Alger v. Anderson

• Decision Date: 15 March 1899
• Citation: 92 F. 696
• Parties: ALGER v. ANDERSON et al.
• Court: U.S. District Court — Middle District of Tennessee

92 F. 696

ALGER v. ANDERSON et al.

United States Circuit Court, M.D. Tennessee.

March 15, 1899

Albert D. Marks, J. J. Lynch, and Floyd Estill, for Russell A Alger.

Williams & Lancaster, J. B. Branhan, Brown & Spurlock, A. S. Colyar and W. J. Clift, for Mrs. Keith and the Andersons.

J. J Vertrees, W. T. Murray, and Mr. Mathews, for John W. Gonce.

CLARK District Judge.

The bill, as originally presented, is one by the vendee against the vendor for rescission, upon the ground of fraudulent misrepresentation. I have concluded, upon the additional proof presented under a petition to rehear, that the plaintiff, with knowledge of the fraud, elected to abide by the transaction, and that with such knowledge he unreasonably delayed instituting suit to rescind, and the case in this aspect is justly subject to the objection of laches, and upon both grounds the bill, in so far as rescission is concerned, must be dismissed.

An amended bill has been filed, which presents the question of compensation or damages as alternative or secondary relief in the event the primary relief of rescission cannot be had. Under this amended bill, it is sought to recover damages to the extent that there is a deficiency in the quantity of land conveyed by reason of a defect or want of title in the vendor to certain parts of the land actually embraced on the deed. The case presented by the record is really not one of defect of quality or surface deficiency, but of defective title in the vendor; for the deficiency in area comes about, not because the quantity of land called for and embraced within the deed is incorrectly given, but because the title to parts of this land fails by reason of superior conflicting claims, as plaintiff insists. It must be observed that the case is not one of an executory contract, but is one where a contract of sale of real estate has been executed by a deed of conveyance with the usual covenants, including one of warranty. The contention is that if the plaintiff, with knowledge of the fraud, has elected to affirm the transaction, or by laches has defeated his right to rescind, then, the fact of fraud being established, the court may proceed to decree, as secondary relief, compensation against the defendants for the purchase price of that portion of the land to which the vendor did not have valid legal title, and in this way grant complete relief in this suit. In addition to this, it is said that intricate issues, with complicated facts, in suits at law, would be avoided by this form of relief; but as the plaintiff could obviously institute one suit against the personal representative of the deceased vendor, and recover in an action on the covenants in the deed for all the land as to which there is a failure of title, it is not perceived that there is any real ground on which to base this suggestion. There would be only the question of the quantity of land to which there is a failure of title in such a suit. Furthermore, if I am right in the conclusion that the plaintiff has, by election and acquiescence, waived any right to the equitable relief of rescission upon the ground of fraud, it is not believed that it would be consistent to hold that the fraud may, nevertheless, be made the basis of equitable relief in a different form and to a less extent. My opinion is that when the plaintiff has, by affirmative election or laches, waived the fraud as a ground of rescission, he has also thereby lost the right to insist upon such fraud as a ground of any equitable relief at all. The proposition that the fraud, as a ground of one form of relief, is lost, while it may be made the basis of relief in a different form, cannot, in my opinion, be maintained. Fraud, as a ground of equitable relief, when once lost, is lost for all purposes. The objection of fraud, once waived, leaves the contract just as if the fraud had not occurred. McLean v. Clapp, 141 U.S. 429, 12 Sup.Ct. 29, reaffirming Grymes v. Sanders, 93 U.S. 55.

