Opinion
03-29-1817
Williams v. Price.[*]
Nicholas and Wickham for C. D. Williams, and Chapman Johnson and Wirt for Price
Editorial Note:
The Pagination of this documents reflects the pagination of the original published documents. [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]
Upon an Appeal from a Decree of the Superior Court of Chancery, holden at Staunton, in a suit brought against the Appellant Cumberland D. Williams and others, by James Price.
The Bill stated that, in the year 1803, a certain Englehard Yeiser of Baltimore, having purchased very valuable and extensive real property in Augusta County, Virginia, at the price of $ 16,000, a contract was entered in to between said Yeiser, a certain Joseph Williams, and the complainant, whereby said Yeiser sold to each of them one fourth of said real property; and it was agreed that the parties to the said agreement, which was dated the 6th of August, 1803, should erect and conduct in partnership, on said real property, a furnace for iron works, on the terms specified in said agreement: that the parties accordingly engaged in the enterprise of said iron works; the plaintiff expended large sums in erecting the Furnace, now called Mount Torry Furnace, on said property, in making other improvements thereon, and preparations therefor: that Joseph Williams sold his one fourth of the property to C. D. Williams, of Baltimore; and that the business was carried on, under this new firm, under the agreement aforesaid, until the 9th of January, 1806, when a new agreement to regulate the conducting of the iron works was entered into; under which last, the business was carried on until the plaintiff parted with his interest therein: that the plaintiff and C. D. Williams became jointly interested in certain other property in Augusta County, on which is Belvedere Forge, which they conducted in partnership until the 29th of November, 1806, when the plaintiff sold his moiety to said Williams: the Furnace was carried on by the partnership last mentioned, until the 13th of March, 1807, when the plaintiff sold his one fourth thereof to C. D. Williams.
The Bill then stated the substance of the agreement of March 13th, 1807. C. D. Williams bought of Price his one fourth of the Furnace and its appurtenances, and all the servants, stock, horses, wagons, coal, iron and other things belonging to said Furnace, or to Belvedere Forge; and all debts due to the Furnace or Forge, and the benefit of all contracts with either of them. C. D. W. stipulated to pay to James Price $ 23,000, out of which were to be deducted certain debts to be assumed and paid by the former for the latter: the balance of the $ 23,000 to be paid by installments; C. D. W. to pay the plaintiff's proportion of the debts due from the Furnace and Forge. The plaintiff agreed that Yeiser's representatives (he being dead) should convey the Furnace property to Trustees, to be by them re-conveyed to C. D. W. who should then convey it in trust to secure the performance of the agreement on his part. It was farther stipulated, that the " property so to be conveyed to C. D. W. as aforesaid, should be the only security for his performance of said agreement; it being expressly agreed and understood by and between the parties, that neither the said C. D. W., his Heirs, Executors, Administrators, estate or effects should, at any time thereafter, be answerable, or in any manner liable for the payments aforesaid, or for the performance of any Covenant or Agreement therein, farther than the said property, so as aforesaid to be conveyed to him, would extend to discharge and satisfy the same."
The Bill farther stated that, in pursuance of this agreement, C. D. Williams entered into the immediate possession and enjoyment of all the property, real and personal, sold to him by the plaintiff; that he proceeded to pay off part of the debts from the Forge and Furnace Concerns, and to collect a part of the debts due to them; that he paid $ 1015.06 due at the Office of Discount and Deposit in Baltimore, and also $ 250 part of a debt to one Clements, which the plaintiff, by the contract of November, 1806, had bound himself to pay, but has left unpaid: he, however, did not (as the agreement required) assume the payment of a note in the Bank at Baltimore, for $ 3669, 13, nor give his own note to the plaintiff for the amount thereof; but for a long time evaded, and ultimately refused doing either: that, on the 30th of July, 1808, he executed a lease to Joseph Williams of the whole of Belvedere Forge, and of all the said C. D. W.'s interest in Mount Torry Furnace, to commence from the first of May, 1808, and to expire on the first of July, 1811, with a right reserved to C. D. W. to terminate the lease at any time, on giving four months previous notice; the rent reserved being $ 2650 per annum, not distinguishing between the rent for the forge, and the rent for the furnace; by which lease, all the pig metal, bar iron and castings on hand, at the commencement thereof, and all the debts due, either to the forge or furnace, were conveyed to Joseph Williams absolutely, who was to use the stock on hand during the term, and, at the end thereof, return it in kind or value; covenanting to pay the debts, due from the forge and furnace, in iron, and to return the rented furnace in good repair: that, on the 17th of December, 1808, while the said lease was in full force, and Joseph Williams in possession, (no notice having been given him of an intention to revoke it,) C. D. Williams, in Baltimore, wrote a letter to the plaintiff, declaring himself unable to comply with the articles of agreement of March, 1807, and saying he was compelled to avail himself of the last provision in those articles, and to give up to the plaintiff his quarter of the furnace, and all the property belonging thereto, which remained on hand, of what he had received of him; saying nothing about the time or manner of returning said property, nor about the lease to Joseph Williams; but saying that a part of the debts yet remained unpaid, for the payment whereof Joseph Williams was to deliver iron; thus seeming to admit that C. D. W. was yet bound to pay the debts, and that Joseph Williams's lease was to continue. The Bill protested against any construction of the agreement, by which C. D. W. should be permitted to surrender the property in discharge of personal or other responsibility; alleging that the personal property at the Furnace was greatly diminished by his fault or neglect; that he had left the State, and the United States; that, prior to his departure, viz. on the 24th of April, 1809, he conveyed the forge, and one fourth of the furnace, to his brothers, in trust, to secure to them $ 50,000; and that the said Lease and Deed of Trust were both fraudulent. The plaintiff alleged, that the accounts between himself and Yeiser's estate had never been settled; and that a balance was due to him; and that no title had been made by Yeiser, or his representatives, to the plaintiff for his one fourth of the furnace property.
The prayer of the Bill was for an Account; that Yeiser's heirs be decreed to convey and perfect the title; that the nature of the lease and Deed of Trust be investigated; that the property in the hands of Joseph Williams be attached; " that the real property sold, by the plaintiff to C. D. Williams, by the agreement of March 13th, 1807, and so much of the personal property as remained," be sold to pay the balance due to the plaintiff; and, in case of a deficiency, that a personal decree be entered against the said C. D. Williams.
The answer of Cumberland D. Williams, filed in July, 1810, went into a very minute and particular statement of facts and accounts, not necessary to be detailed here. It admitted the existence of all the contracts stated in the Bill: it denied that the lease to Joseph Williams, or the Deed of Trust to the respondent's brothers, was fraudulent, averring that both were bona fide transactions, and that the Deed was executed to reimburse advances made, and to meet such, as his brothers were continuing to make for him: it described each of those instruments, as embracing all the forge property, and the whole of his interest in the furnace. In relation to the relief sought by the Bill, the respondent seems to have taken three grounds of defence: 1st. That the plaintiff, not having procured a conveyance from the representatives of Yeiser, had no right to call upon C. D. Williams for the performance of any covenant on his part; the procurement of such conveyance being considered as a condition precedent to the performance of any act on the part of C. D. W.: 2d. That the plaintiff had no right to recover any balance, that may have been due him from the furnace partnership, or from Yeiser, one of the partners, on the 13th of March, 1807; for two reasons; the one, that, by the agreement of that date, such balance was plainly transferred to the respondent; and the other, that the plaintiff, by his agent, had relinquished this claim to Yeiser's representatives: 3d. That the last clause in that agreement, protected the respondent, in his person and property, from any liability, and authorized him to return to the plaintiff, in full discharge of all obligation, his one fourth of the real property appertaining to the furnace, and so much of the personal property, as might be remaining.
In support of this last ground, the respondent denied the correctness of the schedules exhibited with the Bill; and alleged, that, living as he did at a distance from the property, and having only visited it once, he was ignorant, at the time of making the contracts with the plaintiff, of its value and incumbrances, and was induced to make those contracts by the false representations of his friend and relation Joseph Williams; that, nevertheless, he was fearful of the consequences of embarking farther, because of the unprofitableness of the works theretofore, and had the last clause introduced, after great deliberation, for the express purpose of protecting himself from losses; which clause was well weighted, and well understood, both by himself and the plaintiff's agent: that the plaintiff received decided and numerous advantages from the contract entered into with the defendant: on the other hand, the defendant never derived any advantage from the plaintiff's one fourth of said furnace property: that $ 1000 were never realized from the debts due to said forge and furnace; that most of those debts were for advances made to workmen, who were insolvent, and had absconded: several thousand dollars of this description had been entered, " desperate," on the books of the works: that whatever had been derived from this source, had been applied to the payment of the debts, due from the concern, and in keeping up the establishment: that, owing to the bad quality of pig iron on hand, for some time before the defendant's purchase, the character of the works was materially injured; that the value of the personal property belonging to said works was very inconsiderable: that, finding the works deeply in debt, and in bad credit, the bar iron out of repute, the pig iron of a quality unfit for use, the forge standing still waiting for better metal, it was impossible for the respondent to comply with the agreement: he had expended $ 41,636,05, and had never received one cent of profit: that the respondent's means being thus wholly exhausted, he meant to put an end to carrying on the business; but, Joseph Williams being of opinion that he could manage the works to advantage, the respondent agreed to lease his interest in them to said Joseph Williams, he expressly stipulating to pay off the debts, and there being a provision that the defendant might at any time revoke the lease on four month's notice; which clause was inserted because the defendant did not know what disposition he might be compelled to make of the property: that Joseph Williams, in pursuance of said stipulation, had extinguished the largest of said debts: the respondent had received no part of the rent reserved; but Joseph Williams was responsible therefor: that the respondent's concern in the said iron works having been so disastrous, no alternative was left to him, consistent with honour and justice, but a candid disclosure to the plaintiff, of his inability to accomplish a specific compliance with his agreement; and, being desirous to do him more than justice, by returning him his property in no manner deteriorated, but, on the contrary, greatly enhanced in value, by being relieved of heavy incumbrances of debts, which the plaintiff would have been bound to pay, and by improvements erected thereon by the respondent, he wrote to the plaintiff the letter of December 7th, 1808.
