VETTERLEIN 'V. BAnKER.
(Of,rcuit Court, B. D. New York. Harch 21,1891.)
VAOA'1'ING DEOREE-EvIDENOB-RBS AlnUDlOATA.
the court which rendered it, where it appears that the collateral decree was void for want o.f jUrisdiction of the court, and was vacated tor that reason. The vacating of tbe decree did not detract from its original inoperativeness as res adJudicata, and therefore is not new matter arising since the decree now to be annulled, within the rules that apply to bills of review.
OF TRUSTBB. " . .
A bill of review to annul a decree cannot be maintained on the ground that a decree in flo collateral suit between the parties, which was introduced as res ad:1udft. cata upon some of the issues in the cause, has, since the decree, been set aside by
A bill to annul a decree for fraud cannot be maintained upon the theory that the defendants, who were trustees, were derelict their duty to their cestuis que trustent in not availing themselves ot defenses which they might have presented, where it does not appear that the complainant in the suit was cognizant ot any misconduct on the plutof the trustees, and where they were the proper parties to represent the beneficiaries aud litigate the cause for them. Under such circumstances the verse party cannot be deprived of the benefit of the adjudication which he has obtained.
In Equity. Roger M. Sherman, for plaintiffs. John ProctOr Clarke, for defendant. W AI,LACE,' J. This if! a bill to reverse and set aside a decree of this court, (16 Fed. Rep. 759,) in affirmance of a decree of the district court (Id. 218) adjudging that certain insurance policies, the property of the bankrupt firm composed of Theodore H. Vetterlein and Bernhard. E. Vetterlein, and assigned to trustees for the benefit of the wife and children of Theodore H. Vetterlein, were so assigned in fraud of the rights of the assignee in bankruptcy of the Vetterleins. The present complainants are the wife and children of Theodore H. Vetterlein, the beheficiaries named in the assignment of the policies. The defendants lire t4e assignors in bankruptcy, who are the successors of the complainant in the former suit, and the defendants in that suit. The bill proceeds upon three grounds: (1) That a decree in a. collateral suit between the parties to the original suit, which was put in evidenco as res adjudicata. upon the issueoUraud, has since been aimulled by the court which reh:. dared. it as void for want of juriediction; (2) that the use of the coIlat:. eral decree as evidence in the original suit was in fraud of an agreement made between the parties to that suit;· and (3) that the defendants in the original suit, who were trustees for the present complainants, violated their duty to their cestuis que trustent by omitting to avail selves of defenses which existed, and setting up defenses in hostility to their trust,-of all which the complainant in the original suit was aware at the time. The bill has been discussed by counsel as though it were . a bill of review. So far as it proceeds upon the theory that the vacating- of the collateral decree is new matter, which has arisen since the original decree, it would state facts appropriate for such a bill, if it did not appear that the collateral decree was void for want of jurisdiction of
the court,-a fact which is not new matter, which presumably was known when the deCl\ee,wll8' offered in evidence, and which, if it had been urged at the time, would have destroyed the effect of the decree as evidence. So .far 'as the bill proceeds upon the theory that the former defendants, trustees of the present complainants, were derelict in their dutyjp. ',the conliuctof the auit, 'to thekQ.9wledgeof the former complainant, it is essentially one' to impeach adecree for fraud, and not a bill of review. As the biUhas not been to the cause will be dispOseaofon the proofs as though the averments,if established by thepi'oofs,. would to relief in any aspect of the , ',. " . ' ,."..,'. fa cts. . The, bill cannot be maintained on the first two grounds, because the pruofs do ,not show that t1:l.e reception of the collateral decree in evidence , had any material influanceupon' .the result. The recbrcl of the proofs in the original suit has not been introduced, consequently it cannot be ascertained upon what evidence the court decreed. .It would seem, however, from. the opinion of the judge that there was evidence, irrespective of the collateral decree, to establish all the material facts in controversy upon which the decree proceeded, and that the collateral decree was not regarded at all in reaching the decisiQIl. The bill cannot be maintained upon the third grQund, because, irrespective of other consideratiQns, it dQes not appear that the complainant in the !original suit was oogni,zant of any misconduct Qf the trustees in the defense of the suit. He made the trustees,adverse parties, because they were the prQperpersons to represent the beneficiaries. He is en· titled to the benefit of the adjudicatiQn he has obtained by his diligence, and cannot.be deprived of it,because those who were duly authorized to represent the beneficiaries were negligent or faithless. ' If the trustees were dereljot, the cestuiBque tt"l.l.$tent must look to them for their remedy. It appear,B,however,.that the trustees insisted that the beneficiaries were necessary parties to the suit, and that they should be brQught in. This contention was overruled, and the supreme court: held that it was properlyoverruled. .Vetwlein v. BarneB, 124 U. S. 169,8 Sup. Ct. Rep. 441. The cireumstancethatthe trustees endeavored to have the beneficiaries brought in as parties ja,quite cogent. to show that they intended to protect the rights, of the ·beneficiaries..From all that'now appears, there is 'that the trustees defended the suit to the best of little room· their ability. is dismissed, with, costs.
