Willard v. Wood (164 U.S. 502)/Opinion of the Court

The court of appeals held that the bill was effectually dismissed as to the estate of Wood by the order of January 5, 1885; that the right, if any, attempted to be enforced against the estate of Wood, by the reason of the assumption in favor of Dixon, was fully barred by the statute of limitations, or the lapse of time before the bringing of this suit; that plaintiff, as the representative of the mortgagee, could not be substituted to the position of Wood, with the right to enforce the covenant Bryan made with and for the benefit of Wood, under the circumstances; and that the covenant of Bryan in the deed from Wood, if it could be availed of at all, could not be deemed a lawful asset of the estate of the deceased in this District, which vested in the administrator here, and entitled him to sue Bryan therefor.

William Henry Dennis and Enoch Totten, for appellant.

[Argument of Counsel from pages 511-518 intentionally omitted]

John Sidney Webb and John Selden, for appellees.

Mr. Chief. Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.

The action of covenant, brought by Willard against Wood, December 30, 1884, was heard by the supreme court of the District of Columbia in general term in the first instance; and it was held that the acceptance by Wood of the deed of Dixon to him created no specialty obligation on the part of Wood, though he might be held liable on it in assumpsit, as on a simple contract, and that the act of limitations of the District barred such action, because brought more than three years after the cause of action accrued. 4 Mackey, 538.

The case being brought on writ of error to this court, it was ruled that, whether an agreement by the grantee of a mortgagor to assume the mortgage debt could be enforced at law or in equity was governed by the law of the place where the action was brought, and that by the law of the District of Columbia, whether such an agreement was or was not considered as under seal, it was an agreement made with the grantor only, and created no direct obligation to the mortgagee, upon which the latter could sue at law. If the agreement of the grantee was considered under seal, by reason of the deed being sealed by the grantor, it fell within the settled rule, in force in the District of Columbia, that no one could maintain an action at law on a contract under seal, to which he was not a party; and, if the agreement of the grantee was considered as in the nature of assumpsit, implied from his acceptance of the deed, 'still, being made with the grantor only, and for his benefit, upon a consideration moving from him alone, there being no privity of contract between the grantee and the mortgagee, and the latter not having known of or assented to the agreement at the time it was made, nor having since done or omitted any act on the faith of it, it follows that, by the law as declared by this court, and prevailing in the District of Columbia, the mortgagee cannot maintain an action at law against the grantee. Keller v. Ashford, 133 U.S. 610, 620, 622, 10 Sup. Ct. 494, 496, 497, and Second Nat. Bank of St. Louis v. Grand Lodge of Free & Accepted Masons of Missouri, 98 U.S. 123, there cited. * *  * Moreover, if the grantee's liability was in assumpsit only, it was, in any view of the case, barred by the statute of limitations in three years.' And the judgment of the supreme court of the District was accordingly affirmed. Willard v. Wood, 135 U.S. 309, 10 Sup. Ct. 831.

In Keller v. Ashford, above referred to, it was held that, although the contract of the purchaser to pay the mortgage, being made to the mortgagor, and for his benefit only, created no direct obligation of the purchaser to the mortgagee, yet, that, in a court of equity, the mortgagee may avail himself of the right of the mortgagor against the purchaser, upon the familiar principle, in equity, that a creditor shall have the benefit of any obligation or security given by the principal to the surety for the payment of the debt. And it was said: 'The doctrine of the right of a creditor to the benefit of all securities given by the principal to the surety for the payment of the debt does not rest upon any liability of the principal to the creditor, or upon any peculiar relation of the surety towards the creditor, but upon the ground that the surety, being the creditor's debtor, and in fact occupying the relation of surety to another person, has received from that person an obligation or security for the payment of the debt, which a court of equity will therefore compel to be applied to that purpose at the suit of the creditor. Where the person ultimately held liable is himself a debtor to the creditor, the relief awarded has no reference to that fact, but is grounded wholly on the right of the creditor to avail himself of the right of the surety against the principal. If the person who is admitted to be the creditor's debtor stands, at the time of receiving the security, in the relation of surety to the person from whom he receives it, it is quite immaterial whether that person is, or ever has been, a debtor of the principal creditor, or whether the relation of suretyship, or the indemnity to the surety, existed, or was known to the creditor, when the debt was contracted. In short, if one person agrees with another to be primarily liable for a debt due from that other to a third person, so that, as between the parties to the agreement, the first is the principal, and the second the surety, the creditor of such surety is entitled, in equity, to be substituted in his place for the purpose of compelling such principal to pay the debt.' 133 U.S. 623, 10 Sup. Ct. 497.

