Webster v. Skipwith

Mr. Justice PIandy delivered the opinion of the court. This was a bill in chancery, filed to enjoin a judgment at law rendered in behalf of the appellee against William M. Winn, one of the appellants. The facts set forth in the pleadings and testimony are prolix and voluminous, and will only be noticed here in reference to the leading features of the ease, touching the questions of law arising in it. It appears that in January, 1844, Skipwith bargained and sold to Winn a tract of land which Skipwith had previously purchased from the American Land Company, Winn paying to Skipwith $400 in cash, and giving him his note for the further sum of $400, payable 1st January, 1845, and executing his bond to Skipwith in the penalty of $10,000, conditioned that Winn and J. H. and F. G. Webster should well and truly pay and deliver to Skipwith two notes given by Skipwith to the American Land Company, and then unpaid, without hin-derance or costs of any kind to Skipwith. Winn was acting in the matter as agent for the Websters, though his own name alone was used. An action at law was instituted on this bond to May term, 1847, averring, as a breach of it, that the notes mentioned in the condition had not been paid; but the amount of them was not specified in the declaration, as it originally stood. To this, the defendant pleaded that he had well and truly paid the notes, according to the obligation; and thus the case stood at the trial term in November, 1847. Long before the institution of this suit, the Websters had really discharged and taken up the notes of Skipwith to the Land Company; and it appears that, at the trial term of the suit at law, Winn was in attendance and prepared with the proof necessary to a successful defence of it; but, on the assurance of his counsel, that, as the pleadings stood, the burden of proof was upon the plaintiff, and that his counsel had no proof to sustain the action, it would be decided for the defendant. Winn gave no further attention to the case, but left the court. The attorney for Skipwith was of opinion that he could not recover a final — 347 — judgment, for want of proof, and so stated to the adverse counsel, and proposed to him that the case should be continued, expressing a willingness to dismiss it upon the payment of costs and his fee, which was declined. He then determined to obtain an amendment of the declaration, so as to dispense with proof, and accordingly made such an amendment, acting, as he thought, under the consent of the attorney for the defendant. But in this, there seems to have been a misunderstanding between the attorneys ; the one believing the consent to have been given, and the other not intending to give it, and being, as he states, ignorant of the fact that the amendment was made. Under these circumstances, the case proceeded to trial, the declaration as amended was read, and the defendant’s original plea; and the defendant contended that the burden of proof was upon the plaintiff, and, there being no proof introduced to sustain the case, that a verdict should be rendered for the defendant. The court was of a different opinion, and judgment was rendered for the plaintiff for the full amount of the notes referred to in the condition of the bond, ¡§5,000. A motion was made for a new trial, on the ground of the erroneous opinion of the court, which motion was overruled, and, on writ of error, the judgment was affirmed in this court, and the judgment for the entire amount of principal and interest, damages" and costs, v'as attempted to be collected; while, if any thing was due Sldpwith, it could only be a small sum for costs incurred in a suit against him brought before the purchase of the property from him by the Websters. This bill is filed to enjoin this execution, alleging the above-stated facts in part, and charging fraud on Sldpwith in prosecuting the suit, tendering the payment of whatever may be found to,be justly due on the transactions, &c. &c. The bill was dismissed; and from that decree, the case is here by appeafi■ A preliminary question is raised in behalf of the appellee, on the gpound that the bill shows no cause for relief in equity, and that; the demurrer in the court below should have been sustained, because the bill shows that there was an ample defence at la W upon the state of facts set forth in it. But in addition to — 348 — the facts stated, showing that the suit might have been successfully defended at law, the bill shows clearly that the complainants were lulled into security by the statements of Skipwith, “ at the time of the institution of the suit and during its whole progress,” in substance, that he only claimed about fifty or sixty dollars; and the bill states that these repeated statements prevented Winn and his principals from making diligent defence to the suit. If this be true, (and the demurrer admits it,) there can be no question but that it affords a sufficient excuse for the failure to make the proper defence at law. There can be no controversy in relation to the injustice of the judgment at law, or the unconscientious efforts of the plaintiff to take every advantage to be derived from it. The question is, whether the complainants show such a case as to bring them within the remediable powers of a court of equity; and after a careful consideration of the case in all its circumstances, we are satisfied that sufficient ground is shown to entitle the complainants to relief in that court. 1. There is sufficient in the record to show that the judgment at law was obtained through mistake of fact. It appears that the defendant in the suit either had in his possession, or was able to obtain readily, ample evidence to defeat the action, either entirely or for all but a very inconsiderable amount. From the condition of the pleadings and the statements of his counsel, founded possibly in misapprehension of fact, but still operating both upon the deferidant and his counsel, in relation to the small amount which was claimed to be due, he concluded that there was no danger of a judgment being rendered against him. Nor could there have been any final judgment rendered at that term in the attitude of the pleadings at that time, and for the want of proof to sustain the plaintiff’s case. But at this point it seems-that a misapprehension occurred between the counsel for both parties, in consequence of which, on the part of one of them, an amendment of the pleadings was made, which materially altered the .state of the case, and enabled the plaintiff, in the absence of evidence on the part of the defendant, to obtain the judgment. Without imputing any impropriety to either of the counsel, it is clear — 349 — from