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CHAPMAN v. SUCCESSION OF WILSON.
(Circuit Court, D. Louisiana. January, 1881.)
1. BILL TO SET ASIDE SETTLEMENT-FRAUD-FAILURE OF CONSIDERA
TION-LACHES.--In May, 1867, Bradley, Wilson & Co., being largely indebted to Chapman, and having become financially embarrassed, transferred to Walker, agent of Chapman, by way of compromise, and in full settlement of their debt, inter alia, the notes of one Prewitt, an insolvent, secured by a marriage settlement made between Prewitt and wife before marriage. The notes were indorsed “without recourse except as to the consideration,” and Chapman executed & release discharging the firm from all liability upon their indehtedness. This compromise was promoted and advised by Walker, an attorney, and mutual friend of both parties, who had drawn up the marriage settlement, and was himself also secured thereby on a debt due him from Prewitt. At that time a suit was pending to set aside the marriage settlement as fraudulent and void as against the unsecured creditors of Prewitt, to which suit Bradley, Wilson & Co., Walker, and others were parties defendant.
In 1874 a decree was rendered in this suit, sustaining the marriage settlement and dismissing the bill. In December, 1870, another suit was begun for the same purpose in a United States circuit court hy Prewitt's assignee in bankruptcy, and that court, in April, 1878, made a decree declaring the marriage settlement fraudulent and void. Both decrees were appealed, the former to the supreme court of the state, the latter to the supreme court of the United States, and these appeals are both still pending.
Held, upon the bill filed by Chapman, October 15, 1879, to set aside the settlement of May, 1867, upon the ground of fraud, mistake, and want of consideration, that the complainant, by the lapse of twelve and a half years, had allowed his claim to become stale, and had
waived his right to assert the same. 2 LACHES. – Hed, further, that the laches of the complainant were not
excused by the fact that he claimed not to have discovered the alleged fraud until December, 1870; and by the further fact that the question of the validity of the marriage settlement was pending, during the
whole period, in both the state and circuit courts. 3. FRAUD-INSUFFICIENT EVIDENCE. -Held, further, that the mere cir
cumstance that the firm, by compromise with their creditors, and by a favorable turn in the value of their property, ultimately succeeded in saving a considerable surplus, would not furnish sufficient ground
for setting aside the settlement of May, 1867. 4. FRAUDULENT CONCEALMENT-INSUFFICIENT EVIDENCE. -Held, further,
that the mere fact that Chapman was not aware of the existence of the suit in the state court to set aside the marriage settlement, and 7.5, no.4-20
that it was not mentioned at the time the compromise was effected, did not show that there was any fraudulent concealment of the exist
ence of such suit, 6. MISREPRESENTATION–MARRIAGE SETTLEMENT—ALLEGATION OF VA
LIDITY.-Held, further, that the validity of the marriage settlement as against the creditors of Prewitt, not provided for in it, was a question of law resting in opinion, and not a question of fact resting in evidence and representation;, and, therefore, that when it was alleged to be valid, it was so alleged as a matter of belief only, and did not
constitute a misrepresentation of fact. 6. MARRIAGE SETTLEMENT GUARANTY OF VALIDITY. — Held, further,
that the mere transfer of the Prewitt notes did not constitute a
guaranty of the marriage settlement by which they were secured.
that the litigation in relation to the marriage settlement must be
In Equity. Suit to set aside a settlement upon the ground of fraud, mistake, and want of consideration.
BRADLEY, C. J. Reuben Chapman, the complainant in this case, formerly governor of Alabama, and a lawyer by profession for a long time prior to the late civil war, and to some extent during the war, had dealings, as a planter in Alabama, with the firm of Bradley, Wilson & Co., commission merchants and bankers, of New Orleans, who had a branch house at Huntsville, Alabama. Before the war commenced the firm had become largely indebted to Chapman, and the debt was somewhat increased afterwards. Their dealings being very extensive, and many of their assets proving worthless, they became financially very much embarrassed. In May, 1867, whilst in this condition, their account with Chapman showed a balance due to him of $23,650.29, which they proposed to compromise and settle by transferring to him a claim which they held against one Richard Prewitt, consisting of two notes drawn in 1861, and then past due, amounting, with interest, to $20,136.23, and an open account amounting to $1,231.71, and a draft against one Nimmo for $150.75. The claim against Prewitt was secured by a provision in a marriage settlement made on the twenty-seventh day of April, 1866, between Prewitt and his wife before marriage, by which cer
tain lands therein conveyed were appropriated..First, to the satisfaction of Prewitt's indebtedness to Bradley, Wilson & Co., and after that to certain other designated purposes.
А transfer to Chapman of this security was embraced in Bradley, Wilson & Co.'s proposition for a settlement with him, as Prewitt was known to be insolvent, and the only value of his notes and indebtedness consisted in this supposed security.
