Thomas v. Doub

The opinion of the' court was delivered by Le Grand, C. J. This case-was before theTate Court of Appeals, at December term 1849. It was then remanded to the court of chancery, since when, the proceedings there had, have not, iñ any material degree, changed the questions which we are now called upon to decide. To the original- bill of Complaint the appellant had filed his answer. The character of the answer, or, other circumstance, induced the complainant to file an amended bill. To this amended bill, the appellant demurred, but the chancellor over — 321 — ruled the demurrer and ordered the defendant to answer, and at the same time, dissolved the injunction before granted; directed an account to be taken for the purpose of ascertaining the sums to be contributed, by the several purchasers from the trustees, towards payment of the judgments mentioned in the proceedings, and also, an account against Price, the surviving trustee. From this decree, the defendant Thomas appealed. The late Court of Appeals sustained the chancellor in his overruling of the demurrer, and pronounced a full opinion on the merits of the entire cause. The case was then remanded to the court of chancery for further proceedings, when the complainant Doub, alter the defendant had answered it, dismissed his amended bill; whereupon, on the 7th April 1851, the defendant Thomas filed his petition, for leave to file an amended and supplemental answer to the original bill. This petition Mas accompanied by the amended and supplemental answer, which denied that the sum of $2,800, was derived directly, or indirectly, from the proceeds of sales of the trust estate, averring, that the defendant urging payment of his last judgment, the trustees prevailed on Mrs. Eliza Sprigg, to advance said sum of $2,800, which was to be applied in the purchase of so much of said judgment on her account r that the money was received by the defendant, under an arrangement for a purchase on account of Mrs. Sprigg, of a part of his judgment ;■ and pursuant thereto, an assignment was executed by the defendant, of a part of his judgment in favor of Mrs. Sprigg, which was forwarded to the trustees, and was at one time on file in Washington county court. At a subsequent date, however, this assignment was returned by the trustees, and at their request, the defendant gave them a receipt acknowledging the payment to him by the trustees, of the said sum of $2,800, on account of the judgment. The answer states, that the payment of $5,000, was made by the joint note of the trustees in favor of William Schley Esq., for that sum, dated the 15th January, at ninety days, which was discounted at the Fanners and Merchants Bank, and the proceeds — 322 — received by the defendant; and for the accommodation of the trustees, this note was renewed for a lesser amount. The defendant avers, that the note for $5,000, so given by the trustees, was intended by them tó be a personal engagement, and as such, was accepted by the defendant; and there was no undertaking or agreement, or understanding, that the same was to be paid out of the trust funds received or to be received by the trustees, or that the same was not to be paid in case sufficient funds were not received or should not be received by them, or that in any event the sum so received by the defendant should be refunded. On the same day, (7th April 1851,) the chancellor ordered, that the application for leave to file the amended and supplemental answer, stand over until the hearing of the cause on its merits. At the final hearing the chancellor refused to allow the defendant to file his answer, and decreed that he bring into court, or pay to J. T. Mason, as trustee of his wife, the sum of eight thousand, nine hundred dollars and fourteen cents, with interest on the sum of five thousand and seventy-three' dollars, from the 27th May 1851, until paid, and unto the complainant Doub, the sum of five thousand one hundred and forty dollars and forty-eight cents, with interest on the sum of two thousand seven hundred and ten dollars, from the 27th May 1851, until paid. These amounts were ascertained by the fourth audit contained in the record, as that of liens on the purchase of Doub, to which his purchase money ought to be applied, and for which, the defendant Thomas was liable, having improperly received it to the exelusion of prior incumbrancers. It is the correctness of this decree which is now before this court; the case differing from its condition when it was before the court at December 1849', only in this : — the petition and offer to file an amended answer of the character indicated. The dismissal of the amended bill of the complainant, cannot affect the merits of the cause; it merely assailed the validity of the judgment of Thomas, on the ground of usury. By the dismissal it left the cause, so far as the merits — 323 — are concerned, upon the statements of the original bill and answer, as they appeared before the Court of Appeals at its December term of 1849. The first question for our consideration is, — was the refusal of the chancellor, to allow the defendant Thomas, to file his amended and supplemental answer, such an error, if error at all, as can he corrected by this court; It is not the right of a party to file an amended answer. Before it can be done the leave of the court must be obtained, and this, is never granted, except under peculiar circumstances verified by affidavit. The rule upon this subject is, says chancellor Bland, 1 Bland, 162, “that the defendant must move to put in a supplemental answer, and accompany the motion with an affidavit, in which he must swear, that when he put in his answer, he did not know the circumstances upon which he applies, or any other circumstances upon which he ought to have stated the fact otherwise, or that when he swore to his original answer, he meant to swear in the sense in which he now desires to be at liberty to swear.” And in 2 Daniell’s Chancery, (Perkin’s edition,) 914, we