F. owed H. & Co. on account about $22,000. He settled this
in part by a cash payment and in part by a transfer of promissory
notes payable to himself, the payment of two of which, for $5,000
each, was guaranteed by him in writing. H. & Co. transferred
these notes to a bank as collateral to their own note for about
$13,000. They then became insolvent, and assigned all their estate
to P. as assignee for distribution among their creditors. The bank
sued F. on his guaranty. He set up in defense that his indebtedness
to H. & Co. grew out of dealings in options in grain and other
commodities, to be settled on the basis of "differences," and that
it was invalidated by the statutes of Illinois, where the
transactions took place. The court held that he could not maintain
this statutory defense as against a
bona fide holder of
the guaranteed notes, and gave judgment against him. Execution on
this judgment being returned unsatisfied, a bill was filed on
behalf of the bank to obtain a discovery of his property and the
appointment of a receiver, to which F. and the maker of the notes,
and R., with others, were made defendants. P., the assignee of H.
& Co., was, on his own application, subsequently made a
defendant. An injunction issued restraining each of the defendants
from disposing of any notes in his possession due to F.
Subsequently to these proceedings, F. assigned to R. the two notes
which H. & Co. had transferred to the bank. P., as assignee of
H. & Co., filed a cross-bill in the equity suit, showing that
the judgment in favor of the bank was in excess of the balance due
the bank by H. & Co. R. filed an answer and a cross-bill in
that suit, setting up his claim to the said notes, and maintaining
that the judgment in favor of the bank was invalid as being in
conflict with the statutes of Illinois.
Held:
(1) That the liability of F. upon the guaranty was, as between
the bank and him, fixed by the judgment in the action at law.
(2) That all the bank could equitably claim in this suit was the
amount actually due it from H. & Co., which was considerably
less than the amount of the face of the notes.
Page 142 U. S. 29
(3) That the transfer and guaranty of the notes to H. & Co.
were void under the Illinois statutes, and passed no title to them
or their assignee.
(4) That R. was the equitable owner of the notes, and was
entitled to receive them on payment to the bank of the amount of
the indebtedness of H. & Co. to it.
(5) That the assignment to R. having been made in good faith and
for a valuable consideration, he was a person interested in the
object to be attained by the proceedings within the intent of the
statute. When, by filing a replication to a plea in equity issue is
taken upon the plea, the facts, if proven, will avail the defendant
only so far as in law and equity they ought to avail him.
Hughes v.
Blake, 6 Wheat. 453, explained and distinguished
from this case.
The case was stated by the Court as follows:
This case involves the conflicting claims of the appellant and
the appellee to the balance due upon a judgment in favor of
Huntington W. Jackson, receiver of the Third National Bank of
Chicago, and to two promissory notes in his or its hands.
The history of that judgment, and the circumstances under which
the bank got possession of the notes, are as follows:
Hooker & Co., June 29, 1876, rendered to Ira Foote an
account for $22,165.72, which the latter settled in part by
delivering to that firm four notes, of $5,000 each, executed to him
by the trustees of the estate of Ira Couch, deceased. The balance,
$2,165.72, was paid at the time in cash through James H. Rice. Upon
each of two of the Couch notes, due respectively on the first days
of July and October, 1877 -- the ones here in dispute -- was the
following endorsement: "I hereby guarantee the payment of the
within note, for value received at maturity. Ira Foote, By J. H.
Rice, Attorney in Fact."
On the 30th of December, 1876, Hooker & Co. made their note
to the Third National Bank of Chicago for $13,912.97, payable
ninety days after date, with interest at the rate of ten percent
per annum, and as collateral security for its payment deposited
several promissory notes with the bank, including the above two
notes guaranteed by Foote.
For the purpose of making a distribution of their estate among
creditors, that firm executed, February 28, 1877, an
Page 142 U. S. 30
assignment to J. Irving Pearce of all their property of every
kind.
