In equity, where a creditor agrees to receive specific articles
in satisfaction of a debt, even although it be a debt upon bond
secured by mortgage, he will be held to the performance of his
agreement.
But in order to bring a case within this principle there must
be
1. An agreement not inequitable in its terms and effect.
2. A valuable consideration for such agreement.
3. A readiness to perform and the absence of laches on the part
of the debtor.
Where the agreement to receive payment in goods was made by a
person who acted under a power of attorney from the creditor,
authorizing him to trade, sell, and dispose of notes, bills, bonds,
or mortgages, and under this power a partial payment was received
in goods which was afterwards recognized as a payment by the
creditor, the power was sufficient to authorize an agreement to
receive the remaining amount, also in goods, at any time when
called for within twelve months, especially as the bond had yet
four years to run.
This agreement was not inequitable; there was a valuable
consideration for it and the debtor was always ready to comply with
it on his part.
The creditor cannot now allege fraud in his debtor. It is not
charged in the bill, and although he may not have known of the
agreement when the bill was framed, yet when the answer came in he
might have amended his bill and charged fraud.
In 1841, one Darwin Lindsley owned a lot of land in the Town of
Little Rock and State of Arkansas which was known as lot No. 7, in
block or square No. 35 in that part of the city west of the Quapaw
Line, and known as the Old Town.
On 3 March, 1841, he sold this lot to Jonas Levy, who gave two
bonds, each for $4,000, one payable five years after date and the
other six years after date. Both were to carry interest, at 7
percent, payable quarter-yearly. The bond, payable in five years,
was not involved in the present suit, and no further notice need be
taken of it. Both bonds were secured by a mortgage of the
property.
On 25 March, 1841, Lindsley assigned the six years' bond to
Martin Very, a citizen of the State of Indiana.
This bond had the following credits endorsed upon it:
1841, March 15 . . . . . . . . $550.00
1842, January 29 . . . . . . . 181.12
1843, March 3 in goods . . . . 1898.25
The last credit was signed Martin Very, by J. S. Davis, and
arose in this way:
On 25 November, 1842, Davis addressed the following letter to
Levy.
"NEW ALBANY, Indiana, Nov. 25, 1842"
"DEAR SIR -- My object in writing to you, is to inquire what
Page 54 U. S. 346
you will give in cash and jewelry for the last note that you
gave to Darwin Lindsley, and which was assigned by him to Martin
Very. I have bought a part of the note, and am authorized to make
disposition of it, and I thought, as a matter of justice, you
should have the refusal of the note at a considerable discount if
you desired it. Please let me hear from you at your earliest
convenience. I write for myself and Mr. Very."
"I am, respectfully yours, &c."
"Mr. JONAS LEVY JOHN S. DAVIS"
"[Endorsed] -- Mr. JONAS LEVY, Little Rock, Arkansas"
"[Postmarked] -- New Albany, Ind., Nov. 26"
On 28 January, 1843, Very executed the following power of
attorney to Davis:
"Know all men by these presents that I, Martin Very, of the
County of Floyd and State of Indiana, have made, constituted, and
appointed and do by these presents make, ordain, constitute, and
appoint John S. Davis, of the City of New Albany, Indiana, my true
and lawful attorney for me, and in my name, and for my use to ask,
demand, sue for, recover, and receive all such sum of sums of
money, notes, bills, bonds, mortgages, or debts which are or shall
be due, owing, or belonging to me in any manner or by any means
whatsoever, and I hereby give my said attorney full power and
authority to trade, sell, and dispose of any notes, bills, bonds,
or mortgages held or owned by me on any resident or residents of
the State of Arkansas, and I hereby give my said attorney full
power and authority in and about the premises to have, use, and
take all lawful ways and means in my name for the purposes
aforesaid, and upon the receipt of such debts, dues or sums of
money to make, seal, and deliver acquittances and other sufficient
discharges for me and in my name, or, upon the sale of any bill,
bond, note, or mortgage, to execute a good and sufficient
assignment of the same to the purchaser thereof for me and in my
name, and generally to do and perform in my name all other acts and
things necessary to be done and performed in and about the premises
as fully and amply to all intents and purposes as I myself could or
might do if personally present, and attorneys, one or more, under
him for the purpose aforesaid to make and constitute and again at
pleasure revoke. And I hereby ratify and confirm all and whatsoever
my said attorney shall lawfully do in my name in and about the
premises by virtue of these presents, and I hereby make this power
of attorney irrevocable to all intents and purposes. In testimony
whereof I have hereunto
Page 54 U. S. 347
set my hand and seal this the 28th day of January in the year of
our Lord 1843."
