17 Mass. 302

Dwight v. Pomeroy

Decided September 15, 1821

Massachusetts Supreme Judicial Court · decided 1821-09-15

This was a bill in equity, in which the plaintiff alleges that William Edwards, on the 8th of November, 1813, was indebted to him in the sum of 7500 dollars, to secure which the said W. E. had made an assignment of so much of his share of the profits of the Hampshire Leather Manufactory, as would amount to the sum of 10,000 dollars, to be paid out of the first dividends, and authorizing the plaintiff to give proper receipts, &c.;—that the said W. E., on the 25th of October, 1815, being indebted to the said Pomeroy in the sum of 18,400 dollars, to John Tappan 6400 dollars, to the said N. Edwards and R. Smith 4000 dollars, and to the said Lloyd 4000 dollars; for securing their said debts made to them respectively assignments of his claims upon the said Hampshire Leather Manufactory, and disputes having arisen between the plaintiff and the said other creditors respecting their several claims, and then priority therein, for preventing whereof, for obtaining satisfaction, and for ascertaining the amount of the said W. E.’s claim on the said manufactory, and the several proportions due to said assignees ; it was on the day last aforesaid agreed by and between the plaintiff and the said assignees, that the said W. E. should make and execute a deed of trust to the defendants Pomeroy, Lyman, and Whiting, assigning to them all his claims and demands upon the said manufactory, and also the said original contract; in trust, after paying all costs and charges, that the plaintiff should receive and be paid, absolutely and unconditionally, in full satisfaction of his claim of 7500 dollars, the sum of 5500, and no more ; the residue to be paid to the said other creditors in proportion to their respective debts, computing the said Pomeroy’s claim at 18,400 dollars; [ * 304 ] and in case said Tappan and Lloyd should * not agree to "said trust, the said residue, after payment of the charges, and also the said 5500 dollars to the plaintiff and the said other creditors the amount of their claims, to be paid to the said W. E.;—that the said Pomeroy being in urgent want of money, and it being uncertain what sum was to be received, it was agreed that the trustees might pay over lo him 9120 dollars out of the first moneys received, upon condition, however, that the plaintiff should receive 5500 dollars out of the net proceeds, and that the residue, including the said 9120 dollars, should be divided ratably among the creditors other than the plaintiff; and all former assignments were to be can-celled ; that on the same day the said W. E. made and executed a deed of assignment to the said Pomeroy, Lyman, and Whiting, upon the several trusts before mentioned ;—that the said Tappan and Lloyd not being present, it was provided that, if they neglected for twenty days after notice to accede to the said deed of trust, the sums due to them respectively should be paid to the other creditors, &e.; that the said Pomeroy, Lyman, and Whiting, re ceived said deed, and that the plaintiff, relying upon their faithful performance of the said trust, gave up to be cancelled his said first-mentioned assignment; the said Lloyd signifying his assent within the twenty days, and the said Tappan neglecting so to do; that said trustees have received divers large sums of money, amounting to 10,000 dollars, by the conveyance to them of certain tan-works in Chester and Cummington, purporting to be for the consideration of 16,111 dollars, 12 cents; that they have converted the same into money, have discharged all claims and demands of the said W. E. against the said H. L. Manufactory, and from the proceeds, after paying costs and charges, have received more than sufficient to pay the plaintiff 5500 dollars, although he is ignorant of the precise amount so received by them; that the plaintiff has often requested the said trustees to account for the said proceeds, and to pay the said sum to him ; and he is advised and humbly insists that by the * said deed of trust, he is equitably entitled [ * 305 ] to receive that sum, if so much has been by them received, &c.; and that, in case said deed, as it was executed, cannot be so construed, which he does not admit, it was not made in conformity to said agreement, but is so made by accident and mistake, and ought to be made and carried into effect according to the said agreement, and