The bank, by its receiver, brought suit against Foote, April 26,
1878, in the court below, upon the above guaranty of the two Couch
notes. He pleaded that he did not promise in manner and form as
alleged; also that the promises alleged had no other consideration
than the buying and selling by Hooker & Co. for him upon the
Chicago Board of Trade, deals and options in grain, wheat, lard,
pork, and other commodities wherein neither party had or was to
deliver or receive any articles so bought or sold, and which
transactions were to be settled entirely upon the basis of
"differences." He pleaded, in addition, a set-off for money lent
and advanced, money paid, laid out, and expended, etc. The issues
were found for the bank, and judgment was rendered against him for
the sum of $14,635.55. In that case, the court said that while
Foote may have contemplated dealing wholly in "differences" to such
an extent as would make the transactions, under the decisions of
the courts of Illinois, wager or gambling contracts at common law,
he did not, according to the evidence, intend that his brokers
should make for him such contract -- options to buy or sell at a
future time property that was not to be delivered -- as were
expressly made illegal by the Illinois statute. It was said, among
other things:
"The defendant having delivered these notes, with his guarantee
upon them, to Hooker & Co., in settlement of their demand
against him, even though their demand was tainted as a gambling
claim at common law, he cannot be allowed to set up the illegality
of the dealings between himself and Hooker & Co. as a defense
to these guarantees in the hands of a
bona fide holder. He
has put this paper, with his guarantee affixed to it, afloat upon
the market. Unless a clear case of violation of the statute is made
out -- and the burden of making such a case is upon the defendant
-- this guarantee in the hands of a
bona fide holder for
value is valid, and not tainted by any of the defenses between the
original parties."
Jackson v. Foote, 12 F. 37, 41.
Execution against Foote having been returned no property
Page 142 U. S. 31
found, the bank, to obtain satisfaction of its judgment, brought
the present suit September 21, 1882, to obtain a discovery of his
property and effects and the appointment of a receiver. To this
suit Foote, Rice, the trustees of Couch's estate, and others were
made defendants. An injunction was issued restraining the
defendants from selling, assigning, negotiating, receiving,
collecting, or in any manner disposing of any debts, bonds, or
notes due Foote, whether, in his possession or held by other
persons in trust for his use or benefit. A receiver having been
appointed, Foote was directed, by an order of court, to execute and
deliver a general assignment of all his property and effects. This
was done by him November 1, 1882. Pearce was made a defendant on
his own petition, and with leave of the court filed a cross-bill
showing, among other things, that the judgment of the bank against
Foote was largely in excess of the balance really due it from
Hooker & Co., and claiming that he, as assignee of that firm,
was entitled not only to the above two notes, but to such balance
as might be realized on that judgment after paying the amount due
from his assignors to the bank.
Rice filed an answer and cross-bill asserting his ownership of
the two Couch notes by assignment from Foote. That assignment was
made February 16, 1885, and is in these words:
"For value received, I hereby sell, assign, transfer, and set
over unto James H. Rice, of Chicago, Illinois, all my right, title,
interest, claim, and demand in and under two (2) certain notes
executed by the trustees of Ira Couch's estate to my order, each of
said notes being for the sum of five thousand dollars ($5,000.00)
and are dated the first day of July, 1876, and are now in the hands
of Huntington W. Jackson, receiver of the Third National Bank of
Chicago, said notes being held by said Jackson, receiver as
aforesaid, as collateral security for a certain indebtedness due
said Third National Bank from S. G. Hooker & Co. I hereby give
said Rice full power and authority to prosecute, in my name or his
own, any and all suits touching said notes in any manner that he
may deem best."
The principal consideration for this assignment was the taking
care of Foote by Rice. The evidence
Page 142 U. S. 32
of Rice on this point is uncontradicted. He testified:
"I have spent a good deal of money on him, taking care of him.
He had no money of his own except what I let him have. He has been
an invalid, and had to have somebody to look after him, and have
somebody to attend to him. . . . I had paid out money for Mr.
Foote. He had got suits on his hands that he had to carry out, and
I had become responsible for some of his fees, attorney's fees, and
in fact had advanced him money to carry on his cases. It had gone
so far that I didn't care about taking a great many chances more,
and he assigned that [the two Couch notes] to me. . . . There are a
good many other considerations besides the advancement of money
that Mr. Foote is indebted for. He has made his home with me; been
provided with nurses and doctors, and taken good care of. Outside
of the friendship I have for Mr. Foote, there would be no money
consideration for what I have gone through with."
