Opinion · Supreme Court of the United States
Ward v. Sherman
192 U.S. 168
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1904-01-11
- Topic
- general
Mr. Justice Brewer, after making the foregoing statement, delivered the opinion of the court. The Supreme Court of the Territory, without considering the merits of the. case, affirmed the judgment on the ground that the assignment' of errors was insufficient,' citing in its opinion from a rule of- practice which had been prescribed by it and in force for many .years: “All assignments of errors must distinctly specify each ground of error relied upon, and the particular ruling complained of. . . . An objection to the ruling or action of-the court below will'be deemed waived here, unless it has been assigned as error, in the manner above provided.” Undoubtedly the assignment of errors was general in its terms. An application was made to the Supreme Court for leave to amend the assignment of errors, but it was denied.
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WARDv. SHERMAN,192 U.S. 168(1904)
24 S.Ct. 227
WARDv. SHERMAN.
APPEAL FROM THE SUPREME COURT OF THE TERRITORY OF ARIZONA.
No. 25.
Argued October 15, 16, 1903.
Decided January 11, 1904.
THE facts in this case are few and beyond dispute, most of
them being shown by the averments in the answer of the defendant
Sherman. On August 23, 1889, Ward, the plaintiff and appellant,
sold to the defendants the Sunflower range, together with the
cattle thereon and other personal property. A conveyance was by
agreement made to the defendant Hardenberg, who, to secure a part
of the purchase price, to wit, $25,000, evidenced by two notes of
$12,500 each, made by Hardenberg and guaranteed by Sherman,
executed a mortgage of the cattle and some other property.
Thereafter the defendants incorporated themselves under the laws
of the Territory of Arizona as the Sherman-Hardenberg Cattle
Company, and transferred to it all of the property above
mentioned,
Page 169
subject to the payment of the two notes held by the plaintiff. On
September 12, 1894, an agreement was entered into between the
company and the plaintiff which, after reciting the indebtedness,
reads as follows:
"Whereas, the said party of the second part is unable to pay
to said party of the first part the said sum of $14,500 due on
October 1, 1894, and has notified said party of the first part
that it will be unable to pay said sum at said time; and
"Whereas, said party of the second part desires to deliver up
and turn over to said party of the first part all of the property
heretofore purchased by one David Hardenberg of the party of the
first part, and for which said notes were given as a part of the
purchase money:
"Now, therefore, in consideration of the promises and
agreements of said party of the first part, the said party of the
second part hereby agrees to and with said party of the first
part to transfer and convey by proper deeds of conveyance and
bills of sale all of the real and personal property heretofore
purchased by the said David Hardenberg of the said party of the
first part; also, all personal and real property owned by the
said party of the second part in the Territory of Arizona, in
whomsoever's name the same may now stand, to said party of the
first part, and more particularly described as follows, to wit:
The Sunflower Cattle Range in Maricopa County, Arizona Territory;
all cattle, horses, mules or burros branded with either of the
following brands: Diamond brand, thus: ; H.B. brand, thus: HB;
also all wagons, mowing machines, farming implements and camp
outfit, and everything pertaining to or used by said
Sherman-Hardenberg Cattle Company, excepting only from the
provision of said conveyance such cattle as shall have been sold
and delivered by said Sherman-Hardenberg Cattle Company prior or
to September 1, 1894, it being understood that all stock cattle
which may have been sold subsequent to September 1, 1894, shall
be accounted for by the party of the second part to said party of
the first part.
"That in consideration of the said party of the second part
Page 170
conveying to said party of the first part all of the property
hereinbefore described within thirty days from the date hereof,
and delivering possession of the same to said party of the first
part or his authorized agent, in said county of Maricopa
aforesaid, the said party of the first part hereby covenants and
agrees to deliver to said David Hardenberg and one M.H. Sherman
two promissory notes, each for $12,500, one of which matures on
October 1, 1894, and one of which matures on October 1, 1897,
heretofore executed by the said Hardenberg and Sherman to the
party of the first part; also to release the said Hardenberg and
Sherman from the payment of all interest due thereon, and to
cancel and discharge a certain chattel mortgage executed by the
said David Hardenberg to the said party of the first part, for
the purpose of securing the payment of said notes, which said
mortgage is now on file and of record in the office of the county
recorder of Maricopa County, in the Territory of Arizona.
"In witness whereof, the said party of the second part, The
Sherman, Hardenberg Cattle Company, has executed these presents
in its corporate name, by its president, and the said party of
the first part has executed these presents the day and year first
above written."
