Hudgens v. Baugh

• Decision Date: 15 September 1915
• Citation: 225 F. 899
• Parties: HUDGENS et al. v. BAUGH.
• Court: U.S. Court of Appeals — Fourth Circuit

225 F. 899

HUDGENS et al. v. BAUGH.

United States District Court, W.D. South Carolina.

September 15, 1915

Richey & Richey, of Laurens, S.C., and Haynsworth & Haynsworth, of Greenville, S.C., for complainants.

Dial &amp Todd, of Laurens, S.C., and Cothran, Dean & Cothran, of Greenville, S.C., for defendant.

JOHNSON District Judge.

In December, 1911, the defendant in this bill, William S. Baugh brought an action at law in the Circuit Court of this district against the complainants in this bill, as defendants, upon three several promissory notes, each for the sum of $1,066.66, dated February 13, 1907, and payable respectively, October 1, 1908, October 1, 1909, and October 1, 1910, with interest at 6 per cent. from maturity and 10 per cent. attorney's fees; each note subject to a credit of $266.66 as of February 8, 1907. The defendants in that action answered the complaint and made defense, alleging a breach of warranty in the sale of a German Coach stallion for which the notes were given.

The action came on to be tried by Judge H. A. M. Smith and a jury at October, 1913, term, and resulted in a directed verdict in favor of the plaintiff for $3,789.56. Upon the trial it appeared that the two notes maturing October 1, 1909, and October 1, 1910, were transferred to William S. Baugh before maturity, for value, but that the note maturing October 1 1908, was transferred to him after maturity. The defendants made no contest as to the two notes transferred before maturity, but contested the other. The verdict as to it was directed upon the ground that the sale was made under a special warranty, which required a return of the horse, and this was never tendered.

In October, 1914, nearly a year after the rendition of the judgment, a motion was made before Judge Smith for a new trial upon after-discovered evidence; the after-discovered evidence being that at the time of the purchase of the stallion, which was the consideration for the notes set up in the complaint, the defendants did not know that one D. H. Counts, who acted for them in the purchase, was at the same time the agent and acted for the vendor, and was interested in making the representations on behalf of the vendor and procuring the sale; that D. H. Counts had deceived the defendants into the belief that he (Counts) had faith in the enterprise and had joined in the venture, and he would be stimulated to make the business a success, and to make sure of the deception resorted to the trick of giving his check as one of the purchasers for $200, which was paid to the vendor, who thereupon paid it back to Counts; that this was a fraud under the principles decided in Hickman v. Sawyer, 216 F. 281, 132 C.C.A. 425, and that as to the third note sued upon, which was not proven to have been transferred to the plaintiff for value before maturity, this defense of fraudulent conspiracy could be interposed; that it was unknown to the defendants at the time of the previous trial, and only now were they able to set it up, and therefore upon this after-discovered evidence they are entitled to a new trial upon this note.

On the 13th of November, 1914, Judge Smith filed his order refusing the motion, holding that the moving parties had not shown due diligence, that their motion depended upon the declarations of a witness who was examined at the trial, and that it referred to an issue which was not made upon the trial. His concluding words were:

'If the verdict and judgment has been procured by fraud through the collusion of the plaintiff and the witness Counts in preventing the interposition of the fraud of the vendor and Counts as a defense in this cause, so that it is an issue not determined upon the trial had, then it may be that the defendants would be entitled to an injunction on the equity side of the court against the enforcement of the judgment.'

Thereafter the defendants were inactive until the 20th day of July, 1915, when this bill was filed. The defendants in the action at law now bring this bill against the plaintiff in that action to enjoin the enforcement of the execution issued upon the aforesaid judgment. It is important to notice the exact ground for this bill. The plain intimation in Judge Smith's order, which is unquestionably the law, is that if the verdict and judgment has been procured by fraud through the collusion of William S. Baugh and the witness Counts in preventing the interposition of the fraud of Couch & Son and Counts as a defense, the defendants could maintain this bill to enjoin the enforcement of the execution. The collusion must have been between the plaintiff, Baugh, and the witness Counts, not between Couch & Son and Counts.

The bill makes no reference to any fraud or collusion between Baugh and Counts, but refers only to that between Couch & Son and Counts. It appears that Baugh came into the case long after the negotiations for a sale in February, 1907, and there is not a word in the bill connecting him with the alleged fraud of Couch and Counts. The defendant W. S. Baugh now moves for an order dismissing the bill for want of equity, and that is the matter presently to be decided. I think that the controversy is governed by the case of United States v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93. There it is held:

'But there is an admitted exception to this general rule in cases where, by reason of something done by the successful party to a suit, there was in fact no adversary trial or decision of the issue in the case. Where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise, or where the defendant never had knowledge of

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