McDonald v. Hobson
48 U.S. 745 (1849)

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U.S. Supreme Court

McDonald v. Hobson, 48 U.S. 7 How. 745 745 (1849)

McDonald v. Hobson

48 U.S. (7 How.) 745

ERROR TO THE CIRCUIT COURT OF THE

UNITED STATES FOR THE DISTRICT OF OHIO

Syllabus

Where the complainant and respondent in a suit in chancery entered into a mutual covenant, that, pending the suit, they would divide the money between them in certain proportions and that if, in the said suit, it should be decreed that these were not the correct proportions, they would respectively pay the difference so as to conform to the decree, and the result of said suit was a dismissal of the complainant's bill with costs, and the respondent brought an action of covenant against the complainant, reciting the agreement in his declaration with an averment that, by virtue of the decree of dismissal, he was entitled to receive a certain sum of money, this declaration was bad.

The agreement looked to a judicial determination of the rights of the parties in some court of law or equity, and the declaration omits all averment that these rights had been so settled.

The decree of dismissal did not of itself prove that the complainant owed the respondent anything. It only proved that the respondent was not indebted to the complainant.

Nor is this defect in the declaration cured by verdict. It cannot be presumed that evidence was given upon the trial to show that some decree had adjusted the amount due, as claimed in the declaration, because this would be presuming against the record, which recites the substance of the decree. A total omission to slate any cause of action is a defect which a verdict will not cure.

The averment of the virtute cujus is insufficient either as matter of law or fact -- as law because no such legal consequence could follow from the premises and as fact because the averment was in contradiction to the record itself.

There was no bill of exceptions in the case, but the whole record was brought up upon the allegation of a fatal defect in it, because no cause of action was shown by the plaintiff below in his declaration.

Hobson, a citizen of Alabama, brought an action of covenant against McDonald, as the administrator of McArthur. As the whole case depended upon a very nice point of pleading, the Reporter has thought it proper to insert the whole of the declaration, which was as follows:

"William McDonald, administrator of all and singular the goods &c., of Duncan McArthur, deceased (which said William is, and the said Duncan was, at the time of his death, a citizen and resident of the State of Ohio) was summoned to answer unto Matthew Hobson, a citizen and resident of the State of Alabama, in the said United States of America, of a plea of covenant broken, and thereupon the said Matthew, by Wm. Key Bond and H. Stanbery, his attorneys, complains: for that whereas, heretofore, to-wit, on 25 September, A.D. 1830, at Chillicothe, in the said District of Ohio, by a certain article of agreement, made and executed, as well by the said Matthew as by the said Duncan and sealed with their seals respectively, which said article being on file in this court

Page 48 U. S. 746

as an exhibit in the case in chancery hereinafter mentioned, the said plaintiff is unable to make profert thereof, it was, among other things, witnessed:"

"That whereas on the 10th day of November in the year of our Lord 1810, a contract was entered into by and between John Hobson and Matthew Hobson (the said plaintiff) of the one part and Duncan McArthur (the said defendant's intestate) of the other part, providing for the withdrawal of certain entries of land warrants, and the relocation of the same, as by reference to said contract will appear, since which time the said John Hobson had transferred his interest in said contract to the said Duncan McArthur, and whereas, on 26 May, 1830, the Congress of the United States passed and enacted a certain statute in virtue of which it became competent for the parties to the said last-mentioned contract, as holders and owners of the reentries made under said last-mentioned contract, to relinquish the same to the United States, and receive therefor the amount at which the lands included in said entries were valued by an inquest appointed by the United States, with interest, as by the said statute would appear."

"And whereas the said Matthew and Duncan were each willing to make such relinquishment to the United States and avail themselves of the benefits of the said act of Congress, but had disagreed about their respective rights under said last-mentioned contract, in consequence of which said disagreement the said Duncan McArthur had then recently instituted a certain suit in chancery in the Supreme Court of the State of Ohio in and for the County of Ross, in said state; and, among other things, had obtained an injunction in said cause restraining the said Matthew Hobson from receiving any money under the said act of Congress, until the matters could be inquired into, as by reference to said suit would fully appear."

