A letter of attorney may, in general, be revoked by the party
making it, and is revoked by his death.
Where it forms a part of a contract and is a security for the
performance of any act, it is usually made revocable in terms, or
if not so made, is deemed irrevocable in law.
But a power of attorney, though irrevocable during the life of
the party, becomes (at law) extinct by his death.
But if the power be coupled with an interest, it survives the
person giving it, and may be executed after his death.
To constitute a power coupled with an interest, there must be an
interest in the thing itself, and not merely in the execution of
the power.
The general rule that a power of attorney though irrevocable by
the party during his life, is extinguished by his death is not
affected by the circumstance that testamentary powers are executed
after the death of the testator; the law in allowing a testamentary
disposition of property not only permits a will to be considered as
a conveyance, but gives it an operation which is not allowed to
deeds which have their effect during the life of the person who
executes them.
How far a court of equity will compel the specific execution of
a contract intended to be secured by an irrevocable power of
attorney which was revoked by operation of law on the death of the
party.
The general rule, both at law and in equity, is that parol
testimony is not admissible to vary a written instrument.
But in cases of fraud and mistake, courts of equity will
relieve.
It seems that a court of equity will relieve in a case of
mistake of law merely.
Page 21 U. S. 175
The original bill filed by the appellant Hunt stated that Lewis
Rousmanier, the intestate of the defendants, applied to the
plaintiff, in January, 1820, for the loan of $1,450, offering to
give, in addition to his notes, a bill of sale or a mortgage of his
interest in the brig
Nereus, then at sea, as collateral
security for the repayment of the money. The sum requested was
lent, and on 11 January the said Rousmanier executed two notes for
the amount, and on the 15th of the same month he executed a power
of attorney authorizing the plaintiff to make and execute a bill of
sale of three-fourths of the said vessel to himself or to any other
person and, in the event of the said vessel, or her freight, being
lost, to collect the money which should become due on a policy by
which the vessel and freight were insured. This instrument
contained also a proviso reciting that the power was given for
collateral security for the payment of the notes already mentioned,
and was to be void on their payment, on the failure to do which the
plaintiff was to pay the amount thereof and all expenses out of the
proceeds of the said property, and to return the residue to the
said Rousmanier.
The bill further stated that on 21 March, 1820, the plaintiff
lent to the said Rousmanier the additional sum of $700, taking his
note for payment and a similar power to dispose of his interest in
the schooner
Industry, then also at sea. The bill then
charged that on 6
Page 21 U. S. 176
May, 1820, the said Rousmanier died insolvent, having paid only
$200 on the said notes. The plaintiff gave notice of his claim,
and, on the return of the
Nereus and
Industry,
took possession of them, and offered the intestate's interest in
them for sale. The defendants forbade the sale, and this bill was
brought to compel them to join in it.
The defendants demurred generally, and the court sustained the
demurrer, but gave the plaintiff leave to amend his bill.
The amended bill stated that it was expressly agreed between the
parties that Rousmanier was to give specific security on the
Nereus and
Industry, and that he offered to
execute a mortgage on them. That counsel was consulted on the
subject, who advised that a power of attorney such as was actually
executed should be taken in preference to a mortgage, because it
was equally valid and effectual as a security and would prevent the
necessity of changing the papers of the vessels or of taking
possession of them on their arrival in port. The powers were
accordingly executed, with the full belief that they would and with
the intention that they should give the plaintiff as full and
perfect security as would be given by a deed of mortgage. The bill
prayed that the defendants might be decreed to join in a sale of
the interest of their intestate in the
Nereus and
Industry or to sell the same themselves and pay out of the
proceeds the debt due to the plaintiff. To this amended bill also
the defendants demurred, and on argument the demurrer was
sustained
Page 21 U. S. 177
and the bill dismissed. From this decree the plaintiff appealed
to this Court.
The cause was argued at the last term.
