A bill for an injunction was filed, alleging that the parties
who had obtained a judgment at law for the amount of a bill of
exchange, of which the complainant was endorser, had, before the
suit was instituted, obtained payment of the bill from a subsequent
endorser, out of funds of the drawer of the bill, obtained, by the
subsequent endorser, from one of the drawers. It was held that it
was not necessary to make the subsequent endorser, who was alleged
to have made the payment, a party to the injunction bill.
In such a bill an allegation that the amount due on the bill of
exchange was paid, is sufficient without stating the value or
nature of the effects out of which the payment was made.
If there be any one ground upon which a court of equity affords
relief, it is an allegation of fraud, proved or admitted.
On 24 June, 1834, Cain and Lusk, merchants of Alabama, drew a
bill of exchange for two thousand four hundred and five dollars on
Martin Pleasants and Company, of New Orleans, in favor of the
appellant, James Atkins. This bill was endorsed by James Atkins to
Parham N. Booker, and was afterwards endorsed to N. & J. Dick
& Company, the appellees. The bill was protested, and the
appellees brought a suit against James Atkins, in the Circuit Court
of the United States for the District of Mississippi, to May term,
1838, and recovered a judgment for thirty-two hundred and
twenty-five dollars.
Execution was issued on the judgment, and a levy was made on the
property of James Atkins, who, in redemption of the same, gave a
forthcoming bond, with sureties, for the delivery of the property
to the marshal on the day of sale. The property not having been
delivered according to the provisions of the bond, the marshal
returned the bond as forfeited, whereby, according to the laws of
the State of Mississippi, it became, in force and effect, a
judgment against the obligor and his sureties.
The appellant, in order to stay execution on the bond against
himself, and the sureties, filed a bill on the equity side of the
court, and obtained an injunction against the obligors in the
bond.
The bill states that since the giving of the forthcoming bond by
the appellant and his sureties, he has ascertained, and does verily
believe, that N. & J. Dick & Company had been paid the
money mentioned in the bill of exchange, before the institution of
the suit on the same, but that he had no knowledge of this on the
giving of the forthcoming bond and its forfeiture; that he is
advised and believes that the bill of exchange was paid to N. &
J. Dick & Company by Parham N. Booker before the action was
brought against him on the bill, and that the same was paid because
of
Page 39 U. S. 115
effects placed in the hands of Booker by Lusk, one of the
drawers of the bill. That he is advised and believes that he would
have had a good and meritorious defense against Booker, on account
of the effects placed in the hands of Booker by Lusk, had Booker
brought an action against him in his own name, and he charges that
the names of N. & J. Dick & Company have been used to
defeat him in such a defense.
The defendant, the appellees demurred to the bill, and alleged
the following causes of demurrer:
1. It is alleged in the bill as a substantive, and the original
ground for injunction of the statutory judgment therein named, that
one Parham N. Booker, is the actual, and not the nominal plaintiff
in said judgment; that as endorser of the bill of exchange (the
basis of the judgment) next after the complainant as the first
endorser, having paid the amount of the bill to the holders,
received certain effects of the drawers, whose amount ought to be
credited to complainant, and yet the said Booker is not impleaded
as a defendant.
2. Nor is the amount or value or nature of the effects so
charged to have been paid to the second endorser, specified in said
bill; nor what part or portion was discharged, or whether any of
such effects proved productive.
3. The said bill contains no matter or grounds whereon the court
can grant the relief prayed therein.
The court ordered, adjudged, and decreed that the demurrer to
the bill be sustained and that the complainant have leave to amend
his bill. It was further ordered, adjudged, and decreed that the
injunction be dissolved, and the complainant in the bill declined
making any amendment to the bill, and put the cause down for a
further hearing upon the bill and demurrer, and, after argument
heard, it appearing to the satisfaction of the court that Parham N.
Booker was materially interested in the issue of said cause, and
that the said Booker had not been made a party to the same, it was,
therefore, ordered, adjudged, and decreed, that the said bill be
dismissed for want of proper parties to the same, &c.
Page 39 U. S. 118
MR. JUSTICE BARBOUR delivered the opinion of the Court.
The appellant was the payee of a bill of exchange drawn by Cain
and Lusk, which he endorsed to Parham N. Booker, who endorsed it to
N. & J. Dick & Company.
The bill having been dishonored, Dick & Company brought suit
thereon, and recovered a judgment against Atkins, the first
endorser.
Upon this judgment an execution was issued, a forthcoming bond
was taken and forfeited, by reason whereof the bond, according to a
statute of Mississippi, had the force of a judgment, on which
execution was issued.
Atkins thereupon filed his bill in equity, in which he alleged
that he had ascertained, and verily believed, that Dick &
Company had been paid the amount of the bill of exchange before the
institution of their suit against him, but that he had no knowledge
of it at the time of the giving and forfeiture of the forthcoming
bond. That he was advised, and verily believed that the bill of
exchange was paid to Dick & Company by Parham N. Booker before
the suit was brought, and that it was paid because of effects
placed in the hands of said Booker by Lusk, one of the drawers of
the bill of exchange. That he was advised and believed that he
would have had a good defense against Booker on account of said
effects received by him from Lusk with which to pay the bill in
case said Booker had sued in his own name thereon. That the names
of Dick & Company were used with the intent to defeat him of
that defense in case he became advised that said effects had been
placed in the hands of Booker by Lusk with which to pay and satisfy
the bill. The bill charged that in these proceedings the appellant
had been most palpably defrauded and that in order to consummate
the fraud, Dick & Company had caused execution to issue on the
judgment created by the forfeited forthcoming bond, which was then
in the hands of the marshal, and it prayed an injunction, a
perpetuation thereof, and for general relief. An injunction was
granted. The defendants demurred
Page 39 U. S. 119
to the bill, assigning three causes of demurrer, to-wit:
1. That Booker was not made a party.
2. That neither the amount, nor the value, nor the nature of the
effects, charged in the bill to have been paid to the second
endorser, was specified, and that it was not stated what part or
portion was discharged, nor whether any of such effects proved to
be productive.
