Dearing v. The Bank Of Charleston

• Decision Date: 30 November 1848
• Docket Number: No. 58.,58.
• Citation: 5 Ga. 497
• Parties: William Dearing, et al., plaintiffs in error. vs. The Bank of Charleston, et al.,defendants.
• Court: Georgia Supreme Court

5 Ga. 497

William Dearing, et al., plaintiffs in error. vs. The Bank of Charleston, et al., defendants.

No. 58.

Supreme Court of the State of Georgia

NOVEMBER TERM, 1848.

In Equity—Richmond Superior Court, decision on demurrer, by Judge Holt, June Term, 1848.

The defendants in error filed their bill in Richmond Superior Court, charging that Samuel H. Peck owned 310 shares in the Augusta Insurance & Banking Company, which, in June, 1839, he transferred to the Bank of Charleston, So. Ca. as a security for a large sum of money, ($28,000) owing by Holcombe, Peck & Co. to the Bank.

In March, 1843, the capital stock of the Company was reduced, and a certificate was granted to A. Rose, Cashier, for 232 shares.

William Dearing having obtained a judgment against Peck, in Richmond, caused a levy and sale of these shares, as the property of Peck.

On the day of sale, (7th January, 1845,) notice was given by an agent of the Bank of Charleston, that Peck had no interest in the Stock. Henry H. Cumming became a purchaser of 165 shares, at the price of $2 per share.

On the same day a bill was filed in the Circuit Court of the United States, for the district of Georgia, to which Cumming was made a party, to restrain the Insurance Company from transferring the shares to the vendees of the sheriff, which bill was still pending when this was filed. Mr. Cumming answered the bill in the Circuit Court, disclaiming any interest in the shares, and alleging that he purchased, as agent of William Dearing, Stovall & Simmons, and Ives & Brother, who were made parties.

On 7th February, 1845, William Dearing filed a bill in Richmond Superior Court, alleging the transfer of the shares from Peck to the Bank of Charleston, to have been fraudulent, and praying a decree ordering the Insurance Bank to transfer the shares to him.

The Bank of Charleston was made a party to this bill, and being non resident, a rule was published for four mouths in the Chronicle & Sentinel, a newspaper published in Augusta, requiring the Bank of Charleston to appear and answer.

There being no appearance, the bill was taken pro confesso, and a decree taken ex parte, in conformity with the prayer of the bill.

The present bill of complainants below, defendants in error, alleges that the Bank of Charleston had no notice of these proceedings, and that so soon as they came to their knowledge, this bill was filed to review and set aside the decree rendered in the bill of Dearing vs. The Bank of Charleston, et al. The affidavit of the cashier of the Bank was attached to the bill.

William Dearing, in his answer, among other things, alleged that the Bank of Charleston did have notice, from several facts; one, that a director of the Bank of Charleston inquired of thedefendant, what the notice in the Chronicle & Sentinel meant, when the defendant referred him to the notice itself. Another, that the paper was filed in the public reading room in Charleston, to which all the officers of the Bank had access. And another, that the President of the Bank of Charleston, in the Banking House of the "Augusta Insurance & Banking Company, " in Augusta, was notified of the pendency of this suit, and agreed to defend it.

Upon the coming in of the answer, a motion was made to dissolve the injunction, which motion was refused by Judge Holt, and Dearing excepted.

Miller & Cumming, for plaintiffs in error.

1st. There is no equity in the bill of the said Bank of Charleston, nor any thing calling for the interference of the Court by injunction.

2. The said Bank of Charleston was regularly and legally made party defendant to the first bill, and was concluded by the decree rendered therein. Rule of the Superior Court, Hotchkiss, 676. 953. 3 Kelly, 23. Dudley, 190. 3 Binney, 277, 417. 4 Stewart d Porter, 447. 12 (Jill d Johns. 09. 10 Yerg. 172. Story's Eq. Pl. s. 135, 135 a.

3d. The stock in dispute was within the jurisdiction of the Court, and the Augusta Insurance & Banking Company, the other and material defendants to the first bill, being duly served with process, the Bank of Charleston was bound by the decree rendered. 2 McCord's Ch. R. 435. 3 Gill d Johnson, 504, 509. 1 Atkyns, 19. 10 Yerg. 172. Story's Conflict of Laws, Sec. 383.

4th. The Bank of Charleston had knowledge of the sale of the stock by the Sheriff—had an agent there, and was bound to know what proceeded from it, or suffer the consequences. 3 Kelly, 74. Story's Eq. Pl. s. 414.

5th. The Bank of Charleston has neither complied with the decree, nor permitted it to be complied with. Story's Eq. Pl. s. 406.

6th. There is no error on the face of the decree enjoined; nor does the bill of the Bank of Charleston allege the discovery of any material testimony since it was rendered. Story's Eq. Pl. s. 404. 12 Gill d Johnson, 69.