Benjamin Williams, Samuel Williams, Amos A. Williams and George Williams, by their joint answer, referred to exhibits, as shewing the amount of their advances for C. D. Williams, and alleged that the Deed of Trust to secure these advances, and such as they might thereafter make, was executed in good faith.
The answer of Joseph Williams admitted that Yeiser and himself entered into the agreement, in 1803, with the plaintiff; that it was true that, afterwards, to wit, in November, 1804, this defendant, with the assent of two partners, sold his interest to C. D. Williams; from which time, until 1808, he had no connection with the business, except as agent for C. D. W.: this connection as agent enabled him to say that the schedules referred to in the Bill were grossly incorrect, including nearly double as much property, as was delivered to C. D. W. under the contract of March 13th, 1807. This defendant admitted he leased C. D. W.'s interest in said property; that said lease was bona fide: that Yeiser did, in 1806, convey to him his part of said furnace; which conveyance, though absolute on its face, was intended to be in trust for the benefit of Yeiser's children: that he is willing, as one of Yeiser' representatives, to comply with any decree of the Court for completing the plaintiff's title: that he supposes, if any balance was due from Yeiser to the plaintiff, it was transferred, by the agreement of March, 1807, to C. D. W.: that he holds the property leased according to the terms and principles of that lease, and on no secret trust for C. D. W., or his Trustees.
The answer of Yeiser's Executors. They had heard and believed there was a partnership in iron works between James Price, Joseph Williams and said Yeiser, and that C. D. Williams also became interested in said works; but they had no knowledge of the state of the accounts relating thereto. They alleged, however, and were ready to prove, that said Yeiser sold all his interest in said iron works (being the moiety thereof) to Joseph Williams, upon condition of his paying all the money, due from said Yeiser to the other partners, or to other persons, on account of said iron works, or partnership therein; as would fully appear by a deed from said Williams to John Borland and others, in trust for these purposes, recorded in Augusta County Court: that C. D. Williams had also released the estate of said Yeiser from all claims, which he as co-partner may have had against Yeiser; but the defendants do not know how the accounts stand. They deny that the plaintiff has a lien on the real estate, while the other partners are personally liable.
General replications were put in to all the answers, except that of Yeiser's Executors.
The depositions taken on both sides, related either to the construction of the written agreement of March 13th, 1807, which was attempted to be explained by parol evidence, or to the state of the works, when C. D. Williams received them in 1807, and when he offered to return them under the contract; also to the manner in which the works were conducted. It was contended, on the one hand, that the value of the property was greatly enhanced by C. D. Williams's management, and by the improvements he put thereon; whilst it was attempted to be shewn on the other, that the property was deteriorated, and Price's security diminished, by C. D. Williams's conduct.
An Order of Account was made on the plaintiff's motion; whereupon a Commissioner returned a Report, which being re-committed, he made another; to which the defendant C. D. Williams, and the plaintiff, both filed exceptions: but, as no decision was had upon them in the Court of Chancery, or in this Court, it is unnecessary to insert them.
A motion was made to the Chancellor, in behalf of C. D. Williams, who, at the time of the institution of this suit, was a citizen of the State of Maryland, to remove the cause to the Circuit Court of the United States, under the 12th section of the Act of Congress, entitled, " An Act to establish the Judicial Courts of the United States," passed September 24th, 1789; but the motion was over-ruled.
On the 4th of April 1812, CHANCELLOR BROWN delivered the following Opinion and Decree.
Before I proceed to an opinion on the merits of this case, it may be proper to notice some objections, which have been made to the reception of certain exhibits, as evidence in the cause. The first I shall mention is the deposition of Joseph Williams, objected to on the ground of competency as well, as credibility.
This objection I consider well founded. The Witness is a defendant, and his interest may be deeply affected by the ultimate decision, which may be given in this cause. Besides other grounds of interest, he is the real owner (notwithstanding he seems, by his answer, to think otherwise,) of all Yeiser's interest in the Furnace property, including half the lands belonging thereto, and is responsible for the payment of Yeiser's partnership debts, to secure which he has executed a Deed of Trust, (of the same date with Yeiser's Deed to him,) of his property to Borland and others; in which Deed Yeiser is also a party.
The next objection is to the reception of parol testimony, viz. that of F. Price and others, to explain the agreement of the 13th of March 1807. This I consider also a good objection. There is nothing in this agreement to take it out of the general rule, respecting the admission of said testimony to explain a Deed. So far, therefore, as those Witnesses are introduced for that purpose, I think their testimony inadmissible.
There are some other objections, to certain depositions, for want of notice, and for irregularity; on which it is necessary only to observe, at present, (as I have endorsed my ideas on the papers themselves,) that, whenever the objecting parties have attended, and cross-examined the Witness, I have considered all defects, as well for want of notice as formality, waived.
This cause involves two important inquiries. 1st. What is the plaintiff entitled to recover from the defendants, or either of them?
2dly. What is the extent of his remedy against the defendant C. D. Williams? In other words, is the defendant personally liable for the payment of any sums in which he may be found indebted?
First, What is the plaintiff entitled to recover, or can he recover any thing from Yeiser's representatives?
His claim against them is for a balance due from Union Forge to Mount Torry Furnace; and for extra advances on behalf of said Furnace. It is contended that those claims are the private and exclusive property of the plaintiff, unconnected with his partnership character, to which he is entitled in the same manner, that he would have been for money lent or advanced to Yeiser, as an individual, upon his individual credit; that if Yeiser's estate should prove insolvent, the whole loss would devolve on the Complainant; and therefore that he has not parted with his interest in them by the agreement of the 13th of March 1807, transferring his partnership rights. But the debts due from Union Forge was a debt, due to the Furnace partnership, and not a debt, contracted with the plaintiff in his private or individual character. If it should be lost in consequence of Yeiser's insolvency, the loss must be jointly borne by the plaintiff and the defendant C. D. Williams, the other partners in the Furnace Firm, as the plaintiff's extra advances mere made on the credit, and for the benefit of that firm. And those several transactions having never been closed 'till after the 13th of March 1807; nor any separate contract made with Yeiser respecting them; the defendant, on that day, had a claim against the partnership for them, in the same manner that he would, under the agreement of that day, have a right, in case of Yeiser's insolvency, to require the defendant C. D. Williams to pay his the plaintiff's increased proportion of the debts occasioned by such insolvency. It therefore appears to me, on the best consideration I have been able to give the subject, that the plaintiff's interest in those claims was a partnership interest, which was transferred by the following clause of the agreement of the 13th of March, 1807, viz. " Also all the right, interest and benefit of him the said James Price, as well in and to all the debts, sums of money due, owing or payable to all or any of the said several partners in the said several Iron Works," & c. & c.
The correctness of this construction of the agreement has been contested by the supposition, that the claim against Yeiser might have exceeded the whole price, which was to be given for the property. But how would this argument apply to the supposition that the debts, which the defendant C. D. Williams had assumed to pay, might have exceeded the whole value of the property purchased? The presumption is that the partners had some knowledge of the state of their affairs; and, should a fact happen, as has been supposed, on either side, the Court might fairly presume some fraud or mistake in the transaction, which might be proved and relieved against."
It will here be understood, that the Court offers, at present, no opinion as to the real amount of Yeiser's debt, or the right of the defendant C. D. Williams to recover it from the heirs of Yeiser. This, it is believed, cannot be properly ascertained in the present suit.
Secondly, what is the plaintiff entitled to recover of the defendant C. D. Williams? On this point, I am equally satisfied that the plaintiff has a just claim against this defendant, for the full amount of the purchase money, agreed to be given by the aforesaid Contract of March 1807, with interest from the respective periods of payment, after deducting therefrom the sum of $ 1015,06 cents paid at the Bank of Discount and Deposit, and the farther sum of $ 250 paid Clements. This last credit, as it has been much controverted, requires some remarks. By the agreement of November 1806, the plaintiff undertakes to pay, first, the interest or discount, for one year, on a Note in Bank; 2dly, the second payment of $ 500, to Clements; and 3dly, half the Debts of the Forge; making three distinct Covenants. In the agreement of March 1807, this former agreement is specially referred to, and it is there stipulated that the defendant C. D. Williams " shall and will pay, satisfy and discharge all and singular the debts; and engagements, due, owing or payable from the said James Price and C. D. Williams, as late partners in the aforesaid Forge; and, generally, all claims against the said Forge; so that the said James Price shall be exonerated and discharged from a Covenant contained in a certain Agreement heretofore, on or about the 29th of November last past, & c. & c. for the payment of one half of the said Debts." Here we see the extent, to which the agreement of November 1806, was to be set aside by the new contract; viz. the payment of half the Forge Debts. These $ 500, were once a partnership debt, being for the purchase of the Forge Seat, & c. But the partners had, before this last agreement, provided for its payment in a certain way; and this provision is not set aside by this agreement more than the Covenant for the payment of the interest or discount.
My reason, for charging the defendant C. D. Williams for the payment of the full amount of the purchase money and interest, according to this agreement of March 1807, is simply, that he has contracted to do so; and I know of no rule, by which one contracting party, where the contract is fair, and has been deliberately entered into, (which appears to have been the case here,) can avoid that contract without the consent of the other. If he has paid debts, he was bound to do so. If he has made improvements, they must be considered for his own benefit. The property was absolutely his own.
I come now to the last, and to me not least difficult point: that is, is the defendant C. D. Williams personally liable for the payment of this money?
This leads me to an examination of the agreement; the last clause of which is drawn with a particular view to this question, and is so cautiously worded, as scarcely to admit of doubt, as to the intention of the parties.
