Keighler v. Savage Manufacturing Co.

Le Grand, C. J., delivered the opinion of this court. The bill filed in this cause has several objects in view, which may be thus stated: first, to enjoin the execution of a judgment in favor of appellants, and against the appellee; second, to procure, a full atid accurate account, embracing items and dates, of the dealings between the parties, the appellants having been the factors or agents of the appellee, for the sale of goods manufactured by the latter. The bill, in substance, alleges that the judgment sought to be enjoined was confessed by the appellee, not as an acknowledgment, absolutely, of so much indebtedness, but merely as a security for any which might thereafter be ascertained to exist. It also charges the accounts rendered by the appellants to be incorrect; that sales were reported to have been made, and at rates, when none such were made, and at the rates stated; that its agents, the appellants, took, on frequent occasions, to their own account goods, and reported them as bona fide sales, to its great loss. It asks for a full account of the dealing of the parties, including certain specifications and details, so that the complainant, when furnished with such information, may be enabled to surcharge and falsify. On this bill the court granted the injunction as prayed. The defendants answered, and the complainant excepted to the answer, both on the ground of impertinency and insufficiency. Testimony was taken, and a motion to dissolve the injunction and the exceptions were heard together. The court continued the injunction, afid Sustained of complainant’s exceptions to the sufficiency of the answer, those numbered in the record 7, 8, 9, 10, 11, 12 and 13. From this action of the court this appeal is taken. A motion has been made to dismiss the appeal, because of the want of an answer. This motion is founded on the language of the acts of 1835, eh. 346 and 380, which provide that an appeal will not lie from an order granting, or from the refusal to 'dissolve an injunction, until the defendant has filed his answer, and on the case of Richter & Wheat vs. Pue & Wife, 9 G. & J., 475, which determines an insufficient answer to be no answer within the view of the acts of Assembly. It follows, therefore, that if the court below was right in hold — 413 — ing good (he exceptions of the complainant, or any of them of material importance, then this appeal must be dismissed. Before alluding to (he exceptions, we think it proper to say that we do not. agree with the counsel for the appellee, that no appeal would lie until the court below should adjudge the sufficiency of (he answer. It is for this court alone to determine when an appeal will lie. Excrs. of Oliver, vs. Palmer & Hamilton, 11 G. & J., 137. Thompson vs. McKim, 6 H. & J., 302. To confide the decision of this question to the court of original jurisdiction, would be, in many cases, to deny all review by the appellate tribunal. Besides, the language of the decree in the case of Richter vs. Pue, shows plainly that it was the judgment of this court, and not that of the court below, which determined the insufficiency of the answer. It says, that the defendants having ‘ failed to file sufficient answers to the bill of complaint,” §'c. Not that the court below had so decided, but that this court so determined and adjudged, and, therefore, appeal dismissed. It is a well settled principle of equity jurisprudence, that if a respondent submit to answer, he must answer fully; Warfield vs. Gambrill, 1 G. & J., 511; and that ‘‘the court expects from everyone seeking relief, unreserved frankness; and he who evidently and purposely holds back something, cannot complain if he should find himself regarded with suspicion, and distrust, and be refused that to which he may, in truth, be entitled, and under other appearances might have obtained.” 3 Bland, 132. By the same authority we are assured that whatever it may be in the English courts, “it has long been the practice of this court (chancery) to hear and decide upon the motion to dissolve and the exceptions to the answer at the same time.” These citations are sufficient to show what are the questions before us, and the rules which are to decide them. In the present condition of the record, it is impossible to •siate what, in fact, was the answer to the seventh exception. It refers to a paper marked X 4, as showing the dates and amounts of the receipts from collaterals in their hands. There — 414 — is no such exhibit in the record, and, of course, this court cannot undertake to decide upon its statements. It may, or not, have furnished a full and complete answer to the exception. All we can do, is to declare that the complainant is entitled to full knowledge of A he amount of collaterals in the hands of the defendants, and also what has been received from them, and, indeed, a correct and detailed statement of the condition of such securities. We must hold the exception to have been properly sustained. We are also