Dudley v. Miner's Ex'ors

Uiely, J., delivered the opinion of the court. We have no statutory provision commanding courts of equity to require, in any case, a confession of judgment as a condition of equitable interference with legal proceedings. The terms upon which injunctions are awarded by courts of equity, except where they are controlled by statutory enactments, are, in each case, a question for the discretion of the chancellor. It is not, however, an arbitrary discretion, but a discretion, as was said by Judge Bouldin in Great Falls Manfg Co. v. Henry’s Admr., 25 Gratt. 575, 579, “to be exercised on well established principles of equity and law, so as to preserve, as far as practicable, the rights of the party restrained, and at the same time to inflict no wrong on the plaintiff in equity.” If it be a general rule, as was claimed by counsel for the appellees, that, where a party seeks to restrain a plaintiff from prosecuting against him his suit at law, he will be required, as a condition of the injunction, to confess judg — 410 — ment in the action at law, the rule is far from being inflexible; but, on the contrary, a court of equity will not, under the practice in this State, require an unconditional confession of judgment at law in any case where it would be unsafe for the defendant to do so. Great Falls Man’f’g Co. v. Henry’s Admr., 25 Gratt. 581. In Warwick et ux. et al. v. Norvell, 1 Rob. 308, 320, Judge Allen said: “ No authority has been produced which establishes that a party haying a defence at law to an action brought against him, and a distinct- ground of equitable relief should his defence prove unavailing, must abandon his legal defence by confessing judgment or await the decision of the action at law before he can be entertained in a-court of equity.” In Staples v. Turner’s Admr. 29 Gratt. 330, the bill was filed to correct errors in a certain settlement of accounts between the parties, in which were blended individual and executorial accounts, and to have the accounts separated, and a proper settlement made by the Chancery Court as the most appropriate tribunal for this purpose, so as to ascertain the amount for which the complainant was individually liable; and to restrain the plaintiff in two actions at law, which were founded on the erroneous settlement, from proceeding further to prosecute the same. The injunction was granted upon the condition that judgments were confessed in the suits at law. It was held by this court that “the case was not a proper one for requiring the confession of judgments in the suits at law as a condition upon which the injunction would be awarded.” In Thornton v. Thornton, 31 Gratt. 212, the complainant'filed his bill in equity to restrain the plaintiff from proceeding in an action at law which he had brought to recover an alleged balance on account between them; and, denying wholly the justice of the claim asserted in the action at law, asked that the court settle and adjust the accounts between — 411 — them. The complainant confessed judgment unconditionally in the action at law for the amount claimed, under an order of the judge in the chancery cause requiring him to do so, or else submit to a dissolution of the injunction and a dismissal of his bill. Judge Burks, who delivered the opinion of the court, after strongly intimating that is was an erroneous exercise of the discretion vested in the chancellor to require the complainant to confess a judgment at law in the pending action, which was founded on mutual accounts between the parties, said: “If it was proper to require a confession of judgment at all, the order requiring it should have expressly provided that the judgment so confessed was thereafter to be dealt with as the Chancery Court might direct.” In Great Falls Man’f'g. Co. v. Henry’s Admr. supra, the complainant in equity denied the right of the plaintiff in the action at law to recover his claim or any part of it in any tribunal, but did not lay claim to any strictly equitable defence to the claim at law. It merely sought to transfer the litigation to the equity side of the court, as the more appropriate tribunal, under all the circumstances of the case, to do justice between the parties. In that case, Judge Bouldin said: “The appellant came into equity, denying in toto the right of the appellee to recover at law or in equity, denying the existence of any indebtedness at all, and merely invoking, under the peculiar circumstances of the case, the aid of the equity court in making his defence available. It is very evident that, in such case, if entertained in equity at all, the defendant at law could ‘ not safely confess a judgment,’ and therefore no such confession should have been required, but if required, it should certainly have been on terms of being ‘ dealt with as the court shall direct,’ so that it might retain control of the judgment. But the Circuit Court, as we have seen, in disregard of the principles above declared, required an unconditional confession of