Orman v. Barnard, Adams & Co.

DuPONT, J., delivered the opinion of the Court: Preliminary to stating the grounds upon which we have. decided this cause, it may not be amiss to remark upon the condition of the record, and to call to the special attention of the members of the bar the very unskilful manner in which it has been prepared, and consequently the great confusion which prevails in the presentation of the case to _ the mind of the Court. The record does not, as it ought to do, give a history of the proceedings in the cause, but is for the most part only a copy of the files. In no part of the record is it stated what proofs were read at the hearing, but we find only copies of exhibits, depositions and other documents, without any statement going to show whether or not they, or any of them, were read at the hearing, and if read, whether with or without exception. This, in an Equity cause especially, where all of the proofs are required to be reduced to writing, and where we have not, as in a Court of common law, the benefit of the bill of exceptions, whose office it is to set forth the evidence adduced at the trial, is certainly very irregular and well calculated to produce confusion and uncertainty, and j>ossibly injustice to parties litigant. A corrective ought to be applied, and we know of none more efficient than the personal superintendence of the Solicitor of the Appellant, whose duty it is to see that a correct and perfect record of the proceedings in the cause is made out for the inspection and information of the Ap — 533 — peltate Tribunal. In the frequent changes and constant rotation which are continually going on under the operation of our Republican organization, it is perhaps presuming too much tp expect of the Clerks of our Courts that professional knowledge and scientific skill whiqh is to be met with amongst the officers of the English Courts, or even of the Courts of the older States. But in making this remark, we would, not by any means be understood to offer an apology for, or to extenuate, either the negligence, ignorance or unskilfulness of this class of officers; for there is an implied promise on the part of every man, who either solicits or accepts office, that he either is, or will speedily qualify himself for the efficient discharge of his duties. This particular record does not present an isolated case, for we a*re constrained to remark that it is but a sample of the larger portion of those which are of file in this Court. But, to apply the foregoing remarks to the record under consideration, it is very manifest (if the strict rule of Chancery practice were adhered to,) that this cause would be before us without any proofs ; and in order to rescue it from this category, we have been constrained to resort to the oral admission of the Counsel on either side — a practice of ex. tremely doubtful utility, and not to be encouraged. The admission' to which we refer and which we understood to have been made at the Bar, was to the effect that the Court should consider everything contained in the record, partaking of the character of, and purporting to be evidence, as having been read at the hearing without exception, giving to each item of evidence such weight as its relevancy might entitle it to. It is upon this basis that we have considered the matters of evidence which have led óur minds to the conblusion at which we have arrived in the final determination of this case. The bill was filed by Barnard, Adams & Co., (the appel" — 534 — lees,) as the assignees of the Southern Life Insurance and Trust Company, for the foreclosure of a mortgage, which it is therein alleged was executed and delivered to the said Company by Samuel Shnpson, the intestate of respondent. The mortgage was given to secure the payment of a bond purporting to have been executed by the said Simpson, for the payment of $6,000, and conditioned to be void upon the full payment .of the said sum of money* on or before the expiration of five years from the date thereof. The date of both the bond and mortgage is the sixteenth day of March, A. D. 1839. There is nothing on the face of the bond which indicates the particular “ consideration” for which it was given. It purports to be an ordinary obligation to-secnre the payment of money, and is in the usual form ; nor is there any allegation in the bill in reference to the “ consideration.” The answer alleges that Simpson “ was induced to make the bond and mortgage, not for the consideration of six thousand dollars, as in said bond stated,but for the consideration of a certificate purporting to entitle said Simpson to sixty shares of capital stock in said Institution;” and then going into a detailed history of the transaction, alleges that the jmrehase of the stock by Simpson was induced by the false and fraudulent misrepresentations of the authorized agents of the said Company. There is also contained in the answer the formal allegation that the “ bond and mortgage were fraudulently obtained from the said Simpson, and were given without consideration fi' but this allegation is coupled with the further statement that they were given for the purchase of a “ stock certificate.” The defence set up against the prayer for a foreclosure, has been considered by the counsel who argued the case for the respondent, under four distinct and independent heads, each of which, it was argued and insisted, appeared in the answer) and presented a substantive matter of defence. — 535 — The several grounds, as alleged, were as follows, viz : 1st. That the bond and mortgage sued upon were given to the Southern Life Insurance and Trust Company without any consideration ; 2d. “ Illegality of consideration,” in this, that the bond and mortgage were'given for a pretended sale of shares in the capital stock of the Southern Life Insurance and Trust Company; 3d. That the bond and mortgage were given to the Southern Life Insurance and Trust Company upon the false and fraudulent misrepresentations of the authorized and accredited agent of the said Company, in fegard to the solvency and prosperous condition of the aifairs of the Company, and in regard to the value of its stock; 4ths That the assignment of the bond and mortgage is void, and vests no interest in the assignee, as being in contravention of the inhibition contained in the sixth section of the charter of in corporation j