of opinion that the eighth exception is well founded. The answer to it, to say the least of it, is ambiguous; it refers to books such as are supposed in the bill. It is the duty of the factor to keep books, in which shall be correctly entered the transactions on account of his principal, and the latter is entitled to a correct copy of the entries, including all memoranda connected therewith. The 9th, 10th, llth, 12th and 13th exceptions were, in our judgment, sufficiently answered. The answers, in substance, declare that the accounts were true in every particular, “and were fully examined, understood and approved;” that it is now impossible for the defendants to give the names of the purchasers in every instance; that had the demand been made within a reasonable time, they might have been able to have furnished the information. We think the settlement of accounts, with full knowledge of all the items of which they were composed, without any intimation given that the names of the purchasers would ever be required, is a fact entitled to considerable weight, for although in a case of actual fraud during the life time of the parties, limitations will not bar, (4 How., 561,) yet when parties with complete information adjust their accounts, it would be unreasonable to subject them, or either of them, at any considerable distance of time thereafter, to a demand for names which could have been readily furnished, if required, at the time of accounting, but which, in the lapse of time, if not absolutely impossible, it is very burdensome and expensive to obtain. The obligation of candor is reciprocal. If it were the intention ever to make such a demand, the defendants should have been notified of it at the date of some of the adjustments, of within a reasonable time thereafter. This view, — 415 — of course, is based upon the supposition that the conduct of the defendants has been honest and faithful in all things; if, on the contrary, they deceived the complainant by false statements, and by the concealment of material facts, then it, is competent to complainant to avail itself of every circumstance which will cast light upon the transactions of its factors. The case involving large interests, and much lime having already elapsed without any really practical result having been accomplished, and understanding it to be the wish of all parties, as announced at the bar, that when the case goes back, that it does so accompanied with the views of this court as to the principles upon which it should be ultimately decided, we will briefly indicate them for the government of the Superior Court. As to the Judgmkjmt. — Prima fade it imports verify, and, as to the parties to it, is conclusive, unless mistake or fraud be shown, and the onus is on those who impeach it. A judgment is the highest exercise of the judicial power, and, as such, to be interfered with or questioned only with great delicacy and circumspection. Were this not so, our judicature, instead of being a guaranty of stability and certainty, would be worse than a farce; would be a snare and a trap to the confiding. The law regards it as the final adjustment of the matter in dispute, upon which the parties may confidently rely. If, as alleged in this case, the judgment was agreed and understood by the parties to it to be, not-an ascertainment of so much actual indebtedness, but only as a security for so much as thereafter might be ascertained to be due, then, in such case, it would he a fraud oil the part of the appellants to use it for a purpose different from that of the agreement, and a court of equity would enjoin them from doing so. 10 G. & J., 226. But to establish such a proposition in direct conflict with the legal import of the judgment, the evidence should be abundantly full and explicit; so full, indeed, as to leave no doubt on the mind of the court. Unless evidence of this character be adduced, the judgment should be regarded as unimpeached, and remain in full vigor. In the final decision of this case, the law governing the re — 416 — iation of principal and factor, is to be applied to the dealings of the parties. What that law is — so 'far as this case is concerned — -we shall, as concisely as may be, state. Its paramount and vital principle is good faith; without it the relation of principal and agent cannot exist; and so sedulously is this principle guarded, that all departures from it are esteemed frauds upon the confidence bestowed. Almost any number of cases might be cited to support this declaration, but such a labor would be but an unprofitable employment of time, inasmuch as all that can be usefrrlly noticed, has been in a very clear manner brought together by Sugden, in his work on Vendors and Purchasers, by Justice Story, in his commentaries on Equity Jurisprudence, and in the decisions of the Supreme Court of the United States. In these compilations we have, without unnecessary verbiage, the relative duties of principal and agent distinctly defined. There is no discordance between