"And whereas (as is further recited by said article of agreement first herein mentioned) the said parties, to-wit, the said Matthew and Duncan, were then mutually willing and anxious that the said money, so appropriated by the said act of Congress, or such part of it as should await the determination of said suit, should not remain inactive, and did therefore wish to put the whole matter in such state as would make the fund available and profitable pending the same suit, but without in any manner affecting or being held or interpreted as affecting their said controversy, in order to accomplish which it had then been determined and arranged that the said Matthew should assign and transfer to the said Duncan all the interest of the said Matthew of, in, and unto the said entries and warrants in such way as would enable the said Duncan to receive from the United States the moneys aforesaid, out of which said money the said Duncan should at

Page 48 U. S. 747

once pay to the said Matthew the sum of eleven thousand five hundred dollars, and retain the balance of the same in his, the said Duncan's, possession, and the said Duncan, in and by the said article of agreement first herein mentioned, did covenant to and with the said Matthew that if, in the said suit so instituted as aforesaid, it should be held, adjudged, decreed, or determined that the said Matthew, his heirs or assigns, executors or administrators, were or should be entitled to any greater portion of said money, directly or indirectly, than the said sum of eleven thousand five hundred dollars, then and in such case he, the said Duncan, his heirs, executors, or administrators, should and would pay to the said Matthew, his heirs, executors, administrators, or assigns, at the Bank of Chillicothe any such excess over and above said sum, together with interest on such excess, from the day of the date of said article of agreement, which said covenant last aforesaid, it was provided by said article of agreement, should be held to embrace any judgment, order, or decree, which might produce the said result, whether made and rendered in said suit in chancery or in any other suit or before any other tribunal, founded on the same subject matter or contract, and in and by said first-mentioned article of agreement it was further witnessed that the said Matthew Hobson did thereby covenant to and with the said Duncan McArthur that in case it should be determined, held, ordered, adjudged, or decreed in said chancery suit, or before any other tribunal finally decided in a suit founded on the same subject matter that he, the said Matthew Hobson, was entitled to a less sum than the aforesaid sum of eleven thousand five hundred dollars, then and in such case he, the said Matthew Hobson, his heirs, executors, and administrators should and would refund and pay to the said Duncan McArthur, his heirs, executors, administrators, or assigns, at the Bank of Chillicothe, the said amount so received by him beyond what he was entitled to, with interest thereon from the said date of said article of agreement."

"The said plaintiff further says that in performance of his covenant in that behalf in said article of agreement mentioned, he did afterwards, to-wit on the said 25 September, A.D. 1830, at Chillicothe aforesaid, assign and transfer to the said Duncan McArthur all the interest of him, the said Matthew, of, in, and unto the said entries and warrants, which said assignment and transfer was then and there accepted and received by the said Duncan in discharge of the said covenant of the plaintiff in that behalf so made as aforesaid. In virtue of which said assignment and transfer, the said Duncan afterwards, to-wit on the same day and year last aforesaid, at Chillicothe

Page 48 U. S. 748

aforesaid, did receive from the United States the moneys so appropriated, amounting in the whole to a large sum of money, to-wit, the sum of fifty-seven thousand six hundred and eight dollars."

