Allen v. Galloway

30 F. 466, 1887 U.S. App. LEXIS 2469
CourtUnited States Circuit Court
DecidedMarch 5, 1887
StatusPublished
Cited by4 cases

This text of 30 F. 466 (Allen v. Galloway) is published on Counsel Stack Legal Research, covering United States Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allen v. Galloway, 30 F. 466, 1887 U.S. App. LEXIS 2469 (uscirct 1887).

Opinion

HaMmond, J.

Whatever rule may prevail elsewhere, there can be, in the equity courts of the United States, no relief from a mistake of law. Hunt v. Rousmaniere, 1 Pet. 1, 15; Bank of U. S. v. Daniel, 12 Pet. 32, 55; Railroad Co. v. Soulter, 13 Wall. 517, 524; Upton v. Tribilcock, 91 U. S. 45, 50, 51; Lamborn v. County Com'rs, 97 U. S. 181, 185; Snell v. Insurance Co., 98 U. S. 85, 90, 92; U. S. v. Ames, 99 U. S. 35, 46, 47.

It was distinctly proclaimed in Snell v. Insurance Co., supra, that the ruling in that case was not to be considered as any departure from the general and salutary principle to which the court had always adhered. And most of the above cases will illustrate the application of it to facts like those we have here. In the case, just cited the judgment is founded on the fact of'a misrepresentation of the legal effect of the words used in a policy by the agent of the insurance company, innocently made, no doubt, but nevertheless operating as a deception of one party to the contract by the other, in a case where the party misled might reasonably rely [468]*468upon the other for a correct selection of the proper form of contract, to accomplish their agreement.

But in this case there is no circumstance like that, or anything approaching it. It is absolutely bare of any incident to take the case out of the category of a pure mistake of law, unmixed with any element of misrepresentation, accident, or fraud upon the part of anybody. It is said there was a mistake of fact as to the true state of the account, but that is untenable. It is only another way of saying that Allen believed that he had the right to make the appropriation of the balance due Galloway & Burns to the payment of the balance due from Galloway, individually. He relied with too much confidence upon that opinion of the law which was overthrown by the supreme court of Louisiana. Carter v. Galloway, 36 La. Ann. 473, and Id. 730. In the first of these cases the plaintiffs were garnishees, the suit involved these very transactions, and we have that record in proof in this case; while in the second, another firm of creditors similarly situated, and attempting to save themselves by a similar process, were garnishees; but the court, properly, as we think, if -we may be called on to say that, did not permit the partnership assets of the defendants to be so diverted to the payment of the individual debts of one of the firm.

But, even if the court were wrong in that judgment, it is impossible now and here, by this proceeding in equity, to set aside the settlement, any more than by the suit at law upon a newly stated account, as to which plaintiffs took a nonsuit at a former term.' The decision in Louisiana was final as to the law of the transaction, and the plaintiffs cannot thus mitigate the loss occasioned to them by any real or supposed error of the court, and thereby transfer the burden of it to the firm of Galloway & Burns, or to Galloway individually, as they are here attempting to do. They do not show by the proof here, any more than they did in the Louisiana suit, that Burns ever consented to the arrangement by which they undertook to appropriate the firm’s assets to the pajmrent of Galloway’s losses in futures. Indeed, taking into view only Galloway’s own letters, upon which alone Allen acted in making the appropriation, and it may be doubtful if they fully justify the assumption that even he authorized it; but this is immaterial, as we consider the case as if he had given the fullest authority.

But it is argued that Allen expected Burns to testify in the Louisiana suit that he, too, had given authority and consented to the appropriation, and that Burns “went back on him,” to use the expression of the idea in the argument. This was a wholly gratuitous expectation, for there .is not a particle of proof that Burns encouraged or countenanced it by anything he ever said or did about the matter, — not in the least. The most that can be said is that he was quiescent, as the Louisiana court said, and the proof here is not any better on that point than it was there. But in the view of the supreme court of Louisiana, as expressed in the opinions cited, it would possibly have made not the least difference in their judgment if Burns had expressly authorized the appropriation, and had testified to that fact. For it may well be doubted, on the law of [469]*469partnership, whether it is competent for all the partners, by any consent or act of theirs, to appropriate the firm assets to the payment of individual debts, after they have failed and become insolvent, and far more doubtful if they could do this, as Allen attempted to do, after creditors have attached the assets.

But, aside from this, Allen’s attitude at the time of the compromise settlement cannot be improved by such expectations as that, lie made no such conditions in his acceptance of the compromise as that certain proof should be made, or that certain facts should exist. He was master of the situation,- — altogether so, — and might have said to his debtor that, if he should lose the suit then ponding, the balance due him would be more than if he should win it, and that some provision must be made for that contingency. But he did not. He accepted the offer made on the basis of gaining the suit; that is to say, he gave his receipt in full at the figures that would be due if he should win, and either never thought of losing, or was willing to take the chances. He relied with abundant confidence, fortified, no doubt, by the opinion of counsel, upon his belief that, as a matter of law, he could, notwithstanding the ponding attachment, upon Galloway’s instructions, — or Galloway & Burns’, if you please, — appropriate the balance due from the firm to the payment of the individual debt of one of the partners. This was a grievous mistake as it turned out, but bo has no one to blame but himself; and one has only to observe, as he appears on the witness stand, his enthusiastic confidence in his own judgment, to know that he is the very man to stand fast by his own convictions, and never stop to doubt them.

Yet, if we remember the real situation as it then existed, this was not an unwise acceptance of the compromise offered. Galloway & Burns, as a firm, really owed Allen’s firm nothing whatever, but the indebtedness was the other way. Anything offered by this bankrupt firm out of their firm assets in payment of Galloway’s individual indebtedness to Allen, West & Bush was so much clear gain; and the assent of other creditors, — who might have objected to this appropriation, as they did to that already attempted to be made, — by joining in the compromise, would make that, at least, secure as a payment, whatever fate should befall the other. It was like a game in which Allen had everything to gain, and nothing to lose that was not already lost, if his judgment about the Carter Bros.’ garnishment should be in fault. True, he might have held to Galloway’s liability for the Ml amount of his gambling losses in futures, but that was a sorry prospect at that time, (it has improved since by his recovery of his credit, etc.,) with the firm insolvent, as it was, and the individual members equally so.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Greenberg v. German American Ins.
160 P. 536 (Oregon Supreme Court, 1916)
Goodno v. Hotchkiss
237 F. 686 (D. Connecticut, 1916)
Arandes v. Báez
20 P.R. 364 (Supreme Court of Puerto Rico, 1914)

Cite This Page — Counsel Stack

Bluebook (online)
30 F. 466, 1887 U.S. App. LEXIS 2469, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allen-v-galloway-uscirct-1887.