1. The point cannot be first made in this Court that no
replication has been made to an answer in chancery, and therefore
that the answer is to be taken as conclusively true in all points.
If such a point is meant to be insisted on here, it should have
been made in the court below.
2. New defenses,
i.e., defenses not made in an answer
to the original bill, cannot be first set up in an answer to a bill
of revivor. Such bill puts in issue nothing but the character of
the new party brought in.
3. After the late rebellion broke out, debtors in the rebellious
states had no right to pay to the agents or trustees of their
creditors in the loyal states debts due to these last in any
currency other than legal currency of the United States. Payment in
Confederate notes or in Virginia bank notes (security for whose
payment was Confederate bonds, and which notes like the bonds
themselves never, after the rebellion broke out, were safe, and
before it closed had become worthless)
held to have been
no payment, and the debtor charged
de novo.
For several years prior to February 25, 1861, a litigation had
been waged by Fretz and wife, residents of Pennsylvania, against
Stover, a resident of Fauquier County, Virginia, a certain Chilton,
a lawyer in embarrassed circumstances, and resident in the same
county, being the counsel of the former. The suit was for property
claimed by the wife. On the said 25th of February, 1861, a
compromise
Page 89 U. S. 199
was effected between the parties, and it was agreed that Stover
should give his bond to Fretz and wife, secured by a deed of trust
to Chilton, as trustee, of a valuable farm, specified, for $2,366,
payable on or before the 1st of March, 1863. Fretz and his wife now
returned to their home in Pennsylvania, leaving their attorney,
Chilton, to see that the compromise was properly carried out, and
that all details necessary for its completion were attended to.
Chilton did thus accomplish matters, and Stover having, on the 8th
of April, 1861, executed his bond, payable on or before March 1,
1863, to Fretz and his wife, and transferred to Chilton by deed of
trust for Fretz and his wife the farm to secure it, both
instruments were delivered in form to Chilton. Of all this Fretz
was informed. At the time when the compromise was made. the country
was in a disturbed condition with the Southern issues, but
intercourse between all parts of it was still common, and as yet no
war existed. On the 12th of April, 1861, Sumter was fired on by
rebels, and civil war became flagrant. All communication ceased
between Pennsylvania and that part of Virginia in which Chilton and
Stover lived.
In 1864, intercourse being restored between Fauquier County,
Virginia, and Pennsylvania, Chilton wrote Fretz saying "that the
papers were all safe, and that he would keep them safe, as he could
collect nothing but Confederate money." In the autumn of 1865,
Fretz went to Fauquier County, where he saw Chilton, and Chilton
then told him that he had received nothing on account of the bond;
showed him a letter from Stover offering to pay it in Confederate
money, which money Chilton said that he had not taken because it
would have been of little use to him, Fretz. In 1866 -- that is to
say after the war was ended -- Fretz learned accidentally that the
bond had been paid in December, 1862, not wholly in notes of the
Confederate states, but partly in them and partly in notes of
Virginia banks; the security for the payment of which latter was
bonds of the Confederacy, and the bonds and all the notes, of
course, becoming worthless alike with the fall of the Confederacy
itself.
Page 89 U. S. 200
Chilton was alive at this time, but soon after (1867) died
insolvent, and Fretz now (August 9, 1869) filed a bill in the court
below (his wife not being a party) against Stover to set up and
have enforced the deed of trust, the ground of the bill being that
Chilton had no authority to receive payment in paper such as he did
receive it in, nor Stover the right to make it. The bill set forth
the general history of the transaction, alleged
"that the said bond and the deed of trust securing the sum of
money specified in the bond were left with the said Chilton as the
attorney at law of the complainant, the deed of trust for record
and the bond for collection at its maturity."
It charged actual fraud between Chilton and Stover in this, that
Stover, taking advantage of Chilton's great pecuniary necessities,
induced him to receive the Confederate and Virginia paper money at
par in payment and discharge of the bond.
After the filing of the bill, Mrs. Fretz, the wife, was by
consent of counsel made a party to it.
Stover filed his answer, admitting the settlement and execution
of the bond and deed of trust, and the payment in Virginia bank
notes and Confederate Treasury notes as charged, but denied that
these payments were the result of an unlawful and fraudulent
combination between the respondent and Chilton. He insisted,
however, that they were in law a full discharge and satisfaction of
the debt and trust deed, but if this were not so, that to the
extent of the compensation due by Fretz to Chilton for professional
services, he should not be compelled to pay a second time.