Page 21 U. S. 201
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the
Court.
The counsel for the appellant objects to the decree of the
circuit court on two grounds. He contends,
1. That this power of attorney does, by its own operation,
entitle the plaintiff, for the satisfaction of his debt, to the
interest of Rousmanier in the
Nereus and the
Industry.
2. Or, if this be not so, that a court of chancery will, the
conveyance being defective, lend its aid to carry the contract into
execution according to the intention of the parties.
We will consider 1. the effect of the power of attorney.
This instrument contains no words of conveyance or of
assignment, but is a simple power to sell and convey. As the power
of one man to act for another depends on the will and license of
that other, the power ceases when the will or this permission is
withdrawn. The general rule therefore is that a letter of attorney
may at any time be revoked by the party who makes it, and is
revoked by his death. But this general rule, which results from the
nature of the act, has sustained some modification. Where a letter
of attorney forms a part of a contract and is a security for money
or for the performance of any act which is deemed valuable, it is
generally made irrevocable in terms, or if not so, is deemed
irrevocable in
Page 21 U. S. 202
law. 2 Esp.N.P. 565. Although a letter of attorney depends, from
its nature, on the will of the person making it, and may in general
be recalled at his will, yet if he binds himself for a
consideration, in terms, or by the nature of his contract, not to
change his will, the law will not permit him to change it.
Rousmanier therefore could not, during his life, by any act of his
own, have revoked this letter of attorney. But does it retain its
efficacy after his death? We think it does not. We think it well
settled that a power of attorney, though irrevocable during the
life of the party, becomes extinct by his death.
This principle is asserted in Littleton, sec. 66, by Lord Coke
in his commentary on that section, p. 52
b, and in Willes'
Reports, pp. 105, note, and 565. The legal reason of the rule is a
plain one. It seems founded on the presumption, that the substitute
acts by virtue of the authority of his principal, existing at the
time the act is performed, and on the manner in which he must
execute his authority, as stated in
Coombes' Case, 9 Co.
766. In that case it was resolved that "when any has authority as
attorney to do any act, he ought to do it in his name who gave the
authority." The reason of this resolution is obvious. The title can
regularly pass out of the person in whom it is vested only by a
conveyance in his own name, and this cannot be executed by another
for him when it could not in law be executed by himself. A
conveyance
Page 21 U. S. 203
in the name of a person who was dead at the time would be a
manifest absurdity.
This general doctrine that a power must be executed in the name
of a person who gives it, a doctrine founded on the nature of the
transaction, is most usually engrafted in the power itself. Its
usual language is that the substitute shall do that which he is
empowered to do in the name of his principal. He is put in the
place and stead of his principal, and is to act in his name. This
accustomed form is observed in the instrument under consideration.
Hunt is constituted the attorney, and is authorized to make and
execute a regular bill of sale in the name of Rousmanier. Now as an
authority must be pursued in order to make the act of the
substitute the act of the principal, it is necessary that this bill
of sale should be in the name of Rousmanier, and it would be a
gross absurdity that a deed should purport to be executed by him,
even by attorney, after his death, for the attorney is in the place
of the principal, capable of doing that alone which the principal
might do.
This general rule that a power ceases with the life of the
person giving it admits of one exception. If a power be coupled
with an "interest," it survives the person giving it and may be
executed after his death.
As this proposition is laid down too positively in the books to
be controverted, it becomes necessary to inquire what is meant by
the expression, "a power coupled with an interest?" Is it an
interest in the subject on which the power is to be
Page 21 U. S. 204
exercised, or is it an interest in that which is produced by the
exercise of the power? We hold it to be clear that the interest
which can protect a power after the death of a person who creates
it must be an interest in the thing itself. In other words, the
power must be engrafted on an estate in the thing.
