May v. Le Claire

THIS was an appeal from a decree of the Circuit Court of the United States for Iowa, dismissing a bill filed by one James May against the executors of Antoine Le Claire and others.

The evidence in the case showed apparently the following leading facts, viz.:

1st. That May and Le Claire had, previously to February 4th, 1859, been associated in business, and that they then had mutual claims against each other.

2d. That on that day May made to Le Claire a written offer of compromise, which, about two months afterward (March 8th, 1859), was accepted by Le Claire, in writing, which acceptance was witnessed by his attorney and counsel, John P. Cook, Esquire.

3d. That this compromise consisted in a settlement and cancellation of their mutual claims by an exchange of property of unequal values, whereby May was to be paid his claim against Le Claire by the difference in value between the property which he was to give and the value of the property which he was to receive, that difference being about $27,000.

That the particulars of the compromise were these:

May was to release all claims against Le Claire and convey to him, free from incumbrance, a farm called Rosebank, within twelve months; Le Claire was to release all claims against May and convey to him his interest as mortgagee in certain lands which he had sold to one Adrian H. Davenport; that is to say, to assign to May five notes of $5000 each, with the mortgage given by Devenport, and also to convey certain island and river-shore lands owned by Le Claire, below the town of Le Claire, in Iowa.

That at the date of the agreement the Rosebank farm, which May agreed to convey to Le Claire freed from its incumbrances, was incumbered--(a) By a mortgage to one Kettell, for $3125, payable November 1st, 1867.

(b) By a trust-deed to one Powers, to secure $6550, payable May 1st, 1858; overdue, therefore, like the mortgage, at the time of the compromise; this deed containing a clause authorizing Powers, the trustee, to sell the land if the amount was not paid at maturity.

4th. That in part performance of the contract on his part, May gave to Le Claire immediate possession of Rosebank, through his nephew and business agent (one Joseph A. Le Claire), and also executed and deposited with Cook & Sargent, bankers at Davenport, a deed, conveying the farm to Le Claire.

5th. That in part performance of the contract on his part, Antoine Le Claire also assigned to May the notes, mortgage, and collaterals of Davenport, and deposited them with Cook & Sargent. That this assignment was declared to be 'in consideration of an amicable and full settlement between said May and myself of all matters of difference heretofore existing between us;' and was witnessed by Cook, already named, the attorney and counsel of Le Claire.

6th. That Le Claire, at the time and for a short time afterwards, was satisfied with the compromise, but afterwards became dissatisfied.

7th. That in the meantime, to wit, April 12th, 1859, Davenport offered in writing to make a settlement with May by paying him part of the liabilities of him, the said Davenport, which had already been assigned by Le Claire to May. That this offer was not accepted.

8th. That in the spring of 1859, May, in further execution of the contract on his part, entered into negotiations at Pittsburg, where he had once lived and was known, by which he was to obtain the means to enable him to remove the incumbrances now overdue upon the Rosebank farm; that the means thus provided were approved bankers' drafts. That while he was absent at Pittsburg Rosebank was advertised by Powers, the trustee, for sale, on the 20th of July, under the deed of trust, Cook urging this on and stating to Powers that the 'compromise' was very unjust to Le Claire, who, he said, on the facts, truly understood, had owed May nothing on a settlement; that he, Cook, wished to break it up; feeling himself bound as the friend and attorney of Le Claire to protect him as far as possible against so gross an imposition. That on the day, and near the hour advertised for the sale of the farm, May and a Pittsburg friend called on Powers to make arrangements to pay the said incumbrances, and were informed by Powers that the drafts would be satisfactory and that the sale should not take place. That while May was thus in conversation with Powers, a note written by Cook was handed to Powers, who then stated that he was called out on other business, excused himself and went away; that on Powers thus withdrawing from the company of May, he joined Cook, and the two went to the court-house (without May's knowledge) and there sold the farm under the trust-deed at auction, subject to the mortgage, striking it off for $5000 to one Dessaint; a deed having been already prepared by Cook with a blank for the purchaser's name; now filled in with Dessaint's.