After citing many cases, and quoting from Crowell v. St. Barnabas Hospital, 27 N. J. Eq. 650, 655, the opinion continued: 'The decisions of this court, cited for the defendant, are not only quite consistent with this conclusion, but strongly tend to define the true position of a mortgagee, who has in no way acted on the faith of, or otherwise made himself a party to, the agreement of the mortgagor's grantee to pay the mortgage; holding, on the one hand, that such a mortgagee has no greater right than the mortgagor has against the grantee, and therefore cannot object to the striking out by a court of equity, or to the release by the mortgagor, of such an agreement when inserted in the deed by mistake (Elliott v. Sackett, 108 U.S. 132, 2 Sup. Ct. 375; Drury v. Hayden, 111 U.S. 223, 4 Sup. Ct. 405) and, on the other hand, that such an agreement does not, without the mortgagee's assent, put the grantee and the mortgagor in the relation of principal and surety towards the mortgagee, so that the latter, by giving time to the grantee, will discharge the mortgagor. Shepherd v. May, 115 U.S. 505, 511, 6 Sup. Ct. 119, 121.'

The court of appeals rightly held that remedies are determined by the law of the forum, that Wood's liability by reason of his acceptance of Dixon's deed was subject to the limitation prescribed as to simple contracts, and was barred by the application in equity, by analogy, of the bar of the statute at law.

We also concur with the court of appeals that the bill was effectually dismissed as against the estate of Wood on the 5th of January, 1885. That court held that there could be no doubt that it was the intention of plaintiff, by the order of that date, to dismiss the bill as to the representatives of Wood's estate, and that it was supposed at the time to have been effectually done; that this dismissal was a concession to the demand of Wood that plaintiff should elect as between his action at law, then pending against the representatives, and the bill in equity; that it could not be urged that the defendant or his representative might object to the dismissal; and that, after a voluntary dismissal of the bill by plaintiff, he would not be allowed to reinstate it unless it was shown that there was surprise or mistake. It was further held that, though the order of dismissal referred alone to Mrs. Wood, she was the only active representative of the estate, and that the fair construction of the order of dismissal would not permit of the contention that the bill was still intentionally retained as against the co-executor, the son; and that, indeed, being dismissed voluntarily as against the active representative, it was left fatally defective, even though technically still pending against the son.

The proceedings show that Mrs. Wood was regarded as the sole representative, she only having administered; and the attempts, by filing a replication, July 1, 1890, without leave of court, to the answer filed by Wood, who had then been dead nearly eight years, and by filing a paper signifying the withdrawal of the direction to dismiss the bill, July 31, 1890, also without leave of court, were unavailing in the premises.

But it is insisted that, conceding the remedy as to Wood was barred, it does not follow that Bryan was entitled to avail himself of that bar, since the right was not extinguished; that Bryan joined in the execution of the deed of Wood, and thereby expressly agreed to pay the balance due on the mortgage; that this was an absolute promise to pay, and not merely a contract of indemnity; and that it could be proceeded on as a specialty, irrespective of whether the remedy on Wood's contract with Dixon was barred in the District or not.

It is not denied that the enforcement or the contract was open to all defenses existing between Wood and Bryan. City Mission v. Brown, 158 U.S. 222, 15 Sup. Ct. 833. Christmas had not been deprived by either of them of any security he ever had, there was no mutual agreement between him and them, and he had in no way acted on the faith of the agreement between them in such a way as to bind either of them by estoppel.