The following instrument was also executed:
"PHOENIX, ARIZONA,Sept. 29, 1894.
"To J.M. WARD, ESQ.:
"The Sherman-Hardenberg Cattle Company hereby authorizes you
to enter upon and take possession of all the property belonging
to the Sherman-Hardenberg Cattle Company, in accordance with and
as described in that certain contract entered into by and between
the Sherman-Hardenberg Cattle Company and yourself, bearing date
on the 12th day of September, A.D. 1894.
"That on receipt of said property you are to turn over to the
Sherman-Hardenberg Cattle Company, at the office of C.F.
Ainsworth in Phoenix, Arizona, the notes described in the
Page 171
contract, and also to cancel the chattel mortgage held by you on
the property therein referred to.
"THE SHERMAN-HARDENBERG CATTLE Co.,
"By C.F. AINSWORTH,Its Secretary.
"I hereby authorize H.C. Ward as my agent to rec. the above
described property for me.
"J.M. WARD."
All the property mentioned in this agreement was turned over
to Ward except, as he claimed, 104 head of cattle. Ward retained
possession of the property and managed it as his own, but did not
cancel the mortgage or surrender the notes, insisting that he was
entitled to receive the 104 head of cattle or else their value.
On June 12, 1895, he commenced an action in the District Court
for the county of Maricopa, in which he set forth a copy of the
first of the notes, and alleged that there was due thereon the
sum of $1500. At the same time he filed an affidavit for an
attachment, in which he averred that the payment of the note was
not secured by mortgage or lien upon any real or personal
property, or any pledge of personal property, and that the amount
due was $1500. No property was attached and no service of process
made until May 6, 1899, and then only on the defendant Sherman,
who thereupon filed an answer and counterclaim, which was in the
nature of a cross-bill in equity, in which he set up the purchase
from Ward, the organization of the company, the transfer to the
company, of the property purchased and the agreement for the
delivery of the property to Ward and the return of the notes and
cancellation of the mortgage, and alleged that though the
property had been delivered the notes had not been returned nor
the mortgage cancelled. He also alleged a transfer by the company
to himself of all its rights and claims.
The trial court found the facts as above stated in respect to
the original transactions between Ward and defendants, the
organization of the company, the transfer to it and by
Page 172
it to Sherman; and, further, in reference to the transaction
between the company and Ward in 1894 it found as follows:
"5. That during the month of September, 1894, and before the
maturity of the first note, the Sherman-Hardenberg Cattle Company
attempted to make a settlement with the plaintiff, by agreeing to
turn over to him the Sunflower range, all the cattle then on the
range, also the desert wells, and other property which it had,
which was not included in the mortgage, on condition that said
plaintiff turn over and deliver up the two notes aforesaid, with
the interest thereon, and cancel and satisfy the mortgage
securing the same.
"6. That this contract was never carried out on the part of
the plaintiff; but that acting under it he took possession of all
the property of the Sherman-Hardenberg Cattle Company as
aforesaid, on or about October 1, 1894; but never turned over,
delivered or cancelled said notes, or either of them; or
satisfied or discharged the chattel mortgage securing the same.
And that, on the contrary, he brought suit on one of said notes
for the collection of a portion that he claimed to be due
thereon. At the time he brought this suit on the note maturing
October 1, 1894, the other note had not matured."
It thereupon adjudged that Ward was a mortgagee in possession,
and after finding the disposition which he had made of the
property entered a judgment in favor of the defendant Sherman for
$17,173.50, and decreed the cancellation of the notes and
mortgage.
By section 1 of an act of the territorial assembly, Laws
Arizona, 1897, p. 127, it is provided that in a case appealed to
the Supreme Court of the Territory the appellant may have the
testimony taken in the trial transcribed and certified by the
court reporter, and filed with the papers in the case, and that
thereupon it shall "become and be a part of the record in said
cause;" and be transmitted to the Supreme Court of the Territory
with the other papers in the case. That was done in this case,
and part of the record taken to the Supreme Court
Page 173
of the Territory and brought here is the duly certified
transcript of the testimony taken on the trial.
Section 2 of that act also provides that it shall not be
necessary "to file with the Supreme Court any transcript,
assignment of errors or other papers except as herein provided."
