FEDERAl. REPORTER,· vol.
(ot.rcuU COUrt, S. D. Iowa;O. D. November 18, 1891.1 .
JUR1SDIOTION.,..BILL TO CANCEL JUDGMENT IN STATB COURT.
When the requisite jurisdictional amount Is involved\.and the citizenship of the parties is diverlle, a federal oourt has power to grant reuef against a judgment obtained in a state oourt by means of fraud.
A bill tor relief against a judgment at law alleged that oomplalnant and another were sued for ciamages for a joint assault and battery; that cOtnplainant's codefendant therein paid the plaintiff $100 in full settlement of the damages, and that. 'b.vagreement between the latter two this settlement wail kept secret from complainant. and the suit prosecuted· against him for their joint benefit; thatjudgmant was obtained for $4,000, and partly ellforced by execution sales of complainant'sllmds; that complainant, having thereafter discovered the fraud, applied for a new trial, which was dellied; and that be is without remedy in that oourt. Held, thattbe bill stated a ground for equitable relief against the judgment and sales.
In Equity. Snit by ·John L. Young against P. Sigler to set aside a judgment at law on the ground of fraud in procuring it. On demurrer to bill. Demurrer overruled. Cole, Me Vey &: Cheshire andT. H. Grmt, for complainant. Kauffman &: Guernsey and Harvey &: Parrish, for defendant. Belore SHIRAS and WOOLSoN,JJ. . SHIRAS, J. It is averred in the bill herein filed that on the 19th day of March, 1885, one William: Lee brought an action in the circuit court of Decatur county, Iowa, against Lyman P. Sigler, the defendant herein, and John :Lo' Young, the- now complainant, to recover damages in the sum of 810,000 tOr a joint assault alleged to have been committed upon the person of said Lee by said Sigler and Young; that on the 12th day of October, 1886, while said action was pending and yet untried, the said Sigler and, said Lee entered into an arrangement whereby it was agreed that said Sigler should pay to said Lee the sum of $100 in full satislaction of all damages caused to said Lee by rensonof said alleged assault, andthnt said sum was paid by said Sigler and by said Lee received in full satisfaction and accord of said cause ofaction; that it was further agreed between said Sigler and said Lee thatthefaet of such settlement, payment, and discharge of said joint cause of action should be kept concealed from said Young; thltt said action for damages shoul<1 therenlter be prosecuted against said Young for the common benefit of said Lee and Sigler. who should mutually share all the fruits and bp,nefits attainable therein; that complainant was kept in entire ignorance of these facts, and that in October, 1886, ,he was forced togo to trial, not knowing that the cause of action had been in fact satisfied and the case dismissed as to his co-defendant; that said Lee, with the secret and fraudulent co-operation of said Sigler, and with the peI:jury and false testimony offered by thein,obtained from ihejury a verdict for $4,000; . that in fact the said complainant was innocent of the charge laid against him, and that, if said Lee suffered any damages by reason of the alleged assault, the same were due to the acts of the said Sigler; that complain-
YOUNG fl. SIGLER.
moving to that end, was unable to obtain a new trial in said cause, and is without remedy, according to the rules and practice of the court at law in whiohthisjudgmetlt wItS renderedj that, suance of said fraudulent agteement, the said Lee 'assigned said ment, in January, 1888, to one C. W. Hoffman,who in turn, without any consideration paid to him, assigned said judgment to said Siglerj ,that, said :::ligler caused execution, from time to time, to be issued on said judgment, and to be levied on the real and personal property of eornplainantj that by means of sucH levies and sales thereunder and the assignment of the certificates of sale the said Sigler has caused to be conveyed, to himself two lots owned, by complainant in the town Qf Grand River, Decatur county, ,two lots in the town ofLeon, and two hundred acres ofland in said Decatur county, the said property beiog bought in ,for sulw! far, less thaJithefairvaluethereof, and that there is still left due or. thtH'ecordon, said judgment the sum 0($2,69,9.30; that, shortly eaid fraudulent judgment against him, complain.;;' after the ant removed to the stllteof Colorado, and was, kept in ignorance of the levies made upon his property and the sales made ,thereof;, and that he did not obtain kllGnvledgeof the settlement and satisfaction of said claim ,sued Oll and of th"fraudulent combination between Lee and Sigler until in November. 