Oelrichs v. Spain
82 U.S. 211 (1872)

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U.S. Supreme Court

Oelrichs v. Spain, 82 U.S. 15 Wall. 211 211 (1872)

Oelrichs v. Spain

82 U.S. (15 Wall.) 211

Syllabus

1. In the jurisprudence of the United States, the objection that there is an adequate remedy at law raises a jurisdictional question, and may be enforced by the court sua sponte though not raised by the pleadings nor suggested by counsel.

2. The equity jurisdiction will be sustained when time, expense, and multiplicity of suits will be saved, as also when the case contains an element of trust.

3. Securities to an injunction bond cannot go behind the decree to raise a question of illegality as to an agreement on which it is founded.

4. A release not under seal is not a technical bar even in a suit at law. But even when sealed, it cannot be set up in equity to defeat those who were not parties to it and who had separate interests.

5. An injunction bond given to one who held the legal title to a fund will enable him at law to recover to the full extent damages touching the entire fund, and a court of equity will follow the law in its proper distribution.

6. Counsel fees are not recoverable on such bonds.

On the 9th of November, 1842, the Bank of the United States was the owner of $500,000 of the bonds of the then independent Republic of Texas, a government, at that time, of bad pecuniary credit. Owing W. S. Wetmore $50,000, the bank assigned these bonds, with arrears of interest on them, to him as a security for the debt. In July, 1845, the Republic became one of the United States under the name of the State of Texas, and immediately certain holders of its bonds became urgent that Congress should assume the payment of them, principal and interest. Among these holders was General James Hamilton, a person of some political influence in his day, and who had been instrumental in procuring the admission of Texas into the Union. As the Bank of the United States would gain largely if the United States did so assume the debt, Hamilton applied to its trustees -- the bank having itself failed, and assigned its effects -- urging them to employ him to have it done, and the trustees, in October, 1845, agreed with him that if he would devote his

Page 82 U. S. 212

"best efforts, time, and means to the great object of securing the recognition and payment of these claims," and if his efforts should be successful, they would allow him a commission of ten percent for the service so rendered. This agreement was limited by its terms to two years. However, Hamilton having labored successfully, this provision as to time was not insisted on. The trustees communicated the agreement fully to Wetmore, September 16, 1850, without mentioning the original limitation, and directing him to "hold subject to the order of Hamilton one-tenth of any sum over and above his claim against the said bonds." Wetmore acknowledged the receipt of this order and promised to hold the bonds accordingly.

Through his, Hamilton's, efforts largely, Congress, by an act of 9 September, 1850, did assume the payment of this debt and authorized a five percent stock of the United States to be issued in lieu of the bonds of Texas, the act requiring, however, that before the stock of the United States should be issued, the holders of the Texas bonds should "first file at the Treasury of the United States, releases of all claims against the United States for said bonds."

The amount finally paid, June 3, 1856, in behalf

of the claim held by Wetmore was . . . . . . . . . $817,720.88

Wetmore having paid himself his own debt, paid

the residue of the nine-tenths to the trustees

of the bank. This left in his hands, as

trustee for Hamilton, the remaining one-tenth, or 81,772.08

A considerable time before this money was payable

by the United States, Hamilton, who had long been

pecuniarily embarrassed, directed Wetmore, by

written orders, which Wetmore accepted, to pay

out of it, when received,

To Wetmore, himself . . . . . . . . $ 2,500

To Corcoran & Riggs . . . . . . . . 25,000

To one Hill . . . . . . . . . . . . 33,500

with interest from certain dates; so much being

due by him, Hamilton, for money borrowed of these

persons respectively.

It seemed to be admitted by all as unquestionable

that the trustees of the Bank of the United States

were, in virtue of some agreement of an admitted

priority, entitled to receive of this. . . . . . . 81,772.08

The sum of . . . . . . . . . . . . . . . . . . . . 12,051.50

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Leaving as Hamilton's true one-tenth . . . . . . . . $69,720.58