"And the said plaintiff further says that such proceedings were afterwards had in the said suit in chancery, referred to in said before-recited article of agreement, that afterwards, to-wit, at the December term, A.D. 1831, of said Circuit Court for the Seventh Circuit and District of Ohio, the said suit in chancery was, on the petition of said Matthew Hobson on the ground of his residence and citizenship in the State of Alabama aforesaid, removed to and docketed in the said circuit court, and such further proceedings were afterwards had in said suit that the same was finally heard and decided before the Supreme Court of the United States at Washington, to which said court the same had been taken by appeal from the decree of said circuit court, at the January term thereof, A.D. 1842, and such decree was by the said Supreme Court of the United States then and there rendered that it was adjudged and ordered that the said Matthew Hobson should recover against the complainants in said suit, viz., Allen C. McArthur, James D. McArthur, Effie Coons, Mary Trimble, Eliza Anderson, Frances Walker, and John Kercheval, heirs at law of said Duncan McArthur (he, the said Duncan, having deceased during the pendency of said suit, and the said last-mentioned complainants having been made parties thereto in his place and stead) the sum of one hundred and sixty-six dollars and eighty-three cents, for his costs therein expended, and that he have execution therefor, and further that the said cause should be and the same thereby was remanded to the said circuit court with directions to the said last-mentioned court to dismiss the bill without prejudice."

"And afterwards, to-wit, at the July term, A.D. 1843, of the said circuit court, to which the mandate of the said Supreme Court had been duly sent for execution of the said last-mentioned decree, the said bill was, by the order of said circuit court, in conformity with said mandate, dismissed without prejudice, all which will more fully and at large appear by reference to the record and proceedings of said suit in chancery, and the said mandate, and several orders and decrees therein now in said court remaining."

"And the said plaintiff further avers and in fact says that in virtue of the decree aforesaid, he is well entitled to have and demand of and from the said defendant, as administrator as aforesaid, a greater portion of the said moneys, so received by the said Duncan McArthur as aforesaid than the said sum of

Page 48 U. S. 749

eleven thousand five hundred dollars, which last-mentioned sum the plaintiff admits he received from said Duncan at and after the execution of said article of agreement, to-wit, the sum of three thousand two hundred and one dollars, with interest thereon from the said 25 September, A.D. 1830. Of all which premises the said defendant, afterwards, to-wit, on 10 July, A.D. 1843, at Cincinnati, in the District of Ohio aforesaid, had due notice; yet neither the said Duncan whilst in life nor the said defendant as administrator as aforesaid, since the decease of said Duncan, has at any time, though thereto requested, paid to said plaintiff the said last-mentioned sum of money at the Bank of Chillicothe or elsewhere, or any part thereof, but the same to do have hitherto refused, and the same, with the accruing interest, still remains wholly due and unpaid. Wherefore the said plaintiff saith, that neither the said Duncan nor the said defendant, his administrator as aforesaid, hath kept the said covenant in that behalf, but the same is broken, to the damage of the said plaintiff of ten thousand dollars, and therefore he brings suit &c."

"BOND & H. STANBERY, Attorneys for Plaintiff"

The defendant demurred to this declaration, but his demurrer was overruled.

At December term, 1843, the defendant craved oyer of the agreement, and pleaded non est factum and nul tiel record. The plaintiff joined issue upon both pleas.

Page 48 U. S. 753

MR. JUSTICE NELSON delivered the opinion of the Court.

The questions presented arise upon the record of judgment, no bill of exceptions having been taken to the rulings of the court at the trial. It is insisted that the declaration is fatally defective and the judgment for that reason erroneous.

The action is covenant, brought by Matthew Hobson against William McDonald, as administrator of Duncan McArthur, deceased.

The declaration recites that, on 10 November, 1810, a contract was entered into between the said Matthew and Duncan providing for the withdrawal of certain entries of land warrants

