A court of equity of the United States will not sustain a bill
in equity, in a case of fraud, to obtain only a decree for the
payment of money by way of damages when the like amount might be
recovered in an action at law.
A bill in equity alleged that the defendant, after agreeing in
writing to sell
Page 119 U. S. 348
to the plaintiff a certain number of cattle at a specified
price, induced him to surrender the agreement and to receive
instead thereof an assignment from the defendant of a similar
contract of a third person with him and also to pay the defendant a
sum of money and to give an obligation to pay him another sum, by
false and fraudulent representations as to the solvency of that
person, and prayed for a cancellation of the aforesaid assignment
and obligation, for a reinstatement and confirmation of the
original agreements and its enforcement on such terms as the court
might direct, or else for a repayment of the sum paid and for
damages, and for further relief.
Held that the bill slowed
no case for relief in equity, because an action of deceit would
afford a full, adequate, and complete remedy.
If a bill in equity showing ground for legal, and not for
equitable, relief prays for a discovery as incidental only to the
relief sought, and the answer discloses nothing, but the plaintiff
supports the claim by independent evidence, the bill must be
dismissed without prejudice to an action at law.
This was a bill in equity, filed November 23, 1881, by Buzard
and Hillard, citizens of Missouri, against Houston, a citizen of
Texas, the material allegations of which were as follows:
That the plaintiffs were partners in the business of pasturing
and breeding cattle upon a tract of land owned by them in the State
of Texas, and on October 14, 1881, negotiated a purchase from the
defendants of 1,500 cows and 50 bulls, to be delivered at Lampasas,
in that state, in May, 1882 at the price of $15.50 a head, one-half
payable upon the signing of the contract and the other half upon
delivery of the cattle; that the terms of their agreement were
stated in a memorandum of that date, signed by the parties and
intended as the basis of a more formal contract to be afterwards
executed, and that the plaintiffs at once paid to the defendant
$500 in part performance. That on October 31, 1881, the parties
resumed negotiations and met to complete the contract; that the
defendant then proposed that in lieu of the contract with him for
the cattle mentioned in the memorandum, the plaintiffs should take
from him an assignment of a similar contract in writing, dated
August 13, 1881, and set forth in the bill, by which one Mosty
agreed to deliver to the defendant an equal number of similar
Page 119 U. S. 349
cattle at the same time and place at the price of fourteen a
head.
That the defendant then stated that he had paid the sum of
$15,000 on the contract with Mosty, and asked that in case of his
assigning that contract to the plaintiffs, they should pay him that
sum, and also the difference of $1.50 a head in the prices
mentioned in the two contracts, but finally proposed to deduct from
this twenty-five cents a head.
That as an inducement to the plaintiffs to make the exchange of
contracts, the defendant represented to them that Mosty was good
and solvent, and able to perform his contract; that he was better
than the defendant, and then had on his ranch 1,200 head of the
cattle, and that there was no doubt of the performance of this
contract, because one McAnulty was a partner with Mosty in its
performance, of all which the plaintiffs knew nothing except that
they knew that McAnulty was a man of wealth, and fully able as well
as willing to perform his contracts.
That on November 1, 1881, the plaintiffs, believing and relying
on the defendant's representations aforesaid, accepted his
proposition and paid the sum of $14,500, making, with the sum of
$500 already paid, the amount of $15,000, which he alleged he had
paid to Mosty on his contract, and executed and delivered to the
defendant their obligation to pay him, on the performance by Mosty
of that contract, an additional sum of $1,837.50, being the profit
on the contract with Mosty in the sale to the plaintiffs, less the
deduction of twenty-five cents a head, and returned to him his
original contract with them, and in lieu thereof received from him
his contract with Mosty, and his assignment thereof to the
plaintiffs endorsed thereon, and set out in the bill, containing a
provision that he should not be responsible in case of any failure
of performance by Mosty.
That the aforesaid representations of the defendant were
absolutely untrue, deceitful, and fraudulent, and were known by the
defendant to be false, and the plaintiffs did not know and had no
means of knowing that they were untrue; that those representations
were intended by the defendant to deceive
Page 119 U. S. 350
the plaintiffs, and did deceive them, to their great injury,
to-wit, to the extent of the amount of $15,000 paid by them to him,
and to the further extent of $10,000 for the expenses necessary to
obtain other cattle, and for the loss of the increase of such
cattle for the next year by reason of the impossibility of
obtaining them in the exhausted condition of the market, and that
Mosty, at the time of the assignment, was absolutely insolvent, and
had no property subject to be taken by his creditors, and his
contract was utterly worthless, as the defendant then knew.
The bill then stated that the plaintiffs brought into court the
contract between the defendant and Mosty, that it might be
delivered up to the defendant, and also the assignment thereof by
the defendant to the plaintiffs, that it might be cancelled.