Section 3 requires the plaintiff in error, or appellant, to make
an abstract of the record for the benefit of the opposite party
and the Supreme Court. Sections 4 and 5 are as follows:
"SEC. 4. Each party shall prepare and print or typewrite an
argument of the points and authorities relied on. The briefs of
both sides shall begin with a succinct statement of so much of
the record as is essential to the questions discussed in them,
referring to the printed abstract by folios and sufficient to
dispense with the reading of the printed abstract on the
argument. The brief of the plaintiff in error or appellant shall
also next contain a distinct enumeration in the form of
propositions of the several errors relied on, and all errors not
assigned in the printed brief shall be deemed to have been
waived. It shall not be necessary to assign or file any
assignment of errors in the court below or Supreme Court, except
those assigned in the brief of the plaintiff in error or
appellant.
"SEC. 5. All rulings made by the court below in opposition to
the plaintiff in error or appellant shall be taken as excepted to
by the party appealing or suing out the write of error, and when
assigned as error in the brief shall be reviewed by the Supreme
Court without any bill of exceptions or other assignment of
errors as herein provided."
The record discloses that in the Supreme Court the appellee
moved to strike from the files appellant's abstract of record. No
action appears to have been taken upon this motion. The record
also discloses that leave was given to the appellant to file a
supplemental brief. Neither the original nor the supplemental
brief, if one was filed, is before us.
"The rules relating to assignments and specifications of error have been so long in force, and we have so often decided that a failure to make proper assignments amounts to a waiver of all errors which are not fundamental, that it would seem there should be no longer occasion for disregard of these plain requirements. In the absence of any assignment of error in this case, and none appearing upon the face of the record, the judgment must be affirmed."
We shall not stop to inquire whether the court erred in refusing to permit an amendment of the assignment of errors, but accepting its conclusion that the failure to make proper assignments is "a waiver of all errors which are not fundamental," and bearing in mind the provisions of section 5 of the statute of 1897, that all rulings made by the court below in opposition to the plaintiff or appellant are to be taken as excepted to, we proceed to inquire whether there was not a fundamental error which should have been corrected by thePage 175Supreme Court. We are of opinion that there was. It may be assumed, as no objection was made on that account, that the counterclaim, which was in its nature a bill in equity for the redemption of the mortgaged property, was properly filed in this action to recover money. Can such a bill be sustained under the circumstances disclosed by the answer? It appears from that answer that the property was turned over to Ward to hold, not as mortgagee, but under a contract by which he was to take the property in satisfaction of the debt, cancel the mortgage and return the notes. In other words, according to the averments of the answer a contract of sale was made by the company to Ward, and under the contract of sale Ward took possession. Now, even if it be conceded that Ward's failure to perform was such a breach of the contract as entitled the company to rescind and thereafter to treat Ward as a mortgagee in possession, a bill in equity to enforce such a decision must be presented within a reasonable time. The right to rescind is an affirmative right, asserted by the vendor, the former mortgagor, and, being such, it must be asserted by him within a reasonable time. The answer alleges that on or about October 1, 1895, this agreement was made and the property delivered, but it was not filed until May 16, 1899, more than three years and a half thereafter. During all that time, Ward was in possession of the property, managing and dealing with it as his own. Can it be that a vendor can wait three years and a half, permit the vendee to deal with the property as his own — that property being of a value variable from year to year and requiring constant care to make it prosperous — give his time and labor to its management, take the chances of rise or fall in the market, and then, if it turns out that the business has been prosperous through his efforts, insist on account of some technical failure upon a rescission of the contract, and that the party who has been supposing himself the owner, and acting as such, shall be treated as a mortgagee in possession, and held to account for the success of his business efforts? In Pollock's Principles of Contracts, p. 515, the author says:Page 176
"The contract must be rescinded within a reasonable time, that is, before the lapse of a time after the true state of things is known, so long that under the circumstances of the particular case the other party may fairly infer that the right of rescission is waived."
See alsoGrymesv.Sanders,93 U.S. 55;McLeanv.Clapp,141 U.S. 429,432.
But was there any ground for the rescission of the contract? There was no fraud, mistake or false representations. There is no suggestion that the contract was not entered into with full knowledge or that it was unfair in any of its details. The complaint merely is that Ward was guilty of a breach of one of its stipulations. If so, the company was entitled to damages for that breach, but no damages are shown. The company paid nothing; has lost nothing. So far as disclosed it went out of business, and therefore the failure to release the mortgage could not have injured its business credit. But whatever may be the rights, other than a simple claim of damages for breach of contract, possessed by the company and transferred by it to the defendant Sherman, they are equitable in their nature, and in respect to them the general doctrine of laches applies. We have often had occasion to consider the question of laches. InGalliherv.Cadwell,145 U.S. 368,373, andPenn Mutual Life InsuranceCompanyv.Austin,168 U.S. 685, are collected the decisions of the court. In the former of these cases it is said, p. 372.
