Search Supreme Court Cases
GRISWOLD V. HAZARD, 141 U. S. 260 (1891)
U.S. Supreme Court
Griswold v. Hazard, 141 U.S. 260 (1891)
Griswold v. Hazard
Argued and submitted April 10, 13, 1891
Decided May 25, 1891
141 U.S. 260
An admitted or clearly established misapprehension of law in the making of a contract creates a basis for the interference of a court of equity resting on its discretion, and to be exercised only in unquestionable and flagrant cases.
Whether laches is to he imputed to a party seeking the aid of a court of equity depends upon the circumstances of the particular case.
In this case, it is held on the evidence that the bond given by Griswold in the ne exeat proceeding conditioned that the defendant in that proceeding should "abide and perform the orders and decrees" of the court was executed by him under such an apprehension of the obligations in law assumed by him in executing and delivering it as to make it the duty of a court of equity to reform it so as to make him liable for the penal sum named only in the event that the principal fail to appear and become subject to the orders and decrees of the court, but that, the defendant in the suit in which the ne exeat was issued having died, and such a decree being therefore inappropriate, and Griswold being guilty of no laches, a decree should be entered perpetually enjoining the prosecution of any action, suit or proceeding to make him liable in any sum on or by reason of said bond.
In the action at law upon the bond given in the ne exeat proceedings (No. 53), the court erred in ordering the amended pleas to be stricken from the files.
D. was sued in the Supreme Court of Rhode Island by stockholders in the Credit Mobilier for an accounting and payment of what might be found
due on the accounting for securities and moneys coming into his hands as President of the Credit Mobilier. The receiver of that company in Pennsylvania released him from such liability. The Supreme Court of Rhode Island would not allow that release to be interposed as a defense. Held that the error, if any, in this respect could not be corrected by bill in equity filed by a surety on a bond given to release D. when arrested on ne exeat proceedings in that Rhode Island suit.
A pleading presenting only a question of error in a judgment of a state court does not go to the jurisdiction.
The first of the above suits was brought by Griswold, a citizen of New York, against the appellees, citizens of Rhode Island, to obtain a decree cancelling or (if relief of that character could not be granted) reforming a certain bond for the sum of $53,735 executed by Thomas C. Durant as principal and Griswold and S. D. Bradford as his sureties. It was heard upon bill, answer, and proofs, and the bill was dismissed.
The action at law, No. 53, was brought by the appellees against Griswold upon the above bond in one of the courts of Rhode Island, and was removed upon his petition to the Circuit Court of the United States for the District of Rhode Island, where a judgment was rendered against him for the sum of $66,470.
The other two cases, Nos. 51 and 52, were suits in equity brought by Griswold, pending the action at law in the circuit court, to obtain an injunction against its further prosecution. The relief asked in each of those suits was denied and the bills were dismissed.
All of the cases have their origin in a suit in equity brought August 22, 1868, in the Supreme Court of Rhode Island, by Isaac P. Hazard, of that state, against Thomas C. Durant, Oliver Ames, Benjamin E. Bates, John Duff, Cornelius S. Bushnell, Sidney Dillon, Henry S. McComb, the Credit Mobilier of America, a Pennsylvania corporation, and the Union Pacific Railroad Company, a corporation created by acts of Congress. Hazard sued on behalf of himself and all other stockholders in the first-named corporation who should become parties to his bill. Durant, from an early date in 1864 until May 18, 1867, was President of the Credit Mobilier of America, having, it
was alleged, to a great extent the management of its affairs and the confidence of its directors and trustees as well as the control of its finances and disbursements and of its treasurer, clerks, and servants. The theory of the bill was that he had acquired a large amount of the stock of the Credit Mobilier of America upon which dividends had been paid in money and in the stock and bonds of the Union Pacific Railroad Company, the amount of such bonds exceeding, it was alleged, $700,000, and the amount of such stock of the last-named corporation being nearly $2,000,000, and that the shares of stock, bonds, and moneys, so received by him, belonged equitably to the Credit Mobilier of America and its stockholders.
