Where a promissory note was given in Mississippi for the
purchase of slaves, the title of the vendor of which afterwards
proved to be defective, but in the meantime a foreign creditor of
the vendor had laid an attachment in the hands of the vendee for
the amount of the promissory note, and obtained judgment against
him as garnishee, the purchaser of the slaves should be credited
upon the judgment against him, with the value of the slaves at the
time when they were taken away from him, and the damages, costs,
and expenses actually paid upon the decrees of the court of
chancery in Mississippi.
The facts of the case are stated in the opinion of the
Court.
MR. JUSTICE CAMPBELL delivered the opinion of the Court.
The appellee, B. R. Truly, purchased of J. R. Herbert, in 1836,
in Mississippi, five slaves, for whom he gave two notes, one of
which for $3,575, was payable in March, 1838, at a banking house in
Brandon, with ten percent, interest till paid. Another note for the
same sum has been collected. During the year 1837, the appellants
recovered a judgment in the circuit court against Herbert, who had
absconded in insolvent circumstances. In 1839, a process of
garnishment was served upon the appellee before named, who
acknowledged the existence of this note, and a judgment was
rendered against him. An execution issued, a levy was made, a
forthcoming bond was taken,
Page 58 U. S. 585
and a forfeiture of it returned; upon this bond, J. H. Truly was
a surety. In 1840, an injunction was obtained by the appellees,
upon the allegation
inter alia that they had heard that
the slaves, which form the consideration of the notes, were the
property of certain minor children in Alabama, whose guardian had
fraudulently removed and sold them to Herbert. This bill was before
this Court and was dismissed.
46 U. S. 5 How.
141.
While the suit was in this Court, the minor children referred
to, instituted suits in the court of chancery in Mississippi, by
sequestrating the property, against the appellee or his assigns and
which resulted, during the progress of the present suit, in the
recovery of two of the slaves, and nine tenths interest in a third,
with the damages for their loss of service.
The original bill was filed in the present suit, in anticipation
of this result, and alleges the death of Herbert and his vendor,
Nicholson, in Texas, insolvent, and that the appellees were willing
to release their claim on the slaves as derived from them, and
surrender the defense of the suits to the appellants, and call upon
them to take their place. The fact of the recoveries subsequently
is brought to the notice of the court through supplemental bills.
The circuit court decreed a perpetual injunction in favor of the
appellees. The averment of the outstanding paramount title in the
wards of Nicholson, and which the appellees had only heard of from
common report, which appeared in the former suit, was disposed of
by this Court as insufficient, for that the appellees then
"retained possession of the property without a threat of
molestation."
The rule of the courts of Mississippi, as well as of this Court,
is that, except in special cases, a vendee in possession cannot, at
law or in equity, contest the payment of the purchase money
stipulated in a contract of sale, by an alleged defect of title,
the reliance must be placed on the covenants it contains.
Gilpin v. Smith, 11 S. & R. M. 109;
Dennis v.
Heath, id., 206;
15 U. S. 2 Wheat.
13;
28 U. S. 3 Pet.
310; 3 Porter 127; 19 John. 77.
The disturbance of the possession by the orders and process of
the court of chancery, the imminence of the danger from the title
propounded in those suits, and the insolvency and death of the
warrantors, were facts which authorized the circuit court to take
equitable cognizance of the present complaint of the appellees, and
to administer relief. The rule of the civil law, that the price of
the sale of real property cannot be recovered by the vendor if the
vendee has been disturbed in his possession by prior encumbrances
or paramount titles, or has just grounds for apprehension on that
account, Pothier de Vente, § 280, is the rule of chancery where
there has been fraud, on where the
Page 58 U. S. 586
covenants of warranty are inadequate to the protection of the
vendee by reason of the insolvency of the vendor.
In
Bumpus v. Platner, 1 John.Ch. 213, Chancellor Kent
said: "I consider an eviction at law an indispensable part of the
claim to relief here, on the mere ground of a failure of
consideration." And in
Abbott v. Allen, 2 John.Ch. 519, he
said:
"If there be no fraud in the case, the purchaser must resort to
his covenants if he apprehends a failure or a defect of title, and
wishes relief before eviction."
