Prewett v. The Citizens Nat'l Bank Of Parkersburg.
| Decision Date | 09 November 1909 |
| Parties | Prewett v. The Citizens National Bank of Parkersburg. |
| Court | West Virginia Supreme Court |
1. Bills and Notes Actions Fraud as Defense.
Fraud in the procurement of an accommodation endorsement of a negotiable promissory note, alleged to have been perpetrated by the holder thereof, may be proved as matter of defense in an action at law, instituted by him on the note. (p. 180).
2. FRaud Ju risdiction.
In respect to redress of an injury, predicated on such a fraud, courts of law and courts of equity have concurrent jurisdiction. (p. 187).
3. Courts Concurrent and Legal Jurisdiction Transfer from one Court to Another.
In cases of concurrent jurisdiction, the maxim, Qui prior est tempore, potior est jure, applies, and that court whose jurisdiction first attaches will retain cognizance of the cause, unless it he the law court and ground for removal into a court of equity is set up and sustained. (p. 187).
4. Trial Transfer from Law to Equity.
Though necessity for discovery constitutes good ground for removing a cause from a legal to an equ.ty forum, the hill must show the evidence required cannot be obtained, under the common law rules, otherwise than by discovery in equity, and is indispensible to the protection or relief of the plaintiff. (p. 187).
5. Discoveey Grounds of Remedy Indispensalle Evidence.
Matter, constituting only ground for inference of motive for making alleged false representations, relied upon for relief, though relevant and material, is not deemed indispensable evidence, within the rule, prescribing the requisites of a bill for discovery and relief, because remote and indirect in its bearing upon the cause of action or matter of defense. (p. 187).
6. Equity-Jurisdiction Adequacy of Legal Remedy.
Allegations of a bill, seeking relief in equity, which really amount to nothing more than pretexts for the exercise of jurisdiction, are disregarded. (p. 190).
Appeal from Circuit Court, Wood County.
Bill by C. W. Prewett against the Citizens' National Bank of Parkersburg and others. Decree for defendants and complainant appeals.
Affirmed and Remanded.
Merrick & Smith, for appellant.
L. N. Tavenner, for appellees.
Alleging fraud in the procurement of his signature, C. W. Prewett, an accommodation endorser of a note for the sum of $3,000.00, executed by O. S. Hawkins, and negotiable and payable at The Citizens National Bank of Parkersburg, obtained an injunction, inhibiting and restraining said bank, the holder of the note, from proceeding to take judgment for the same, by motion, after notice, in the circuit court of Wood county. The bank and C. H. Shattuck, its president, against whom the allegations of fraud were made, answered the bill, denying ail the facts set up in it, as grounds of relief, and, on the hearing of the motion of the bank to dissolve the injunction, numerous affi-davits, directly conflicting and contradictory as to the charges of fraud were filed, and the motion was sustained and a demurrer to the bill overruled and the cause retained for further proceedings. An additional ground of relief set up in the bill is discovery, it being charged, by way of suggestion of motive for the perpetration of the alleged fraud, that the bank, at the time of the execution of the note, held two other notes of Hawkins', one of which was past due, and both of which were paid out of the proceeds of the $3,000.00 note. This charge having been made, a prayer for discovery was inserted in the bill. At the time of the execution of the note, a deed of trust was executed by Hawkins and left at the bank, by which certain real estate at Bedford City, Virginia, was conveyed to W. P. Flaherty, the cashier of the bank, as trustee, to indemnify Prewett as endorser on that note and all notes that might thereafter be endorsed by him in renewal of the same. This deed of trust was not recorded until about six months after the date thereof, and, although no real injury resulted from this, since the property was already encumbered to an extent considerably in excess of its value, this fact is relied upon in the bill as ground of relief. The misrepresentations, set up in the bill as having been made to secure the endorsement of Prewett, related to this property, it being charged that Hawkins, having applied for the endorsement, referred Prewett to Shattuck, president of the bank, for information as to the arrangements made for his protection, and that Shattuck exhibited to him a paper which he called a deed of trust on the Bedford City property, and told him the property was worth $7,500.00 and was ample security, and, therefore, he could safely endorse the note. These representations, if made, were absolutely false, since the property proved to be worth not more than $5,600.00 and was, at the time, encumbered by purchase money and judgment liens, amounting to over $7,000.00. Between the date of the execution of the deed of trust and the recordation thereof, a purchase money note for $1,300.00 was paid, whereb^y the property was relieved to that extent, but two judgments, amounting to more than $500.00, were acquired and made liens thereon, within the same period.
Assuming, for the purposes of this case, the sufficiency of the defense to the note set up in the bill, fraud in the procurement thereof, a vital inquiry is, whether the bill can be maintained under the circumstances. This defense can be made in the action at law as well as in equity, and, for the right to make such defense at law, it is not necessary to rely upon the statutory provisions found in sections 5 and G of chapter 126 of the Code. The purpose of that statute was to broaden the jurisdiction at law, not to restrict or cut it down, Sterling Organ Co. v. House, 25 W. Va. 88, and, prior to the enactment thereof, fraud in the procurement of a note or other contract, could be given in evidence under the general issue, in assumpsit or debt, or the plea of non est factum. Davis v. Baxter, 2 Patt. & H. 133; Todd v. Summers, 2 Grat. 168; 4 Min. Ins. (Part I) 770-74; Insurance Co. v. Buck & Newsom, 88 Va. 517; Hogg's Pl. & Forms 177, 188"'; Haden v. Garden, 7 Leigh 157. In all such cases courts of law and courts of equity have concurrent jurisdiction. B. & 0. R. R. Co. v. Lafferty, 2 W. Va. 104. In this case, Judge Brown said: See also Crislip v. Cain, 19 W. Va. 438; Kelly v. Riley, 22 W. Va. 247; Poore v. Price, 5 Leigh 52; Johnson v. Handley, 5 Munf. 219; White v. Jones, 4 Call 253. When a case of concurrent jurisdiction is pending in one of the courts, competent to try and determine it, the jurisdiction of that court will prevail, and the case cannot be removed to the other upon the sole ground that it also has jurisdiction. Hoge v. Trust Co., 103 Va. 1; Bruner & McCoach v. Miller, 59 W. Va. 36, 42-43; Ellis v. Amich, 53 W. Va. 421; State v. Fredlock, 52 W. Va. 232; Grand Chute v. Winegar, 15 Wall, 373; Insurance Co. v. Bailey, 13 Wall. 616. As the action o: i the note had already been instituted on the law side of the court, when this bill was filed, the defendant was bound to make his defense there, unless he could show inability on his part to do so, because of some equity in his favor, of which the law court could not take cognizance. He could not invoke the aid of a court of equity merely because, ordinarily, that court would...
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