Kelly & Mitchell v. Morris

By the Court. Jenkins, J., delivering the opinion. The first error assigned against the judgment of the Court below, is, “That the Court erred in deciding that the purchaser, at a sale made under a decree of a Court of Chancery, upon a bill filed in the State of Tennessee, for the purpose of foreclosing a mortgage upon the whole telegraph line and fixtures, furniture, etc., acquired no title to that portion of the said property lying in the State of Georgia.” This is an objection to the jurisdiction of the Court of Chancery in Tennessee. This point is not free from difficulty, arising chiefly from the meager statement of facts in the transcript. Unwilling to decide so important a question upon insufficient knowledge of the facts involved, and, finding that the other question, raised by the defendants, in the Court below, as cause shown against the granting of the injunction prayed, must control our judgment, we pass at once to its consideration. The only other error assigned, is, that “The Court below-erred in refusing to grant said injunction upon the facts stated in said bill, and the evidence exhibited.” This brings us to the consideration of the case upon its merits, as made in the bill, and we give the plaintiffs in error the benefit (for the purposes of the argument) of a concession of jurisdiction in the Court of Chancery in Tennessee. Plaintiffs in error claim under J. and W. J. Kelly, who purchased at a sale made under a decree of that Court. Defendants in error hold, under Hammett, who purchased1, at sheriff’s sales, in the several counties in Georgia, through which the telegraphic line passes, and in which the “fixtures, furniture,” etc., were found; these sales having been made under certain common law judgments, obtained in Georgia, against the original company, in favor of Hammett and Glover, older than the [60] mortgage liens, under which J. and W. J. Kelly purchased, and of which Georgia judgments J. and W. J. Kelly had notice at the time of their purchase. Plaintiffs in error predicate their claim for relief, upon the averment of fraud, committed" by Hammett (representing Glover as well as himself). The averment is, that Hammett, being present at the sale under the decree in Tennessee, entered into- an agreement with J. and W. J-. Kelly, for himself and Glover, anterior to the sale, by which he bound them to accept in lieu of their judgment liens, the notes of one Clute, secured by mortgages of J. and W. J. Kelly, of so much of said telegrap-h line and other property as were in the State of Georgia, which notes and mortgages were actually given, and accepted by Hammett. They further allege, that the subsequent sale of the property within the State of Georgia, under these identical judgments, was fraudulent and vo-id as against themselves, who were innocent purchasers, without notice of these judgments. The defendants, in the Court below, incorporated in their response to the rule nisi, requiring them to- show cause why an injunction should not be granted, the affidavit of Hammett (who was not a party to the bill), negativing this averment, and alleging, that by the agreement, entered into at the time of the sale in Tennessee, aforesaid, he bound himself to transfer his judgment and fi. fa. to Clute, upon the payment, by Clute, of his no-tes so given — and he appends to his affidavit a copy of his said agreement. Further, he states, that, at the time of the maturity of Clute’s notes, he was insolvent and had absconded without having paid any portion of them; that, after waiting a considerable time, he sent a special messenger to the Messrs. Kelly, to-' demand payment of Clute’s notes, that they declared themselves unable to pay the notes, and did not' expect to do so- at any time — bvhereupon, he, Hammett, proceeded to levy upon, and sell the property lying in Georgia. This affidavit and agreement were before the Court below, as a part of defendants’ response to the rule nisi, and came before this Court in the transcript of the record. There is something mysterious in Clute’s connection with the negotiation in Tennessee; but J. and W. J. Kelly, under whom plaintiffs claim-, must have understood and adopted that connection, whatever it may have been. We must suppose them to have been cognizant at the time of Hammett’s [61] obligation to transfer those fi. fas. and judgments to Clute, upon the payment of his notes — and this is wholly incompatible with plaintiffs’ averment, that 'by the negotiation in Tennessee the judgments were considered satisfied, and were fraudulently kept open, and used subsequently. J. and W. J. Kelly, under such a showing, would not have been entitled to the relief asked, and the plaintiffs in error can be in no better condition. Defendants’ showing upon this point was abundantly sufficient. It is insisted, however, that the sale by Hammett to defendants was intended to consummate and cover up his fraud, and1 that plaintiffs in- error, being innocent purchasers, without notice of these judgments, are entitled to protection. There are several answers to this view: 1. As already shown, the response to the rule nisi removes the imputation of fraud from Hammett, in the original transaction; and there was, therefore, no fraud to be averred or consummated by the sale to defendants. 2. Although the chronological order of the events, narrated by plaintiffs in their bill, is not very clear, we are constrained to infer from,their statements that this property had been sold in Georgia by the sheriff, and purchased by Hammett, and had passed legally and peaceably into his possession, before plaintiffs purchased from J. and W. J. Kelly. The fact, then, that these vendors were not in possession of the property sold, was sufficient notice to put them on the alert, to stimulate them to diligent inquiry into these vendors’ title. 3. The bill does not charge upon the defendants either participation in the alleged fraud, or knowledge of it,, as charged to have been practiced by Hammett. It charges fraud, and knowledge of fraud, upon no person, except Hammett, who is no party to the cause. Its allegation is that the defendants purchased from Hammett, then in peaceable possession, under a purchase at sheriff’s sale. We think the position of defendants decidedly better in every point of view than that of plaintiffs’ in error — but if equal only, in other respects, by plaintiffs’ own showing, it is better in this, that defendants are in possession fairly and legally acquired. The Court below was, therefore, right in refusing the injunction. ' [62] JUDGMENT. Whereupon, it is considered and adjudged by the Court, that the judgment of the Court below be affirmed.