The Mechanics Bank of Alexandria, Appellants v. Adam Lynn, Appellee

• Decision Date: 01 January 1828
• Citation: 7 L.Ed. 185,1 Pet. 376,26 U.S. 376
• Parties: THE MECHANICS BANK OF ALEXANDRIA, APPELLANTS, v. ADAM LYNN, APPELLEE
• Court: U.S. Supreme Court

26 U.S. 376

1 Pet. 376

7 L.Ed. 185

THE MECHANICS BANK OF ALEXANDRIA, APPELLANTS, v. ADAM LYNN, APPELLEE.

January Term, 1828

APPEAL from the Circuit Court for the county of Alexandria.

The appellee filed his bill on the Chancery side of the Circuit Court for the county of Alexandria, in the District of Columbia, against the Mechanics Bank of Alexandria, to enjoin the bank from proceeding upon a judgment at law, which the bank had obtained against him, and upon which an execution had issued, and he had been taken and confined.

The bill stated, that the judgment which had been obtained against the complainant was for what is called, according to the bank phrase, 'an overdraw,' amounting to $1573 85; and, that after this judgment had been obtained, he had made a deed of trust to Thomas F. Mason, to secure the payment of his debts, and that this judgment against him was among the first to be paid; and also that the security provided in the deed was ample for that object.

The bill then states, that the complainant after this deed had been made, entered into a settlement with the bank of the various claims which they had against him, and agreed with them upon certain modes of payment of his debts, and among others of the judgment of $1573 85 for the overdraw. That this $1573 85 was to be paid out of the trust fund conveyed to Mr. Mason; and as an evidence of it, the bill refers to the account stated in the written settlement, in which the defendant Lynn is charged with the judgment for the overdraw, and credited by 'the security in deed to Mason for overdraw.'

The bill alleges also that in pursuance of this settlement the complainant carried into effect the terms of the said settlement, and that every thing due from him to the bank was satisfied except the sum of $3700, which was to be secured to the satisfaction of the bank; and that so far as respected this $3700, he had offered security, such as the committee of the bank had considered ample, and such as the bank ought to have accepted; but which they refused to accept.

The bill then alleges, that notwithstanding this settlement and the fulfilment of it, on the part of the complainant, the bank had issued an execution against him upon the judgment for 'the overdraw,' and had confined him in the bounds of the jail under the execution, and prayed he might be relieved from his imprisonment, and that the bank should look to the security provided in the deed of trust to Mason, and to that fund only. Upon this bill an injunction was granted, and the complainant was released from his confinement under the execution.

The appellants filed an answer to this bill, and among other things stated; that they had agreed upon a settlement with the complainant, of the various claims which the bank had upon him. That they were very desirous of securing the payment of these claims, and in order to effect the said settlement, they had given up to the complainant $784 04; and had agreed to take his bank stock and property at prices above their value; and had also agreed to take their payment for 'the overdraw' out of the trust fund in Mason's hands, provided they could have had the full benefit thereof. They admit that in pursuance of this agreement, the defendant Lynn did transfer to the bank his stock and lands leaving nothing unpaid, but the judgment for 'the overdraw,' and the sum of 3700 dollars which was to have been secured to the satisfaction of the bank. They refer to the articles of agreement to show, that the security to be given for this 3700 dollars was to be such as was satisfactory to the Board of Directors; and the answer states that it never was secured to their satisfaction, and that no tender or offer of security was ever made, that ought to have been acceded to by the bank; and that the bank was right in refusing the security offered.

The answer also states, that as to the judgment for the overdraw, it never was satisfied, and that the deed of trust to Mason was entirely inoperative, as to this debt, and was made upon such terms that the bank could not accede to them. That their cashier, immediately after the agreement had been entered into between Lynn and the bank, had called upon the trustee, Mr. Mason, to know whether the bank might expect payment from that fund; and was informed by him, that one of the conditions of the deed was, that the creditors accepting the benefit of the deed, should within six months of the date of it, release to Lynn all claims and demands which they had upon him; that this deed had been executed on the 16th November 1820, and that the agreement of Lynn with the bank had been executed on the 19th May 1821, so that the six months had, in fact, expired before the said agreement had been made. The trustee therefore informed the cashier, that the bank was not entitled to any benefit under that deed, and that they could not reckon upon that fund for the payment of their said judgment. The answer then states, that the bank, finding they were not entitled to any benefit from the trust funds, and seeing no other means of payment from Lynn; had resorted to an execution upon their judgment, and he was accordingly taken in execution and remained in execution nearly a year, until it became necesary for him to take the oath of insolvency, and under these circumstances he obtained the injunction, and they prayed that it might be dissolved.