The words themselves would seem to import this meaning. "A power
coupled with an interest" is a power which accompanies or is
connected with an interest. The power and the interest are united
in the same person. But if we are to understand by the word
"interest," an interest in that which is to be produced by the
exercise of the power, then they are never united. The power to
produce the interest must be exercised, and by its exercise is
extinguished. The power ceases when the interest commences, and
therefore cannot, in accurate law language, be said to be "coupled"
with it.
But the substantial basis of the opinion of the court on this
point is found in the legal reason of the principle. The interest
or title in the thing being vested in the person who gives the
power remains in him, unless it be conveyed with the power, and can
pass out of him only by a regular act in his own name. The act of
the substitute, therefore, which in such a case is the act of the
principal, to be legally effectual must be in his name, must be
such an act as the principal himself would be capable of performing
and which would be valid if performed by him. Such a power
necessarily ceases with the life of
Page 21 U. S. 205
the person making it. But if the interest or estate passes with
the power and vests in the person by whom the power is to be
exercised, such person acts in his own name. The estate, being in
him, passes from him by a conveyance in his own name. He is no
longer a substitute, acting in the place and name of another, but
is a principal acting in his own name, in pursuance of powers which
limit his estate. The legal reason which limits a power to the life
of the person giving it exists no longer, and the rule ceases with
the reason on which it is founded. The intention of the instrument
may be effected without violating any legal principle.
This idea may be in some degree illustrated by examples of cases
in which the law is clear, and which are incompatible with any
other exposition of the term "power coupled with an interest." If
the word "interest," thus used, indicated a title to the proceeds
of the sale, and not a title to the thing to be sold, then a power
to A. to sell for his own benefit would be a power coupled with an
interest; but a power to A. to sell for the benefit of B. would be
a naked power, which could be executed only in the life of the
person who gave it. Yet, for this distinction, no legal reason can
be assigned. Nor is there any reason for it in justice, for a power
to A. to sell for the benefit of B. may be as much a part of the
contract on which B. advances his money as if the power had been
made to himself. If this were the true exposition of the term, then
a power to A. to sell for the use of B., inserted in a conveyance
to A., of the thing
Page 21 U. S. 206
to be sold would not be a power coupled with an interest, and
consequently could not be exercised after the death of the person
making it, while a power to A. to sell and pay a debt to himself,
though not accompanied with any conveyance which might vest the
title in him, would enable him to make the conveyance and to pass a
title not in him, even after the vivifying principle of the power
had become extinct. But every day's experience teaches us that the
law is not as the first case put would suppose. We know that a
power to A. to sell for the benefit of B., engrafted on an estate
conveyed to A., may be exercised at any time, and is not affected
by the death of the person who created it. It is, then, a power
coupled with an interest, although the person to whom it is given
has no interest in its exercise. His power is coupled with an
interest in the thing which enables him to execute it in his own
name, and is therefore not dependent on the life of the person who
created it.
The general rule that a power of attorney, though irrevocable by
the party during his life, is extinguished by his death is not
affected by the circumstance that testamentary powers are executed
after the death of the testator. The law, in allowing a
testamentary disposition of property, not only permits a will to be
considered as a conveyance, but gives it an operation which is not
allowed to deeds which have their effect during the life of the
person who executes them. An estate given by will may take effect
at a future time or on a future contingency, and in the meantime
descends
Page 21 U. S. 207
to the heir. The power is necessarily to be executed after the
death of the person who makes it, and cannot exist during his life.
It is the intention that it shall be executed after his death. The
conveyance made by the person to whom it is given, takes effect by
virtue of the will, and the purchaser holds his title under it.
Every case of a power given in a will is considered in a court of
chancery as a trust for the benefit of the person for whose use the
power is made and as a devise or bequest to that person.
It is, then, deemed perfectly clear that the power given in this
case is a naked power not coupled with an interest which, though
irrevocable by Rousmanier himself, expired on his death.