7th. The decree of a Court of Equity cannot be stayed by injunction. 4 Iredell's Eq. R. 481. 8th. The equity of the bill of said Bank of Charleston is denied by the answer of Wm. Dearing.

Gould, for defendants in error.

1st. The equity of the bill is not sworn off.

This equity consists in want of notice of the original proceeding.

The Cashier swears, positively, that the Bank had no notice.

The President's affidavit was to the same effect, but is mislaid.

It is sworn off by inference and hearsay—no positive averment of notice in the answer.

The statement of Mr. Boyce's conversation, is only inference.

That of notice from the Insurance Bank, is only hearsay.

2d. The injunction was properly granted.

No man can be deprived of his rights, without a hearing.

There are cases (of attachment, for instance,) where, from necessity, decisions are made, ex parte.

But these depend only on Statutes, and can only be extended by Statute.

A Rule of Practice is relied on. (Rule 2, in Equity.)

1st. But where a party is not heard, rules against him must be construed strictly, and strictly complied with. It does not appear that this order was founded on affidavit.

2d. Courts have power to make rules of practice, not to legislate away substantive rights.

The Act of 1821 goes no further—gives no power to the Judges, to legislate by procuration. See Const. Art. 1, s. 1. Hotch. 500.

The Act of 1838, (Hotch. 676,) merely fixed the time of publication, which the rule left to discretion of the Court, made no provision concerning, and gave no sanction to the subject-matter of the rules.

The only Statute authority for this rule is in the Statute 5 Geo. II. c. 25. Schley, 366, '7. See Compiler's note.

And if that Statute reaches the case, the party Is allowed seven years to impugn the decree. Sec. 4.

And a similar privilege is given, in other States, where a similar proceeding is authorized. 7 Stat. S. C. 210. Jas. L. Petigru, for defendant in error.

The appellant ought to be enjoined from attempting to enforce the order made in his favor, because it is an ex parte order, not made upon the merits and contrary to the truth.

It is the distinction of Equity, not only to do justice, but full justice: it is not enough that the case should be plain between A. and B. If ulterior interests be involved, Equity will not disturb the condition of the parties, without taking care that all right are preserved. Therefore, in all who are interest-Equity, ed, must be made parties. 2 Daniel's Pr. 982. 16 Vesey, 321. Mit. 133.

But to bind the rights of those who have not been heard, and who are made parties only nominally, and for the very purpose of condemning them unheard, is wholesale injustice.

A decree ex parte is considered as the decree of the party, and be must take such a decree as he can abide by. 1 Smith's Pr. 416. Gilbert's For. Rom. 155. 2 Mad. Pr. 351.

This is the rule when the party has appeared, and is in contempt. When he is in contempt for not appearing, the practice is regulated by 5 George II. Cap. 25, which is of force in Georgia. See Schley's Dig. 366. But this Statute does not infringe, in the least, on the cardinal principle of Equity, that judgment should follow justice. In cases under the Statute, the party does not draw his own decree, but the Judge, on examination of the pleadings. Geary vs. Sheridan, 8 Ves. 102. 2 Dan. Pr. 970; and ample opportunity is given to the party affected by the decree, to make his objections within seven years. Such is the caution of Chancery, and the Statute Law of Georgia, in respect to parties who have absconded, to avoid being served, or incurred the penalties of a contempt, by disobeying the process of the Court.

When the rule, that all persons interested in the subject of the suit, should be made parties, would include some persons out of the jurisdiction, Equity modifies the form of proceeding. The fact is stated in the bill, and process prayed against the absentees, when they come within the jurisdiction. 1 Scho. & Lef. 240. Story's Eg. Pl. 78. Osborne vs. the Bank, 9 Wheat. 738, 846. It would be mockery of justice to preserve the form, at the expense of substance, and include the absentee, because it is a rule of Equity to include every party that may be affected by the de-cree; and condemn him unheard, and without evidence, because he is absent.

If the Bank had been in contempt, an absolute decree against them, without hearing, could not be justified.

2. But the Bank was not in contempt.

The State of Georgia, and its Courts, have no jurisdiction over strangers, not within the limits of the State. Extra-territorial authority, whether attempted to be exercised by the Executive or Judiciary, is necessarily illegal. As to the public, it is a glaring usurpation on the independence of a State, to summon its citizens to a foreign tribunal. And as to the individual, it is against the first principles of reason and justice, that either in civil or criminal proceedings, a man should be condemned before he is heard. 2 Ins. 51. Buchanan vs. Pucker, 1 Camp. 63. 9 East, 192. Pawling vs. Wilson, 13 John. 192. Borden vs. Fitch, 15 John. 121. Miller vs. Miller, 1 Bail. 242. Story's Conf. Laws, §54(i.

There is, however,...