not otherwise; that the said Lyman and Whiting, combining with the said Pomeroy, N. Edwards, Smith, and Lloyd, and others unknown, to defraud the plaintiff, refuse to render him any account of what they have received, &c., and to pay over to him said sum of 5500 dollars, or any part thereof; sometimes alleging that they have not received more than 9120 dollars, and that the whole ought to be paid to said Pomeroy, and by him accounted for to the others; and at other times pretending that they are willing to do what is right, but are holden to pay the same to said Pomeroy; whereas in truth they have received more than sufficient to pay the plaintiff 5500 dollars, and he agreed to give up his whole claim to receive that sum, and the said other creditors agreed to his receiving that sum absolutely, and to run their risk, &c., all which was well known to the said W. E. and to the defendants, at the time of máking said deed of trust, and was so understood by the defendants long afterwards; who, after finding what was due., urged the plaintiff to give up part of his claim, alleging that he would receive by far the greater part of what should be realized; all which is contrary to right, equity, &c. The plaintiff, therefore, having no adequate, plain, and complete remedy at law, to the end that the defendants may make true and perfect answer, &c., and particularly that they may fully set forth the said agreement, &c., and whether it was not agreed and understood by the parties and the said trustees, that the plaintiff should give up his claim against the said W. E. and receive a certain fixed sum, and the other creditors to receive in proportion to their respective debts; and that the said Pomeroy, Lyman, * and Whiting, may set out the said deed of assign- [ * 306 ] ment, &c., and may also declare what sums they have received, &c.; also that the said trustees may declare on oath whether, in a conversation held with the plaintiff at Boston, in December, 1817, to induce him to give up a part of the said 5500 dollars, they did not state to him that, unless he did so, there would be little or nothing left for the other creditors, and may set out the import of such conversation ; that in case it should appear that the deed of trust aforesaid was not made pursuant to the said agree ment, &c., the Court here would cause such mistake to be rectified; and that in case, as he confidently trusts, it shall be found that the deed was made in conformity with the agreement, the trustees may pay over to him, &c., and that he may have such other relief as shall be agreeable to equity, &c. The defendants made several answers, from some of which it appeared that W. E., previously to making the deed of trust of the date of October 25th, 1815, mentioned in the plaintiff’s bill, had made a conveyance to the plaintiff, and another to Pomeroy, of his claims upon the Hampshire Leather Manufactory, for securing to them their respective debts; and some question existed between the two creditors, as to which had the legal priority. When, however, the said deed of trust was executed, those prior conveyances were cancelled. The defendants disclaimed all knowledge of the agreement stated by the plaintiff, that he was to be first paid 5500 dollars absolutely, and without deduction, out of the first proceeds of the property conveyed. The plaintiff, however, produced evidence tending to establish that fact, and to show that the provision was omitted by mistake of the scrivener who drew the deed. It seemed, however, that the question, whether the plaintiff should be first paid the sum above-mentioned, or the defendant Pomeroy should first receive his 9120 dollars, was not at the time of the negotiation considered as of great weight, it being then the opinion of all the parties, that the proceeds of the property conveyed in trust would greatly exceed the aggregate of the two sums. [ * 307 ] *The said deed of trust, which is set forth in the answer of one of the defendants, after reciting that the defendant Pomeroy had endorsed sundry promissory notes made by W. Edwards payable at several banks, amounting in the whole to the sum of 27,100 dollars; that the said W. E. was indebted to John Tappan in the sum of 6400 dollars, and to the defendant Lloyd in the sum of 4000 dollars; and that the defendants Edwards and Smith were sureties for the said W. E. on a note made to David Hinckley, the amount of which is not mentioned; also