Again:
"Mr. Foote has made his home with me for nine years. He has been
very feeble, especially for the past two years. He is in his
sixty-eighth year. He has had to travel for his health, and has
been away both winter and summer. He has had no money within the
last five years except what I have furnished him; no nurses or
doctors except what I have paid for since he has been sick."
Rice's answer and cross-bill proceeds upon the ground that the
original transaction between Hooker & Co. and Foote was based
upon a mere wager or bet upon the price of grain or provisions
constituting an option contract prohibited and declared void by the
statutes of Illinois, and therefore that the consideration of
Foote's guarantee upon the two notes failed, no title to them
passing to Hooker & Co. The relief asked by him was that the
judgment rendered in favor of the bank against Foote be vacated and
set aside; that if for any reason that could not be done, then that
the judgment be set aside upon the payment to the bank of any
balance due from Hooker & Co., which payment he offered to make
upon the surrender of the above notes to him, and that the bank be
ordered to return the notes to him. He asked such other relief as
equity require.
Page 142 U. S. 33
Foote adopted the answers of Rice to the original and
cross-bills of Pearce as his own. The bank and Pearce each relied
upon the judgment against Foote in bar of the claim asserted by
Rice. They denied that the original transactions between Foote and
Hooker & Co. were in violation of law or that Rice was a
bona fide owner for value of the Couch notes.
Upon final hearing, it was adjudged that the bank was entitled
to be paid upon its judgment against Foote the balance due on the
note of Hooker & Co. after crediting all payments thereon,
including one by Pearce as assignee of Hooker & Co. The
cross-bill of Pearce was dismissed for want of equity.
In respect to the claim of Rice, it was adjudged that he was the
equitable owner of the two notes in question; that, they having
been transferred by Foote to Hooker & Co. for a gambling
consideration, the transfer was void as between those parties; that
upon payment by Rice to the bank of the amount due upon the
indebtedness to it of Hooker & Co., he, as assignee of Foote,
was entitled to have the notes delivered to him, together with a
transfer of the bank's judgment against Foote, the judgment to be
satisfied of record by Rice upon the collection by him of the
notes, or enough thereon to satisfy the amount to be paid to the
bank, together with his costs and expenses, and that upon such
payment within thirty days from the date of the decree, the bank
should deliver the notes to Rice with an assignment duly executed
of its judgment against Foote. Pearce alone appealed from the
decree.
Page 142 U. S. 34
MR. JUSTICE HARLAN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
Does the bank's judgment against Foote preclude inquiry in this
suit, between the respective assignees of Foote and of Hooker &
Co., as to whether the original claim of that firm against Foote,
and Foote's transfer of the Couch notes to it with guarantee of
payment, were void under the laws of Illinois?
The statute of Illinois referred to, being the part of the
Criminal Code of that state relating to "Gambling and Gambling
Contracts" provides:
"SEC. 130. Whoever contracts to have or give to himself or
another the option to sell or buy at a future time, any grain or
other commodity, stock of any railroad or other company,
Page 142 U. S. 35
or gold, or forestalls the market by spreading false rumors to
influence the price of commodities therein, or corners the market,
or attempts so to do, in relation to any of such commodities, shall
be fined not less than $10 nor more than $1,000, or confined in the
county jail not exceeding one year, or both, and all contracts made
in violation of this section shall be considered gambling
contracts, and shall be void."
"SEC. 131. All promises, notes, bills, bonds, covenants,
contracts, agreements, judgments, mortgages, or other securities or
conveyances made, given, granted, drawn, or entered into, or
executed by any person whatsoever, where the whole or any part of
the consideration thereof shall be for any money, property, or
other valuable thing, won by any . . . wager or bet upon any . . .
chance . . . or unknown or contingent event whatever, or for the
reimbursing or paying any money or property knowingly lent or
advanced at the time and place of such . . . bet, to any person or
persons so gaming or betting, . . . shall be void and of no
effect."
