Dickinson v. Lewis, Garthwaite & Co.

A. J. "WALKEN, O. J. The account against the complainant has been stated, and settled by his execution of notes for the balance found against him. To open this stated account, and correct its errors, is the object of the bill. Where errors have occurred in a stated account, in consequence of a fraud, equity has jurisdiction to open the account, and will either re-examine the entire account, or allow the injured party to surcharge and falsify it as to specified errors. — Cowan v. Jones, 27 Ala. 317 ; 1 Story’s Eq. Jur. § 523. The accounts which, when stated, the court will open, must, however, be understood to be such as fall within the jurisdiction of the chancery court. The power to open stated accounts for re-examination, or for surcharge and falsification, belongs to the ‘jurisdiction over matters of account, and grows out of it. The court can not have jurisdiction to open and re-examine, or to correct the errors of a stated account, when the account, before it was stated, did not pertain to the jurisdiction of that tribunal. If, therefore, the original account, the alleged errors of which the complainant seeks to correct, would not have been a matter over which the court of chancery could exercise jurisdiction, then the opening of that account after being stated, for re-examination, or for surcharge and falsification, is without itsjurisdiction. [2.] The account against the complainant was not such as appertained to the jurisdiction of the chancery court. If either party had appealed to that court, before the account was stated between them, to have the balance ascertained, the cause would have been repudiated. This will be apparent from an observation of the character of the account, in connection with the principles which control the equity jurisdiction over the subject. The account was for clothes furnished to the complainant during a series of years, and differs from the ordinary accounts of merchants in this, that the rate of charging was controlled by a contract made at the inception of the [643] account. There was no mutuality of accounts. On the complainant’s side there was only a claim of credits for payments made. The engagement with the complainant by his creditors,, to make a deduction oí 10 per cent, on the price of certain goods so.ld by the former at cost, was but a modification of the price of those particular goods, and gave rise to no mutuality of account. There was nothing more, therefore, than an account on one side, with credits for payments made. Of such an account chancery has not original and independent jurisdiction. There was a plain, adequate and complete remedy at law, for the enforcement of his demand by the creditor, and for the assertion by way of defense of all his rights by the debtor. — 1 Story’s Eq. Jur. § 459; Kirkman v. Vanlier, 7 Ala. 217; Crothers v. Lee, 29 Ala. 337; Rembert & Hale v. Brown, 17 Ala. 667. It is true that chancery sometimes takes jurisdiction where there is no mutuality, on account of its complication ; but it only does so where there is a strong case of entanglement. — Phillips v. Phillips, 12 Eng. L. & Eq. 259; S. C., 9 Sim. 471; Padwick v. Stanley, 12 Eng. L. & Eq. 281; S. C., 9 Sim. 627. This account certainly does not present that strong case of entanglement, or complication, which is necessary to maintain the equity jurisdiction. The conclusion deduced from what is above said is, that the equity of complainant’s bill cannot be sustained, merely upon the ground of the chancery jurisdiction to open a stated account, and re-examine, or allow a surcharge and falsification of it. [3.] Eraud is, of itself, a ground of equity jurisdiction. But this rule is not universal in the jurisprudence of England, or in any of the United States. The doctrine of this courtis, that. notwithstanding the fraud, “if the party can have full, complete and adequate redress at law, he can not go into chancery.” — Knotts v. Tarver, 8 Ala. 743 ; Russell v. Little, 28 Ala. 160. By that doctrine, as expounding a just and convenient rule, too long recognized in this State to be lightly departed from, we will abide, without inquiring whether it harmonizes with all [644] the decisions upon the subject. The fraud which the complainant alleges, is confined to the making of a charge of five per cent, upon the actual cost of the material and making of the clothes furnished to him. The precise amount of variation which this fraud produced on the settlement, from the true amount of complainant’s indebtedness, is alleged, and its ascertainment involves only a simple arithmetical calculation, which can as well be made in a court of law as in a court of chancery. This allegation of fraud is determinable by inquiring, what was the contract as to the rate of charges ? what was its legal effect ? and have the defendants covertly and fraudulently violated it? This inquiry a court of law is as competent to make as a court of chancery. There is, then, nothing in the nature of the fraud, or in the inquiries to which it gives rise, which affords a reason why complete and adequate redress can not be had at law. The case made by the bill is simply one where creditors have fraudulently embraced in their account against a debtor an erroneous charge, for which the debtor has given his notes. His defense is obviously at law, upon the simple ground of a want of consideration as to a part of the amount for which the notes were given. The complainant’s remedy, by defending against the notes at law, was not the less complete and adequate, because the account for which the notes were given had been contracted with two partnerships, one succeeding the other in business, and differing from each other somewhat as to the persons who composed them. To the defense of a want of consideration for the note, the parties to whom the notes are payable, and with whom the settlement of the entire account was made, could not object that a part of the aceount was contracted with their predecessors. No recovery could be had, at law, for any part of the notes which was founded in fraud, and unsupported by a consideration, whether the account was originally made with the payees, or with their predecessors in business. Such a fraud and want of consideration would be as available against the party to whom the notes were given, as [645] against the party with whom the account was originally contracted. [4.] The remaining point of view, in which it is claimed that the bill contains equity, is that it has the allegation necessary to make it a good bill of discovery. The chancery court has jurisdiction, and will grant relief, where an account is to be taken, and there is no mutuality of account, if “ a discovery is wanted in aid of the account, and is obtained.” — 1 Story’s Eq. Jur. § 458. But, to the maintenance of the bill upon the ground of discovery, it is not sufficient simply to allege that there are facts of which the complainant can not make proof without a discovery; it must appear that those facts are material in making out the right to relief. — Saltmarsh v. Bower, 22 Ala. 227; 2 Story’s Eq. Jur. § 74; Lucas v. Bank of Darien, 2 St. 280 ; Horton v. Moseley, 17 Ala. 794; Perrine v. Carlisle, 19 Ala. 686; Crothers v. Lee, 29 Ala. 838. The only allegation in the bill, as to the complainant’s inability to make proof, is in the following words: “Your orator further showeth, that he has no adequate means of establishing at law, or otherwise, the various items of expense involved in the original cost and manufacture of all the goods so furnished him as aforesaid by the defendants, up to the time of said settlement; that the same is almost exclusively within their knowledge, and embraced in their books of original entry; and that it is indispensable to the maintenance of his claim, that they should make a full and particular discovery of each and every one of said items, under oath, distinctly discriminating such as are embraced in the per centage objected to from the remainder, and that all the said books should •be produced.” The bill does not allege any error whatever in the charges for the original cost and manufacture of the goods, but that without any authority, and in violation of the contract, five per cent, was added to the cost and manufacture of the goods. Upon the case made by the bill, it was, therefore, totally immaterial to inquire about the cost of the material and manufacturing. That was a matter entirely outside of the litigation commenced by the bill; and when the inability to make proof as to [646] that matter is shown, the necessity of discovery as to a material matter does not appear. The bill carefully excludes the idea, that any portion of the cost of the materials and manufacture was embraced in the fraudulent and unauthorized charge of five per cent. From this it results, that it jis not a question of the case made by the bill, whether the five per cent, did not, in part, cover some of the items of expense in the purchase of materials and manufacture of the clothes. There is no equity in the bill in any aspect, and the chancellor’s decree must be affirmed.