French v. Hay, 89 U.S. 231 (1874)
U.S. Supreme CourtFrench v. Hay, 89 U.S. 22 Wall. 231 231 (1874)
French v. Hay
89 U.S. (22 Wall.) 231
In 1809, A lent to B., who was largely interested in an embarrassed railroad, $5,000 to buy certain judgments against the road, and B. having bought, in 1859 and the early part of 1860, judgments to the amount of $31,000, assigned the whole of them to A. absolutely. Subsequently -- that is to say in August, 1860, A. made a transfer (so-called) of them to B., "upon B.'s payment of $5,000, with interest from this date," and gave to B. a power of attorney of the some date authorizing him "for me and in my name" to dispose of them as he might see proper. Held:
1st. That the so-called transfer was executory, amounting only to an offer that if B. would pay the $5,000, B. should become owner of the judgments; and that B. having, in May, 1861, gone South and joined the rebels there and not come back till 1865, could not in 1868 file a bill, and on an allegation that A. had collected the judgments, claim the proceeds, less the $5,000 and interest.
2d. That a bill making such an allegation and such a claim was demurrable,
the bill not being one of discovery and the complainant having complete remedy at law.
3d. That the road having been sold under a mortgage existing prior to the judgments and bought by A., who, under the laws of the state where it was, organized a new company, issued new stock, and having got as an allotment to him a quantity of such stock which he sold for more than enough to pay the judgments -- on which satisfaction was then entered -- such satisfaction was not in any sense a collection of the judgments.
4th. That if it could be so considered, yet that the sale to A. having been judicially declared void and set aside, and the old company thus brought again into existence, and B. so reinstated in his old ownership of his stock in it, unimpaired by the sale, he could claim no proceeds of the judgments from A., because if they were ever his (B.'s) by virtue of the transfer and power of attorney, they remained his still, since no one but the owner could enter satisfaction on them.
In 1855, James French and Walter Lenox, of Alexandria, Virginia, obtained from the Legislature of Virginia a charter for a railroad between Alexandria & Washington, to be called the Alexandria & Washington Railroad Company. The two persons just named, with a third (a relative of French), owned all the stock, French owning three-fourths of the whole. The capital paid in being inadequate to make and equip the road, the company borrowed $60,000 and gave a deed of trust on the road to secure payment of the debt. The company soon afterwards and before 1859 incurred other debts which were not secured by mortgage.
In this condition of things Alexander Hay, of Philadelphia, in 1859, advanced to French $5,000, and French in the year just named and in the winter and spring of 1860 bought in $31,000 of these unsecured debts. Having reduced them to judgment, he assigned the judgments to Hay. And Hay, on the 24th of August, 1860, executed to French these two papers -- the first a transfer, whose character (whether executory or executed) was the chief matter of contest in this case, and a power of attorney whose meaning was not disputed: --
"THE AGREEMENT TO TRANSFER"
"For and in consideration of the sum of $5,000, with interest from this date, I hereby assign and transfer to James French, of Alexandria, Virginia, all the judgments, notes, or claims which I hold against the Alexandria & Washington Railroad Company or against said railroad company, endorsed by the said French and Walter Lenox or by either of them, to be held by the said French, his heirs and assigns, as his individual property, upon his payment to me of the above-named sum of $5,000, with interest from this date."
"Given under my hand and seal this 24th of August, 1860."
"THE POWER OF ATTORNEY"
"To all whom it may concern: Be it known that I, Alexander Hay, of the City of Philadelphia, do hereby constitute and appoint James French, Esq., of Alexandria, Virginia, my true and lawful attorney, for me and in my name, to make such disposition as he may deem proper of all the judgments, notes, or claims which I hold against the Alexandria & Washington Railroad Company or against said company, endorsed by said French and Walter Lenox, or by either of them, to take all necessary steps for collecting the same, or pledge or hypothecate the same, or compromise or sell the same, on such terms as he shall deem proper, and do with them whatever he shall choose, as fully as if they were his individual property; and I do hereby, by these presents, ratify and confirm the same as fully as if I were present acting in person."
"Given under my hand and seal this 24th of August, 1860."
"A. HAY [SEAL]"
No part of the $5,000 was ever paid by French to Hay.
In May, 1861, French went south and joined the rebels, Lenox going with him.
In April, 1862, the trustees in the deed of trust sold the road with the franchises, to pay the mortgage on it, and
Hay bought it, paying for it $12,500. Immediately afterward, Hay, under the code of Virginia, formed a new company called the Washington, Alexandria & Georgetown Railroad Company, and issued new stock. A part of this new stock was allotted to Hay. He subsequently sold it, selling it for more than enough to satisfy the judgments which he held, by French's assignment of them to him, against the old road. He did accordingly satisfy those judgments.
In May, 1865, the rebellion being now suppressed, French and Lenox returned to their homes in Alexandria and caused a suit to be brought in the name of the old corporation, for which they had procured a charter, against the new company organized by Hay, to recover bank the road and old franchises, on the ground that the sale to Hay was void. This suit was decided in favor of the old corporation. The sale was set aside and the old corporation reinstated in its possessions as of ancient and former right.
French now (July, 1868) filed a bill -- the bill in this case -- against Hay. It recapitulated several of the facts above mentioned, charging that in 1859 Hay agreed to advance to the complainant the necessary money to purchase the outstanding debts of the Alexandria & Washington Railroad Company, and that he did advance the $5,000 for that purpose; that in pursuance of the arrangement the complainant, in 1859, and in the winter and spring of 1860, bought up the debts of the company to the amount of $31,000; that the debts thus bought were reduced to judgment and assigned to Hay; that in the purchase, the complainant employed and paid out of the money advanced by the defendant something less than $5,000, and that all the money over and above the said sum of $5,000 paid out in purchase of said debts (a list of which was attached to the bill) was furnished and paid out of his own proper money and resources, in the expectation that the same would be repaid or otherwise satisfactorily accounted for by the defendant on a settlement. The bill then averred that on the 24th of August, 1860, the defendant, by the written assignment and power of attorney already quoted, transferred and assigned
to the complainant all the said claims so purchased, reserving the repayment of $5,000 to cover the advances made, and charged that notwithstanding the said assignment the defendant afterwards collected all the said judgments and claims, and appropriated the proceeds thereof to his own use.
Upon these averments an account was prayed for of all the judgments and claims, and a decree that the defendant pay to the complainant all sums of money arising therefrom, with interest, after deducting the said sum of $5,000, with any interest due thereon, so as aforesaid advanced to the complainant.
The answer admitted the execution of the transfer and power, but asserted that they were to take effect only on payment of the $5,000; that French on the outbreak of the rebellion had joined it and abandoned Alexandria; that the defendant was not bound to wait the issue of the rebellion and to see if French would ever return.
The answer alleged also that, independently of all this, French had a complete remedy at law and that the bill was demurrable.
The court below dismissed the bill, and French appealed.