Fretz v. Stover

APPEAL from the District Court for the Eastern District of Virginia; the case being thus:

For several years prior to February 25th, 1861, a litigation had been waged by Fretz and wife, residents of Pennsylvania, against Stover, a resident of Fauquier County, Virginia; a certain Chilton, a lawyer in embarrassed circumstances, and resident in the same county, being the counsel of the former. The suit was for property claimed by the wife. On the said 25th of February, 1861, a compromise was effected between the parties, and it was agreed that Stover should give his bond to Fretz and wife, secured by a deed of trust to Chilton, as trustee, of a valuable farm, specified, for $2366, payable on or before the 1st of March, 1863. Fretz and his wife now returned to their home in Pennsylvania, leaving their attorney, Chilton, to see that the compromise was properly carried out, and that all details necessary for its completion were attended to. Chilton did thus accomplish matters; and Stover having, on the 8th of April, 1861, executed his bond, payable on or before March 1st, 1863, to Fretz and his wife, and transferred to Chilton by deed of trust for Fretz and his wife the farm to secure it, both instruments were delivered in form to Chilton. Of all this Fretz was informed. At the time when the compromise was made the country was in a disturbed condition with the Southern issues; but intercourse between all parts of it was still common, and as yet no war existed. On the 12th of April, 1861, Sumter was fired on by rebels, and civil war became flagrant. All communication ceased between Pennsylvania and that part of Virginal in which Chilton and Stover lived.

In 1864, intercourse being restored between Fauquier County, Virginia, and Pennsylvania, Chilton wrote Fretz saying 'that the papers were all safe, and that he would keep them safe, as he could collect nothing but Confederate money.' In the autumn of 1865 Fretz went to Fauquier County, where he saw Chilton, and Chilton then told him that he had received nothing on account of the bond; showed him a letter from Stover offering to pay it in Confederate money, which money Chilton said that he had not taken because it would have been of little use to him, Fretz. In 1866, that is to say, after the war was ended, Fretz learned accidentally that the bond had been paid in December, 1862, not wholly in notes of the Confederate States, but partly in them and partly in notes of Virginia banks; the security for the payment of which latter was bonds of the Confederacy; and the bonds and all the notes, of course, becoming worthless alike with the fall of the Confederacy itself. Chilton was alive at this time, but soon after (1867) died in solvent, and Fretz now (August 9th, 1869) filed a bill in the court below (his wife not being a party) against Stover to set up and have enforced the deed of trust; the ground of the bill being that Chilton had no authority to receive payment in paper such as he did receive it in, nor Stover the right to make it. The bill set forth the general history of the transaction, alleged 'that the said bond and the deed of trust securing the sum of money specified in the bond were left with the said Chilton as the attorney at law of the complainant, the deed of trust for record and the bond for collection at its maturity.' It charged actual fraud between Chilton and Stover in this, that Stover, taking advantage of Chilton's great pecuniary necessities, induced him to receive the Confederate and Virginia paper money at par in payment and discharge of the bond.

After the filing of the bill, Mrs. Fretz, the wife, was by consent of counsel made a party to it.

Stover filed his answer, admitting the settlement and execution of the bond and deed of trust, and the payment in Virginia bank notes and Confederate treasury notes as charged, but denied that these payments were the result of an unlawful and fraudulent combination between the respondent and Chilton. He insisted, however, that they were in law a full discharge and satisfaction of the debt and trust deed, but if this were not so, that to the extent of the compensation due by Fretz to Chilton for professional services, he should not be compelled to pay a second time.

After this answer was filed, the deposition of Fretz, the husband, was taken by the complainants, which was the only evidence in the cause. Fretz swore that Chilton had no authority over the bond and deed of trust, except to take charge of them and keep them safely, and to have the deed recorded, all which he promised to do; and that he, Fretz, had never given any authority to Chilton to receive payment in any kind of currency; that the subject of payment of the instruments had never been spoken of between the parties.

Fretz further testified that at the time of Chilton's death, Chilton was indebted to him on another account, over and above any fees due for professional services; and that these had been paid.

