Hughes v. Blake

APPEAL from the Circuit Court of Massachusetts. The object of the bill in equity filed in this case, was to recover from the defendant, Blake, a sum of money arising from the sale of a tract of land, called Yazoo lands, alleged to have been made in 1795, by the defendant, as agent of certain persons named in the bill, in which lands the plaintiff, Hughes, claimed an equitable interest, in common with the immediate principals of the defendants, and, therefore, to be entitled to a proportion of the proceeds resulting from the sale. The bill also charged, that the defendant had rendered himself distinctly liable for a specific sum of money, in virtue of a certain order, having reference to the plaintiff's interest in the lands, drawn by one Gibson, in September, 1796, in favour of the plaintiff, and accepted by the defendant, with certain modifications and conditions, as particularly expressed in the acceptance. The defendant pleaded in bar, both to the relief and the discovery sought by the bill, a former verdict and judgment at law rendered in his favour, in the Supreme Court of Massachusetts, in the year 1810, upon a suit commenced against him by the present plaintiffs, in 1804, being long before the exhibition of the present bill, for the same cause of action. The plea averred, that the judgment at law was still in force; that the matters in controversy, and the parties in both suits, were the same; that the whole merits of the case, as stated by the bill, were fully heard, tried, and determined in the action at law, and in a Court of competent jurisdiction; and that the judgment was obtained fairly, and without fraud, covin, or misrepresentation, or the taking any undue advantage. It was also averred by the plea, that no evidence has come to the plaintiff's knowledge, since the trial at law, respecting any of the facts alleged in the bill, and which he did not, or might not have produced on such trial: and further, that the defendant has at no time, as alleged in the bill, obtained of a certain E. Williams, any allowance or payment, for, or on account of his, the defendant's, being liable as bail for Gibson, in the plaintiff's bill mentioned, and for which liability he has claimed in the action at law an indemnity out of a fund on the credit of which he had accepted the order in favour of the plaintiff. The defendant, then, without waiving his plea, proceeded to answer and deny the matters alleged by the bill, as circumstances of equity to avoid the effect of the proceedings at law, and which he had already denied by the averment in his plea. To this plea and answer the plaintiff filed a general replication in the usual form, and witnesses were examined by both parties. At the hearing, the identity of the causes of action were sought to be established, without the aid of collateral proof, from a comparison of the matters set forth in the bill, with the averments contained in the several counts of the plaintiff's declaration; it appearing, moreover, that, in the trial at law, the plaintiff had submitted to the jury, in support of these counts, the depositions of the same witnesses, on whose evidence he relied, in support of his bill. The principal other question of fact related to the subject of the negotiation respecting the lands before mentioned, alleged in the plaintiff's bill to have taken place in 1814, between the defendant and E. Williams, whose testimony respecting it, was insisted by the plaintiff not to be sufficient to outweigh the effect of the positive denials contained in his plea and answer. The cause being heard on the issue joined, and the proofs taken in it, the Court below decreed that the plea was sufficiently proved, and therefore dismissed the bill with costs, and the cause was brought by appeal to this Court. February 19th. Mr. Pinkney, for the appellant, stated three questions for the consideration of the Court: (1.) Whether the plea was in itself sufficient, supposing its sufficiency to be now an open question? (2.) Whether it has been proved? (3.) Whether its sufficiency, supposing it to be proved, is now open for inquiry? The first of these questions being answered negatively, and the third affirmatively, would produce a reversal of the decree: and let them be answered as they might, if the second be answered negatively, a reversal would equally follow. 