judgment as the price of the injunc — 412 — tion, thus compelling the defendant at law to acknowledge, ■as the price of his injunction, that a debt was in fact due, the existence of which he had ever denied, both at law and in equity.” The principle to be deduced from these decisions is that, although a defendant in an action at law has a legal defence to the action, yet if he has also a distinct ground for equitable relief should bis defence at law prove unavailing, he is not compelled to abandon his legal defence by ■confessing judgment, or to wait the decision of the action at law, before he can be entertained in equity; nor where he denies any indebtedness whatever upon the claim sued on at law and the right to recover in any forum, either at law .or in equity, but invokes the aid of a court of chancery as the more appropriate tribunal, under all the circumstances •of the case, in which to conduct the litigation, is he required, if entertained at all in equity, to confess judgment in the •action at law as the price of an injunction to the proceedings at law. In such cases, it is not safe for him to confess •a judgment at law, and it is error for the chancellor to impose such condition upon him. The appellants, who were the defendants in two actions at law brought on certain promissory notes executed by them to the Salem Development Company for the purchase of lots, alleged in their bill that the notes were procured from them by false and fraudulent representations of the said Company, and by reason thereof were wholly null and void; and that the plaintiff in the actions at law, and the persons through whom he claimed, had notice of such fraud before any transfer of the notes was made. They further alleged that the said notes, along with a number of other notes also given for the purchase of lots, all of which notes were secured by deeds of trust on the lots, and aggregating $27,392, were delivered by the Salem Development Company to the Farmers National Bank of Salem, to be held by it as eollat — 413 — eral security for a note of $21,500, given by the said Coni' pany to certain named persons representing themselves as the Olean Cart Company, limited; that the sum of $8,000-had been paid on the note of $21,500, leaving the sum of $13,500 unpaid; that all the notes constituted one security - for the payment of the note to the Olean Cart Company,, and that the Bank had no authority to transfer any of the-said notes; that the complainants, if held liable at all on their notes, and the makers of the other notes which were likewise deposited with the Farmers National Bank as collateral security (which persons they also made defendants to, their bill), were entitled to contribution among themselves,, and to have the Bank as trustee collect on each note such sum as was necessary to satisfy the balance due on the note-of Olean Cart Company; that to this end they were entitled to have an account taken of the balance then due on the said note for $21,500, and of the notes held by the Bank and the collections thereon, if any, and to have sale made of’ the said lots under the various deeds of trust, and the proceeds of sale applied to the payment of the balance on said note for $21,500; and as ancillary to their relief in equity, they prayed an injunction to restrain the plaintiff in the actions at law from further prosecution of the same. The injunction as asked for was awarded upon proper bond being given, but upon a motion thereafter to dissolve it, the court decreed that unless the defendants, before the adjournment of the term of the court, confessed judgment, in the actions at law, the injunction should be dissolved. This they declined to do and obtained an appeal from this court. It is manifest from the allegations of the bill that the de-fendants in the actions at law, denying any liability whatever on the notes sued on by reason of the fraud that infected them in the hands of the Salem Development Company, and notice thereof by the plaintiff before any transfer of — 414 — the notes was ever made by the said Company, if entitled, upon the case made by the bill, to be entertained in equity at all to make their defence, could not safely confess judgment in the actions at law; and it was error in the court to require it as the condition of a continuance in force of the injunction. But even if the requirement of such condition had been a proper exercise, under the circumstances of the case, of the discretion vested in a court of equity, the confession should not have been left by it to be made unconditionally, but the court should have expressly provided in its order that the judgments so confessed were thereafter to be dealt with as the court of equity might direct. Thornton v. Thornton, supra; and Great Falls Man’f’g Co. v. Henry’s Admr., supra. For the foregoing reasons, the decree of the Circuit Court must be reversed, and the injunction awarded in the cause continued in force, without a confession of judgment in the actions at law. Reversed.