Union Bank of Georgetown v. Geary

Appeal from the circuit court of the district of Columbia for the county of Washington.

Anna Geary, as administratrix of her husband Everard Geary, filed her bill in the circuit court, in which she sets forth, that her intestate some time before his death became security on a note which was discounted for the accommodation of J. Merrill, at the Union Bank of Georgetown, for a large sum of money, which was continued from time to time, by a renewal in the usual way, for the accommodation of Merrill, until the death of her intestate. Subsequent to his death, suits were instituted in the circuit court upon the note, against the drawer and indorser; and she was called on by the counsel and attorney of the bank, and requested to confess a judgment on the note, and was at the time assured, by the attorney, that if she did so, and did not dispute her liability upon the note, the bank would immediately proceed by execution to make the amount thereof from the principal debtor, Merrill; who, he assured her, had sufficient property in the country to satisfy the same: and he, advising her that she would be thus saved from liability for the debt, prevailed on her to make no defence against the suit at law, but voluntarily to confess a judgment thereon, for the amount of the debt, principal, interest, and costs.

The judgment was confessed for four thousand dollars damages and costs, to be released on payment of two thousand dollars with interest from 24 January 1815 until paid. Various payments from May 30, 1815 until August 6, 1816 were made by Merrill, amounting to seven hundred and fifty-three dollars and thirty nine cents.

The complainant charges, that at the time of confessing the judgment, a valid legal defence existed against the suit, which would have defeated the plaintiff's right to recover on the indorsement; the plaintiffs not having made the due and legal demand, and given due and legal notice, so as to bind the indorser: that the attorney of the bank well knew the same, and therefore, and to prevent complainant from contesting the suit, made the proposition before stated.

The bill further charges, that when the judgments were obtained against Merrill and the complainant, on the note, Merrill resided in Georgetown, and had then and there sufficient property to satisfy and pay the judgments, and the same might then and for some time afterwards, have been recovered by process of execution, issued either against the body or the goods of Merrill. Complainant repeatedly and earnestly called upon the plaintiffs, and urged them to issue execution against Merrill, and recover their debt, according to the agreement and understanding upon which she had confessed judgment. The plaintiffs, however, continued to indulge Merrill for a long space of time, and, notwithstanding all the remonstrances of the complainant, permitted him to leave the district, and take with him all his property beyond the process of the court; nor have they taken any effectual and proper means to recover the debt from said Merrill, as bound by their agreement to do. Merrill is now, as the complainant is informed and believes, in insolvent circumstances. And now, that by their misconduct and breach of faith, they have lost the means of recovering the judgment from Merrill; the plaintiffs, most unjustly and unreasonably, demand payment of the same from the complainant, and threaten to proceed against her on said judgment, which she believes they mean to do.

The answer of the defendants below, which was filed under their corporate seal and was not sworn to, admits that Merrill did borrow the sum of two thousand two hundred dollars, upon his promissory note indorsed by Everard Geary, and avers that the loan was made exclusively on the credit of the indorser; Geary having proposed himself as security of Merrill, whom he was anxious to assist and benefit by indorsing his note. The answer alleges that the needy circumstances of Merrill were well known to the defendants and to the indorser; he never had sufficient property to pay his debts, and that the indorser was known to be in good circumstances, and of ability and willingness to discharge his debts and responsibilities. During his life time the indorser frequently promised to save and protect the bank from any loss on account of Merrill's inability to meet the note; and had he lived, he would punctually have complied with such promises.

Upon the death of E. Geary, his administratrix, the complainant, refused to pay the note when it became due, and suffered the same to be protested; and it became necessary for defendants to institute suits against the drawer and indorser; upon which suits judgments were obtained in December 1817.

As to so much of the bill as charges any persuasion or agreement by the attorney of the bank, the defendants deny the same; and aver that the judgment was not obtained voluntarily, the complainant having appeared to the suit, and contested the same in every stage until the trial term; and when defendants were prepared with all necessary proof, and the case actually called for trial, the attorney of complainant, knowing that he had no good and valid defence, confessed the judgment.

The defendants deny that they ever authorised or directed their attorney to hold out any inducements to the complainant to confess the judgment, or to make any such persuasions and promises as are set forth in the bill; and they aver that such persuasions and promises would have been wholly superfluous and unnecessary, as the complainant was legally and justly liable and bound to the defendants for the payment of the debt, and was then better acquainted with the situation of Merrill than the defendants or their attorney.

They deny that the complainant had any valid legal defence to the action; but aver that payment of the note was legally demanded, and that due notice of non-payment was given. But whatever defence the complainant might have had, which is denied, the defendants insist that she has waved any such legal or technical defence, and omitted to protect herself thereby at law, and cannot now avail herself of the same in equity.

