Hazard v. Durant

In our last previous opinion¹ we suggested a question which we did not wish to decide without first having it debated by counsel. The question which since then has been ably argued, is this: The defendant, Durant, who is charged in the bill with having misappropriated or wrongfully converted to his own use certain funds belonging to the Credit Mobilier of America, a corporation of which he was the president, neglected to answer the bill until the time for answering it had elapsed. The bill was accordingly taken as confessed, and a decree was entered by a single justice, from which Durant appealed to the full court. He subsequently moved to set aside the decree pro confesso and for leave to answer, filing his proposed answer, which denies the charges of the

bill as an affidavit. But meanwhile he had been adjudged guilty of contempt for disobeying an injunction of the court, and was, therefore, not entitled to be heard in his defence without first purging himself. The court has prescribed terms of purgation which he professes to be, and probably is, unable to comply with. The question is whether, in view of his denial of the allegations of the bill, which was brought to our attention on the trial of his petition for leave to purge himself, and in view of his inability to comply with the terms of purgation, we shall proceed, without proof of the allegations, the same as we usually proceed when a bill is taken as confessed, or shall require them to be proved.

The practice of taking bills pro confesso, though not of long standing, is yet well established. Rose v. Woodruff, 4 Johns. Ch. 547. When a bill is so taken, the ordinary rule is for the court to consider all the facts, which are definitely averred, to be admitted by the defendant, and to give the plaintiff the relief to which the facts, if admitted, would entitle him. Landon v. Ready, 1 Sim. Stu. 44; Geary v.Sheridan, 8 Ves. Jun. 192; Simmonds v. Palles, 2 J. L. 489; Platt v. Judson, 3 Blackf. 235. If, however, the bill is uncertain in its allegations, or requires the taking of an account, the court will not proceed to a final decree without proof. Fellows v. Shelmire, 5 Blackf. 48; Pendleton v.Evans, Wash. C.C. 391; Marshall v. Tenant, 2 J.J. Mar. 155;Atkins v. Faulkner, 11 Iowa, 326. The practice rests upon the presumption that if the defendant had any good defence to the bill he would not refuse to answer it, the refusal being a contempt of court. Atterberry v. Knox, 8 Dana, 282. And accordingly the court seldom refuses leave to answer after default, upon proof that this presumption is incorrect.Milspaugh v. McBride, 7 Paige, 509; Graham v. Elmore, Harring. Mich. 265; Williamson v. Sykes, 13 N.J. Eq. 182;Williams v. Thompson, 2 Bro. C.C. 280. If the defendant be an infant or lunatic, and so incapable of answering, the court will not proceed against him at all without proof. And if a bill be taken pro confesso against one of two or more defendants, and the others, making answer, show that it is devoid of equity, it will be dismissed as against all of them. Clason v. Morris, 10 Johns. Rep. 524; Lingan v. Henderson, 1 Bland, 236; Frow v. De La Vega, 15 Wall. 552; Walsh v. Smyth, 3 Bland, 9. It is held in Illinois that it is discretionary with the court, where a bill is taken as confessed, to require proof of all or any portion of the allegations. Smith v. Trimble, 27 Ill. 152;Stephens v. Bichnell, 27 Ill. 444. See also Pierson v.David, 4 Iowa, 410.

These cases show that the practice was intended to be subservient to the purposes of justice; and that the court, in their discretion, disregard it when it cannot be observed without injustice. Now, in the case at bar the bill charges the defendant with enormous embezzlements or misappropriations. The defendant entreats for leave to answer, denying them. We therefore cannot presume that the allegations of the bill are true by reason of any implied admission. Shall we then proceed as if they were true, because the defendant, being in contempt, and unable to relieve himself, cannot make his denials effectual by answer or defence? The question is novel; but we think it admits of only one solution. The court must be careful not to become an instrument of injustice, even against a person who has forfeited all claims upon its favor. We decide, therefore, that the cause must go to a master to inquire into the truth of the inculpating allegations of the bill, and, if he finds them true to any extent, to take the account accordingly, making for the sake of dispatch one report of the entire matter. We also decide that in making the inquiry the master shall not be confined to testimony furnished by the complainants, but shall notify Durant, so that he may be present, if he sees fit, to aid the inquiry and to testify himself, and furnish the testimony of others. But further than this we cannot go. Durant is still in contempt, and cannot be permitted actively to defend himself. If he attends the master, he will attend without counsel, and only for the purposes above mentioned.

Decree entered July 1, 1878, sending the cause to a master"to inquire into the charges and allegations contained in thebill of complaint in said cause against said Durant, and if hefind the same, or any material part thereof, to be true, then totake and state an account between said Durant and the CreditMobilier of America, of and concerning all and singular themoneys belonging to said Credit Mobilier had, received, orprocured by said Durant, or by any person for him, as for his use, and fraudulently orwrongfully held, used, or converted as alleged in said bill, withinterest thereon, at the rate of seven per cent. per annum, fromthe time the same were so as aforesaid had, received, or procuredby or for said Durant, and also of and concerning all andsingular the stocks and bonds in each of said defendantcorporations, purchased wholly or partially with the money ofsaid Credit Mobilier, and had or held at any time by said Durant,or by any person, openly or secretly, for him, or for his use,and of and concerning all profits and dividends on all saidmoneys, stocks, and bonds, over and above said seven per cent.interest, however acquired and paid, and whether in money,stocks, bonds, or otherwise; and the said master shall report tothe court in the premises upon all the foregoing, with allconvenient speed.

"And inasmuch as said Durant is in contempt of the court,and, therefore, not permitted actively to defend himself, themaster shall notify him, so that he may be present, if he shallsee fit, to aid said inquiry by testifying himself, andfurnishing other testimony, with the right of cross-examination;but he shall not appear or attend before the master with anycounsel, nor for any purpose except as above indicated."

The decree then reserves consideration of further matters and directions, and permits application to be made to the court, as occasion may require. The master's commission directs him to proceed ex parte, if either party neglects to attend before him after being notified.

Subsequently application was made to the court for instructions to the master as to the mode of proof to be adopted by him in his inquiry and as to the admissibility of certain evidence submitted to him. Upon this application, which was argued by counsel, the court gave the following opinion.

Providence. December 21, 1878.

¹ 11 R.I. 202-209.