Stowell v. Eldred

LyoN, J.

I. It'is earnestly ai’gued by the learned counsel for the plaintiffs, that the defendant Anson Eldred can derive no benefit from the payments made by Farr on his agreement with the plaintiffs for the purchase of the Illinois judgment, notwithstanding such agreement was in fact made by Farr as the agent of Eld/red, for him and at his request, and such payments thereon were made with the money and property of Eldred. The argument is based upon the facts that the agreement is a sealed instrument, and that it does not appear on its face that Eldred had any interest in it. To sustain the position, the counsel invoke two familiar rules of law: 1. That the terms of a written contract cannot be changed by parol evidence; and 2. That a contract under seal executed by an agent in his own name, does not bind the principal not named therein, but it in whose behalf the contract was in fact made, nor does it confer any rights upon such principal. Story on Agency, § 160. So many exceptions to the last rule have been made in modern times by the courts, that the rule seems to operate at the present time within quite narrow limits. One of these exceptions, sanctioned by reason and authority, is, that if the instrument would be valid without a seal, then, although executed under seal, it is to be treated as written evidence of a simple contract, and the seal adds nothing to it. Opinion of Senator Verplanck in Evans v. Wells, 22 Wend., *627 341 . That the agreement between- Farr and the plaintiffs would have been equally valid and binding upon the parties had it not been executed under. seal, will not be denied. Hence it comes within the. exception to the rule last above stated.

Neither is it a violation of the rule which prohibits the changing of the terms of written contracts by parol evidence, to permit the defendant Anson Eldred to avail himself of the benefits of the agreement made for him by Farr for the purchase of the Illinois judgment. It is not sought to deprive any party to that agreement of any right, or to relieve any party thereto from any liability given, or imposed by that instrument, but only to show that a person not a party thereto has rights under it because it was entered into for his benefit. It is no more a violation of the rule under consideration to permit Anson Eld/red to do this, than it would be to sustain an action on the instrument brought .by a person to whom Farr had assigned his rights under it. The true significance of the rule as applied to this case is, that Fan cannot relieve himself from liability to the plaintiffs under his agreement with them, by showing that he made the agreement merely as the agent of Eldréd and for him, nor can the plaintiffs, by like proof, relieve themselves from liability to Farr. But the rule will not prevent Eldred from asserting and enforcing the same rights that Farr has under the agreement, or the plaintiffs from asserting and enforcing the liability of Eldred thereunder, coextensive with that of Farr.' The rule of law which is believed to be applicable to this case is thus stated by Judge Stoky in his work on Agency: “If the agent possesses due authority to make a written contract, not under seal, and he makes it in his own name, whether he describes himself to be an agent or not, or whether the principal be known or unknown, he, the agent, will be liable to be stied, and be entitled to sue thereon, and his principal also will be liable to be sued, and be entitled to sue thereon in all cases, unless from the at *628 tendant circumstances, it is clearly manifested that an exclusive credit is given to the agent, and it is intended by both parties that no resort shall in any event be had by or against the principal, upon it.” § 160 a. There is nothing in the agreement under consideration, of in the attendant circumstances, manifesting an intention by the parties thus to exclude JEldred from benefit of liability under it. This doctrine is fully sustained by numerous adjudged cases, many of which are cited in the notes to the text, from which the above quotation is made. It is abundantly proved that Farr entered into the agreement with the plaintiffs for the purchase and assignment of the Illinois judgment, for and on behalf of Anson Eldred and for his use and benefit. In the light of the principles above stated, it must be held that the latter may avail himself of the benefits of that agreement.

It must be further held that his rights are coextensive with those which Farr would have, were he in court seeking to compel the plaintiffs to perform the agreement on their part.

. "We do not mean that Eldred must be confined literally to the relief to which Farr would be entitled — but he must be substantially confined to it. The fact that the judgment, which is the subject matter of the agreement, is against El- dred, may render necessary a change in the form of the relief, if relief be granted. For example, if Farr would be entitled to an assignment of the judgment should he prevail in an action brought by him against the plaintiffs to enforce specific performance of the agreement, in a like action by Eldred-he might be entitled to a discharge of the judgment, or to an injunction restraining the collection of it; for it is quite immaterial to the plaintiffs whether they assign or discharge, and the difference between the two modes of relief is unimportant and formal. Neither do we mean to say that Anson Eldred may not, in this action, enforce his equitable counterclaim; for that is a matter entirely independent of such agreement.

