The Circuit Court of the United States in Mississippi cannot,
under the operation of sections 1843 and 1845 of the Code of
Mississippi of 1880, take jurisdiction of a bill in equity to
subject the property of the defendants to the payment of a simple
contract debt of one of them, in advance of any proceedings at law,
either to establish the validity and amount of the debt or to
enforce its collection, in which proceedings the defendant is
entitled, under the Constitution, to a trial by jury.
The general proposition that new equitable rights created by the
states may be enforced in the federal courts is correct, but it is
subject to the qualification that such enforcement does not impair
any right conferred, or conflict with any prohibition imposed by
the Constitution or laws of the United States.
Clark v.
Smith, 13 Pet. 195, distinguished from this
case.
Holland v. Challen, 110 U. S. 15,
explained and shown to contain nothing sanctioning the enforcement
in the federal courts of any rights created by state law which
impair the separation established by the Constitution between
actions for legal demands and suits for equitable relief.
Page 140 U. S. 107
This was a suit in equity to subject to the payment of a debt
alleged to be due and owing to the complainants by the defendant
George Y. Scott certain property owned by him and other property
owned by his wife and co-defendant, Lottie M. Scott. The material
facts out of which it arose, so far as is necessary for an
intelligent consideration of the questions discussed, may be
briefly stated as follows:
In 1873, the defendant George Y. Scott was in partnership with
his brother, Charles Scott, in the practice of the law in Bolivar
County, Mississippi. Their practice is represented to have been
large and lucrative. They were also engaged in other business, in
which it is said they were successful, and that their income from
all sources was from twelve to fifteen thousand dollars a year. In
1876, the brothers were of opinion that lands in the Mississippi
Delta would in the then near future become valuable, and were
therefore desirable as investments. They accordingly made purchases
of different tracts and took deeds of the lands to their respective
wives. In some cases, their notes were given for part of the
purchase money.
In January, 1880, the brothers dissolved their law partnership,
and a partition of the lands purchased was made between their
wives. Subsequently, during the same year, other lands were
purchased by George Y. Scott, and the deeds taken in the name of
his wife. In 1881, he also purchased a large tract and took the
deed in his own name, paying part of the purchase money in cash and
giving his promissory notes for the balance.
The lands thus purchased by him and those held by his wife were
greatly improved by him and put in a high state of cultivation, and
valuable crops were raised on some of them. In March, 1883, to
enable him to carry on the "planting business" on these lands, he
arranged what is termed "a line of credit" with the firm of Brooks,
Neely & Company, of Tennessee, the complainants herein, as
factors and commission merchants, they to furnish him supplies and
money as needed, and he to ship to them the cotton raised on the
plantations, to be sold by them and the proceeds applied to the
payment of their advances. The dealings between Scott and the
complainants
Page 140 U. S. 108
under this arrangement continued until July 6, 1885, at which
time he owed them a balance of $6,264.89 on account and a note of
$2,000.
The present suit was commenced in March, 1885, to subject, as
stated above, the property owned by the defendant George Y. Scott
and other property owned by his wife to the payment of these sums
with interest and in aid of the lands purchased by her husband.
Issue being joined in the replications to the answers by the
defendants, testimony was taken, and upon the pleadings and proofs
the case was heard by the District Court of the United States for
the Northern District of Mississippi, exercising the powers of a
circuit court. It was adjudged and decreed that certain parcels of
the lands, which were described, were subject to the debt due the
complainants, and that they had a lien for the same from the date
of filing their bill, which debt, from the reports of the master,
was found to be $8,547.89. It was also decreed that the defendant
George Y. Scott pay that sum within thirty days, and in default
thereof that a commissioner of the court, appointed for that
purpose and "clothed with the title to said lands," proceed to
advertise them, or a sufficiency thereof, and sell the same to the
highest bidder for case and report his proceedings to the
court.
MR. JUSTICE FIELD, after stating the facts as above, delivered
the opinion of the Court.