They deny that when the judgment was obtained, or at any time afterwards, Merrill had sufficient property unincumbered whereon execution could have been levied and the money made; and they believe that had they issued an execution against his body, it would have involved a useless increase of costs, as they believe he would have taken the benefit of the insolvent law; they deny that they have been remiss and inattentive in obtaining payment from Merrill; on the contrary they aver that by their active exertions they did obtain payment from Merrill eight hundred and fifty-three dollars which otherwise never would have been paid. They deny ever having granted indulgences to Merrill without the knowledge, consent and concurrence of the complainant; or that they permitted him to leave the district and take his property with him, or refused to take proper and efficient measures to recover their judgment from him.

The answer also states, that whenever they called upon the complainant to pay the debt, they were ready and willing to make an assignment of the judgment against Merrill, and repeatedly offered to do so before he left the district, which was refused.

On the answer being filed, the circuit court, on motion, dissolved the injunction; and the complainant having filed a general replication, the testimony of various witnesses was taken; and upon a final hearing, the court revived and perpetuated the injunction. From this decree an appeal was entered.

The substance of the depositions is as follows: Daniel Renner, a director of the bank, says, that he was called on by Mrs Geary to get the Union Bank to have an execution issued against Merrill, before Merrill left the district. He made the application to the board. No answer was made, or, if any, to this effect: that they were not bound to press Merrill; that Mrs Geary, if she pleased, could pay the judgment, and then adopt such course as she pleased. He is not certain whether this suggestion came from the board or from some of them out of the bank. Mrs Geary made frequent applications to him to get execution issued against Merrill before he left town; and he several times spoke of it to the board.

G. Cloud stated that all the knowledge he had of the judgment, was from the conversations between the cashier of the bank, Renner, Merrill, and Wiley, the attorney of the bank, and Mrs Geary. He well recollects the conversation between Mrs Geary and Mr Wiley on the subject of her confessing judgment; and understood from the conversation of both of them, that if she would agree and confess judgment, she was to be cleared, and the money to be made out of Merrill's property, as he (Wiley) said he had ascertained that Merrill had property sufficient to satisfy the debt, which was clear of incumbrances; and that it was expressly on these conditions that she confessed judgment.

He heard Mrs Geary tell Mr Wiley, that he had promised that if she would confess judgment, it would be better for her, as he would have the execution levied on Merrill's property; and it would clear her from paying the debt, as Merrill had a sufficient property clear of incumbrance: which he admitted he had told her, but that the fault was not in him, but in the directors of the bank. He did not think that she was in danger of paying the debt; for he thought they would still get it out of Merrill. Merrill had considerable property in his possession when he left the district; but the witness did not know his title to it. He heard Mr Wiley say he had ascertained that it was clear of incumbrances; and that he had sufficient to satisfy the judgment. He heard Mrs Geary tell Mr Wiley she never would have confessed judgment if he had not told her that he would clear her by instantly levying on Merrill's property; and that she verily believed it was in his power to have the execution levied at his will-which he admitted.

The reason assigned by Mr Wiley was, that the directors of the bank would not suffer the execution to issue, as they knew their debt was safe, and did not wish to break up Merrill. The witness also stated that he knew of frequent applications by Mrs Geary to Wiley to have execution issued, and went frequently himself on that business; but they would not suffer the execution to issue. One of the directors advised Mrs Geary to pay off the judgment, and then the bank could not prevent her from having the execution issued; but she could not procure the money to do so. He has heard Mr Renner say that the directors did not use Mrs Geary well by withholding the execution, and suffering Merrill to leave the district; and that he had done what he could to have the execution issued, but to no effect.

E. Riggs, a director of the bank, stated that he does not remember any agreement between the bank or its officers, and Mrs Geary. He remembers a decision of the circuit court exonerating indorsers upon a fourth day protest. He remembers that complainant, or some person for her, made application to the board to call on Merrill for the debt, and press him for payment. The reply of the board (made by Dr Magruder, as well as deponent recollects,) was, that Merrill was not then able to pay, but was about to remove where he would probably be more able to pay; but that complainant, if she chose, might pay the money, and have the judgment assigned to her; but the majority of the board did not feel themselves called upon to distress Merrill, by complying with her request. Some of the board thought differently; and thought that if she could make any thing out of Merrill's property, she should be allowed to do so. These were casual remarks, but no decision made. He thinks the application was made by Mr Renner, or by Mr English, the cashier. He was always opposed to the loan to Merrill; but was always answered that the indorser was sufficient.