That previous to this sale, Cook had told Powers that he need not have bidders there; that it was unnecessary to bid against him (Cook) or Dessaint, who Cook said desired to purchase, and that if the property was struck off to either for less than the amount due both on the trust-deed (now $7400) and mortgage, he, Cook, would see both the debts paid in full. That the balance due on the trust-deed was thus afterwards paid, and that on the 28th of July, 1859, Powers sold to Cook the mortgage of May to Kettle, taking in payment Cook's own note for $3255.87, indorsed by Le Claire and one Ebenezer Cook, and that Cook sued May on the note in the Circuit Court of the United States for the Northern District of Illinois and obtained a judgment. That May complained to Powers, and to others, of the mode in which Rosebank had been sold, and that Powers promised to annul the sale on payment of the debt, and did in fact apparently make some efforts to induce Dessaint to give up his bargain; which, however, Dessaint refused to do, saying that he had bought the farm to keep.

9th. That the said farm was now held by one Joseph A. Le Claire, Junior, by an apparently free and unincumbered title, as the assignee of Antoine Le Claire.

10th. That this had been accomplished by what the complainant called 'a circle of conveyances,' as 1st, a quit claim deed from Dessaint to Ebenezer Cook, dated July 27th, 1859; 2d, from Ebenezer Cook to one George L. Davenport, by deed dated December 16th, 1859; 3d, from George Davenport to Joseph A. Le Claire, Junior, by deed with special warranty only, dated January 23d, 1862, made in pursuance of a written contract of Antoine Le Claire with his nephew, Joseph A. Le Claire, Senior, dated November 21st, 1860, and in consideration of the payment, by the estate of Antoine, of two notes of E. Cook for $10,000, the payment of which was assumed, or alleged to have been assumed, by the said George Davenport.

This, in the complainant's language, 'completed one circle of operations.'

11th. That, on the other hand, Antoine Le Claire, on the 9th of March, 1860,-one day after the expiration of the twelve months within which May, by the terms of the compromise with Le Claire had bound himself to convey Rosebank unincumbered to him, Le Claire, offering to convey what he, on his part, was bound to convey, made a curt written demand on May for 'a good and sufficient deed for Rosebank, and that all the incumbrances, judgments, and liens of every character be removed from said Rosebank, so that I get a clear, perfect, and unincumbered title therefor.' [Rosebank, as the reader will remember, having at this time been sold some months before under the deed of trust.] That shortly, to wit, seventeen days afterwards, to wit, on the 27th of March, 1860, Le Claire entered into a written contract with Adrian Davenport, by which it was agreed that he, Le Claire, should resume title and possession of the property sold and conveyed by him to the said Davenport; that the notes given by Davenport should be cancelled and he discharged from liability, and that, as a means to this end, Le Claire should proceed to foreclose his mortgage and buy in the property at the sale under the mortgage; it being agreed that if at the foreclosure sale the property should sell for more than the amount of the notes and interest, Davenport was to have the overplus; if for less, the notes were to be given up; that if Le Claire should acquire the title as proposed, he agreed to confirm the sales of certain parts of the property which Davenport had made; a map being referred to as showing the premises so sold. That Davenport assigned to Le Claire and placed in his hands notes of his vendees for part of the purchase-money, amounting, with interest, to about $16,000; Davenport stipulating that there were no offsets against any of the notes, except two of trifling amount, which were mentioned, and that if it should prove there were any valid offsets, he would pay the amount to Le Claire, and Le Claire agreeing that, upon the payment to him of the balance of the purchasemoney by Davenport's vendees, he would convey to those holding title bonds from Davenport.

That, accordingly, in April, 1860, proceedings to foreclose the mortgage were instituted by the said John P. Cook; that to facilitate the proceedings, Davenport admitted the allegations of the bill, and a decree pro confesso was entered against him and subsequently liquidated at the sum of $41,708.32. That all this was done without notice to May; and that, under this decree, the mortgaged property was subsequently sold and conveyed by the sheriff to Le Claire for $20,000.

This completed what the counsel styled 'the other circle of operations.'