Page 48 U. S. 754

and relocation of the same; that on 26 May, 1830, Congress passed an act which enabled the parties, as holders and owners of these warrants, to relinquish the same, and receive their value in money; that the said Hobson and McArthur were each willing to make such relinquishment and to avail themselves of the provisions of the act, but that they had disagreed as to their respective rights under the contract of 1810, in consequence of which disagreement McArthur had commenced a suit in chancery in the State of Ohio against Hobson and had obtained an injunction restraining him from receiving any of the moneys under the act of Congress until the matters in dispute should be settled; that both parties had then become anxious that the money, or such part of it as must otherwise await the determination of the suit, should not remain useless, and therefore desired to put their differences on such a footing as would make the fund available and profitable during the litigation, and at the same time without in any manner affecting the suit; that in order to accomplish this, it had been agreed that Hobson should assign and transfer to McArthur all his interest in the said warrants, so as to enable him to receive the money from the government, out of which he should at once pay over to Hobson the sum of $11,500 and retain the balance, and the said McArthur did then and there covenant to and with the said Hobson that if it should be adjudged and determined in the suit in chancery that the latter was entitled to a greater portion of the money than the $11,500, directly or indirectly, then and in such case McArthur would pay to him such further amount with interest at the Bank of Chillicothe. It was at the same time declared that the covenant should be held to embrace any judgment or decree that might produce this result, whether rendered in the suit in chancery or in any other suit or before any other tribunal founded on the same subject matter. And the said Hobson did also then and there covenant to and with McArthur that in case it should be adjudged and determined in the suit in chancery or in any other tribunal that he was entitled to a less sum than the $11,500, then and in such case he would refund to McArthur the excess so received, with interest, at the Bank of Chillicothe.

The declaration then, after setting out the transfer of the interest of Hobson in the land warrants to McArthur, and also the receipt of the sum of $57,608 from the government by the latter, averred that such proceedings were had in the suit in chancery that it was removed into the circuit court of the United States and that such further proceedings were there had that it was finally heard and decided in the Supreme Court of the United States, at Washington, at the January term, 1842, to

Page 48 U. S. 755

which the same had been carried by appeal, and such decree was then and there rendered as adjudged and ordered that Hobson recover against McArthur $166.83 for his costs, and that the cause be remanded to the circuit court with directions to dismiss the bill without prejudice -- all which was afterwards done at the following July term of the circuit court accordingly.

The plaintiff then avers that, in virtue of the decree aforesaid, he is well entitled to have and demand of and from the defendant, as administrator as aforesaid, a greater portion of the said moneys, so received by McArthur, than the sum of $11,500, to-wit, the sum of $3,201, with interest from 25 September, 1830, the date of the articles of agreement -- of all which the defendant had notice.

The usual breach is then set out, concluding to the damage of the plaintiff of $10,000.

The defendant put in a demurrer to the declaration, which was afterwards overruled by the court. He then craved oyer of the articles of agreement, and, after setting them out in haec verba pleaded 1st non est factum and 2d, as to the decree, nul tiel record. Upon which issues were joined, and were found for the plaintiff, and the damages assessed at the sum of $5,833.30.

The question presented for our decision is as to the sufficiency of the declaration after verdict, and this depends upon the construction to be given to the articles of agreement upon which the action is founded and as set forth in the pleadings.

The construction given by one pleader is that the decree or order on the suit in chancery mentioned in the agreement, and upon which the right to any portion of the fund in dispute, beyond the $11,500 already received is made to depend, need not determine either the right to any excess beyond that sum, or, if any, the amount of it, but, on the contrary, either or both may be established by evidence independently of the proceedings in that or any other suit, and that the decree is material only as showing the suit to be at an end. Hence, after setting out the decree by which it appears that the bill of complaint had been dismissed with costs, the pleader proceeds to aver that, in virtue of the decree, the said plaintiff is well entitled to have and demand of and from the defendant a greater portion of the said moneys, so received by the said McArthur, than the sum of $11,500, to-wit, the sum of $3,201, with interest.

This, it is said, is an averment of a matter of fact, and not of a conclusion of law, and that after verdict, the court must presume that evidence was given on the trial to establish the right of the plaintiff to the amount recovered over and above

Page 48 U. S. 756

the sum already received, and that upon this ground the judgment may well be sustained.