"MARTIN VERY [SEAL]"
"Signed, sealed, and delivered in presence of"
"Jos. P. H. THORNTON"
Under this power, Davis went to Little Rock, and on 3 March,
1843, put the receipt above mentioned upon the back of the bond for
$1,898.25, paid in goods, and on the same day executed the
following paper,
viz.:
"LITTLE ROCK, March 3, '43"
I hereby agree to take in goods, such as jewelry &c., the
balance due me on a note assigned by D. Lindsley to me, as also a
mortgage assigned by the said Lindsley, said goods to be delivered
to m, or any agent at Little Rock, Arkansas, at reasonable prices,
at said Little Rock, said goods to be called for within twelve
months from this time. MARTIN VERY
"By J. S. DAVIS"
"
Attorney in fact"
Davis stated in his deposition that in January, 1844, he wrote
to Levy directing him to pay the balance in jewelry, watches
&c., to Mr. Waring in Little Rock; that he received an answer
from Levy declining to do so, but that he had lost or mislaid this
answer from Levy.
On 3 February, 1844, Davis wrote to Levy the following
letter:
"NEW ALBANY, Feb. 3, 1844"
"DEAR SIR -- If you can pay the balance of your note in good
silver or gold watches and good jewelry at fair prices, say about
half of each or two-thirds watches, you will please notify me of
the fact by return of mail and I will send on for them at once. The
things you let me have before were too high -- at least Mr. Very
says so. Let me hear from you. I am your friend,"
"JOHN H. DAVIS."
"MR. J. LEVY."
"[Postmark] New Albany, Ind., Feb. 5"
"[Endorsed] MR. JONAS LEVY, Jeweler, Little Rock, Ark."
In April, 1848, Very filed his bill in the Circuit Court of the
United States for the District of Arkansas against Levy for the
purpose of foreclosing the mortgage. The answer of Levy admitted
all the allegations of the bill, but set up as a defense the
execution of the power of attorney by Very to Davis, and the
subsequent agreement between Davis and himself, by which
Page 54 U. S. 348
the goods were to be called for within twelve months. It was
then alleged that not only during the next twelve months but always
afterwards, Levy had kept on hand goods enough of the proper
character to pay the balance due, been always ready and still was
ready to deliver them, and had often urged the complainant to
receive and accept them, and would deposit them in the custody of
anyone directed by the court.
Levy brought into court a large quantity of goods and jewelry,
which was placed in the hands of a receiver.
The case being heard on bill, amendment, answers replications,
exhibits, and testimony, the court held Very bound by the
agreement, and found that Levy had always had sufficient goods on
hand ready to be delivered, and directed the master to ascertain
the balance due on the bond and the value of the goods delivered to
the receiver.
The master reported the balance due on 3 March, 1844, to be
$2,002.59, and the value of the goods, $5,776.99. No exception was
taken to the report, and it was confirmed.
The court then ordered the complainant to select out of the
goods to the amount of $2,002.59, and on his failure, after notice
to his solicitor, that the master should do so. The complainant
failed to select; the master set apart the requisite amount, the
residue were redelivered to Levy, and the court decreed that Very
should receive the goods so set apart by the master and that the
bond and mortgage were satisfied, denied the relief prayed, and
dismissed the bill, all costs to be paid by the complainant.
Very appealed to this Court.
Page 54 U. S. 356
MR. JUSTICE CURTIS delivered the opinion of the Court.
This is a suit in equity to foreclose a mortgage commenced in
the Circuit Court of the United States for the District of
Arkansas. The bill alleges that on 3 March, 1841, the respondent,
Levy, executed his writing obligatory for the sum of four thousand
dollars, bearing interest at the rate of seven percent per annum,
payable to Darwin Lindsley in six years after its date, and secured
the same by a mortgage on certain premises situated in the City of
Little Rock; that by assignment from Lindsley the complainant
became the owner of this bond and mortgage on 25 March, 1841, and
the bill prays for an account and foreclosure.
