Union Bank of Georgetown v. Geary - 30 U.S. 99 (1831)
U.S. Supreme Court
Union Bank of Georgetown v. Geary, 30 U.S. 5 Pet. 99 99 (1831)
Union Bank of Georgetown v. Geary
30 U.S. (5 Pet.) 99
It is a well settled rule that in a bill praying relief, when the facts charged in the bill as the ground for the decree are clearly and positively denied by the answer and proved only by a single witness, the court will not decree against the defendant. And it is equally well settled that when the witness on the part of the complainant is supported and corroborated by circumstances sufficient to outweigh the denial in the answer, the rule does not apply.
An injunction bill was filed upon the oath of the complainant against a corporation, and the answer was put in under their common seal, unaccompanied by an oath. The weight, of such answer is very much lessened, if not entirely destroyed, as it is not sworn to.
The court is inclined to adopt it as a general rule, that an answer not under oath is to be considered merely as a denial of the allegation in the bill, analogous to the general issue at law, so as to put the complainant to the proof of such allegation.
The attorney of the plaintiffs in an action on a promissory note agreed with the defendant, whose intestate was endorser of the note, that if she would confess judgment, and not dispute her liability upon the note, he, the attorney, would immediately proceed by execution to make the amount from the drawer of the note, the principal debtor, who he assured her had sufficient property to satisfy the same. Upon the faith of this promise, she did confess the judgment. Held that this agreement fell within the scope of the general authority of the attorney, and was binding on the plaintiffs in the suit. The plaintiffs in the suit having failed to proceed by execution against the drawer of the note, and having suffered him to remove with his property out of the reach of process of execution, the circuit court, on a bill filed perpetually enjoined proceedings, on the judgment confessed by the administratrix of the endorser, and the decree of the circuit court was on appeal affirmed by the Supreme Court.
The consideration alleged in the bill for the promise of the attorney to proceed by execution against the drawer of the note and make the amount of the same was the relinquishment of a defense which the defendant at the time considered legal and valid. By a subsequent judicial decision, it was determined that the defense would not have been sustained. To permit this decision to have a retrospective effect so as to annul a settlement or agreement made under a different state of things would be sanctioning a most mischievous principle.
The general authority of an attorney does not cease with the entry of a judgment. He has at least a right to issue an execution, although he may not have the right to discharge such execution without receiving satisfaction.
The suit does not terminate with the judgment; proceedings in the execution are proceedings in the suit.
Anna Geary, as administratrix of her husband Everard Geary, filed her bill in the circuit court in which she sets forth that her intestate, sometime before his death, became security on a note which was discounted for the accommodation of J. Merrill, at the Union Bank of Georgetown, for a large sum of money, which was continued from time to time, by a renewal in the usual way, for the accommodation of Merrill until the death of her intestate. Subsequent to his death, suits were instituted in the circuit court upon the note against the drawer and endorser, and she was called on by the counsel and attorney of the bank and requested to confess a judgment on the note, and was at the time assured by the attorney that if she did so and did not dispute her liability upon the note, the bank would immediately proceed by execution to make the amount thereof from the principal debtor, Merrill, who, he assured her, had sufficient property in the country to satisfy the same, and he, advising her that she would be thus saved from liability for the debt, prevailed on her to make no defense against the suit at law, but voluntarily to confess a judgment thereon for the amount of the debt, principal, interest, and costs.
The judgment was confessed for four thousand dollars damages and costs, to be released on payment of two thousand dollars with interest from 24 January, 1815, until paid. Various payments from May 30, 1815, until August 6, 1816, were made by Merrill, amounting to $775.39.
The complainant charges that at the time of confessing the judgment, a valid legal defense existed against the suit which would have defeated the plaintiff's right to recover on the endorsement, the plaintiffs not having made the due and legal demand and given due and legal notice so as to bind the endorser; that the attorney of the bank well knew the same, and therefore, and to prevent complainant from contesting the suit, made the proposition before stated.
