to sale at public auction. They became the purchasers at the sale for the sum of $50,000.

On the 26th of February, 1847, Erwin filed his bill in the Circuit Court of the United States for Louisiana, setting forth, in great detail, the above facts; and averring that Nixon had sold his half of the two notes purchased by him and Erwin conjointly, to some person unknown. The bill charged Dick and Hill with a corrupt, fraudulent, and iniquitous combination and conspiracy, to and with Wall, to cheat, defraud, and injure the creditors of Wall, and especially the complainant. It averred, that Dick and Hill were the creditors of Wall (if at all) only for advances made upon crops, which advances had been fully paid; that the sale by them of the mortgaged property was therefore wholly unnecessary; that the sum of $50,000 was an inadequate price; that, if they had a claim upon Wall for a sum less than $50,000, the residue, after paying themselves, ought to be shared amongst the creditors of Wall, amongst whom the complainant was one; that Wall was in the enjoyment of all the large revenues from the property. The bill then prayed that Parham should be adjudged to pay, &c., and in default thereof that the property might be sold. It further prayed for an injunction upon Parham, Dick, and Hill, forbidding them from selling the property, or disposing in any manner of any of the revenues or crops.

An injunction was granted, and the defendants appeared and answered; but afterwards withdrew their answers and demurred to the bill.

On the 8th of February, 1848, the Circuit Court dissolved the injunction, and dismissed the bill, with costs; whereupon, the complainant appealed to this court.

It was argued by Mr. Johnson, who made the following points:

1. That the notes, from 1 to 13, inclusive, by virtue of the executory process of seizure and sale and purchase, averred in the bill, became the property of the complainant in his own right as to eleven of them, and to one half of the other two; the other half having been originally in J. W. Nixon.

2. That, as such owner of said notes, he had a specific lien upon the property, real and personal, mentioned in the bill.

3. That, upon that ground alone, as well as upon the ground of discovery, he had a right to the relief prayed.

4. That he was entitled to relief, also, upon the ground of the corrupt combination and conspiracy between the defendants, Dick and Hill, and James M. Wall, to defraud the complainant, as well as upon the ground of like combination and conspiracy between Dick and Hill, and William S. Parham, to defraud the creditors of said Wall.

5. That if the property, subject to the incumbrance of said notes, is not in the hands of Dick and Hill responsible for the whole amount of the notes, it is at least responsible in the proportion that said amount bears to the sum of $35,979.79, with the interest thereon, being the amount of the note made by Wall to Dick and Hill, dated 31st January, 1846.

6. The rule established in 5 Peters and 11 Gill & Johnson, is that if, besides inadequacy of price, there be suspicion of fraud, equity will leave the party to his remedy at law. But here there is nothing but mere inadequacy of price. We bought at a judicial sale, and all the preliminary steps required by law are alleged in the bill, and admitted by the demurrer to have been taken.

Mr. Justice CATRON delivered the opinion of the court.