It remains to inquire whether the appellant is entitled to the
aid of this Court to give effect to the intention of the parties,
to subject the interest of Rousmanier in the
Nereus and
Industry to the payment of the money advanced by the
plaintiff on the credit of those vessels, the instrument taken for
that purpose having totally failed to effect its object.
This is the point on which the plaintiff most relies, and is
that on which the court has felt most doubt. That the parties
intended, the one to give and the other to receive, an effective
security on the two vessels mentioned in the bill is admitted, and
the question is whether the law of this Court will enable it to
carry this intent into execution when the instrument relied on by
both parties has failed to accomplish its object.
The respondents insist that there is no defect
Page 21 U. S. 208
in the instrument itself; that it contains precisely what it was
intended to contain, and is the instrument which was chosen by the
parties deliberately, on the advice of counsel, and intended to be
the consummation of their agreement. That in such a case, the
written agreement cannot be varied by parol testimony.
The counsel for the appellant contends with great force that the
cases in which parol testimony has been rejected, are cases in
which the agreement itself has been committed to writing, and one
of the parties has sought to contradict, explain, or vary it by
parol evidence. That in this case the agreement is not reduced to
writing. The power of attorney does not profess to be the
agreement, but is a collateral instrument to enable the party to
have the benefit of it, leaving the agreement still in full force,
in its original form. That this parol agreement, not being within
the statute of frauds, would be enforced by this Court if the power
of attorney had not been executed, and not being merged in the
power, ought now to be executed. That the power being incompetent
to its object, the court will enforce the agreement against general
creditors.
This argument is entitled to and has received very deliberate
consideration.
The first inquiry respects the fact. Does this power of attorney
purport to be the agreement? Is it an instrument collateral to the
agreement? Or is it an execution of the agreement itself in the
form intended by both the parties?
The bill states an offer on the part of Rousmanier
Page 21 U. S. 209
to give a mortgage on the vessels, either in the usual form or
in the form of an absolute bill of sale, the vendor taking a
defeasance, but does not state any agreement for that particular
security. The agreement stated in the bill is generally that the
plaintiff, in addition to the notes of Rousmanier, should have
specific security on the vessels, and it alleges that the parties
applied to counsel for advice respecting the most desirable mode of
taking this security. On a comparison of the advantages and
disadvantages of a mortgage, and an irrevocable power of attorney,
counsel advised the latter instrument, and assigned reasons for his
advice, the validity of which being admitted by the parties, the
power of attorney was prepared and executed and was received by the
plaintiff as full security for his loans.
This is the case made by the amended bill, and it appears to the
Court to be a case in which the notes and power of attorney are
admitted to be a complete consummation of the agreement. The thing
stipulated was a collateral security on the
Nereus and
Industry. On advice of counsel, this power of attorney was
selected and given as that security. We think it a complete
execution of that part of the agreement, as complete though not as
safe an execution of it as a mortgage would have been.
It is contended that the letter of attorney does not contain all
the terms of the agreement.
Neither would a bill of sale nor a deed of mortgage contains
them. Neither instrument constitutes the agreement itself, but is
that for which the
Page 21 U. S. 210
agreement stipulated. The agreement consisted of a loan of money
on the part of Hunt, and of notes for its repayment, and of a
collateral security on the
Nereus and
Industry,
on the part of Rousmanier. The money was advanced, the notes were
given, and this letter of attorney was, on advice of counsel,
executed and received as the collateral security which Hunt
required. The letter of attorney is as must an execution of that
part of the agreement which stipulated a collateral security as the
notes are an execution of that part which stipulated that notes
should be given.
But this power, although a complete security during the life of
Rousmanier, has been rendered inoperative by his death. The legal
character of the security was misunderstood by the parties. They
did not suppose that the power would in law expire with
Rousmanier.