We are not to consider and determine what the rights of *629 Farr would be under tbe agreement, were be seeking to enforce tbem.

In 1868, tbe plaintiffs attempted to exercise tbe option given tbem in the agreement, to declare tbe same void and to secure tbe forfeiture of tbe payment's theretofore made on it by Farr. This they could not do effectually without an offer to surrender to Farr tbe outstanding notes which be bad given tbem in part execution of tbe agreement; and they made no such offer. Hence there has been no sufficient exercise of such option, and, consequently, no forfeiture of tbe payments made by Farr on tbe agreement. "We are not called upon to determine, and do not here determine, whether or not a court of equity would relieve against such forfeiture, bad tbe plaintiffs, with tbe attempted exercise of such option in 1868, surrendered or offered to surrender to Farr such outstanding notes.

As tbe case stands upon tbe proofs, until Anson Eldred asserted bis rights under tbe agreement, as principal, Farr could have maintained an action against tbe plaintiffs to compel a specific performance of tbe agreement, .upon tendering or offering jjayment'of tbe balance due thereon. Specific performance in such case would be an assignment to Farr of tbe Illinois judgment. Inasmuch as Farr would take such assignment as tbe agent and for tbe use and benefit of Anson Eldred, who paid tbe consideration therefor, aside from any question of fraiid, sucli specific performance would be equivalent to a discharge of tbe judgment.

When this action was commenced, Anson Eldred had tbe same right to enforce specific performance of tbe agreement on tbe same terms and conditions; and in such case tbe appropriate specific performance is tbe equivalent of assignment to Farr, to wit, tbe discharge of tbe judgment, or a decree declaring tbe judgment fully paid and satisfied.

But such relief, whether at tbe suit of Farr or of Anson Eldred, can only be obtained in a court of equity. Hence, *630 while it is competent for ElclrecL to obtain snob relief in this action, lie can only obtain it by pleading a counterclaim in tbe nature of a bill in equity for a specific performance of the agreement.

The payments made by Earr on the agreement are pleaded as payments on the Illinois judgment; but they are not payments on the judgment, and are not available as a legal defense to an action thereon.

It was argued at the bar that there is enough in such plea of payment to constitute it a counterclaim. But we think otherwise. The answer in that behalf avers payment by Parr of $4,100 on the judgment, and claims that the amount should be allowed as such. This is no counterclaim, much less is it an equitable counterclaim, but only a legal defense to a part of the plaintiff s’ claim. The issue upon it would be triable by a jury. As such defense, it is not available in this action. The testimony introduced under it, and received under objection, failed entirely to show that those payments were made on the judgment; and under the pleadings as they are, the testimony should have been rejected.

On former occasions this court has had under consideration answers containing averments of fact so pleaded that it -was doubtful whether counterclaims were predicated upon them, or whether they were alleged merely as defenses; and by argument and the application of various tests, the court has determined the character of these pleadings. Should it be asserted that there is an inconsistency in those decisions, we are not prepared to dispute the assertion. The rule on this subject should be certain and uniform. In order that it may be so in the future, we take this occasion to say that hereafter no averment in an answer will be held to constitute a counterclaim, unless it is so denominated and the appropriate relief prayed. Wanting these requisites, the pleading will be held to be a defense only. It is so easy to commence a counterclaim by denominating it a counterclaim, and to close it with a demand *631 for relief, tbat it' is not unreasonable, and does no violence to tbe spirit of tbe code, to require tbe pleader to do so.

Tbe judgment herein is substantially a judgment in equity for the specific performance, by tbe plaintiffs, of their agreement with Earr. Tbe action is an action at law, and we have seen tbat tbe portion of tbe answer under consideration, and upon which tbe judgment is founded in part, is merely a legal defense. Hence there are no sufficient pleadings to support tbe judgment. Tbe variance between .a mere legal, defense of payment, and an equitable counterclaim for specific performance, is material and vital; and it cannot be disregarded, or cured by summary amendment of tbe answer on tbe trial.

II. Although tbe views above expressed must necessarily result in tbe reversal of tbe judgment, yet, for tbe purpose of giving tbe proper directions to tbe circuit corxrt, it is necessary to consider tbat portion of tbe judgment which relates to the' equitable counterclaim in tbe answer.

