THIS was an appeal from the circuit court of the United States for the southern district of Mississippi. The facts of the case are stated in the opinion of the court. It was argued by Mr. Coxe, for the appellants, and by Mr. Brent and Mr. May, for the appellees.
The opinion of the court was delivered by: Mr. Justice Campbell delivered the opinion of the court.
The appellee (B. R. Truly) purchased of J. R. Herbert, in 1836, in Mississippi, five slaves, for whom he gave two notes, one of which for $3,575, was payable in March, 1838, at a banking-house in Brandon, with ten per cent, interest till paid. Another note for the same sum has been collected. During the year 1837, the appellants recovered a judgment in the circuit court against Herbert, who had absconded in insolvent circumstances. In 1839, a process of garnishment was served upon the appellee before named, who acknowledged the existence of this note, and a judgment was rendered against him. An execution issued, a levy was made, a forthcoming bond was taken, and a forfeiture of it returned; upon this bond, J. H. Truly was a surety. In 1840, an injunction was obtained by the appellees, upon the allegation (inter alia) that they had heard that the slaves, which form the consideration of the notes, were the property of certain minor children in Alabama, whose guardian had fraudulently removed and sold them to Herbert. This bill was before this court and was dismissed. 5 Howard, S. C. R. 141.
While the suit was in this court, the minor children referred to, instituted suits in the court of chancery in Mississippi, (by sequestrating the property,) against the appellee or his assigns and which resulted, during the progress of the present-suit, in the recovery of two of the slaves, and nine tenths interest in a third, with the damages for their loss of service.
The original bill was filed in the present suit, in anticipation of this result, and alleges the death of Herbert and his vendor, (Nicholson,) in Texas, insolvent; and that the appellees were willing to release their claim on the slaves as derived from them, and surrender the defence of the suits to the appellants, and call upon them to take their place. The fact of the recoveries subsequently is brought to the notice of the court through supplemental bills. The circuit court decreed a perpetual injunction in favor of the appellees. The averment of the outstanding paramount title in the wards of Nicholson, and which the appellees had only heard of from common report, which appeared in the former suit, was disposed of by this court as insufficient, for that the appellees then 'retained possession of the property without a threat of molestation.'
The rule of the courts of Mississippi, as well as of this court, is, that, except in special cases, a vendee in possession cannot, at law or in equity, contest the payment of the purchase-money stipulated in a contract of sale, by an alleged defect of title, the reliance must be placed on the covenants it contains.
Gilpin v. Smith, 11 S. and M. 109; Dennis v. Heath, Ibid. 206; 2 Wheat. 13; 3 Pet. 310; 3 Porter, 127; 19 John. 77.
The disturbance of the possession by the orders and process of the court of chancery, the imminence of the danger from the title propounded in those suits, and the insolvency and death of the warrantors, were facts which authorized the circuit court to take equitable cognizance of the present complaint of the appellees, and to administer relief. The rule of the civil law, that the price of the sale of real property cannot be recovered by the vendor if the vendee has been disturbed in his possession by prior incumbrances or paramount titles, or has just grounds for apprehension on that account, (Pothier de Vente, § 280,) is the rule of chancery where there has been fraud, on where the covenants of warranty are inadequate to the protection of the vendee by reason of the insolvency of the vendor.
In Bumpus v. Platner, 1 John. Ch. R. 213, Chancellor Kent said: 'I consider an eviction at law an indispensable part of the claim to relief here, on the mere ground of a failure of consideration.' And in Abbott v. Allen, 2 John. Ch. R. 519, he said: 'If there be no fraud in the case, the purchaser must resort to his covenants if he apprehends a failure or a defect of title, and wishes relief before eviction.'
But in the last case he suggests, 'that existing incumbrances which appeared to admit of no dispute,' or 'where an adverse title is put forward,' 'or an adverse proceeding threatened,' might support an injunction till the title was ascertained at law. And in Johnson v. Gere, 2 John. Ch. R. 547, he administered relief in accordance with these suggestions. A learned successor of this eminent jurist, with these cases before him, determined that when 'the covenants have been actually broken, and the grantor is insolvent, a court of equity may restrain him from proceeding to collect the whole amount of the purchase-money, and may offset the damages occasioned by the treach of the covenants of seisin or warranty, against such unpaid purchase-money. Woodruff v. Bunce, 9 Paige, 443.
And this conclusion is supported by well considered adjudications in other courts of the States. 2 Dana, 276; 1 Ib. 303; 5 Leigh, 39, 607; 8 Ala. Rep. 920; 1 Black. 384; Carver v. Miller, 10 Ala. Rep.
The question arises whether the equity we have considered, of the vendee to protection from the insolvency of the vendor, has been modified or defeated by the pursuit of the attaching creditor in the circuit court. The proceeding by garnishment is designed to subject a debt due to the defendant, to the payment of the demand of his creditor, by investing the creditor with a judicial power to collect and apply the amount due. The claim of the attaching creditor against the defendant is only extinguished by a satisfaction of his demand by the garnishee. The garnishee is entitled to make at law legal defences, and his equities must be sought in a court of chancery. 17 Ala. 455; 5 Met. 263; 2 Wash. C. C. R. 488.
The statutes of Mississippi do not assign any extraordinary effect to the judgment condemning the debt in the hands of the garnishee, nor do they enlarge the rights of the attaching creditor beyond those of any other assignee of a chose in action. The equity of the vendee to be indemnified from the purchase-money in his hands, for a breach of the covenants of warranty by an insolvent vendor, originates in the contract, and inheres to it so long as any part of it is executory. The equity of the attaching creditor does not arise in the contract, and is subsequent to its formation. In claiming the benefit of the fund, he renders no service to the vendee, and releases none of his rights against the vendor. He may fail in realizing hopes or anticipations by the defeat of his suit against the garnishee, but his judgment against his debtor remains in operation. Where a party contracts specifically for property, pays money, acquires a legal title without notice of an equity, a court of chancery will not disturb his legal position. But there is no principle upon which a court of chancery is required to imply that a proceeding by a defendant, through the intervention of his creditor, to subject a legal demand, unconnected with any equity–a demand which equity would not permit him to collect in his own name, in consequence of the failure of consideration, shall divest the garnishee of equitable claims and defences.
The rule of law is accurately stated by Vice-Chancellor Wigram, who says: 'That a creditor, under his judgment, might take in execution all that belongs to his debtor, and nothing more. He stands in the place of his debtor. He is a purchaser who, by the terms of his conveyance, takes, subject to any liability under which the debtor himself held the property.' Whitworth v. Gaugain, 3 Hare, 416; s. c. 1 Cr. & Phil. 325; Langton v. Horton, 1 Hare, 549; Hutch. Dig. Miss. Stat. 912, § 8.
The most restricted view of the doctrine of these cases is, that the equitable rights of the garnishee remain unaffected by the judgment, or the proceedings under the judgment, till the execution is executed, unless the garnishee is accessory to some act, or guilty of some omission or laches, ...