Sonstiby v. Keeley

McCrary, C. J. 1. I have grave doubts as to the propriety of attempting to apply to a case at law the principle invoked by counsel for defendant in this case. That principle is that where the vendee buys in good faith, and without notice of fraud on the part of the vendor, and pays a part only of the consideration, agreeing to pay the remainder at a future day, if, before such remainder is paid, he receives notice of the vendor’s fraud, he will be protected only to the amount act. ually paid before notiec. No doubt this is a sound principle of equity; but can it be applied by a court of law? Can such a court rescind the contract pro tanto, and place the parties in statu quo ? If so, can it be done in a case like the present, i 1 which no issue is made except upon the validity of the sale ? If the sale was held void, so as to leave the title in Forbes, against whom the attachments were issued, judgment at law could be rendered for defendant; but where the sale is found [449] to be valid and bona fide, in so far as the vendee is concerned, and the title is vested in him, and where he has sold or disposed of a portion of the stock, and probably expended money and given time and labor in its care and preservation, it seems probable that only a court of equity would be competent to grant any relief to the creditors of the vendor. 2. But it is not necessary to pass finally upon this question, as I am clearly of the opinion that the proof shows a payment by plaintiff of the whole of the purchase price. It is contended that the promise by plaintiff to assume and pay the indebtedness of Forbes at the bank, though made as a part of the consideration for the purchase, was not payment, and this for the reason that plaintiff is not legally bound to pay those debts. It is said that the holders of those claims can not sue plaintiff and recover upon them. Upon this question there is a conflict of authority in this country. In many of the states the right of action by the payee of such debts against the party assuming to pay them is maintained, even where such payee is not party to the contract. This upon the ground that such a promise is an original promise, based upon a valuable consideration, namely, the sale and delivery of the goods. 1 Pars. Con. (5th Ed.) 466-468; Fanly v. Cleveland, 4 Cow. 432; Same v. Same, Id. 639; Canal Co. v. Bank, 4 Duer, 97; Lawrence v. Fox, 20 N. Y. 268; Arnold v. Lyman, 17 Mass. 400; Carnagie v. Morrison, 2 Met. 404; Crocker v. Stone, 7 Cush. 338; Hynd v. Hold-ship, 2 Watts, 104; Burs v. Robinson, 9 Barr, 229; Eddy v. Roberts, 17 Ill. 508; Todd v. Tobey, 29 Me. 219; Motley v. Manuf’g Ins. Co. Id. 337; Metcalf on Contracts, 205-11, and cases cited in notes. And such is the law in Minnesota, as repeatedly decided by the supreme court of that state. Sanders v. Clason, 13 Minn. 379; Goetz v. Foos, 14 Minn. 265; Merriam v. Lumber Co. 23 Minn. 314. But the opposite doctrine is maintained by numerous cases, and among them, by the supreme court of the United States, in Nat. Bank v. Grand Lodge, 98 U. S. 123; 2 Chitty, Con. (11th Ed.) 74, and cases cited in notes; Mellon v. Whipple, 1 Gray, 317. [450] Ordinarily this court would feel bound to adopt and follow the rule laid down by the supreme court in Nat. Bank v. Grand Lodge, supra; but, under the peculiar circumstances of the present case, I am clearly of the opinion that I ought to apply the rule established by the supreme court of the state of Minnesota. It will be observed that the plaintiff assumed and agreed, in consideration of the sale to him of the stock of goods, etc., to pay certain debts held by the bank against Forbes. In so far as the debts are the property of the bank, it is certain that they can be sued upon only in the state courts; for it appears that the bank is a corporation of the state of Minnesota, and the plaintiff a citizen of that state. How many of these debts belong to the bank, and how many to other parties represented by the bank, and how many of such other parties are citizens of Minnesota, does not appear, nor is it material; it is enough to say that certainly a part, and probably the whole, of said debts could only be collected by suit in the state courts. It may be 'that some of the claims are for less than $500, and for that reason not within the jurisdiction of this court. I must assume, therefore, that, in case plaintiff refuses to pay said claims, suits must be brought, certainly upon some of them, and probably upon'all of them, in the courts of Minnesota. So far .as those courts are concerned, as already seen, the law is settled by repeated decisions of the supreme court, and, in accordance therewith, the plaintiff would be held liable in a suit by the payee of any of said debts. The question therefore is, shall this court hold that the creditors of Forbes are entitled to recover from plaintiff the sum of those debts, in this case, and thus subject him to a second payment of the same amount to the holders of the claims ? A decision which would establish injustice such as this, is not, I am sure, required at my hands. It is true that this case does not belong to the class in which, as a rule, the federal courts are required to follow the decisions of the highest judicial tribunal of the state. But, although the question is a new one, I am clearly of the opinion that, even on questions purely of commercial law, the federal courts [451] should follow those decisions if it appears that, by reason of the situation of the parties and of the subject-matter, to hold otherwise would subject a party to double payment of the same dobt, without the possibility of relief from the federal courts. The motion for a new trial is overruled.