McDonald v. Pearson

BRICKELL, C. J. — The appeal is taken from a decree of the city court, sitting in equity, sustaining a demurrer to a bill; the demurrer assigning eleven separate, distinct causes. The decree is in its terms general, that the demurrer is well taken and is sustained, not referring to either or any of the causes specially assigned. It is insisted by the appellants, that if any of the causes of demurrer were illy taken or assigned, there must be a reversal of the decree, though there were other causes well taken, and which ought to have been sustained. While the appellee insists, that if any of the causes were well taken, the decree must be referred to them, and referring it to them, an affirmance must follow. The rule of practice, as declared by the more recent decisions, is, that on an appeal from a decree sustaining or overruling a demurrer to a bill in equity, the decree will be referred to the causes of demurrer which will support it, and not to others which would render it erroneous, working a reversal. — Steiner v. Parker, 108 Ala. 357 ; Tatum v. Tatum, 111 Ala. 341. When, as in the present case, the decree is general, not specifying the causes of demurrer sustained, if there are causes which should have been overruled, without a violation of the maxim, prevailing in appellate courts, that all reasonable intendments, consistent with the record, must be made to support the j udgments or decrees of primary courts, and that error will not be presumed, but must be affirmatively shown, the decree must be referred to the cause of demurrer, if any, which are all taken, and not; to the others which were illy taken. Whatever may have been said, or decided in S. & N. A. R. R. Co. v. H. A. & B. R. R. Co., 104 Ala. 233, to the contrary, must not be regarded as authoritative. The object of the bill is to impeach a final decree of the city court rendered at a former term, for alleged fraud. Such a bill is commonly called an original bill — 642 — in the nature of a bill of review. — Ex parte Smith, 34 Ala. 455 ; Story Eq. Pl., § 426 ; 2 Dan. Ch. PI. & Pr., 1585. The material causes of demurrer, to which the argument of counsel has been particularly directed, are addressed to the sufficiency of the allegations of fraud contained in the bill; and raise the further inquiry, whether these allegations, so far as they may be regarded as admitted by demurrer, disclose such fraud as will authorize the vacation of the decree. With regard to fraud, it is the settled doctrine, that whether pleaded in law or in equity; whether relied on as a cause of action, or as matter of defense, the facts supposed to constitute it must be stated. Mere general allegations are conclusions of law, it is the interest of the pleader should be drawn, and are not admitted by demurrer. There must be a positive averment of facts from which the court can see clearly that fraud has intervened. — Story Eq. PL, §§251, 639 ; Flewellen v. Crane, 58 Ala. 627 ; Loucheim v. First National Bank, 98 Ala. 521; Reynolds v. Excelsior Coal Co., 100 Ala. 296. An elementary principle is, that fraud is not to be presumed, when parties do not stand in fiduciary relations ; and will not be imputed when the facts and circumstances from which it is supposed to arise are fairly, reasonably consistent with honesty of intention. — 1 Story Eq. Jur., § 190; 1 Brick. Dig. 662, § 323; Thames v. Rembert, 63 Ala. 561; Harrell v. Mitchell, 61 Ala. 270; Pollak v. Searcy, 84 Ala. 259. By this is not intended that fraud may not be proved by circumstances ; nor that in civil cases, the evidence must be so clear and convincing as to exclude all reasonable doubt of its existence. It is but seldom that it is capable of direct, positive evidence; most usually, it is the matter of inference or deduction from the facts or circumstances attending the particular transaction, or which spring from, or have some relation to, or connection with it. All that is intended, is, that the courts will not strive to force the conclusion of fraud ; that the facts and circumstances relied on as evidence, must naturally and logically indicate its existence. If they are of doubtful significance, as reasonably consistent with innocence as with guilt, the proof of fraud is wanting. — Life Ins. Co. v. Petway, 24 Ala. 544; Cromelin v. McCauley, 67 Ala. 542. When the facts are specially pleaded; when what was actually — 643 — done is stated clearly and distinctly, the effect is a question of law and not of fact. If the sufficiency of the facts to constitute fraud is drawn in question by demurrer, that construction of them must prevail, which would be given to them as matter of evidence. There is no doubt of the general jurisdiction of a court of equity to grant relief against fraud; to vacate all deeds, contracts or other instruments obtained by fraudulent practices; or to undo any and all transactions hurtful to the party complaining, which are infected by fraud. The jurisdiction extends to the vacation of the judgments or decrees of courts which have been procured by fraud. But the final judgment or decree