Thus by what the complainant styled 'the joint effect of two parallel series of operations,' Le Claire became possessed of both of the equivalents agreed to be exchanged between him and May, by the compromise of March 8, 1859, in payment of the admitted debt of about $27,000 from him to May; that is to say: Le Claire had paid his debt to May in full; he, or his relative, Le Claire, Junior, held Rosebank by a free and unincumbered title; he still held the island and river-shore property below the town of Le Claire; and had got back all the Davenport property, which he agreed to convey, and did convey, to May.

May, on the contrary, had nothing as the result of the whole operations except a suit in chancery.

Still the great question of the case remained, whether what had occurred was the result, on the one hand, of Le Claire's superior attention and vigilance, within proper limits, and of an unembarrassed condition as to money; and on the other, of May's supineness, bad arrangements, and embarrassed condition; whether the combination of persons was purely accidental, or whether there was contrivance and design; in other words, whether each part was so connected with the whole, that, taken together, they furnished clear evidence that the result was contemplated from an early date, and that after the compromise had been made in good faith, and partially executed by both parties, the plan to break it up was conceived as an afterthought by J. P. Cook, a lawyer, and executed under his direction by Powers, Dessaint, Ebenezer Cook, the two Davenports, and the two J. A. De Claires, Senior and Junior?

Especially arose the question, how far had Antoine Le Claire, who the case rather showed was an old and perhaps illiterate half-breed Frenchman-part Indian-an interpreter in early times, who had grown rich by the growth of a large town, on land granted to him many years since by the bounty of the United States-how far had he originated the scheme, if it was one; or, if not originating it at all, how far was he to be affected by what was done by J. P. Cook and the others, assuming that what they did was a fraudulent scheme successfully carried out?

This was a matter depending largely on the relations subsisting between J. P. Cook, old Le Claire, and the various parties already named.

As to that matter, it appeared,

1. That Powers, the trustee who sold Rosebank, was a banker; that the firm of J. Cook & Sargent, which was composed of the lawyer J. P. Cook, his brother, Ebenezer Cook, and one Sargent, were also bankers; that Powers was in the habit of borrowing money from Cook & Sargent, and so under obligations to them pecuniarily.

2. That Antoine Le Claire had no lineal descendants; and that Joseph Le Claire was his nephew and business agent, occupied the same office with him, and, under the permission of Antoine Le Claire, was in the actual occupation of Rosebank, after the agreement of May and Le Claire, receiving the rents.

3. That George Davenport and Antoine Le Claire were intimate in their business relations, indorsers for each other, and both of them indorsers for Cook & Sargent to a considerable amount, and also indorsers for Ebenezer Cook.

4. That Dessaint was a Frenchman and an intimate friend of Le Claire, and in the habit of lending him money.

5. That Ebenezer Cook, Antoine Le Claire, George Davenport, and Dessaint, were associated in business as stockholders and directors of the State Bank.

6. That Cook & Sargent having failed, George Davenport was one of their assignees, and that Antoine Le Claire had appointed him by will one of his executors.

7. That John P. Cook was the agent and attorney of Le Claire; selected by him as the custodian of the papers relating to the matter in controversy; the subscribing witness, as already said, to the compromise agreement of March 8, 1859, and to the assignment to May, dated March 10, 1859; drew and dated the agreement, March 27, 1860, between Le Claire and Adrian Davenport, in regard to the Davenport mortgage; was one of the attorneys who, on the 24th day of April, 1860, commenced the action for Le Claire to foreclose the Davenport mortgage, and procured the decree; as attorney, held the collaterals until after Le Claire's death, and delivered them to the executor; as attorney of Le Claire, attended the sale of the mortgaged property under the decree in favor of Le Claire v. Davenport, and after Le Claire, the nephew, bid off the property, that he directed the deed to be made to Antoine Le Claire.

8. That at the time, 16th of December, 1860, when Ebenzer Cook (as already mentioned on p. 221), conveyed Rosebank to George Davenport, the judgment in favor of John P. Cook against May (mentioned on p. 220), was assigned to Davenport; the consideration, according to the statement of Davenport, having been that he agreed to pay a bill and note of Ebenezer Cook, on which he and Le Claire were liable as accommodation indorsers, both bill and note dated 20th October, 1859; maturing, respectively, three and four months from date, and both renewed by Davenport and Le Claire, Davenport admitting that Le Claire had paid at that time $1000 upon one of them.

