City Bank v. Smith

Buchanan, Ch. J., delivered the opinion of the court. The note given by the defendant to James Sterrett, to secure the payment of which, the mortgage to Sterrett was executed, was for the price of a number of tickets in the Washington Monument Lottery, third class, (the scheme of which had been purchased from the managers by Sterrett and others,) and payable by its tenor, in cash or prize tickets in that lottery, fifty days after the drawing should be completed. The drawing of the lottery was completed on the 12th of December, 1817, and the bill being for the fore-closure of the mortgage, (which, on the 18th of April, 1820, was transferred to the complainants, the President, Directors, and, Company of the City Bank of Baltimore, in consideration of a debt due from him to them, and a further pecuniary consideration,) and a sale of the mortgaged premises, to satisfy the balance claimed to be due on the note, various payments having been before made by the defendant in cash or prize tickets, the question is, whether the defendant is at this time, entitled to a credit for a n umber of prize tickets, which were not demanded within twelve months after the completion of the drawing of the lottery? It can scarcely be doubted, that the prize tickets stipulated to be received in payment of the note, were intended to be available tickets; not such as had lost their validity, but tickets; on which the holder would be entitled to demand and receive the prizes drawn to their respective numbers. None other would be a prize ticket within the — 276 — meaning of the contract; and as it relates to prize tickets in the 3d class of the Washington Monument Lottery, it is proper to inquire what was a prize ticket in that lottery, on which the holder was entitled to receive the prize drawn to its number. That inquiry is gratified by an inspection of the tickets themselves, by each of which, the holder is advised, in the language of the ticket, that he “will be entitled to such prize as may be drawn to its number, if demanded within twelve months after the completion of the drawing.” It was not a concealed or hidden purpose, or of doubtful import, but a palpable notice to all the world, by which every purchaser was informed of the terms, on which alone, he could become a successful adventurer. It informed him, that a prize being drawn to the number of his ticket, was not alone sufficient; but that, to entitle himself to such prize, it was. necessary he should demand it within twelve months after the completion, of the drawing. A prize ticket, therefore, in the third class of the Washington Monument Lottery, the, holder of which was entitled to the prize drawn to its number, was one, on which the prize had been demanded within twelve months from the completion of the drawing: or one, the holder of which was entitled to demand the prize, twelve months not having elapsed from the time of the drawing. It was a part of the scheme of the lottery, that the prizes not demanded within twelve months should become a part of the fund, which it was the object of the lottery to raise; and the probability that a portion of them would not be demanded, entered into the calculation of- the chances. To which scheme, and to the condition plainly expressed upon the face of such ticket, every purchaser gave his.assent, by the act of becoming a purchaser. The time and circumstances attending the claim to a credit for these tickets, are not such as to invite the favorable consideration of the court. The note was given on the 26th of July, 1817, and the mortgage we have seen, was transferred to the President, Directors, and Company of the City Bank of Baltimore, on the 18th of April, 1820, — 277 — more than two years afterwards. Between the date of the note and the assignment of the mortgage, various payments were made on the note by the defendant, in cash or prize tickets, leaving a large balance, which, it is proved by John 8. Gittings, then acting as the agent of Sterrett, he frequently admitted to him was due, and promised to pay. Here the inquiry forces itself upon us, why, if he then owned, or was in possession of the prize tickets, for which he now claims a credit, and thought himself to be entitled to do so, did he not apply them to the payment of the note, or claim a credit for them, when he was making payment in other prize tickets ? They amounted to a large sum, (several thousand dollars,) too large a sum it would seem to have been overlooked or forgotten.- And why, with such ready means of payment, did he acknowledge to the agent of Sterrett, that he owed the balance appearing upon the note to be due, and frequently promise to pay it? In the latter end of the year 1820, after the assignment of the mortgage, and when he had a knowledge of that assignment, he at different times, in conversations with John B. Morris, who was acting for the Bank, proposed to give a note for the balance due on the note in question, if the Bank would cancel the mortgage. And it is proved by another witness that he heard him, several times, say to John B. Morris, that he had also offered an endorser. Why did he not then, when negotiating with Morris, for an adjustment of the balance claimed to be due upon the note, instead of offering a new note for that balance with an endorser, offer in payment the prize tickets for which he is now claiming a credit ? If he then possessed or owned them, and was entitled to the credit claimed, it is difficult to conceive that he could have forgotten them, or why he did not claim to be allowed for them, when pressed for a settlement of the note; they were prizes, many of them of 20, others of 50, and some of $500 each. It was not that he was inattentive to his interest, because he did claim other credits; and if he had the tickets, and supposed' he was entitled to it, he ought to have claimed — 278 — this. It was a matter peculiarly within his own knowledge, for the Bank cannot be presumed to have known that he had such tickets in his possession, and it was his duty to have disclosed it, if he intended ever to set them up against the claim upon the note and mortgage, or supposed he had a right to do so; and not by concealment to deceive the Bank, at the very moment when he was pressed for payment of the balance claimed upon the note. The original bill for a fore-closure of the mortgage, which was filed in May, 1820, was dismissed for the want of proper parties, on the 21st of December, 1826; but by an agreement appearing in the record, all the proceedings and evidence in that case are to be used in this. In his answer to that bill, the defendant sets up no pretence that the note was satisfied, or that he was entitled to any credit on account of any tickets in his possession. And although testimony was taken under the commission in relation to a few prize-tickets which were alleged to have been lost, amounting to something more than $78, and for which a credit had been claimed, and also in relation to a pair of oxen, both of which credits are allowed by the auditor in his statement; yet no testimony whatever, was taken, nor claim set up, in relation to those prize tickets, of so much more importance, until July, 1825, when, for the first time, they were exhibited before the auditor, and the amount of the prizes insisted on as a credit against the note, more than seven years after the drawing of the lottery, and more than five years after the filing of the bill. During the whole of this time, the