I am not prepared to say that such a clause as this in an agreement renders the whole contract void, or would itself be a void Covenant; or that B. might not purchase an estate from C., with the liberty of restoring it, in a reasonable time, in discharge of the purchase money. And this certainly would be the effect of this Covenant, in the latitude contended for; for if the estate is the only security, and there is no personal responsibility, why not give it up to the Vendor, to dispose of as he pleases, without the expense and delay of a suit; since this could be all that could be obtained by a suit? But, in that case, there would be a special trust and confidence that the property should not, in the mean time, be deteriorated: there would be a moral obligation on the Vendee, which would create an implied assumption, on his part, to return it at least as good as he received it, and perfectly disencumbered, to the Vendor. It would be entirely different from any case where there was a personal responsibility in which, such special trust and confidence need not be supposed. Without, therefore, expressing any positive opinion on the legal effect of this clause, provided no change of circumstances in the property sold had taken place; and taking the defendant's exposition as the correct one; let me ask, ought the plaintiff now to be tied down to this security? It is in vain to talk of its improved state, upon the evidence before us. The testimony of Joseph Williams is inadmissible; and Cahil's goes, principally, to improvements at the Forge, with which we have nothing to do. But the whole mass of testimony goes to shew that it is now destitute of everything requisite and necessary to carry on the operations: and the unavoidable destruction and waste, which time produces, must convince every one of its deteriorated state. It debts have been paid, the defendant C. D. Williams was bound by contract to pay them: and it has been before observed, that he has no right to abandon his contract without the plaintiff's consent. But what was the situation of this property on the 17th of December 1808, when the defendant C. D. Williams offered to deliver it up? And had he it then in his power to restore it? This offer was made from Baltimore, two hundred miles from the plaintiff or the property, and four months after he had given a lease upon it, for upwards of two years after the offer was made; not for the plaintiff's benefit, as has been alleged, but for his own; and to a tenant, whom he must have known the plaintiff would not have accepted of, because it was known to him that the plaintiff had sold out, in part, to avoid any connection with him. It is said in the Answer, that this lease embraced no part of the real property sold by the plaintiff; and the defendant claims the benefit of all the personal property conveyed by that sale. But the lease, which is dated 30th July, 1808, some months before the offer of surrender, is all the defendant C. D. Williams's interest in the Furnace; and at that time he held the plaintiff's half part. But it is said, the plaintiff's title being superior, he could have evicted the tenant; and if not before the termination of his lease, he would have been entitled to the Rent. But for the payment of that Rent there was no security; and its amount is, as appears by the papers in this cause, disputed by the parties to the lease.
Under this view of the case, could the defendant avail himself of this offer to return the property? (a doctrine once contended for, though not by his Counsel here.) And how ought it to operate in discharge of his personal responsibility? I mean not to reflect on the character of the defendant C. D. Williams. From my knowledge of him, I would suppose him incapable of doing, intentionally, a dishonest or dishonourable act. But, finding himself unable to comply with his contract, which I have no doubt was entered into with good faith, and deceived by the flattering prospects, held out to him by the other defendant, Joseph Williams, he consented to lease the property to him in July. In the December following, finding his expectations again disappointed, he made the offer of the property. It was then beyond his control; and, surely, it was not right to confide to one, who might utterly destroy without the possibility of making compensation, and who, it appears, has considerably injured that property, which he contends is the plaintiff's only security for the payment of the whole purchase money, not only of that, but other property. Whatever his rights might once have been under his contract, I think him now personally responsible, for the balance of the purchase money, beyond what that property will pay.
It has been said that the plaintiff has no right to recover any thing, as the defendant has received no Title. A complete Title, before all the heirs of Yeiser come of age, could not have been expected. But the Court will not compel the defendant to pay 'till his title is perfectly secured. This is agreeable to the universal practice.
As the defendant, C. D. Williams, cannot have complete justice without a cross bill, he will be permitted to file one, and to make the heirs of Yeiser parties, if he thinks proper, to try the validity of the release mentioned in his Answer, and also to ascertain more correctly the amount of Yeiser's debt.
The Mortgage to the defendants, brothers of C. D. Williams, embraces no part of the real estate sold by the plaintiff to the defendant; and I very much doubt whether the last clause in the agreement embraces the personal property. This would be a reason, with me, for construing the agreement, as the plaintiff contends; that the Debts in Bank were to be immediately paid or assumed, according to the understanding of the parties at the time of contracting; and, that the Debts at Bank have not been paid, is an additional reason, why I consider the defendant personally responsible; as the personal property seems wholly disposed of, or wasted.
For these reasons, I am of opinion, that the plaintiff is not entitled to any balance for extra advances to the partnership, which may have been due to him on the 13th of March 1807, the date of the last contract between him and the defendant C. D. Williams; but that any such balance, whatever it may have been, was transferred to the said C. D. Williams by the contract aforesaid; that, under all the circumstances of this case, the said C. D. Williams cannot be entitled to return to the plaintiff, the Furnace property, the subject of the Contract aforesaid, or such of it, as is remaining, in its injured and ruinous condition, or to restrict the plaintiff's security for the purchase money to that property alone; but that the plaintiff is entitled to recover from the defendant the amount of said purchase money, subject to the following credits; viz. $ 1015,06 cents, paid by the defendant at the office of Discount and Deposit in Baltimore, and the farther sum of $ 250, paid to Clements; that the Mortgage to Samuel Williams and others, brothers of C. D. Williams, does not cover that part of the real property, appertaining to the Furnace, which was the subject of the contract between the plaintiff and the defendant C. D. Williams; and that is doubtful even, whether it covers that part of the personal property: but they were properly brought before the Court, if upon no other ground than this, that the profits of the real estate, which were conveyed to them, might, after the payment of their debt, be attached for the satisfaction of the plaintiff's debt; and that the plaintiff, who appears, by an Exhibit in this cause, to have procured a Deed, to Frederick Price and William M'Mechen, from the widow of Englehard Yeiser, and from Joseph Williams and Elizabeth his wife, Richard Sex Kingsmore and Rebecca his wife, and Catharine M. Yeiser, but which has not been duly proved, as to all the parties, or recorded in proper time as to any of them, ought, before he demands payment of the balance of the purchase money aforesaid, to procure a sufficient Deed of Conveyance, to himself, for the legal title to the said one fourth of the Furnace real property from the said widow of Englehard Yeiser, and as many of his heirs, as may be capable in law of conveying, and a sufficient deed of release, from the said Frederick Price and William M'Mechen, of all their right and title therein, and then execute to the said C. D. Williams a sufficient Deed, with general warranty, for the same, and moreover file in the Office of this Court, a Bond, with sufficient security, in the penalty of twenty thousand dollars, payable to said C. D. Williams, and conditioned for the complete indemnification of the said C. D. Williams, his heirs and assigns, against the claim or claims of such of the heirs of said Yeiser, as shall not have conveyed as aforesaid. Under this view of the case, it is unnecessary to express any further opinion on the various exceptions filed to the Commissioner's Reports.
It is therefore adjudged, ordered and decreed, that, upon the plaintiff's procuring the Conveyances from the widow and adult heirs of Englehard Yeiser, and the release from Frederick Price and William M'Mechen, executing the Deed with general warranty to the defendant C. D. Williams, and filing Bond with sufficient security, in the Clerk's office of this Court, in the manner specified in the foregoing opinion; then the said C. D. Williams, do pay to the plaintiff the sum of $ 21734,94 cents, with six per cent. interest on $ 3669, 13 cents, part thereof from the 13th day of March, 1807; (that being the amount of the note at Bank, which said C. D. Williams was bound to take up at the date of the contract; ) on one fourth of the residue thereof from the first day of January, 1809, 'till paid; on one other fourth from the first day of January, 1810,' till paid; and on the balance from the first of January, 1811, 'till paid, together with the costs, which the plaintiff has expended in prosecuting the suit. And if the said C. D. Williams shall not have paid the aforesaid sum of money, with interest as aforesaid, within 120 days after the plaintiff shall have complied with the precedent conditions hereby required of him, then, who are hereby appointed Commissioners for that purpose, any two or more of whom may act, are hereby authorized and required, after having advertised the time and place of sale for six weeks, in some newspaper, published in the town of Staunton, and at the door of the Court house of Augusta County, on one Court day at least, to sell at public auction, for cash, the one undivided fourth part of the real property sold by the plaintiff to the defendant C. D. Williams, by the contract of the 13th of March, 1807, aforesaid; to wit, one undivided fourth part of the Mount Torry Furnace, and the lands thereto appertaining; and, out of the proceeds of said sale, that they do pay first the costs and charges thereof, then, to the plaintiff, the money, with interest and costs hereby decreed to him, if sufficient there be for that purpose; and the balance, if any, that they do pay over to the defendant C. D. Williams, or his order.
It is farther adjudged, ordered and decreed, that the Bill of the plaintiff be dismissed as to the defendants Samuel Williams, Benjamin Williams, Amos A. Williams and George Williams; but without costs. As to the representatives of Englehard Yeiser, this cause is continued for farther proceedings; and, on the motion of the defendant C. D. Williams, by his counsel, leave is given him to file a cross Bill against Joseph Williams and the said representatives of Yeiser."
The counsel of the defendant, C. D. Williams, objected to the foregoing Decree, and contended that, if the Court subjected his client to personal responsibility at all, they should direct the furnace property to be first sold, and the said C. D. Williams should then be responsible for the residue; in order that the said C. D. Williams, who had no objection to the sale of said property, might only appeal from so much of the Decree as subjected him to personal responsibility, and thereby not encounter the risk of damages on the whole amount of the Decree. The Court not having thought proper to reform its Decree according to this principle, he appealed from so much of the said Decree, as directed him to pay to the plaintiff the money and interest therein mentioned.
The plaintiff also appealed from so much of the same Decree, as disallowed his claim for extra advances.
The cause was argued here, (in the absence of the Reporter,) on the 4th and 5th of February, 1817, by Nicholas and Wickham for C. D. Williams, and Chapman Johnson and Wirt for Price, on a preliminary question, whether the motion made in the Court below, to remove the suit to the Federal Court, ought to have prevailed, or not.
Judge Roane delivered the following opinion of this Court. Judge Cabell.
OPINION
Upon this point, JUDGE ROANE delivered the following opinion of this Court.
