There must be conscience, good faith, and reasonable diligence,
to call into action the powers of a court of equity.
In matters of account, where they are not barred by the act of
limitations, courts of equity refuse to interfere, after a
considerable lapse of time, from considerations of public policy,
and from the difficulty of doing entire justice, when the original
transactions have become obscure by time, and the evidence may be
lost.
The facts in the case are fully stated in the opinion of the
court, to which the reader is referred.
Page 42 U. S. 163
MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.
It appears from the record that the appellant Charles McKnight,
by deed bearing date 29 September, 1813, conveyed to Robert I.
Taylor, certain real property described in the deed, situate in the
Town of Alexandria, upon trust, to permit the appellant to occupy
the same, and to receive the rents and profits without account,
until a sale should become necessary, under the terms of the deed,
and if he, the said Charles McKnight, should not, on 1 April, 1818,
have paid the several creditors named in a schedule, annexed to the
deed, the debts therein mentioned with interest, then the said
Robert I. Taylor should, on notice of such default from anyone of
the said creditors or his representatives, proceed to sell the said
property, or so much thereof as might be necessary, for cash at
public auction, after giving three weeks notice of the time and
place of sale, by advertisement in any paper published in
Alexandria, and after defraying the reasonable expenses of sale,
discharge the aforesaid debts will all interest due thereon.
The bill in this case was filed in August, 1837, by Robert I.
Taylor, the trustee above mentioned, and after setting forth the
deed of trust, proceeds to state that Thomas Janney & Co. (who
are named as creditors in the schedule) had assigned the debt due
to them, to Joseph Janney in trust for the payment of their
creditors, and that Joseph Janney, under a provision in the deed of
assignment, afterwards transferred the same to George Johnson in
trust for the same purpose; and that the complainant had been
required by the said George Johnson and by certain
Page 42 U. S. 164
other creditors named in the schedule (but who are not named in
the bill), to sell the premises, so as aforesaid conveyed to him in
execution of the trust; that the debts mentioned in the schedule
were due from McKnight, the appellant, and John Stewart, who had
been trading under the firm of McKnight & Stewart, and that no
part of any of them had been paid. The bill further states that
before the execution of this deed, the appellant had, on 30 April,
1808, conveyed a part of the same premises to a certain Jacob
Hoffman, in order to secure Thomas Janney, against his
responsibility as endorser on two notes discounted at the Bank of
Alexandria and the Bank of Potomac, and that the said notes had
been long before paid, although the property had not been
reconveyed to the appellant, that McKnight was giving out that the
debts in the schedule had been all paid, and threatened to withhold
possession if the trustee proceeded to sell under the deed, and
that from these declarations of the appellant, and the outstanding
legal title, the sale could not be made without injury to the
interests of the parties concerned, without the aid of the court of
chancery, and prays process against the heirs of Hoffman (he being
dead) and against McKnight & Stewart, and all of the creditors
named in the schedule, and, among the rest, against George Johnson
in order that they may be compelled to appear and answer the
several matters charged in the bill. A supplemental bill was
afterwards filed in order to make additional parties and for other
purposes, but in the view which the Court take of this subject, it
is unnecessary to state its contents. The creditors secured by the
deed of trust are eleven in number, their respective claims varying
in amount, the lowest being $85.72 and the highest $1,227.19. The
trustee, Robert I. Taylor, is himself one, and the debt due him
stated to be $214.54.
To this bill Hugh Smith, one of the creditors, whose debt was
$151, answered, saying merely that his claim is still due.
James Carson, another of the creditors whose claim was $85.72,
answered and admitted that he had been paid.
The heirs of Hoffman also answered, and admitted that the notes
intended to be secured by the conveyance to their father had been
paid, and submit themselves to such decree as the court may deem
just.
