Hemphill v. Ruckersville Bank

By the Court.

Warner, J.,

delivering the opinion.

The judgment of the Court below, dissolving the injunction, is the ground of error assigned in this cause.

It appears from the record, that on the 23d day of January, 1847, the Court below refused to dissolve the injunction on the ground, that the answer of the defendants was not sufficient, and sustained exceptions thereto. On the 8th July, 1847, the defendants made another motion for the dissolution of the injunction, at chambers, (a regular term of the Court having intervened,) upon two grounds:

1. Because the answers of the defendants had been filed, swearing off all the equity in complainants’ bill.

2. Because there is no sufficient equity in the bill to authorize a court of equity to make any decree against the defendants.

On the argument of the motion to dissolve the injunction, the complainants insisted that the motion could not be entertained, for the reason that there had been a similar motion made once before, and refused by the Court. The record discloses the fact, that the first motion to dissolve was refused because the answer was not sufficient, and ..the exceptions taken thereto were sustained by the Court; and we are of the opinion that this objection was properly overruled by the Court below; nor can we see any good reason why the complainants should object that the motion to dissolve was not made at the regular term of the Court, as the injunction continued to operate'in their favour until the motion to dissolve was afterwards made at chambers, pursuant to the 4th Equity Rule of Practice.

The complainants further objected to the dissolution of the injunction in the Court below, as appears from the decision of the Court contained in the record, “ Because the Ruckersville Bank had filed no answer ; the answer filed not being under the seal of the corporation, but was sworn to by certain persons styling themselves the president, the cashier, and the directors. The Court determined that a corporation could only file its answer to a bill in equity under its corporate seal, and that an answer sworn toby the president, cashier and directors, would be treated as no answer of the corporation ; but that the answer in this case would be considered as the answer of Joseph Ruckers only, who is a party to said bill. But the Court further determined and ordered, that the injunction be dissolved, upon the ground that there is no sufficient equity in the bill to authorize a court of equity to make any decree against the defendants, and that the bill has never been sworn to properly, as it appears on the face of the bill that James Hemphill is the only complainant who could know any thing about the material charges in the bill, and Moses G. Bradbury is the only complainant who has sworn to it.”

We have thus given the decision of the Court below in full, as the same appears in the record, because we concur in the judgment of the Court dissolving the injunction, but do not concur in the judgment of the Court below as to the grounds upon which its judgment was predicated.

Independently of the answers of the defendants, we are of the opinion that there is sufficient equity in the bill to authorize a court of equity to make a decree against them, in favour of the complainants.

The complainants chabge, that there was a verbal agreement entered into in the month of August,'1843, on the part of the defendants and James Hemphill, one of the complainants, by which it was distinctly stipulated and agreed,'in consideration that the complainants would withdraw an appeal then pending in a suit instituted by the defendants against the complainants on the note mentioned in the record, and surcease their defence thereto, and would at the next ensuing term of Floyd Superior Court confess a judgment to the defendants in the bill, for the amount of the note sued on, the defendants would wait, and stay all further proceedings in said case until the 1st day of April, 1844, at which time the defendants would enter into a full and fair settlement with the complainants, and receive in full settlement and satisfaction of the judgment so confessed, the sum tyhich might be equitably due after allowing James Hemphill, as a payment thereon, the sum of $1,400, paid to the Ruckersville Bank as stated in the record, and would also allow him all that should be due him as profits or dividends, and give up, or cause to be given up to him, the mortgages in the record mentioned, and release, or cause to be released, the lands of Hemphill from"’ all incumbrances, and receive back the "stock of the bank; which agreement, the complainants charge, they have no means of proving, except by the answers of the defendants. The complainants further charge, that, relying on the said agreement, and not doubting the fidelity of the defendants in complying with the same, they dismissed their appeal, and the judgment for the full amount of the note sued on was confirmed, and that they have paid over to the sheriff of Floyd county, in part satisfaction of said judgment, the sum of $6,000, the same being as much or more than would have been due to the bank on a fair settlement. The 'complainants allege that they have complied with the agreement, but that the defendants have refused to perform any part of the agreement, and are enforcing the collection of the balance due on the judgment, which balance would have been extinguished by a fair settlement made according to the terms of the agreement, and by allowance of the sets-off to which the complainant Hemphill is entitled, and upon which he intended to rely in his defence to said action, on the appeal which .was pending at the time of the agreement charged and set forth in complainants’bill. Taking all the charges in complainants’ bill to be true, we are of the opinion that a strong case for the exercise of the equitable jurisdiction of the Court is most clearly made out; and that the injunction ought not to have been dissolved on the ground that there was %o equity in the complainants’ bill which would authorize a decree in their favour.