The bill alleged that Durant's pecuniary condition was precarious; that he was, and for a long time had been, largely engaged in hazardous speculations and financial operations, sustaining thereby heavy losses, and liable to sustain others; that any recovery against him, it was feared, could not be enforced by execution or the ordinary process of law. that he was "about to depart out of the state, and out of the jurisdiction of this Court," and that the defendants -- the individual defendants being sued as trustees in a certain contract with the Union Pacific Railroad Company, the profits of which belonged to the Credit Mobilier of America and its stockholders -- "though requested so to do," had wholly neglected and refused to take any steps to compel him to account for said moneys, stocks, and bonds, so received and improperly appropriated.
The principal relief asked was that Durant be required to pay over and deliver to the Credit Mobilier of America and the plaintiff Hazard such sums of money and shares of stock as should appear upon an accounting to be justly due or belonging to that corporation and to Hazard, and to make such transfer of the stock and bonds as would fully protect its and his rights in the premises; that the amounts ascertained to be due be adjudged a lien upon the shares in the stock of each of said corporations owned or held by or standing in the name of Durant, as well as upon the above contract assigned to the
defendant trustees and the dividends, earnings, stocks, and bonds received or to be received by virtue of that contract, to the extent of the shares to which Durant might be entitled under it, and that, on default in the payment and delivery of the moneys, stocks, and bonds so found due, all such stocks and bonds be sold under the direction of the court or otherwise transferred and apportioned equitably among the rightful owners and claimants thereof, and that such stock, bonds, moneys, interest, and rights, so procured by Durant, be deemed and taken as the rightful property of the Credit Mobilier of America and its stockholders. The bill prayed that Durant be restrained from departing out of the state and out of the jurisdiction of the court by writ of ne exeat issued under its seal and by its order.
A writ of ne exeat was ordered to be issued, August 22, 1868, for $53,735. It was in these words:
"Whereas, it is represented to our supreme court, sitting in equity, on the part of Isaac P. Hazard and others, complainants, against Thomas C. Durant and others, defendants, that said Thomas C. Durant is greatly indebted to the said complainant, and designs quickly to go into other parts beyond this state (as by oath made in that behalf appears), which tends to the great prejudice and damage of the said complainants: therefore, in order to prevent this injustice, we hereby command you that you do, without delay, cause the said Thomas C. Durant to come before you and give sufficient bail or security, in the sum of fifty-three thousand seven hundred and thirty-five dollars, that he, said Thomas C. Durant, will not go, or attempt to go, into parts beyond this state without the leave of our said court, and in case the said Thomas C. Durant shall refuse to give such bail or security, then you are to commit him, the said Durant, to our county jail, in your precinct, there to be kept in safe custody until he shall do it of his own accord, and when you shall have taken such security you are forthwith to make and return a certificate thereof to our said court, distinctly and plainly, under your hand, together with this writ."
Durant was arrested under this writ on the night of August
22, 1868, and on the 24th he executed, with Griswold and Bradford, as his sureties, the following bond, drawn by one of Hazard's attorneys:
"Know all men that we, Thomas C. Durant, as principal, and John N. A. Griswold and S. Dexter Bradford, as sureties, are firmly bound to Isaac P. Hazard, Rowland Hazard, Rowland G. Hazard, Elizabeth Hazard, Elizabeth Hazard, trustee, Anna Hazard, Mary P. Hazard, Lydia Torrey, Sophia Vernon, and Anna Horner in the sum of fifty-three thousand seven hundred and thirty-five dollars, to be paid said obligees, their executors, administrators, or assigns; to which payment we bind ourselves, our several and respective heirs, executors, and administrators, jointly and severally, hereby."
"Sealed with our seals and dated this 24th day of August, A.D. 1868."
"The condition of this obligation is that said Thomas C. Durant shall on his part abide and perform the orders and decrees of the Supreme Court of the State of Rhode Island in the suit in equity of Isaac P. Hazard and others against said Thomas C. Durant and others, now pending in said court within and for the County of Newport."