The answer of the appellant, so far as it is material to set
forth
Page 42 U. S. 165
its contents, states that the claim of Thomas Janney & Co.,
which was $1,022.69, was due upon open account, and that the
respondent was entitled to a deduction of considerably more than
$300 for money overpaid by mistake on the settlement of a former
account, but that he cannot find a memorandum in writing to
establish it, which he knows did once exist, and that after the
execution of the deed of trust, he transferred to Thomas Janney, on
account of this debt, the note of a certain Jonathan Mandeville for
$467.08, due on 20 January, 1815, which, from what Janney himself
afterwards told him, he believes to have been paid, and in respect
to this item, his answer is responsive to the bill. He also
specifies several creditors whose claims he states that he has
paid, and among them the trustee, Robert I. Taylor, and he sets
forth the manner in which he satisfied that debt. Some of the
creditors mentioned in the schedule are not, however, named in his
answer, and he mentions three whom he admits that he has not paid,
and makes the same admission as to the small balance which would be
due to Thomas Janney & Co., after deducting the credits claimed
by him as above stated, but he does not admit that these debts are
yet due, and insists that there is every reason to believe that
they were paid by his former partner, Stewart, who was equally
liable with himself, or, if not paid, that it was owing to the
negligence and laches of the creditors in not proceeding against
him; the respondent alleging that Stewart, after the dissolution of
the partnership with him, removed to Martinsburg, in Virginia,
about the year 1812, where he carried on a prosperous business
until his death in 1825, and was fully able to pay these debts if
the creditors had used proper diligence to recover them; and he
relies upon the lapse of time as a good defense upon principles of
equity against this proceeding.
There is a general replication to this answer, and it appears in
evidence that upon the dissolution of the partnership of McKnight
& Stewart, in 1812, a notice of it was published in the
newspapers, stating that McKnight was authorized to collect the
debts and settle the business of the concern. And a witness was
also examined on the part of the complainant, who states, that from
a perfect knowledge of the pecuniary situation of Stewart, from
1812, until his death, he knows that he was insolvent
Page 42 U. S. 166
when he removed from Alexandria to Martinsburg, and that he
continued and died insolvent; that he had no property he could call
his own, and out of which an old debt of $100 or $200 could have
been made.
It also appears in evidence, that Thomas Janney & Co., on 30
April, 1823, assigned all their effects and claims to Joseph
Janney, in trust to pay their debts. That by virtue of a provision
contained in this deed of assignment, Joseph Janney afterwards, on
10 August, 1829, renounced the further execution of the trust, and
transferred all the property and claims that remained in his hands
to George Johnson in trust for the same purposes for which they had
been conveyed to him. And on 14 November, 1837, after this bill was
filed, Johnson sold and assigned all the effects and claims which
he then held as trustee of Thomas Janney & Co., to John Lloyd,
of Alexandria, and on the same day executed a power of attorney in
his favor, authorizing him to receive whatever might be recovered
in this suit, or on any other claims of Thomas Janney & Co.,
and to compromise and settle them in any manner he might think
proper. The consideration paid by Lloyd is not stated, nor indeed
does it appear by the assignment, that any consideration whatever
was paid. The deed of assignment merely states that Johnson had
sold these effects and claims to Lloyd, and authorizes him to
collect, compromise, and settle them.
The bill was taken
pro confesso against all of the
creditors who had not appeared and answered, and the circuit court
proceeded on final hearing to decree that the appellant should pay
the full amount of the debts mentioned in the schedule, with
interest, by a certain day specified in the decree, except those of
Joseph Janney, John Leo, and James Carson, which were admitted to
have been paid; and in default of payment by the day limited in the
decree, the property was directed to be sold and the proceeds
applied to discharge the aforesaid debts.
This is the case in its material parts, as presented in the
record. The omission of the creditors to appear and answer, upon
which the bill as against them was taken
pro confesso, was
not, of course, regarded by the circuit court as establishing their
claims. The decree, we presume, proceeded upon the ground that the
creditors mentioned in the schedule were entitled to the aid of the
court
Page 42 U. S. 167
to enforce the payment of the whole amount originally admitted
to be due, unless the appellant could show by legal proofs that the
debt had been since discharged.