It appears from tbe evidence tbat tbe plaintiffs Samuel It. JELaven and Jane S. Hci/oen, bis wife, have resided for many years in tbe city of Chicago, and tbat all tbe other plaintiffs, during the time covered by tbe transactions involved in this litigation, resided, and still reside, in tbe state of Massachusetts ; tbat Samuel JR. Sawn (who is referred to in tbe bill of exceptions as Dr. JEmen) bad tbe sole charge of tbe premises described in tbe Grey lease, renting tbe same and collecting tbe rents, from tbe time tbat lease was executed until tbe spring of 1861, when be entered tbe army as a surgeon and remained therein until tbe spring or summer of 1863; and tbat during that period he was almost constantly absent from Chicago. On leaving Chicago, in 1861, Dr. Haven appointed one Schofield bis agent to transact all bis business in tbat city during bis absence, and delivered to him alibis papers relating to tbe Stowell property leased to Grey, but which property was then occupied by Eldreds & Balcom.

In January, 1862, Eldreds & Balcom abandoned tbe leased *632 property, notified Schofield of the fact, and surrendered or offered to surrender the same to him for the plaintiffs. Thereupon, in March, 1862, the plaintiff Mary A. StoweU., who owned or represented an undivided seven-ninths of the property, gave Schofield a formal power of attorney duly authorizing him to relet the same; the plaintiff George W. Johnson, who represented one-ninth of the property, .wrote to Schofield telling him to use his best discretion in leasing the property, and giving him certain directions as to terms of lease; and Dr. Haven, who represented the other one-ninth interest, wrote to Schofield from Yirginia, telling him to do as .he thought best in the matter. It is certain that all of the above named plaintiffs knew, at the time they so acted or wrote, that the property was vacant, and that' Eldreds & Balcom were endeavoring to surrender their lease.

Armed with such ample authority’to do so, Schofield, on the 24th of March, 1862, leased the property to the firm of Pearson & Avery for one year from May 1, 1862, at the rent of $2,500 per year, and said lessees entered into possession thereof April 1, 1862. Under date of March 30th, in the same year, and no doubt in anwer to a letter from Schofield informing him that the property had been leased to Pearson & Avery, Johnson wrote to Schofield that he was glad to hear that the property was rented to a responsible man, and that the rent for the first quarter had been paid.

Schofield collected the rent for two quarters of Pearson & Avery, and accounted therefor to the plaintiffs. Under date of October 23, 1862, he remitted to Johnson a draft for $606.25, with statement showing it to have been received for rent of the property leased to Pearson & Avery; and five days later, Jolmson acknowledged by letter the receipt of the draft.

Schofield having ceased to act as the agent of the plaintiffs, one Ingalls collected the rent of Pearson & Avery for the third quarter, and paid over or accounted for the same to Dr. Haven, who, for himself and all the other plaintiffs, re *633 ceipted to him therefor. This receipt is defectively dated, but was doubtless given May 1, 1863, at which time Dr. Haven was temporarily in Chicago. On the same day (May 1, 1863) Dr. Haven in person éollected the rent of Pearson & Avery for the fourth quarter, ending on that day.

After the action was brought against Eldreds & Balcom, in 1864, in the Cook county circuit coxrrt, the defendant Anson Eldred made reasonable and diligent efforts to find Schofield (who left Chicago in 1862), for the purpose of obtaining his testimony, which, had it been obtained, would have proved or tended to prove Eldred’s defense in that action as to the rent accruing after April 1,1862.. Those' efforts were unsuccessful. Dr. Haven was the only plaintiff in that action who was present at the trial thereof. Eldred called him as a witness to prove such defense, and he was duly sworn and examined in that behalf. But, instead of testifying to the facts as he knew them to be, or, at least, as he had recently known them to be, he denied that he authorized Schofield to act for the Stowell estate in respect to the property leased to Grey and occupied by Eldreds & Balcom; he denied all knowledge of the lease to Pearson & Avery; he denied that he had ever received a dollar of rent accruing under that lease to his knowledge; he denied knowledge that any of the plaintiffs ever received. any such rent, or knew of the existence of the lease; and, in brief, he denied more or less positively all knowledge of the existence of any and every fact material and essential to such defense. Having no other testimony at hand to prove the same, of course Eldred failed to establish his defense, and judgment went against him for $6,500 more than plaintiffs would have recovered had Dr. Ilmen testified to the facts as they were. The foregoing facts are substantially ’ stated in the answer, and in the findings of the court.