"SEC. 135. All judgments, mortgages, assurances, bonds, notes,
bills, specialties, promises, covenants, agreements, and other
acts, deeds, securities, or conveyances, given, granted, drawn, or
executed contrary to the provisions of this act may be set aside
and vacated by any court of equity, upon bill filed for that
purpose, by the person so granting, giving, entering into, or
executing the same, or by his executors or administrators, or by
any creditor, heir, devisee, purchaser, or other person interested
therein, or, if a judgment, the same may be set aside on motion of
any person aforesaid, on due notice thereof given."
"SEC. 136. No assignment of any bill, note, bond, covenant,
agreement, judgment, mortgage, or other security or conveyance as
aforesaid, shall in any manner affect the defense of the person
giving, granting, drawing, entering into, or executing the same, or
the remedies of any person interested therein."
Rev.Stats. Illinois 1874, pp. 372, 373, c. 38.
The appellant invokes the general rule that a judgment is final
and conclusive in any subsequent suit, between the same parties or
their privies, as to all matters actually determined,
Page 142 U. S. 36
or which were necessarily involved, in the first suit; also, the
rule recognized in the courts of the United States, that equity
will not at the instance of one against whom a judgment at law has
been rendered, restrain the operation or effect of that judgment
unless there be equitable circumstances justifying its interference
or unless such person was prevented by fraud or accident, unmixed
with fault or negligence upon his part, from making full defense at
law.
The courts of Illinois have not regarded these rules as strictly
applicable in cases under the law relating to gaming and gambling
contracts. In
Mallett v. Butcher, 41 Ill. 382, 385, the
Supreme Court of that state, construing the statute in question,
held that all contracts having their origin in gaming were void,
not voidable only, and that it was entirely immaterial when or how
the fact was disclosed to the court; consequently a suit in equity
would lie to set aside a judgment at law on a note given for money
lost in gaming with cards where the obligor failed to make defense.
The same question arose in
West v. Carter, 129 Ill. 249,
253, which was also a suit in equity to set aside a judgment --
obtained without a real defense's being made -- upon a contract
void under the gaming statute. It was there contended that
section§ 131 and 135 of the statute had no application to
judgments except those rendered by confession -- in other words,
that those sections, in their application to judgments, affected
only such as resulted from the voluntary act of the defendant. But
the court refused to so restrict the operation of § 131. The
judgments, promises, and instruments therein specified being void
and of no effect, "it is not," said the court,
"in the power of the party to whom made, granted, given, or
executed, or in whose interest they are drawn or entered into, to
give the contract validity. Nor can the court at the instance of
such party, any more than it could by the confession or consent of
the defendant, vitalize the contract and by its judgment defeat the
effectiveness of the proceeding in equity authorized by the 135th
section of the statute to set aside the void contract. . . . The
rule in equity that courts of chancery will not take jurisdiction
when there is an adequate defense or remedy
Page 142 U. S. 37
at law must yield to the requirements of the statute that relief
may be granted in a court of equity to vacate and set aside
judgments and contracts obtained in violation of this
provision."
These cases in effect decide that the judgments which the
statute permits to be vacated upon bill in equity or motion embrace
those on confession as well as those rendered upon default or
without a direct issue fully and fairly tried between proper
parties. It is consistent with those cases to hold -- as upon any
sound interpretation of the statute, and in obedience to the
principles of equity obtaining in the courts of the United States
we must hold -- that Foote's liability upon his guarantee of the
Couch notes was, as between the bank and him, fixed by the judgment
upon the direct issue in the suit at law, as to such liability, and
which judgment has not been modified or reversed. Neither he nor
Rice, claiming under an assignment executed after that judgment,
could have it annulled by decree in a court of the United States
except upon some ground recognized in the courts of the United
States as sufficient for the interference of equity.
Still it is clear that the result for which the appellant
contends does not follow. The two Couch notes were held by the bank
only as collateral security for its claim against Hooker & Co.
