Union Bank of Georgetown v. Geary
30 U.S. 99 (1831)

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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

APPEAL FROM THE CIRCUIT COURT

OF THE DISTRICT OF COLUMBIA

Syllabus

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.

Page 30 U. S. 100

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

Page 30 U. S. 101

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,

Page 30 U. S. 102

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

Page 30 U. S. 103

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,

Page 30 U. S. 104

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

Page 30 U. S. 105

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.

Page 30 U. S. 107

MR. JUSTICE THOMPSON delivered the opinion of the Court.

The appellee, who was the complainant in the court below and administratrix of her late husband, filed her bill in the Circuit Court for the District of Columbia and for the

Page 30 U. S. 108

County of Washington, for the purpose of obtaining an injunction to restrain the Union Bank of Georgetown from all further proceedings on a judgment recovered against her as administratrix upon a promissory note for $2,200 bearing date 21 November, 1814, which had been endorsed by her late husband and discounted by the Union Bank for the accommodation of Jeremiah Merrill, the maker. The judgment was entered in December, 1817.

The bill states that suits were instituted in the circuit court upon the note against the drawer and endorser, and that the complainant was called upon by the attorney of the bank and requested to confess a judgment on the note, and was at the time assured by the attorney, 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 Merrill, the principal debtor, who, he assured her, had sufficient property to satisfy the same, and 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.

The bill charges that at the time of confessing the judgment, a valid legal defense existed against said suit which would have defeated the plaintiff's right to recover on the endorsement, the plaintiff not having made the due and legal demand, and give due and legal notice, so as to bind the endorser. That the attorney of the bank well knew the same, and to prevent the complainant from contesting the same, made the proposition above stated. The bill further charges that when the judgments were obtained upon the note, Merrill resided in Georgetown, and had sufficient property to satisfy and pay the judgments, and that 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. And that the complainant repeatedly and earnestly called upon and urged the plaintiffs to issue execution against Merrill according to the agreement and understanding upon which she had confessed judgment, but that the plaintiffs continued to indulge Merrill, and permitted him to leave the District and take with him all his property beyond the process of the court; nor have they taken any

Page 30 U. S. 109

effectual and proper means to recover the debt from Merrill, as bound by their agreement to do. The complainant further states that she is informed and believes that Merrill is in insolvent circumstances, and that now the Bank, having by its misconduct and breach of faith lost the means of recovering the judgment from Merrill, unjustly and unreasonably demand payment of the complainant and threaten to proceed against her on the judgment, which she believes they mean to do.

The defendants, in the court below, in their answer, deny the agreement alleged to have been made by their attorney and aver that the judgment was not confessed voluntarily, but contested in every stage until the trial term, and when the cause was actually called for trial, the complainant's attorney knowing he had no good defense, confessed the judgment.

They deny that they ever authorized or directed their attorney to hold out any inducements to complainant to confess the judgment or to make any such persuasions and promises as are set forth in the bill; that they would have been wholly superfluous and unnecessary, as the complainant was legally and justly liable and bound for the payment of the note.

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.

They deny that when the judgment was obtained, or at any time afterwards, Merrill had sufficient property unencumbered whereon any execution could have been levied and the money made. They deny that they have been remiss and inattentive in obtaining payment from Merrill.

These are the only parts of the bill and answer which it is deemed material to notice. Depositions having been taken, the cause was set down for a final hearing upon the pleadings, exhibits, and depositions, and the court decreed a perpetual injunction. From which decree an appeal was taken to this Court.

The first inquiry that seems naturally to arise in this case is whether the agreement or contract set up in the bill to have been made between Wiley the attorney of the bank, and the complainant in the court below, has been established

Page 30 U. S. 110

by sufficient evidence according to the rules and principles which prevail in courts of equity. It is denied by the answer that such agreement was made. The agreement is certainly very fully proved by one witness.