But in the last case he suggests, "that existing encumbrances
which appeared to admit of no dispute," or "where an adverse title
is put forward," "or an adverse proceeding threatened," might
support an injunction till the title was ascertained at law. And in
Johnson v. Gere, 2 John.Ch. 547, he administered relief in
accordance with these suggestions. A learned successor of this
eminent jurist, with these cases before him, determined that
when
"the covenants have been actually broken, and the grantor is
insolvent, a court of equity may restrain him from proceeding to
collect the whole amount of the purchase money, and may offset the
damages occasioned by the breach of the covenants of seisin or
warranty, against such unpaid purchase money.
Woodruff v.
Bunce, 9 Paige 443."
And this conclusion is supported by well considered
adjudications in other courts of the states. 2 Dana 276; 1
id. 303; 5 Leigh, 39, 607; 8 Ala. 920; 1 Black. 384;
Carver v. Miller, 10 Ala.
The question arises whether the equity we have considered, of
the vendee to protection from the insolvency of the vendor, has
been modified or defeated by the pursuit of the attaching creditor
in the circuit court. The proceeding by garnishment is designed to
subject a debt due to the defendant, to the payment of the demand
of his creditor, by investing the creditor with a judicial power to
collect and apply the amount due. The claim of the attaching
creditor against the defendant is only extinguished by a
satisfaction of his demand by the garnishee. The garnishee is
entitled to make at law legal defenses, and his equities must be
sought in a court of chancery. 17 Ala. 455; 5 Met. 263; 2 Wash.C.C.
488.
The statutes of Mississippi do not assign any extraordinary
effect to the judgment condemning the debt in the hands of the
garnishee, nor do they enlarge the rights of the attaching creditor
beyond those of any other assignee of a
chose in action.
The equity of the vendee to be indemnified from the purchase money
in his hands, for a breach of the covenants of warranty by an
insolvent vendor, originates in the contract, and inheres
Page 58 U. S. 587
to it so long as any part of it is executory. The equity of the
attaching creditor does not arise in the contract, and is
subsequent to its formation. In claiming the benefit of the fund,
he renders no service to the vendee, and releases none of his
rights against the vendor. He may fail in realizing hopes or
anticipations by the defeat of his suit against the garnishee, but
his judgment against his debtor remains in operation. Where a party
contracts specifically for property, pays money, acquires a legal
title without notice of an equity, a court of chancery will not
disturb his legal position. But there is no principle upon which a
court of chancery is required to imply that a proceeding by a
defendant, through the intervention of his creditor, to subject a
legal demand, unconnected with any equity -- a demand which equity
would not permit him to collect in his own name, in consequence of
the failure of consideration, shall divest the garnishee of
equitable claims and defenses.
The rule of law is accurately stated by Vice-Chancellor Wigram,
who says:
"That a creditor, under his judgment, might take in execution
all that belongs to his debtor, and nothing more. He stands in the
place of his debtor. He is a purchaser who, by the terms of his
conveyance, takes, subject to any liability under which the debtor
himself held the property."
Whitworth v. Gaugain, 3 Hare 416;
s.c., 1 Cr.
& Phil. 325;
Langton v. Horton, 1 Hare 549;
Hutch.Dig.Miss.Stat. 912, § 8.
The most restricted view of the doctrine of these cases is that
the equitable rights of the garnishee remain unaffected by the
judgment, or the proceedings under the judgment, till the execution
is executed, unless the garnishee is accessory to some act, or
guilty of some omission or laches, by which their efficacy is
impaired. 1 McN. & G. 437; 8 Ala. 867.
When the execution is executed, the claim of the attaching
creditor upon the defendant in the suit his original debtor is
satisfied. He has purchased thereby the issues of his garnishment
process, for an adequate consideration, and could not,
consequently, be called to refund at any future time. This view of
the rights of the vendee is sustained by Chancellor Walworth, in
Sanford v. McLean, 3 Paige 117, where the effect of a
judgment is stated and where a purchaser under it is said to be
subject to every equitable claim thereon which was prior in point
of time to the judgment, of which he had notice at or before the
sale of the property. In many of the states, the policy has been
adopted of placing the claims of judgment creditors upon the same
footing as purchasers in reference to unrecorded conveyance, and of
assigning to creditors' liens a higher rank than they occupy in the
general system of equity jurisprudence; but in the absence of such
a policy, the rules we have quoted must determine their
dignity.