This is the view of the case as set forth in the declaration and which was sought to be sustained in the argument, and conceding it to present the true construction of the articles of agreement -- though the averment is certainly informal and illogical in the mode of stating it, as it is difficult to perceive how the right to the sum of money claimed, or to any sum, can result to the plaintiff, even as a matter of fact, in virtue of a decree dismissing a bill in chancery against him -- yet, with the usual intendments of the law in support of a judgment after verdict, it might perhaps be deemed sufficient. The appellate court would presume that evidence had been required and given, under the averment at the trial to support the claim to the amount recovered. 1 Saund. 228, n. 1; 1 Chit.Pl. 589; 1 Maule & Selw. 234; Doug. 68; 7 Wend. 396.

But the Court is of opinion that the pleader has mistaken altogether the true construction of the agreement in the particular mentioned, and has placed the right of action upon ground not warranted by any of the stipulations of the parties. This will be apparent, on recurring for a moment to the agreement as set forth in the pleadings.

The recitals show, that a dispute had arisen in respect to the division of a large sum of money coming from the government, in which the parties were jointly interested, and that a suit had been commenced by McArthur against Hobson, in chancery, enjoining him from receiving any part of it, until their rights had been judicially determined. The effect of this proceeding was to tie up the fund in chancery, pending the litigation, and until the court could make a proper distribution. It was to remedy this inconvenience, and to enable the parties to possess themselves of the fund, pending the controversy, that the agreement in question was entered into, and which was in substance as follows. McArthur was to receive the whole of the money from the government, and at once pay over to Hobson $11,500, retaining in his possession the residue; and if, in the suit then pending, it should be determined, directly or indirectly, that Hobson was entitled to a larger amount for his share, then McArthur would pay such additional sum, with interest, at the Bank of Chillicothe, and, on the other hand, if it should be determined that Hobson's portion of the fund was less than the sum already received, he would refund the excess, with interest, to McArthur at the same place.

The object of the parties was to procure the money from the government, where it was lying idle, and, at the same time, to

Page 48 U. S. 757

make a provisional distribution, without in any way interfering with the suit in chancery. That was to be carried on for the purpose for which it was originally commenced, but as a provisional division had taken place, it became necessary to provide for a special decree, having reference to the changed situation of the fund, and, as the suit had become an amicable one, to provide also for the payment of any sum that might be found due from either party. Hence the stipulation that the decree should be made upon the basis of this provisional distribution and that the parties should pay over at once any balance that might be found due without further proceedings.

The strongest proof exists in the agreement itself that the parties did not intend to interfere with the settlement of their differences by the suit in chancery or by some other suit to be instituted for that purpose, for the last article provides that this contract shall not be used by either party in the suit pending, or in any other suit, or in any other court, or in any proceeding under the contract of 1810, as affecting or in any way changing the rights of either in the matters in dispute, but that the suit in chancery, or any suit which either might think proper to bring, should be conducted in all respects as though this contract had not been entered into.

We think, therefore, it is clear the parties intended that their respective rights to the common fund in question should be settled and fixed by the chancery suit then pending, or by some other legal proceeding that might be instituted for the purpose, and that, when so settled, they would conform the provisional distribution already made to the decision by paying over at once the amount adjudged to be due, for we have seen that instead of interfering with the suit which had been already commenced, great pains are taken to guard against any such consequence and, as if apprehensive that their rights might not be definitively settled by that suit, provision is made for the institution of any other by either party before the same or any other tribunal having cognizance of the case.

In a word, the whole amount of the agreement is to provide first for a provisional distribution of the fund, so that the money might be used pending the litigation; secondly, for a judicial determination of the controversy in respect to it in some court of law or equity; and thirdly for the payment of any balance that might be found due from either at the Bank of Chillicothe.

This being in our judgment the legal effect of the agreement, it is manifest that the pleader has failed to comprehend it, and has therefore failed to set out any cause of action in

Page 48 U. S. 758

the declaration. There is a total omission of any averment of the fact upon which the right of the plaintiff to any portion of the fund beyond the $11,500 is made to depend -- namely a judgment, order, or decree awarding to him the amount. There is not only an omission of any such averment, but the contrary appears upon the face of the declaration, as the decree in the chancery suit is set out and its contents particularly described.

