Pringle v. Storrow

• Decision Date: 08 December 1925
• Parties: PRINGLE v. STORROW et al.
• Court: U.S. District Court — District of Massachusetts

9 F.2d 464 (1925)

PRINGLE v. STORROW et al.

District Court, D. Massachusetts.

December 8, 1925.

Sherman L. Whipple and E. Dwight Fullerton, both of Boston, Mass., for plaintiff.

Howard Stockton, Jr., and Richard M. Russell, both of Boston, Mass., for defendant Shaw.

Charles F. Choate, Jr., of Boston, Mass., for other defendants.

LOWELL, District Judge.

This is an action to recover for the breach of a duty owed to the plaintiff in regard to the purchase of property for investment. The defendants filed a general denial; they also pleaded a release under seal. The question raised by this motion is one of much importance in the trial of cases by jury. The answer to it depends on the examination of many authorities — their name is legion — in the federal courts. The question is whether, in a trial by a jury, a sealed instrument can be shown to have been procured by fraud. To one accustomed to the practice in the state court of Massachusetts — and the same is true of New Hampshire — the prompt answer is in the affirmative. Lyon v. Manning, 133 Mass. 439; Comstock v. Livingston, 210 Mass. 581, 97 N. E. 106; Piper v. Boston & M. R. Co., 75 N. H. 228, 72 A. 1024.

Such was the answer given by the Circuit Court of Appeals for this circuit in Manchester St. Ry. v. Barrett, 265 F. 557.

It is earnestly contended by the defendants that this decision is contrary to the law as laid down by the Supreme Court of the United States. After a careful consideration of the authorities, I have come to the conclusion that their contention is sound, and that in the federal courts a sealed instrument can be attacked only in a court of equity, if the attack be supported, not by fraud in the execution of the instrument, but by fraudulent representations which induced the plaintiff to sign it. The cases are many and various, but they will be found to depend on two distinctions: First, that between a simple contract and a specialty; and second, in the case of specialties, the distinction, already referred to, between fraud in the actual signing of the document and fraud in procuring its signature. The study of the reported cases is made more difficult by the fact that in many of them the character of the instrument before the court is not apparent. This is true of the Manchester St. Ry. Case, but I have ascertained by referring to the original papers that the release in that case was under seal. It is the only instance, so far as I am aware, where the courts taking the same view of the law as does the Circuit Court of Appeals for this circuit were dealing with sealed instruments when they delivered their opinions.

The state of the law is confused, also, by the further fact that it is not always clear whether the courts intended to draw a distinction in their opinions between a sealed and an unsealed instrument. This distinction is, however, fundamental. A seal was a sacred thing at the common law. It is usually said that the difference between a simple contract and a specialty is that a seal imports consideration. But, as is pointed out by Professor Ames in 9 Harv. Law Rev. 49, this statement is not accurate. A specialty does not require consideration. A seal had a peculiar effect at the common law. It showed that the document to which it was attached was executed with studied formality, and therefore should not be lightly abrogated.

Before considering the authorities, the preliminary remark should be made that, as this question relates to the equitable jurisdiction of the federal courts, the state practice is not binding on them. The Conformity Act (R. S. § 914; U. S. Comp. St. § 1537) has not affected that jurisdiction. Scott v. Armstrong, 146 U. S. 499, 13 S. Ct. 148, 36 L. Ed. 1059; Hill v. No. Pac. Ry. Co., 113 F. 914, 51 C. C. A. 544; Un. Pac. R. Co. v. Syas, 246 F. 561, 158 C. C. A. 531.

Two cases in the Supreme Court have directly passed on the point now under discussion. They are Hartshorn v. Day, 19 How. 211, 15 L. Ed. 605, and George v. Tate, 102 U. S. 564, 26 L. Ed. 232. The first related to a sealed assignment of a patent; the second to a bond. In each case it was held that fraud relating to the consideration for the sealed instrument could not be shown in an action at law. In the first case Mr. Justice Nelson said that the court "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. * * * 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." 19 How. at page 223. In the second case, Mr. Justice Swayne said: "It is well settled that the only fraud permissible to be proved at law in these cases is fraud touching the execution of the instrument such as misreading, the surreptitious substitution of one paper for another, or obtaining by some other trick or device an instrument which the party did not intend to give." 102 U. S. 564, at page 570.

Before the passage in March, 1915, of section 274b of the Judicial Code (38 Stat. 956; U. S. Comp. Stat. § 1251a), the party who complained of fraud in relation to the procuring of a sealed contract was compelled to file a bill in equity. Liberty Oil Co. v. Condon Bank, 260 U. S. 235, 243, 43 S. Ct. 118, 67 L. Ed. 232; Vandervelden v. Chic. & N. W. Ry. Co. (C. C.) 61 F. 54; Kosztelnik v. Bethlehem Iron Co. (C. C.) 91 F. 606; Riggs v. Gillespie, 241 F. 311, 154 C. C. A. 191.

This is not now necessary, but the powers and duties of a federal court in equity have not thereby been changed. Liberty Oil Co. v. Condon Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232.

Most of the cases hereinafter cited arose before 1915; their reasoning, however, has not been outlawed by section 274b of the Judicial Code.