defendant was pressed for payment of the balance claimed to be due on the note, and for the greater part of the time, proceedings in Chancery were going on to enforce the payment. From all which, the conclusion is irresistible, that the defendant was not in possession of, nor had any interest in the tickets in question, at any time, before the assignment of the mortgage to the Bank, nor until long after. And he comes into a Court of Chancery with a bad grace, insisting upon a credit for them now, to which, by his proposal to give a note with an endorser, — 279 — for the amount claimed to be due, if the Bank would cancel the mortgage, he virtually admitted he was not at that time entitled, and without showing how, or when, or from whom, he obtained the tickets for which the credit is claimed. By the stipulation in the note of the defendant, that it should be payable in cash or prize tickets, such tickets were meant as would, at the time of payment, entitle the holder to their prizes, which, according to the terms of the condition expressed upon the face of each of them, is not the character of the tickets, for which, the defendant now claims a credit against his note, none of them having been demanded within twelve months after the drawing of the lottery; and consequently not being such, as entitle the holder to the prizes drawn to their numbers. And adhering to the express terms of the lottery, if this was a proceeding by James Sterrett and the other purchasers of the scheme, to enforce the payment of the note, the defendant would not be entitled to the credit he claims; the omission by the holders of tickets to demand the prizes in time to entitle themselves to them, being one of the sources of profit, which the purchasers of the scheme had a right, and probably did look to and rely upon, as a part of the scheme of the lottery. In that respect, occupying the position of the original managers, for they purchased the scheme with all its advantages. It was only by the terms of the note, that prize tickets were made receivable at all in payment; for without that stipulation, the defendant would have had no right to pay olf his note in prize tickets, and to settle his claim for prizes in that way, but must have looked to the original managers for payment of his prizes; and to compel the receipt now, of such as are not available, and do not entitle the holder to demand and receive the prizes from the managers, would not be to oblige the parties to fulfil their engagement, but to coerce them to do what they never contracted to do, what, by the terms and spirit of their engagement, they were under no obligation to do; for their engagement was not to receive in payment, tickets that would not entitle the holder to the prizes — 280 — drawn to their respective numbers; and as to such tickets, it is, as if there was no stipulation to receive prize tickets in payment at all, and the note was payable in cash only. And if the defendant would not be entitled to a credit for those tickets, as against Sterrett and the other purchasers of the scheme, in proceedings by them to foreclose the mortgage, what pretence is there for such an allowance, as against the assignees of the mortgage, who took it more than two years after the drawing of the lottery had been completed; and when the balance claimed on the note was acknowledged by the defendant to be due, and no claim to a credit for those tickets had been set up, nor until five years afterwards, though the defendant was pressed for payment, to which he might have applied them at any time within twelve months after the drawing, if he was then in possession of them, of which there is no evidence, but every reason to believe that he. did not obtain possession of them for many years after the title of the assignees had accrued. And though the note informed them that it was payable in prize tickets, yet they were also informed by the tickets themselves, that the defendant could not, according to the scheme of the lottery, be in possession of any tickets applicable to that purpose, when they received the assignment of the mortgage; the time having elapsed within which alone the holders of tickets were entitled to demand and receive the prizes drawn to their numbers. They took the assignment of the mortgage, therefore, not only, “without notice of any subsisting claim to a credit for these tickets, but with the assurance, looking to the terms of the lottery as proclaimed on the face of each ticket, that there could be no such claim. -But it has been strongly urged, that the assignees of the mortgage took it subject to all the equity of the mortgagor as against the mortgagee; and that this being the case of a condition, equity will relieve against the effects of the nonpierformance of it, by giving to the defendant the benefit of the prizes, though not demanded according to the condition. — 281 — Equity will relieve against penalties and forfeitures, and where the matter lies in compensation, whether the condition be subsequent or precedent; as if it be for the payment of a certain sum of money at a certain day, and the payment at a subsequent day will be a compensation for the nonperformance, the intent being to secure the payment of the money. But notwithstanding it will, in many cases, interpose to prevent the divesting an estate, it will not relieve against the non-performance of a condition precedent to the vesting of an estate, by giving an estate that never vested; it will not vest an estate, that by reason of the non-performance of a condition precedent will not vest in law. This is not a case of forfeiture; no right to the prizes for which the credit is claimed, was ever acquired, to be forfeited. Nor is it one in which the matter lies in compensation; for if the defendant is to be relieved against the non-performance of the condition, by being allowed a credit for the amount of the prizes drawn to the numbers of those tickets— what is to be the compensation to the assignees of the mortgage, who would thus lose the amount of the prizes so credited? It is not within the principle on which equity will relieve, where a compensation can be made, as where the condition is for the payment of a certain sum of money at a certain day, the breach of which condition may be compensated by payment at a subsequent day. But here the entire loss would rest upon the assignees of the mortgage, without any compensation; and it would be the same, if the proceeding was by the purchasers of the scheme, who by the allowance of the credit here claimed, would be deprived of the benefit of the prizes, without any compensation, to which, by the omission to demand them within twelve months after the completion of the drawing of the lottery, they become entitled, as a part of the profits of the scheme, and of their purchase. Neither is it the case of a condition subsequent; but a demand within twelve months after the completion of the drawing, was a condition precedent to the vesting of the right to the prizes, and without the per — 282 — formance of which, the right could not vest in law; and equity will not relieve by interposing to vest the right. We therefore think, that the defendant is not entitled to the credit claimed ; and that the decree ought to be reversed with costs ; and a decree passed for a foreclosure, and sale of the mortgaged premises, to satisfy the amount due, with interest, according to account No. 1, as stated and reported by the auditor. decree reversed.