The answer of Levy admits the execution of a bond and mortgage
and their assignment to the complainant and avers that on 3 March,
1843, he agreed with the complainant, through one John S. Davis,
his agent, to deliver goods such as jewelry &c., in which the
respondent dealt, at Little Rock upon reasonable prices in
satisfaction of this bond and mortgage within twelve months from 3
March, 1843; that in pursuance of that agreement he did actually
deliver on that day a part of the goods, agreed to be of the value
of $1,898.25, and
Page 54 U. S. 357
afterwards, on the same day, the complainant, through his agent,
Davis, signed and delivered to the respondent a memorandum in
writing as follows:
"Little Rock, March 3, '43. I hereby agree to take in goods such
as jewelry &c., the balance due me on a note assigned by D.
Lindsley to me, as also a mortgage assigned by said Lindsley, said
goods to be delivered to me or any agent at Little Rock, Arkansas,
at reasonable prices at said Little Rock; said goods to be called
for within twelve months from this time. Martin Very. By J. S.
Davis, Attorney in fact."
That in further pursuance of this agreement, the respondent kept
in his hands and ready for delivery and withdrawn from his trade a
sufficient amount of goods such as are referred to in the
memorandum during the whole year which elapsed after the making of
the agreement, and was constantly ready and willing to deliver the
same at Little Rock, but the complainant was not there, and did not
authorize anyone to receive them; that the respondent has ever
since been ready and willing to perform his agreement, and offers
to bring the goods into court or place them in the hands of a
receiver. The court below appointed a receiver, ascertained the
amount of goods necessary to satisfy the unpaid residue of the
bond, ordered the receiver, upon demand, to deliver the same to the
complainant in full satisfaction of the bond and mortgage, decreed
the mortgage satisfied, and ordered the complainant to pay the
costs. From this decree the complainant appealed.
An agreement by a creditor to receive specific articles in
satisfaction of a money debt is binding on his conscience, and if
he ask the aid of a court of equity to enforce the payment, he can
receive that aid only to compel satisfaction in the mode in which
he had agreed to accept it. A court of equity will even go further,
and in a proper case will enforce the execution of such an
agreement. At law, a mere accord is not a defense, and before
breach of a sealed instrument, there is a technical rule which
prevents such an instrument from being discharged except by matter
of as high a nature as the deed itself.
Alden v. Blague,
Cro.Jac. 99;
Kaye v. Waghorne, 1 Taunt. 428;
Bayley v.
Homan, 3 Bin.N.C. 915. But no such difficulties exist in
equity. On the broad principle that what has been agreed to be done
shall be considered as done, the court will treat the creditor as
if he had acted conscientiously and accepted in satisfaction what
he had agreed to accept and what it was his own fault only that he
had not received. Indeed, even a court of law, in a case free from
the technical difficulties above noticed, will do the same thing.
Bradly v. Gregory, 2 Camp. 383.
Page 54 U. S. 358
In order, however, to bring a case within these principles,
three things are necessary -- an agreement, not inequitable in its
terms and effect; a valuable consideration for such agreement;
readiness to perform and the absence of laches on the part of the
debtor.
In this case, the agreement was in writing, and one objection to
it made by the complainant is that the person who executed it on
his behalf was not authorized to do so. The authority was in
writing, and gave the attorney
"full power and authority to trade, sell, and dispose of any
notes, bills, bonds, or mortgages, held or owned by me, on any
resident, or residents of the State of Arkansas."
Acting under this power, Davis did actually accept a partial
payment in goods amounting to $1,898.25, and signed the memorandum
in writing which is relied on. The bond, being produced, bears the
following endorsement:
"Received on the within, in goods, the sum of eighteen hundred
and ninety-eight dollars and twenty-five cents, March 3, 1843.
Martin Very. By J. S. Davis."
The complainant in his bill treats this as a payment, and it
does not appear that he made any objection to it, though Davis says
in one of his letters he thought the prices were too high.
Upon this state of facts, we are of opinion Davis had authority
to enter into the agreement in question. Besides the power to
collect and sell is the power to trade this bond and mortgage. It
might be difficult to attach any general legal signification to
this word. But considered in reference to the particular facts of
this case, we think its meaning sufficiently clear.
It is proved by Davis that the power, though general in its
terms, was given solely in reference to this particular bond and
mortgage. The bond had yet four years to run. When, therefore,
Davis was authorized to collect this bond, the parties to the
letter of attorney must have had in view some agreement respecting
its extinguishment which should vary its original terms of payment,
and when he was further empowered to trade it, it is not an
inadmissible interpretation that the new agreement for its
extinguishment, which he was empowered to make, might be an
agreement to receive specific articles in payment. It has been said
that special powers are to be construed strictly. If by this is
meant that neither the agent nor a third person dealing with him in
that character can claim under the power any authority which they
had not a right to understand its language conveyed, and that the
authority is not to be extended by mere general words beyond the
object in view, the position is correct. But if the words in
question touch only the particular mode in which an object admitted
to be within the
Page 54 U. S. 359
power is to be effected and they are ambiguous, and with
reasonable attention to them would bear the interpretation on which
both the agent and a third person have acted, the principal is
bound although, upon a more refined and critical examination, the
court might be of opinion that a different construction would be
more correct.
