Knott v. Seamands

Johnson, Phesxdent : Has equity jurisdiction in this cause? The defendant in the action at law having under the statute filed his equitable pleas, and a verdict having been rendered against him, which was set aside as not being responsive to the issue, could he then by leave of the court withdraw his plea, reserving equity, and invoke the aid of the court of chancery? Section 6 of chapter 126 of the Code provides as follows: “If a defendant entitled to such plea, as is mentioned in the preceding section, shall not tender it, or though he tender it, if it be rejected for not being offered in due time, he shall not be precluded from such relief in equity, as he would have been entitled to, if the preceding section had hot been enacted. If an issue in fact is joined on such plea, and the same be found against the defendant, he shall be barred of relief in equity upon the matters alleged in the plea, unless upon such ground as would entitle a party to relief against a judgment in other ease.” The statute giving the right to a defendant to defend at larv or obtain relief in equity, if he avails himself of his right — 104 — to make bis defence at law, and a judgment is given against him, be cannot afterwards obtain relief in equity. (1 Bart. Ch. Pr. 41. Penn v. Reynolds, 23 Grat. 523; Sanders v. Branson, 22 Grat. 364.) In this case there was no judgment at law against him. There was a verdict, which was set aside because not responsive to the issues. Thereupon the defendant withdrew his pleas reserving equity and instituted this suit in chancery for relief. It was in the discretion of the judge of the trial-court to permit or refuse the withdrawal of the pleas; a discretion only reviewable on writ of error in that case. That not having been done, we must presume ho property exercised his discretion; and the pleas having by leave of court been withdrawn, he was wholly undefended at law and had a right to resort to a court of equity, and the court had jurisdiction of the cause. But should the chancellor in the exercise of 1ns discretion, before he granted the injunction, have required the applicant to confess the judgment at law? It has frequently been held, that one who comes into equity for relief against proceedings at law, and who seeks to enjoin such proceedings, will be granted relief only upon condition of his first confessing judgment at law. The principle, upon which the rule is based, is said to be, that whenever a person resorts to equity for substantive relief against a claim asserted at law, he must submit himself entirely and without reserve to the jurisdiction of the chancellor. The rule however, if rule it may be called, is by no means inflexible; and where one has a distinct ground of equitable relief aside from his defense at law, he is not obliged to abandon his legal defense by confessing judgment before proceeding in equity to enjoin the suit at law. But where complainant in his bill expressly offers to withdraw his defense at law and submit to judgment, for the reason that his relief is alone in equity, he is entitled to an injunction. (High on Injunctions, sec. 59, and cases cited.) The better doctrine is, that the question of requiring a defendant at law, who seeks upon equitable grounds to enjoin the action against him, to first confess judgment at law as a condition of relief in equity, rests in the discretion of the court, to be exercised according to the circumstances of the — 105 — case upon well defined principles of equity and law. The object to be attained in such cases is to preserve the rights of the person enjoined and at the same time to inflict no wrong on him who seeks relief in equity. The court should not require the defendant at law to confess judgment, if such course would manifestly endanger his rights, or when his bill wholly denies the right of the plaintiff at'law to recover. And if the injunction is granted upon such terms, the confession should be required only upon the terms, that the judgment shall afterwards be dealt with, as a court of equity may direct. Where therefore a defendant at law has been allowed an injunction against the action upon condition of his confessing judgment thereon, and the injunction is af-terwards dissolved for want of equity, the plaintiff in the action at law should be required to withdraw the judgment, which they have thus obtained, in order that the cause maybe tried at law upon its merits. (High on Injunctions, sec. 60, and case cited.) This section from High on Injunctions we approve. A defendant at law having a legal defense to the action,- and a distinct ground of equitable relief against the plaintiff’s claim may bring his suit in equity without waiting for the determination of the suit at law, and may without being compelled to waive his legal defense by confessing judgment have a hearing in a court of chancery on the merits of his case and a decree for the proper relief. But it ought to have appeared in plaintiff’s bill, whether he had or relied on any legal defense, and if he had not, the court in its discretion, before the injunction was granted, should have required a confession of judgment at law. (Warwick v. Norvell, 1 Rob. 308; Great Falls Co. v. Henry’s Adm’r, 25 Grat. 575.) Were the contract and notes procured by fraud, and 'were the notes executed without consideration ? The evidence convinces us, that Seamands was-a man without much