Opinion
04-08-1874
RICHMOND ENQUIRER CO. v. ROBINSON & als.
Ould & Carrington, for the appellants. Page & Maury, for the appellees.
1. Equity will only relieve against a judgment at law if the omission of the defendant to avail himself of his defence at law was unmixed with any negligence in himself or his agents.
2. The negligence of an officer of a corporation, in allowing a judgment to be rendered against his corporation as garnishee when the debt had been previously assigned to another party, and notice thereof had been given to another officer, will exclude the corporation from relief in equity against the judgment.
In August 1866 R. M. and Wm. W. Smith executed to Thomas Smith their bond for $5,000, with Wm. K. Watts, G. W. Gretter and R. H. Dibrell as their sureties. The Smiths were the owners of the Richmond Enquirer establishment and publishers of that paper, and on the 13th of July, 1867, they sold out the establishment to a corporation known as the Richmond Publishing Company, for which said company, beside other considerations, was to pay to Smith & Son $5,000, with interest, in two years from the date. On the 15th of the same month Smith & Son assigned this claim of $5,000 to Watts, Gretter and Dibrell, the same when collected to be applied to pay the debt due to Thomas Smith, for which they were bound. On the 20th of the same month notice of this assignment was given to D. S. McCarthy, secretary and treasurer of the company, which was acknowledged by an endorsement upon the notice, and A. M. Bailey, the business manager of the company, was informed of the assignment at the same time, or a few days after. N. Tyler, the president of the company, had gone to New York a few days before the notice was given, and did not return until some days after.
On the 10th of August 1867 Robinson & Fairbanks recovered in the Circuit court of the city of Richmond two judgments against R. M. Smith & Son, amounting together, of principal $1,020.53, with interest from the 30th of May 1867, on which executions were issued, which were returned " no effects." And then the plaintiff's suggesting that the Richmond Publishing Company were indebted to Smith & Son, the company was summoned as a garnishee, and the process having been served on N. Tyler, the president, he appeared in answer to it, and upon his examination stated that the Richmond Publishing Company were indebted to R. M. Smith & Son in the sum of $5,000, which was evidenced by two bonds of $2,500 each, payable two years after date, with interest from date. And thereupon the court rendered a judgment that the said Richmond Publishing Company do, on the 30th of July 1869 (when the said bonds would fall due) pay to the plaintiffs the amount of their two judgments against Smith & Son. Though Tyler seems not to have heard of the assignment by Smith & Son to Watts & als. before his examination in court, upon his return from the court to the office of the company, and mentioning to Bailey what had been done in the court, he was informed of the assignment; but took no step to have the judgment set aside, or his mistake corrected.
After these judgments had been rendered against the Richmond Publishing Company, that company sold out the establishment with all its property, to another corporation called the Richmond Enquirer Company; and this last company undertook to pay all the debts of the Richmond Publishing Company.
In November 1869, Robinson & Fairbanks having sued out executions upon their judgments against the Richmond Publishing Company, which were returned " no effects," made suggestions in their cases, that the Richmond Enquirer Company was indebted to the Richmond Publishing Company, and the Enquirer Company was summoned as a garnishee. This company admitted in its answer to the summons, that they were bound to pay $5,000; but they stated that Watts and others claimed the two bonds by assignment, and asked that they might be brought before the court to have the question as to which party should receive the money on the bonds settled; and Watts & als. were accordingly made parties.
In January 1870 Watts and his co-sureties filed their bill in the Circuit court of the city of Richmond, in which they set out the facts of the assignment to them of the debt of the Richmond Publishing Company to Smith & Son, before the issue of the executions against Smith & Son, upon the judgments recovered against them by Robinson & Fairbanks. And making Robinson & Fairbanks, The Richmond Enquirer Company, and others, defendants, they asked that Robinson & Fairbanks might be enjoined from collecting the money on the bonds, and that the Richmond Enquirer Company might be compelled to pay the amount to them or in discharge of the debt due Thomas Smith for which they were bound as sureties.
In this suit the Richmond Enquirer Company filed a cross-bill, in which they professed their readiness to pay the bonds, but insisted that they should not be required to pay them twice. The company insisted that the judgment against the Richmond Publishing Company was not valid and binding, because the summons was to the corporation, and it should have appeared under its corporate seal; that Tyler did not represent the corporation, but was examined as a witness, and having given his testimony under a mistake of fact, such mistake might be corrected in equity.