find it stated that, “although the court will, in cases of mistake, or other cases of that description, permit a defendant to correct his answer by a supplemental answer, it always does so with difficulty, where an addition is to be put upon the record prejudicial to the plaintiff, though it will be inclined to yield to the application, if the object is to remove out of the plaintiff’s way the effect of a denial, or to give him the benefit of a material admission.” * * * * “And it is to be observed, that the court will not allow a supplemental anwer to be filed, unless on new matter, nor unless a sufficient reason appears for not having inserted it in the original answer.” The defendant, although he accompanied his petition with the draft of his answer, yet, did not accompany it -with an affidavit stating circumstances, bringing it within the rule to which we have adverted, and on this ground, if there were none other, we think the chancellor justified in his refusal to allow it to he filed. But aside from the stringency of the rule — 324 — governing such applications, we perceive no prejudice to the defendant, by the decision of the chancellor. In his answer to the original bill, the defendant admitted the receipt of the five thousand dollars, and also, that of the twenty-eight hundred dollars, referred to in the amended answer. In the answer to the original he explained that the sum of five thousand dollars had been paid him, by means of a discount, effected on a note of Messrs. Price and Yost. • The only difference, in this particular, between the answer filed and the one offered, is, that in the latter is given a fuller and more detailed explanation of the manner and time when he received these two sums of money. In the first, he merely admits the receipt of the $2800, whilst in the latter, he explains that it was derived from Mrs. Sprigg. In the view we have of the case we do not perceive that the additional particularity of the amended answer would have availed, to the advantage of the defendant, if the chancellor had permitted the answer to have been filed. But if we were of a different opinion, still, it is not in the power of this court to remedy the defect. The application rests within the discretion of the court of chancery, and the exercise of such discretion is not cause of error, or matter from which an appeal will lie. Wall. vs. Wall., 2 Harr. & Gill, 79. And 6 Harr. & John., 151, (note) Hawkins vs. Jackson. ' This being so, we are called upon to decide the cause on its merits, as presented independently of any advantage which the filing of the answer would have given to the defendant Thomas. What those merits are, we conceive to be finally settled, so far as this record is concerned, by the opinion of the Court' of Appeals of December term 1851, which is equally binding on the chancellor and this court. Hambleton vs. Tenant, 4 H. & J., 440. Clerkee vs. Mundel, 4 H. & J., 197. Mong vs. Bell’s admrs., 7 Gill, 244. And the case of Young vs. Frost, decided at this term. ' The judge who delivers this opinion, speaking for himself, has no hesitation in saying, that whilst he considers himself bound by the action of the late Court of Appeals in this case, — 325 — he does not perceive the correctness of that decision, and that if the case was before the court for the first time, he should hold that the complainant Doub is not entitled to any relief against the defendant Thomas. He thinks the whole case shows, that all, or if not all, the principal difficulties which environ this case and himself, have been brought about by his own culpable negligence, and that in justice, he, and not Thomas, is responsible for the consequences of his own indifference to the manner in which his purchase money was applied. It was in his power, and it was his duty to have seen to its proper appropriation. He neglected this, and therefore, in the opinion of one of this court, has no jupt cause of complaint against either the defendant Thomas or the other judgment creditors. But the late Court of Appeals thought differently, and their opinion is binding on the new court. Before proceeding to examine the opinion heretofore pmnounced, we will advert to the argument urged with so much ability by the counsel for the appellant, that the decision of the Court of Appeals only decided that the defendant should answer the amended bill. We do not concur in this opinion. Independently of the act of 1832, chap. 302, the argument of the learned counsel would be unanswerable; hut by the 6th sectiou of that act, it is made the duty of the Court of Appeals, “in its order remanding the cause to express the reasons for the remanding, and also to determine and declare the opinion of said Court of Appeals on all jJoints which may have been made before said Court of Appeals, or which may be presented by the record.''' And in addition to the enjoining of this duty, the same section makes each decision of the Court of Appeals, “conclusive,,” as to the points finally decided. It is clear from the language of the act of 1832, that the Court of Appeals not only had the right, but it was their duty to determine and decide all points raised or presented by the record. In undertaking to do so, the court did not, therefore, transcend the limits of its authority, but merely compli — 326 — ed with the directions and command of the legislature. ■ That the cause was remanded under that act, is clearly shewn by the terms of the decree. This being so, we are now to inquire what it was that the Court of Appeals decided. We do not see how any construction different from that of the chancellor’s, can be placed upon the opinion pronounced. We understand it as explicitly deciding, that the complainant Doub had the right to insist upon the application of his purchase money to the payment of the liens on his land, and that the defendant, Thomas, was liable to him, and the judgment creditors whose liens were of a prior date to that of Thomas’, for the amount which he received