David English, the cashier, states that he never knew of the agreement until the bill was filed, nor did he know, when the judgment was confessed, that the circuit court had delivered their opinion upon the insufficiency of a four days protest. It was determined not to issue execution against Merrill, but upon what grounds he did not recollect. It was said the board were willing to assign the judgment. The note fell due before the decision of the court relative to a four days protest. The practice of protesting on the fourth day was general with all the banks; and the indorser being a considerable dealer in the banks, was probably acquainted with it. The suit was in the hands of Mr Wiley.

James A. Magruder deposed that Mr Wiley was the attorney, or counsel, for the Union Bank, at the time the judgment was confessed by the complainant.

It was known to the bank, before the judgment was confessed, that many of their suits against indorsers for trial at that term, were in jeopardy, in consequence of the late decision of the court, as to the insufficiency of the demand and notice on the fourth instead of the third day of grace.

He understood from Wiley that he was authorized and requested by the bank, or some of its officers, to adjust all such cases, and get judgments confessed by the parties, so as to avoid such defences being made by the indorsers.

He was requested by said Wiley to call on several of the indorsers, and among others, the complainant, with a view to make such adjustment; and did advise her to see Mr Wiley, who was friendly to her, and would not advise her to do any thing against her interest.

The case was argued by Mr Swann for the appellants, and by Mr Coxe and Mr Jones for the appellee.

Mr Swann contended that the complainant had not made out a case for the action of a court of chancery. The allegations of the bill were denied in the answer; and these allegations did not exhibit facts which entitled the complainant to relief, nor were they supported by the testimony of witnesses.

The bank gave no authority to their attorney to accept a judgment on the terms stated; and the judgment was entered at the trial term, when the plaintiffs in the suit were prepared with witnesses to prove the liability of the administratrix in fact and at law; nor had the drawer of the note property to pay the judgment. His inability to pay the note was known when the loan was made; and it was made on the credit and sufficiency of the indorser.

The evidence by no means sustains the allegations of the bill. No two witnesses support the facts it asserts: and as the answer denies the bill, two witnesses are required to give the complainant a right to the injunction.

But if the attorney had made the promise which is averred by the complainant, such a promise would not bind the bank. As an attorney he had no such right; and no evidence is given that the bank gave the authority. Beecher's case, 8 Coke. 116. If the bank had made a promise which at the moment the judgment was entered avoided it, such promise would be nugatory, as being without consideration. A judgment imports an absolute and unconditional obligation to pay; and the evidence of this obligation is of the highest character, that of a record; but in this case it is to be invalidated by a parol agreement. A condition at war with a grant is void. So a condition at war with a judgment of record would be void.

The judgment was obtained in 1817; long before any decision relative to protests on the fourth day. The bill was filed in 1819, two years after the question was made. The complaint then was, that the judgment was not confessed on the ground that there was no defence; and the bill asks that the defence of want of legal notice may be allowed. But since that time it has been decided by this court, that the notice was legal; and now the complainant asks to be relieved from the debt altogether, by having the injunction perpetuated. Neither the law nor the evidence supports the claim.

Mr Coxe and Mr Jones for the appellee contended, that it was necessary to look at the time when the judgment was obtained. At that time great doubts were entertained about the regularity of a four days protest; and thus the arrangement made by the bank was one by which a benefit was supposed to be secured to the plaintiffs. The consideration for that judgment was the promise to proceed against Merrill; whose ability to pay the debt was declared by the attorney of the bank to have been satisfactorily ascertained. Thus it was not material whether the question of the legality of the protest had been decided.

Two witnesses are not required to sustain the allegation of a bill, when one witness and circumstances confirm them. In this case the statements of the bill are not denied on oath, the corporation having answered under its seal; and thus even the general rule cannot be applied to the case. 1 Cowen's Rep. 110.

Nor is the denial of the bank a denial of facts which they could have known. The bill charges the acts to have been done by the attorney. Maryland Rep. 283. 9 Cranch 153.

The facts of the case present merits which fully entitle it to the relief of a court of equity. The agent of the bank agreed to take the judgment on the condition that the debt should be collected from Merrill, who had property. It was positively stipulated that execution should issue immediately against that property; and the question is presented, whether the attorney could make such an agreement.

The bank acts only by its attorney. Wiley was the regular attorney of the bank, and is proved to have acted for them. The act done by him was within his powers in this relation to the bank. Cited, 3 Taunt. 486. 1 Esp. Cases, 178. Sayer, 259. 1 Dall. 164. 1 Lord Raym. 251. 13 Johns. 174. 17 Johns. 324. But if there had been no ground of defence to the suit, the case is not varied. There was a meritorious consideration for the agreement, and it was binding on the bank. Cited, 1 Ves. 408. 4 Ves. 848. 2 Johns. Ch. Cases, 51, 60. 2 Vern. 423.

Mr Justice THOMPSON delivered the opinion of the Court.