Schwarz v. Wendell

1 Harr. Ch. 395

• Court: Michigan Court of Chancery
• Decided: July 1, 1841
• Status: Published

Opinion

The Chancellor.

The plea in this case is insufficient. It merely sets up the settlement, release and covenants, and that the note was given for the balance found due to him. It does not state the manner in which the acoount was rendered.

It is alleged in the bill that the claim for which the note in question was given, arose from the profits of the speculation upon the Erie lots therein mentioned ; that the profits, if any, arose from the use of the funds of the cestui que trust, and that the amount was presented on a slip of paper, and unintelligible, and that the present trustee, Mr. Hastings, executed the covenant without any knowh edge of the facts.

The rule is very well stated by Lord Roddesdale in the case of Roche vs. Morgell 2 Sch., Lcf. 726. He says :

“Upon the argument of a plea every fact stated in the bill and “ not denied by the answer in support of the plea, must be taken as “ true. The plea to the relief (of a slated account,) ought to have “ averred that the accounts, settled all dealings between the parties -, “ that the accounts wove just and fair and due ; and these averments ought to have been supported by an answer to the same effect.”

Joy& Porter, for complainants. D. Goodwin, for defendants.

The same rule is also substantially stated by the same high authority on the subject of pleading in Mit. Pl. 262, &c. There are many other authorities sustaining this rule.

Without going into the consideration of the other point iaised at the hoaiing as to the relation of the parties as trustee and cestui que trust at this time, (which would now perhaps be admitted,) I must say that this seems to me a very proper case for the application of the rule. The covenant entered into by Mi. Hastings, the new trustee, and the other complainants under the circumstances alleged in the bill, cannot vary the rule;

The"plea must be overruled.

A rehearing of this Cause on the plea filed was granted.

The Chancellor. — A plea is a special answer to a bill demanding the judgment of the court in the first instance whether the special matter urged by if, does not debar the complainant from his title to an answer which the bill requires.

The rule as to pleas which was stated on a former occasion is admitted to be the correct one; the propriety of its application to the case under consideration is however questioned.

It is not necessrry to reiterate at much length the allegations of this hill as they were before fully stated. The allegation that this claim of five thousand dollars in substance and fact arose from the use of the trust funds, used in a supposed speculation in lands at Erie is not denied. It is further alleged that this demand was unexpectedly made when the parties had met together to execute the deeds. That it was a surprise upon the cestui que trust, that the defendant insisted that the cestui que trust should purchase this interest, that he insisted upon its present settlement, that it was yielded to hastily and for the purpose of getting the property out of the hands of the defendant; that the new trustee signed the note without any ¿nowledge of the facts and circumstances stated in the bill.

It is further charged that no part of the $4,000 received by the trustee has been repaid to the complainants or any of them, and that they fully believe that a large balance of said money still remains in the hands of said defendant, and unaccounted for by him, and that the account was presented on a slip of paper and unintelligible. The bill also prays an account of this money, as well as to be relieved against the note, and for such further and other relief as the circumstances of the case may require. Now whether these 'allegations relate to one transaction or to one or more items of a complicated account can make no difference; and Without reference to the covenants set up by Way of defence in the plea, the plea unsupported by Un answer cannot bar the complainants from an answer to which they are entitled, and the rules of pleading as before stated are correct, and applicable to this case.

But it is insisted that the covenants not being alluded to in the bill, Constitute a bar to the relief. The indenture containing these covenants bears even date with the alleged settlement and note. It is as follows, as stated in the plea (after the preliminary recital,) that “ this defendant had executed various deéds, entered into several “covenants and done oilier matters at the request of the parties ‘‘ of the first part, (the said Catharine and the said John E.,)— “ some or all of which might then create a personal liability on the “ part of the defendant, and that this defendant had by deeds of equal “ date therewith assigned overto the siiid Eurotus P. his heirs and as- “ signs at the request and by the desire and appointment of the said “Catharine, all the said, trusts and all the trust property belonging “to the said Catharine heretofore vested in him; and that th'e said John “E. in and by the said indenture, in consideration of the premises and “ of the sum of one dollar therein acknowledged to have been received “ from this defendant, did for himself, his heirs, executors and ad- “ minislrators, covenant, promise and agree to and with this defend“ant, his heirs, executors and administrators, that he, the said John “ E., should and would well and truly save harmless and indemnified, “ and keep defended this defendant and his legal representatives of and “ from all acts, deeds, covenants and other doings which he, this de- “ fendant at any time theretofore had done, committed, executed or “ entered into as trustee as aforesaid, or in the execution of the “ said trusts,' and of and from all consequences and liabilities of ev~ ery kind or nature then existing, or which might thereafter arise, “ for or by reason of his (this defendant’s) having acted as such trust “ tee, and should and would reimburse this defendant and his said rep- “ resentatives all such losses or sums of money, if any, as he or they “ might be legally compelled to pay or sustain for or by reason of “ his (this defendant’s) having accepted the said trusts.”

It was held in the case of Roche vs. Morgell, that a plea of a release unsupported by an answer was insufficient* although the same objection was there urged, which is now taken, that thé bill did not refer to it, and pray that it might be sot aside.

Certainly no greater effect can be given to this statement than to an express release. On the contrary, I have strong doubts whether the covenants set out in this plea were intended to extend to, of do in fact reach the case made by the bill at all.

The manifest intent and object of this instrument was to indemnify and save harmless the trustee from any act done by him in the execution of his trust. The prayer of the bill among other things, is that he may account for money belonging to the trusty fund, which they charge to be in his hands unaccounted for.'

It would in my view be going very far to say that these covenants shall bar and preclude the complainants from an answer, when in fact they were intended for another and a different purpose. But I do not intend to dwell upon this view of the case, as it is not now intended to preclude the defendant from whatever benefit he cart properly derive from this.dofence when supported by an answer.

Enough has been shown, 1 think to justify the conclusion that the plea is insufficient. To obviate any embarrassment which may be apprehended from the form of the entry, the order will be that the plea stand for an answer with liberty to accept.