The sixth section of chapter 23 of the act of 1715 of the state of Maryland, and which is in force in this District, is as follows:

'No bill, bond, judgment, recognizance, statute merchant, or of the staple, or other specialty whatsoever, except such as shall be taken in the name of for the use of our sovereign lord the king, his heirs and successors, shall be good and pleadable, or admitted in evidence against any person or persons of this province, after the principal debtor and creditor have been both dead twelve years, or the debt or thing in action above twelve years' standing; saving to all persons that shall be under the aforementioned impediments of infancy, coverture, insanity of mind, imprisonment, or being beyond the sea, the full benefit of all such bills, bonds, judgments, recognizances, statutes merchant, or of the staple, or other specialties, for the space of five years after such impediment removed, anything in this act before mentioned to the contrary notwithstanding.' 1 Kilty's Laws Md.

This section was peculiar to the state of Maryland, and in effect went to the cause of action. In some aspects it has often received the consideration of the courts of that state. Some of the decisions are referred to by Chief Justice Alvey in Mann v. McDonald, 22 Wash. Law Rep. 98, and it is there said: 'Unlike the construction that has been placed upon the terms of the statute employed in the second section, in regard to simple contract debts, the construction uniformly placed on the terms employed in the sixth section in regard to judgments, recognizances, and specialities of various kinds, owing to the peculiar force and prohibitory nature of the language employed in this latter section, has been different, and unyielding to circumstances that would remove the bar of the statute as applied to simple contract debts. Hence it has been uniformly held that a mere acknowledgment of the debt due on judgment, or even an express promise to pay the same, will not arrest the running of the statute, or remove the bar, as against the judgment or specialty mentioned in the act, though such judgment or specialty may form the basis or inducement to a new express promise to pay, upon which an action may be maintained. Lamar v. Munro 10 Gill & J. 50; Young v. Mackall, 4 Md. 367. And so the payment of interest, or even part of the principal of the judgment debt, will not have the effect of avoiding the operation of the statute, as applied to proceedings on the judgment to revive, or to recover on the judgment by action of debt. In the case of Carroll v. Waring, 3 Gill & J. 491, it was held that the payment of interest upon a bond was no avoidance of the bar of the act of limitations of 1715, c. 23; nor would even an express acknowledgment of the debt revive the remedy upon a bond barred by that act.' And see Digges v. Eliason, 4 Cranch, C. C. 619, Fed. Cas. No. 3,904; Thompson v. Bevcridge, 3 Mackey, 170; Galt v. Todd, 23 Wash. Law Rep. 98.

The saving clause of the section relates to creditors only, and by section 466 of the Revised Statutes of the District all exceptions in favor of parties beyond the District were repealed. However, as this sixth section of the act of 1715 was not pleaded, we need not consider whether its benefits are denied to nonresident debtors by the fourth and fifth sections, relating to 'persons absenting the province, or wandering from county to county,' or by the act of November, 1765, c. 12, as to persons who 'may be absent out of this province, at the time when the cause of action hath arisen or accrued' (1 Kilty's Laws Md.; Hysinger v. Baltzell, 3 Gill & J. 158; Maurice v. Worden, 52 Md. 283), or other statutory provision.

But it is well to observe that this covenant was entered into in the District between residents thereof, and, although its performance was required elsewhere, the liability for nonperformance was governed by the law of the obligee's domicile, operating to bar the obligation, unless suspended by the absence of the obligor.

The general rule in respect of limitations must also be borne in mind, that if a plaintiff mistakes his remedy, in the absence of any statutory provision saving his rights, or where, from any cause, a plaintiff becomes nonsuit, or the action abates or is dismissed, and, during the pendency of the action, the limitation runs, the remedy is barred. Alexander v. Pendleton, 8 Cranch, 462, 470; Young v. Mackall, 4 Md. 367; Wood, Lim. § 293, and cases cited.