1. The plaintiff's allegations must be taken to be true, except so far as the averments in the plea, and the answer in support of the plea, deny them. Coop. Eq. Pl. 231; 2 Atk. 155; Gilb. Ch. 158. And if the plea does not deny whatever is alleged, and if true, would make the plea no bar, it is no plea. Coop. Eq. Pl. 226, 266. The result of an examination of the allegations in the bill will be found to be, that the defendant was the legal owner of the notes taken for the sale of the lands, by taking and holding them in his own name; that the plaintiff, and the other persons interested, were cestui que trusts according to their respective interests, explained and known to the defendant; that the defendant's conditional acceptance of the order in the plaintiff's favour, so far as it affected to authorize him to apply the plaintiff's interest as an indemnity for his liability as Gibson's bail, being without the plaintiff's consent, did not destroy the defendant's character of trustee. That when he afterwards sold the plaintiff's interest, (it being still a merely equitable one in the view of Chancery, the conditional acceptance being of no force in equity,) in order to apply the money to the wrongful purpose of the conditional acceptance, the defendant still remained answerable, in equity, upon the foundation of the original trust. That the defendant knew all the material facts charged in the bill, out of which arose the trust, and breach of trust, and his alleged continuing accountability. That the defendant, insisting upon thus misapplying the money, the plaintiff, mistaking the proper forum, sued the defendant at law, and a verdict and judgment passed against him; and the bill charges the defendant's breaches of trust, and abuse of his power as legal owner in taking advantage of the plaintiff, and the impossibility of his obtaining a full and fair trial of the whole merits at law, as reasons why the verdict and judgment should not be suffered to prevent relief in equity. The defendant, notwithstanding all this, pleads the verdict and judgment in bar of the relief and discovery. The plea leaves uncontradicted whatever in the bill showed a mere equitable trust, and undue advantage taken of the defendant's character of legal owner and holder of the fund. Since, then, the plaintiff could obtain relief no where, but upon the mere trust, which was properly cognizable in Chaneery; and even if it were barely possible that a Court of law could relieve, and that great difficulties only stood in the way arising out of the nature of the subject, his miscarriage at law ought not to oust a Court of equity of its power of relief in a matter appertaining to its jurisdiction. It cannot be denied on the other side, that a judgment at law may be relieved against in equity upon equitable inducements of various kinds. Cases of this sort furnish the familiar and ordinary business of the Court of Chancery. Coop. Eq. Pl. 141; Tothill 231; 1 Ch. Cas. 56. The only question, therefore, is, upon what grounds will it relieve? I admit, with Lord Chancellors Eldon and Redesdale, that mere inattention, omission, or neglect, however fatal the consequences may be, shall not of itself be a ground of equitable relief against a judgment at law. Ware v. Harwood, 14 Ves. 31; Bateman v. Willoe, 1 Sch. & Lef. 201. But where the matter is cognizable in equity, although also cognizable at law, and effectual cognizance has not, and cannot be taken at law, Chancery will relieve against a judgment at law; especially if the matter is better adapted to equitable cognizance, and forms a favourite subject of that jurisdiction. The instances put by Lord Redesdale of cases in which equity will interfere, although a verdict and judgment have been obtained at law, are only put by way of example. 1 Sch. & Lef. 204. They are not all the excepted cases: and the case actually before him, where he refused to interfere, was a case of crassa negligentia on the part of the defendant at law. If there has been no such gross negligence, and if the Court of law be not only of competent jurisdiction, but competent to do justice in the case, from the nature of the subject, and its mode of proceeding, doubtless its judgment is conclusive. But this does not exclude the right of equity to control the judgment of a Court of law, for equitable purposes. It is no just reproach to a Court of law, that it cannot do complete justice in all cases where it may have jurisdiction. The question is, whether it has adequate jurisdiction: and if it has not, equity will and ought to interfere: as in the case of a bond given for the purchase money of lands, and a suit at law brought upon it; and after judgment, a fatal defect discovered in the title; a Court of equity will enjoin and relieve against the judgment, although it has no natural jurisdiction over a suit brought for a specialty or simple contract debt. In the view of a Court of equity, a party who elects an incompetent forum, is not concluded by its judgment. The question still recurs, had he, and could he have justice there? The terms of the averment of the present plea, are also important to be considered. The plea alleges, that the merits were fully and fairly tried. But if it appears that, in the nature of things, there were inherent difficulties in opposition to a full trial of the real merits, the plea cannot be true. The general rule, that whatsoever might have been, and was litigated at law, is concluded, need not be denied, if taken with this qualification, that it be fully and fairly litigated, and there be no equitable reason why the judgment should be set aside. But if there be new evidence discovered, or