G. Gloud states in his deposition that he well recollects the conversation between Mrs. Geary and Mr. Wiley, the attorney of the bank, on the subject of her confessing the 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 Wiley said he had ascertained that Merrill had property sufficient to satisfy the debt, that was clear of encumbrance, and that it was expressly on these conditions that she confessed judgment. This witness, in his answer to another interrogatory states that Mrs. Geary was to be cleared (as he expresses it) by instantly levying on Merrill's property. From which it is clearly to be inferred that it was not intended that she should be absolutely released from the judgment, but that her discharge would result from the satisfaction to be obtained from Merrill, of which, from the assurances of Wiley, little or no doubt could be entertained. Some criticisms have been made at the bar upon the deposition of this witness. It has been supposed by the appellant's counsel that he speaks only of one conversation, and that after the judgment was entered. The inference that there was but one conversation is drawn from the printed statement of this deposition, where the witness is stated to have sworn that all the knowledge he had of the judgment was from a conversation between Mrs. Geary, Mr. Wiley, and others. But in the deposition, as contained in the record, his knowledge is stated to have been derived from the conversation he heard between those persons. And he afterwards speaks of a multiplicity of conversations he heard on the subject between the years 1815 and 1820, and evidently referring to periods both before and after the entry of the judgment. The agreement having been fully and satisfactorily established by this witness, the question arises whether there are any circumstances or other testimony disclosed in the case to sustain the bill against the denial in the answer.

It is certainly a well settled rule that on a bill praying

Page 30 U. S. 111

relief, when the facts charged in the bill as the grounds for obtaining 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 where 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. 13 U. S. 9 Cranch 160.

What are the circumstances in this case to meet and outweigh the denial in the answer? It is to be borne in mind that the bill does not charge the agreement to have been made with the bank, but with their attorney. The denial by the bank is not, therefore, of any matter charged to have been within their own knowledge. They could therefore only speak of their belief, or from information received from their attorney, and not from their own knowledge of the transaction.

The denial of their ever having authorized or directed their attorney to hold out any inducements to the complainant to confess judgment or to make to her any such promise as is set forth in the bill is not in answer to any allegation in the bill. The bank is not charged with having specially authorized or directed the agreement to be made. But it is charged as the act of their attorney, and whether this was within the scope of his authority as attorney in the suit will be hereafter noticed.

There are other circumstances which go very far to take this case out of the application of the rule which requires corroborating evidence to support the testimony of a single witness against the answer. This is an injunction bill, filed upon the oath of the complainant. An answer in all cases, according to the course and practice of courts of chancery, must be sworn to unless dispensed with by order of the court under special circumstances. In the present case, the answer being by a corporation, it is put in under their common seal, unaccompanied by an oath. And although the reason of the rule which requires two witnesses or circumstances to corroborate the testimony of one to outweigh the answer may be founded in a great measure upon the consideration that the complainant makes the answer evidence by calling for it;

Page 30 U. S. 112

yet this is in reference to the ordinary practice of the court requiring the answer to be on oath. But the weight of such answer is very much lessened, if not entirely destroyed as matter of evidence, when unaccompanied by an oath, and indeed we are inclined to adopt it as a general rule that an answer not under oath is to be considered merely as a denial of the allegations in the bill, analogous to the general issue at law, so as to put the complainant to the proof of such allegations. But it is not necessary in the present case to go thus far, for independent of all these circumstances the testimony of Cloud is strongly corroborated by that of Magruder. He swears that Wiley was the attorney and counsel for the bank when the judgment was confessed. That he understood from him 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 defenses' being made by the endorsers with respect to the insufficiency of the demand and notice. And that Wiley requested him to call on the complainant with a view to make such adjustment, and that he advised her to see Mr. Wiley, who was friendly to her, and would not advise her to do anything against her interest.

All these circumstances are abundantly sufficient to corroborate the testimony of Cloud and outweigh the answer even if it had been sworn to. The agreement, therefore, alleged in the bill to have been made by Wiley, the attorney of the bank, must be considered as fully established. And the next inquiry is whether the attorney had authority to make such agreement so as to bind the bank.