After this answer was filed, the deposition of Fretz, the
husband, was taken by the complainants, which was the only evidence
in the cause. Fretz swore that Chilton had no authority over the
bond and deed of trust, except to take charge of them and keep them
safely, and to have the deed recorded, all which he promised to do,
and that he, Fretz, had never given any authority to Chilton to
receive payment in any kind of currency; that the subject of
payment of the instruments had never been spoken of between the
parties.
Page 89 U. S. 201
Fretz further testified that at the time of Chilton's death,
Chilton was indebted to him on another account, over and above any
fees due for professional services, and that these had been
paid.
Subsequently Stover died, and a bill of revivor was filed to
make his brother, who was his sole devisee and legatee, as also the
executor of his will, a party defendant. The brother appeared and
answered, admitting the character imputed to him by this bill but
setting up new defenses founded on alleged ratification of
Chilton's acts by silence and acquiescence after they came to the
complainant's knowledge -- defenses not made in the answer of
Stover to the original bill. The record did not show any
replication made either to the original answer or to the answer of
the executor.
On the hearing, the bill was dismissed, and this appeal was
brought to revise that decree.
Page 89 U. S. 203
MR. JUSTICE DAVIS delivered the opinion of the Court.
At the outset of this case we are met with the objection that
there is no replication in the record; but this objection,
Page 89 U. S. 204
on the authority of
Clements v. Moore, [
Footnote 1] should have been made in the
court below. Not having been made there, it will be considered as
having been waived. It would work great injustice in this case to
allow it to be taken here for the first time, for manifestly the
submission was not on bill and answer, for proofs were taken, and
it is to be presumed, in the absence of anything in the record to
the contrary, that they were considered by the court in the
disposition of the cause.
So far as the answer to the bill of revivor was concerned, no
formal replication was required to avoid its effect as evidence in
the cause. Nothing could be brought into the litigation by the bill
of revivor besides the mere question whether the brother, brought
in on the bill of revivor, was the executor of the will of Stover,
and his legatee and devisee, for Catharine Fretz had been made a
party to the original suit before answer was made to it. [
Footnote 2] The new defenses,
therefore, set up in the answer to the bill of revivor, were not
pertinent to it, and cannot be considered in the case. [
Footnote 3]
We are brought, therefore, directly to the question whether the
payments by Stover to Chilton were, under the circumstances
surrounding the parties, of any validity.
It is argued by the appellants that the bond was not left with
Chilton for collection at all, but only for safekeeping until it
matured; but the bill avers the fact to be otherwise, and,
naturally, it must have been so. Chilton had been the attorney of
Fretz and wife through a protracted and angry litigation, and, as
the evidence shows, assisted at the compromise of it. This
compromise was effected in February, 1861, and contemplated several
transactions which could not be completed until after Fretz's
return to Pennsylvania. Among these was the execution of the bond
and deed of trust in question. As Fretz could not in person see
that the papers were properly drawn, he entrusted that duty to
Chilton,
Page 89 U. S. 205
and the additional duty of having the deed recorded. It was
undoubtedly expected at the time that before the bond matured Fretz
would hold frequent communications with Chilton, and this may
account for nothing's being said on the subject of collecting the
bond. There was no necessity for it, as the bond had a long time to
run, and besides no trouble was anticipated about the collection of
it. It is, however, fairly to be inferred from the relation between
the parties that Chilton had authority to collect and transmit, in
the absence of any specific directions on the subject. And if war
had not intervened, and he had not been told to collect the bond in
legal currency alone, he would have been authorized to receive
payment in current bank bills which passed at their par value in
business transactions at the place where the contract was to be
performed. But if this rule holds good when the country is at peace
and undisturbed by civil commotion, it has no application in a
state of war like that of the late rebellion. That rebellion
effected a change in the status of the parties to this contract and
in the relations between the appellants and Chilton. Although the
country was unquiet when these parties, in February, 1861, settled
their differences, yet it would be a violent presumption to suppose
that they anticipated the changed condition of things which soon
after occurred. They doubtless acted on the belief that the
difficulties which threatened the peace of society would be
adjusted and the monetary affairs of the country remain as they
were. On this theory they concluded their agreement, and Fretz
repaired to his home in Pennsylvania, leaving Chilton to see that
Stover performed his part of it. It may be that it was not expected
that the bond which Chilton obtained from Stover would be paid in
specie, but at least it was expected that it would be paid in
current bank notes, redeemable on presentation at the counter of
the banks issuing them. At any rate, it was executed with reference
to the standard of value then existing in the United States.