This is a suit in equity to subject the property of the
defendants to the payment of a simple contract debt of one of them,
in advance of any proceedings at law either to establish the
validity and amount of the debt or to enforce its collection. It is
founded upon sections 1843 and 1845 of the Code of
Page 140 U. S. 109
Mississippi of 1880, being parts of the chapter which treats of
the chancery courts of the state. They are as follows:
"SEC. 1843. The said courts shall have jurisdiction of bills
exhibited by creditors who have not obtained judgments at law, or,
having judgments, have not had executions returned unsatisfied, to
set aside fraudulent conveyances of property, or other devices
resorted to for the purpose of hindering, delaying, or defrauding
creditors, and may subject the property to satisfaction of the
demands of such creditors; as if complainant had a judgment and
execution thereon returned, 'No property found.'"
"SEC. 1845. The creditor in such case shall have a lien upon the
property described therein from the filing of his bill, except as
against
bona fide purchasers before the service of process
upon the defendant in such bill."
At the outset of the case. the question is presented whether a
suit of this kind, where the complainant is a simple contract
creditor, can be maintained in the courts of the United States. It
is sought to uphold the affirmative of this position on the ground
that the statute of Mississippi creates a new equitable right in
the creditor which, being capable of assertion by proceedings in
conformity with the pleadings and practice in equity, will be
enforced in those courts. The cases of
Clark v.
Smith, 13 Pet. 195;
Broderick's
Will, 21 Wall. 503, and
Holland v.
Challen, 110 U. S. 15, are
cited in its support.
The general proposition as to the enforcement in the federal
courts of new equitable rights created by the states is undoubtedly
correct, subject, however, to this qualification -- that such
enforcement does not impair any right conferred, or conflict with
any inhibition imposed, by the Constitution or laws of the United
States. Neither such right nor such inhibition can be in any way
impaired, however fully the new equitable right may be enjoyed or
enforced in the states by whose legislation it is created. The
Constitution, in its Seventh Amendment, declares that "in suits at
common law where the value in controversy shall exceed twenty
dollars, the right of trial by jury shall be preserved." In the
federal courts this right cannot be dispensed with except by the
assent of the
Page 140 U. S. 110
parties entitled to it, nor can it be impaired by any blending
with a claim, properly cognizable at law, of a demand for equitable
relief in aid of the legal action or during its pendency. Such aid
in the federal courts must be sought in separate proceedings, to
the end that the right to a trial by a jury in the legal action may
be preserved intact.
In the case before us, the debt due the complainants was in no
respect different from any other debt upon contract. It was the
subject of a legal action only, in which the defendants were
entitled to a jury trial in the federal courts. Uniting with a
demand for its payment, under the statute of Mississippi, a
proceeding to set aside alleged fraudulent conveyances of the
defendants did not take that right from them or in any respect
impair it.
This conclusion finds support in the prohibition of the law of
Congress respecting suits in equity. The 16th section of the
Judiciary Act of 1789 enacted that such suits "shall not be
sustained in either of the courts of the United States in any case
where plain, adequate, and complete remedy may be had at law," and
this prohibition is carried into the Revised Statutes. Sec. 723. It
is declaratory of the rule obtaining and controlling in equity
proceedings from the earliest period in England, and always in this
country. And so it has been often adjudged that whenever,
respecting any right violated, a court of law in competent to
render a judgment affording a plain, adequate, and complete remedy,
the party aggrieved must seek his remedy in such court, not only
because the defendant has a constitutional right to a trial by
jury, but because of the prohibition of the act of Congress to
pursue his remedy in such cases in a court of equity.
Hipp v. Babin,
19 How. 271,
60 U. S. 278;
Lewis v.
Cocks, 23 Wall. 466,
90 U. S. 470;
Killian v. Ebbinghaus, 110 U. S. 568,
110 U. S. 573;
Buzard v. Houston, 119 U. S. 347,
119 U. S. 351.
All actions which seek to recover specific property, real or
personal, with or without damages for its detention, or a money
judgment for breach of a simple contract, or as damages for injury
to person or property, are legal actions, and can be brought in the
federal courts only on their law side. Demands of this kind do not
lose their character as claims
Page 140 U. S. 111
cognizable in the courts of the United States only on their law
side because in some state courts, by virtue of state legislation,
equitable relief in aid of the demand at law may be sought in the
same action. Such blending of remedies is not permissible in the
courts of the United States.
