Adler v. Van Kirk Land & Construction Co.

BRICKELL, C. J. — On the 24th day of March, 1894, by consent of parties, a decree was entered by the chancery court of Escambia county, in vacation, upon a submission duly made by the parties under the statute and 80a Rule of Chancery Practice, for a final decree in vacation, in favor of Morris Adler against the VanKirk Land and Construction Company, foreclosing a mortgage upon a large body of lands, executed by that company to Worthington, Elliott & DeBardeleben, and by them assigned, together with the demands thereby secured, to said Adler. After the register, proceeding to the execution of the decree, had advertised the lands for sale, on the 9th day of February, 1895, the Land and Construction Company filed the bill in this cause, seeking to review the proceedings had, and the decree rendered in the foreclosure suit, and to vacate and set aside the decree, and for an accounting, and, as an incident to the main relief prayed an order temporarily restraining the sale under the decree. The bill is essentially a bill of review, based upon alleged newly discovered evidence, which, it is the theory of the bill, shows that, by false and fraudulent representations made several months prior to the rendition of the consent decree, upon an accounting and settlement then had between the parties touching the demands secured by the mortgage, the Land and Construction Company, relying upon such representations and believing them to be true, had been induced to admit and to bind itself to pay an amount largely in excess of what was in fact owing by it upon those demands,which amount, by the consent decree, the company was ordered to pay in redemption of the mortgage. The chancellor overruled a motion interposed by the defendants, the appellants here, to dismiss the bill for want of equity; and that ruling is the only error assigned. The argument in support of the motion and against the ruling of the chancellor is, that, while in the bill it is averred that the fraud alleged was- not discovered by — 557 — the complainant until after the consent decree was entered, the bill is wholly wanting in averments showing the exercise of any diligence whatever by the complainant, its officers or agents, to ascertain the facts out of which the fraud arose, or the evidence ffelied upon to establish it, or that such facts or evidence, by the use of reasonable diligence, could not have been discovered, prior to the rendition of the decree, or the execution of the agreement upon which it was based. The doctrine is now too well settled to admit of controversy, and is upheld by a sound and conservative public policy, that, to maintain a bill of review upon newly discovered evidence, the matter must not only be new, that is, ascertained or discovered after the court has passed its decree, but it must also affirmatively appear, by appropriate averments and by proof, that the party complaining, by the use of reasonable diligence, could not have, prior to the decree, ascertained or discovered it. If such matter was known to him before decree entered, and he failed to avail himself of it, or if unknown, but by the exercise of proper diligence, he could have known it, the court will not afford him relief. A wrong may have been inflicted, rather than a right enforced, by the decree ; yet, according to the uniformly declared policy of the court, it is better that such wrong should go unredressed, than that the solemn decree of the court should be set aside at the suit of a party who, having had his day in court, failed, by reason of his own negligence or laches, to timely present the matter of his defense for adjudication. Diligence in this respect is of the essence of the equity of the bill; laches or negligence is as fatal to relief as the actual absence of a matter of defense. In Young v. Keighley, 16 Ves. 348, Lord Eldon says : "The question always is, not what the plaintiff knew, but what, using reasonable diligence, he might have known;” and this court, in Banks v. Long, 79 Ala. 319, speaking through Chief Justice Stone, said: “The equity of a bill of review, for newly discovered testimony, is the fact that it is newly discovered, and that, with the other testimony, it entities the complaint to a decree different — beneficially different — from that rendered in the cause. It must be newly discovered; for, if known before the trial, or if with proper diligence it would have been known, this is a complete bar to such relief.” This principle is uni — 558 — formly recognized and upheld by the text-writers and adjudged cases. — Story’s Eq. Plead., § 414; 2 Dan. Ch. Pl & Pr., (5th ed.), p. 1578; 2 Beach Mod. Eq. Pr., § 862; Dexter v. Arnold, 5 Mason, 312, 321; Wiser v. Blochly, 2 John. Ch. 488 ; Traphagen v. Voorhees, 46 N. J. Eq. 41; Davis Co. v. Dunbar, 9 S. E. Rep. 237; Murrell v. Smith, 51 Ala. 301; Randall v. Payne, 1 Tenn. Ch. 142. Considering a similar question, in Waring v. Lewis, 53 Ala. 625, the court said: “There must be an end to litigation ; and without offending principles of public policy, endangering the order and peace of society, and deranging the whole structure of our judicial system, a court of equity cannot intervene against the decree or judgment of a court of competent jurisdiction, because of facts known, or capable of discovery by reasonable inquiry, at the time of its rendition. Fraudulent practices or concealments may be resorted to by an unscrupulous suitor; witnesses may be corrupted, or evidence suppressed, and an unjust, unconscientious judgment wrested from the court; these must have been unknown, and reasonable diligence not sufficient to have guarded against them ; the judgment must stand, or the conservatism of the law will be violated. — Freeman on Judgments, §§ 493-506.” Turning to the bill, an examination of its averments leaves it free from doubt that it