" The Court is of opinion, that, upon the true construction of the 12th section of the Judicial Act of the United States, the motion made in this case to remove the cause, from the Court of Chancery, into the Circuit Court of the United States, was properly over-ruled. That section, if it extends at all to cases, in which citizens are joint defendants with aliens or citizens of other States, does not embrace cases, like the present, in which citizen defendants have, also, essential interests in the cause, which may be affected by a removal into the Federal Court. The Court adopts this opinion upon the construction of that Act, merely; and without reference to the question whether, in this particular, it be constitutional or not. This course is pursued by the Court on account of its thinness at this time. It has no hesitation, however, in saying, that it does not consider that the case of Brown v. Crippin & Wise, 4 Hen. & M. 173, decided that question. The question of constitutionality was not made in that case; and the decision turned, exclusively, upon the construction of the Act. That question is to be considered, therefore, as still open; except so far as it may be affected by the principles settled by the Court in the case of Hunter v. Fairfax, 1 Munf. 218; as to which, for the reason before assigned, the Court at present gives no opinion.
The cause was farther argued on the 17th, 18th, 19th, 20th, 21st and 22d of March, 1817, by Nicholas, Call and Wickham, for Williams, and Johnson and Wirt for the Executrix of Price, who had departed this life.
The Counsel for Williams relied on the following points:
1st. That the Court ought not to have decreed a sale before a complete title to the property was made.
2d. That by the agreement of March 13th, 1807, Williams was exonerated from all personal responsibility, and the Court erred in decreeing against him personally.
3d. That there was nothing in the evidence filed, nor in the reports of the Commissioners, which justified the Court of Chancery in departing from the stipulation that the property should be the only security; but both shewed the propriety of adhering to it.
4th. That the plaintiff, not being able to comply with his contract, and a Decree to account having been entered, and reports returned, by which it would appear that C. D. Williams had disbursed large sums of money in paying debts, charged on the plaintiff's one fourth, a Decree ought to be entered for the payment of the monies so advanced by the defendant.
5th. That, even on the principles contended for by the plaintiff, the land was the primary fund for the satisfaction of his claim; and no personal Decree ought to have been entered against the Appellant, until that was disposed of, and then only for the deficiency, that should appear.
6th. That there could have been no lien intended on the personal property, which was constantly changing.
For Price's Executrix, it was contended, that the Decree was wrong in disallowing his claim for extra-advances; because that claim was for a debt due to him from Yeiser's representatives; and, by the contract of March 1807, his interest was conveyed, in such debts only, as were due to the respective firms, not his interest in a debt due to himself, from a member of the firm, or from the firm itself: but that the Decree was right in other respects.
In support of this last position, the Counsel insisted,
1st, That the plaintiff's failure to convey the legal title presented no objection to the relief he sought: because such conveyance was not a condition precedent: because it appeared, on the face of the contract, that the legal title was in Yeiser's heirs, some of whom were infants: and because the want of legal title, and the non-age of Yeiser's heirs, made it necessary to come into a Court of Equity for relief:
2d, That C. D. Williams was not exempt from personal liability, under the contract of March, 1807; because it being a personal contract, and the only remedy given by it being a personal remedy, no stipulation in the contract could exempt him from personal liability; and because it was not the intention of the contract so to exempt him.
3d, That, by the contract, C. D. Williams was bound forthwith to provide for the debts in Bank, and pay Price's proportion of the partnership debts, for which no security was deemed necessary; and the property was to be security for the other payments.
4th, That, whether the clause respecting security is to be so restricted, or is to be construed, as extending to all the payments, yet C. D. Williams was bound to the careful preservation and management of all the property purchased by him and to a faithful application of that property and its profits to the payment of the monies due from him.
5th, That under either construction of the contract, payments voluntarily made by him did not diminish the fund for security, but left the whole amount standing, as security for balances unpaid.
6th, That if the plaintiff's security was to be restricted to the property sold, then the personal property and the profits of the real, must be ascertained by an account, and injury to the real property by an issue of quantum damnificatus: but that it was not to be so restricted; because of the inadequacy of such inquiries to do justice to the parties; because C. D. Williams did not apply the property, as he was bound to do, did not carefully preserve or manage it, and had it not, with its profits, ready to be applied to the payment of the monies due from him.
7th, That C. D. Williams, by the Deed of Trust for the benefit of his brothers, and the Lease to Joseph Williams, had disabled himself from restoring the property to the plaintiff; and that, on this subject, a temporary inability was equivalent to an eternal one.
5 Viner. 221, 223, 224, pls. 1, 2, 3, 4, 8, 11, 12, 13, Sir Anthony Main's case, 5 Co. 21.
In reply to this last point, it was said that C. D. Williams was not bound to restore the property. He had even a right to sell it; and the buyer would have taken it subject to Price's lien. There it was; let Price take it. If Williams was incapacitated from delivering it, did that incapacitate Price from claiming it? Is equity to go beyond the law, and for the purpose of enforcing a forfeiture?,
JUDGE ROANE.
For the general grounds of my opinion in this case, I beg leave to refer to the opinion and decree to be delivered by the President. That decree has been drafted in a spirit of concession, so far as it relates to me, as to minor points, and with a view to procure as much unanimity, as is practicable in the ultimate decision of this cause.
While we are all unanimous as to many of the principles involved in this case, I regret that the worthy Judge, who has last spoken differs from the rest of the Court on one point which cannot be deemed unimportant. While he admits in the fullest terms, that the Appellant was exempted from personal responsibility, for the purchase money, by the terms of the contract of March 13th, 1807, he has adopted a construction, which, in effect, amounts to the same thing; by holding the Appellant liable, (if I understand him correctly,) for all the personal and perishable property, annexed to the forge and furnace, under all possible circumstances. It undoubtedly amounts to the same thing, if, (of which there is no doubt,) that property, in addition to the real subject, is adequate to cover the debt in question. To this point, I shall apply the few remarks I have to offer, and rely, for the other parts of the case, (or such of them as are deemed proper to be noticed,) on the Decree, to be pronounced as aforesaid.
I think the Court has conceded enough, (possibly more than enough,) in admitting that the personal subject is at all embraced by the lien, and that, for all unjustifiable dilapidations thereupon, he shall be held personally liable. More than this I cannot concede: and I am not absolutely sure that even this is not going too far. It is not upon the terms of the contract that I have consented to go thus far: but upon the general justice of holding the subject purchased liable for the payment of the purchase money, and upon the understanding, which seems to have prevailed, on the part of the Appellant, that the personal subject was also comprehended. That understanding, however, has never been manifested, (but quite the contrary) to the extent, to which this construction would carry it: that is, to make the Appellant liable for the return of the personal property, under all possible circumstances: he has never admitted himself liable for any dilapidations, or to restore more of that property, than should be on hand at the time of the offer to return it. On the ground of the Appellant's assent and understanding, therefore, this is the ultimatum that should bind him; and as the other ground of general justice, just mentioned, may be limited or extended by the express contract of the parties, it may well be doubted whether the criterion established by the Court does not rather give the Appellee too much, than too little, in relation to the personal subject.
The contract of March 13th, 1807, is substantially divisible into two parts: 1st. That which conveys the purchased property from the Appellee to the Appellant; and 2dly, That which re-conveys it, as it were, or a part of it, in the shape of a pledge. As to the first part of this contract, it is specific; and goes into detail, as to both the real and personal subject. After conveying the land and furnace, it conveys specifically, and by a minute description, all the personal property, to which it relates. This, in the opinion of the contracting parties, was necessary to convey that property; and it would seem to be equally necessary in the reconveyance thereof, if it had been intended to embrace the personal subject. That minuteness, however, is not absolutely necessary, and would be readily dispensed with, if, in the last part there were even general words of reference to the first part, or clear and unambiguous expressions competent to reach it. As to the conveying part of this contract, the case would be made complete, by shewing what articles were on the premises at the date of the contract, and the Appellant could thenceforth take possession of them: but as to the re-conveying part, there is both a defect of any clear expressions to shew that any personal goods were also comprehended, and of all expressions indicating whether the same identical goods are to be forthcoming, or goods of the same value or amount only. There are no clear expressions, (if any expressions,) in the contract, going to any of these important particulars. Admitting that the personal goods are embraced by the contract, the idea, that the same identical goods are to be returned, is refuted as well by the want of a stipulation to that effect, as by the character and nature of the articles: many of them were articles of consumption, and subject to decay, and would even perish through the mere efflux of time, before the days of payment had arrived. And, as to the amount to be restored, why was it not stated, if it were intended, that it should be so restored, and whether an aggregate amount of the articles would be sufficient, or whether the same amounts of the several distinct classes would do. These considerations, added to the general objection of giving a lien upon mere fluctuating and perishable property, would turn the scale against a construction embracing them, unless there are clear and sufficient expressions to be found in the instrument to shew the contrary. There are none such in this contract. After the lapse of nearly two pages from the conveying part of the contract, it is found necessary to ascertain, more particularly, how the title can be conveyed from the Yeisers to the Appellant. That certainly did not relate to the personal subject; to which the Yeisers had no claim. It provides that the real estate shall be conveyed from Yeiser's representatives to F. Price and M'Mechen, from them to Cumberland D. Williams, and from him to M'Mechen, Purviance and M'Dowell, " in trust to secure the payment aforesaid, and generally the true performance of the agreement on the part of Cumberland D. Williams." It is argued that this conveyance is not to C. D. Williams; and that, as the personal property, as well as the real, is conveyed to him by the first part of the contract, that is only covered by this general expression.
In addition to the remark, that it requires more than a general and ambiguous expression to subject personal property of this kind to a lien like the present. It is here to be remarked, that naturally this expression, " conveyed to him as aforesaid," refers to the conveyance from the Yeisers, (the last antecedent,) and, especially, when it is, at the same time, provided that the land thereby conveyed should be placed in the hands of trustees as before mentioned, to secure the payment of the purchase money. This, then, it would seem, was the pledge provided; and I rather think these two circumstances, and especially the last, which defines the land as the security for the purchase money, would turn the scale in confining the lien to the real, in exclusion of the personal subject. It cannot be justly said that the personal fund is included, because the real one is insufficient. Exclusive of the difficulties, unavoidably arising from comprehending the personal fund, under the vagueness of this contract as relating to it, the parties were the proper judges of the sufficiency of the real fund. It is competent to a party to agree to rely on even an incompetent fund: but, in this case, it is not shewn, as at the date of the contract, that it was incompetent; and the Appellee might justly have counted on the improvements, which he believed the Appellant would have placed, (and which he alleges he did place) upon the same.
