French v. Hay (89 U.S. 238)

[Syllabus from pages 238-240 intentionally omitted]

APPEAL from the Circuit Court for the Eastern District of Virginia; the case, though between the same parties as the preceding one (that is to say, between French and Hay), not relating to the same transactions, and being thus:

In October, 1858, McCullough owning a house and lot in Alexandria, Virginia, and being indebted to Harper in the sum of $3000, evidenced by six negotiable notes of $500 each, conveyed the premises in the month named, to Brent, in trust to secure the payment of the six notes. He then leased the premises, together with certain furniture then in the house, to James French, for five years at a rent of $600 a year; and in March, 1859, conveyed the premises to Robert French in trust for the wife of the said James; assigning at the same time to Robert French the lease previously made to James; the money to be paid upon which would in the course of the five years amount to exactly $3000, and which it was agreed should be paid to Harper in extinguishment of his debt of that amount.

On the execution of the lease James French went into possession.

The rents were applied as agreed on, so that when the rebellion became flagrant, as it did in the spring of 1861, all the notes had been paid, excepting one. Five hundred dollars were, therefore, thus due by McCullough to Harper, and were still secured by the deed of trust to Brent.

In this state of things McCullough, the debtor, died; Harper, his creditor, went south into the rebel lines, indorsing the note for the $500 and leaving it with his wife in Alexandria. James French and wife followed Harper, leaving a Mrs. Brandy, a sister of French's, in occupation of the house and furniture; and things in Alexandria got into such confusion as in a civil war might occur in a place situated as it was.

With the death of McCullough and the withdrawal south of the other original actors, two new persons appeared. One Alexander Hay, a citizen of Pennsylvania, a creditor of McCullough, who upon his death applied for and got letters of administration from the proper court at Alexandria on McCullough's estate; and the other, J. B. Stewart, a citizen of New York, who alleging himself to have become owner of the remaining note of $500 due by the estate of McCullough, applied for and got in the usual court at Alexandria, an order by which Hay was substituted as trustee in the place of Brent, now alleged to be in the Confederate army.

Hay, in order, as he alleged, properly to administer on McCullough's estate as the legal administrator of it, and also to execute as substituted trustee, his newly received trust, now, December, 1865, advertised and sold as trustee under the deed of trust executed to Brent in 1858, the premises conveyed by it; Dr. Ripley, a surgeon in the army, bidding them off as purchaser at $2600; the deed of McCullough to Robert French in trust for the wife of James French, executed in March, 1859, having never been put on record until about a month before this sale, and neither Hay nor Dr. Ripley apparently having ever heard of it until after the sale was made.

Dr. Ripley, now hearing of the deed to French, and fearing that there might be trouble about title, and about getting possession, refused to pay for or to take the property; and Stewart being willing to take his bid, Ripley assigned the bid to him. But Hay too was alarmed, and some allegations reaching his ears that Stewart when he made the motion for the substitution of a trustee in the place of Brent, did not own the remaining note of $500 as he had alleged he did, would take no money from nor execute any deed to Stewart. In short, after the sale he did nothing whatever, and his connection with the property ended. Stewart, however, got possession of the house under an arrangement between himself and its then occupant, and being once in, held on to the occupancy.

In February, 1866, the rebellion being now ended, and Harper and the other parties who had gone south having come back to Alexandria, their old home, Robert French, as trustee of Mrs. James French, filed a bill in the County Court of Alexandria, against Stewart, Hay, Brent et al., alleging that Stewart was not owner of the remaining $500 note, when the order of court putting Hay as trustee in the place of Brent was made, and that the note was at that time still owned by Harper, and that the sale by Hay was collusive and void; that the note had since been paid, and that so the whole $3000, which the property was conveyed to Brent to secure, was now discharged; and the complainant entitled to hold the property upon the trusts created for Mrs. Robert French by the deed of March, 1859, there being now no prior trust. The prayer of the bill was:

'That the defendants, Stewart and Hay, may make full and true discovery of all their transactions connected with the sale, by the said Hay, of the property described, to the said Stewart, that the sale may be set aside, and the deed made in pursuance thereof delivered up and cancelled; that the said Stewart may render an account of the rents and profits of the said property while in the use and occupation thereof.'