This is the the bond above referred to.
Under the latter date, and presumably before the execution of that bond, the attorneys of Hazard and Durant signed the following agreement:
"In the above entitled case it is agreed that said Thomas C. Durant shall file a bond, with surety in the penalty marked in the writ of ne exeat therein, to abide and perform the orders and decrees of the court in said cause, and that thereupon the writ of ne exeat aforesaid shall be discharged, and that the court may enter decree accordingly."
The court, under the same date, entered the following order:
"Thomas C. Durant, one of the defendants in this suit, having executed and filed a bond, with sureties, to abide and perform the orders and decrees of the court made in this suit, it is now, by consent, ordered that the writ of ne exeat heretofore issued be discharged."
For some reason not explained, the writ of ne exeat was not returned to the clerk's office and filed until October 21, 1868. The sheriff made this return on the
"Newport, August 24, 1868. I caused the within-named Thomas C. Durant personally to come before me, as within commanded, on the 22d day of this month, and now the writ is discharged by order of court."
On the 2d day of December, 1882, more than fourteen years after the commencement of Hazard's suit, it was ordered, adjudged, and decreed in that suit, among other things, as follows:
"Second. That the defendant Thomas C. Durant is accountable for and do, within 90 days from the date hereof, pay the sum of $16,071,659.97, with interest from this date, the said sum, with interest thereon, to be deposited in the registry of this court, or be paid, in the first instance, to Rowland Hazard, of South Kingston, in said state, and Henry Martin, of Brooklyn, in the State of New York, who are hereby appointed special commissioners, with authority, jointly and severally, to collect and receive the same, and with power to take such steps to collect the same as may be necessary and according to law, and said fund, or so much thereof as may be collected by process or otherwise, is hereby directed to be paid and deposited in the registry of this court to the credit of this cause."
"Third. Of the aforesaid total sum of $16,071,659.97, the defendant Thomas C. Durant is hereby allowed and is decreed to be entitled to pay and discharge $8,816,232.93, or any part thereof pro tanto, by transferring and delivering stock of the Union Pacific Railroad Company and first mortgage and sinking fund bonds of said company, as per statement 'G,' now exhibited to the court, and directed to be filed in this cause, with all dividends which may have been collected or received by said defendant or his assigns after the date of this decree, together with interest on the same to the date of payment thereof by said defendant, the certificates of said stock, with transfers thereof, and the said bonds to be delivered to the said Rowland Hazard and Henry Martin, who are hereby appointed special commissioners to receive the same, and who are hereby authorized and directed to sell the same, or such portions thereof as may be delivered to them from time to
time as they are secured at public auction, and receive the proceeds thereof, and, after deducting the costs and charges of such sales, deposit the same in the registry of this court to the credit of this cause: provided, however, that the said privilege herein granted to the said defendant Thomas C. Durant to transfer and deliver said stocks and bonds in partial discharge and payment of the sum hereinbefore decreed to be paid by him be exercised by him within thirty days from the date of the entering this decree, and that, in default of such transfer and delivery or of the transfer and delivery of the entire amount of said stock and bonds within the said thirty days, the obligation of the defendant Thomas C. Durant to pay the said proportion of the said sum or of the residue of the same, after deducting the amount of such stocks and bonds as may be delivered, as aforesaid at their face value, shall become, and is hereby declared to be, absolute, and provided further, nevertheless, that the said option or privilege of the said Thomas C. Durant shall not interfere in any manner with any order or decree in the cause touching the transfer, delivery, sale, or other disposition of said stock and bonds."