The bill prayed for a discovery; for a rescission and
cancellation of the assignment of the contract with Mosty, and also
of the plaintiffs' obligation to pay to the defendant the sum of
$1,837.50; for the repayment to the plaintiffs of the excess of
money received by the defendant from them beyond the amount which
they were to pay him under the original contract; for a
reinstatement and confirmation of that contract, and its
enforcement upon such terms as the court might deem just and
proper; or, if that could not be done, that the defendant be
compelled to restore to the plaintiffs the sums of $500 and $14,500
received from them and also to pay them the sum of $10,000 for
damages which they had sustained by reason of the defendant's
fraudulently obtaining the surrender of the original contract, and
by reason of the other injuries resulting to them therefrom, and
for further relief.
The defendant demurred to the bill, assigning as a cause of
demurrer that the bill showed that the plaintiffs' only cause of
action, if any, was for the sums of money paid by them on the
contract, and for damages for breach of the contract, for which
they had an adequate and complete remedy at law. The circuit court
overruled the demurrer.
The defendant then answered fully under oath, denying that he
made any of the representations alleged, and repeating
Page 119 U. S. 351
the defense taken by demurrer; the plaintiffs filed a general
replication; conflicting testimony was taken; at a hearing upon
pleadings and proofs the bill was dismissed, with costs, and the
plaintiffs appealed to this Court.
MR. JUSTICE GRAY, after stating the case as above reported,
delivered the opinion of the court.
In the Judiciary Act of 1789, by which the first Congress
established the judicial courts of the United States and defined
their jurisdiction, it is enacted that
"Suits in equity shall not be sustained in either of the courts
of the United States in any case where plain, adequate, and
complete remedy may be had at law."
Act of September 24, 1789, c. 20, § 16, 1 Stat. 82; Rev.Stat. §
723. Five days later, on September 29, 1789, the same Congress
proposed to the legislatures of the several states the article
afterwards ratified as the Seventh Amendment of the Constitution,
which declares that "In suits at common law, where the value in
controversy shall exceed twenty dollars, the right of trial by jury
shall be preserved." 1 Stat. 21, 98.
The effect of the provision of the Judiciary Act, as often
stated by this Court, is that
"Whenever a court of law is competent to take cognizance of a
right, and has power to proceed to a judgment which affords a
plain, adequate, and complete remedy without the aid of a court of
equity, the plaintiff must proceed at law, because the defendant
has a constitutional right to a trial by jury."
Hipp v. Babin,
19 How. 271,
60 U. S. 278;
Insurance Co. v.
Bailey, 13 Wall. 616,
80 U. S. 621;
Grand Chute v.
Winegar, 15 Wall. 373,
82 U. S. 375;
Lewis v.
Cocks, 23 Wall. 466,
90 U. S. 470;
Root v. Railway Co., 105 U. S. 189,
105 U. S. 212;
Killian v. Ebbinghaus, 110 U. S. 568,
110 U. S. 573.
In a very recent case, the Court said:
"This enactment certainly means something, and if only
declaratory of what was always the law, it must at
Page 119 U. S. 352
least have been intended to emphasize the rule, and to impress
it upon the attention of the courts."
New York Guaranty Co. v. Memphis Water Co.,
107 U. S. 205,
107 U. S.
214.
Accordingly, a suit in equity to enforce a legal right can be
brought only when the court can give more complete and effectual
relief, in kind or in degree, on the equity side than on the common
law side -- as for instance, by compelling a specific performance,
or the removal of a cloud on the title to real estate, or
preventing an injury for which damages are not recoverable at law,
as in
Watson v.
Sutherland, 5 Wall. 74, or where an agreement
procured by fraud is of a continuing nature, and its rescission
will prevent a multiplicity of suits, as in
Boyce v.
Grundy, 3 Pet. 210,
28 U. S. 215,
and in
Jones v.
Bolles, 9 Wall. 364,
76 U. S.
369.
In cases of fraud or mistake, as under any other head of
chancery jurisdiction, a court of the United States will not
sustain a bill in equity to obtain only a decree for the payment of
money by way of damages when the like amount can be recovered at
law in an action sounding in tort or for money had and received.
Parkersburg v. Brown, 106 U. S. 487,
106 U. S. 500;
Ambler v. Choteau, 107 U. S. 586;
Litchfield v. Ballou, 114 U. S. 190.
In England, indeed, the Court of Chancery, in cases of fraud,
has sometimes maintained bills in equity to recover the same
damages which might be recovered in an action for money had and
received. But the reason for this, as clearly brought out by Lords
Justices Knight, Bruce, and Turner in
Slim v. Croucher, 1
D., F. & J. 518, 527, 528, was that such cases were within the
ancient and original jurisdiction in chancery before any court of
law had acquired jurisdiction of them, and that the assumption of
jurisdiction by the courts of law, by gradually extending their
powers, did not displace the earlier jurisdiction of the Court of
Chancery. Upon any other ground, such bills could not be
maintained.