No prayer, as the reader will observe, was made that Hay might be charged with rents and profits.

On the 2d of June, 1866, Stewart filed his answer; the same being sworn to and signed in the ordinary way, and signed also by his attorney, C. F. Doddridge, Esquire.

On the 8th of December following, the court decreed that the sale was void; that the property should be restored to the complainant; that Stewart was chargeable with the rents and profits, and that the case should be referred to a master to ascertain the amount. An appeal was thereupon taken by Stewart to the proper court of the State-the State District Court-which affirmed the decree of the County Court. Upon the return of the case to the County Court it was referred to a master to take an account of the rents and profits, pursuant to the decree.

The master reported that Stewart was chargeable with $3276, from which sum was to be deducted the payments made by him, amounting in all to $887, and leaving a balance against Stewart of $2389, and on the 2d of June, 1869, the court decreed that he should pay that sum with interest from the 26th of October, 1868. This the reader will understand was for rents and profits of the real estate only, and not for use of furniture.

At the same time when this decree was made leave was given to the complainant to file an amended bill; 'William Dulany' (said the record), 'an attorney of the court, appearing in court and consenting thereto.'

He thereupon, June 7th, 1869, did file such bill, charging that Hay had participated in the frauds of Stewart, and should be held equally liable with him for rents, and that both were chargeable in addition for loss and damage touching the furniture in the house when Stewart took possession. The bill was taken as confessed by Hay, and on the 21st of August, 1869, it was decreed that he should pay to the complainant on account of rents and for the detention and damage to the furniture, $3389, with interest from the 26th of October, 1868, the date already named in the former decree. Thereafter Hay and Stewart applied to the court to vacate the decrees against them, and for leave to appear and answer; the grounds of their application being that no process upon the amended bill had been served upon them, and that they had no notice or knowledge of its pendency against them until after the decree pro confesso had been entered, nor until a short time before the application now made; and Hay averred and showed by his own oath and by other proofs that Mr. Dulany, the attorney, who had acted for him in that behalf had done so by a misunderstanding, wholly without his consent or knowledge; and he set forth a variety of facts which, if true, made a complete defence to the bill.

On the 23d of December, 1869, the court vacated the decree of the 21st of August, 1869, against Hay, but at the same time and in the same order decreed against him for the sum of $2389, with interest from the 26th of October, 1868, on account of the rents, and ordered that an issue should be tried on the law side of the court touching the furniture; and that Hay and Stewart should both have leave to answer. They thereupon answered as to the whole case; denying each and all of the allegations both of the original and the amended bill. On the 8th of February, 1870, they moved the court for an order for the removal of the case to the Circuit Court of the United States for that district, pursuant to the act of Congress of the 2d of March, 1867. An order was made and the cause was removed accordingly. The whole proceedings in the State court, including, of course, all the bills and the answers, among the latter, the answer of Hay denying each and all of the allegations of the bills, were thus transferred as the record for the circuit of the United States.

In the Circuit Court of the United States Hay and Stewart severally moved the court to vacate the several decrees against them made by the Circuit Court of the county. These motions were heard, and the several decrees were annulled, and it was 'ordered that the case do now stand for hearing on the bill, answer, and pleadings.' Testimony was thereafter taken, by agreement, upon both sides. On the 13th of October, 1873,-near three years after the case had been removed, and when it was ready for hearing-the complainant moved the court to remand it to the court whence it came, he insisting that the act of Congress under which the case had been removed, had not been complied with in respect to time and several other important particulars. The motion was overruled. The case was then heard upon the merits and the bill dismissed.

The complainant appealed to this court, and the case was thus brought here for review.

In the argument here the objection touching the removal of the case from the State court was renewed, and the case otherwise discussed both on technical points and on merits.

Mr. W. Willoughby, for the appellant; Messrs. H. H. Wells and G. W. Paschall, contra.

Mr. Justice SWAYNE delivered the opinion of the court.