L. Bucki & Son Lumber Co. v. Atlantic Lumber Co.

116 F. 1, 53 C.C.A. 513, 1902 U.S. App. LEXIS 4304

• Court: Court of Appeals for the Fifth Circuit
• Decided: May 20, 1902
• Docket: No. 1,130
• Status: Published

Opinions

McCORMICK, Circuit Judge.

The bill shows that the parties to this suit prior to April x, 1893, entered into a contract whereby the appellee, the Atlantic Lumber Company, bound itself to deliver to the appellant, the L. Bucki & Son Lumber Company, 2,000,000 feet, board measure, of good, merchantable pine logs each month for a period of eight years, with a guaranty that the logs should average 3j4 logs to the thousand feet, board measure. About April, 1893, the parties commenced work under this contract, and continued to work under it until October 1, 1897. On that day the appellee brought an action at law against the appellant to recover a balance claimed to be due on account of the contract price for logs delivered for four months, to wit, June, July, August, and September next preceding the 1st day of October, 1897, in which action it alleged that the balance due was $8,609.78. The action was commenced in the state circuit court, but was duly removed to the circuit court of the United States for the Southern district of Florida. To this action the appellant filed, among other pleas, four several pleas of set-off for damages sustained by the appellant by reason of the breaches of the warranty and guaranty contained in the contract. These pleas separately laid breaches for the months, respectively, of June, July, August, and September', and charged that the logs delivered in those months averaged less than 3 logs per thousand feet, board measure, according to the rules which the contract had made the standard, and charged further that the value of the logs actually delivered, according to the established and admitted basis of valuation at Jacksonville, where the logs were delivered, was very much less than the contract price; that without adjustment thereof from month to month the appellant had actually paid during the months of June, July, and the first half of August for the amount, in board measure, of the logs actually delivered, at the contract price, which was greatly more than the value of the logs so delivered during that time. The bill charges that the amount of the deliveries during each of the periods, and the exact average of the size and the exact value of the logs actually delivered, was shown by undisputed evidence, the result of which was particularly and minutely set out in the bill, and the exact amount of the difference between the value of the logs actually delivered and of the price actually paid was fully and minutely disclosed. The bill shows that on the trial of the action the court, at the request of the appellant, instructed the jury that the difference between the contract price of the logs that should have been delivered and the market price of the logs that were actually delivered was the legal measure and rule of damages to be allowed and awarded to the defendant in the action under these pleas of set-off; and the court submitted to the jury on the trial the question of the amount of damages and set-off to be allowed the appellant under its pleas in respect to, and only in respect to, the logs delivered between the 14th of August and the 1st of October, 1897, which instruction the jury obeyed, and under which instruction the jury allowed the set-off claimed for the period between the 14th of August and the 1st of October, 1897, and were expressly required not to allow the claim for the period up to the 15th of August, on the ground that it was established by the evidence at the trial that the appellant had, prior to the bringing of the action, without objection, and with knowledge of the size of the logs actually delivered, paid and settled with the appellee for all logs it had delivered between the 31st of May and the 15th of August, 1897. The proper exception was taken and reserved. Such further proceedings were had that on the 7th day of May, 1898, the jury returned its verdict against the appellant for the sum of $8,988.37, on which the court on the same day rendered its judgment, without any fault, negligence, or want of diligence on the part of the appellant. The appellant moved for a new trial, on which motion, at the hearing thereof, the court entered the following order:

“This cause coming on to be beard upon a motion for a new trial, and having been fully heard and considered, and it appearing that possibly an error was committed in instructing the jury that payments and settlements had between the parties for the logs up to the 15th day of August, 1897, was final, although it might appear that the size of the logs for that time was smaller than the average guarantied, and that, according to the custom of the market, the price of such logs in the market, on account of such smaller size, was $583.07 less than the amount paid, it is ordered that, upon the remitting of the said sum of $583.07 from said judgment by the plaintiff, that said motion for a new trial be denied.”