On the 30th of July 1870 the causes came on to be heard, when the court held that Watts and his co-sureties were entitled to receive the money due upon the bonds aforesaid, and to have it applied to pay the debt to Smith, for which they were bound; and made a decree against the Richmond Enquirer Company for the amount due upon them. And on the 9th of May 1871 the court made a further decree that the Richmond Enquirer Company should pay to Robinson & Fairbanks the sum of $1,020.53, with interest, & c., that being the amount of the two judgments they had recovered against Smith & Son and the Richmond Publishing Company. And thereupon the Richmond Enquirer Company applied to this court for an appeal; which was allowed.
Ould & Carrington, for the appellants.
Page & Maury, for the appellees.
OPINION
ANDERSON, J.
It is well settled that it is no ground for equitable interference that a party has not effectually availed himself of a defence at law. There are cases in which equity will relieve after verdict, although a defence might have been made at law; but only where there has been no fault or negligence on the part of the defendant or his agents. The rule, as laid down by Chancellor Kent in Foster v. Wood, 6 John. Ch. R., 89, is, " that chancery will not relieve against a judgment at law, on the ground of its being contrary to equity, unless the defendant in judgment was ignorant of the fact in question pending the suit; or it could not be received as a defence; or unless he was prevented availing himself of the defence by fraud or accident, or the act of the opposite party, unmixed with negligence or fault on his part." To the same effect is the declaration of the rule by C. J. Marshall, in The Marine Insurance Company of Alexandria v. Hodgson, 7 Cranch R., 332. It must appear that the omission of the defendant to avail himself of the defence at law " was unmixed with any negligence in himself or his agents." This rule is absolutely inflexible, and cannot be violated, even when the judgment is manifestly wrong in law or fact; or when the effect of allowing it to stand will be to compel the payment of a debt which the defendant does not owe, or which he owes to a third person. 3 Lead. Cas. in Equity, p. 467, and cases cited. It is not sufficient to show that injustice has been done, but that it has been done under circumstances which authorize a court of equity to interfere; because if a matter has already been investigated in a court of competent jurisdiction, according to the ordinary rules of investigation, a court of equity cannot take it upon itself to enter into it again. Ibid, citing Bateman v. Willoe, 1 Sch. & Lef. R., 201. To the same effect is the current of Virginia decisions. Many of them are cited by J. Lee in delivering the opinion of the court in Slack v. Wood, 9 Gratt. 40.
Before Robinson & Fairbanks obtained their judgments against R. M. Smith & Son, the debt due them by the Richmond Publishing Company had been assigned to Watts, Dibrell and Gretter, for a valuable consideration. And two of the principal officers of the company were informed of this assignment. In fact, the company had been formally notified of the assignment, as is shown by the acknowledgment of its treasurer and secretary, endorsed on the notice, and also by his deposition in the cause. It is true that the president, Tyler, who was served with the process against the company, testifies that he was ignorant of the assignment, and failed to make defence for the company; but, on the contrary, testified and acknowledged that the company was indebted to R. M. Smith & Son by the bonds aforesaid, not knowing that they had been assigned to Watts, & c. He admits that he knew that it was the intention of R. M. Smith & Son to assign the said bonds to Watts, Dibrell and Gretter; yet before he answered to the process, he did not even take pains to enquire whether that assignment had been made. He knew that he had been absent in New York, when the assignment might have been made and notice thereof given to the company, yet after being served with process, without enquiring of the other officers whether an assignment had been made and notice thereof given to them in his absence, or making any preparation for the defence of the company, he goes forward carelessly, not to say recklessly, and acknowledges the company's indebtedness to R. M. Smith & Son. And upon his acknowledgment or testimony judgment was rendered against his company in favor of Robinson & Fairbanks for the amount of their judgment debt against R. M. Smith & Son. And it is remarkable, and evidences the most extraordinary negligence on the part of this agent of the company, that on the same day the judgment was rendered against the company, he was informed that the bonds had been assigned by R. M. Smith & Son to Watts and others for a valuable consideration, of which the company had been notified prior to the judgment and execution of Robinson & Fairbanks against R. M. Smith & Son, and he did nothing to have the error in the judgment against his company corrected, which might then have been done; but, as the agent and representative of the corporation allowed the judgment to stand.
A corporation can only act through its agents, and must abide the consequences of their acts, done within the scope of their authority. This company's defence could only be made through its president or other agents; and by their fault and gross negligence it did not avail itself of its defence at law, and allowed judgment to go against it for the want of defence. It is, therefore, not in the power of a court of equity, without overturning longestablished principles, to reopen the investigation, revise the judgment of the court of law, and relieve against it. The court is, therefore, of opinion to affirm the decree of the chancellor.
DECREE AFFIRMED.