"Fourth. The defendant Thomas C. Durant is likewise ordered and directed to transfer and deliver, within thirty days from the date hereof, five thousand seven hundred and seven 45/100 (5,707 45/100) shares of the stock of the Credit Mobilier of America, which stock has been found by the master to have been purchased with the funds of the Credit Mobilier and which stock, with any dividends or profits accrued or to accrue on the same, is hereby declared to be the property of said corporation, subject to the decrees and orders in this cause, with any interest, dividends, rights, benefits, and profits which may have accrued to the said Thomas C. Durant as the holder of the said 5,707 45/100 shares of stock, or any part thereof, and not hereinbefore charged against him, said transfer and delivery to be made to the said Rowland Hazard and Henry Martin, or either of them, as special commissioners, with power, which is hereby granted to said commissioners, forthwith to take such measures, by suit or suits in their own names, or
otherwise, as they may be advised is lawful and necessary to enforce such transfer, collection, or delivery, and said stocks to be held by said commissioners subject to the further order of the court in this cause."
"Fifth. All interlocutory injunctions heretofore made in this cause, so far as consistent with this decree, are declared to be and are hereby made perpetual, and the further consideration of the cause, and particularly as to allowances to the complainants for costs, expenses, and services, and as to the distribution of the funds that may be deposited in the registry of the court to the credit of the cause, and also the consideration of any order or decree which may be necessary in the premises against the defendant Thomas C. Durant by reason of any default which may be made by him touching any portion of this decree, and also the consideration of any other and further decree herein against or concerning the defendants other than the said Thomas C. Durant, be, and they hereby are, directed to stand over, with leave to any party in interest, save parties in contempt or parties who may appear to be for any other cause disqualified, to apply at any time for further orders and directions."
The bill in case No. 50 was filed September 13, 1881. That suit proceeds upon these grounds: that the bond of August 24, 1868, whereby Griswold became bound as one of the sureties of Durant that the latter should
"on his part abide and perform the orders and decrees of the Supreme Court of the State of Rhode Island in the suit in equity of Isaac P. Hazard and others against said Thomas C. Durant and others, now [then] pending in said court,"
was obtained by fraud, and by concealment from him of facts he was entitled to have communicated to him before he assumed the obligations imposed by that instrument; that he intended to sign, and believed at the time, that he signed, a bond which simply bound him for the appearance of Durant, so that he should be personally amenable to the process and orders of the court in the suit brought by Hazard; that the execution of the bond in question was the result of mistake; that the agreement whereby, upon the execution by Durant of a bond, the writ of
ne exeat was to be discharged, was made without his knowledge or consent, as was also the order of court in pursuance of such agreement, and was in derogation of his rights; that his purpose to become surety only for Durant's appearance to answer the process of the court was well known at the time to the plaintiff and his attorneys, who prepared, and supervised the execution of, the bond, and that the writ of ne exeat was sued out upon the ground that Durant was about to depart from the state, when in fact he only contemplated coming to the state.
Protesting that the legal effect of the bond was that he should be responsible only for the appearance of Durant so as to be subject to the process of the court in the Hazard suit, and averring his willingness to execute a proper ne exeat bond, he prayed that the bond in question be set aside as having been obtained by fraud, imposition, and mistake, or reformed, as indicated, and that the defendants be restrained by injunction from enforcing it in its present shape.
The answers of the defendants put in issue the material allegations of the bill. The plaintiff filed a replication, and proofs being taken, and the cause heard, the bill, as already stated, was dismissed. 26 F. 135.
The action at law, being case No. 53, was commenced March 3, 1883, in one of the courts of Rhode Island, and was removed, upon Griswold's application, to the circuit court of the United States. The declaration set out the bond of August 24, 1868, alleged that Bradford, one of the sureties thereon, was dead, and that Durant had not kept its condition, in that he had not performed the above decree of December 2, 1882, in the equity suit brought by Hazard, whereby the plaintiffs Rowland Hazard, Rowland G. Hazard, Anna Hazard, and Lydia Torry were entitled to have and demand of him the amount of said bond, $53,735. A copy of that decree was made an exhibit in the declaration. The defendant Griswold filed ten pleas, each of which was in bar of the action. One of the pleas ma e a copy of the proceedings in Hazard's suit a part of it. Demurrers and replications were filed to the
pleas, those to the second, third, fourth, fifth, and seventh pleas being special demurrers. By an order entered July 1, 1884, the demurrers were sustained to the second, third, fourth, fifth, and seventh pleas, the opinion of the court being delivered by MR. JUSTICE GRAY. 21 F. 178.