of a court of competent jurisdiction, is impeachable only for actual fraud in its procurement. In Patch v. Ward, L. R. 3 Ch. App. 205, it was said by Lord Cairns : “Now, it is necessary to bear in mind what is meant, and what must be meant by fraud, when it is said that you may impeach a decree signed and enrolled on the ground of fraud. The principle on which a decree may be thus impeached is expressed in the case which is generally referred to on this subject, The Duchess of Kingston’s Case, where the judges being consulted by. the House of Lords, replied to one of the questions, ‘Fraud is an extrinsic collateral act, which vitiates the most solemn proceedings of courts of justice. Lord Coke says it avoids all judicial acts, ecclesiastical or temporal.’ The fraud there spoken of must clearly, as it seems to me, be actual fraud, such that there is on the part of the person chargeable with it the malus animus, the mala mens putting itself in motion and acting in order to take an undue advantage of some other person for the purpose of actually and knowingly defrauding him.” And further it was said : “I apprehend the fraud, therefore, must be fraud which you can explain and define upon the face of a decree, and that mere irregularity, or the insisting upon rights which, upon a due investigation of those rights, might be found to be over, stated, or overestimated, is not the kind of fraud which will authorize the court to set aside a solemn decision which has assumed the form of a decree signed and- enrolled.” In Ward v. Town of Southfield, 102 N. Y. 103, it was said by Earl, J. : “It is not sufficient merely to raise a suspicion or to show what is — 644 — sometimes called constructive fraud, but there must be a false and fraudulent representation, or a fraudulent affirmative act; or a fraudulent concealment of a fact, for the purpose of obtaining an undue and an unjust advantage of the other party and procuring an unjust and unconscionable judgment. It is not practicable nor possible to formulate a rule on this subject which will be sufficient to solve all cases ; but where fraudulent concealment of a fact is relied upon for the purpose of impeaching and setting aside a judgment regularly obtained, it must be an intentional concealment of a a material and controlling fact, for the purpose of misleading and taking an undue advantage of the opposite party.” The books abound with cases enunciating and illustrating this doctrine. — U. S. v. Throckmorton, 98 U. S. 61; Randall v. Payne, 1 Tenn. Ch. 143 ; Gifford v. Thorn, 9 N. J. Eq. 702 ; Dringer v. Receiver, 42 N. J. Eq. 573 ; Watts v. Frazer, 80 Ala. 188 ; Adler v. VanKirk Land and Construction Co., ante, p. 551. The allegations of the bill have been carefully scrutinized, and subjecting them to the tests of the general principles to which we have referred, we cafinot reach the conclusion that they make a case of fraud practiced to the inj ury of the complainants; and certainly not, that they can be accepted as disclosing actual fraud in the procurement, or, as is often expressed, “the concoction” of the decree, justifying its vacation. There is no room for the suggestion that there was any relation of trust and confidence existing between the parties, nor that the defendant had or exercised any influence over the complainant conducting the negotiations, resulting in the agreement for the decree. The defendant was the known counsel of the trustee in the litigation pending, when the negotiations occurred,asserting rights and interests adverse to the rights and interests asserted by the complainants ; he was under no professional duty to them ; his relation to them was adversary rather than confidential. As is a just inference from the allegations of the bill, the complainant conducting the negotiations, would not enter upon them without the presence of his counsel, and this must have been for the.purposes of assistance and advice. When transactions are had between persons standing in strictly confidential relations, as that of trustee and cestui que trust, from which the trustee derives ben — 645 — efit and the cestui que trust sustains detriment, if the cestui que trust has the presence and assistance of counsel of his own selection, it goes far to remove the presumption that he acted under the influence of the relation. If no such relation exists, the presence and assistance of such counsel is a significant fact that the parties are dealing “at arm’s length.” The readiness with which the complainant, conducting the negotiations, suggested the statute of limitations as a possible or probable bar to the demand of the defendant, indicates' clearly the animus in which he was dealing. Such a suggestion may proceed and may be expected from the wary and vigilant dealing with an adversary in interest; it is not to be expected from one reposing trust and confidence, and subject to the influence they generate. The alleged fraud consists wholly in the falsity of statements attributed to the defendant, made during the negotiations to which we have referred. These statements must be