1890., TQeprayeds that the judgment be set aside and canceledjthat the sales of property made on the e;x:eclltiona issued there,on,be'setl1sidej that tpedefendant be required to account for the moneys realized from complainant's property, and for other adequl\terelief.T() this bill the defendant demurs, the first ground being that thjs court has ;not jn:risdiction to entertain a bill attacking 8 judgnIentrendered ,by a ,state court. Whell the proceeding is merely the equivalent of a D)otiolil fOIl new trial or for a review of alleged errors committed on the triaJ;or ,forrelier against some mformality or irregularity in the prQceedings tl;1I!, !ltate court, it is settled ,that the applicationc&nnotblll made to. the federal court;, but when the, proceeding is to obtain: relief by setting aside ,a judgment. for fraud in the obtaining Qourt may take jurisdiction if the citi:zenahip of the litigants il' amount involved is sufficient. Barrowv. H'U,ni,on" 99 U.,S.80j,JohnsO'nv. Waters, 111 U. 8.640,4 S1,1p.Ct. Rep. 619. In this case complainant is a citizen of Colorado, the defendant of JQwa, the ,amount or value at issue exceeds $2,000, and the proceeding, in equity to! Bet aside the judgment for fraud, and hence the court has judsdiction of the cause. . Thatco.lnts of eq1,1ity :will grant relief against judgments is not i qlle80tioned;the point in dispute being in what the [rand must consist, in order to Justify thesettillg aside the judgment at law. In v. ¥odgson,7 Cranch, 332, Chief ,Justice MARSH4LL gave the rule8s follows: '.. wttb'out attempting to draw any precise Une to which courts of equity wiUadvance andwhicb they cannot pas8 itirestraining partie8 fromsvllilillg themseJves of jndgmentsobtained at law, it may be safely said that: any fact whic1lclearly proves, it to, be against qoDljQhlDett to a j u,dgQlent,lJnd
of which the injured 'party cOllld not have availed himself at law, or of which be might have availed himself at law, butwHs prevented by fraud or accident, unmixed with anyfQ.ult or negligence in bim,self or his agents, will of chancery/' justify an application to a In Black on Judgments, 369, the rule is stated in the following terms: "Where a party, having It good defense to an action at law, is pr6\'ented, by the fraud or' fraudulent representations of the plaintiff or his attorney, ,from setting up that defense, and a jUdgment is obtained against him without any, negligence or fault on his part, it is a proper case in eqQity for relief against the judgment." See,also, Hendrickson v. Hinckley, 17 How. 443; Embry v. Palmer, 107 U. S.St 2 Sup. Ct. Rep.25j Phillipa v. Negley, 117 U. S. 665,6 Sup. Ct.' Rep. 901. ' ,In U. S. v. Tlwockmorton. 98 U. S. 61, the distinctionexiiting betweeti fl'aud inhering in the very matter thai was heard and determined by the court rendering the judgr:nent subjected to 'attack and fraud extrinsic orcoHateral thereto is pointed out. In the former class of cases the existence of the fraud is the matter which the cotirt was called upon, or might have been called upon, to hear and determine in the trial of the issue before· it, and the judgment of thatclmtt upon this issue is final and concluSive. ,When, however, the fraUd complained of was not in issue before the trial courttbut is extrinsic or collateral to the issues haard,-as, for instance, if the defendant, by some fraud practiced by the opposing party, is prevented from making a defense open to him, or is fraudulently misled as to the existence of material facts, and thus in fact has been prevented from fully exhibiting his case,-in such and similar cases a court' of equity may grant relief. For. illustration, suppose two persons sign a promissory note as makers, A.being the real debtor and B. a surety in fact. The note not being paid at maturity, the owner brings suit thereon against A. and B. Thereupon A., without the knowledge of B., pays the note in full, but at the same time enters into ati arrangement with the plaintiff in the suit whereby it is agreed between them that the fact of payment is to be kept concealed from B.; that judgment is to be taken for the fun amount of the note against B.,ad'dpayment enforced by execution, and the proceeds realized to be shared equally between the plaintiff and A.B., being ignorant of the fact of payment having been made in full, does riot so plead, but sets up that he had been fraudulently induced to sign the note as joint maker by misreprAsentations made by the plaintiff and A.· Upon this issue the court adjudges against him, and a judgment is rendered for the full am<lunt of the note. After the time for obtaining relief from the court at law has elapsed, B. discovers the fact that the 110te had been paid in full under the supposed circumstances, and, further, that testimony exists which, if adduced, would clearly sustain the defense that he ,had been induced to sign the note. through fraud. Under the rule announced by the supreme court in U. S. v. Throckmorton, 8upra, a court in equity would not graM relief against the judgment based upon the latter ground,. because that would, in effect, be retrying the issue in-
YOUNG V. SIGLER.