In
Bennett v.
Butterworth, 11 How. 669,
52 U. S. 674,
in commenting upon the practice prevailing in the courts of Texas,
Mr. Chief Justice Taney, after observing that although the common
law had been adopted in Texas, the forms and rules of pleading in
common law cases had been abolished, and the parties were at
liberty to set out their respective claims and defenses in any form
that would bring them before the court, said:
"Although the forms and proceedings and practice in the state
courts have been adopted in the district court, yet the adoption of
the state practice must not be understood as confounding the
principles of law and equity, nor as authorizing legal and
equitable claims to be blended together in one suit. The
Constitution of the United States, in creating and defining the
judicial power of the general government, establishes this
distinction between law and equity, and a party who claims a legal
title must proceed at law, and may undoubtedly proceed according to
the forms of practice in such cases in the state court. But if the
claim is an equitable one, he must proceed according to rules which
this Court has prescribed under the authority of the Act of August
23, 1842, regulating proceedings in equity in the courts of the
United States."
This decision was followed in
Thompson
v. Railroad Companies, 6 Wall. 134,
73 U. S. 137,
the Court there observing that
"the remedies in the courts of the United States are at common
law or in equity not according to the practice of the state courts,
but according to the principles of common law and equity, as
distinguished and defined in that country from which we derive our
knowledge of these principles,"
citing also to that effect the case of
Robinson
v. Campbell, 3 Wheat. 212. In
Fenn v.
Holme, 21 How. 481,
62 U. S.
484-486, the same doctrine was affirmed.
The Code of Mississippi gives to a simple contract creditor a
right to seek in equity, in advance of any judgment or legal
Page 140 U. S. 112
proceedings upon his contract, the removal of obstacles to the
recovery of his claim caused by fraudulent conveyances of property.
There, the whole suit, involving the determination of the validity
of the contract, and the amount due thereon, is treated as one in
equity, to be heard and disposed of without a trial by jury. It is
not for us to express any opinion of the wisdom of this law, or
whether or not in its operation it is more advantageous in the
interests of justice than an entire separation of proceedings at
law from those for equitable relief. It is sufficient that under
the statute of the United States, such separation is required in
the federal courts, and by the Constitution in cases at common law,
a right to a trial by jury is secured to the defendant.
The attempt is made to assimilate the enforcement of the state
law in the federal courts in the same manner as in the state courts
to proceedings in suits to enforce mortgages and other liens upon
property, created by contract as security for loans and advances.
No jury, it is said, is required in those suits to ascertain the
amount due on the mortgage debt, and why, it is asked, should there
be any jury in the case under the state statute -- that giving a
lien for the debt claimed by the filing of the bill to set aside
the fraudulent conveyances of the debtor? The distinction between
the cases is plain, and will be obvious from a brief statement of
their nature. A mortgage is in form a conveyance vesting in the
mortgagee a conditional estate, which becomes absolute on the
nonperformance of the condition. Originally at law it carried the
rights and incidents of ownership, although at an early day equity
gave to the mortgagor, even after breach of condition, a right to
recover the property from forfeiture upon payment of the debt or
obligation secured within a prescribed period. The ancient law as
to the character of the instrument still prevails in some of the
states, but in a majority of them this has been changed from a
consideration of the object of the instrument and the intention of
the parties, and it is there regarded as a mere lien upon or pledge
of the property for the payment of the debt or the performance of
the obligation stated. Whatever character may be ascribed to it
Page 140 U. S. 113
from its form, it has always been treated by courts of equity as
intended for security, and is enforced by them solely to give
effect to that intention.
Hutchins v.