The subsequent paragraphs of the bill show an abortive attempt to have this judgment reviewed on a writ of error, failure to accomplish which is shown in its minutest details, with a strenuous allegation that the appellant had been deprived of its rights and moneys and property, as set out, without any negligence, want of diligence, care, or skill on its part or on the part of its attorneys in the premises, and against the legal contentions, defenses, and pleadings of the appellant and its attorneys in the action at law, and against the undisputed and conceded evidence in that action; that on the basis of the deliveries actually made, and the rule of law adopted by the trial court, and made the basis of its instruction to the jury, as far as it allowed the jury to consider it at all under the appellant’s pleas, does, by mathematical calculation, exactly show that, in order to correct the error of withdrawing the consideration of these pleas during the period before the 15th of August, not the sum of $583.07 results, but the sum of $4,553.90, which is the amount for which the appellant should have been allowed credit under its pleas for the months of June, July, and the first half of the month of August; that the rule of law as to the finding of damages in the particular case exhibited by the pleadings and proof in that action was definitely and correctly settled, and, as between the parties to the suit, became res adjudicata, and that the mistake committed by the trial judge, on the hearing of the motion for a new trial, in arriving at the amount which, on the basis of the undisputed facts and the correct rule of law adopted, was a mistake of fact, and a miscalculation, not subject to be reviewed on a writ of error, and not concluded by any action had on such writ; that the result is that the appellee has obtained and now holds a large sum of money, indicated, which it is unconscionable for it to hold, and against equity for the appellant to be deprived of; that therefore the suit is brought to obtain credit for that amount on the judgment rendered in the action at law. The later paragraphs in the bill anticipate the defenses of the appellee, and reply to them. The appellee submitted a demurrer specifying seven grounds, the first of which was, “Because the said bill does not set up such facts as entitle the complainant to any relief in a court of equity against this defendant.” On the hearing of the demurrer the circuit court “ordered that said demurrer be, and the same is hereby, sustained, upon the first ground alleged therein; and, it further appearing that the insufficiency of the bill is such that it cannot be cured by amendment, it is ordered that it be dismissed.” The appellant contends that the bill, in the first 31 paragraphs, alleges facts admitted by demurrer, saying that the appellant has been deprived of the set-off without its fault, and that the judgment is against equity and conscience, and ought not to be enforced without such credit; and it assigns that the court erred in dismissing the bill because the demurrer was not well taken, and that the bill stated a proper case for relief. It contends that the central point in this case is that, on the motion for a new trial of the action at law, the court in calculating the amount to be remitted from the verdict upon the undisputed evidence, by mistake ordered an amount to be remitted too small by about $4,000; that the correct rule of law is that the amount due the appellant was the difference between the contract price of $7.25 per thousand feet, board measure, actually paid for the logs, and the market price of logs of the size actually delivered between the dates of May 31 and August 15, 1897; that such was the rule of law declared by the circuit court in its order on the motion for a new trial, as well as in its instruction to the jury in respect to the logs delivered between August 14 and October 1, 1897, as the bill explicitly avers; that the bill alleges the exact quantity of feet of logs delivered; that it alleges the payment of $7-25 Per thousand, board measure, for all logs delivered between May 31 and August 14, 1897, the custom of the market as to the market price of logs, and the basis of $7 per thousand for logs averaging three logs per thousand; and that the bill alleges the items in dollars and cents, and the aggregate difference to be $4,553.90. The appellant further contends that the bill alleges facts establishing beyond the possibility of denial that the appellant exhausted in the trial of the action at law every means known to procedure to have and obtain the set-off of $4,553.9°, and that the failure of obtaining such set-off was in no' way attributable to the want of care, diligence, and skill on the part of the appellant or of its counsel. It contends that the demurrer admits all of these facts, and that the only question to be considered is, upon such admitted facts, do. they establish an equity or right in the appellant to have the mistake corrected, and the set-off allowed as a credit on the verdict of the jury ? which is the relief sought by the bill.

In Insurance Co. v. Hodgson, 11 U. S. 332, 3 L. Ed. 362, Chief Justice Marshall said:

“Without attempting to draw any precise line to which courts of equity will advance, and which they cannot pass, in restraining parties from availing themselves of judgments obtained at law, it may safely be said that any fact which clearly proves it to be against conscience to execute a judgment, and of which the injured party could not have availed himself in a court of law, or of which he might have availed himself at law, but was prevented by fraud or accident, unmixed with any fault or negligence in himself or his agents, will justify an application to a court of chancery. * * * Being capable of imposing its own terms on the party to whom it grants relief, there may be cases in which its relief ought to be extended to a person who might have defended, but has omitted to defend himself at law. Such cases, however, do not frequently occur. The equity of the applicant must be free from doubt. The judgment must be one of which it would be against conscience for the person who has obtained it to avail himself.”