wholly fails to show that the complainant made any effort whatever, prior to the rendition of the consent decree, to ascertain for itself the true status of the accounts between it and Worthington, Elliott & DeBardeleben, secured by the mortgage, or to ascertain whether the representations made upon the settlement were true or false ; nor does the bill contain any averment that shows or even tends to show that such effort, if made, would have been unavailing and fruitless. The settlement was effected in July, 1893, more than eight months before the agreement was made for the consent decree, and before that decree was entered and payment of the amount then agreed upon as due from the company to Worthington, Elliott & DeBardeleben, was extended until the 27th day of December, 1893, the company executed to them its several promissory notes in evidence of the indebtedness. Not only is this true, but it is fair to presume from the averments of the bill and the exhibits thereto, that, prior to the — 559 — settlement, the company had several months in.which to ascertain the extent of its liability upon the secured demands. It was not until Adler was proceeding to have his decree executed by a sale, nearly one year after its rendition, that the company, for the first time, so far as disclosed by the bill, took any steps to ascertain whether the representations made upon the settlement were true or false. So far as disclosed by the bill, it then did what it could easily have done before ; it caused estimates to be made of the embankment and excavation done by Worthington, Elliott & DeBardeleben under the contract with the Mobile & Girard Railroad Company, and inquiries to be made as to payments made on the indorsed note by Worthington, Elliott & DeBardeleben ; and upon information thus and for the first time obtained, it files its bill, seeking to have the consent decree vacated and set aside, and the accounts between the parties reopened. It is a clear inference from the averments of the bill that the complainant was as fully possessed of the facilities for prosecuting its inquiries before as it was after' the consent decree was entered ; that it then knew of the location of the .railroad upon which the work was done, and of the holder and owner of the indorsed note, and its place of business. Manifestly, such conduct constitutes negligence or laches that bars relief in cases involving the principle under consideration. However much the court might desire to relieve against the decree, it is powerless to grant any relief consistently with well settled principles and a true regard to a sound and conservative public policy. The only pretense of an excuse offered in the bill for this remarkable supineness is, that the complainant, its officers and agents, relied implicitly on the representations, which are-alleged to have been made by a member of the firm of' Worthington, Elliott & DeBardeleben, believing them to be true, and not having any reason to suspect that they were untrue. The only relation shown by the bill to have existed between the complainant and Worthington, Elliott & DeBardeleben is that of mortgagor and mortgagee. Such relation is, so far. as the question under consideration is concerned, one merely of debtor and creditor, the creditor holding the mortgage as security for his debt; this relation is not one of a confidential character. — Paulling v. Creagh, 54 Ala. — 560 — 657 ; O’Bear Jewelry Co. v. Volfer, 106 Ala. 205. In Otis v. Dargan, 58 Ala. 178, legatees sought to excuse their laches by asserting confidence reposed by them in the executor of the testator, in a case involving a like principle with the one under consideration; but the court held the excuse insufficient, saying: “They reposed confidence in the appellee, it is alleged ; but there is no evidence that it was in any other degree than such confidence as is usually extended from one person to another in the ordinary transactions of life. The confidence, the trust, which, when abused, will invoke the aid of a court of equity is not shown to have existed except so far as it may be deduced from the relation of executor and legatee in every case.” Whether the relation of trust and confidence, if it had existed between the complainant and Worthington, Elliott & DeBardeleben would have relieved the complainant from its laches, it is not material here to consider ; for no such relation existed between them, and the complainant, in relying with implicit confidence upon the representations made to it, did so at its peril. To admit of such an excuse would be, in effect, to destroy the principles so well established and so essential to the conservatism of the law. It is disclosed by the bill that the decree complained of was rendered in vacation upon a submission had in vacation. The Code authorizes the rendition of final decrees at any time, whether in term time or vacation, by consent of parties or their counsel. — Code of 1886, § 3593. The bill shows that the decree was rendered by consent of parties, and the copy of the decree exhibited with the bill, shows that Rule 80a of Chancery Practice was strictly complied with. The decree was, therefore, of the same validity as' if it had been rendered in term time. It is averred in the bill that the decree in the foreclosure suit was “solely upon the consent of the parties to said cause, and that no judicial ascertainment of the facts stated in the bill filed in said cause was ever had ;” and that ‘ ‘said consent decree does not and did not constitute an adjudication of said cause.” The. purpose of the pleader, in making this averment was, doubtless, to state, as a fact, that the decree was merely a consent decree, a decree agreed upon by the parties, and upon — 561 — such consent, rendered by the court, without an ascertainment of the truth of the facts averred in the. bill, or of the rights