If this view of the subject is correct; if the personal goods are not embraced by the lien; and if the consent of the Appellant has only been expressed that they should be bound, so far as they were on hand at the time of his offer to restore them, it would seem that we go full far enough in subjecting him to make good, such as were lost by his wilful default and misconduct.
If these goods were at all intended to be subject to restoration, by the contract, they were not the identical goods; for they had perished by time, and were consumed or worked up from the raw material. It was not the amount thereot, which was to be restored; for there is no such stipulation in the contract, and there was no inventory thereof taken; a measure of great importance in that view. If the personal goods were at all intended, it could only be in this sense, that, as the Appellant received, with the works, all the floating articles necessary to carry them on, and all the stock then on hand, so, in the event of a restoration, the Appellant's stock on hand of the same articles, should be forthcoming to the Appellee. There was a confidence existing between the parties, (admitting that the contract embraced the personal goods,) that the Appellant would not diminish the fund; a breach of which confidence, however, by any gross default on his part, would subject him to a reparation in damages. This confidence might well have been placed in the Appellant. He had this manufacture much at heart on an extended scale; and was, besides, owner of another fourth part of these works, and could not have destroyed the interest of the Appellant in the personal subject, without at the same time destroying his own. So, too, this view, in event, would have been beneficial to the Appellee: in giving him more of the articles of this class than he conveyed to the Appellant. The Appellant might have placed on the premises more of these articles, than he received; and it is only by losing sight of the ideas of the parties at the date of the contract, by attending to posterior facts resulting from imperfect and unfinished reports, that we can infer the contrary. The true rule in expounding contracts, as well as Wills, is, to keep an eye upon the instrument and the state of things as at the date thereof, exclusive of posterior events or circumstances.
But it is supposed that the Appellant is personally responsible, to the amount of the goods conveyed, notwithstanding the express stipulation in the agreement to the contrary; from the negative clause therein, that he shall be no farther bound than " the said property so as aforesaid conveyed to him will extend." This negative way of creating a charge is rather novel. In addition to other answers to this idea, inferable from what I have already said, this argument proves too much. Taken strictly, it would prove that there should be no fund at all for this payment, as far as the perishable goods may have disappeared; although abundant goods of the same character were still on the premises: and if it is meant that the same amount of the goods shall be liable, I answer; 1st, That this is not provided for in the contract; and 2dly, That this idea is in conflict with the provision, which confines the lien to the property " so as aforesaid conveyed; " a provision which wholly excludes all articles afterwards acquired. This is a dilemma, from which the Appellee can only escape by agreeing that the lien extends to the real subject only, or that it only extends to the personal subject under the view, the Court is disposed to take of it; namely, the continued personal fund in the hands of the Appellant at the time in question, subject to reparation for injuries as aforesaid. This measure of relief I am willing to give to the Appellee; and it is more than I would have consented to have given him, had it not been for the seeming consent of the Appellant.
I will here remark, that this idea of the worthy Judge is in utter collision with the prayer of the Appellee's bill. He best knew the extent of his own rights; and, in his bill, he only claimed that " the real property, sold to the Appellant by the articles of March 13th, 1807, and so much of the personal property as remained," might be sold: he does not require that such of the articles, as he delivered to the Appellant, and were not on hand, should be found and delivered to him, as forming a part of this fund; a claim that would have equally existed for him, under the Judges construction of the contract.
These are the remarks I have thought it proper to add: for the rest of my opinion, I refer, as aforesaid, to the Decree which is to be delivered.
The President, on the 29th of March, 1817, delivered the following as the Opinion and Decree of the Court.
The Court is of opinion, that, in making the purchase of the property in question, by the Appellant from the Appellee, it was competent for him to stipulate, that the purchase money should be only paid out of the property purchased, in exoneration of the person and other property of the said Appellant. That such stipulation may not have been unreasonable in relation to a subject peculiarly uncertain as to its success and value; and that the stipulation in question, in the agreement before us, is so clear and explicit to this effect, as to leave no doubt (in exclusion of other testimony) as to the real intention of the parties.
It is further the opinion of the Court, that the Appellant may have been influenced by the consideration of this exemption, in agreeing to give for this property nearly double the sum, for which he had purchased an equal portion of the same interest, from Joseph Williams, not a great while before; and that to hold him to the enhanced price, while his claim of exemption should be disregarded, would be irreconcileable as well with the principle of equity, as with the positive terms of his contract. The Court is further of opinion that, while the sum agreed to be given for this property, as well as the time and manner of payment, is fixed by the contract; and while the Appellant stands exonerated from personal responsibility, as aforesaid, the property subjected to the lien, in lieu thereof, is to be considered as a pledge; as liable to raise, by sale, all the sum due, or so much thereof, as it may be adequate to produce; and that the balance thereof, if any, should enure to the benefit of the Appellant.
While this principle is admitted, it follows, that the Appellant, in the event of his inability to comply with his contract for the payment of the purchase money, may relinquish his eventual interest in the balance as aforesaid, and give up, in absolute property, to his Creditor, the whole of the pledged subject, and thereby exonerate himself from the payment of the Debt: such Creditor having no right to complain, that, instead of having a right to charge the subject, to pay his debt, that subject is given up to him in absolute property.
The Court is further of opinion that, if, (as the case is in the present instance,) the conveyance of the property pledged, or a part thereof, has not been completed in favour of the Appellant, it would be unnecessary, and improper, in the event of such surrender, to go on and perfect the same; but that, instead thereof, the contract for such conveyance should stand annulled; and that there is no necessity, in such case, to convey the property to the Appellant, merely that he might re-convey it to the Appellee; nor is there any necessity, in such case, to charge the property by the process of any Court; but, the debt being discharged by the delivery of the pledged property, it may be used, or sold, by the Creditor, at his discretion.
In ascertaining what is the true subject, oppignorated in the present instance, the Court cannot but see, that, while apt and appropriate expressions are used in the Deed to convey to the appellant, as well the personal subject, appertaining to the Furnace, as the Furnace itself, and the Land, on which it is erected, there are no words of the former character found in that part of the contract, which created the pledge; and that, taken on the contract merely, it is, at least, somewhat doubtful whether the personal subject is thereby embraced or not. Nor does the Court see that it can look into the testimony in relation to the intention of the parties, as to this particular, without infringing the settled rules for expounding contracts; nor that it ought to hold the Appellant bound by the admission, that the personal subject is embraced by the contract, contained in his letter of the 17th December 1808; as the offer therein made tended to a compromise, and was not accepted.
The Court is also of opinion that, although personal, and even transitory, and fluctuating property, may be made the subject of a lien, at the pleasure of the contracting parties, it should seem that explicit words should be used to effect such purpose; the want of which, in the case before us, is another circumstance, making it at least doubtful whether the personal subject is comprehended as a part of the pledge, or not.
While these circumstances are porne in mind by the Court, it is deemed a liberal course to allow that the personal subject is embraced by the contract in this case, as well as the real.
This construction is only admitted, because it seems just, (especially, in a case, in which a personal exemption has been stipulated,) that the property purchased should be considered liable for the debt; and because the parties themselves seem, in several instances, to have expounded the contract in this sense. But this concession, in the opinion of the Court, goes far enough. We ought not to go further, and view a personal and perishable subject, as if it were a real one. We ought not to make the same construction in relation to a fluctuating, transitory and perishable property, as if it were permanent.
Although the terms of the contract are general, that the " property, agreed to be conveyed" to the Appellant, shall be held liable to discharge the debt, it is not to be construed so strictly, as that the personal property shall be embargoed and tied up from use; nor that, in the case before us, even the same kind and amount of property, shall be forthcoming in future, as the pledge.
In the case before us, the personal subject consisted of perishable articles, provisions, and articles of consumption, raw materials, which were to be worked up, implements necessary for the Furnace, and horses, wagons, & c. The idea, that the same identical articles were to be restored, is refuted by their nature and properties as aforesaid. Nor can we consider that the same amount is to be restored, on any other hypothesis, than that the Appellant is the insurer against the accidents to which this property is so liable. That idea is also refuted by the consideration that no stipulation to that effect is inserted; and because no inventory of the kinds and value of the property was taken. The true solution is, that, as a common fund of these articles was received by the Appellant, with the works, the fund, which he should leave of the same articles, should be restored by him, and considered as the pledge.
There was a confidence that the Appellant would not dilapidate and waste this property unnecessarily; both because it was necessary to carrying on the manufacture, which he had so much at heart, on an extended scale, and because he was under the further check, that he could not destroy the Appellee's portion of the articles, without, at the same time, destroying his own.
If, however, these checks were not sufficient, we are willing to go further, and subject the Appellant, by an issue of quantum damnificatus, to make good all the waste of the personal property pledged, which arose from his fraud, wilful default or misconduct.
Pursuing these principles, the Court is of opinion that the personal property on hand, at the time of the offer to return it as aforesaid, as well as the debts then due to the concern, should be considered, as the subject offered to be returned, (in addition to the real property,) and subject to the condition just mentioned. At that time a serious and explicit offer of this property was made, and refused by the Appellee. It was no longer incumbent on the Appellant to keep the works, or to keep the property together: and, if such property has been since destroyed, or dispersed, it is the Appellee's misfortune; but the property, that remains, is not exempted from the lien. Further than that, we cannot go, without compelling the Appellant to insure the property, after he had elected to restore it; and, as to liability for damage in the cases above mentioned, the Court supposes they have gone far enough, especially in a Court of Equity, when it is considered that he is not to be allowed for valuable improvements, which he may have (and which he alleges he has) placed upon the premises.
The Court is also of opinion, that there is nothing in the alleged objection that the Appellant had disqualified himself from delivering up the pledge in question.