According to some adjudged cases, if the point had been made in the
suit at law, the judgment against Foote would have been restricted
to the real amount of the bank's claim. It is an undisputed fact
that the amount due from Hooker & Co. to the bank at the date
of its judgment against Foote, April 17, 1882, computing the
interest at ten percent per annum, was less than one-half of the
sum for which it took judgment. The excess over the amount really
due from Hooker & Co. did not in any view equitably belong to
the bank, but as between it and Pearce, to the latter. Its interest
in Foote's guarantee was measured by the amount of the indebtedness
of Hooker & Co. to it at the date of the judgment against
Foote. If the bank had collected the entire amount of that judgment
from Foote, it would have been bound to account to the assignee of
Hooker & Co. for the
Page 142 U. S. 38
balance remaining after its demand against that firm was
satisfied, and this for the reason that it could not be deemed a
bona fide holder for value except to the extent of its
demand against Hooker & Co. Story on Prom.Notes, § 195;
Mayo v. Moore, 28 Ill. 428;
Williams v. Smith, 2
Hill, 301;
Stoddard v. Kimball, 6 Cush. 469;
Chicopee
Bank v. Chapin, 8 Met. (Mass.) 40;
Farwell v. Importers'
& Traders' Bank, 90 N.Y. 483, 488;
Allaire v.
Hartshorne, 21 N.J.Law 665;
Maitland v. Citizens' Nat. Bk.
of Baltimore, 40 Md. 540, 570;
Union Nat. Bank v.
Roberts, 45 Wis. 373, 379;
Tarbell v. Sturtevant, 26
Vt. 513, 517;
Valette v. Mason, 1 Ind. 89;
First Nat.
Bk. of Dubuque v. Werst, 52 Ia. 684, 685;
Citizens' Bank
v. Payne, 18 La.Ann. 222. All the bank can equitably claim in
this suit is the amount due it from Hooker & Co., which was
admitted and found to have been only $8,459 at the date of the
decree in this case. And its substantial rights were not disturbed
by the decree under review, for its judgment against Foote, which
was only collateral security for that claim, was not set aside, but
the payment of the above amount made a condition precedent to its
surrender of the Couch notes, and the assignment of that judgment.
Neither the bank nor Rice complains of the decree in that form.
So that the real question before us is as to the respective
claims of the assignee of Hooker & Co. and the assignee of
Foote to the possession of the Couch notes, and to the right of the
appellant to enforce the judgment against Foote after the amount
due the bank is paid. In determining these matters, must we assume,
as between those assignees -- neither having taken any greater
rights than their assignors had -- that the transfer of the Couch
notes to Hooker & Co. by Foote and the latter's guarantee of
those notes were valid contracts under the above statutes of
Illinois? Did the judgment of the bank establish the validity of
those contracts as between Foote and Hooker & Co.? These
questions must receive a negative answer. Hooker & Co. were not
parties to the action at law, and there was no issue in it between
them and Foote. Within the law of estoppel, there was no privity
between
Page 142 U. S. 39
the bank and Hooker & Co. -- certainly none that entitled
the latter to rely upon the bank's judgment as conclusively
establishing their claim against Foote. Hooker & Co. had no
right to control in any wise the proceedings in that suit. While
liable to the bank upon their own note, they were not liable to it
upon the Couch notes or upon Foote's guarantee of them, for they
simply deposited the notes thus guaranteed with the bank as
collateral security, without endorsing them. It is true they had a
pecuniary interest in the bank's succeeding in its action against
Foote, and it may be that the same facts that would constitute a
good defense, under the statute, for Foote, if sued by Hooker &
Co., would equally have protected him against liability to the bank
upon that guarantee. But these circumstances do not show such
privity between the bank and Hooker & Co. as to conclude Foote,
the bank having been successful, or to have concluded Hooker &
Co. if Foote had succeeded, in respect to matters in dispute
between him and that firm. In no legal sense was Hooker & Co.
represented in the action upon Foote's guarantee. If they had sued
him upon his guarantee, and, pending that action, the Couch notes
had been transferred to the bank with the guarantee of payment
endorsed thereon, there would have been such privity between Hooker
& Co. and the bank as perhaps to have made the judgment against
Foote conclusive for, and a judgment in his favor conclusive
against, both Hooker & Co. and the bank in respect to the
matters litigated, for in the case supposed, Hooker & Co. would
have been parties to the judgment, and the bank, although not a
party, would have succeeded to the rights asserted by that firm
after the institution of the suit, and from a party thereto.