"They (the adjudicated cases) proceed on the assumption that the party to whom laches is imputed has knowledge of his rights, and an ample opportunity to establish them in the proper forum; that by reason of his delay the adverse party has good reason to believe that the alleged rights are worthless, or have been abandoned; and that, because of the change in condition or relations during this period of delay, it would be an injustice to the latter to permit him to now assert them." And again, p. 373:
"But it is unnecessary to multiply cases. They all proceedPage 177upon the theory that laches is not, like limitation, a mere matter of time; but principally a question of the inequity of permitting the claim to be enforced — an inequity founded upon some change in the condition or relations of the property or the parties."
And in the last case, p. 698:
"The reason upon which the rule is based is not alone the lapse of time during which the neglect to enforce the right has existed, but the changes of condition which may have arisen during the period in which there has been neglect. In other words, where a court of equity finds that the position of the parties has so changes that equitable relief cannot be afforded without doing injustice, or that the intervening rights of third persons may be destroyed or seriously impaired, it will not exert its equitable powers in order to save one from the consequences of his own neglect."
Apply these considerations to the case at bar. The property was turned over on a contract of sale. Ward was left in possession for over three years and a half without a suggestion of any claim that he was only a mortgagee in possession. He had a right to believe that he was the owner. If the contract had not been made he could have foreclosed his mortgage and acquired title by sale under foreclosure proceedings. He dealt with the property as his own. He gave his time, skill and labor to the work of caring for it. It is impossible to replace the parties in the situation they were in at the time the contract was made. It would be grossly inequitable to deprive him of the benefit of his time, skill and labor, and give it to the mortgagor, who all those years did nothing and gave no notice of any question of the completeness of Ward's title. It seems to us that the doctrine of laches applies with force, and that upon the pleadings the court should have adjudged the defendant not entitled either to a rescission of the contract or to hold the vendee as a mortgagee in possession.
If we look beyond the pleadings to the testimony (and that, as we have seen, was by virtue of the statute made a part of thePage 178record of the case in the Supreme Court) the error of the trial court is even more apparent.
The agreement of September 12 provided for the transfer and conveyance of all cattle on the Sunflower range, branded with the named brands, "excepting only from the provision of said conveyance such cattle as shall have been sold and delivered by said Sherman-Hardenberg Cattle Company prior or to September 1, 1894, it being understood that all stock cattle which may have been sold subsequent to September 1, 1894, shall be accounted for by the party of the second part to said party of the first part." By this all the cattle belonging to the company on September 1 were to be transferred to the plaintiff, and if any of such cattle had been sold subsequently to September 1 they were to be accounted for by the company to the plaintiff. Further, the agreement stipulated for the delivery and cancellation of the notes and mortgage "in consideration of the said party of the second part conveying to said party of the first part all of the property hereinbefore described within thirty days from the date hereof, and delivering possession of the same to said party of the first part or his authorized agent, in said county of Maricopa aforesaid." By the undisputed testimony two lots of cattle, one of 69 or 70 head and the other of 34 or 35 head, were sold and delivered by the company to other parties than the plaintiff after the first of September. Therefore the company was to account for those cattle so sold and delivered, and the duty resting upon Ward to surrender and cancel the notes and mortgage was conditioned upon the delivery within the county of the property described within thirty days from September 12. In short, the terms of the contract were clear. Ward performed all that he was under obligations to perform. The default was on the part of the company. Ward took possession of the property delivered, managed it successfully for several years, and still the court held that the defaulting party could take advantage of its own default, appropriate the entire profits of Ward's care and ability, and upon that basis adjudged against Ward thePage 179return of all the property then in his possession and the payment of over seventeen thousand dollars. But it is said that Ward himself repudiated the agreement because he brought suit on the first of the notes. There may have been a technical mistake in the form of the action, but there was no repudiation of the agreement, as is shown by the fact that the complaint only asked judgment for $1500, and that Ward filed with the complaint an affidavit for an attachment, in which he averred that the payment of the sum due was "not secured by any mortgage or lien upon real or personal property or any pledge of personal property." But equity will not destroy rights on account of a mere technical mistake of counsel. It may be conceded that Ward should have brought an action in form for the value of the cattle not delivered, but it is manifest that that value was all that he was seeking to recover.The judgment of the Supreme Court of Arizona is reversed andthe case remanded to that court with instructions to reverse thejudgment of the District Court and remand the case to that courtfor further proceedings in conformity to the views hereinexpressed.