Pursuant to a stipulation of counsel, dated November 26, 1883, that the plaintiff might demur specially to the second, third, fourth, fifth, and seventh pleas, and, in case the demurrers were overruled, reply to those pleas as if no demurrers had been filed, and that amended pleas, if desired, might be filed by the defendant, and in obedience to the order of court requiring the amended pleas to be filed on or before October 15, 1884, the defendant, on the 14th of October, 1884, filed amended third, fourth, fifth, and seventh pleas. The case was subsequently heard on a motion by plaintiff, made November 19, 1884, that the amended pleas be stricken out, and on the 30th of March, 1885, this order was made: "Plaintiff's motion to strike amended pleas from the files is granted." Certain stipulations were made between counsel; among others, one to the effect
"that the plaintiffs were able to prove under the decree of the Supreme Court of Rhode Island, in the equity suit brought by Hazard, an amount of damage in excess of the penal sum of the bond declared on in this suit."
A jury having been waived in writing, the court gave judgment, as of February 12, 1887, against Griswold, for $66,470.
The suit in equity No. 51 was brought June 12, 1885. The bill in that case, after referring to the suit in equity brought by Isaac P. Hazard in 1868, showed that, on the 17th of November, 1875, Rowland G. Hazard commenced a suit in equity in one of the courts of Pennsylvania, against the Credit Mobilier of America and others, which was subsequently removed to the Circuit Court of the United States for the Eastern District of Pennsylvania, that being the domicile of the corporation; that in such suit Oliver Ames was appointed receiver of all the goods, chattels, rights, and effects of the corporation, and was authorized by the court in Pennsylvania to deliver to Durant a deed of release from all actions, causes of action, suits, bills, bonds, writings obligatory, debts, dues, duties, reckonings, accounts, sums of money, judgments, executions,
extents, quarrels, controversies, trespasses, damages, and demands whatever, both in law or equity, which the Credit Mobilier of America then had or might at any time thereafter have, claim, allege, or demand, against said Durant, for or by reason or means of any matter, cause, or thing whatever; that afterwards, on the 27th day of October, 1881, Ames, under the said authority, and in consideration of the execution by Durant of a deed conveying the title to certain lands mentioned in the order of court authorizing the release, delivered to the latter a deed of release, of the kind above indicated, of all sums of money then due or owing to, or thereafter to become due to, said corporation; that the above equity suit in the Supreme Court of Rhode Island was, and had been, wholly controlled by Rowland G. Hazard; that notwithstanding the delivery of the above deed to Durant, the latter suit was proceeded with, and the Supreme Court of Rhode Island rendered a decree refusing to allow him to set it up as a bar to the entering of such decree on the ground that he was in contempt of that court for violation of one of its decrees rendered therein, and that after the delivery of the deed of release to Durant, the plaintiff requested the defendants to surrender the bond of August 24, 1868, and to abstain from suing him thereon, but they refused to comply with that request. The relief asked was an injunction restraining the defendants from further proceeding in the action at law. Upon a hearing before Judges Colt and Carpenter, a demurred to the bill was sustained, and the bill dismissed, October 28, 1886, Judge Carpenter delivering the opinion of the court. 28 F. 597.
The bill in case No. 52 was filed June 12, 1885. It assailed the jurisdiction of the Supreme Court of Rhode Island over the subject matter of the suit in equity brought by Hazard upon the ground that before bringing it, neither the plaintiff therein, Isaac P. Hazard, nor any other stockholder of the Credit Mobilier of America, requested the managing committee of the board of directors or the stockholders of that corporation to begin legal or equitable proceedings against Durant. The cause was heard upon demurrer before Judges Colt and
Carpenter. The demurrer was sustained and the bill dismissed, the opinion of the circuit court being delivered by Judge Carpenter. 28 F. 578.
Official Supreme Court caselaw is only found in the print version of the United States Reports. Justia caselaw is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.