from the trustees in Doub’s note; the two payments of $2,800 and $5,000 and also for the amount of purchase by him of J. T. Mason’s land; the court say: “The payment of the trust money to Thomas, who was under the circumstances not entitled to it, whether the money of Doub or other purchasers, established such a relation between all of them, that if any one of them is called upon to pay again, there is such privity between him and all the others, that he can seek in a court of chancery to have the money restored and applied. In equity, the money paid to Thomas, or the piece of land sold to him, becomes the fund of the party who is prejudiced by its misapplication, and his resort is not alone against the trustees in this case, but he may follow the fund.” Again; “no arrangement with the trustees could let him in before his judgments attached in their prior order.” ***** “The land purchased by Thomas and not paid for, is equally liable in equity to the payment of these judgments.” * * * * “Pie, (Thomas,) takes the land under a judgment, which could not be legally paid until every dollar of Mrs. Mason’s assigned judgment should be paid.” He receives from the trustees, Doub’s bond for the lands purchased by him which ought to have been applied to extinguish prior liens, and by the receipt of moneys, countenances a clear perversion of the trusts, and prevents the proper application of the fund.” And in speaking of the $7,800, the court say, he — 327 — must have known “that he was taking it to the exclusion of elder judgments, and by assenting to the deed as he did, why-should not the parties aggrieved by this misapplication, have redress against him ?” And in addition to all this, the court say, “it is nothing to the purpose to say that .Doub has forfeited his standing in a court of equity by his own negligence." And that the trustees, by the misapplication of the funds, they have anticipated the payment of Thomas’ junior judgments, whether out of complainant's identical money or not, is immaterial." When the case was last before the court, there was no exception to the sufficiency of the averments of the complainant’s bill, and under the 5th sec. of the act of 1832, chap. 302, the court could not notice any such insufficiency. The case was therefore decided upon the facts exhibited in the answer; and although some of them related to matters in regard to which there were no averments in the bill, yet, under the fifth section of the act of 1832, in the absence of exception to the sufficiency of the averments of the bill, the court was authorised to consider them as constituting a part of the equity of the cause. In the case of Oliver vs. Palmer and Hamilton, 11 Gill and John., 442, the point was raised by the appellant’s counsel, that neither the case stated in the bill, nor the case attempted to be proved, shew any title in the complainants to the interposition of a court of equity. To escape from this objection, the appellees insisted, that even if their bill were too inartificially drawn, by reason of an insufficiency of its averments, to entitle them to the relief sought, yet, One proof in. the cause having clearly established their right to the interposition of a court of equity, the appellants were, by the fifth section of the act of 1832, chap. 302, precluded from urging as a ground of reversal, any such defect in the bill; and the court say, that if the assumption of the appellees had been correct in regard to the efficacy of the proof, they entirely concurred in the position assumed. This interpretation of the act of 1832, clearly justified the court in looking to the whole case, without being restrained by the — 328 — technical rales of pleading, as applied to the averments of the bill. The chancellor had decreed an accounting and directed the preparation of an audit, in conformity with the principles which he had recognized and- decided, and whether the subject matters to which he referred- were covered by the averments of the bill, could not be a question on the decision of which a reversal of the chancellor’s-decree depended; for under the act of 1832, no such objection could avail in the Court of Appeals, unless- it had been made in the court below. No such objection had been interposed. 'When,- however,, the cause was remanded, the defendant did except to the sufficiency of the averments in the bill. And it is conceded-, that the bill only proceeds against the defendant Thomas, on the hypothesis of his being a purchaser of lands, for which he has not paid the purchase money, and not against him for money belonging to the tract which he has received, and which ought to have been applied to the payment of liens, prior to his own, on Doub’s purchase.- We think, therefore, that the cause must be remanded, so that the complainant may so amend his pleading, as to embrace the whole case. In remanding it,, in- obedience to the mandate of the act of 1832, we give such direction to the court below as in our opinion the merits of the cause require.- Under the instruction of the opinion heretofore pronounced, and which, for reasons already given, we are bound to conform to, we determine and decide, that on- amending his bill,- if no other facts or circumstances be shown, by the p-leadings and proof,- varying the nature of the dealings of the defendant Thomas with the trustees, from the account given of them in his answer to the original bill, or that contained in his proposed supplemental answer, the complainant will be entitled to the relief which the chancellor has already decreed him. We consider the late Court of Appeals as having decided the case in his favor, admitting the truth of all the explanations contained in the supplemental answer; and we consider also, as did the chancellor, that the opinion then pronounced, — 329 — covers the question of application of the purchase money of the lands liable to liens. The cause will be remanded to the court of chancery, to enable the complainant to amend his pleadings.