Page 58 U. S. 588
The appellees cannot be charged with any laches or conduct
calculated to deceive or mislead the attaching creditor, but the
only complaint of them is that they insisted upon their title to
relief prematurely and with too much pertinacity. Whatever effect
may be visited upon such a course of conduct, we know of no rule
that would authorize the forfeiture of their claim to relief. We
concur, therefore, in the leading principle upon which the cause
was determined in the circuit court. But we do not agree with the
court in their allowance of a perpetual injunction without
requiring an account.
The contract of the appellee was for five slaves, for whom only
one-half the price has been paid. The whole of them were possessed
for many years, when two and nine-tenths of another were recovered,
with damages for the detention of two.
The damages recovered were compromised, and only a portion of
them paid. No notice was given to the appellants of the offers or
acceptance of the compromise.
The appellants are complainants in equity seeking to enforce a
covenant of indemnity, and must receive relief upon the principles
on which the court habitually extends it -- that is, upon the
principle of doing equity, upon a principle of compensation for the
injury sustained. This is the rule stated in
McGinnis v.
Noble, 7 Watts & S. 451, and applied in a similar case to
this, of
Jones v. Lightfoot, 10 Ala. 17. The appellees,
upon their eviction, are entitled to the value of the slaves they
have lost at the date of the decrees, and the damages, costs, and
expenses, actually paid upon the decrees of the court of chancery
in Mississippi.
We direct the reversal of the decree of the circuit court
and remand the cause with directions that these amounts be
ascertained and the judgment at law in the circuit court against
the appellees and their sureties be credited with this sum, as of
that date, and that the costs of this Court be paid by the
appellees.
MR. CHIEF JUSTICE TANEY, MR. JUSTICE McLEAN, and MR. JUSTICE
DANIEL, dissented.
MR. JUSTICE DANIEL.
I dissent from the decision by the majority of the Court in this
case, and in expressing my disagreement, I have felt no greater
perplexity in reconciling that decision with every principle of
justice than in reconciling it with itself. For to my apprehension
it clearly appears that if there ever was a decision which could be
characterized as
felo de se, it is precisely the decision
made in this case.
This controversy had its commencement by a proceeding
Page 58 U. S. 589
familiarly known and practiced in several of the states, and
particularly in the south and southwest, usually denominated a
foreign attachment. By this proceeding, a person whose debtor may
have absconded or who has no visible property which can be reached
directly by legal process is authorized to attach in the hands of a
third person who may be indebted to the debtor of the attaching
party an amount equal to the demand due to the latter. Under such
proceeding, the plaintiff in the attachment is placed in the
precise position of his debtor with respect to the defendant, and
can either legally or equitably recover of him nothing more than
what was due from the defendant to the debtor of the plaintiff. In
other words, the plaintiff stands affected and is bound by every
legal and equitable right appertaining to the parties of whose
transactions and relation to each other he seeks to avail himself.
Avoiding a detail of the facts and proceedings had in this cause
further than is necessary to its correct comprehension, those facts
and proceedings are prominently and simply these. That in the year
1836, the appellant, Bennett R. Truly, purchased five slaves of one
John R. Herbert, and for the purchase money for those slaves
executed two promissory notes of $3,575 each. That Herbert, shortly
after the sale and purchase of these slaves, removed to Texas,
where he died insolvent. That Wanzer and Harrison, being creditors
by judgment of this insolvent person, Herbert, sued out an
attachment against Truly and obtained a judgment thereon for the
sum of $3,575, the amount of one of the notes given for the
purchase of the slaves, the other note for the like amount having
been paid.
That suits had been instituted by certain persons whose
guardian, during their minority, had run off with those slaves from
the State of Alabama and sold them to Herbert, of whom they were
purchased by Truly, who was ignorant, when he purchased, of any
defect in the title to them. That in the suits brought for these
slaves, a recovery had taken place in behalf of the true owners,
and that the slaves had been surrendered by Truly, who had also, by
a compromise with the agent of the persons who had obtained a
decree for the slaves, delivered to said agent four other slaves in
satisfaction of the hires of those slaves and of the costs incurred
by their true owners' prosecuting their title to them.