The bill further charges that when the judgments were obtained against Merrill and the complainant on the note, Merrill resided in Georgetown, and had then and there sufficient property to satisfy and pay the judgments, and the same
might then and for some time afterwards have been recovered by process of execution issued either against the body or the goods of Merrill. Complainant repeatedly and earnestly called upon the plaintiffs and urged them to issue execution against Merrill and recover their debt according to the agreement and understanding upon which she had confessed judgment. The plaintiffs, however, continued to indulge Merrill for a long space of time, and, notwithstanding all the remonstrances of the complainant, permitted him to leave the District and take with him all his property beyond the process of the court, nor have they taken any effectual and proper means to recover the debt from said Merrill, as bound by their agreement to do. Merrill is now, as the complainant is informed and believes, in insolvent circumstances. And now that by their misconduct and breach of faith they have lost the means of recovering the judgment from Merrill, the plaintiffs, most unjustly and unreasonably, demand payment of the same from the complainant and threaten to proceed against her on said judgment, which she believes they mean to do.
The answer of the defendants below, which was filed under their corporate seal and was not sworn to, admits that Merrill did borrow the sum of $2,200 upon his promissory note endorsed by Everard Geary, and avers that the loan was made exclusively on the credit of the endorser, Geary having proposed himself as security of Merrill, whom he was anxious to assist and benefit by endorsing his note. The answer alleges that the needy circumstances of Merrill were well known to the defendants and to the endorser; he never had sufficient property to pay his debts, and that the endorser was known to be in good circumstances, and of ability and willingness to discharge his debts and responsibilities. During his lifetime, the endorser frequently promised to save and protect the bank from any loss on account of Merrill's inability to meet the note, and had he lived, he would punctually have complied with such promises.
Upon the death of E. Geary, his administratrix, the complainant, refused to pay the note when it became due, and suffered the same to be protested, and it became necessary for defendants to institute suits against the drawer and endorser,
upon which suits judgments were obtained in December, 1817.
As to so much of the bill as charges any persuasion or agreement by the attorney of the bank, the defendants deny the same and aver that the judgment was not obtained voluntarily, the complainant having appeared to the suit and contested the same in every stage until the trial term, and when defendants were prepared with all necessary proof and the case actually called for trial, the attorney of complainant, knowing that he had no good and valid defense, confessed the judgment.
The defendants deny that they ever authorized or directed their attorney to hold out any inducements to the complainant to confess the judgment or to make any such persuasions and promises as are set forth in the bill, and they aver that such persuasions and promises would have been wholly superfluous and unnecessary, as the complainant was legally and justly liable and bound to the defendants for the payment of the debt, and was then better acquainted with the situation of Merrill than the defendants or their attorney.
They deny that the complainant had any valid legal defense to the action, but aver that payment of the note was legally demanded, and that due notice of nonpayment was given. But whatever defense the complainant might have had, which is denied, the defendants insist that she has waived any such legal or technical defense, and omitted to protect herself thereby at law, and cannot now avail herself of the same in equity.
They deny that when the judgment was obtained, or at any time afterwards, Merrill had sufficient property unencumbered whereon execution could have been levied and the money made, and they believe that had they issued an execution against his body, it would have involved a useless increase of costs, as they believe he would have taken the benefit of the insolvent law; they deny that they have been remiss and inattentive in obtaining payment from Merrill; on the contrary, they aver that by their active exertions they did obtain payment from Merrill $853 which otherwise never would have been paid. They deny ever having granted indulgences to Merrill without the knowledge, consent, and concurrence of the complainant, or that they
permitted him to leave the District and take his property with him or refused to take proper and efficient measures to recover their judgment from him.
The answer also states that whenever they called upon the complainant to pay the debt, they were ready and willing to make an assignment of the judgment against Merrill, and repeatedly offered to do so before he left the District, which was refused.
On the answer being filed, the circuit court, on motion, dissolved the injunction, and the complainant having filed a general replication, the testimony of various witnesses was taken, and upon a final hearing, the court revived and perpetuated the injunction. From this decree an appeal was entered.
The substance of the depositions is as follows:
Daniel Renner, a director of the bank, says that he was called on by Mrs. Geary to get the Union Bank to have an execution issued against Merrill before Merrill left the District. He made the application to the board. No answer was made, or, if any, to this effect: that they were not bound to press Merrill; that Mrs. Geary, if she pleased, could pay the judgment, and then adopt such course as she pleased. He is not certain whether this suggestion came from the board or from some of them out of the bank. Mrs. Geary made frequent applications to him to get execution issued against Merrill before he left town, and he several times spoke of it to the board.