As to the Mortgage to his brothers, it may not, perhaps, cover the property in question; but, if it did, that Mortgage had no existence at the time of the offer aforesaid. With respect to the alleged impediment of the lease, the objection comes with a bad grace from a plaintiff in a Court of Equity, seeking for a specific performance of a contract, and who has not performed his contract; a plaintiff, too, who, for several years, has wholly omitted to procure for the Appellant a title to the premises, or the estate contracted for. The want of this Title may have abridged the Appellant in his full use of the property, arising from the hazard of placing expensive improvements on property, from which, probably, he might be thereafter evicted. So, this want of title may have disabled the Appellant from selling the premises, (as many are willing to buy a legal, though not an equitable title,) and, by so selling, from paying the purchase money with the proceeds,
The Court is of opinion, therefore, that the Appellee has not entitled himself to make the objection in this instance: an objection, too, which, in a Court of Equity, subjects the Appellant to a heavy forfeiture. On the other hand, the Court is of opinion that the Appellant, by making the lease in question, has not disabled himself from substantially performing that condition. Had the offer of the Appellant been accepted by the Appellee, he might, for any thing appearing to the contrary, have obtained the instant possession of the property from Joseph Williams: and, if not, he could, under the terms of his lease, have obtained in a short time.
It would be highly inequitable, while the Appellee had failed, for years, to execute this contract, on his part, to compel the Appellant to occupy the premises in person, which must be the case, if he is interdicted from leasing it; nor is it to be forgotten, that this lease contains beneficial stipulations for the Appellee, in relation to the safety of the property leased.
On the whole the Court is of opinion, that the Decree be reversed with costs: and the Court, proceeding to make such Decree, as the said Superior Court ought to have rendered, it is decreed and ordered, that the Appellee may, under the direction of the Court of Chancery, have it ascertained what were the kinds, qualities and numbers of the personal property agreed to be conveyed by the contract aforesaid, and which were on hand, at the Furnace, and Belvedere Forge, on the 17th of December 1808, and that all these several articles of property shall be decreed to be delivered up to the Appellee, as his absolute property, subject to the just claims of others: that an account be taken of the sums, due to the partnerships aforesaid, on the said day, including that, alleged to be due from the Yeisers, (who for this purpose may be proceeded against in this suit: and that Prices' proportions of such sums be considered as due to, and recoverable by him: that the Appellee's one fourth of all sums of the said debts, received by the Appellant, Price, the day aforesaid, so far as they exceed payments made by him, on account of the concerns, or by any person for him, since the date aforesaid, be refunded to the Appellee by the Appellant, and he and his estate be held responsible therefor: that his one fourth of all rents, due for the premises by Joseph Williams, or others, after the date aforesaid, and now unpaid, be paid to the Appellee, and such as may have been received by the Appellant since that day be refunded by him, and he, and his estate, be also held liable therefor: that the Appellee shall have the benefit of the Covenants, on the part of Joseph Williams, contained in his lease from Cumberland D. Williams; and especially that for preserving, and restoring the personal property thereby conveyed; which the Court supposes may remedy much of the Appellee's complaint, respecting the waste and dispersion of the said property: that an issue, or issues, be directed, if required, to inquire into any losses, or damage, done to the personal fund aforesaid, through the fraud, wilful default, or misconduct of the Appellant, prior to the said 17th day of December, 1808; and that the same be also recoverable from the said Appellant, his estate, and effects; and that the Appellee be decreed to release to the Appellant the sum, or sums, due under his Contract. And the cause is remanded to the said Superior Court of Chancery, to be proceeded in, agreeably to the principles of this Decree.
PLEDGES.
I. Definition.
A. In General.
B. Distinction between Pledge and Chattel Mortgage.
C. Delivery and Possession of Property.
1. Necessity to Deliver Property to Pledgee.
2. Right of Pledgee to Retain Possession after Debt Is Barred.
3. Pledgor's Equity of Redemption.
4. Property Pledged Not General Security.
II. What Property May Be Pledged.
A. In General.
B. Choses in Action.
III. Pledgor's Authority to Pledge and Requisite Ownership.
A. In General.
B. Authority to Pledge Delegated.
1. Agents.
2. Bailees.
3. Power of Partners to Pledge.
IV. Pledgee's Duties and Rights with Respect to the Custody and Use of the Property Pledged.
A. Duty of Pledgee to Preserve Collaterals.
B. Right of Pledgee to Enforce and Control Choses in Action.
C. Power of Pledgee to Sell upon Default of Pledgor.
I. DEFINITION.
A. IN GENERAL.
A pledge or pawn, may be defined to be a deposit of personal property as security, with an implied power of sale upon default, though probably a fuller understanding may be obtained by a citation of the definitions of some eminent jurists. First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552; Gilliat v. Lynch, 2 Leigh 493, 501.
Thus, Lord Holt, who was the first to make a systematic statement of the general law of bailment, defined a pawn to be that sort of bailment " when goods or chattels are delivered to another to be a surety to him for money borrowed of him by the bailor." Sir William Jones, defined it to be " A bailment of goods by a debtor to his creditor, to be kept by him till his debt is discharged." The definition given it by Judge Story, is " A bailment of personal property as a security for some debt or engagement." First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552.
Pothier defines a pawn or pledge, to be " a contract by which a debtor gives to his creditor, a thing to be detained as security for his debt, which the creditor is bound to return when the debt is paid."
While the definitions of pawns and pledges as given by some of the writers are limited in terms to cases where a thing is given as mere security for a debt, a pawn may well be given as security for any other engagement. Surber v. McClintic, 10 W.Va. 236, 242.
Hence, every contract by which the possession of personal property is transferred as security only is to be deemed a pledge. First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552.
" Pledge" and " Pawn" Synonymous.--Thus from the foregoing definitions it will be readily observed that the two terms pledge and pawn, are synonymous.
B. DISTINCTION BETWEEN PLEDGE AND CHATTEL MORTGAGE.
In General.--A pledge differs from a mortgage of personal property in being a lien upon property, and not a legal title to it. The legal title to the property pledged remains in the pledgor, while a mortgage passes the legal title to the property itself to the mortgagee, subject to be revested in the mortgagor upon the performance by him of an express condition subsequent. First Nat. Bank v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552.
Therefore, a mortgage is a pledge and more, for it is an absolute pledge, to become an absolute interest if not redeemed at a certain time; a pledge is a deposit of personal effects, not to be taken back but on payment of a certain sum, by express stipulation, or in the course of trade, to be a lien on them. Surber v. McClintic, 10 W.Va. 236, 242.
Furthermore, in the case of a mortgage, the estate is absolute after forfeiture, and at law there is no remedy; equity, therefore, administers relief on its own principles. But, in the case of pledges, whenever the owner pays or tenders the money due, he may bring trover, or detinue for the effects deposited; and when such cases come into equity, that court must decide them as a court of law would. Gilliat v. Lynch, 2 Leigh 493, 501.
C. DELIVERY AND POSSESSION OF PROPERTY.
1. Necessity to Deliver Property to Pledgee.
In order to constitute a valid pledge there must be a delivery of the property to the pledgee. Williams v. Gillespie, 30 W.Va. 586, 5 S.E. 210; First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552.
For, an agreement to pledge personal property for the security of a debt is ineffectual to create a pledge of, or lien on the property, unless the property is put in the possession of the pledgee. Williams v. Gillespie, 30 W.Va. 586, 5 S.E. 210; First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552.
Delivery May Be Symbolical or Constructive.--While delivery and possession are essential to a pledge, the delivery may be symbolical, and the possession according to the nature of the thing.
Thus the delivery of a bill of lading is a symbolical delivery of the property represented by it. First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 553.
So the transfer for value, as collateral security, of warehouse receipts, by indorsement and delivery, or by delivery only, where such receipts are made payable to " holder," or " only upon return of this receipt," vests the legal title and possession of the property in the pledgee, and is equivalent to an actual delivery of the property. Millhiser Mfg. Co. v. Gallego Mills Co. (decided June 11, 1903), (Va.), 44 S.E. 760, 764. See also, First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552.
2. Right of Pledgee to Retain Possession after Debt is Barred.
Limitations. --The law is settled that the pledgee is entitled to retain the pledge or security in his possession against the pledgor, notwithstanding the statute of limitations might be successfully pleaded to an action on the debt for the security of which the pledge was made. Roots v. Salt Co., 27 W.Va. 483, 494; Camden v. Alkire, 24 W.Va. 674, 680.
3. Pledgor's Equity of Redemption.
In General. --Whenever the owner of the pledge tenders the amount of the debt to the pledgee, the latter is compelled to return the pledge to such owner.
Upon the refusal of the pledgee to deliver the pledged property, the owner may bring trover or detinue for the effects deposited. Gilliat v. Lynch, 2 Leigh 493, 500; Hyde v. Nick, 5 Leigh 336; Richardson v. Valley of Va. Ins. Co., 27 Gratt. 749; Alexandria, etc., R. Co. v. Burke, 22 Gratt. 254.
Right of Redemption a Personal Right.--It is, however, generally true, that if goods be pawned, without a day of redemption fixed, he who pawned, has time during his life to redeem; but, his executors cannot. For, it is a condition personal, and being generally pawned extends only to the life of him who pawned it. Chapman v. Turner, 1 Call 280, 290.
4. Property Pledged Not General Security.
Where personal property is pledged, generally, as a collateral security for a debt, or for any other specific purpose, without any agreement that it shall in any event be absolutely forfeited by the owner, no other lien can be imposed upon it for any other debt or purpose whatsoever, without an agreement to that effect, either express or implied. Gilliat v. Lynch, 2 Leigh 493, 508; Bacon v. Bacon, 94 Va. 686, 27 S.E. 576; Loyd v. Lynchburg Nat. Bk., 86 Va. 690, 694, 11 S.E. 104.
Likewise money bona fide lent to a sheriff and applied by him for his own use, prior to his receiving a writ of fieri facias against the lender, is not liable to satisfy such execution, either at law, or in equity; notwithstanding the same money was originally deposited in his hands as a pledge for certain purposes. Price v. Crump, 2 Hen. & M. 89.