of the parties therein asserted; and, as a conclusion of law flowing from these facts, that the decree does not operate an adjudication against the Land and Construction Company of the matters embraced in the lis pendens of the foreclosure suit; and the argument is, that the decree is hot an estoppel of record against the company as to the amount by the decree declared to be owing upon the demands secured by the mortgage. Whatever effect such a conclusion, if logically deducible from the premises stated, would have upon the rights of the parties in this cause, under the averments contained in the bill, it is not necessary to consider ; and this because the conclusion is a non sequitur. In the absence of fraud in its procurement, and between parties sui juris, who are competent to make the consent, not standing in confidentia] relations to each other, a judgment or decree of a court having jurisdiction-of the subject-matter, rendered by consent of parties, though without any ascertainment by the court of the truth of the facts averred, is, according to the great weight of American authority,' as binding and conclusive between the parties and theiiA privies as if the suit had been an adversary one, and the conclusions embodied in the decree had been rendered upon controverted issues of fact and a due consideration thereof by the court. — Freeman on Judgments, § 330 ; 2 Black on Judgments, § 705 ; Gifford v. Thorn, 9 N. J. Eq. (1 Stock.), 722; French v. Shotwell, 5 Johns. Ch. 568 ; Walsh v. Walsh, 116 Mass. 383 ; Dunman v. Hartwell, 60 Am. Dec. 177; Nashville, &c. R. R. Co. v. United States, 113 U. S. 261; Curry v. Peebles, 83 Ala. 228; Rogers v. Prattville Co., 81 Ala. 483 ; Patillo v. Taylor, 83 Ala. 233. The fact that the decree in the foreclosure suit was rendered by consent of parties does not, therefore, detract from its dignity, or lessen its conclusiveness, as an adjudication between the parties. Not only is such its effect, but its consent is a waiver of error, precluding a review of the decree upon appeal and,, as a general rule, upon a bill of review. — Thompson v. Maxwell, 95 U. S. 391; Nashville &c. R. R. Co. v. United States, 113 U. S. 266; 2 Dan. Ch. Pl. & Pr., (5th Am. ed.), p. 1576; — 562 — Dunman v. Hartwell, 60 Am. Dec. 176 ; Curry v. Peebles, 83 Ala. 227. As an original bill, or as an original bill in the nature of a bill of review, seeking to impeach the consent decree for fraud, it is equally without equity, for the reason that the fraud charged does not relate to the procurement of the decree, or of the consent upon which it was based, but to the accounting and settlement had between the parties in July, 1893, and to the consideration of the notes which wex*e executed in pursuance of the accounting and settlement. If the allegations of the bill charging the fraud were all true, they would have constituted pro tanto a defense to any suit brought for the collection of the notes or of the debts evidenced thereby, and, therefore, any suit brought to foreclose the mortgage. As a legal question, the fraud charged-was xio more than axxy other defexise the complainant might have had to the foreclosure suit; and to allow relief to be granted in this case upon such allegations, would open the doors of a court of equity to every defendant who has, by negligent failure to interpose his defense, suffex*ed an unjust judgment or decree to be rendered against him. As we have seen, this would be contrary to the well settled rules of that court. To give equity to such a bill it must be clearly shown that the decree, or the consent upon which it was based, was procured by fraud; that the fraud was practiced in the act of obtaining the decree or the consent therefor. The principle is too well settled to admit of controversy. In Stratton v. Allen, 16 N. J. Eq. 231, the chancellor says : “It seems to be conclusively settled, that a judgment can only be impeached in a court of equity for fraud in its concoction;” and in United States v. Throckmorton, 98 U. S. 61, it is said: “The acts for which a court of equity will, on account of fraud, set aside or annul a ■ judgment or decree betweexi the same parties, rendered by a court of competent jurisdiction, have relation to frauds, extrixxsic or collateral to the matter tried by the first court, and not a fraud■ in the matter on which the decree was rendered.” The principle is thus clearly expressed by Mr. Freeman in his work on Judgments, section 489: “It must be boxme in mind that it is.not fraud in the cause of action, but fraud in its management, which entitles a party to relief. The fraud for which a — 563 — judgment may be vacated or enjoined in equity must be in the procurement of judgment. If the cause of action is vitiated by fraud, this is a defense which must be interposed, and unless its interposition is prevented by fraud, it can not be asserted against the judgment; for judgments are impeachable for those frauds only which are extrinsic to the merits of the case, and by which the court has been imposed upon or misled into a false judgment. They are not impeachable for frauds relating to the merits between the parties.” The principle has been frequently declared by this court.— Watts v. Frazer, 80 Ala. 188 ; Humphreys v. Burleson, 72 Ala. 1; Noble v. Moses, 74 Ala. 604; Cromelin v. McCauley, 67 Ala. 542; Curry v. Peebles, 88 Ala. 227. In any aspect in which the bill may be considered, it is without equity, and the chancellor should have sustained appellant’s motion and dismissed the bill. The statute under which this appeal is taken provides that “if the decree of the chancellor be reversed, the court shall render such decree as should have been rendered by the chancellor.” It is, therefore, mandatory upon this court, to render a decree, reversing the decree of the chancellor and dismissing the bill for want of equity. Reversed and rendered.