3. That the bill contained no matter or grounds on which the
court could grant the relief prayed for.
The court sustained the demurrer and gave the plaintiff leave to
amend his bill, and he declining to make any amendment, they
dissolved the injunction, and dismissed the bill for want of proper
parties.
From that decree this appeal was taken. The defendants, having
demurred to the bill, in the consideration of the case, we are to
take all its allegations to be true.
The bill is somewhat inartificially drawn, but it substantially
alleges that before the institution of the suit at law against the
plaintiff, the amount of the bill of exchange in question had been
paid to Dick & Company, by means of effects furnished by one of
the drawers. The particular language of the allegation is that it
was paid to them because of effects placed in the hands of Parham
N. Booker, by Lusk, one of the drawers. Now we understand the
import of this to be that these effects constituted the means by
which the payment was effected; whether Booker sold the effects and
paid the bill out of the proceeds of the sale or detained them
himself, and in their stead advanced their value in money is an
inquiry of no moment, because in either aspect of the case, the
effect would be that the bill was paid by means furnished by one of
the drawers. And upon this state of facts it is clear that the same
operation which satisfied the claim of Dick & Company at the
same time extinguished all the rights as well as liabilities
growing out of the bill of exchange, because they, being the last
endorsers, were the persons entitled to receive the amount of the
bill, and the drawers being liable to every other party, and the
funds by which the payment was effected being furnished by them,
there was no longer any person who could have a claim against any
other, founded upon a bill thus paid.
Upon this view of the subject, the question is whether a party
who has received payment of his debt shall be permitted by a court
of equity to avail himself of a judgment at law to enforce a second
payment, and that too against a party who did not know of that
payment until after the judgment was obtained. To state such a
proposition is to answer it.
The bill further charges the defendants with fraud, and this too
is admitted by the demurrer. If there be any one ground upon which
a court of equity affords relief with more unvarying uniformity
than on any other, it is an allegation of fraud, whether proven or
admitted. Whilst, therefore, a case stands before us upon such a
bill and demurrer, we cannot hesitate to say it must be considered
as entitling the party to the aid of a court of equity.
Page 39 U. S. 120
It is contended that Booker ought to have been made a party. And
the ground taken is (and this is the first cause of demurrer
assigned) that every person ought to be made a party who has an
interest in the subject of controversy, and it is said that Booker
is in that situation. We think that he has no interest in the
object of this suit -- in other words, that he is not interested in
the question between these parties. The ground of equity is that
Dick & Company, the plaintiffs in the judgment at law, received
payment of the amount recovered by them before they brought their
suit. Now if he were made a party at all, it must be as defendant.
But the plaintiff neither sought nor could he obtain any decree
against him. He only asked a perpetual injunction against Dick
& Company on the ground of an equity attaching upon them
personally. If the plaintiff should prevail against them, it would
be upon the ground that the amount of the bill had been paid to
them by the drawers; supposing that to be the case, then Booker
would not be liable to them as endorser. If, on the contrary, the
plaintiff should fail, Booker's rights would in nowise be concluded
or affected; but if, as endorser, he should be made liable to Dick
& Company, then, as endorser, he could recover against the
plaintiff, Atkins, as endorsee to him. But again, Booker's right
and liability upon the bill are at law. We cannot, therefore,
perceive any ground upon which, in a contest between two parties to
a bill founded upon an allegation of equity attaching personally to
one of them, a third party can be brought into a court of equity to
mingle in that litigation when the attitude in which he stands is
purely legal. If the equity attached to him, then he ought to be
made a party: but as it does not, a court of equity is not the
forum in which to discuss or to decide either his right or
liability. A very familiar case will illustrate this principle.
Suppose an obligee to assign a bond on which the assignee recovers
a judgment, where, by statute, he may sue in his own name, and that
the obligor thereupon files his bill in equity, praying for a
perpetual injunction on the ground of some equity attaching upon
the obligee before the assignment. In such a case, the assignor
must be made a party, because he is directly interested in
discussing the equity alleged to exist against him. But if, on the
contrary, the bill were filed upon the ground of some equity not
existing against the assignor, but arising between the obligor and
assignee after the assignment, then there would be no pretense for
saying that the assignor ought to be a party, plainly because in
that particular question he has no interest whatsoever. Whichever
way that question may be decided, the relation between the assignor
and assignee and the liability of the former to the latter growing
out of the assignment are purely questions of law, wholly
unaffected by the decision of the case in equity.
The second ground of demurrer is that neither the amount nor
value nor nature of the effects charged to have been paid is
specified, nor is it stated what portion of the debt was
discharged, nor whether any of such effects proved to be
productive. This cause
Page 39 U. S. 121
of demurrer we consider altogether untenable. The allegation in
the bill is that the money mentioned in the bill of exchange was
paid to Dick & Company. This allegation covers the whole equity
of the case, because it asserts that there was a payment, and that
a payment of the money mentioned in the bill -- that is, the whole
amount of the bill.
The third cause of demurrer, that there is no ground laid in the
bill for relief, has been already discussed, and we have shown that
the bill does contain sufficient allegations to entitle the
complainant to the aid of a court of equity.
We are of opinion that the circuit court, instead of sustaining
the demurrer, ought to have overruled it and ordered the defendants
to answer.
The decree is therefore reversed and the cause remanded to
the circuit court, to be proceeded in in conformity with this
opinion and as to equity and justice shall pertain.