Subsequently Stover died, and a bill of revivor was filed to make his brother, who was his sole devisee and legatee, as also the executor of his will, a party defendant. The brother appeared and answered, admitting the character imputed to him by this bill, but setting up new defences founded on alleged ratification of Chilton's acts by silence and acquiescence after they came to the complainant's knowledge; defences not made in the answer of Stover to the original bill. The record did not show any replication made either to the original answer or to the answer of the executor.

On the hearing the bill was dismissed, and this appeal was brought to revise that decree.

Mr. John Sergeant Wise, for the appellants, contended that the decree was erroneous; because,

1st. Chilton never was, by express appointment or implication, the attorney at law or in fact of Fretz to collect said bond at all.

2d. If he was authorized at the time he received the bond to collect it when due, his appointment was made in ignorance of and without reference to the contingency of war, and in its very nature revoked by its breaking out.

3d. If he was agent or attorney with power to collect, and the breaking out of war did not revoke and terminate his agency, he had no right or power to take, and Stover had no power to pay anything but gold and silver.

4th. Granting to Chilton every power which Stover contends he had, the power he did exercise, in view of the mode in which and time it was exercised, was in collusion with Stover, to the destruction of his principal's debt, without possibility of benefit to any one but Stover and himself.

Mr. W. Willoughby, contra:

I. We raise a preliminary point.

There being no replication either to the original answer of Stover or to that of his executor answering the bill of revivor, both are by settled chancery practice to be taken as conclusively true 'in all points,' whether responsive to the bill or not; the reason of this being that the plaintiff, by not replying, has excluded the defendant from the opportunity of proving his averments.

II. Passing to the main case.

1. The bill was filed August 9th, 1869, for the purpose of setting up a deed of trust that had been paid and satisfied in December, 1862, nearly seven years before, on the ground that payment had been made in Virginia bank notes and Confederate money, to an agent, without authority. It admits that the deed of trust was left with Chilton, as the attorney at law of the complainant, for record, and the bond, which it was given to secure, 'for collection at its maturity.' Chilton died in 1867. The complainant did not disavow, or object to such payment, before the death of Chilton; nor did he do so at all before the commencement of the suit, at least two years after he had full knowledge of the fact and manner of payment.

2. Chilton, who received the payments and satisfied the deed of trust, had authority to receive payment. The whole case shows this. The bill itself states so. He was the trustee in the deed of trust.

3. It is contended that if there was an agency, it was put an end to by the fact of Chilton's being in an enemy's country during the war. But this is not true. 'A person may have an agent in the enemy's country to collect debts due to him, and to preserve his property there.' The fact that it may have been illegal to remit, did not make it so to receive. In addition, Chilton was trustee as well as agent. He was not only the proper person to satisfy the deed of trust, but he was the only one who could do so.

4. But, it is denied that Chilton had authority to receive in payment Virginia bank notes or Confederate currency.

In Hale v. Wall, payment of bonds in Confederate currency and Virginia State bank notes, to an agent, under circumstances similar to those of this case, was held to be a good payment, 'in the absence of instructions from the principal, not to receive such money.'

The peculiar circumstances of this case have an important bearing upon the rule of law as to such payments. In Fauquier County, Virginia, such currency was, at that time, the only currency in circulation. It was in constant use; and by that standard contracts were made, and all the business of society carried on. Payments were constantly made in such currency; and, in this respect, it was like the notes of banks, with which all business had been carried on, and which were always regarded as good payments, unless objected to at the time.

The bill of complaint is framed upon the theory that the payment, made as it was, was the result of conspiracy between Stover and Chilton to defraud Fretz. This is denied by the answer, and there is no proof in support of the charge. The circumstances under which such payment was made show entire good faith. Mr. Chilton was an upright lawyer, as is shown, primarily by the fact that implicit confidence had been placed in him by Fretz himself.'

The only testimony in the case is that of Fretz, the husband, a party to the case, and a party embittered by long-waged litigation. Such testimony is really of little value. If Chilton were alive, and we could have the benefit of his testimony, a very different state of facts might appear from that attempted to be made by Fretz, and on his making of which his only hope of recovery depends.

Mr. Justice DAVIS delivered the opinion of the court.