VAN VLEET SLEDGE
et ale v.
fl. VAN, VLEET.
(O£rcuit OO'Ull'tt W. D. Tenne8see. . August 9,
1. NEGOTIABLE INSTRUMENTS-INDORSEMENT-EVIDENCE. The testimony of a witness all to statements of the indorsers of a note in regard to tbe agreement under which the indorsement was made is inadmissible as hearsay. B. all CONTRACT-EvIDENCE; Parol evidence is inadiIiissible to vary or explaiu an unconditlonallndorsement of notes, but is competent for the purpose of reforming the contract of indorsement. S. .SAJ,[...ENTRY ON Booxs 011' ACOOUNT. An entl] on the books of the indo"rsers, charging the notes to the indorsees, and reciting, ,All said notes transferred to them in' part ,payment of their account, and indorsed by us, waiving n is not ambiguous, and the person who made tbe entry cannot construe it, or testify as to what was meant by the word "payment. .. " SAM»-REF.ORMATION 01' CONTRAdTS. A written'contract will not be reformed unless a materlalmistake is shown by proofs .that are fUll, clear, and decisive, free from doubt and uncertainty, and such as to entirely satisfy the conscience of the court. ' 5. SAME-LACllES. Notes :were indorsed and transferred in payment of an indebtedness, and at the same time an entry was made by the indorsers' book-keeper intbeir books to the ef· feet that tbe indorsement was unconditional. Afterwards the indorsers went into voluntary liquidation, with. complainants' testator as liquidating partner, and he had charge of the books until his death, four years after which, aUd nine years after the indorsement! complainants sought to reform the contract of indorsement by making it conditlOnal. Held, that they were estopped on the ground of laches. 6. SAlIrn,,-RElIORJUTION OF TIlE Boox-ENTRY. The entry in the indorsers' hoo:lts, claimed by complainants to have,been a written memorandum 'of a verbal in regard to the indorsement. could not be refonned to show that the indorsement,was oondi'tional, where, it was, without mistake, made to appear on the notes as unconditiol).al j since the effect woald be to put in writing a verbal understanding, to vary the written contract. '1. SAME- PAROL EVIDENCE TO' VARY WRITTEN CONTRAOT-RULE 011 FEDERAL CoURTS. The federal court is not bound by the decisions of the state courtof the state over wbich it bas, jur,isdiction, allowing a parol agreement to limit the effect of a written contract, tiutwill follow the contrary rule, as established in the federal courts. 8,' INTEREST-RECOVERY OF USURIOUS INTEREST PAID. Usurious interest alleged to have been received from a firm by one of the part,. ners cannot be recovered from 4is representative by the representatives of the other partners, where it is neither alleged nor shown tbat the lattel' did not receive like interest. II. SAME-LACHES. , A demand for fluch interest will be repelled on the ground of lacbes, where it is made 10 years after the a1fairs of the partnership have been amicably settled, and the accounts of the several partners, as between themselves"sljotisfactorily adjusted 10. INTEREST-STATEMENT OF ACCOUNT-CONVENTIONAL INTEREST. . ,Where a statement of account is furnished by the debtor, charging himself witb , interest at the conventional rate, he thereby con,trQllts to pay that rate, and cannot, after paying the, amount, recover the interest on the ground that it was greater than the legal rate. ' . 11. SAME-USURY. The statute, of Mississippi, making the legal rate of inter,est 6 per cent., and providing that" contracts may be made in writing" for tbe payment of 10 per cent., only prevents the recovery of more than 6 pel' cent, unless the'contract is in and does not give the right to recover back more than 6 per cel).t. VOluntarily paid under a verbal agreement. 12. PRACTICE IN FEDERAL OounTs-LACHES. The .1ed$'8l courts sitting in equity will decline relief :where complaillant has been of laches, though his claim may not be barred. by the lItatute of limitations of the state. '