9. That, in these money operations, the relations between some of the parties named, if not all, were quite confidential. For example: before their failure, Cook & Sargent, on the 21st of August, 1858, 'in consideration of $70,000, executed to Antoine Le Claire a mortgage upon a large quantity of real estate.' The mortgage recites that Le Claire had accepted various sums for their accommodation, and proposed to indorse and accept other and further sums for them, with the view of enabling them to borrow money on such acceptances. The condition was that they should pay these liabilities, and save Le Claire harmless. On the 22d of December, 1859, after their failure, they sold and assigned to Le Claire the banking-house of Cook, Sargent, Downey & Co., in Iowa City, and all the assets of that firm. The deed recites that Le Claire 'had made and executed certain notes, drafts, and acceptances for the accommodation of Cook & Sargent, and was now liable to pay the same.' No condition or trust was expressed. On the 12th of December, 1860, in consideration of $15,000, they assigned to George Davenport their interest in the assets of the firm of Cook, Sargent & Parker, of Florence, in the Territory of Nebraska, and covenanted that the interest thus transferred was worth $15,000. On the 2d of July, 1861, by a deed, absolute on its face, Le Claire conveyed to Dessaint a large number of tracts of land. An article of agreement, dated the 15th of the same month, recited, however, that the prior conveyance had been made in trust to enable Dessaint to sell and pay a debt of Le Claire to the Merchants' Branch of the State Bank of Iowa, and Dessaint stipulated that, after accomplishing this object and paying the expenses of the trust, he would reconvey to Le Claire.

Le Claire himself being dead, leaving a life interest in his estate to his wife, Marguerite (who with the George Davenport already named were found to be executors), and the remainder to collaterals, residents some abroad, May now filed this bill against both the executors, the two Cooks, Dessaint, Sargent, and such collateral devisees of Le Claire as he could reach (these being about half of those inheriting under the will), praying for specific performance, or alternatively for compensation in money, by way of substitution; and for such other relief as the court might see fit.

The case came here on a printed transcript of 612 pages; a confused mass of papers and record entries thrown together without regard to order or method. It appeared to have been originally made up by the clerk of the court below, or his deputy, for transmission to this court in twelve separate parcels, not inappropriately described in the clerk's certificate as a 'bundle of papers.' Many of the exhibits, together with certain accounts produced or identified by the witnesses, appeared in the transcript entirely separated from the depositions of which they formed a part, and without anything to connect them therewith.

Notwithstanding the character of the transcript the case was presented with clearness, and was elaborately argued by Mr. J. A. Wills, for the appellant, and by Messrs. M. H. Carpenter and J. N. Rogers, contra: Mr. Wills contending that it was not necessary to go into minute particular facts to infer fraud; that the case was one which it was impossible to view, even in outline, as a whole, without seeing a fraudulent contrivance-argued that the fraud being unkennelled, equity would certainly, in some form, grant relief; that if specific performance could not, in the complications which, with time, deaths, transfers of property, absence of parties defendant, &c., be decreed, and if the fraudulent proceedings should thus of necessity have to stand, then that taking things, though fraudulent, on the base where the parties had put them, Le Claire's estate could be followed for the fruits of them in the hands of his executors, and so made to respond.

The counsel of the other side, asserting that the proof of fraud consisted only in an artful collocation of facts, and denying that fraud was proved, and especially that there was anything to show that, in this matter, Cook had acted as agent of Le Claire-so as to charge Le Claire's estate with a fraud committed by attorney-contended that the bill was defective in not bringing in all Le Claire's devisees; that specific performance was almost confessedly impracticable, and that if compensation in money was asked, the case became a claim for damages, and a case therefore for law, not for equity; that even if a case for equity, May had lost his rights by supineness in not paying off the overdue trust-deed incumbrance, time being of the essence of his contract to Powers under the trust-deed; but that if this was not so, and if he still asserted rights in Rosebank, he should file a bill to redeem.

Mr. Justice SWAYNE delivered the opinion of the court.