King, 1 Wall. 53. The debt or obligation to secure
which it is given is stated in the instrument itself, and the only
proceeding with reference to its amount is one of calculation as to
the interest thereon, or as to what remains due after credit of
payments, and it is only to ascertain this that a reference is made
to an accountant, usually a master in chancery, and not to try the
validity of the debt or obligation secured. The equitable suit is
to enforce the application of the property to the purposes in
tended by the contract of the parties. In the case at bar, under
the statute of Mississippi, there is no amount stated by the
defendant as due which is secured by any lien on property executed
by him, and that amount is uncertain, not resting in mere
calculation of interest or in the application of credits, but upon
proof of the existence and validity of the alleged contract between
the parties. In all cases where a court of equity interferes to aid
the enforcement of a remedy at law, there must be an acknowledged
debt or one established by a judgment rendered, accompanied by a
right to the appropriation of the property of the debtor for its
payment, or, to speak with greater accuracy, there must be, in
addition to such acknowledged or established debt, an interest in
the property or a lien thereon created by contract or by some
distinct legal proceeding.
Smith v. Railroad Co.,
99 U. S. 398,
99 U. S. 401;
Angell v. Draper, 1 Vern. 398, 399;
Shirley v.
Watts, 3 Atk. 200;
Wiggins v. Armstrong, 2 Johns.Ch.
144;
McElwain v. Willis, 9 Wend. 556;
Cripping v.
Hudson, 13 N.Y. 161;
Jones v.
Green, 1 Wall. 330.
In
Wiggins v. Armstrong, Chancellor Kent held that a
creditor at large or before judgment was not entitled to the
interference of a court of equity by injunction to prevent the
debtor from disposing of his property in fraud of the creditor,
citing some of the above authorities and stating that the reason of
the rule seemed to be that until the creditor had established his
title, he had no right to interfere, and it would lead to
unnecessary and perhaps a fruitless and oppressive interruption
Page 140 U. S. 114
of the debtor's rights, adding, "Unless he has a certain claim
upon the property of the debtor, he has no concern with his
frauds."
It is the existence, before the suit in equity is instituted, of
a lien upon or interest in the property, created by contract or by
contribution to its value by labor or material, or by judicial
proceedings had, which distinguishes cases for the enforcement of
such lien or interest from the case at bar.
Upon the contention of the complainants, it is not perceived why
all actions at law, even for injuries to persons or property, may
not be withdrawn by the state from a court of law to a court of
equity by allowing a lien upon the property of the defendants on
the issue of process at the commencement of the action, and
authorizing the court to direct a sale of the whole or a portion
thereof, in its discretion, to pay the damages recovered, and to
set aside any obstacles to their satisfaction from fraudulent
conveyances of the wrongdoer. Whatever control the state may
exercise over proceedings in its own courts, such a union of legal
and equitable relief in the same action is not allowed in the
practice of the federal courts.
As to the cases to which we are referred,
Clark v.
Smith, 13 Pet. 195, and
Holland v.
Challen, 110 U. S. 15, a few
words only need be said.
In the first case, the act of Kentucky of 1796 had provided
that
"Any person having both legal title to and possession of land
may institute a suit against any other person setting up a claim
thereto, and if the complainant shall be able to establish his
title to such land, the defendant shall be decreed to release his
claim thereto, and pay the complainant his costs, unless the
defendant shall, by answer, disclaim all title to such lands, and
offer to give such release to the complainant, in which case the
complainant shall pay to the defendant his costs, except, for
special reasons appearing, the court should otherwise decree."
The validity of this law was sustained, the Court observing
that
"The state legislatures certainly have no authority to prescribe
the forms and modes of proceeding in the courts of the United
States, but, having created a right and at the same
Page 140 U. S. 115
time prescribed the remedy to enforce it, if the remedy
prescribed is substantially consistent with the ordinary modes of
proceeding on the chancery side of the federal courts, no reason
exists why it should not be pursued in the same form as it is in
the state courts."
To this view there can be no possible objection; nor can there
be to the enforcement in the federal courts of the right created.