It would seem from the above statement that the case is a proper one for equitable relief, within the rule laid down on the former appeal ( 26 Wis., 504 ). It is claimed, however, *634 tbat tbe case is not not within that rule, for the alleged reason that Dr. Haven did not commit perjury in his testimony on the trial of the Illinois suit, but that he had forgotten the facts, and testified honestly, though inaccurately. The answer to this position is, that Dr. Hamm, knowing all the facts essential to Eldred?s defense in that suit, ought not to have forgotten them when a little honest effort in that direction would have brought them within his recollection. He and his coplaintiffs cannot be heard in a court of equity to assert such forgetfulness, and thereby compel Anson Eldred to pay them many thousands of dollars more than in equity and justice he owes them.

The propriety and reasonableness of these views will be more apparent if we look for a moment at a single aspect of the case, and there are others equally significant. In 1863, Dr. Haven, in person, collected $625 in cash of Pearson & Avery, for rent accruing under their lease of the property theretofore held by Eldreds & Balcom under the Grey lease. At the same time he received the account of Ingalls, the agent of the plaintiffs, and receipted to him for a like amount of rent collected by Ingalls of Pearson & Avery on the same lease.

Proof of these transactions on the trial would have reduced the judgment in suit $6,500. Dr. Haven, on being called as a witness to make such proof, testified that he never received a dollar of rent accruing under the Pearson & Avery lease, to his knowledge. Such testimony was given within less than three years after he received in person a large sum of money, and audited the account of Ingalls for another' large sum (amounting in all to $1,250), all of which accrued under that lease. Because Dr. Haven so testified, the judgment in suit is for $6,'500 more than it would have been had he testified that he received the rent. What manner of equity would that be which would permit him and his coplaintiffs to enforce payment of that portion of the judgment?

Let us look for a moment at another aspect of the case. *635 The Illinois suit was commenced in 1864. At that time every one of the plaintiffs knew that Eldreds & Balcom were not legally liable for any rent accruing on the Grey lease after April 1, 1862. That action was brought too recently after the transactions above narrated to leave any room for the plea of forgetfulness. Yet the plaintiffs sought in that suit to recover, and, by means of the alleged forgetfulness of facts by one of. their number, did recover, thousands of dollars of rent accruing after that date.

The plaintiffs seelc to recover the full amount of the Illinois judgment, principal and interest, less §2,500 received of Pearson & Avery, which they now offer to allow thereon. To permit them, under all of the circumstances of the case, to do so, would be to permit the defendants to be grossly wronged; and to hold that a court of equity is powerless to prevent such wrong from being consummáted, would be to restrict the powers of that court to relieve against fraud and injustice, within limits altogether too narrow.

"Were Dr. Haven on trial for perjury assigned upon his testimony in the Illinois suit, he might allege forgetfulness of the fact to disprove criminal intent; but the plaintiffs ought not to be heard to allege such forgetfulness by one of their number to enable them to recover of Anson Eldred several thousands of dollars more than in justice and equity they ought to recover.

Our conclusions are, that to entitle the defendant Anson Eldred to recover on his equitable counterclaim, it is sufficient that he has proved: 1. That when the Illinois suit was brought, the plaintiffs knew they had no valid claim against Eldreds & Balcom for rent accruing after April 1, 1862; 2. That Dr. Ilmen, when examined as a witness on the trial of 'that suit, denied knowledge of facts which were within his knowledge, and which he ought to have recollected, and which, had they been proved, would have prevented a recovery for rent accruing after that date; and, 3. That he, the said *636 Anson Eldred, is not chargeable with laches in that action, in respect to his defense thereof.

The portion of the judgment of the circuit court appealed from must be reversed, and the cause remanded with directions to that court to permit the defendant Anson Eldred to -amend his answer by inserting therein another equitable counterclaim founded on the contract between Farr and the plaintiffs, and the payment of money into court as. stated in the judgment. The nature of such counterclaim has already been sufficiently indicated. If the amendment be made within such reasonable time as the court shall direct, a new trial is awarded. Otherwise, judgment must be entered for the plaintiffs for the Chicago judgment less $6,503.84, and interest on the balance at six per cent, from the time the judgment was rendered.

By the Court. — Ordered accordingly.