Orthwein v. Thomas, 127, Ill. 554, 571; 1 Greenl. Ev.
§§ 523, 524. In respect to the two Couch notes in
question, the issue is presented in this suit for the first time
between Hooker & Co. and Foote as to whether the transfer and
guarantee of those notes to that firm were upon such a
consideration as rendered the transfer and guarantee void under the
statute. The bank's judgment against Foote having inured in equity
to its benefit only to the extent of its demand against Hooker
Page 142 U. S. 40
& Co., neither he nor his assignee, nor any person
interested, was estopped thereby from proving as against Hooker
& Co. or their assignee the real nature of the transactions on
the Chicago Board of Trade in which that firm represented Foote.
Any other view would tend to defeat the manifest object for which
the statute was enacted.
In respect to the character of the transactions resulting in the
claim of Hooker & Co. against Foote for $22,165.72, which the
latter settled by a transfer of the four Couch notes, with
guarantee of their payment, but little need be said. What the
evidence was upon this point in
Jackson v. Foote, 12 F.
37, we are not informed otherwise than by the opinion of the court
in that case. But the evidence before us is overwhelming to the
effect that the real object of the arrangement between Hooker &
Co. and Foote was not to contract for the actual delivery, in the
future, of grain or other commodities, which contracts would not
have been illegal,
Pickering v. Cease, 79 Ill. 328, 330,
but merely to speculate upon the rise and fall in prices, with an
explicit understanding from the outset that the property apparently
contracted for was not to be delivered and that the transactions
were to be closed only by the payment of the differences between
the contract price and the market price at the time fixed for the
execution of the contract. There was no material part of the claim
of Hooker & Co. that was not based upon a palpable violation of
the statute. The parties deliberately engaged in what is called
"gambling in differences." It results that both the transfer and
guarantee of the Couch notes to Hooker & Co. were void under
the statute, and passed no title to them or to their assignee. It
was so ruled by the Supreme Court of Illinois in
Pearce v.
Foote, 113 Ill. 228, decided after
Jackson v. Foote,
which was a suit by Pearce as assignee of Hooker & Co., on one
of the four Couch notes transferred to that firm by Foote.
See
also Tenney v. Foote, 95 Ill. 99;
Lyon v. Culbertson,
83 Ill. 33;
Pickering v. Cease, 79 Ill. 328;
Irwin v.
Williar, 110 U. S. 499;
Barnard v. Backhaus, 52 Wis. 593;
Love v. Hervey,
114 Mass. 80;
Flagg v. Baldwin, 38 N.J.Eq. 219;
Bigelow v. Benedict, 70 N.Y. 202.
Page 142 U. S. 41
It is contended, however, that under the pleadings and the rules
of practice adopted for the equity courts of the United States, no
decree could properly have been rendered except one dismissing the
cross-bill of Rice. The bank filed a plea and answer together, the
plea setting up the proceedings and judgment at law in bar of
Rice's cross-suit and saving to the bank the benefit thereof.
Pearce, as assignee of Hooker & Co., filed an answer, the first
part of which, as did the plea of the bank, set out the proceedings
and judgment in the action at law upon Foote's guarantee, relying
upon them in bar of Rice's cross-suit and praying that he might
have the same benefit as if he had pleaded them. To the plea and
answer of the bank, and to the answer of Pearce, general
replications were filed by Rice whereby it is insisted Rice
admitted the sufficiency in law of the matters pleaded in bar and,
as the facts relating to the action at law were proven, the
cross-bill of Rice, it is contended, should have been dismissed, as
of course.
In support of this contention,
Hughes v.