It is necessary here that it should be understood with precision what this agreement was. It seems to have been considered at the bar by the appellants' counsel as an agreement to release and discharge the complainant from all responsibility if she would confess judgment upon the note. But such is not the agreement set up in the bill. It is that if the complainant would confess judgment, and not dispute her liability upon the note, he (the attorney) would immediately proceed by execution to make the amount thereof from Merrill, the principal debtor, who, he assured the complainant, had sufficient property to satisfy the same, upon the faith of which promise she did confess the judgment.

Page 30 U. S. 113

It is not alleged or pretended that any special authority was given by the bank to their attorney to make the agreement set up in the bill, and unless it fell within the scope of his general authority as attorney in the suit, the bank cannot be held responsible. The general authority of the attorney does not cease with the entry of the 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. 8 Johns. 366. 10 Johns. 220. His suit does not terminate with the judgment. Proceedings on the execution are proceedings in the suit. It was therefore within the scope of the general authority of the attorney in the suits to postpone the execution on the judgment against the endorser and issue one on the judgment against the maker of the note, and this is the utmost extent of the alleged agreement. And indeed it does not go thus far. The attorney only stipulated to issue an execution immediately upon the judgment against Merrill. And if he had authority to issue an execution, of which there can be no doubt, he had authority to enter into an agreement that such execution should be issued, and thereby to bind the bank to the performance thereof. And that the bank has violated this agreement by refusing to have an execution issued against Merrill is abundantly proved. Repeated and urgent applications were made to them for that purpose without effect, and the attorney, on application to him, admitted that he had agreed to issue an execution immediately after obtaining the judgment and have it levied on Merrill's property, but said the fault was not in him, but in the directors of the bank. No execution was issued, and Merrill was permitted to leave the District and remove his property beyond the jurisdiction of the court. And it may very fairly be concluded from the evidence that had an execution been issued, the judgment might have been satisfied out of Merrill's property. It was proved by several witnesses that he had considerable property in his possession which he took with him when he removed from Georgetown. That he was a housekeeper, had his house furnished, was the owner of hacks and horses, or had them in his possession. But what is still more conclusive and satisfactory, is the declaration of Wiley the attorney, who, for the purpose of inducing the complainant to confess the

Page 30 U. S. 114

judgment, assured her that he had ascertained that Merrill's property was clear of encumbrance and was sufficient to satisfy the judgment. This necessarily implied that his knowledge was the result of particular inquiry on the subject.

But it is objected that this contract was without any consideration to support it.

The consideration alleged in the bill is relinquishing all defense in the action and confessing a judgment, averring that the complainant had a valid legal defense, which would have defeated the right of the bank to recover on the endorsement, no due and legal demand having been made of the maker and notice thereof given to the endorser.

It is unnecessary to examine whether this defense would have been available or not. The validity of the contract did not depend upon that question. It is enough that the bank considered it a doubtful question and that it supposed it was gaining some benefit by foreclosing all inquiry on the subject, and the complainant, by precluding herself from setting up the defense, waived what she supposed might have been of material benefit to her. That the bank considered it of some importance to shut out this defense is fully shown by the testimony of Magruder. He says 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 a late decision of the court as to the insufficiency of the demand on the fourth, instead of the third day of grace. So that this question, at the time the contract was entered into, was considered by the bank at least doubtful. And to permit a subsequent judicial decision on this point in its favor as having a retrospective effect, so as to annul a settlement or agreement made by it under a different state of things would be sanctioning a most mischievous principle.

In addition to this, there was a moral obligation resting upon the bank to do the very thing its attorney stipulated to do. Every consideration of justice and equity, in a moral though not in a legal point of view, called upon it to use due diligence to obtain satisfaction of the debt from the principal before recourse was had to the surety.

The decree of the circuit court granting a perpetual injunction is accordingly

Affirmed.

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