The war occurred, and Fretz was prohibited by the law of the
government under which he lived from holding communication
Page 89 U. S. 206
with Virginia. If some persons did take the risk and cross the
line in order to save their property, certainly Fretz, who did not
choose to break the law and encounter the danger, cannot be held
responsible for not going to Virginia and withdrawing the bond and
deed of trust from the hands of Chilton. When, in 1864, he first
heard from Chilton, he was told his papers were safe and would be
kept so, as nothing but Confederate money could be collected, which
was valueless. And not until 1866 did he learn the truth, although
after the war closed he had frequent personal interviews with
Chilton. This conduct of Chilton's shows his consciousness that he
had attempted to wrong his principals and his unwillingness to
disclose his culpability. But it is of no importance what he
attempted to do, for his principals are not bound by his wrongful
acts. If he was authorized when he received the bond to collect it
when due in bank bills which were current in Virginia at the time,
this authority was conferred in ignorance of, and without reference
to, the contingency of war, and in the nature of things was revoked
when war broke out. The authority to collect was based on the power
to remit, and this it was impracticable, as well as unlawful, to
do. Besides this, the authority to receive bank bills at all in the
collection of debts only rests on the theory that they pass as
money at their par value by the common consent of the community,
and can be used by the principal where he lives in the common
transactions of life. But when this is not the case, and war has
disturbed the country to that extent that the paper used in
Virginia to pay debts is of no value in Pennsylvania, there is no
longer any authority to take it by an agent living in Virginia in
discharge of a debt due a citizen of Pennsylvania. If it were
otherwise, then as long as the war lasted, every Northern creditor
of Southern men was at the mercy of the agent he had employed
before the war commenced. And his condition was a hard one.
Directed by his government to hold no intercourse with his agent,
and therefore unable to change instructions which were not
applicable to a state of war, yet he was bound by
Page 89 U. S. 207
the acts of his agent in the collection of his debts the same as
if peace prevailed. It would be a reproach to the law if creditors,
without fault of their own, could be subjected to such ruinous
consequences.
If Chilton could not receive payment of the bond in Confederate
paper and Virginia bank notes, neither had Stover the right to pay
them. It was a void act on his part to attempt to discharge his
debt in this way, as well as a fraud in Chilton to suffer him to do
so. His obligation when the bond fell due was to pay it in the
legal currency of the United States, and yet he tries to discharge
it in paper worthless to Fretz, and with knowledge that, worthless
as it was, it could not be sent to him. If it be true that he did
not represent Fretz, still he had no right to do an act of gain to
himself, but of no benefit to Fretz. Besides, what ground had he
for supposing that Fretz gave authority to Chilton to make such a
sacrifice? As a sensible man, he must have known that this could
not be so, especially as the debt was secured by a deed of trust on
a valuable farm. It is impossible to escape the conviction that
there was collusion between Chilton and Stover in the transaction,
but whether this be so or not, the transaction itself was
invalid.
In recognition that this might be the judgment of the court,
Stover asks that his payments may be applied towards the debt for
professional services due Chilton from the appellants. Without
stopping to inquire whether this could be done if the appellants
owed Chilton anything, it is enough to say that the evidence shows
that the indebtedness is the other way.
It is claimed that the Virginia bank notes at least should be
treated as payment
pro tanto, but, as we are advised, the
difference between their market value and that of Confederate bonds
and notes was merely nominal during the war, and when it ended, the
bank notes were worthless, being only secured by Confederate bonds.
[
Footnote 4] Apart from this,
the
Page 89 U. S. 208
evidence shows they were, when paid, equally with Confederate
paper valueless in Pennsylvania.
The views taken of this case accord with
Ward v. Smith,
[
Footnote 5] and are supported
by the Court of Appeals of Virginia in
Alley v. Rogers.
[
Footnote 6] It follows from
what has been said that the bond given by Charles Stover to Isaac
Fretz and Catharine his wife has not been paid, or any part of it,
and that the deed of trust to secure it is still a subsisting
security in full force and effect.
Decree reversed and the cause remanded with instructions to
enter a decree for Catharine Fretz, survivor of her husband, in
conformity with this opinion. Reversal and remand
accordingly.
[
Footnote 1]
6 Wall. 310.
[
Footnote 2]
Story's Equity Pleadings § 377.
[
Footnote 3]
Gunnell v.
Bird, 10 Wall. 308.
[
Footnote 4]
See the ordinances adopted by the Convention of
Virginia in June and July, 1861, after the state had seceded.
[
Footnote 5]
74 U. S. 7
Wall. 451.
[
Footnote 6]
19 Grattan 381.