fraud, or an unconscientious advantage taken by the opposite party, or matters of equity which a Court of law could not effectually investigate and decide, then the judgment at law is not conclusive. Let us now see whether this case, as it appears on the bill, and the record pleaded as a bar, was properly and effectually relievable at law. And, in order to do this, it is necessary to examine the counts of the plaintiff's declaration in the suit at law, which a Court of equity will do with a hypercritical eye, when it becomes necessary to inquire whether a judgment of a Court of law is fit to bar its own jurisdiction. It does not act on such an occasion as an appellate Court: but it looks to the case with a view to see whether justice could be effectually done by the Court of law. Lord Redesdale, in the case before alluded to, inquired what was open before the jury (1 Sch. & Lef. 204); and an examination of the counts in this declaration has the same object, and the further object, to ascertain whether any judgment could have been recovered upon them. The learned counsel here entered into a minute analysis of the counts, in order to show that complete justice could not be done in the action at law, upon the equitable merits of the case, considered as a case of trust, complicated accounts, and fraud. The original trust was never tried, and could not be tried. A declaration could not be framed to try it fully and effectually. A complicated account may indeed be examined at law. There is no defect of jurisdiction: but there is an insurmountable difficulty in doing justice. A Court of law is not adapted, although it has jurisdiction, to arrive at a just result on such a subject: and as matters of account are a proper subject of equitable jurisdiction, equity will interpose on the mere ground of that difficulty, notwithstanding there has been a trial at law. The want of the defendant's oath, which this bill, in seeking relief, calls for, was alone an insurmountable obstacle: This is not a bill for discovery merely; if it was, it could not be maintained; for then it would not be a case for equitable cognizance, and the plaintiff should have come here for a discovery during the lis pendens at law. But although it is a bill for relief, discovery is most important to that relief. The relief was always in the power of a Court of equity, and one of the reasons why this Court ought not to be satisfied with what has been done at law, is, that at law, there could be no discovery. The examination into the trust, and its abuses, could not be complete without the defendant's oath. If the plaintiff had come into equity seeking discovery and relief, while the suit was depending at law, the Court of equity would have taken the whole cause under its care, and would have determined it as now required to do: and the principle is not altered by the suit at law having proceeded to judgment, since the cause has not yet been decided upon the defendant's oath. Where a bill alleges that a verdict has been obtained, on a matter of equitable cognizance, against the defendant's knowledge of the merits, a reliance upon such verdict is as much against conscience as to that defendant, as the alleged breach of trust itself. In this case, the plea is no bar to the relief, if the defendant's knowledge makes the verdict unconscientious. A judgment may, indeed, be pleaded in bar, where the matter has been fully tried, and where the judgment is not impeached through the conscience of the defendant. If the bill alleges nothing, that if true, convicts the defendant of knowledge that his verdict is against conscience, the plea is good. But a Court of equity ought not to relinquish its jurisdiction, until the defendant has maintained the verdict, on a matter of equitable cognizance, by his oath. 2. It has already been shown, that the merits of the cause could not have been fully and fairly tried at law, and the judge's charge shows that they were not. But it is said that the plaintiff ought then to have moved for a new trial: and certainly upon a matter which a Court of law only had a right to dispose of, this would have been the proper course: But this is a matter of equity, and if the party will set up a trial at law as a bar to equitable relief, he must show it, as he alleges it to be, a full and fair trial, and that the equitable merits were really left open to the jury. 3. But supposing the plea to be proved, is its sufficiency now open for inquiry? And certainly the general rule would exclude that inquiry: pleas are not usually forestalled by the bill: but if the bill shows what, if true, would invalidate the plea, taking issue on it does not cure the defect. Coop. Eq. Pl. 227. But, it has been before shown, that this bill does allege such matter, and the plea admits the whole of it by not denying it. It is true that the defendant cannot amend his plea, but he may be ordered to answer, reserving him the benefit of his plea at the hearing, and in that mode justice will be done.