Brown v. Grove

• Decision Date: 14 May 1897
• Docket Number: 211.
• Citation: 80 F. 564
• Parties: BROWN et al. v. GROVE et al.
• Court: U.S. Court of Appeals — Fourth Circuit

80 F. 564

BROWN et al. v. GROVE et al.

No. 211.

United States Court of Appeals, Fourth Circuit.

May 14, 1897

E. G Smith, for appellant.

John Bassel, for appellees.

Before SIMONTON, Circuit Judge, and HUGHES, District Judge.

SIMONTON Circuit Judge.

This case comes up on appeal from the circuit court of the United States for the district of West Virginia. The bill was filed to enforce a deed of trust in the nature of a mortgage of a lot of land in Clarksburg, W.Va. Smith, Brown & Co. were merchants doing business in the town of clarksburg.

Their establishment was consumed by fire. They were not insured and the firm became greatly embarrassed. Wood, Brown & Co. were merchants of Philadelphia, with whom this Clarksburg firm had had much dealing. They came to the assistance of the Clarksburg firm, and agreed, upon security, to sell them goods on credit. The Philadelphia firm did not wish it to be published to the world that they were doing a large business with a firm so much impaired in credit as the Clarksburg firm. And therefore it was agreed between the two firms that the security should be executed to James A. Campbell, the head clerk of the credit department of the Philadelphia firm. The Clarksburg firm, in the impaired condition of their credit, did not wish published to the world the full extent of their liability. For this reason the deed of trust which was taken as security had this recital:

'Whereas, the parties of the first part (Smith, Brown & Co.) have accepted a certain business proposition of James A. Campbell, of the city of Philadelphia, and state of Pennsylvania, by which he, said Campbell, may, in case of accident and misfortune, under liability for the parties of the first part, and the parties of the first part being willing to secure said Campbell against such liability and loss, do for the consideration aforesaid,' etc.

This paper is dated 23d of July, 1888, but the transaction was not completed, and the deed was not recorded, until the 13th of October, 1888. The negotiations were conducted by Mr. Bassel, who has as his client the Philadelphia firm. In August, 1888, he received a note from one of the firm of Smith, Brown & Co. in these words:

'Philadelphia, Pa., Aug., 1888.

'In consideration and for a deed of trust this day executed by Smith, Brown & Co. in favor of James A. Campbell, of Wood, Brown & Co., of Philadelphia, to secure said Wood, Brown & Co. against loss by reason of selling goods on open account to said Smith, Brown & Co., we hereby agree to extend to Smith, Brown & Co. a line of credit up to thirty-five hundred dollars, but not to exceed this amount at any one time.

'Mr. Bassel-- Dear Sir: We think this about what we will want from Wood, Brown & Co. in the way of a consideration for the deed of trust. You will say to W., B. & Co. it is due S., B. & Co. to have such a paper, and that you hold the deed of trust subject to their orders on receipt of the paper.

'Yours, truly,

S., B. & Co.'

Thereupon Mr. Bassel prepared the formal memorandum to be signed by the Philadelphia firm, as follows:

'Philadelphia, Pa., Sept. 18, 1888.

'Whereas, A. G. Smith, John W. Brown, and Beeson H. Brown, composing the firm of Smith, Brown & Co., of Clarksburg, West Virginia, on the 27th day of July, 1888, executed to John Bassel, as trustee, a deed of trust in favor of James A. Campbell; and whereas, the real purpose of said trust was to secure the undersigned, Wood, Brown & Co., against loss by reason of the sale of goods to said Smith, Brown & Co. upon credit, in consideration of the execution of the said deed of trust: We hereby agree to extend to the said Brown & Co. a line of credit to the amount of thirty-five hundred dollars, but not to exceed such sum at any one time.

Wood, Brown & Co.'

The deed of trust was then delivered, and recorded in the proper office. The credit was given, and the amount of indebtedness incurred and now unpaid is $4,466.97. In the meanwhile Wood, Brown & Co. have become insolvent, and have made an assignment for the benefit of their creditors, and this bill is filed by the assignee and by James A. Campbell. The prayer of the bill, as has been stated, is a foreclosure of this deed of trust.

The defendants adopted three lines of defense: First, that the deed on its face declares that it was to indemnify James A Campbell, and no one else, and that Campbell has sustained no loss whatever through them; second, that the alleged agreement between the two firms was fraudulent and void, and that the complainants do not come into equity with clean hands; third, they plead the statute of limitations. The circuit court overruled all of these objections, and gave judgment for the sale of the property, and for the application of the proceeds of the sale to the ascertained debt, with leave to enter judgment for any deficiency. The case is here on assignment of errors covering these points and also directed to the order of the court, which was made without any reference to a master, to ascertain the amount due. It is also...