Page 82 U. S. 213

In this state of things -- and when if Wetmore had been allowed to distribute the one-tenth of Hamilton or his one-tenth less the bank's last-named deduction, it would have paid Hill as well as Wetmore and Corcoran & Riggs, all in full -- one Spain filed a bill against Wetmore, Corcoran & Riggs, and the trustees of the bank, Hill not being by name made a defendant, charging that Wetmore had the $81,772.08 as the property of Hamilton, and that he, Spain, had an assignment of the whole fund made by Hamilton at an early date. The bill then alleged that Wetmore, disregarding this earlier assignment, pretended to hold the fund, subject to certain other alleged assignments of later date, the bill specifying that to Wetmore himself, and those to Corran & Riggs, Hill and the trustees of the bank, and alleging that Wetmore meant to apply the fund to the payment of these last "said recited claims" and that the secretary was about to pay to Wetmore the said sum of $81,772.08. Asserting thus a superior equity, the bill then prayed:

"That the said Wetmore, his assignees, aiders, and abettors, may be enjoined and restrained from receiving the sum of $81,772, being the one-tenth of the three certificates,"

&c. Subpoenas were prayed against all these parties, and that the representative of Hill (Hill himself being now dead) should be made defendant when discovered. An injunction was granted "as prayed for." A bond in the penalty of $15,000, signed by a certain J. F. May and Henry May, in favor of Wetmore, Corcoran & Riggs, and the trustees of the bank, but not by name in favor of Hill, was filed. The writ of injunction was issued on the 31st of May, 1856, directed to Wetmore, Hamilton, Corcoran & Riggs, and the trustees of the bank. It recited the filing of the bill and its object. The restraining clause was in these words:

"You, the said W. S. Wetmore, your assignees, aiders, and abettors, are hereby restrained and enjoined from asking for or receiving the sum of $81,772.08, being the one-tenth part of the bonds or certificates,"

&c.

This writ was served on Wetmore, and Corcoran & Riggs. From that time, until the dissolution of the injunction, hereinafter

Page 82 U. S. 214

mentioned, the money laid idle in the Treasury of the United States. Answers were filed by Wetmore, Corcoran & Riggs, the trustees of the bank, and by the representative of Hill.

On motion of the defendants, it was subsequently thus ordered:

"It appearing to the satisfaction of the court that there is not sufficient security to indemnify the defendants for their costs and damages &c., it is ordered that the complainant file a bond in the penalty of $20,000 conditioned to pay the defendants such costs and damages as they may respectively sustain."

Prior to this, the complainant had released his injunction as to the sum of $12,051, improperly enjoined, and this had been paid by Wetmore to the bank, and a release of the injunction bond executed by the trustees of the bank. The form of that release did not appear in the record.

The second bond, ordered as above-mentioned to be filed, was filed, executed by Spain and Oelrichs. This, by consent of the parties, was ordered to stand in lieu of the bond previously filed, reserving the right of the obligees to have recourse to the original bond for interest theretofore accrued. The obligees named in this bond were Wetmore and Corcoran & Riggs, but not Hill by name. The bond recited the injunction issued by the court to restrain the collection of the money mentioned in the writ; it recited also that certain portions of the money so enjoined had been released and paid over. The condition was:

"That if the said Spain &c., shall prosecute the writ of injunction to effect, and pay as well the costs, damages, and charges that shall occur in said circuit court in Washington County, as all costs, damages, and charges that shall be occasioned by said writ of injunction, and shall in all things obey such order and decree as the said court shall make in the premises, then the obligation to be void and of no effect, otherwise to remain in full force and effect."

The cause being heard, it was decreed, on the 19th February, 1861, 4 years 8 months and 16 days after the injunction had issued:

Page 82 U. S. 215

1. That the legal title to the fund was from the 9th November, 1849, and still is in Wetmore.

2. That from the 16th September, 1850, when the trustees of the bank notified to him their arrangement with Hamilton and he accepted it, Wetmore held the legal title of the one-tenth as trustee of the fund.

First, to pay himself, with interest, the

loan of . . . . . . . . . . . . . . . . . . $ 2,500

Second, to pay Corcoran & Riggs . . . . . . . 30,000

Third, to pay Hill with interest from

9th March, 1852 . . . . . . . . . . . . . . 33,500

From this decree Spain alone appealed. At the December Term 1863, this Court affirmed the decree with costs. [Footnote 1]

Pending the appeal, there being no supersedeas and the decree having dissolved the injunction, the Treasury paid to Wetmore, on 20 March, 1861, the sum remaining due on the one-tenth, $69,720.60.