Now of the eight creditors in whose favor the decree was made,
five of them seem to have taken no concern in these proceedings,
and for aught that appears in the record, may not have known that
it was pending; certainly there is nothing to show that they ask or
desire the interposition of the court in the manner sought for by
the bill. Of the remaining three, one has answered and stated that
his claim is still due, but does not ask for a sale, nor say
anything that sanctions, on his part, the proceedings of the
trustee; and the trustee himself does not ground the bill upon his
own claim, nor allege its nonpayment as the foundation of the suit,
but places it entirely upon the notice and request of George
Johnson and other creditors, and his own duty upon such an
application to proceed to sell according to the provisions in the
deed of trust. But, although the application is alleged to be made
by other creditors, as well as George Johnson yet no other creditor
has appeared to claim the execution of the trust, and as they were
all made defendants and called to answer, and have refused or
neglected to appear, the bill under the provisions of the deed must
be regarded as founded exclusively upon the application of the
creditor named in it, and as instituted and conducted without the
cooperation or request of any other creditor.
In relation to this claim, it appears that nineteen years and
three months were suffered to elapse, before any application was
made for the execution of the trust by which it had been secured.
No reason is assigned for this delay; nor is it alleged to have
been occasioned in any degree by obstacles thrown in the way by the
appellant. As the record stands, it would seem to have been the
result of mere negligence and laches. The original creditors were
in business ten years after the deed was made, and five years after
the expiration of the credit which it gave to McKnight &
Stewart. And as they became insolvent in 1823, it must be presumed
that in the last-mentioned period they were themselves pressed for
money. The property is situated in the town of Alexandria, where
the laws of Virginia have been adopted by Congress; and the
trustee, under these laws, had an undoubted right to sell, upon the
application of any creditor, as soon
Page 42 U. S. 168
as default was made, without asking the interposition of the
court of chancery. Such delay, under such circumstances, by the
original creditors, followed by fourteen years more by the
assignees who afterwards had charge of this claim, can perhaps
hardly be accounted for without supposing that this debt had been
nearly, if not altogether, satisfied in the manner suggested in the
answer of the appellant. If, indeed, the suit had been postponed a
few months longer, twenty years would have expired, and in that
case, according to the whole current of authorities, the debts in
the schedule would all have been presumed to be paid. But we do not
found our judgment upon the presumption of payment. For it is not
merely on the presumption of payment, or in analogy to the statute
of limitations, that a court of chancery refuses to lend its aid to
stale demands. There must be conscience, good faith, and reasonable
diligence, to call into action the powers of the court. In matters
of account, where they are not barred by the act of limitations,
courts of equity refuse to interfere after a considerable lapse of
time, from considerations of public policy, and from the difficulty
of doing entire justice when the original transactions have become
obscure by time, and the evidence may be lost. The rule upon this
subject must be considered as settled by the decision of this Court
in the case of
Piatt v.
Vattier, 9 Pet. 416, and that nothing can call a
court of chancery into activity but conscience, good faith, and
reasonable diligence, and where these are wanting, the court is
passive and does nothing; and therefore, from the beginning of
equity jurisdiction, there was always a limitation of suit in that
court.
It certainly cannot be said that there has been anything like
reasonable diligence by any of the creditors in the case before us,
and at this distance of time, when many of the parties originally
concerned are dead, we should hardly do justice between them if we
required the appellant to pay the whole amount stated in the
schedule unless he can establish the credits he claims by legal
proofs. In fact, but one of the creditors appears to have called
for this proceeding, or to have sanctioned the institution of this
suit; and the party who now holds that claim and seeks to enforce
it, has obviously no equitable ground upon which he can ask for a
relaxation of the rule in his favor. When the assignment was made
to him he knew it was a disputed claim in actual
Page 42 U. S. 169
litigation at the time, which had been allowed to sleep for
almost twenty years, and for which it does not even appear that he
paid any valuable consideration. And as to all of the creditors
named in the schedule, they had originally an easy and simple
remedy in their own hands, to be used or not at their own pleasure,
and if they have suffered it to be lost by the lapse of time, their
own negligence can give them no right to call into action the
powers of the court of chancery.
The decree of the circuit court must therefore be reversed,
and the bill dismissed with costs.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Columbia, holden in and for the County of Alexandria, and was
argued by counsel. On consideration whereof, it is now here ordered
and decreed by this Court, that the decree 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, with directions to dismiss the bill of the
complainant with costs.