Supreme Court of United States.
[Present ... . JUDGES WASHINGTON, LIVINGSTON, TODD, DUVALL & STORY.]
*7 This cause was argued at great length in February, 1810, by Pendleton and Lewis for the Complainants, and by Edwards and for the Defendants; and again at this term by Joseph R. Ingersoll, E. Tilghman, P.B. Key and Lewis for the Complainants, and by D.B. Ogden and Stockton for the Defendants.
*17 WASHINGTON, J. after stating the facts of the case, delivered the opinion of the Court as follows:
*18 The first point made by the counsel for the appellants is, that G. Morris ought to be considered as a trustee of Talbot and Allum's judgment for the trustees. On this point it is contended that, although in the first instance, G. Morris might have had no other inducement in purchasing that judgment than to perform a friendly service to R. Morris, yet he afterwards charged himself with the interests of the trustees by an express declaration contained in the agreement of the 29th of August, 1799, connected with the subsequent agreement of the 16th of September, 1799, which, notwithstanding his disapprobation of some parts of it, he adopted by his silence and subsequent conduct. The trust being thus established, it is then contended that the Holland company, the purchasers of this judgment from G. Morris, took the same clothed with all the equitable rights of the trustees, which were attached to it in the hands of G. Morris upon the ground that a judgment is a chose in action, and the assignment passes no more than an equitable interest to the debt of which it is the evidence. Having arrived at this point, the title of the trustees is placed upon the well known principle which governs a Court of Chancery, that between merely equitable claimants, each having equal equity with the other, he who hath the precedency in time, has the advantage in right.
If the cause rested upon this state of the case, it would be incumbent on the Court to examine these principles and their application to the respective pretensions of the trustees and of the Holland company. Whether an equity arising to a third person who claims the chose in action, and whose title depends upon a secret trust and confidence between him and the ostensible assignee, has equal equity with the person who afterwards purchases the judgment bona fide and without notice of a fact not disclosed by the previous assignments, is a question which the Court deems it unnecessary to decide, because, tho' the equity of the trustees and the Holland company should be admitted to be equal, yet the latter have acquired another title to the subject in controversy which a Court of equity will never disturb. They, or rather their trustee, have got the fruits of their execution, and have obtained the legal estate in the land on which the judgment gave them only a lien. Having at least equal equity with the trustees, it was perfectly justifiable in them to obtain a superiority by buying in the legal estate.
*19 Aware of this difficulty, one of the counsel for the appellants found it necessary to contend that the sale on the 13th of May was absolutely void, the execution having been taken out before it could lawfully issue in consequence of the stay on record which prevented its emanation prior to the 8th of June following. This, however is arguing against the fact; because we find that long prior to the sale and assignment of the judgment to the Holland company, the testatum fi: fa: had issued by the consent of R Morris as well as of the trustees, who, on the 6th of Feb. 1800, had endeavored to render it effectual by a sale attempted on that day. The release of the stay is not spread on the record so that the terms of it, or its date might be examined. But since the execution could not legally issue without a regular release filed in the Court where the judgment was of record, and since the form of such a release was applied for, by one of the trustees so early as the 2d of May, 1799, it must be presumed, against the trustees and in favor of the regularity of the proceedings, that the release was in due form, and bore date prior at least to the emanation of the execution.
But it is contended that the consideration for this release was the trust declared by G. Morris in August, 1799, or acquiesced in by him under the agreement of the 16th Sep. and that his breach of trust in selling the judgment to the Holland company with a view to the intended purchase of the lands in dispute by them, did away the effect of the release previously executed by R. Morris. That this was a legal consequence of the alleged breach of trust can scarcely be maintained. The release being once regularly executed and delivered could never afterwards be avoided at law by a failure of one of the parties to perform an act in consideration of which the release was given. It could extend no further than to charge G. Morris with a breach of contract for which he might be personally liable to the party aggrieved. But as to third persons claiming fairly under him, without notice of the alleged breach of trust, the legal effect of the release would remain unimpaired.