Clifford v. Brooke, 13 Ves. 131;
Thompson
v. Barclay, 9 Law Journal (Ch.) 215, 218. And we have not been
referred to any instance in which an English court of equity has
maintained a bill in such a case as that now before us. In
Newham
Page 119 U. S. 353
v. May, 13 Price, 749, Chief Baron Alexander said:
"It is not in every case of fraud that relief is to be
administered by a court of equity. In the case, for instance, of a
fraudulent warranty on the sale of a horse, or any fraud upon the
sale of a chattel, no one, I apprehend, ever thought of filing a
bill in equity."
The present bill states a case for which an action of deceit
could be maintained at law, and would afford full, adequate, and
complete remedy. The original agreement for the sale of a number of
cattle, and not of any cattle in particular, does not belong to the
class of contracts of which equity would decree specific
performance. If the plaintiffs should be ordered to be reinstated
in all their rights under that agreement, and permitted now to
tender performance thereof on their part, the only relief which
they could have in this suit would be a decree for damages, to be
assessed by the same rules as in an action at law. The similar
contract with Mosty, and the assignment thereof to the plaintiffs,
are in the plaintiff's own possession, and no judicial rescission
of the assignment is needed. If the exchange of the contract was
procured by the fraud alleged, it would be no more binding upon the
plaintiffs at law than in equity, and in an action of deceit, the
plaintiffs might treat the assignment of the contract with Mosty as
void, and, upon delivering up that contract to the defendant,
recover full damages for the nonperformance of the original
agreement. No relief is sought against Mosty, and he is not made a
party to the bill. The obligation executed by the plaintiffs to the
defendant is not negotiable, so that there is no need of an
injunction. A judgment for pecuniary damages would adjust and
determine all the rights of the parties, and is the only redress to
which the plaintiffs, if they prove their allegations, are
entitled. There is therefore no ground upon which the bill can be
maintained.
Insurance Co. v.
Bailey, 13 Wall. 616, and other cases above
cited.
The comparative weight due to conflicting testimony such as was
introduced in this case can be much better determined by seeing and
hearing the witnesses than upon written depositions or a printed
record.
Page 119 U. S. 354
This case does not require us to enter upon a consideration of
the question under what circumstances a bill showing no ground for
equitable relief, and praying for discovery as incidental only to
the relief sought, is open to a demurrer to the whole bill, or may,
if discovery is obtained, be retained for the purposes of granting
full relief, within the rule often stated in the books, but as to
the proper limits of which the authorities are conflicting. It is
enough to say that the case clearly falls within the statement of
Chief Justice Marshall:
"But this rule cannot be abused by being employed as a mere
pretext for bringing causes, proper for a court of law, into a
court of equity. If the answer of the defendant discloses nothing,
and the plaintiff supports his claim by evidence in his own
possession, unaided by the confessions of the defendant, the
established rules limiting the jurisdiction of courts require that
he should be dismissed from the court of chancery, and permitted to
assert his rights in a court of law."
Russell v.
Clark, 7 Cranch 69,
11 U. S. 89.
See also Horsburg v.
Baker, 1 Pet. 232,
26 U. S. 236;
Brown v.
Swann, 10 Pet. 497,
35 U. S.
503.
The decree of the circuit court dismissing the bill generally
might be considered a bar to an action at law, and it is therefore,
in accordance with the precedents in
Rogers v. Durant,
106 U. S. 644, and
the cases there cited,
Ordered that the decree be reversed and the cause remanded
with directions to enter a decree dismissing the bill for want of
jurisdiction and without prejudice to an action at law.
MR. JUSTICE BRADLEY, dissenting.
I dissent from the judgment in this case so far as it directs
the bill to be dismissed by the court below for want of equitable
jurisdiction. The complainant had been induced to give up a
contract for cattle made to him by the defendant and to accept in
lieu of it an assignment from the defendant of a contract which he
had from a third person who was insolvent, and whose insolvency was
not known by the complainant, but was known by the defendant,
though he asserted that the third person was entirely responsible.
The bill seeks to abrogate
Page 119 U. S. 355
and set aside the assignment, and to restore to complainant his
original contract on account of the fraud and misrepresentation
practiced upon him. Having been induced to pay $15,000 in the
transaction, and suffered a large amount of damages, he adds to the
relief sought a prayer to have his damages assessed and decreed.
This is the case made by the bill. I think it is clearly within the
scope of equity jurisdiction, both on account of the fraud, and
from the nature of the relief asked by the complainant -- namely
the cancellation of an agreement and the reinstatement of a
contract which he had been fraudulently induced to cancel. If the
bill had prayed nothing else, it seems to me clear that it would
have presented a case for equity. A court of law could not give
adequate relief. The existence of the assignment, and the
cancellation of the first agreement, would embarrass the plaintiff
in an action at law. It is different from the case of a lost note
or bond. Fraud is charged, and documents exist which in equity
ought not to exist. I think the complainant is entitled to have the
fraudulent transaction wiped out and to be restored to his original
status.