The statute simply enlarged the cases in which, without it, bills
to quiet title could be maintained in the courts of the United
States. Previously to its passage, in order to maintain such suit,
it was necessary that the title of the plaintiff should be
established by successive judgments in his favor. Upon that
appearing, he being in possession of the property, courts of equity
would interpose and grant a perpetual injunction to quiet his
possession against any further litigation. That statute only did
away with the necessity for the previous adjudications at law in
favor of his right, it being declared sufficient to call into
exercise the powers of a court of equity that he was in possession
of the land and of the title, and was disquieted by the assertion
of a claim to the property by the defendant. In the second case,
Holland v. Challen, the suit was brought to quiet the
title of the plaintiff to certain real property in Nebraska against
the claim of the defendant to an adverse estate in the premises. It
was founded upon a statute of that state which provided
"that an action may be brought and prosecuted to final decree,
judgment, or order by any person or persons, whether, in actual
possession or not, claiming title to real estate, against any
person or persons who claim in adverse estate or interest therein,
for the purpose of determining such estate or interest and quieting
the title to such real estate."
In that suit, neither party was in possession, and the
jurisdiction was maintained in equity, as no remedy in such case
could be afforded in an action at law. As we there said, speaking
of unoccupied lands:
"It is a matter of everyday observation that many lots of land
in our cities remain unimproved because of conflicting claims to
them. The rightful owner of a parcel in this condition hesitates to
place valuable improvements
Page 140 U. S. 116
upon it, and others are unwilling to purchase it, must less to
erect buildings upon it, with the certainty of litigation, and
possible loss of the whole. And what is true of lots in cities, the
ownership of which is in dispute is equally true of large tracts of
land in the country. The property in this case, to quiet the title
to which the present suit is brought, is described in the bill as
unoccupied, wild, and uncultivated land. Few persons would be
willing to take possession of such land, enclose, cultivate, and
improve it, in the face of a disputed claim to its ownership. The
cost of such improvements would probably exceed the value of the
property. An action for ejectment for it would not lie, as it has
no occupant, and if, as contended by the defendant, no relief can
be had in equity because the party claiming ownership is not in
possession, the land must continue in its unimproved condition. It
is manifestly for the interest of the community that conflicting
claims to property thus situated should be settled so that it may
be subjected to use and improvement. To meet cases of this
character, statutes like the one of Nebraska have been passed by
several states, and they accomplish a most useful purpose. And
there is no good reason why the right to relief against an admitted
obstruction to the cultivation, use, and improvement of lands thus
situated in the states should not be enforced by the federal
courts, when the controversy to which it may give rise is between
citizens of different states."
It was objected in that case that if the suit was allowed under
the statute in the federal courts, controversies properly
cognizable in a court of law would be drawn into a court of equity,
but the court said:
"There can be no controversy at law respecting the title to or
right of possession of real property when neither of the parties is
in possession. An action at law, whether in the ancient form of
ejectment or in the form now commonly used, will lie only against a
party in possession. Should suit be brought in the federal court
under the Nebraska statute against a party in possession, there
would be force in the objection that a legal controversy was
withdrawn from a court of law."
There is nothing in that decision that gives sanction to the
Page 140 U. S. 117
enforcement in the federal courts of any rights created by state
law which impair the separation there required between actions for
legal demands and suits for equitable relief. In the subsequent
case of
Whitehead v. Shattuck, 138 U.
S. 146,
Holland v. Challen was referred to and
explained, and it was said that a suit in equity for real property
against a party in possession would not be sustained, because there
would be a plain, adequate, and complete remedy at law for the
plaintiff, and that it was only intended to uphold the statute so
far as suits in the federal courts were concerned in authorizing
such suits against persons not in possession.
It follows from the views expressed that the court below could
not take jurisdiction of this suit, in which a claim properly
cognizable only at law is united in the same pleadings with a claim
for equitable relief. Its decree must therefore be
Reversed, and the cause remanded with directions to dismiss
the bill without prejudice to an action at law for the demand
claimed, and it is so ordered.
LAMAR, J., did not sit in this case, nor take any part in its
decision.