G. Cloud stated that all the knowledge he had of the judgment was from the conversations between the cashier of the bank, Renner, Merrill, and Wiley, the attorney of the bank, and Mrs. Geary. He well recollects the conversation between Mrs. Geary and Mr. Wiley on the subject of her confessing judgment, and understood from the conversation of both of them that if she would agree and confess judgment, she was to be cleared, and the money to be made out of Merrill's property, as he (Wiley) said he had ascertained that Merrill had property sufficient to satisfy the debt, which was clear of encumbrances, and that it was expressly on these conditions that she confessed judgment.
He heard Mrs. Geary tell Mr. Wiley that he had promised that if she would confess judgment, it would be better for her, as he would have the execution levied on Merrill's property,
and it would clear her from paying the debt, as Merrill had a sufficient property clear of encumbrance, which he admitted he had told her, but that the fault was not in him, but in the directors of the bank. He did not think that she was in danger of paying the debt, for he thought they would still get it out of Merrill. Merrill had considerable property in his possession when he left the District; but the witness did not know his title to it. He heard Mr. Wiley say he had ascertained that it was clear of encumbrances, and that he had sufficient to satisfy the judgment. He heard Mrs. Geary tell Mr. Wiley she never would have confessed judgment if he had not told her that he would clear her by instantly levying on Merrill's property, and that she verily believed it was in his power to have the execution levied at his will, which he admitted.
The reason assigned by Mr. Wiley was that the directors of the bank would not suffer the execution to issue, as they knew their debt was safe, and did not wish to break up Merrill. The witness also stated that he knew of frequent applications by Mrs. Geary to Wiley to have execution issued, and went frequently himself on that business, but they would not suffer the execution to issue. One of the directors advised Mrs. Geary to pay off the judgment, and then the bank could not prevent her from having the execution issued, but she could not procure the money to do so. He has heard Mr. Renner say that the directors did not use Mrs. Geary well by withholding the execution and suffering Merrill to leave the District, and that he had done what he could to have the execution issued, but to no effect.
E. Riggs, a director of the bank, stated that he does not remember any agreement between the bank or its officers and Mrs. Geary. He remembers a decision of the circuit court exonerating endorsers upon a fourth day protest. He remembers that complainant, or some person for her, made application to the board to call on Merrill for the debt, and press him for payment. The reply of the board (made by Dr. Magruder, as well as deponent recollects) was that Merrill was not then able to pay, but was about to remove where he would probably be more able to pay, but that complainant, if she chose, might pay the money, and have the judgment assigned to her; but the majority of the board did not feel themselves
called upon to distress Merrill by complying with her request. Some of the board thought differently, and thought that if she could make anything out of Merrill's property, she should be allowed to do so. These were casual remarks, but no decision made. He thinks the application was made by Mr. Renner or by Mr. English, the cashier. He was always opposed to the loan to Merrill, but was always answered that the endorser was sufficient.
David English, the cashier, states that he never knew of the agreement until the bill was filed, nor did he know, when the judgment was confessed, that the circuit court had delivered its opinion upon the insufficiency of a four days' protest. It was determined not to issue execution against Merrill, but upon what grounds he did not recollect. It was said the board was willing to assign the judgment. The note fell due before the decision of the court relative to a four days' protest. The practice of protesting on the fourth day was general with all the banks, and the endorser being a considerable dealer in the banks, was probably acquainted with it. The suit was in the hands of Mr. Wiley.
James A. Magruder deposed that Mr. Wiley was the attorney, or counsel, for the Union Bank at the time the judgment was confessed by the complainant.
It was known to the bank before the judgment was confessed that many of their suits against endorsers for trial at that term were in jeopardy in consequence of the late decision of the court as to the insufficiency of the demand and notice on the fourth instead of the third day of grace.
He understood from Wiley that he was authorized and requested by the bank, or some of its officers, to adjust all such cases, and get judgments confessed by the parties, so as to avoid such defenses' being made by the endorsers.
He was requested by said Wiley to call on several of the endorsers, and among others, the complainant, with a view to make such adjustment, and did advise her to see Mr. Wiley, who was friendly to her and would not advise her to do anything against her interest.