Chapman consulted on the subject of said proposition L. P. Walker, Esq. of Huntsville, Ala., a lawyer of standing and character, who had previously at various times been the attorney of both parties, and who on this occasion (as he testifies) acted as the mutual friend of both, but not as the attorney for either. He gave it as his opinion that the security was a valid one, he having drawn up the marriage settlement and being acquainted with the entire transaction, and being himself thereby secured in reference to a debt due from Prew. itt to him. Chapman thereupon consented to the proposed arrangement and the transfer was made accordingly, the notes being indorsed to Walker as agent of Chapman at the latter's request, but indorsed "without recourse except as to the consideration;" and the interest of Bradley, Wilson & Co. in the security created by the marriage settlement, and in the open account against Prewitt, being assigned to Walker in like capacity as agent for Chapman; and the latter, in consideration of said transfers and assignment, executed a paper releasing and discharging Bradley, Wilson & Co. from all liability in reference to their indebtedness to him. The present suit is brought to set aside this settlement, and to make the estate of Wilson (one of the firm of Bradley, Wilson & Co., now deceased) liable for the whole amount due, as though no settlement had been made. Chapman never received any money from the securities transferred to him. Tlie Nimmo note was worthless at the time, Nimmo being at the time insolvent, and dying soon afterwards. The marriage settlement, which was the principal thing relied on, was attacked by other creditors of Prewitt, and sought to be set aside as being fraudulent and void as against them.
A suit for this purpose' was brought by one Lile, in Decem
ber, 1866, in the chancery court of Lawrence county, Alabama, against Prewitt and his wife, Bradley, Wilson & Co., and Walker and others. This suit was pending when the settlement with Chapman was made, and the defendants had filed their answers therein. A decree was rendered in 1874 sustaining the marriage settlement, and dismissing the bill. In December, 1870, another suit was commenced for the same purpose by one Robert H. Wilson, Prewitt's assignee in bankruptcy, in the circuit court of the United States for the northern district of Alabama; and that court, in April, 1878, made a decree declaring the marriage settlement fraudulent and void. Both of these decrees were appealed, the former to the supreme court of Alabama, and the latter to the supreme court of the United States, and these appeals are still pending; so that the ultimate fate of the security which was assigned to Chapman in May, 1867, is yet undetermined. The bill in this case was not filed until the fifteenth day of October, 1879, more than 12 years after the transaction took place which it assails. It seeks to set aside the settlement on the grounds of fraud, mistake, and want of consideration. It alleges that Bradley, Wilson & Co., at the time of the settlement, and as an inducement thereto, represented themselves to be insolvent, when, in truth, they were not insolvent; that they represented the security contained in the marriage settlement to be good and valid, when, in fact, it was fraudulent and void; and that they concealed the fact that a suit had already been instituted against Prewitt and themselves to set the marriage settlement aside. It alleges that the complainant Chapman was ignorant of the facts, and was deceived by these representations and concealments, and was thus induced to make the settlement, which he would not have done had he known the truth. The bill is filed against the succession of Wilson, as before stated, and prays that the settlement of May, 1867, may be set aside, and that the complainant may be admitted as a creditor of the succession, and may have a decree for the payment of his entire claim against Bradley, Wilson & Co., with the accumulated interest.
The defendants, who are the widow and executors of Wil..
son, have filed an answer denying all the charges of the bill, and setting up the defence of prescription of 10 years. Formerly, by Civil Code of Louisiana, (art. 3507,) the action for pullity or rescission of contracts, testaments, etc., was prescribed by five years, where the party entitled to sue was in the state, and by 10 years if he were out of it. But by the Revised Code of 1870, (art. 3542,) the time is reduced to five years in all cases, without regard to plaintiff's residence, subject, of course, that the time commenced to run only from the date of discovering the error or deception complained of as the cause of nullity or rescission.
Although courts of equity are not strictly bound by the local laws of prescription or statutes of limitations, yet they generally follow the analogy of those laws, and refuse to enforce claims that bave become stale by the lapse of the prescribed period. In cases, however, of cognizance peculiarly equitable, regard is always had to the force of special circumstances. “There are cases, says Mr. Justice Story, “in which the statutes would be a bar at law, but in which equity would, notwithstanding, grant relief; and, on the other hand, there are cases where the statutes would not be a bar at law, but where equity, notwithstanding, would refuse relief. But all these cases stand on special circumstances, which courts of equity can take notice of, when courts of law may be bound by the positive bar of the statutes.” Eq. Jur. $ 64a. Again : "It is a most material ground, in all bills for an account, to ascertain whether they are brought to open and correct errors in the account recenti facto, or whether the application is made after a great lapse of time.
In matters of account, although not barred by the statutes of limitations, courts of equity refuse to interfere after a considerable lapse of time from considerations of public policy, from the difficulty of doing entire justice when the original transactions have become obscure by time and the evidence may be lost, and from a consciousness that the repose of titles and the security of property are mainly promoted by a full enforcement of the maxim, vigilantibus non dormientibus jura subserviunt." Id. $ 529.