The deed of trust of Mason, bearing date the 16th of November 1820, was filed as an exhibit with the bill of Lynn the complainant. This deed has in it the following proviso, viz. 'Provided always however, and it is hereby expressly required, that each and every of the aforesaid creditors, before they receive the benefit of this deed, shall sign and execute a full and complete discharge from all claims and demands whatsoever, against the said Adam Lynn; and the period of six months shall be, and is hereby, allowed them from the date of this instrument to come in, and elect and sign such discharge; and the dividend or share to which each and all of those who may refuse or neglect for the space of six months as above allowed, for that purpose, to sign and execute such discharge as aforesaid, shall go and be disposed of for the benefit of such of the aforesaid creditors as shall accept of the terms of this deed, and in the order above directed.'

The agreement entered into between the defendant Lynn and the bank, was also made an exhibit with the bill. It bears date on the 29th of May 1821, and so far as respects the matter in dispute is as follows, viz.——

ARTICLE 1st. That the account of A. Lynn, with the Mechanics Bank be stated as follows——

To A. Lynn's By A. Lynn's

stock note, 15,360 00 stock, $21,014 50

Mrs. Buckland and Discount 10

Mrs. Coryton's, 125 00 per cent. 2,101 45

A. Lynn's note

endorsed R. Young, 11,100 00 $18,913 05

Interest on do. By Mrs. B. &

to 4th May 1820, 1,356 00 Mrs. C. do 357 50

A. Lynn's note Discount 10

endorsed J. Gird, 320 00 per cent. 35 75

Interest on do. 36 54 321 75

Overdraw, 1,573 85 Interest on 3553,

Five protests 8 75 difference 434 00

between stock

and stock note,

123 acres of

land at $25, 3,087 50

House and lot, 1,500 00

Security in deed to 1,573 85

Mason for overdraw,

Balance, 4,049 98

$29,880 19 $29,880 19 ARTICLE 2d. The above balance, except $349 98, say 3700 dollars to be secured by A. Lynn to the satisfaction of the Board, and to be paid in one, two and three years.

Depositions were taken on the part of the bank, to prove that the committee of the bank who entered into the settlement with the defendant Lynn, were not authorized to decide upon the security which he had offered for the balance of 3700 dollars; and that they did not in fact agree to accept the security.

Upon the final hearing of the case in the Circuit Court, on the bill, answer, exhibits and depositions, the Court ordered a perpetual injunction; and, to this decretal order an appeal was entered to this Court by the Mechanics Bank.

The case was argued by Mr. Wirt, Attorney General, and Mr. Swan, District Attorney, for the appellants, and by Mr. Jones and Mr. Taylor, for the appellees.

For the appellants it was contended.——The deed from Adam Lynn to J. F. Mason does not appear to be recorded; no notice of its contents was given to the bank, nor does it appear that the bank knew of its terms, at the time of settlement. As soon as the settlement informed the bank of the deed, application was made for the benefit of its provisions; and it was found, that by its terms the bank was excluded therefrom. 1. Because the period for executing a release had passed; and secondly because the bank could not give a general release, as the debt of 3700 dollars had not been secured. Equity will not enforce an agreement, when from circumstances subsequently discovered, it appears that the party who made the agreement was misled, or cannot receive under it, what according to its terms he expected to receive, 2 Sch. & Lef. 341. If the appellee meant to make use of the deed to Mason, he should have shown in his bill that the bank agreed to abide by it. This is not done, nor is it said by the appellee that the bank was knowing of its nature.

The debt of the appellee for 'the overdraw,' has never been paid; although the judgment for 3700 dollars may, by the result of the proceeding upon the judgment, be satisfied; the overdraw remains due, unless the statement in the agreement as to it, shall release the claim of the bank on Adam Lynn and oblige them to look to the deed of Mason for payment. The bank cannot place itself within the terms of the provisions of that deed. There is no evidence before the Court that none of the creditors of Adam Lynn came in under the deed, and thus the fund to arise from that deed is closed against the bank for ever. The effect of the perpetual injunction will be to prevent any of the debt for the overdraw being collected, and give to the appellee the benefit of the...