their respective statements that there was a misunderstanding in relation to the amendment, and the counsel for the defendant states that he would not have gone to trial had he been aware of the amendment. It appears that the trial took place on the last day of the term, and though the amendment had been made for more than a week, it was unknown to the defendant’s counsel. True, when apprised of it on the trial, he contended that it did not change the rule as to the burden of proof, and he took the same position on the motion for a new trial, and it was insisted on when the case was brought to this court. This was a mistake of law, but it did not destroy the effect of the mistake of‘fact which the misapprehension in relation to the amendment caused to the defendant’s interest. It was the amendment which rendered the defendant’s evidence necessary, as, without it and in the absence of proof, the plaintiff could not have succeeded; and it was ignorance of the fact that the amendment had been made which induced the counsel to go to trial, and deprived him of the benefit of his just de-fence. It is said that the defendant’s counsel should have moved for a new trial, because of the surprise. It seems that he thought the decision of the court upon the case as of record was erroneous, and should be reversed. But if surprise would have been a good cause for new trial, it would with more propriety constitute ground of relief against an unconscientious claim in a court of equity; and the cases are numerous where the court of law will not grant a new trial in cases of this character; but courts of equity have given prompt relief. In the application of the remedial powers of a court of equity to cases of this nature, they appear to have acted rather upon the intrinsic equity of the particular case, than upon any strict rule limiting and restraining the powers so as to prevent them from doing equity. Judge Story lays down the rule thus: “ That in all cases where by accident, mistake, or fraud, or otherwise, a party has an unfair advantage in proceeding in a court of law, which must necessarily make that court an instrument of injustice, and it is, therefore, against conscience that he should use that advantage, a court of equity will interfere and restrain him from using the advantage.” 2 Story’s Eq. Jur. — 350 — § 885. Chief Justice Marshall thus states the rule: “Any fact which proves it to be against conscience to execute such judgment, and of which the injured party could not have availed himself in a court of law, or of which he might have availed himself at law, but was prevented by fraud or accident, unmixed with any fault or negligence of himself or of his agents, will authorize a court of equity to interfere.” Marine Insurance Co. v. Hodgson, 7 Cranch, 332. These principles, we think, fully justify the interposition of a court of equity under the circumstances of this case. 2. The bill in this case is filed by the Websters, and for their relief. They were not parties to the judgment at law, nor affected by its technical effect and operation. But they are affected by it collaterally and in an equitable point of view; for as Winn was acting for them in all the transactions between him and Skipwith relative to the matters of this controversy, they would be bound to indemnify him in whatever loss he sustained on account of this judgment. They are the principals, and Winn the agent. If by force of this unconscientious judgment Skipwith were to coerce the amount of it from the agent, he would have his recourse upon his principals, the Websters. They, not being parties to the judgment, are not tied down by the strict legal rules affecting only the immediate parties, and are entitled to have their rights protected against an undue advantage taken of their agent which must ultimately fall on them. If the judgment were obtained by fraudulent means or unconscientious advantage against Winn, and he compelled to pay it, and then the Websters to refund the amount to him, they not being parties to the judgment, could recover of Skip-with the money thus fraudulently obtained by him. This is clearly deducible from the decisions in relation to this point. Moses v. Macfarlan, 2 Burr. 1605; 9 Mass. 14; 8 J. R. 470; 3 Harr. & J. 218; 9 Bing. 660; 6 B. & C. 679; 6 Cowen, 43. With much greater reason are they entitled to come into a court of equity and assert their just rights, by arresting the enforcement of a most unjust and unfounded demand before it is paid. This will prevent litigation, by having all the equities between the parties settled by one suit. — 351 — We think, therefore, that if this judgment was inequitable as affecting the rights of the Websters, they should be heard in a court of equity to protect themselves against its iniquitous consequences. 3. Under the circumstances of this case, whatever the measure of damages might be in the action at law for the breach of the condition ofHhe bond, it is well settled that in a court of equity, Skipwith was entitled only to the actual damages sustained by him. If the notes had not been paid and delivered up to him, he was entitled, in the manner in which this case was presented on the trial at law, to recover damages to their full amount as stated in the declaration, and if their amount had not been stated, he might have had judgment for the full penalty of the bond, in default of a plea. In either case, it would have been a judgment for a penalty, obtained through inadvertence, surprise, or accident, which courts of law would enforce. But against such judgments courts of equity extend their relief, regarding the penalty or forfeiture, in equity, only as intended to secure the damages really incurred. Hardy v. Martin, 1 Bro. Ch. R. in note; Sanders v. Pope, 12 Ves. 282; Skinner v. Dayton, 2 J. C. R. 535, 536; s. c., 17 J. R. 369; 2 Story, Eq. Jur. §§ 1315, 1320. This judgment, therefore, though valid at law, is to be held in a court of equity only as a security for the damage actually sustained by the plaintiff in it, by reason of the failure of the defendant to pay and deliver up the notes referred to in the bond, and the costs incurred by Skipwith in consequence of such failure. The decree below is reversed, and the cause remanded, with directions to have an account taken of the damage actually sustained by Skipwith, and the costs incurred'by him before the institution of the suit at law; and to that amount that the judgment at law stand in full force; but for the residue, that it be perpetually injoined; and if no damages or costs, as aforesaid be ascertained to have been sustained or paid, then that said judgment be perpetually enjoined for the entire amount of it.