There had been previously paid to the bank the sum improperly enjoined, to-wit, 30th March, 1859, the pro rata on $12,051.48.

The sum they paid to Wetmore was in three drafts, intended to represent the interests of the parties as settled by the decree, to-wit:

For Wetmore . . . . . . . . . . . . . . . . . $ 4,333.89

" Corcoran . . . . . . . . . . . . . . . . . 30,000.69

" Hill . . . . . . . . . . . . . . . . . . . 35,386.00

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$69,720.58

Wetmore and Corcoran & Riggs were paid in full; but on Hill's debt, as found by the decree, $52,457, there still remained unpaid $17,071.

Soon after the injunction was issued in this case, two others were issued on bills filed in the same court, one by the James River & Kanawha Company and one by Pierce Butler. In the former, an injunction bond was executed in the penalty of $5,000, signed by Caperton and others; in the latter, one signed by Butler and others in the penalty of $2,500.

Page 82 U. S. 216

Butler's bill was heard with that of Spain, and subsequent to the decree in that case the James River & Kanawha Company dismissed their bill.

In both of these cases, the bonds expressly included among the obligees Hill's executor, as well as Wetmore and Corcoran & Riggs, while in the two bonds filed in Spain's case, as already said, neither Hill nor his executor was expressly named as obligee.

In this state of things, the only child, heir, and legatee of Hill filed a bill to assert his father's claim for damages occasioned by these several injunction bonds. To aid in this, the representatives of Wetmore as also the executor of Hill were joined as complainants. The securities in the two bonds in the Spain case, May and Oelrichs, and the security in the bond in the James River Company's case, Caperton, were made defendants.

The bill was also filed against Corcoran & Riggs to seek a discovery from them as to whether any settlement had been made with them of the bond in the James River case.

It was also filed to marshal assets, and to assert the right of Hill to the whole of this latter bond, and compel Corcoran & Riggs to resort for payment to the other bonds, they being named as obligees in all, while Hill was named only in one -- provided it should be decreed that the omission to name Hill specifically as obligee in the Spain bonds prevented his looking to them for redress -- a matter which was not conceded.

The bill also stated that Corcoran & Riggs has made some settlement of the $5000 bond, and prayed a discovery.

As to the bond for $2,500 given by Butler, the complainant stated its payment by his representatives; and as to these representatives, the representatives of Henry May, one of Spain's securities, Spain himself, Ellis and Ould, parties to the James River bond, all nonresidents and beyond the jurisdiction -- the bill prayed that process might issue against them if they should come within the jurisdiction.

On this bill, answers, and proofs, the cause was tried and

Page 82 U. S. 217

decrees rendered asserting Hill's right to resort to the Spain bonds for redress of damages, and referring Corcoran & Riggs to the bonds on which they were named and Hill was not; and also allowing both Hill and them to recover counsel fees paid in attending to the injunction. The items thus appeared:

Corcoran & Riggs for damages, interest on

the amount of their lien during the term

payment was delayed by the injunction,

a term of 4 years, 8 months, and 16 days . . . . $8,475.00

Their counsel fees in the adverse litigation . . . 1,000.00

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$9,475.00

Deduct the amount they received upon the bond

given in behalf of the James River & Kanawha

Company. . . . . . . . . . . . . . . . . . . . . 5,000.00

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Balance . . . . . . . . . . . . . . . . . . . $4,475.00

Of this sum, $2,455.94 was charged on May's bond, and $2,019.06 on Oelrichs'.

To Hill's estate for loss of principal by

reason of the fact that part of the fund

which would otherwise have been applied

to it in part payment was absorbed for

the interest due the prior claims. . . . . . . . $ 827.41

Interest on $36,214.35 for 4 years, 8 months,

and 16 days. . . . . . . . . . . . . . . . . . . 10,230.55

Counsel fees in the adverse litigation . . . . . . 1,500.00

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$12,557.96

Deduct the amount received on the Butler bond. . . 2,500.00

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Balance. . . . . . . . . . . . . . . . $10,057.96

Of this sum, there was charged to May's bond $5,027.15, and to Oelrichs', $5,030.81.

May and Oelrichs now appealed, and the case was before this Court for final adjudication.

Page 82 U. S. 224

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