which prohibits the assignment of such bonds and mortgages as should be given to secure the re-payment of loams which might be made out of the cash capital of the Company. These are the several grounds of defence, as they were considered by the counsel in argument.' It now becomes our duty, in limine, to ascertain whether or not they legitimately arise in the consideration of the cases In order to ascertain the issues upon which the parties conte'st their respective rights, in any particular case, in a Court of Equity, it is the duty of the Court to have reference as well to the allegations of the bill as to the matters of fact contained in the answer or plea; and upon this data, and this alone, can they proceed to adjudicate those rights. A party may, in good faith and with perfect sincerity, insist in a/rgument upon a particular ground of defence, which, upon an examination of the whole answer, turns out to be merely, an inference of law, de¿ ducible from the matters of fact therein stated. Of this — 536 — character are we constrained to consider the first ground of defence argued by the counsel, viz: The “ want of consideration.” As a foundation for his argument, the counsel for respondent referred to that part of the answer in which the following language is used, viz: “ For further answer, these defendants say that said bond and mortgage were fraudulently obtained from said Simpson, and were given without consideration, and that the said stock certificate was issued without authority of said charter, or any by-law passed in accordance with its provisions, but contrary to its express letter and spirit, by reason whereof the said Simpson, nor his heirs or representatives, could acquire no legal title to any interest in the capital stock of said Company, as these defendants are advised and believe.” This is the only portion of the answer which contains the formal allegation that the bond aud mortgage were given is without consideration,” and in the connection in which the allegation is found, it can scarcely be seriously contended that it amounts to anything more than an inference of law, deducible from the accompanying statement of facts. It is very clear that the existence or non-existence of a consideration, is made to depend upon the result of the question, whether the “ stock certificate” mentioned, (assuming that to have been the real consideration for the giving of the bond and mortgage,) was lawfully issued ; and hence it will be readily perceived that the question involved in this ground of defence, is one of law, and not of fact. Indeed, we would charitably hope that such was the view taken of this matter by the defendant, at the time that he solemnly swore to the facts set forth in his answer^ for we can scarcely suppose that he intended to be understood as swearing in one breath to the fact that there was no consideration, and in the next that there was a consideration. By the common law, a defendant was not permit — 537 — ted, (except perhaps under very special circumstances,) to file contradictory pleas ; and certainly much less will it be toleredat in a Court of Equity that a defendant should he permitted to set up in the same answer contradictory facts as a matter of substantive defence. It would be to encourage perjury in its worst and most dangerous form. This defence, when made at common law, is 'always the subject of a special plea, and it must be so pleaded as not to present a double issue. In other words, it must contain simply the negation of a consideration, and anything bpyond that, showing that the party defendant was only deceived or disappointed in the value of that which he relied upon as a consideration, changes the character of the plea from that of a “ want,” to illegality or failure of consideration. We are, then, fully of opinion that the first ground of defence assumed in the- argum ent, does not arise out of the pleadings, and therefore no argument made on that head can have any influence in determining the rights of the parties. The importance to the defendant of establishing this fif'st head as a substantive ground of defence, grew out of the presumed advantage which it might give him in ■ changing the onus of proof, under the operation of the 24th section of the Act of November 23, A. D. 1828, regulating judicial proceedings, (Thomp. Dig., 331, chap. 2, sec. 1, art. 4,) and which, although evidently intended for the government of Courts of law, seerhs, in the opinion delivered in the case of the Southern Life Insurance and Trust Company vs. Cole, (4 Florida Rep., 377,) to have been thought to be likewise applicable, by analogy, to Courts of Equity. As to wbat may be the authority of that case upon the point, it is unnecessary for us to consider in this investigation. W e are disposed to dismiss it with the simple remark, that whenever the question may be fairly and fully presented how far a Court of Equity is permitted or — 538 — bound to adopt in its practice statutes affecting simply the remedy, and professedly enacted for the regulation of Courts of law, it will receive that calm and deliberate consideration which its importance may demand. Having thus disposed of the first head, we now address ourselves to the three remaining ones, viz : “ Illegality of consideration,” “ fraudulent representations,” and the “ in? yalidity of the assignment.” Our first inquiry will be to ascertain, from the evidence and proofs in the cause, whether any other consideration than that appearing on the face of the bond has been established. In the prosecution of this inquiry, we first refer t.o the bill, and from that reference we ascertain that there is no allegation touching the consideration, and consequents ]y no interrogatory addressed to the defendant in reference thereto. All, therefore, that appears in the answer of the defendant touching the consideration, must be taken to be new and substantive matter, pleaded by way of avoidance, and consequently must be proved aliunde ; for it is a well established principle of Equity practice that only such matters of fact set forth in the answer of the defendant as are clearly responsive to the allegations of the bill, will be considered as evidence in the capse. Matters of fact set up and insisted upon as a substantiye defence, and being not responsive to the bill, will be required to be established by proof