It is very obvious, however, that the whole of this argument is founded on an assumption of facts which are not proved, and which cannot and ought not to be presumed. It does not appear from the evidence in the *20 cause that the trust assumed by G. Morris was the consideration of that release, and yet if the trustees would avail themselves of that circumstance to invalidate the sale, and to deprive the Holland company of the shield by which they have protected their equitable interest, such proof should be clearly made out. On the contrary, the Court must consider the fact as established (since it is asserted on oath by G. Morris in answer to a charge in the bill, that the object of G. Morris in purchasing the judgment, was to confer a personal benefit on R. Morris only,) that, in consequence of this undertaking, made with the knowledge of one of the trustees, and for the purpose of giving effect to this intention, the release was made, and it is fairly to be presumed that it was executed long prior to the arrangement made by G. Morris and the trustees in August and September, 1799, because, as has been before observed, the form of a release was applied for as early as the 2d of May preceding. If the date of the release was contemporaneous with, or subsequent to the agreements of August and September, it was in the power of the trustees fully to have established the fact. Being essential to their argument, their having omitted to furnish the proof affords a strong presumption against them.
It is contended that the Holland company ought to be considered in the light of purchasers of the judgment with notice of the trust, because, knowing, as they were bound to do, that the execution could not issue before the 8th of June, 1800, they were necessarily led to inquire into the right which they assumed of taking out execution at a prior day, and in making this inquiry they must have come to a knowledge of the trust. But the previous issue of the execution, fortified by the circumstance of the sale under it attempted in February and continued by adjournment to the 13th of May, rendered all inquiries into the cause of the release unnecessary. It was enough for them that the impediment to the issuing of the execution was removed at the time they purchased the judgment.
The cause appears to the Court to be so clearly in favor of the Holland company and those claiming under them, upon the point which has been examined, that it seems almost unnecessary to notice those circumstances which detract from the equitable title of the trustees. *21 But it is obvious that the injury of which they complain has arisen in a great measure from the want of energy in themselves, and a kind of helpless dependence upon others, even after they were fully apprized of the steps which were taking and which finally led to the loss from which they now seek to extricate themselves. Mr. Fitzsimmons was informed by A. Hoops, prior to the 22d of April, 1800, that the agent of the Holland company had gone on to New York, and the intention of this visit was most probably communicated to him, as Mr. Hoops, at the same time, advised him to have an understanding with G. Morris. If he received from this advice nothing further than a hint of possible mischief, it was sufficient to put them upon inquiry and exertion.
An attempt was made, though not much pressed, to charge G. Morris with a breach of trust, and with the legal consequences thereof. That his declining to communicate to the trustees his intended sale of Talbot and Allum's judgment to the Holland company upon terms which might seriously affect the interest of the former, was unkind, and a departure from the friendly conduct he had manifested towards them, may be admitted. But since it must be taken as a fact in the cause that no promise of any kind had been made by G. Morris in favor of the trustees, or to his knowledge, in reference to their interests, prior to the agreement of the 29th of August, 1799 ... . (and even this agreement, or the draught made by Cooper and forwarded by Hoops to R. Morris and the trustees for their signature, is not alleged in the bill with any degree of certainty as a ground on which the trust is founded ) and since the arrangement proposed by G. Morris in that agreement and draught was rejected by those parties and another substituted in their stead to which G. Morris was no party, it would be going too far for a Court of equity, in such a case, and in favor of persons who would do nothing for themselves, to make G. Morris a trustee by implication for the purpose of charging him with a breach of trust. It is true that G. Morris might have communicated to the trustees his disapprobation of the change they had made in his arrangement, and his refusal to abide by that which they had proposed as a substitute, so as to have afforded them an opportunity to retrace their steps. But surely he was not, in point of law, as much bound to make such a *22 communication as the trustees were to obtain a certain knowledge of his assent to the agreement of the 16th September. He had gratuitously offered to do a favor to the trustees upon certain conditions. They reject the offer as made and propose other conditions. It was incumbent on them to obtain his assent to the new proposal if they meant to consider him in the light of a trustee.
The opinion given upon these points renders it unnecessary to consider the question of boundaries.
Decree affirmed, without prejudice.
[*] Absent MARSHAL Ch. J. and Livingston, J. the other five present.