It is a decree simply dismissing the bill of complaint, with costs. It may show that the defendant (now plaintiff) had not received more than his share of the money in the division, otherwise the bill would not have been dismissed; but not that the defendant was entitled to more, unless the dismissal of a bill is evidence that something is due from the complainant to the defendant.

Neither can we presume, even after verdict, that evidence was given at the trial, by which it was made to appear that the decree did determine that the amount which has been recovered in this suit was due from McArthur to the plaintiff, for this would be a presumption against the fact of the record. That shows what decree was rendered, and any one of a different import would have been inadmissible under the pleadings.

Besides, there should have been an averment not only that a decree was rendered in the suit in chancery, but that the sum claimed had been therein adjudged to the plaintiff. This is made the foundation of the right to the money, and of course of the action, by the agreement, and the omission is fatal to the judgment.

It is the case of a total omission to state any title or cause of action in the declaration -- a defect which the verdict will not cure, either at common law or by statute. Doug. 683; Cowp. 826; 1 Johns. 453; 2 id. 557; 17 id. 439.

The averment that, in virtue of the decree, the plaintiff was well entitled to recover &c. is insufficient either as matter of law or of fact. As matter of law, it was given up in the argument, as no such legal consequence could follow from the premises stated, and as matter of fact the averment is in contradiction to the record itself. That shows that the decree determined nothing in favor of the plaintiff; it dismissed the bill against him with costs, and nothing more.

Some weight was given in the argument to the peculiar phraseology of the covenant on the part of McArthur wherein it is provided that if it should be determined in the chancery suit that the plaintiff was entitled to any greater portion of the money, directly or indirectly, than the $11,500, then and

Page 48 U. S. 759

in that case he would pay &c. The object of using the words "directly or indirectly" in the connection found is perhaps, at best, but matter of conjecture. But as the chancery suit was against Hobson for the purpose of asserting claims and demands against him by the complainant, it was, according to the rules of chancery, an inappropriate proceeding for the purpose of asserting claims on the part of the defendant against the complainant. These would have required a cross-bill. But as the suit had become an amicable one, it was provided that the claims of both parties might be settled therein notwithstanding the irregularity of the proceeding, and hence the use of the peculiar phraseology referred to.

This explanation receives some confirmation from the covenant on the part of Hobson with McArthur. These words are there omitted. The suit was appropriate to enforce any claim against him.

It was said also, and some stress laid upon the remark, that the agreement would not have provided for the voluntary payment of the balance that might be due from one to the other if it had contemplated an adjustment of the particular amount by the suit in chancery, as in that event the payment could be enforced by the decree.

But we think this consideration leads to an opposite conclusion. How could the payment be made at the bank, as provided, unless the amount in dispute was first adjusted.

There was no dispute about the payment except as respected the amount. That being determined, each party was ready to satisfy it. Besides, it is difficult to believe that in providing so specially for the settlement of the controversy by judicial proceedings, the parties had in view simply the determination of the question whether the one or the other had received more of the fund than his share, without regard to the amount. Such a decision would have been idle, as it could lead to no practical result in the settlement of their differences.

Upon the whole, for the reasons stated, we think the judgment below erroneous, and should be

Reversed and the cause remanded to the court below for further proceedings.

MR. JUSTICE WAYNE, being indisposed, did not sit in this cause.

MR. JUSTICE WOODBURY dissented.

Order

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the

Page 48 U. S. 760

District of Ohio and was argued by counsel. On consideration whereof it is now here ordered and adjudged by this Court that the judgment of the said circuit court in this cause be and the same is hereby reversed, with costs, and that this cause be and the same is hereby remanded to the said circuit court for further proceedings to be had therein in conformity to the opinion of this Court.

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