aliunde. This is a principle of Equity practice, too universally recognised to require the citation of any authority for its support. Proceeding then upon this doctrine in our examination of the various matters set forth in the answer, we are constrained to say that the allegations contained in the answer, in reference to the consideration for which the bond and mortgage were given, afford no evidence of the facts alleged, We are next thrown upon the proofs which — 539 — were adduced at the final hearing of the cause, and after a strict and scrutinizing examination of the record, we are equally at a loss to discover even the semblance of any direct or positive evidence upon the subject, going to show a consideration for the giving of the bond and mortgage variant from that which their face import. The bond purports to be a simple money bond, and the deed of mortgage is of the usual form, containing no extraordinary or unusual covenants. The counsel for the respondent, however, have argued with great ingenuity and zeal that5 there is contained in the record a body “ of circumstantial evidence,” which as conclusively supports the allegations in the answer, as would the'production of the most direct and positive evidence. ~We readily recognise the position as a sound one, when invoiced as a general rule, that in Equity as well as at law “ a well connected train of circumstances, is as conclusive of the existence of a fact, as is the greatest array of positive evidence.” But of equal authority and of no less applicability, is that other familiar rule of evidence, viz : that “ the best evidence the nature of the case will admit of, must always be adduced.” These are frnt general rules, and the 'former especially is not of universal application, for there are some matters of fact peculiarly susceptible of positive proof, whilst there are others which, from their very nature, and from the secrecy which invariably attend them can only be proved by eireumstcmstial evidence. In the application of the rule, it therefore becomes the part of wisdom always to have reference to the nature of the subject. ■ Now the subject under consideration in this investigation is> the true consideration for which an obligation, purporting to be an ordinary money bond, had been executed — 540 — and is, in oar opinion amongst that class of subjects peculiarly susceptible of direct and positive proof. Moreover the bond and mortgage before us are each at" tested by two witnesses, who may be persumed to have been cognizant of the matter in issue, and might have been required to testify on the subject had suitable efforts been made to obtain their testimony. It may be that the witnesses are all dead or beyond tbe reach of the process of the Court. But if such be the fact, there is no proof in the record of its existence, which if proved, would, according to all the well recognised principles regulating the admissibility of evidence, have opened a door for the introduction of tho circumstantial evidence relied upon in the argument of Counsel. In addition to the result of our own examination of the record, it was frankly admitted by the Counsel that there was no positive proof upon the subject of the consideration of the bond, and hence they had to rely exclusively upon the weight .of circumstances, to establish the several defences set forth in the answer of the defendant. These circumstances, as we find them detailed in the brief which has been furnished us, and which were relied upon as tending to prove that the consideration for which the bond and mortgage had been given by the defendant’s intestate Simpson, was a purchase of shares in the capital stock of the Southern Life Insurance and Trust Company are as follows, viz: 1. The fact that no other consideration (than what appears on the face of the bond) appears from the Books of the Bank or was known to its President or Cashier. 2. Copy of a resolution of the Board of Directors shortly prior to the date of the bond and mortgage, empowering Samuel L. Burritt to sell certain stock which had been surrendered, for bonds and mortgages. 3. Copy of a Circular issued about the same time, by the — 541 — bank urging-the people of Middle and West Florida to take stock on those terms. 4. That it is stated by George Field, in his evidence in tlie record, that stock was sold to divers persons for bonds and mortgages, but be says nothing of such a sale of stock to Mr. Simpson. 5. The inability of the Bank to loan the money. 6. The indorsement of a dividend declared in his favor as a credit upon the bond. . 1. The correspondence between the amount of the bond and the amount of the stock. We have carefully considered, severally as -well as collectively, the circumstances before enumerated. But after the maturest deliberation and with an anxious desire to accord to them all the weight to which they might be legitimately entitled, we are constrained to say, they have failed to produce in our minds that conviction which it is the legitimate office of evidence to effect. There is not that conclusiveness — that conviction growing out of a well connected train of circumstances, which will authorize us to say that, from the evidence in the record, the consideration of the bond is other than what it purports to have been. In a matter susceptible of proof, a court must not conjecture. This being the conclusion at which we have arrived, it results as a necessary consequence that neither of the three remaining heads of defence arise for our consideration, dependent as each of them is, upon the allegation in the answer, that the bond and mortgage were given for a purchase of shares in the capital stock of the Southern Life Insurance and Trust Company. We are not disposed, nor indeed would it comport with judicial propriety, xmnecessarily to undertake to discuss the very grave and important questions decided by this Court .in the case of the Southern Life Insurance and — 542 — Trust Company vs. Lanier. Whenever any of those questions may properly present themselves, we doubt not but that they will receive from the Court, that patient, impartial, and independent examination, which their paramount importance may demand. We have carefully examined the record in this cause, and failing to discover any error in the proceedings had in the Court below, it is our judgment that the decree be affirmed with costs.