reciting that it was proposed, for the security of the said Pomeroy, Dwight, Tappan, N. Edwards &f Smith, and Lloyd, that an assignment of the contract of the said W. E. with the Hampshire Leather Manufactory, and all the rights, benefits, and advantages, accruing to the said W. E., under and by virtue thereof, should be made to the defendants Pomeroy, Lyman, and Whiting, for the benefit of the said Pomeroy and others, in the manner thereafter expressed and provided. After these recitals, the deed purports a conveyance to the said three defendants of all the said W. Edwards’s right and interest in the Hampshire Leather Manufactory, and in his contract with the same:—“ To have and to hold the same to them, the said Asahel, Joseph, and Spencer, the survivors or survivor of them, and their respective heirs, executors, administrators, and assigns, and to their use forever; upon the trusts nevertheless, and for the purposes hereinafter expressed ; that is to say, in trust as soon as conveniently may be, by all legal means to demand, recover, and receive of the Hampshire Leather Manufactory, all the lands, chattels, profits, benefits, and advantages, of every name and nature, which the said William may be entitled to claim under his contract with said corporation; and to pay and apply the same, after first converting the same into money in such manner as they shall think fit; First, to discharge all costs and expenses touching the recovery, disposal and distribution of said property ; and after the payment of said costs and * expenses, then, secondly, in [ * 308 ] trust, as to all the said William is entitled to claim under his said contract as his share of the profits, to pay to the said Asahei, Pomeroy, out of the first moneys received, the sum of 9120 dollars, under the terms hereinafter mentioned; and after the payments aforesaid, then in trust, thirdly, to pay to the said Josiah Dwight, absolutely, and without, condition, and in full of his share of the proceeds of this assignment, the sum of 5500 dollars; and after the payments aforesaid, then in trust, fourthly, to apply the residue of said profits to the payment of the claims of the said John Tap pan, Nathaniel Edwards, Rufus Smith, and James Lloyd, according to their ratable share thereof, estimating the claim of the said Pomeroy at the sum of 18,400 dollars; it being understood that if, upon the final settlement of the concern, it shall be found that the said Pomeroy, or the said Tappan, Edwards, Smith, or Lloyd, or either of them, shall have received from the proceeds of the assignment more than his or their ratable proportion thereof, estimating the said Pomeroy’s claim at the sum of 18,400 dollars, then the said party or parties so receiving shall refund to the said Pomeroy, Lyman, and Whiting, so much of the sum or sums so as aforesaid by him or them received, as shall leave him or them, his or their ratable proportion only of said profits. And if any balance shall be due from said corporation to said William, upon said William’s tanning account, after first paying thereout to William Hubbard of Cummington the balance due him from said William Edwards for tanning, supposed to be about the sum of 2600 dollars; then in trust, fifthly, to pay the said balance, together with the residue of said profits, after having first paid out of the said balance and residue the said sum of 5500 dollars, to said Dwight, and having also first fully satisfied the said claims of the said Pomeroy, Tappan, Edwards &/• Smith, and Lloyd, to the said William Edwards, his executors, administrators, or assigns.” The next article gives to the trustees power to ask, [ * 309 ] * demand, &c., to appoint attorneys under them, to execute discharges, &c. &c. Then provision is made for the said Tappan and Lloyd to accede to the said assignment within twenty days after notice; otherwise the sum or sums, to which they would be entitled, to be paid to the said Pomeroy, Smith Sf Edwards, Tappan, or Lloyd, as the case may be, according to their respective claims aforesaid. The concluding article provides that all former assignments, to such as accede to this assignment, shall be rendered null and void. The plaintiff made a general replication to the several answers of the defendants. Written arguments were furnished the Court by the counsel for the plaintiff, and also by the counsel for the defendant Pomeroy; a brief abstract of which is all that can here be given.