them; but, on the contrary, perfect harmony. In the case of Brooke, et al., vs. Berry, 2 Gill, 99, the Court of Appeals emphatically recognized and adopted theviews of Justice Story, contained in his commentaries on Equity Jurisprudence, as stated in section 315. Jn the celebrated case of Michoud, et al., vs. Girod, et al., 4 How., S. C. Rep., 503, (a case elaborately argued by counsel, and fully considered in all its bearings by the court,) the views of Sugden are fully adopted; and he says, when speaking of agents and trustees other than those who are only nominally so, that they “are incapable of purchasing such property (that of their principal) themselves, except under the restraints which will be shortly mentioned. For if persons having a confidential character were permitted to avail themselves of any knowledge acquired in that capacity, they might be induced to conceal their information, and not to exercise it for the benefit of the persons relying upon their integrity. The characters are inconsistent.” The Supreme Court, after fortifying this doctrine by the citation of a great number of cases, proceeds to announce as a consequence, that the law “prohibits a party from purchasing on his own account that which his duty or trust requires him to sell on account of another, and from purchasing on account — 417 — of another that which he sells on his own account. In effect, he is not allowed to unite the two opposite characters of buyer and seller, because his interests, when he is the seller or buyer on his own account, are directly conflicting with those of the person on whose account he buys or sells.” From this it follows that the appellants had not, according to the general principle, the right to purchase the goods of their principal intrusted to them for the purpose of sale to third parties. The exception to this general rule, or, as Sugden terms it, “restraint,” is thus expressed: “We scarcely need add,” say they, “that a purchase by a trustee of his cestui que trust, sui juris, provided it is deliberately agreed or understood between them that the relation shall be considered as dissolved, and there is a clear contract ascertained to be such, after a jealous and scrupulous examination of all the circumstances, and it is clear that the cestui que trust intended that the trustee should buy, and there is no fraud, no concealment, and no advantage taken by the trustee of information acquired by him as trustee, will be sustained in a court of equity.” This extract from the opinion of the court, embraces both its own and the opinion of Sir Edward Sugden. And our late Court of Appeals, in the case already referred to from 2 Gill, after regretting that the inhibition was not without limitation, say — quoting the language of Justice Story — -“To deal validly with their principals in any cases, except where there is the most entire good faith, and a full disclosure of all facts and circumstances, and an absence of all undue influence, advantage, or imposition,” is not to be permitted. According to these doctrines, if the appellants, without the knowledge and assent of their principal, purchased or took to their own account, goods entrusted to them for sale, or, with the knowledge and assent of their principal, purchased its goods, the principal not being fully and thoroughly advertised of every fact and circumstance in the possession of the agents, such sales are invalid. Wliether there were any purchases made by the appellants unattended by these indicia of perfect good faith, is a proper subject of inquiry for the court to which this cause will be remanded. The repord, as it now stands? — 418 — discloses nothing positive on this head, although it does much in regard to the general course of trade, and from the ordinary turn of things, it is inferred by witnesses and counsel that such purchases as are unauthorized by law, were made. The answers of the appellants declare every thing was done with the full knowledge and approbation of the agent of the appellee. If this should turn out to be so, and that there was a free, full and frank disclosure of every circumstance connected with the transactions, and a total absence of all fraud and concealment, then, if the accounts between the parties be properly stated, we do not perceive how, under the decisions to which we have referred, such sales can be impeached in a court of equity. Whether the accounts are properly slated, is not for us to decide; that is more properly the business of a book-keeper or accountant; all we can do, is to point out the principles on which they should be stated. If the items composing the several accounts rendered, and the interest thereon; be arithmetically and properly averaged, then the result is precisely the same as though the interest had been computed separately on each item from its true date. This is a mathematical fact. (Decided July 21st, 1858.) With these views we dismiss the appeal, the injunction remaining until further order of the court. Appeal dismissed.