II. WHAT PROPERTY MAY BE PLEDGED.
A. IN GENERAL.
Ordinarily, all classes of goods and chattels may be the subject of a contract of pledge, including not only tangible chattels but also debts, negotiable instruments, and choses in action, as well hereinafter be seen. For the different subjects of a pledge, see Williams v. Price, 5 Munf. 507; Woodson v. Woodson, Wythe 129; Bank v. Cabell, 96 Va. 552, 32 S.E. 53; Raynolds v. Carter, 12 Leigh 166, 171; Davis v. Miller, 14 Gratt. 1, 13; Donnally v. Hearndon, 41 W.Va. 519, 23 S.E. 646; Didier v. Patterson, 93 Va. 534, 25 S.E. 661.
Property Must Be Capable of Delivery.--But the property must be capable of delivery. First Nat. Bk. v. Harkness, 42 W.Va. 156, 24 S.E. 548, 552.
B. CHOSES IN ACTION.
A chose in action may be assigned as a security for an existing debt, and also for future advances. Didier v. Patterson, 93 Va. 534, 25 S.E. 661. See also, Donnally v. Hearndon, 41 W.Va. 519, 23 S.E. 646.
Thus city script or orders are choses in action, which, if pledged as collateral security, must be collected by the creditor, and unless a power to sell is superadded to the agreement, whereby such chose in action is pledged as a collateral security, the creditor has no right to sell such chose in action, and he cannot come into a court of equity to ask the sale thereof. Whitteker v. Charleston Gas Co., 16 W.Va. 717. See also, Donnally v. Hearndon, 41 W.Va. 519, 23 S.E. 646.
III. PLEDGOR'S AUTHORITY TO PLEDGE AND REQUISITE OWNERSHIP.
A. IN GENERAL.
A person who transfers personal property in pledge as security for a debt must own it or have authority to pledge it.
For mere possession of a chattel, though indication of title, is not title; and one taking a pledge of it is bound to satisfy himself that the pledgor is the owner; and, if he relies solely upon the pledgor's possession, he takes the risk of having to surrender the property to the true owner. If one holding goods for safe keeping pledges them with intent to convert the proceeds to his own use, he, in effect, commits a larceny, and the pledgee acquires no title as against the owner, although he deals with the pledgor in good faith. Patton v. Joliff, 44 W.Va. 88, 28 S.E. 740.
Pledge of Forged Collaterals Vests No Right in Pledgee to Genuine.--And, it has been held, that as against the pledgee, the title of the payee of a note, loaned to another to enable him to secure a loan and which after serving that purpose was returned, is not affected by the fact that in the renewal of such loan a forged copy is substituted for the original. Bank v. Cabell, 96 Va. 552, 32 S.E. 53.
B. AUTHORITY TO PLEDGE DELEGATED.
1. Agents.
Agent Acting in Excess of Authority.--A factor cannot pledge or deliver the property of his principal for the satisfaction of his own debt, since the legal title to the property is in the principal, and not in the factor, the latter having a special authority to sell the property for the use of the principal only. The case of an executor differs from this. The legal title is in him, and his disposition of the property, for any purpose, passes the legal title effectually. Yet the executor holds the legal title in trust for creditors and legatees, whether specific, pecuniary or residuary. As to them, he is guilty of a breach of trust, when he disposes of the testator's property in any way, for his own use. And, as in all other cases, where a trustee has parted with the legal title, in breach of his trust, the cestui que trusts may pursue the property into the hands of a purchaser, with notice of the trust and of the breach of trust; so they may, in the case of an improper sale, or other improper disposition of the testator's assets, when the purchaser has notice of the existence and violation of the trust. For, in that case, the purchaser is guilty of a fraud, and on that account is held to be himself a trustee. But, in such case, as in all other cases, a purchaser of the legal title, without notice of the trust and of the breach of trust, being guilty of no fraud, nor of such gross negligence as amounts to evidence of fraud, may protect himself by the plea of purchase without notice; and a mortgagee for a precedent debt, is a purchaser to all intents and purposes. Dodson v. Simpson, 2 Rand. 294, 297.
2. Bailees.
A consignee of goods has no right to pawn them, as a security for his own debt, and if he does, the pawnee derives no right thereto; for no man can transfer a right which he does not possess to another; and, besides, it is a violation of that confidence reposed in the consignee, and it is of the first importance to that intercourse which should be kept up among men, that such confidence should not be abused. Skinner & Co. v. Dodge, 4 Hen. & M. 432.
Therefore, a bailee pledging another's property without authority is guilty of conversion, and both bailee and pledgee are liable in trover, whether the pledgee knew the real state of the title or not. Patton v. Joliff, 44 W.Va. 88, 28 S.E. 740.
But where the property of one is pledged, without his knowledge or consent, to secure the debt of another, and upon being informed of the transaction the owner agrees that, if the pledgee will forbear the debt for a time, the property may remain in pledge to secure the debt, there is a valid pledge. The forbearance is a sufficient consideration for such an agreement, and a redelivery of possession is not necessary. Patton v. Joliff, 44 W.Va. 88, 28 S.E. 740.
3. Power of Partners to Pledge.
In General. --One partner cannot pledge or sell the partnership property in payment of his individual debts, without the consent of his copartner; and the title is not divested by such pledge or sale in favor of a separate creditor, even though the latter may not know it was partnership property. Liberty Sav. Bk. v. Campbell, 75 Va. 534, 539.
After Dissolution of Partnership. --After the dissolution of the partnership none of the partners, without the consent of the others, can buy, sell, or pledge goods or other property on account of the partnership.
Nor can one of them, without such consent, indorse or transfer the partnership securities to third persons, even to secure a debt due from the partnership, nor in any other way make his acts the acts of the partnership without special authority from his copartners. Roots v. Salt Co., 27 W.Va. 483.
During the Existence of Partnership.--But, on the other hand, it is equally clear, that during the active existence of the partnership and before its dissolution, any member of the partnership is authorized to do any act affecting the business of the partnership or its property, which could be done by all the partners, because he is the legally authorized agent of the partnership for the conduct of its business. One partner, therefore, before the dissolution, could legally pledge the securities of the partnership for the loan of money from a third person or for the security of a debt due from it, to a third person. But it is doubtful whether a partner could, in any case, pledge the securities of one partnership in which he is interested, to another partnership of which he is also a partner and in which he has a large interest. Roots v. Salt Co., 27 W.Va. 483; Williams v. Gillespie, 30 W.Va. 586, 5 S.E. 210.
IV. PLEDGEE'S DUTIES AND RIGHTS WITH RESPECT TO THE CUSTODY AND USE OF THE PROPERTY PLEDGED.
A. DUTY OF PLEDGEE TO PRESERVE COLLATERALS.
Whenever property is pledged it is incumbent upon the pledgee to exercise ordinary care for its preservation and safe keeping. See Raynolds v. Carter, 12 Leigh 166.
Therefore where a party who is indebted executes his notes to his creditor, payable at different times, and subsequently assigns and transfers non-negotiable notes as collateral security for the payment of his notes held by said creditor, it is the duty of such creditor to use reasonable care and diligence to make said notes, received as collateral security, available, and if, by negligence or laches on his part, said collaterals or any of them, are lost, the loss should be borne by such creditor. Rumsey v. Laidley, 34 W.Va. 721, 12 S.E. 866; First Nat. Bk. of Wellsburg v. Kimberland, 16 W.Va. 555, 570; Whitteker v. Charleston Gas Co., 16 W.Va. 717, 721. See also, Fant v. Miller, 17 Gratt. 47.
Where Pledge Lost without Fault of Pledgee, He Still Has Remedy for Debt.--But in case a pledge be lost without the fault of the pledgee, he still had his remedy for the money against his pledgor, for a pledge is given to secure repayment and not as a substitute for it. Raynolds v. Carter, 12 Leigh 166, 170.
Duties with Regard to Perishable Collaterals.--So if a man lend perishable goods as a pledge, and they decay, the pawnee may have debt for his money, for the duty continues. The authorities are all decisive of this case, unless it can be shown to have been the intention of the parties that the lender should look only to the pledge, and that in no event was he to have a charge upon the person. Raynolds v. Carter, 12 Leigh 166, 171.
If personal property, consisting of perishable articles, provisions, raw materials for manufacture, implements necessary for a furnace, etc., be pledged, together with the furnace and land, for payment of the purchase money; the lien is not to be construed so strictly as to tie up the property from use; nor that even the same kind and amount of property shall be forthcoming in future; without a stipulation to that effect; but the purchaser is bound to make good only such waste thereof, as shall have arisen from his fraud, wilful default or misconduct, and to give up what remains on hand when he surrenders the property in satisfaction of the debt. Williams v. Price, 5 Munf. 507, 508.
Pledgee Should Account for Increase of Pledge.--And a creditor with whom a pawn yielding profit is deposited, should account for such profit, though he has not undertaken to do so. Woodson v. Woodson, Wythe 129.
B. RIGHT OF PLEDGEE TO ENFORCE AND CONTROL CHOSES IN ACTION.
It is well settled, that where a chose in action, such as a bond, note, or accepted order on a third person, is transferred and delivered to a creditor as collateral security for a debt, it is the right of the creditor to sue upon such chose in action at law, and, if necessary, to use the name of the legal owner of such chose in action. Whitteker v. Charleston Gas Co., 16 W.Va. 717; First Nat. Bk. of Wellsburg v. Kimberland, 16 W.Va. 555, 594; Lazier v. Nevin, 3 W.Va. 622; Fant v. Miller, 17 Gratt. 47; Davis v. Miller, 14 Gratt. 1.
Priority of Pledgee's Lien.--And, if a stockholder of one bank, by written assignment, transfers his stock to another bank as collateral security for his indebtedness or liability, of any or every kind, present or future; giving such bank the right at any time of collection, to determine to which debt or liability it will apply the same. Such right of application of the collections on or proceeds of the sale of such pledge or collateral, exercised in good faith, cannot be interfered with or contested by the creditors or the debtor to the detriment of the pledgee. Donnally v. Hearndon, 41 W.Va. 519, 23 S.E. 646.