Good law ✅— No negative treatment on recordhow we know

Decided 1821-09-15

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Cited by 20 later decisions (2 by the Supreme Court) — most recently May 1976

1 federal appellate · 15 state decisions

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Parker, C J.,

¶1delivered the opinion of the Court.

¶2He first examined the deed analytically, to ascertain whether there was any latent ambiguity, which would let in parole evidence of the intention of the parties, to explain it; and he stated that the result of the deliberations of the Court upon this point was, that the terms of the deed were sufficiently clear; so that, by the general rule of evidence, it must be construed, according to the common law, by itself, without the aid of extrinsic evidence. He also stated that the Court were all of opinion, that, by the terms of the instrument, it was clear, that Mr. Pomeroy’s claim * of 9120 dollars was first to be provided for out of the [ * 325 ] fund; and that next after Mr. Dwight was to be paid 5500 dollars, without any deduction, in full of his claim. The reasoning, which had brought the Court to this conclusion, was stated at large by the chief justice; but as this part of the case related only to the construction of the contract, and had no tendency to settle any general principle of law or evidence, so much of the opinion as concerned this subject is omitted in this report.

¶3With respect to the other point, viz., whether parole evidence of an agreement of the parties, different from that which appears in the indenture, might be admitted to control the deed, the chief justice delivered himself in substance as follows: That the elaborate and able arguments of the counsel had been perused with great attention, and all the authorities cited had been examined; and that from the whole it was very clear that, neither by the principles of the common law, nor of equity as applied by courts of chancery jurisdiction in England, could the agreement said to have been made, however well it might be proved by parole testimony, be set up in contradiction to the deed.

¶4The chancery jurisdiction recently given to this Court, was not intended to impair or relax the rules of evidence, which govern contracts under seal, or written contracts; but merely to give a *262specific remedy, where none could be had by the common law, in respect to the execution of trusts, and other contracts in writing; and to enable the Court to ascertain, from the parties themselves, the true state of contracts between them.

¶5Wherever a deed is perfect in itself, and capable of a sensible construction, and there has been no fraud or imposition in obtaining it, a court of equity can no more set it aside, than can a court of law. If it were otherwise, all the inconveniences, intended to be avoided by the rule of law, would be introduced. Frauds and perjuries would be encouraged; and very often a contract [ * 326 ] would be established * and enforced, wholly different from that which the parties had solemnly sanctioned by their signatures and seals.

¶6If, now and then, through carelessness or inattention, an instrument, formally drawn up and executed, fail of expressing the true intent of the parties in their bargain, it were better that they should suffer, than that a system should be adopted, the natural tendency and sure consequence of which would be, to increase uncertainty, multiply instances of negligence, and hold out lures to false testimony. If, on the other hand, the rule be rigidly adhered to, men will conform themselves to it; they will take counsel, and act cautiously ; and instances will seldom, if ever, occur of any fatal mistake in their bargains. Ignorance will be protected, if any advantage shall be taken of it by superior cunning or sagacity, and frauds of all kinds may be detected and defeated, by the rules of law, as they now stand.

¶7We think that the just inference from all the cases cited is, that such relief, as is prayed for in this case, would not be granted even in the Court of Chancery in England, whose jurisdiction is not limited by any statute. The more recent authorities are full and decisive against sustaining a bill, founded on an alleged verbal agreement different from a written contract, entered into by the same parties, upon the same subject. One or two cases have been cited, bearing a different aspect; but they have been explained away, or overruled by subsequent decisions. It is repeatedly asserted by the courts of equity, that the rules of evidence arc the same in those courts as in the courts of common law; and that they cannot give relief, by relaxing, or going counter to, the rules of law (66). Indeed it would be strange that, in any country, there should be independent tribunals, having jurisdiction over the same subject matter, which should act upon such different principles, as that a contract should be valid in one and void in the other. One may *263have forms and processes to enforce a contract, which the other may want; but it would seem * impossible that [ * 327 ] the contract itself should be valid or invalid, according to the form in which it should be discussed (67).

¶8But were it otherwise in England, or in the state of Mew York, as some of the cases cited tend to show, it would by no means follow that, in this commonwealth, the same doctrine would be received. On questions arising out of the common law, or the law merchant, the decisions of courts governed by those laws meet with a respect here almost amounting to authority; but the system of equity, as administered abroad, has never yet been adopted here in its full extent; and. m that particular department of our jurisdiction, we are to look critically for the express authority given by the legislature, and not to assume more than was intended to be granted (68).

¶9Whatever may be the policy of refusing to establish a tribunal with full chancery powers, we cannot avoid perceiving that such powers are looked upon with no inconsiderable jealousy; and that the authority which is given to this Court was intended to be limited to the subjects expressly mentioned in the statute. The power given is, “ to hear and determine in equity, all cases of trust, arising under deeds, wills, or in the settlement of estates, and all cases of contract in writing, where a party claims the specific performance of the same, and in which there may not be a plain, adequate and complete remedy at law.” Upon all such subjects the power is general; and the principles of equity, as settled in the chancery courts in England, may be applied, as well as the forms of process used in those courts; but no other subject can be drawn by implication into the equity jurisdiction.