The case of Leggett v. Humphreys, 62 U. S. 66, 16 L. Ed. 50, is stated in the syllabus substantially as follows: There was a suit brought in the circuit court of the United States for the Southern district of Mississippi against a sheriff and his sureties upon the sheriff’s official bond, in which judgment was given for the defendant. Being brought to the supreme court by writ of error, the judgment was reversed, and a mandate went down, directing the circuit court to enter judgment for the plaintiffs. 2 How. 28, 11 L. Ed. 159. While the suit was pending in the supreme court, judgment against the sheriff and his sureties was given in a state court, and execution was issued against one of the sureties, by means of which his property was sold, and the amount of the penalty of the bond collected and paid over. When the mandate of the supreme court went down, the circuit court entered judgment against the surety, who filed his bill in equity for relief. This suit also was brought up to the supreme court, who decided that the complainant was entitled to relief. 9 How. 297, 13 L. Ed. 145. Further proceedings in the case of Leggett v. Humphreys rendered it necessary for the supreme court to decide (1) that the obligation of the surety is strictissimi juris, and he cannot be called upon to pay more than the penalty of his bond; (2) that as he was not permitted to plead puis darrein continuance, the satisfaction of the penalty of his bond, etc., he is entitled to relief in equity.

In Metcalf v. Williams, 104 U. S. 93, 26 E. Ed. 665, the circumstances on which the bill relied for setting aside a judgment below were that the complainant did not owe the money, and had made arrangement to have the claim properly litigated. The course of the proceeding is stated in the opinion of the court, showing the appearance of counsel at the term of court to which counsel had been advised it would be tried, for the purpose of trying the case, and he was informed that no plea had been entered on the record at Richmond, and the case was not on the docket for trial. Being taken by surprise, he moved the court to> reinstate the cause on the docket. The judge, doubting his authority to do this, refused the motion. At the hearing the demurrer to the bill was overruled, and a decree was rendered for the complainant, on the ground that he was not personally bound by the check; in other words, that it was not his check, but the check of the corporation of which he was an officer, on which the judgment at law was given. In considering whether sufficient cause was shown in the bill for setting aside the judgment, it was said in the opinion:

“It is manifest that the judgment was a surprise upon complainant. After what passed in the court at Richmond, his counsel had a right to suppose that the cause would be tried in the ensuing term at Alexandria. The practice in Virginia as to entering pleas of general issue on the record sufficiently accounts for the omission to file a formal plea. Had not the term passed by, the district judge would undoubtedly have set aside the judgment and reinstated the cause on the docket for trial. If, as he supposed, the passage of the term deprived him of power to do this, it became a proper case for equitable interference by bill. When a party has been deprived of his right by fraud, accident, or mistake, and has no remedy at law, a court of equity will grant relief. Perhaps, in view of the equitable control over their own judgments which courts of law have assumed in modern times, the judgment might have been set aside, on motion, for the cause set forth in the bill; but, if this were true, the remedy in equity would still be open; and the fact that the court declined to exercise the power upon motion rendered the resort to a bill necessary and proper. Formerly bills in equity were constantly filed to obtain new trials in actions at law,—a practice which still obtains in Kentucky, and perhaps in some other jurisdictions; but the firmly settled practice by which courts of law entertain motions for new trial, and the dislike of one court unnecessarily to interfere with proceedings in another, has caused an almost total disuse of that jurisdiction. Courts of equity, however, still entertain bills to set aside judgments obtained by fraud, accident, or mistake.”