volved in the original case. But would not a court of equity grant relief upon the other ground, to-wit, that it now appeared that in fact the note had been paid, and therefore the plaintiff ought not to have further prosecuted the case, but that knowledge of this fact has been intentionally kept from B., in pursuance of a fraudulent conspiracy between A. and the plaintiff, the purpose of which was to compel B. to pay a sum not justly due, and to divide the same between the wrong-doers? Clearly it would be against good conscience to allows judgment thus obtained to be collected, and the basis for the action of the court in equity would be the fact that the two parties had fraudulently combined together to deprive E.of his property, by obtaining a judgment upon a note which they both knew was already paid in full. The bill now under oonsiderationavers that the claim sued on by Lee was paid and satisfied in full before the case came to trial, and that Lee and Sigler thereupon entered into the fraudulent combination described, for the purpose of obtaining a judgment against Young upon a claim al.. ready paid and discharged. Counsel for defendant argue that the payment of a small sum like 8100 by a joint wrong-doer for his own release should not in equity be deemed to work the release of the other wrongdoers whefi,it is made clear that the actual damages are much largeJrj that fact being established by the amount of the verdict rendered againllt him by the j ,.try. How can the court of equity know what the amount of the verdict would have been had the real facts been made known, towit, that Lee had released Sigler from all claim for damages for the sUm of $100, leaving aside the question of the legal effect of such release' 8.$ a satisfaction of the entire claim? But the case does not depend upon this single point. The bill charges a fraudulent combination betwl:Jen Lee and Sigler, entered into for the purpose, not alone of getting full compensation to Lee for any damages caused him, but of giving Sigler one-half of all that could, through his aid and assistance, be collected from Young; and according to the averments of the bill, Sigler has now succeeded in having transferred to himself a large amount of property belonging to Young, the complainant. Certainly nothing is shown which would' justify a ci:>urt of eqUity in holding that Sigler ought to be allowed to retain property thus acquired. It is argued in support of th", demurrer that there was no duty or obligation resting upon Sigler to no.. tify or inform his co-defendant Mthe fact'that he had bought his peace and obtained a release from Young. The query is, what was it the duty of the plaintiff to do? If, in fact, he had, as is charged in the bill, accepted It given sum in full payment and discharge 9fhis claim for damages, so that thereby the same had been released and ended, was he acting in good or bad faith towards the court, whose aid he"was invoking, and towards the defendant, when he pressed for judgment on a claim already paid and discharged in full? According to the avero:Hmts of the bill the defendant, Sigler, by his agreement with Lee in fact became interested as plaintiff, because he was to aid in obtaining the judgment, and \'Vas to share in the benefit thereof, and is now the owner thel.'eof on the record. 'Under these circumstances, it cannot be said that he
under no obligations to make known the truth. He had entered into a combinatioDto obtain the money or property of Youpgby becoming an active party in the suit against Young, and in equity he lIlust be deemed to be a co-pJaintift' with Lee, and equally chargeable. with him with thefraud perpetrated upon the court and the defendant in that, action, when a judgment was taken fora large sum upon a claim which the plaintiffs knew had been already fully paid. If the grcivctrrten of the bill was the charge that the judgment had been obtained by perjury committed on the trial of an action at law, the objection urged ,to the failure to set forth specifically in what the perjury consisted"and by whom it was committed, would be well taken. Such does not seem to be the purpose; however, of these allegations. They are doubtless made in support of the gtmera.l allegations that in fact the complainaMdoes not now, and never did, owe any sum as damages for the alleged assault, which again is made to negative the idea that might otherwise be;urged, that complainant .ought to pay.the sum actually due 'before asking relief against the judgment in'question. Many ef the points urged in argument by counsel for 'defendant may have weight when the cause is heard upon the evidence, because the facts may then make the propositions advocated by counsel pertinent and proper to be coosidered; but as the case is now subDlitted upon demurrer it cannot be said that .ground for relief in equity against the judgment and. the eale, of property based thereon is notshQwD.. The demurrer is therefore overruled, with leave to defendant to answer the bill by Dm rule-day. WOOI..SOB, J. I concur in the foregoing opinion.
WIIITB fl. BOWER.
Coun, B. .D. G,orgta, E. D. Ootober IT, 1891.)
£JO) Ca088-BILL-AJTIBJI(ATIVB RBLIBJ'-STA'I'JII PBAG-
Equity proce.dure In the. qntted Statelcourta II not atreoted by the lawl of the Btates In whioh the courts. are held' and therefore, in a suit for IlCcounting, discovery··nd' other rellef,th& defendant oapnot obtain affirmative relief by an .. the natureo! a croBs-bill, .. drawn in accordance with the state practice. Unuer'8qillty rule 90, affirmative relief mUlt be Bought byor08li-bill, as in the English high coutt of chancery.
, Bill for accounting, diseovery, and other relief. On exceptions to answer. R.IR.RWharfh and JOB. A. GTonk, for complainant. Denmark, Adams &: Adams and W. M, Hammond, for respondent.
SPEER, J · The plaintiff filed hill' bill against the respondent on the 8cl of July, 1889. The prayers are for accounting,discovery, and other