The question for the consideration of the Court is this: if
money be advanced on a general stipulation to give security for its
repayment on a specific article, and the parties deliberately, on
advice of counsel, agree on a particular instrument, which is
executed, but, from a legal quality inherent in its nature, that
was unknown to the parties, becomes extinct by the death of one of
them, can a court of equity direct a new security of a different
character to be given? or direct that to be done which the parties
supposed would have been effected by the instrument agreed on
between them?
This question has been very elaborately argued, and every case
has been cited which could be
Page 21 U. S. 211
supposed to bear upon it. No one of these cases decides the very
question now before the Court. It must depend on the principles to
be collected from them.
It is a general rule that an agreement in writing, or an
instrument carrying an agreement into execution, shall not be
varied by parol testimony stating conversations or circumstances
anterior to the written instrument.
This rule is recognized in courts of equity as well as in courts
of law, but courts of equity grant relief in cases of fraud and
mistake which cannot be obtained in courts of law. In such cases, a
court of equity may carry the intention of the parties into
execution where the written agreement fails to express that
intention.
In this case, there is no ingredient of fraud. Mistake is the
sole ground on which the plaintiff comes into court, and that
mistake is in the law. The fact is in all respects what it was
supposed to be. The instrument taken is the instrument intended to
be taken. But it is, contrary to the expectation of the parties,
extinguished by an event not foreseen nor adverted to, and is
therefore incapable of effecting the object for which it was given.
Does a court of equity in such a case substitute a different
instrument for that which has failed to effect its object?
In general, the mistakes against which a court of equity
relieves are mistakes in fact. The decisions on this subject,
though not always very distinctly stated, appear to be founded on
some misconception of fact. Yet some of them bear a
considerable
Page 21 U. S. 212
analogy to that under consideration. Among these is that class
of cases in which a joint obligation has been set up in equity
against the representatives of a deceased obligor, who were
discharged at law. If the principle of these decisions be that the
bond was joint from a mere mistake of the law, and that the court
will relieve against this mistake on the ground of the preexisting
equity arising from the advance of the money, it must be admitted,
that they have a strong bearing on the case at bar. But the judges
in the courts of equity seem to have placed them on mistake in
fact, arising from the ignorance of the draftsman. In
Simpson
v. Vaughan, 2 Atk. 33, the bond was drawn by the obligor
himself, and under circumstances which induced the court to be of
opinion, that it was intended to be joint and several. In
Underhill v. Howard, 10 Ves. 209, 227. Lord Eldon,
speaking of cases in which a joint bond has been set up against the
representatives of a deceased obligor, says
"the court has inferred from the nature of the condition and the
transaction that it was made joint by mistake. That is, the
instrument is not what the parties intended in fact. They intended
a joint and several obligation; the scrivener has, by mistake,
prepared a joint obligation."
All the cases in which the court has sustained a joint bond
against the representatives of the deceased obligor have turned
upon a supposed mistake in drawing the bond. It was not until
Page 21 U. S. 213
the case of
Sumner v. Powell, 2 Meriv. 36, that
anything was said by the judge who determined the cause, from which
it might be inferred, that relief in these cases would be afforded
on any other principle than mistake in fact. In that case, the
court refused its aid because there was no equity antecedent to the
obligation. In delivering his judgment, the Master of the Rolls
(Sir W. Grant) indicated very clearly an opinion that a prior
equitable consideration, received by the deceased, was
indispensable to the setting up of a joint obligation against his
representatives, and added
"so where a joint bond has in equity been considered as several,
there has been a credit previously given to the different persons
who have entered into the obligation."
Had this case gone so far as to decide that "the credit
previously given" was the sole ground on which a court of equity
would consider a joint bond as several, it would have gone far to
show that the equitable obligation remained and might be enforced
after the legal obligation of the instrument had expired. But the
case does not go so far. It does not change the principle on which
the court had uniformly proceeded, nor discard the idea, that
relief is to be granted because the obligation was made joint by a
mistake in point of fact. The case only decides that this mistake,
in point of fact, will not be presumed by the court in a case where
no equity existed antecedent to the obligation, where no advantage
was received
Page 21 U. S. 214
by, and no credit given to, the person against whose estate the
instrument is to be set up.
