Allen v. Hammond - 36 U.S. 63 (1837)
U.S. Supreme Court
Allen v. Hammond, 36 U.S. 11 Pet. 63 63 (1837)
Allen v. Hammond
36 U.S. (11 Pet.) 63
The brig Ann, of Boston, on a voyage from New Orleans to Madeira, was unlawfully captured by a part of the Portuguese squadron, and was, with her cargo, condemned. Upon the remonstrance of the government of the United States, the claim of the owner for compensation for this capture was, on 19 January, 1832, admitted by the government of Portugal to an amount exceeding $33,000, one-fourth of which was soon after paid. On 27 January, 1832, the owner of the Ann and cargo, neither of the parties knowing of the admission of the claim by Portugal, made an agreement with the appellant to allow him a sum, a little below one-third of the whole amount of the sum admitted, as commissions, on his agreeing to use his utmost efforts for the recovery thereof. At the time this agreement was made, which was under seal, H., the appellee, was indebted to the appellant A. $268 for services rendered to him in the course of a commercial agency for him. In the contract it was agreed that this debt should be released. Under the contract, A. received the payment of one-fourth of the amount admitted to be due to H. by Portugal, and H. filed a bill to have the contract rescinded and delivered up to him, the debt of $268 to be deducted from the same with interest, &c. The circuit court made a decree in favor of H., and on the payment of $268 with interest, the contract was ordered to be delivered up to be cancelled. The decree of the circuit court was affirmed, the court being of opinion that the agreement had been entered into by both the parties to it under a mistake and under entire ignorance of the allowance of the claim of the owner of the Ann and her cargo. It was without consideration: services long and arduous were contemplated, but the object of those services had been attained.
If a life estate in land is sold, and at the time of the sale the estate is terminated by the death of the person in whom the right vested, a court of equity would rescind the purchase. If a horse is sold which both parties believed to be alive, the purchaser would not be compelled to pay the consideration.
The law on this subject is clearly stated in the case of Hitchcock v. Giddings, Daniel's Exchequer Reports 1, where it is said that a vendor is bound to know he actually has that which he professes to sell. And even though the subject of the contract be known to both parties to be liable to a contingency, which may destroy it immediately, yet if the contingency has already happened, it will be void.
In the circuit court, the appellee, John Hammond, filed a bill praying that a certain instrument in writing executed by him and the appellant in January, 1832, by which he had stipulated to allow to the appellant a compensation for establishing a claim on the Portuguese government for the illegal capture of a
vessel belonging to him, should be cancelled, the consideration for the said stipulation having failed; the bill also prayed for further and other relief.
The instrument referred to was an irrevocable power of attorney from Hammond to Allen to receive from the government of Portugal or of the United States and of and from all and every person and persons whomsoever a certain claim or demand which said Hammond had for and on account of the capture and condemnation of the American brig Ann, of Boston and her cargo on a voyage from New Orleans to Goree (intending to stop and trade at Fayal, Madeira, and Teneriffe), by the Portuguese squadron cruising off the Island of Terceira, and condemned by the tribunal sitting at Lisbon, under the authority of the Portuguese government, on 22 December 1831. The agreement was made on 27 January 1832, between Hammond and Allen by which Hammond agreed to pay Allen ten percent on all sums recovered until the amount should equal $8,000, and on all sums over that amount, thirty-three percent, and Allen agreed to use his utmost efforts to bring the claim to a favorable issue and to receive the aforesaid commission in full compensation for his services and expenses, already incurred, or thereafter to be incurred, in prosecuting the claims.
The bill, amongst other things, alleged, that on 19 January 1832, in consequence of measures taken by the representatives of the government of the United States at Lisbon, the Portuguese government
recognized and admitted the complainant's claim to the amount of $33,700, of which he alleged he was ignorant, until the month of March 1832. That the power of attorney was executed in consequence of certain representations made by Allen that he could render important services in prosecuting the claim against the Portuguese government, without which services the claim would be lost, and that Allen proposed to Hammond to appoint him his agent, that he was then ignorant his claim had been recognized, and also that the agreement was executed while he remained ignorant of the fact.
The bill also charged that the claim has not been liquidated or paid in consequence of any interference or exertions of the defendant or through any agency or influence on his part. That both said instruments were executed without due consideration and when the complainant was ignorant of the situation of his claim on the Portuguese government. That the contract of January 27, 1832, "was entered into and executed without any adequate consideration or services to be by the said Crawford Allen paid or performed," under mistaken views and ignorance of the then situation of the complainant's claim, and was hard, unconscionable and unequal, and ought on that account to be set aside, even if said claim had not been liquidated by the Portuguese government at the time said contract was made and executed.
The answer gave the history of the acquaintance between the complainant and defendant; showed the measures to enforce this claim, which the defendant had taken as the agent of the complainant prior to the execution of the power of attorney; that those measures were approved by the complainant; that the power was read to him; that three copies were executed, and that the complainant saw all the letters which the defendant had received. It alleged that the defendant relinquished all claims for commissions and services, amounting to $268, then due him, and that the consideration to the complainant for executing said instruments was the defendant's relinquishment of the immediate payment of the money then in his own hands of what was then justly due to him for commissions and for services already rendered in regard to the reclamation of said vessel from the Portuguese government and the agreement on the part of said defendant, to use his "utmost efforts to bring the aforesaid claim to a favorable issue" and to sustain all the expenses in prosecuting said claim.
The defendant expressly denied that it was any part of the understanding or agreement between him and the complainant that the defendant was not to receive said stipulated sums in case there should be little or no trouble in obtaining said money.
On the contrary (he stated), the understanding and agreement was that the defendant was to receive said sums and no more, even though his trouble and expenses should much exceed said sums, and to receive said sums also if his trouble and expenses should be but very small, and both parties fully understood that the value of the bargain to the defendant depended on these contingencies -- and the defendant averred that he had no knowledge at the time of the situation of the claim except that derived from the letters annexed to his answer, that all the information he had was made known to the complainant and was common to them both; that it was made known to the complainant in conversations and by exhibiting said letters, and he denied that the agreement, when executed, was to depend for its validity on any subsequent information from any source whatever.
"On the contrary, it was fully understood that contingencies like the one which unexpectedly happened or others of an opposite character might render the agreement very advantageous or very disadvantageous to the defendant."
The circuit court gave a decree in favor of the complainant, and the defendant appealed to this Court. The decree required the defendant to bring the agreement of January 27, 1832, into the clerk's office within ninety days for cancellation, and enjoined the defendant from asserting any title at law or in equity under the same, and it also ordered the payment of $268 by the complainant to the defendant.