Upon the foregoing facts, this Court has by its decision
affirmed that Herbert, having had no title to the slaves, could
convey none to his vendee, and that the slaves sold by him having
constituted the only consideration for the notes given by Truly, by
the recovery of those slaves by title paramount that consideration
had failed or been taken away, and therefore there
Page 58 U. S. 590
remained no foundation for a claim upon Truly either on behalf
of Herbert or of any person occupying his precise position.
Had the decision of this Court terminated here or at a
conclusion seemingly inevitable from the principles and terms of
that decision, namely the absolute denial to Herbert, or to Wanzer
and Harrison, representing Herbert, of any description of right
under the contract with Truly, that decision would have been
reconcilable with justice and consistent with itself. But this
Court goes on to argue that from the evidence in the record it
appears that Truly has not responded to any regular and specific
rate or demands for the hire of the slaves whilst they were in his
possession or under his control, and therefore there should be an
account taken in this cause showing on the one hand the interest
upon the claim asserted through Herbert and on the other the amount
of the hires of the slaves, regularly and specifically computed,
with the view, if indeed such view is comprehensible for any
conceivable reason, that, should there turn out to be an excess of
hires beyond the interest upon the claim asserted through Herbert,
that excess may be applied to the benefit of Wanzer and
Harrison.
But the error of this direction by the Court is exposed by the
following inquiries. Suppose not one cent of the hires of these
slaves has been paid, to whom do those hires belong? To whom would
Truly be accountable for them? He would be accountable, surely, to
those to whom the subjects constituting the source of those hires
belonged, and not to the purloiner of their property nor to persons
deducing title from such wrongdoers. Nay, the payment to the latter
of any portion of those hires would not exempt the payer from
reclamation from the true owners.
Then let it be supposed that Truly may have compromised with the
true owners the claim for hires, either by the payment of an amount
less than their actual or estimated aggregate or by the transfer of
property in kind -- slaves, for instance -- as it appears were
delivered to the true owners, will this Court undertake to deny to
those parties the right to compromise their own interests? It may
have been that the delivery of the four slaves in satisfaction for
the hires was more satisfactory and more advantageous to the
persons accepting them than any other arrangement which could have
been made. But should these rightful claimants have been willing to
surrender any portion of their interests, or from motives wise or
unwise, should have relinquished the whole of them, could such a
proceeding have given validity to the fraudulent pretensions of
Herbert, or of those who seek to profit by his dishonesty? The
decision of this Court having declared the contract with Herbert
void for an entire want or failure of consideration, unless the
maxim
ex
Page 58 U. S. 591
nihilo nihil fit shall be reversed, and this Court
shall affirm that something can arise from nothing, it passes my
powers to perceive how any right, legal or equitable, can spring
from this contract with Herbert thus declared to be void, and that
alleged right, too, existing in one who, in legal intendment, is
Herbert himself. If the contract with Herbert is valid, then the
judgment upon the attachment should be enforced to its full extent;
if it was invalid, then in the same extent it should be repudiated;
but this Court, while it condemns the contract itself, attempts to
deduce from it and to enforce consequences which necessarily imply
its validity and which can result only from regarding it as valid.
In this aspect of the decision, I cannot but regard it as injurious
to the appellees, as irreconcilable with sound principles of logic
or of law, as irreconcilable with itself. I forbear here any remark
as to the periods at which the grounds of defense in the court
below came into existence, or were tangible and practicable, or as
to the manner in which they were relied on, in opposition to the
demand against the appellee. These are matters entirely distinct
from the essential merits of those grounds of defense, and any
examination of them seems unnecessary, or rather to be excluded, by
the decision here, upon the character of the defense itself.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Southern
District of Mississippi, 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 reversed with costs, and that
this cause be and the same is hereby remanded to the said circuit
court for further proceedings to be had therein in conformity to
the opinion of this Court and as to law and justice shall
appertain.