Yet the course of the court seems to be uniform to presume a
mistake in point of fact in every case where a joint obligation has
been given and a benefit has been received by the deceased obligor.
No proof of actual mistake is required. The existence of an
antecedent equity is sufficient. In cases attended by precisely the
same circumstances so far as respects mistake, relief will be given
against the representatives of a deceased obligor who had received
the benefit of the obligation and refused against the
representatives of him who had not received it. Yet the legal
obligation is as completely extinguished in the one case as in the
other, and the facts stated in some of the cases in which these
decisions have been made, would rather conduce to the opinion, that
the bond was made joint from ignorance of the legal consequences of
a joint obligation than from any mistake in fact.
The case of
Landsdowne v. Landsdowne, reported in
Mosely, if it be law, has no inconsiderable bearing on this cause.
The right of the heir at law was contested by a younger member of
the family, and the arbitrator to whom the subject was referred
decided against him. He executed a deed in compliance with this
award, and was afterwards relieved against it on the principle that
he was ignorant of his title.
The case does not suppose this fact -- that he was the eldest
son -- to have been unknown to him, and if he was ignorant of
anything, it was of the
Page 21 U. S. 215
law, which gave him, as eldest son, the estate he had conveyed
to a younger brother. Yet he was relieved in chancery against this
conveyance. There are certainly strong objections to this decision
in other respects, but as a case in which relief has been granted
on a mistake in law, it cannot be entirely disregarded.
Although we do not find the naked principle that relief may be
granted on account of ignorance of law asserted in the books, we
find no case in which it has been decided that a plain and
acknowledged mistake in law is beyond the reach of equity. In the
case of
Lord Irnham v. Child, 1 Bro.C.C. 91, application
was made to the chancellor to establish a clause, which had been,
it was said, agreed upon, but which had been considered by the
parties, and excluded from the written instrument by consent. It is
true they excluded the clause from a mistaken opinion that it would
make the contract usurious, but they did not believe that the legal
effect of the contract was precisely the same as if the clause had
been inserted. They weighed the consequences of inserting and
omitting the clause, and preferred the latter. That too was a case
to which the statute applied. Most of the cases which have been
cited were within the statute of frauds, and it is not easy to say
how much has been the influence of that statute on them.
The case cited by the respondent's counsel from Precedents in
Chancery is not of this description,
Page 21 U. S. 216
but it does not appear from that case that the power of attorney
was intended or believed to be a lien.
In this case, the fact of mistake is placed beyond any
controversy. It is averred in the bill and admitted by the demurrer
that
"the powers of attorney were given by the said Rousmanier and
received by the said Hunt under the belief that they were, and with
the intention that they should create, a specific lien and security
on the said vessels."
We find no case which we think precisely in point, and are
unwilling, where the effect of the instrument is acknowledged to
have been entirely misunderstood by both parties, to say that a
court of equity is incapable of affording relief.
The decree of the circuit court is reversed, but as this is
a case in which creditors are concerned, the Court, instead of
giving a final decree on the demurrer in favor of the plaintiff,
directs the cause to be remanded, that the circuit court may permit
the defendants to withdraw their demurrer, and to answer the
bill.
DECREE. This cause came on to be heard on the transcript of the
record of the Circuit Court of the United States for the District
of Rhode Island, and was argued by counsel. On consideration
whereof, this Court is of opinion that the said circuit court erred
in sustaining the demurrer of the defendants, and dismissing the
bill of the complainant. It is therefore DECREED and ORDERED that
the decree of the said circuit
Page 21 U. S. 217
court in this case be, and the same is hereby reversed and
annulled. And it is further ordered that the said cause be remanded
to the said circuit court, with directions to permit the defendants
to withdraw their demurrer and to answer the bill of the
complainants.