property, and that this fact was known to Knott. This clearly- appears from the depositions of the plaintiff and defendant, as they agree that, before the contract was closed, Knott gave íáea-mands $10.00 to go with him over the line of the proposed railroad and show him the route, lands, &c. Knott in his deposition says in substance, that he had conditionally made the — 106 — contract; that it he “ was satisfied with the prospect of the enterprise,” he would then accept Seamauds’s terms. By the word “ enterprise” he referred to the building of the railroad. If he was satisfied, the $10 would be a payment on the contract ; if not, it would be forfeited. In answer to the question: “Who did you understand was to build the railroad?” the plaintiff said: “ Parties whom I might induce by show-iugthem these interests and conveyingto them apart thereof.” I-Ie further said that Seamands’s options as a general thing were oral. He admits, that, after he signed the contract, he went to work to obtain written contracts from parties along the line of the proposed road for interests in lands, one-half the minerals, rights of way, &c., nine of which contracts are a part of the record. He says, that nearly all those contracts were written by him and were taken to himself and Wm. It. Seamands jointly. To our minds these contracts show how Knott understood the contract between himself and the defendant. One of the contracts executed on the 7th day of March, a little over two weeks after the contract of February 18 was executed, provides as follows: “That for and in consideration of the sum of one dollar, the receipt of which is hereby acknowledged in full, the said parties of the first part agree to sell and convey to the said Knott and Seamands an undivided one half' interest in all minerals or other valuable thing which may in future be developed, contained in all or any of their lands in the counties of Cabell, Lincoln or Wayne, State of West Yirgina, and all and exclusive rights of way for railroads or other roads, or privileges, necessary to develop the mineral resources of said lands. Hpon consideration, however, that said Knott and Seamands are to convoy oiierhali of their interests to some internal improvement company whom they may select, by whose improvement the mineral resources of said lands may be developed; and when such company shall be organized tor the purpose aforesaid then avc bind ourselves to convey by deed of general warranty the aforesaid interest to said Samuel W. Knott and Wm. It. Seamands.” The only contract that mentions the railroad company referred to in the contract of February 18, even if that — 107 — does, is the one marked No. 2, executed on March 14, 1873, which contains the following language: “ The exclusive right of way for a railroad through their respective lands, running from the city of Huntington on the Ohio river to the coal fields on Guyandotte river ; the said road to be known as the Huntington and Guyandotte River Mineral and Mining Railway Company/’ It will be observed that this is not the name of the road mentioned in the contract of February 18. That road is there called “ The Huntington and Guyan River Mineral Railway Company.” Seamands in his deposition says he did not represent that a railroad had been chartered ; but that he told him the truth about it, that the act had passed the House but failed to pass the Senate for want of time; and in answer to the question, why that clause, which referred to the railroad, was put in the contract,.said : “ Mr. Knott had that inserted to take to Ohio to show people what ho had here.” Knott’s subsequent action in writing the contracts above referred to shows, that he did not rely on that clause in the contract. Without referring further to the evidence we are convinced from the whole record, that Knott was not defrauded; that he was not by fraud induced to sign the contract and notes; and that there was a sufficient consideration to support the notes. He made no complaint of fraud or failure of consideration until after he was sued on the $400.00 note. He evidently knew, that Seamands was a poor man; that he had talked with the people, and had promises from them as to making contracts; that he had some written contracts, but that most of them were verbal; that for $1,150 he took Knott in as equal with himself, and they w-ere to work it up together, expecting if they succeeded, to make a good speculation, but if they failed, to make nothing, but lose what they put into the scheme. In this cause Seamands was entitled to a decree against Knott for the balance duo on the two notes, provided he owned them. But there is evidence in the record, which prima facü shows, that the note for $400.00 had been assigned to one Van dive, and by Vandive to Vance, and by Vance to Hall, and by Hall to the defendant Knott. It is admitted by counsel for plaintiff in argument, that Seamands is — 108 — only entitled to a decree for what is due on the note for $650. It appears to us, that the plaintiff has no equity, having failed to show any ground for equitable relief. The decree is erroneous, because it should have dissolved the injunction and dismissed the bill. It is therefore reversed with costs to the appellant; and this Court proceeding to do what the circuit court should have done, the injunction granted in this cause is dissolved, and the bill dismissed at plaintiff’s costs. Reversed. Dismissed.