In his answer Bryan relied on Wood's answer, which set up laches and the statute of limitations. But the recognized doctrine of courts of equity to withhold relief from those who have delayed the assertion of their claims for an unreasonable length of time may be applied, in the discretion of the court, even though the laches are not pleaded, or the bill demurred to. Sullivan v. Railroad Co., 94 U.S. 806, 811; Lansdale v. Smith, 106 U.S. 391, 394, 1 Sup. Ct. 350, 353; Badger v. Badger, 2 Wall. 87, 95; Syester v. Brewer, 27 Md. 288, 319; Williams v. Rhodes, 81 Ill. 571.

The deed of Wood to Bryan was executed March 14, 1874, and at that time the mortgage bond was overdue, having matured, according to its terms, July 7, 1873; but interest up to February 1, 1874, had been paid on it by Wood. Bryan's obligation to Wood was to pay forthwith, or within a reasonable time,-a distinction of no importance here; and lapse of time and changes in condition began immediately to affect it.

Frederick L. Christmas, the owner of the bond, was then living. He accepted interest for two years thereafter, but this was not paid by either Wood or Bryan; and, if such payment operated as an extension of time, it does not appear to have been with the assent of either of them.

Bryan sold within a few days of his purchase, and conveyed to Palmer, the deed being recorded in Kings county, April 9, 1874, and Palmer covenanted to pay the outstanding balance. To the foreclosure proceedings Christmas did not make Wood and Bryan parties, or either of them, but made Palmer a defendant, though asking a deficiency decree against Dixon only.

Wood gave $17,000 for the property, but its value had been gradually declining, and it was bid in, December 10, 1877, at the foreclosure sale, by the heirs of Christmas, for $5,000, the testimony showing that $8,000 was then a fair price.

Palmer died in 1878 or 1879, being reputed to have parted with 'most of his estate.'

The various lawsuits which had been previously commenced, except the action of covenant of December 30, 1884, against Wood's executrix, were abandoned and dismissed January 5, 1885, on which day this bill was also dismissed, as we have seen.

The bill was filed July 15, 1881, against Wood and Bryan, as alike liable to Christmas as principal debtors, and service of process was had on Wood only, August 18, 1881. The mere fact that the bill was left on the files would not, in itself, relieve from the effects of laches; for failure in diligent prosecution may have the same consequences as if no suit has been instituted. Johnston v. Mining Co., 148 U.S. 360, 370, 13 Sup. Ct. 585, 589.

Nearly sixteen years had elapsed since Bryan entered into the covenant with Wood, when, on March 10, 1890, over eight years after the issue of the first subpoena, alias process was issued against Bryan, and service had. For seven years of this period he had resided in the District. For seven years he had been a citizen of Illinois, as he still remained. By the law of Illinois the mortgagee may sue at law a grantee who, by the terms of an absolute conveyance from the mortgagor, assumes the payment of the mortgage debt. Dean v. Walker, 107 Ill. 540, 545, 550; Thompson v. Dearborn, Id. 87, 92; Day v. Williams, 112 Ill. 91; Insurance Co. v. Hanford, conveyance from the mortgagor, assumes But Christmas did not see fit to bring a suit against Bryan in Illinois, nor was this bill filed during Bryan's residence in the District, and, when filed, it was allowed to sleep for years without issue of process to Bryan, and for five years after it had been dismissed as to Wood's representative, Wood having been made defendant, by Christmas' ancillary administrator, as a necessary party.

In the meantime Dixon had been discharged in bankruptcy and had died; Palmer had also departed this life, leaving but little if any estate; Wood had deceased, his estate been distributed, and any claim against him had been barred; and the mortgaged property had diminished in value one-half, and had passed into the ownership of Christmas' heirs. In view of the laches disclosed by this record, we do not think the equitable jurisdiction of the court ought to be extended to enforce a covenant plainly not made for the benefit of Christmas, and in respect of which he possessed no superior equities. The changes which the lapse of time had wrought in the value of the property and in the situation of the parties were such as to render it inequitable to decree the relief sought as against Bryan. So that, whether the barring in this jurisdiction of the remedy merely, as against Wood, would or would not, in itself, defeat a decree against Bryan, without more, we hold that relief was properly refused, and the decree is affirmed.