Nor do we think the-injunction ought to have been dis- [L] solved on the ground that the complainants’ bill was not properly sworn to, as stated in the opinion of the Court below. The statements in the bill are verified by the affidavit of Moses G. Bradbury, one of the complainants ; and that, in our judgment, is sufficient. If the bill was not properly verified by affidavit, then it ought not to have received the sanction of the chancellor when the application for the injunction was made to him ; but there was no error on the part of the Court below in granting the injunction in the first instance: for, as we have already seen, the allegations contained in the complainants’ bill, make a strong case for the equitable interposition of the court, and, in our judgment were sufficiently verified by the affidavit of Bradbury, one of the complainants, to authorize the writ of injunction to issue. An injunction-bill must be verified by affidavit. 1 Mad. Ch. 126. The affidavit is usually made by the plaintiffs, or one of them; but may be sworn to by any person acquainted with the facts. 1 Smith Ch. Prac. 595.

[2.] This bill was filed against the Ruckersville Bank and Joseph Rucker, and process of subpcena prayed against both. It is true, that when a bill is filed against an aggregate corporation, the corporation may answer under their common seal; but it is to be remarked that the act of 1838, under which the Ruckersville Bank was organized, does not authorize the individuals who may associate themselves together for the purpose of banking, to have and use a common seal. Hotchk. 346.

Although a corporation aggregate, authorized by law to have and use a common seal, may file their answer to a bill in equity under their corporate seal, yet, it has been held, that an injunction against a corporation cannot be dissolved on such an answer, unless the answer is duly verified by the oath of some of the corporators who are acquainted with the facts stated therein. Fulton Bank vs. The New York & Sharon Canal Company, 1 Paige Ch. R. 311.

In that case, the chancellor says : “ Corporations answer under their seal, and without oath ; they are therefore at liberty to deny every thing contained in the bill, whether true or false. Neither can any discovery be compelled, except through the medium of their agents and officers, and by making them parties defendants. But no dissolution of the injunction can be obtained, upon the answer of a corporation which is not duly verified by the oath of some officer of the corporation, or other person who is acquainted with the facts contained therein. There can be no hardship in this rule as applied to corporations, as it puts them in the same situation with other parties; other defendants can'only make a positive denial as to facts within their own knowledge; in relation to every other matter, they must answer as to information and belief. If the agents of the institution under whose direction the answer is put in, are acquainted with the facts, so as to justify a positive denial in the answer, they can verify its truth by a positive affidavit; and if none of the officers are acquainted with the facts, their information and belief can have no greater effect than that of ordinary defendants, however positive the denial in the answer may .be.” The rule stated in the case of the Fulton Bank vs. The New York & Sharon Canal Company, meets with our entire approbation, and we therefore accept it.

The answér in the case now under consideration, was not only verified by the affidavit of the president of the Bank, but also by the cashier and three of the directors thereof, which in our judg-, ment was a good answer for the purpose of dissolving the injunction; certainly, the complainants could not object because the defendants had individually sworn to the answer.

Ought the Court below to have dissolved the injunction on [3.J the first ground taken in the rule, “ because the answers of the defendants had been filed, swearing off all the equity in the bill?”

The general rule undoubtedly is, as stated by this Court in Moore vs. Ferrell et. al., 1 Kelly R. 9, that on the coming in of the answer, plainly and distinctly denying the facts and circurnstances upon which the equity of the bill is based, the Court will dissolve the injunction. Although this is the general rule, and so recognised in the case of Roberts vs. Anderson, 2 Johns. Ch. R. 202, yet the learned chancellor in that case, said: “In some particular cases, the court will continue an injunction, though the defendant has fully answered the equity set up. The granting and continuing of the process must always rest in sound discretion, to be governed by the nature of the case.” The case of James vs. Lemly, 2 Iredell Eq. R. 278, is to the same effect.

"We are of the opinion, that the answer of the defendants plainly and distinctly, and quite satisfactorily, meets and denies all the facts and circumstances upon which the complainants’ equity is based.

The equity of the complainants is based on the verbal agreement alleged to have been made in August, 1843, between Hemphill and the defendants.

The defendants most explicitly deny that any such agreement was ever made, and the letter written by Wm. B. White, one of the defendants, (and who was the cashier of the Bank,) to their attorneys by Hemphill, dated 28th August, 1843, and which is attached as an exhibit to their answer; strongly corroborates the truth of such denial.

It is our opinion, that the injunction ought not to have been dissolved on the ground that there was no sufficient equity in the bill to authorize a court of equity to make any decree against the defendants; nor ought the injunction to have been dissolved on the ground that the bill was not properly sworn to by Moses G. Bradbury, one of the complainants; but it is our judgment, that the injunction ought to have been dissolved by the Court below, on the ground that the answer of the defendants plainly and distinctly denies all the facts and circumstances charged in the bill, upon which the complainants’ equity is based. Therefore, let the judgment of the Court below stand affirmed.