In the case of Hamburg-Bremen Fire Ins. Co. v. Pelzer Mfg. Co., 22 C. C. A. 283, 76 Fed. 479, the foreman of the jury, in announcing the verdict, had omitted by mistake one of the items which the jury had allowed, and the mistake was not discovered until it was beyond the general power of the court to disturb the judgment. On appeal for relief the court held that equity had jurisdiction to grant relief. In this case several actions upon policies of insurance were consolidated. Each suit was upon a single policy, with the exception of one, which was upon two separate policies. The jury agreed upon a verdict awarding to the plaintiff the full amount claimed, but the foreman, in announcing the verdict, for which purpose other business of the court was interrupted, omitted therefrom the amount of one of the policies in the last-mentioned suit. An appeal was taken on matters of law only, and the judgment was affirmed. The mistake was not discovered until nearly three years afterwards, and a bill in equity was immediately filed to correct the same, on which, the proper issue joined, the court held that there was no such laches as would prevent relief.

Mr. Pomeroy, in his Equity Jurisprudence (section 824), says:

“Accident is one of the oldest heads of equity jurisdiction. * * * Its existence and exercise involve two essential requisites. The first and principal requisite is that, by the event not expected nor foreseen, one party, A., had, without fault and undesignedly, undergone some legal loss or liability, and the other party, B., has acquired a corresponding legal right, which it is contrary to good conscience for him to retain and enforce against A.”

In reference to “mistake,” recognizing the difficulty of formulating a definition, contrasting it with “accident,” and considering its essential prerequisites, he concludes:

“Mistake, therefore, within the meaning of equity, and as the occasion of jurisdiction, is an erroneous mental condition, conception, or conviction, induced by ignorance, misapprehension, or misunderstanding of the truth, but without negligence, and resulting in some act or omission done or suffered erroneously by one or both the. parties to a transaction, but without its erroneous character being intended or known at the time.” Id. § 839.

Mr. Freeman, in his work on Judgments (section 500a), says:

“In treating of the vacation of judgments upon motion, we considered the fact that a judgment was procured by mistake, accident, or surprise as a ground of relief therefrom. Substantially the same grounds of relief may be urged with success in equity, except when refused on the ground that an adequate remedy existed at law, and no reason is shown why it was not pursued. Mistakes of fact, whether made by the court or by one of the parties, have been successfully employed as grounds for obtaining the interposition of courts of equity, and securing the relief of the party injured by the mistake. * * * It seems to be well established by the authorities that a mistake in calculating the amount due, by which the judgment was entered for a wrong sum, may be corrected in equity. An error in computation is not necessarily attributable to negligence, for the most careful and expert calculators sometimes make mistakes. So where a judgment is occasioned by the mistake of the judge, the party against whom it was entered may have relief in equity.”

Where the defendant in an action at law has a good defense on the merits, which he is prevented by accident from setting up or making available, without any negligence or inattention on his part, and a judgment is recovered against him, equity will exercise its jurisdiction on his behalf.. Pom. Eq. Jur. § 836. We quote also from Id. § 1364:

“Where the defendant in the action, having a valid legal defense on the merits, was prevented in any manner from maintaining it by fraud, mistake, or accident, and there had been no negligence, laches, or other fault on his part or on the part of his agents, then a court of equity will interfere at his suit, and restrain proceedings on the judgment, which cannot be conscientiously enforced. From the very nature of the case, this interference takes place after the judgment, and not while the action at law is pending.”

Counsel for the appellant contends that the loss of the set-off which he now seeks to establish, having been duly pleaded and proved, was, in the 'eye of equity, an “accident” to the plaintiff here, within the accepted definition of that term; that it was unforeseen, unexpected, and that no human foresight or diligence on plaintiff’s part could have arrested it; that it was a mistake by the trial judge, but an accident to the plaintiff. We have referred at some length to the text of standard authors, rather than reyiew or cite the great number of reported cases which illustrate the doctrine, because the quoted texts express the settled result of the adjudged cases, and because the cases, in the present state of law literature, may readily be found by any interested inquirer.

We conclude that the case stated in the bill is clearly within the sound doctrine as expressed and applied by courts of last resort, and that the circuit court erred in sustaining the demurrer submitted by the appellee, for which error the case must be reversed.

We do not deem it necessary to pass upon the defenses which the bill itself anticipates, and whicíi it seeks to avoid by replying matter in avoidance in advance.

The decree of the circuit court is reversed, and the cause is remanded to that court, with direction to overrule the demurrer.