Blake, 6 Wheat. 453,
19 U. S. 472,
is cited. It was there said:
"The truth of the plea being thus made out, what is to be the
consequence? If the rule of courts of equity in England is to be
applied, there can be no doubt. If a plea, in the apprehension of
the complainant, be good in matter but not true in fact, he may
reply to it, as has been done here, and proceed to examine
witnesses in the same way as in case of a replication to an answer;
but such a proceeding is always an admission of the sufficiency of
the plea itself, as much so as if it had been set down for argument
and allowed, and if the facts relied on by the plea are proved, a
dismission of the bill on the hearing is a matter of course."
That case was decided at February term, 1821, of this Court. The
rule there announced was undoubtedly in accordance with the long
established practice in courts of equity.
Farley v.
Kittson, 120 U. S. 303,
120 U. S. 314;
Story's Eq.Pl. § 697; 1 Daniell's Ch.Pl. & Pr. 695; 1
Smith's Ch.Pr. 234; Mitford's Ch.Pl. 302, 303;
Harris v.
Ingledew, 3 P.Wms. 91, 94. But at the succeeding term, in
1822, of this Court, rules of practice for the equity courts of the
United States were adopted under the authority conferred by the Act
of May 8, 1792, 1 Stat. 275,
Page 142 U. S. 42
c. 36. Rule 19 of that series provided:
"The plaintiff may set down the demurrer or plea to be argued,
or he may take issue on the plea. If, upon an issue, the facts
stated in the plea be determined for the defendant, they shall
avail him as far as in law and equity they ought to avail him."
7 Wheat. x. This subsequently became, and is now, Equity Rule
33. It clearly takes from the establishment of the plea the effect
it had under the old law. When, by filing a replication, issue is
taken upon a plea, the facts, if proven, will now avail the
defendant only so far as in law and equity they ought to avail him.
Under the existing rule, the court may, upon final hearing, do at
least what under the old rule might have been done when the benefit
of a plea was saved to the hearing. "When," says Cooper,
"the benefit of the plea is saved to the hearing, the decision
of the cause does not rest upon the truth of the matter of the
plea, but the plaintiff may avoid it by other matter, which he is
at liberty to adduce."
Cooper's Eq.Pl. 233.
See also Story's Eq.Pl. §
698; Mitford's Eq.Pl. 303;
Hancock v. Carlton, 6 Gray 39,
54.
See also United States v. Dalles Military Road Co.,
140 U. S. 616,
140 U. S.
617.
So far as the bank is concerned, it obtained by the decree below
all it was entitled to demand, for the conclusiveness of its
judgment against Foote is recognized to the full extent of its
actual interest in it -- namely, the amount of its claim against
Hooker & Co. for which the guaranteed notes were held as
collateral security. It has no cause to complain, and does not
complain.
In respect to the assignee of Hooker & Co., he was not
entitled to a dismissal of the cross-bill upon proof merely of the
proceedings and judgment in the bank's suit against Foote, because,
under the evidence in the cause and for the reasons already given,
that judgment did not estop Foote or his assignee from showing, as
has been done, the illegal character of the transactions out of
which arose the claim of Hooker & Co. against Foote, and the
transfer by the latter of the Couch notes, with guarantee of
payment. Consequently, the facts stated in the pleadings of Pearce
as to the proceedings and judgment in the action against Foote,
although established, cannot properly
Page 142 U. S. 43
avail him in this suit. The court was at liberty to determine
under the pleadings and evidence the relief to which the respective
parties were entitled.
It is further contended that Rice, the assignee of Foote, was
not one of those authorized by the statute to proceed by bill in
equity or by motion to set aside or vacate a judgment, mortgage,
assurance, bond, note, bill, specialty, covenant, agreement, act,
deed, security, or conveyance given or executed in violation of the
statute relating to gaming and gambling contracts. We think he was.
The evidence shows that the assignment to him was in good faith and
for a valuable consideration. It is clear that he was a person
interested in the object to be attained by the proceeding which the
statute authorizes.
These views sustain the decree below, and it is
Affirmed.
MR. CHIEF JUSTICE FULLER and MR. JUSTICE GRAY did not hear the
argument nor take part in the decision of this case.