Le Roy v.
Beard, 8 How. 451;
Loraine v. Cartwright,
3 Wash.C.C. 151;
De Tastett v. Crousillat, 2 Wash.C.C.
132; 1 Liv. on Agency 403, 404; Story on Agency sec. 74. Such an
instrument is generally to be construed as a plain man, acquainted
with the object in view and attending reasonably to the language
used, has in fact construed it. He is not bound to take the opinion
of a lawyer concerning the meaning of a word not technical and
apparently employed in a popular sense.
Witherington v.
Herring, 5 Bing. 456.
In this case, the complainant, besides empowering Davis to
collect a bond not yet payable, has authorized him to trade it -- a
word frequently used in popular language to signify an exchange of
one article for another by way of barter.
This power was intended by the complainant to be acted on by the
respondent, a jeweler in the State of Arkansas, and we think he
cannot complain that it was understood in its popular sense, more
especially when he accepted, without objection, goods amounting to
$1,898.25 and gave the defendant no notice of his dissent from that
construction of the power under which his agent received them in
part payment of the bond.
But it is insisted that if Davis had authority to receive those
goods in part payment, he had not power to enter into an executory
agreement to receive the others. This might have presented a
question of some difficulty if the effect of that agreement had
been to give a credit to the obligor or to subject the principal to
any risk or place his claim in any less advantageous position than
it would have been in if no contract had been made in reference
thereto.
It must be borne in mind that it is proved by Marcus Dotter and
Emanuel Levy and other witnesses that the defendant had on hand
more than sufficient goods of the description mentioned at the time
the other goods were delivered and the memorandum signed. By the
memorandum, the residue of the goods was to be delivered at any
time within twelve months when called for by the complainant. The
defendant was obliged to keep this amount of these goods constantly
on hand and ready for delivery. He could therefore gain nothing by
delay. On the other hand, the complainant might have found it more
convenient not to take all at one time; the bond bore interest
which was accruing by the delay, and if the defendant,
Page 54 U. S. 360
upon demand, should fail to comply, the bond would remain in
force, and no right of the complainant to the money debt or its
security by the mortgage would be prejudiced.
Under these circumstances, we are of opinion that as Davis had
authority to receive payment in goods, he had also authority to
enter into this agreement, having the same object in view and
providing for its accomplishment in a way apparently more
beneficial for the creditor than the receipt of all the goods at
the time the arrangement was made.
That the agreement itself imports a consideration deemed by the
law valuable there can be no doubt. An agreement to give a less sum
for a greater, if the time of payment be anticipated, is binding,
the reason being, as expressed in
Pennel's Case, 5 Co.
117, that peradventure parcel of the sum, before the day, would be
more beneficial than the whole sum on the day. Co.Lit. 212, b;
Com.Dig. Accord, B. 2;
Brooks v. White, 2 Met. 283. And
when the time of payment is not anticipated, the law deems the
delivery of specific articles a good satisfaction of a money debt,
because it will intend them to be more valuable than the money to
the creditor who has consented to the arrangement. Bac.Ab. Accord,
A;
Pennel's Case, 5 Co. 117;
Booth v. Smith, 3
Wend. 66;
Kellogg v. Richards, 14 Wend. 116;
Steinman
v. Magnus, 11 East 390;
Lewis v. Jones, 4 B. & C.
513.
In this case both these rules apply, for the time of payment was
to be anticipated, and specific articles delivered.
We consider it also clearly proved that the defendant has been
ready to perform at all times since the agreement was made. It is
said by Davis that in 1844, January, he thinks, he addressed a
letter to Levy requesting him to pay the money coming to Very in
jewelry, watches &c., and also requested him to put them up and
deliver them to Mr. Waring in Little Rock, and that Levy declined
paying as requested. That he has searched for Levy's letter, but
cannot find it.
It is certainly highly improbable that Levy, who had had these
goods on hand and set apart from his trade, ready for delivery,
ever after the agreement was made, should have thus refused to
deliver them.
