Smith v. Mitchell

• Decision Date: 31 March 1849
• Docket Number: No. 62.,62.
• Citation: 6 Ga. 458
• Parties: William Smith and Alfred Shorter, security on appeal, plaintiffs in error. vs. Daniel R. Mitchell, defendant.
• Court: Georgia Supreme Court

6 Ga. 458

William Smith and Alfred Shorter, security on appeal, plaintiffs in error. vs. Daniel R. Mitchell, defendant.

No. 62.

Supreme Court of the State of Georgia

MARCH TERM, 1849.

In Equity, in Floyd Superior Court. Tried before Judge Wright, October Term, 1848.

Daniel R. Mitchell filed his bill of complaint in Floyd Superior Court, charging that on the 12th of May, 1841, being owner of a valuable tract of land lying near the city of Rome, in the fork of the Oostanaula and Etowah Rivers, it was agreed and contracted between him and one William Smith, that Smith would purchase the said land at the sum of $8,000; whereupon, Smith gave complainant his notes, one for $2,000, due December 25th, 1842. and the other for $6,000, due 25th December, 1843, and Mitchell gave his bond for titles. It was further agreed, at the same time, that if Smith should be unable to pay the notes, then Smith was to pay a reasonable rent per annum for the premises, and also $1,000 for the premise\'s whereon the abutment of a contemplated bridge should be built, with the right of way through the land. Early in the year 1842, Smith stated to Mitchell, that he had made an arrangement with a bank in Columbus, to take in payment of certain claims on the Western Bank of Rome, such notes as Mitchell, John H. Lumpkin and Thomas C. Hackett would say were good, and requested Mitchell to make a statement concerning a note on William H. Moore, of Alabama. Mitchell declined, stating that when he knew Moore, he was good, but that times were uncertain, and that he had heard nothing of him for some years back. The bill charges, that Smith and one Hugh M. Cunningham, of the State of Alabama, combining to defraud complainant, Smith procured from Cunningham, a letter directed to Smith, in which he stated in substance, that he boarded with Moore, and knew his situation as well as Moore did himself; that he did not owe more than $20 or $30,000, and owned two hundred negroes and three or four of the best plantations in Talladega, and if his property was sold, it would bring at least $100,000; that he considered him as good as any man in Alabama, and, moreover, that he had a claim against the United States of $40,000. Upon the presentation of this letter, complainant, (Mitchell,) having the utmost confidence in Cunningham, made a written statement, as desired by Smith, of the solvency of Moore. Shortly afterwards. Smith applied to Mitchell to know if he would take Moore\'s note for the notes ($8,000) he held on Smith, which Mitchell agreed to do if Cunningham would indorse the note. Smith assured complainant that Cunningham would do so, and then inquired, if Cunningham should be absent, or any thing happened, so that he might not procure his indorsement, would anyother good name do; to which complainant replied, he would take any body that was good. Smith said there was Tom Jones and Grief Harwell, that he knew were good, and he could get them. About 11th April, 1842, Smith tendered Mitchell with a note purporting to be signed by Moore, and Jones and Harwell as sureties, for $7,500, in satisfaction, together with $500 which Mitchell had promised as a bonus to Smith, whenever he launched a steamboat at Rome, of the notes of Smith for $8,000. Smith, the bill charges again represented that Jones and Harwell were good, and that Moore was also good, and gave as a reason why Cunningham had not indorsed the note, that he was gone to Mobile, and again exhibited the letter of Cunningham before set out. The bill charges, that from these fraudulent and false representations of Smith and Cunningham, complainant was induced to give up his notes for $8,000, and.receive the note for $7,500, and at the same time made a deed to the land to Smith.

The bill farther charges, that Moore was wholly insolvent, and was generally known to be so for several months before the letter of Cunningham was written; that Jones and Harwell were, at that time, and for a long time previously, utterly and hopelessly insolvent; that Moore was not in Alabama, but was in Washington City, Arkansas or Texas, at the time said note, purporting to be made by him, bears date; and that the same, whenever or wherever made, was prepared for the express purpose of perpetrating a fraud on the complainant or some one else; that Cunningham was not gone to Mobile, as falsely stated by Smith, and that the insolvency of Moore, Jones and Harwell was well known to Smith, and unknown to the complainant. The bill farther charged, that Smith has boasted he could "cheat Mitchell out of his eyes, and he wide awake."