interpreted, and their real character determined by the light of the circumstances attending them ; from these circumstances they derive their true complexion, and from them they may not be disconnected, and a force and effect given them, which it may be, could properly be ascribed, if they had been made under variant circumstances and conditions. The purpose of the negotiations was not the ascertainment of the amount of the demand of the defendant, with a view to its payment or adjustment as ascertained. The city court was sitting, and according to the usual course of procedure in a court of equity, the amount could have been readily ascertained, and if the parties had not agreed, it would doubtless have been so ascertained. This procedure, with the contestation it would probably involve, was the hindrance to the rendition of a final decree, quieting the litigation in the pending suit, the complainants were seeking to expedite. With a view to obtaining an adjustment of the demand of the defendant, rather in the nature of a compromise, they drew him into the negotiations. It was not accuracy or precision of statement as to the amount of his demand, they exacted or expected from the defendant, and his statements in this regard must not be so construed and considered. It is not to be doubted from the allegations of the bill, that they were not when made, accepted or construed by the com — 646 — plainant conducting the negotiations, as intended to be accurate or precise. What is conclusive of the real character of the negotiations, of the intent of the parties, is the fact that when they were concluded and the amount to be decreed the defendant had been agreed upon, the complainant conducting them appeared before the register, and testified that the amount agreed upon was due the defendant. The testimony was not and could not have been pro forma, a mere matter of form, as is now alleged in the bill. Parties may not relieve themselves from the obligation, or from the legal operation of oaths, or of testimony, by averring the one was taken, or the other given, as matter of form. The testimony was in all its parts true, when referred, as it must be, to the agreement of the parties, and indicates clearly, that the purpose of the negotiations and the conclusion of them, was an agreement, in the nature of a compromise, avoiding a contestation of the demands of the defendant, and the risks that more might be decreed him than he was willing to accept without resorting to this judicial ascertainment. It must be conceded, that it is now made to appear by the allegations of the bill, that in the course of the negotiations the defendant overestimated or overstated the amount to which he was entitled because of many of the past services he had rendered the trustee, (by which is meant other services than such as were rendered in the pending litigation), and misstated the payments which had been made him; it must be born in mind that the statements were in themselves general and indefinite, and that no degree of explicitness was demanded Of him. If the allegations of the bill do not exclude the hypothesis, they can not be accepted as affirming it, that the overestimate or overstatement was intentional, with a view to deceive, luring the complainants into the agreement for the rendition of the decree. If the circumstances were ambiguous, this is the harshest construction of which they would be susceptible, and a construction, the wisdom and charity of the law does not favor. We need not prolong the discussion of the allegations of the bill. Unless fraud is presumed when all that is alleged is reasonably consistent with fairness of intent, all that can be said is, that under circumstances not demanding, and when from him precision or accuracy of — 647 — statement as to the amount of his demand was not expected, defendant may have overestimated or overstated it. Such overestimate under the circumstances is not fraud — certainly is not of itself evidence of the malus animus, the mala mens, the element of actual fraud, which vitiates a decree or judgment. A bill of this character may be filed without leave of the court. — 2 Dan. Ch. Pl. & Pr., 1584. The bill must state the decree and proceedings which led to it, with the circumstances of fraud on which it is impeached.— Ib. 1585. "We are inclined to the opinion that the allegations of the bill in this respect are sufficient. The first and second causes of demurrer were of consequence not well taken. If the bill was filed for relief because of newly discovered evidence, it may be, the third cause of demurrer would be well assigned; but as the bill is not of that character we need not decide that question. Nor need we consider the sufficiency of the eighth, ninth, tenth and eleventh causes of demurrer; they are not material in the view we have taken of the case. The fourth, fifth, sixth and seventh causes of demurrer, directed to the sufficiency of the allegations of fraud contained in the bill, were well taken. Referring the decree to these causes, it follows that it must be affirmed. Affirmed.