He produces a letter of Davis which, though it bears date on 3
February, 1844, is undoubtedly the letter Davis speaks of, and is
as follows:
"New Albany, Feb. 3, 1844. Dear sir -- If you can pay the
balance of your note in good silver or gold watches, and good
jewelry, at fair prices, say about half of each, or two-thirds
watches, you will please notify me of the fact by return mail, and
I will send on for them at once. The things you let me
Page 54 U. S. 361
have before were too high -- at least Mr. Very says so. Let me
hear from you. I am, your friend. John S. Davis. Mr. J. Levy."
It thus appears Davis was mistaken in supposing he designated a
person in Little Rock to receive the goods, and unless it was the
purpose of this letter to vary the original understanding of the
parties in respect to the proportion of watches to be delivered, it
is difficult to see what fair object it could have had. The
testimony of Davis that Levy refused without undertaking to state
the contents of Levy's letter or the substance of its contents
cannot be deemed sufficient to prove a refusal by Levy to perform
his contract. Before the defendant can be prejudiced by testimony
of a refusal, it is reasonable the court should know what it was.
It certainly was not a refusal to deliver the goods to Waring, as
Davis says, for Waring was not mentioned by Davis in his letter.
The conduct of Davis in this matter is somewhat strange. He made
the memorandum in writing as Very's agent, agreeing to accept
payment of the balance of the bond in these articles; he delivered
to Very the jewelry received, but says he did not tell Very of the
contract to receive the balance in goods; and eleven months
afterwards he wrote the letter of 3 February, which seems to be a
new proposal, as if no contract had yet been made on the subject;
he misstates the contents of his own letter in a material
particular, says he has lost Levy's letter, but the latter declined
paying as requested. We are not satisfied that a breach of contract
by Levy, or any laches on his part, is made out.
It is asserted by the complainant's counsel that the contract
was void on account of Levy's fraud; that it was obtained from
Davis by false statements and the suppression of material facts by
Levy, and, of course, cannot be the basis of any right in a court
of equity.
But this ground is not open to the complainant. No fraud is
charged in the bill, and though the complainant may not have
anticipated, when the bill was filed, that this contract would be
set up in the answer as a defense, yet on the coming in of the
answer he might have amended his bill, as he did in another
particular, averring that if any such agreement was in fact made,
it was void, and charging in what the fraud consisted. Not having
done so, he cannot now avail himself of it. Besides, the evidence
comes in a very irregular way and is wholly unsatisfactory. It is
brought out by Davis, in answer to interrogatories which do not
call for any statements touching such subjects, but relate to
wholly different matters. Thus the 19th interrogatory inquires:
"For what reason was the agreement, marked
Page 54 U. S. 362
B, given or executed, if ever executed." To this Davis
replies:
"That said agreement was executed and delivered for several
reasons, the first of which reasons was that Levy represented that
he had expended large sums of money in defending suits for the
benefit of Very and for the purpose of saving Very from losing the
money for which this suit is brought; the second reason was that
said Levy represented himself as insolvent or wholly unable to pay
the debt due Very; and thirdly that the property mortgaged was of
little value, and would only pay at best a very small portion of
the money intended to be secured by the mortgage; all which
statements and representation thus made by said Levy said Davis,
subsequent to the signing and delivering said agreement, found to
be false."
The 20th interrogatory inquires, "What was the inducement and
consideration for giving and executing the said agreement B?" To
this he answers:
"That the inducement and consideration for giving and executing
agreement 'B' were the false representations of said Levy of his
circumstances, the value of the property mortgaged, and that he,
said Levy, had paid large sums of money to save said debt secured
by said mortgage for said Very; these statements and
representations were made before and at the time said agreement 'B'
was executed and delivered, and said Davis then believed them to be
true, but subsequently found them to be false."
This is all the testimony in support of the charge of fraud.
What he means when he says he "subsequently found the
representations to be false" he does not explain. That he had any
personal knowledge of their falsehood he does not say, and his
statement indicates only that by subsequent inquiry and the
information elicited thereby he became satisfied that he was
deceived. It would not be in conformity with settled rules of
pleading and evidence in courts of equity to convict a party of a
fraud not charged on the record and brought out for the first time
by the voluntary statements of a witness in answer to no question,
and resting at last upon mere hearsay.
The decree of the circuit court is
Affirmed 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
Arkansas, and was argued by counsel. On consideration whereof it is
now here ordered, adjudged, and decreed by this Court that the
decree of the said circuit court in this cause be and the same is
hereby affirmed with costs.