¶10The relief sought for in this bill is upon a contract not in writing, of which we have no jurisdiction under the statute; so that even if there were no deed in the way, we could not sustain the bill. And when the contract supposed is entirely contradictory to a deed actually made, to give force to the former would be to *264[ * 328 ] violate a rule, * under the powers of chancery, which, as a common law court, we should be obliged, by our oaths, to regard.

¶11The plaintiff’s counsel, aware of this difficulty, have urged upon us the cases in chancery, in which the courts have undertaken to reform a deed, so as to make it correspond with the intentions of the party, as proved by parole testimony. If by reforming is meant an essential change of the provisions of the deed, and of the rights and obligations of the parties, then the objections above stated are as forcible as they would be to any form of setting up a parole contract in opposition to a written one. If nothing more is meant by reforming than to make the deed comport with written memoranda, which have been mistaken by the scrivener, the application of such a power would not reach the difficulty complained of in the bill.

¶12In short, there are but two cases in which parole evidence can be admitted to control the operation of the legal provisions in a deed or written contract, in itself complete and intelligible. One is the case of fraud, of which the injured party may avail himself in a court of law, as well as in a court of equity; and the other is, where a party applies to a court of equity to enforce a written contract, and the adverse party is allowed to show, by testimony, that the instrument relied upon does not contain the true agreement of the parties, or the whole of it. In this latter case, the court of equity will withhold the exercise of its power, unless the party seeking relief will do full justice to the other party, according to the facts which are made to appear to the Court (69). Even this power is considered dangerous, and is used with caution ; for it is an infringement of the rule of law, which considers the written instrument as a more safe declaration of the real intention of the parties, than the account given of it by the bystanders, whose memories may be frail, whose minds may be prejudiced, and whose language may be incorrect or misunderstood. [ * 329 J * It may also be observed, in relation to the case before us, that," if we could admit the evidence produced by the plaintiff, it would fail of proving satisfactorily that any actual agreement was made different from that which the deed would prove. The testimony might be sufficient to prove that the plaintiff understood the bargain, as he would now wish to have it enforced ; but he would be obliged to prove that both parties understood it so, and that the terms of the deed were inconsistent with the views of his adversary as well as himself. This does not appear *265On the contrary, it would seem, from the answer of Pomeroy, and the testimony of some of the witnesses, that the bargain was put in writing exactly as it was made.

¶13In short, the very case before us most clearly illustrates the reasonableness of the common law rule, that where there is a writing, that alone shall be the proof of the contract. For, upon examining and comparing the voluminous depositions of the witnesses, and the answers, by the parties, to the interrogatories put by the plaintiff, it is extremely doubtful what the real agreement was ; and if effect was given to the contract, supposed by the plaintiff to have been made, we should by no means be satisfied that injustice would not be done to Pomeroy, the principal defendant.

¶14 Bill dismissed.

¶15 [This assertion must be understood with soiae qualifications.—Ed.]

¶16 [These remarks show a want of knowledge of the principles on which courts of chancery act. They do not always grant or refuse relief, according as the contract or deed may be valid or void at law, but according as the claim may be equitable or conscientious, or the contrary. If, for instance, a sealed instrument were drawn up and executed, which did not contain the same, but a different agreement or grant from that which the parties intended, it would be unconscientious for the party in whose favor it was made to insist upon it contrary to or beyond the agreement or grant intended. If such party should have occasion to seek relief in equity , this Court would admit parole evidence, not for the purpose of contradicting or explaining the deed, but to show that it would be unconscientious to insist upon it. And this 'acing shown, the Court would refuse to lend their aid, and leave the party to his remedies at law.—Vide Story, Equity, 2d Vol., sec. 769, 770,771.—Ed.]

¶17 [But the Court has adopted, as the outlines of their practice in chancery the practice of the English courts of chancery. See Rules.—Ed.]

¶18 [Sed vide 1 Story’s Com. on Equity, 175, and cases there ¡eferredto.—Bn.j