C. POWER OF PLEDGEE TO SELL UPON DEFAULT OF PLEDGOR.
Pledgee Has Power to Sell upon Default. --Upon default in payment of the debt, for which collateral is pledged, such collateral may be sold by the pledgee to satisfy his lien. Richardson v. Virginia Valley Ins. Co., 27 Gratt. 749; Alexandria, etc., R. R. Co. v. Burke, 22 Gratt. 254, 262.
Choses in Action Cannot Be Sold.--In ordinary cases no special agreement is necessary to confer upon the pledgee power to sell the property pledged. The power is, ordinarily, incident to the pledge. There are, however, exceptions to the general rule, as in the case of a pledge of commercial paper. Thus, the pledge of such as security for the loan of money does not, in the absence of a special power for that purpose, authorize the pledgee upon the nonpayment of the debt, and upon notice to the pledgor, to sell the securities pledged either at public or private sale; but he is bound to hold and to collect the same as they become due, and apply the money to the payment of the loan. Alexandria, etc., R. Co. v. Burke, 22 Gratt. 254, 262; Whitteker v. Charleston Gas Co., 16 W.Va. 717, 722.
Optional Whether Sale by Court or Private.--With regard to the right of a pawnee or pledgee to make the pawn or pledge available, after the debt is due, he has the election of two remedies. He may file a bill in chancery, and have a judicial sale under a regular decree of foreclosure; and this has frequently been done in the case of stock, bonds, plate and other chattels, pawned for the payment of the debt. But the pawnee is not now bound to wait for a sale under a decree of foreclosure, as he is in the case of a mortgage of land (though Lord Chancellor Harcourt once held otherwise), and he may sell without judicial process, upon giving reasonable notice to the debtor to redeem. Alexandria, etc., R. Co. v. Burke, 22 Gratt. 254.
Notice of Sale Indispensable and Should Be in Writing.--Before a sale can be made by a pledgee, without judicial proceedings, reasonable notice must be given to the debtor to redeem, also of the time and place and manner of sale. Such notice is indispensable and should more properly be in writing, though this is not necessary, provided actual notice on the part of the debtor is proved. Alexandria, etc., R. Co. v. Burke, 22 Gratt. 254, 263.
CONCUR
JUDGE CABELL.
On the 13th of March, 1807, James Price and C. D. Williams, entered into articles of agreement, by which Price agreed to sell and convey to C. D. Williams, an undivided fourth part of Mount Torry Furnace, in the County of Augusta, (in which the parties had long been partners,) together with one fourth part of the lands and premises appertaining thereto, and of all the tools, utensils and implements used therewith or thereon; and also of all the horses, oxen, teams, wagons, carriages, gears, wood, coal, unwrought or wrought iron, indented servants and stock of every nature, and all and every other matter and thing appertaining either to the aforesaid Furnace, or to a certain Forge in the said County of Augusta, and lately held in copartnership by and between the said parties, and also all the right, interest and benefit of him the said Price, in and to all debts or sums of money owing to or payable to all or any of the several partners in the said iron works; as all contracts, agreements and engagements made, contracted or entered into, by and between the said several partnerships or either of them, and any other person or persons, whereby the said several partnership concerns or either of them, can or may be benefitted.
In consideration of the foregoing covenants on the part of Price, C. D. Williams bound himself to pay the sum of $ 23,000 in the manner set forth in the said articles of agreement; to pay and discharge all the debts due from the said Price and Williams, as late partners in the Forge aforesaid, and to pay Price's proportion of all debts due from the Furnace partnership. There then follows an article, which provides that Price shall cause a title to one fourth of the Furnace lands and premises to be made to Williams, who was thereupon to convey the same, in trust, for the purpose of securing the payment aforesaid, and generally, the true performance of the agreement on the part of Williams: and the articles of agreement conclude with the following stipulation: " that the said property, so as aforesaid to be conveyed to the said C. D. Williams, shall be the only security for the payments aforesaid, and performance of this agreement on his part; it being hereby expressly agreed and understood by and between the parties to these presents that neither the said C. D. Williams, his heirs, executors, administrators, estate or effects shall, at any time hereafter, be answerable, or in any manner liable for the payment aforesaid, for the performance of any covenant or agreement in these presents contained, farther than the said property, so as aforesaid to be conveyed to him, will extend to discharge and satisfy the same."
The principal questions, made in this case, arise on the construction of the clause last recited.
Written contracts would be worse than useless, if the parties, after having said in writing, that they mean one thing, should be permitted to prove by witnesses, that they mean another. The parol testimony in this case, in relation to the intention, is, therefore, utterly inadmissible. And even if it were permitted to adduce such testimony to explain, in a doubtful case, the intention of the parties, it would be unnecessary in the present instance. For, if language has power to exhibit the intention so palpably, as to exclude all possible doubt, that power has been effectually exercised in the case before us. Williams agreed to purchase the property, and to pay a stipulated price for it. But it was not the intention of either party that he should be liable in his person or estate, for that stipulated price. Both parties intended that the property to be conveyed should be the only security for the money agreed to be paid for it; that the property to be conveyed, and not Williams, should be liable for the purchase money. I cannot doubt that it was competent to Williams to insist on such a stipulation, and now to avail himself of the benefit of it. The prudence of the stipulation is proved by the result. I have no doubt that the clause, which thus substitutes a lien on the property, in lieu of personal responsibility, extends to the personal as well as real fund; not merely because it is just that it should be so, but because I think it is expressly provided for. The terms " the said property so as aforesaid to be conveyed to the said C. D. Williams," have reference to the preceding part of the covenant, which describes the property to be conveyed, and thus embrace the whole property both real and personal, in possession and in action, as fully as if the same had been again particularly repeated.
I concur in the opinion that the property, thus subjected to the lien, is to be regarded as a pledge. Such of it as was in possession, passed, at once, by consent of both parties, into the hands of Williams, who also had the power of collecting the choses in action, for which purpose, he might, if necessary, have used the name of Price. Williams, then, is to be considered as a pledge holder for a debt due from himself, and for which he had stipulated that there should be no other security, but the pledged fund. As such, I consider that he had a right to surrender the pledged fund to his creditor; and if he had surrendered the whole, he would have been totally exonerated, both as a pledge holder and as a debtor. If he would neither surrender the pledge fund, nor pay the purchase money, a Court of Chancery would subject that fund, or so much thereof as might be necessary, to the payment of the purchase money. But suppose, (as is alleged in the case before us) only a part of the pledged fund was offered to be surrendered; and that the residue has been wasted, used or disposed of by Williams, so that a Court of Chancery can no longer act directly upon it. Is Williams to be discharged of all obligation in relation to that residue? or will he be permitted, (in the language ascribed to him by one of the witnesses) " to do no more than it may please him to do?" I am clearly of opinion that he is not thus discharged. Although the clause in the Covenant so often referred to, will exonerate him from paying, as a purchaser, the price stipulated to be given for the property, he will, nevertheless, be accountable, as a pledge holder for the real value of the property so wasted, used or disposed of, except, so far as it may have been applied to the objects of the pledge. He has covenanted that the property, which he received, shall be Price's security, and his only security. Shall he be permitted to impair that security by fraud, negligence, misconduct, waste or an application of it to his own uses, and not be compelled to make compensation? I understand it to be admitted, that if he waste the fund, or if loss happen to it through his wilful default or misconduct, he will be personally responsible therefor. If he has used, or disposed of the fund to his own use, so that it has not been applied, or is not now ready to be applied to the object of the pledge, viz. the payment of the purchase money, I consider him equally responsible. But a difference is sought to be made in this case, because it is said that the parties intended that the property should be used. I admit that was the intention of the parties; and farther, that they must have expected that much of the property, from its very nature, would be consumed by that use; and, in this last respect, it differs from an ordinary pledge. This however, only justifies that, which would, otherwise, be an illegal violation of trust. But, although it gives him the right to use the property, it does not exempt him from the obligation of accounting for the value of that, which has been used, and not applied as aforesaid. Nor is the case varied by the property having been used or consumed in the operations of the furnace; for that was for Williams's and not Price's benefit. These, in my opinion, are the results, not only of the general principles of law and equity, but of the particular provisions of the last clause in the covenant, so much relied on by Williams; for its language is that he is not to be personally liable for the payments aforesaid, " farther than the said property, so as aforesaid to be conveyed to him, will extend to discharge and satisfy the same." Had it not been for this stipulation, he would have been personally liable for the whole of the agreed price. As it is, he is exempted from all personal responsibility beyond the value of the property; of course, he remains liable to the extent of that value. However, as he held it only as a pledge, he will be discharged for so much, as he may have forthcoming, or may have applied to the objects of the pledge.
This distinction, between Williams's liability as a purchaser, and his liability as a pledge holder, is not a distinction without a difference. The last clause in the covenant destroyed the former, but established and perpetuated the latter. The former extended to the whole price stipulated, although it might have been a thousand times greater, than the worth of the property; the latter is restricted to the property itself, or to its real value only.
The result of these principles is, that Williams had a right to surrender the whole or any part of the pledged fund. If he surrenders or offers to surrender a part only of the fund, he is nevertheless liable for any waste, or injury, done to the part, thus surrendered, or offered to be surrendered, by his gross misconduct, or wilful default; and he is accountable for the balance not thus surrendered, or offered, including such debts as may have been lost by his negligence. But, against these charges, he should have credit for all payments, he may have made towards the purchase money, (including Price's proportion of the debts, he may have paid) and also such losses, as may have happened to the fund by the act of God.
I concur in the opinion, that the time, when Price received Williams's letter of December, 1808, is the proper period, when the offer to surrender was made, and should have been accepted; and I am farther of opinion that Williams is not liable for subsequent waste or dilapidation; this exemption, however, is not to extend to any portion of the fund, which may have been since applied to his own use. I consider Price to be entitled to the debt due from the Yeisers, and to his portion of all the debts due at the time of the offer to surrender, but liable to Williams for any advances, which Williams may have since made on his account. I concur in the opinion that there is no longer a necessity for selling the pledged fund, but that Price is reinstated in all his rights of property therein.
I am therefore of opinion that the Decree be reversed; and the cause remanded, to be finally proceeded in according to these principles.
[*]For monographic note on Pledges, see end of case.