In considering and determining this question of compensation, then, I must treat the case as one from which fraud is eliminated, and determine whether or not relief, by way of compensation or damages, can be granted, and, if so, upon what ground consistently with the established jurisdiction of this court in equity. In dealing with this question, it must be remarked that the jurisdiction of the circuit courts of the United States as courts of equity is subject to two important limitations. A case, with respect to the rights to be enforced and the remedy desired, must be one of such a character as to come within the recognized boundaries of jurisdiction in equity, as distinguished from jurisdiction at law, and the case must be one also which, by reason of the character of the parties or of the subject-matter of the suit, is one of federal, as distinguished from state, jurisdiction. In this case the court is concerned only with the limitation which marks the boundary of its jurisdiction in equity. In dealing with such a question, it must be borne in mind that chancery jurisdiction is conferred on the courts of the United States under certain limitations, constitutional and statutory, and that, under such limitations, the jurisprudence of the high court of chancery in England, in the absence of a special act of congress, furnishes the chancery law which is exercised by those courts in all of the states. State of Pennsylvania v. Wheeling & B. Bridge Co., 13 How. 518; Litchfield v. Ballou, 114 U.S. 190, 5 Sup.Ct. 820. And this equity jurisdiction conferred on federal courts, being the same as that of the high court of chancery in England, is subject to neither limitation nor restraint by state legislation, and is uniform throughout the different states of the Union. Mississippi Mills v. Cohn, 150 U.S. 202, 14 Sup.Ct. 75; McConihay v. Wright, 121 U.S. 205, 7 Sup.Ct. 940.

Under the provisions of the seventh amendment to the constitution, it is declared that in suits at common law, when the value in controversy exceeds $20, the right of trial by jury shall be preserved; and in section 16 of the original judiciary act of 1789, re-enacted in the Revised Statutes as section 723, it is provided that 'suits in equity shall not be sustained in either of the courts of the United States in any case where a plain, adequate and complete remedy may be had at law. ' So, too, in relation to the practice of the federal courts, the supreme court of the United States, pursuant to authority conferred by section 719 of the Revised Statutes, among other rules regulating equity practice, promulgated, in 1842, rule 90, which provides that:

'In all cases where the rules prescribed by this court or by the circuit court do not apply, the practice of the circuit court shall be regulated by the present practice of the high court of chancery in England, so far as the same may reasonably be applied consistently with the local circumstances and local conveniences of the district where the court is held, not as controlling, but simply as furnishing just analogies to regulate the practice.'

Of this rule, Judge Sawyer, in Lewis v. Shainwald, 7 Sawy. 403, 38 F. 492, said:

'The jurisdiction of this court is derived from the constitution and laws of the United States, and these rules are simply rules of practice, for regulating the mode of proceeding in the courts. They do not, and could not, properly, limit or enlarge the jurisdiction of the court. The rule quoted simply regulates the practice in exercising the jurisdiction of the court in those respects wherein the rules adopted do not apply; but the practice of the high court of chancery is to be applied, not as controlling, but simply as furnishing just analogies to regulate the practice.'

It will be thus seen that the foundation of equity jurisprudence, as well as of equity practice, in the courts of the United States, lies in the system of the English court of chancery. But the practice of the English court of chancery adopted by rule 90 affects only matters of procedure, and does not apply in the determination of questions of jurisdiction, which depends upon, and is limited by, the constitution and laws of the United States. Lewis v. Shainwald, 48 F. 492.

But the question of jurisdiction is here to be considered and decided, and this must be determined by the essential character of the case. Van Norden v. Morton, 99 U.S. 378. And the right asserted, as well as the relief sought, must be equitable (Smith v. Bourbon Co., 127,.S. 105, 8 Sup.Ct. 1043); for it is this which distinguishes the suit in equity from one at common law.

In State of Pennsylvania v. Wheeling & B. Bridge Co., 18 How. 462, Mr. Justice Nelson, delivering the opinion of the court, said:

'Original jurisdiction in equity, in a particular class of cases, conferred by the constitution on this court, has been interpreted to impose the duty to adjudicate according to such rules and principles as governed the action of the court chancery in England, which administered equity at the time of the emigration of our ancestors and down to the period when our constitution was formed.'

See, also, Fontain v. Ravenel, 17 How. 384.

And in McConihay v. Wright, 121 U.S. 206, 7 Sup.Ct. 942, Mr. Justice Matthews said:

'The adequate remedy at law, which is the test of equitable jurisdiction in these courts, is that which existed when the judiciary act of 1789 was adopted, unless subsequently changed by act of congress.'

See, also, Scott v. Neely, 140 U.S. 106, 11 Sup.Ct. 712, and Mississippi Mills v. Cohn, 150 U.S. 202, 14 Sup.Ct. 75.

Both forms of statement of the rule are correct. The court in the former cases was discussing the question as affected by the seventh amendment of the constitution, securing the right of trial by...