Hogg v. Maxwell

• Decision Date: 10 November 1914
• Docket Number: 35.
• Citation: 218 F. 356
• Parties: HOGG v. MAXWELL et al.
• Court: U.S. Court of Appeals — Second Circuit

218 F. 356

HOGG v. MAXWELL et al.

No. 35.

United States Court of Appeals, Second Circuit.

November 10, 1914

WARD Circuit Judge.

We heretofore reversed the judgment in this case in favor of the defendant on the ground that the stipulation made at the trial did not establish jurisdiction because of citizenship of the parties. 215 F. 360, 131 C.C.A. 502. Subsequently both sides agreed that it was the intention of the stipulation to state that the plaintiff was a citizen as well as a resident of New Jersey and the defendants citizens of New York, as alleged in the complaint. Accordingly we now proceed to examine the case further and to express the opinion of the majority of the court. The defendants moved to dismiss the complaint upon among other grounds that:

'Fifth. The plaintiff's complaint does not constitute a cause of action at law. Sixth. The plaintiff's complaint does not constitute a cause of action at law for fraud.'

The difference between jurisdiction at law and in equity is rigorously maintained in the federal courts. Burnes v Scott, 117 U.S. 582, 6 Sup.Ct. 865, 29 L.Ed. 991. In those courts no one can be relieved in an action at law of the effect of a sealed instrument because of fraud, except where the fraud was connected with the actual execution of the instrument. If the party sought to be bound by the instrument was induced when he executed it to think it was something else than what it was-- e.g., that it was a receipt when it was really a release-- he may treat it as void and nonexistent. A plea of non est factum would have been good in an action at common law. But to be relieved because of collateral fraudulent representations he must resort to a court of equity. The leading case is Hartshorn v. Day, 19 How. 211, 15 L.Ed. 605, an action at law to recover damages for infringement by the assignee of a patent against persons claiming title under the same assignor. The plaintiff, whose was the later title sought to avoid the earlier title of the defendants by showing, among other things, that it had been obtained by means of fraudulent representations. Mr. Justice Nelson held that this could not be done in an action at law, saying at page 222 of 19 How. (15 L.Ed. 605):

'Evidence was given on the trial in the court below, for the purpose of proving that the agreement of the 6th of September was procured from Chaffee by the fraudulent representations of Judson, which was objected to, but admitted. The general rule is that, in an action upon a sealed instrument in a court of law, failure of consideration, or fraud in the consideration, for the purpose of avoiding the obligation, is not admissible as between parties and privies to the deed, and, more especially, where there has been a part execution of the contract. The difficulties are in adjusting the rights and equities of the parties in a court of law; and hence in the states where the two systems of jurisprudence prevail, of equity and the common law, a court of law refuses to open the question of fraud in the consideration, or in the transaction out of which the consideration arises, in a suit upon the sealed instrument, but turns the party over to a court of equity, where the instrument can be set aside upon such terms as, under all the circumstances, may be equitable and just between the parties. A court of law can hold no middle course; the question is limited to the validity or invalidity of the deed. Fraud in the execution of the instrument has always been admitted in a court of law, as where it has been misread, or some other fraud or imposition has been practiced upon the party in procuring his signature and seal. The fraud in this aspect goes to the question whether or not the instrument ever had any legal existence. 2 J.R. 177; 12 J.R. 430; (Franchot v. Leach) 5 Cow. (N.Y.) 506; (Stevens v. Judson) 4 Wend. (N.Y) 471; (Taylor v. King) 6 Munf. (Va.) 358 (8 Am.Dec. 746); (Wyche v. Macklin) 2 Rand. (Va.) 426; 10 W. & R. 25; 14 W. & R. 208; (Mordecai v. Tankersly) 1 Ala. 100; (Burrows v. Alter) 7 Mo. 424; (Ingersoll v. Long) 20 N.C. 436; C. & H. Notes, part 2, p. 615, note 306 (Ed. Gould & Banks, 1850).'

The same rule was followed in George v. Tate, 102 U.S. 564, 26 L.Ed. 232; Stephensen v. Supreme Council (C.C.) 130 F. 491; Levi v. Matthews, 145 F. 152, 76 C.C.A. 122; Pacific Ins. Co. v. Webb, 157 F. 155, 84 C.C.A. 603, 13 Ann.Cas. 752. Judge Wallace, in this circuit, in a case involving an unsealed instrument, recognized the law to be so in the case of a sealed instrument. Such v. Bank (C.C.) 127 F. 450. Citing Hartshorn v. Day, he said:

'If the receipt thus alleged to have been given had been a release under seal, it is plain that upon the authorities

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