Hartshorn v. Day and George v. Tate have never been overruled. The greater weight of authority in the lower federal courts is in consonance with these decisions. Shampeau v. Conn. Riv. Lumber Co. (C. C.) 42 F. 760; Johnson v. Merry Mount Granite Co. (C. C.) 53 F. 569; Messinger v. N. E. Mutual Life Ins. Co. (C. C.) 59 F. 529; Vandervelden v. Chic. & N. W. Ry. Co. (C. C.) 61 F. 54; Kosztelnik v. Bethlehem Iron Co. (C. C.) 91 F. 606; Hill v. No. Pac. Ry. Co. (C. C.) 104 F. 754; Hill v. No. Pac. Co., 113 F. 914, 51 C. C. A. 544; Such v. Bank (C. C.) 127 F. 450; Heck v. Mo. Pac. Ry. (C. C.) 147 F. 775; Pac. Mut. Life Ins. Co. v. Webb, 157 F. 155, 84 C. C. A. 603, 13 Ann. Cas. 752; Simpson v. Penn. R. Co., 159 F. 423, 86 C. C. A. 403; De Lamar v. Herdeley, 167 F. 530, 93 C. C. A. 239; Un. Pac. R. Co. v. Whitney, 198 F. 784, 117 C. C. A. 392; Drobney v. Lukens Iron & Steel Co., 204 F. 11, 122 C. C. A. 325; Standard Portland Cement Corp. v. Evans, 205 F. 1, 125 C. C. A. 1; Am. Sign Co. v. Electro-Lens Co. (D. C.) 211 F. 196; Maine N. W. Development Co. v. Northern Commercial Co. (D. C.) 213 F. 103; Hogg v. Maxwell, 218 F. 356, 134 C. C. A. 164; Whitcomb v. Shultz, 223 F. 268, 138 C. C. A. 510; Cline v. So. Ry. Co. (D. C.) 231 F. 238; So. Ry. v. Clark, 233 F. 900, 147 C. C. A. 574; Du Pont v. Gardiner, 238 F. 755, 151 C. C. A. 605; Riggs v. Gillespie, 241 F. 311, 154 C. C. A. 191; Un. Pac. Ry. Co. v. Syas, 246 F. 561, 158 C. C. A. 531; Columbia-Knickerbocker Trust Co. v. Abbot, 247 F. 833, 160 C. C. A. 55; Fay v. Hill, 249 F. 415, 161 C. C. A. 389; Cavender v. Virginia Bridge & Iron Co. (D. C.) 257 F. 877.

Contra: Lumley v. Wabash R. Co., 76 F. 66, 22 C. C. A. 60; Wagner v. Natl. Life Ins. Co., 90 F. 395, 33 C. C. A. 121; K. C. So. Ry. Co. v Martin (C. C. A.) 262 F. 241; Manchester St. Ry. v. Barrett (C. C. A.) 265 F. 557; Plews v. Burrage (C. C. A.) 274 F. 881; National Aniline & Chemical Co. v. Arnhold (D. C.) 298 F. 755.

The cases which run counter to the general current of opinion may be shortly referred to. The Manchester St. Ry. Case, in this circuit, came up to the Circuit Court of Appeals from the District of New Hampshire, and the court followed the New Hampshire practice, without its attention being called to Hartshorn v. Day or George v. Tate. The opinion did not refer to Johnson v. Merry Mount Granite Co. (C. C.) 53 F. 569, in this circuit, where Judge Putnam took a contrary view, nor to Columbia-Knickerbocker Trust Co. v. Abbot, 247 F. 833, 160 C. C. A. 55, where Judge Dodge, in delivering the opinion of the Circuit Court of Appeals for this circuit, said, at page 837:

"Had said agreements been under seal, these contentions must have prevailed, at the time the above rulings were made, according to the rule then undoubtedly established as to sealed written agreements. George v. Tate, 102 U. S. 564 26 L. Ed. 232."

The succeeding remark of the learned judge, that the effect of section 274b of the Judicial Code was to change equitable defenses into legal ones, has now been disapproved by Liberty Oil Co. v. Condon Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232. The Wagner Case, 90 F. 395, 33 C. C. A. 121, related to a contract not under seal, and is supported by the later case in the same circuit of Southern Ry. v. Clark, 233 F. 900, 905, 147 C. C. A. 574, on that ground. The learned judge who delivered the opinion in the Wagner Case, now the Chief Justice of the United States, did not refer to either Hartshorn v. Day or George v. Tate. The case of Wagner v. Insurance Co. has been considered in Hill v. No. Pac. Ry. (C. C.) 104 F. 754, Hill v. No. Pac. Ry., 113 F. 914, 51 C. C. A. 544 (same case on appeal), Such v. Bank (C. C.) 127 F. 450, and Pac. Mutual Life Ins. Co. v. Webb, 157 F. 155, 84 C. C. A. 603, 13 Ann. Cas. 752. The remark of Judge Lurton in Lumley v. Wabash R. R., 76 F. 66, at page 73, 22 C. C. A. 60, is thus referred to in the Wagner Case:

"We find no reason, therefore,...