The bill prayed that the deed to the land might be delivered up to be cancelled, and that Smith and Cunningham may be decreed to comply with the original contract of sale, and then receive titles, or that the said William Smith may be decreed to do so and to receive back the note of Moore, Harwell and Jones, or that the whole contract may be rescinded.

The answer of Smith admitted the sale and the agreement at the time, but insisted that the notes for $8,000 were to be discharged by other good notes. He denied that the letter of Cunningham was written before complainant gave the recommenda-tion to the bank, and stated that complainant said he knew Moore\'s condition, and was willing to take the note upon his own knowledge, but that he would like to have Cunningham\'s opinion about the indebtedness of Moore, and that the letter was written under these circumstances. He denied that the recommendation was procured by any fraudulent representation of himself or Cunningham. He denied that he applied to the complainant to take Moore\'s note, but that the complainant voluntarily proposed to take the note of Moore, stating that he knew him and knew his note to be good; and farther denied any fraudulent intention in transferring the note. He denied that complainant offered to take the note, provided Cunningham would indorse it; on the contrary, the complainant agreed to take Moore\'s individual note. Some time afterwards, the complainant asked defend ant if Cunningham would not indorse it. Defendant replied that complainant knew Cunningham was not in the habit of indorsing notes for any person. Complainant said if Cunningham would not indorse it, perhaps Harwell and Jones would, and that would be satisfactory. He denied making any representation at that or any other time, as to the solvency or ability of Jones or Harwell, but concurred in opinion with complainant, that Moore was good—remarking, at the time, that complainant knew him better than he did. He denies that he knew Moore to be insolvent, nor does he now believe that he is. He does not know anything about the absence of Moore at the time the note was signed, but denies that it was procured with any fraudulent intention. The answer stated fully the consideration paid Moore for the note. He denied ever boasting that he could cheat Mitchell out of his eyes. The answer fully and distinctly denied every allegation of fraud or fraudulent intention.

The defendant, Cunningham, answered that portion of the bill charging confederacy on him, admitted the writing of the letter, insisting it contained the truth, and denied all fraudulent intention. On the first trial there was a decree against Smith.

At the April Term, 1848, the death of Hugh M. Cunningham being suggested, the case being on the appeal, on motion, it was ordered, that complainant have leave to amend his bill by striking out his name. At the same term, (April, 1848,) an order was entered on the minutes, that the defendants have leave to except tothe opinion of the Court, that the complainant could proceed against the surviving defendant at the trial term.

At the October Term, 1848, the cause came on for trial, when the counsel for defendants objected to the complainant's proceeding until the representative of Cunningham was made a party. The Court overruled the objection, and the counsel for defendants excepted.

There was a great volume of evidence submitted to the Jury and embodied in the bill of exceptions, with reference to the insolvency of Moore, Jones and Harwell, at the time of the exchange of the notes. The testimony was in some degree conflicting as to the notoriety of Moore's insolvency at the time. There was no conflict in the testimony showing that Jones and Harwell were notoriously insolvent. Moore, Jones and Harwell lived in Talladega county, Alabama, some ninety miles from Rome, where Mitchell and Smith resided. It was in evidence that Smith was frequently in Talladega, about the time Moore commenced to be suspected of failure, and had dealings with Moore, and that Mitchell never was there. There was evidence of several circumstances insisted on by the complainant, as proving notice to Smith, and there were other circumstances relied on by defendants, to show that Mitchell did not rely on Smith's statements in the making of the transfer. There was also evidence to show that the note was not genuine as to the signatures of Moore and Harwell.

It is unnecessary, for the proper understanding of the decision of this case, to embody more of this mass of testimony in this statement.

The counsel of defendants requested the Court to charge the Jury, "If the solvency of Moore was a matter of opinion or a fact, equally open to the inquiry of both, and there was no special confidence or relation between the parties, and each met the other on equal grounds, the mistaken opinion of Smith as to Moore's solvency, expressed to Mitchell, the plaintiff, (if expressed at all,) is not sufficient to avoid the contract of sale." Which charge the Court refused to give as asked, but charged the Jury, that this was the law, with this qualification—that if Smith represented Moore to Mitchell to be solvent, and Mitchell relied upon the statement of Smith, it was sufficient to avoid the contract.

The counsel for defendants requested the Court to charge the Jury, that "to constitute the fraud complained of, Smith...