⚫480 (141 U. S. 479) DAVIS V. PATRICK. (November 9, 1891.) PROMISE BY CREDITOR IN OBJECTIONS NOT STATUTE OF FRAUDS 1. One who had loaned a large sum to a mining corporation, and had also purchased and paid for in advance à quantity of ore to be extracted from its mine, made a contract with it whereby he was to advance other sums, if needed for operating the mine, and a manager was appointed, with powers of attorney from the creditor and the company, irrevocable except at the creditor's instance, with sole control of the mine until such time as the ore should be delivered and the money repaid. Held that, although the creditor did not thereby obtain any ownership in the mine, he yet had such an interest in its operation that his verbal promise to be personally responsible to one engaged by the manager to haul ore was not within the statute of frauds, as being a promise to pay the debt of another. 2. In an action to charge the creditor on this promise, the fact that the count was on an original employment by him, in 1873, while the proof showed that the original employment was by the company, and the promise by the creditor was in 1874, cannot avail the creditor on appeal, when he made no objection on this ground to the testimony at the trial. In error to the circuit court of the United States for the district of Nebraska. Action by Algernon S. Patrick_against Erwin Davis for the recovery of money. verdict and judgment for plaintiff. Defendant appeals. Affirmed. For report on former appeal, see 7 Sup. Ct. Rep. 1102. STATEMENT BY BREWER, J. This case was commenced on the 24th day of November, 1880, by the filing of a petition in the district court of Knox county, Neb. Subsequently it was removed to the circuit court of the United States, and at the May term, 1883, of that court a judgment was rendered in favor of the plaintiff. That judgment was reversed by this court, at its October term, 1886. Davis v. Pat. rick, 122 U. S. 138, 7 Sup. Ct. Rep. 1102. A second trial, in January, 1890, resulted in another verdict and judgment for the plaintiff, and again the defendant alleges error. The petition counts on two causes of action. No question is made by counsel for plaintiff in error with respect to the first count or the rulings thereon; the only error alleged being in reference to the second count. That count is for the transportation of silver ore from the Flagstaff mine, in Utah territory, to furnaces at Sandy, in the same territory. In the first trial it was claimed that Davis, the defendant, was the real owner of the Flagstaff mine, and therefore primarily responsible for all debts contracted in its working. The relations between Davis and the Flagstaff Mining Company were disclosed by a written agreement, of date December 16, 1873. By that agreement it appeared that Davis, on June 12, 1873, had advanced to the company £5,000, at the rate of 6 per cent. interest, a sum then due; that it had sold to Davis, and agreed to deliver at the ore-house of the company, free of cost, 5,195 tons of ore, of which it bad only then delivered 200 tons, although Davis had paid in full for the entire amount. The agreement also recited that Davis was to advance an additional amount, if needed, not exceeding £10,000. It then provided that the mine should be put under the sole management of J. N. H. Patrick, to be worked and controlled by him until such time as the ore sold had been delivered and the sums borrowed had been repaid, with interest. This control was irrevocable, save at the instance of Davis. Coupled with this agreement was a full power of attorney to Patrick. This court held that such contract established between Davis and the mining company simply the relation of creditor and debtor, and did not make him, in any true sense, the owner. For the erroneous rulings of the trial court in this respect the judgment was reversed. In the second trial, this construction of the relations of Davis to the Flagstaff Mining Company was followed by the court, and the jury instructed that the contract put➡ in evidence between Davis and the mining company created simply the relations of creditor and debtor, and did not make the former liable for expenses created in working and operating the mine; and the trial proceeded upon the theory that during the time the services sued for were being rendered Davis was the party mainly and pecuniarily interested in the working of the mine, and that he assumed to Patrick a personal responsibility for such services; and the real question tried was whether Davis' promises were collateral undertakings to pay the debts of another, and void because not in writing. J. M. Woolworth, for plaintiff in error. John L. Webster, for defendant in error. BREWER, J. That Davis was interested in having the ore transported to the furnaces is clear. He was interested in two respects: First, as to the 4,995 tons to be delivered to him at the ore-house, it being his property when thus delivered. any subsequent handling was wholly for his benefit; and in respect to the balance. as the transportation was one step in the process of converting the product of the mine into money, it would help to pay the debt of the company to him. Davis, therefore, was so pecuniarily interested in, and so much to be benefited by, the prompt and successful transportation of the ore, that any contract which he might enter into in reference to it was supported by abundant consideration. We proceed. therefore, to inquire what he said and did. After the execution of the papers, the newly-appointed manager took possession of the mine; and in the forepart of 1874 the plaintiff commenced the transportation of the ore under a contract with the agent of the manager. The business was carried on in the name of the mining company. The plaintiff understood that Davis was interested in the matter, though not informed as to the extent of the interest, or the terms of the agreement between him and the mining company. In the fall of 1874, Davis came to Utah to examine the property. He was introduced by the manager to the foreman of plaintiff, in the latter's presence, as the boss of the mine, to which Davis assented. After this, plaintiff, who had not received his pay in full for the services already rendered, bad an account made up showing 20 *480 the balance due him, and presented it to Davis. His testimony as to the conversation which followed is in these words: I showed it to Mr. Davis, and told him I was not getting my money, and Mr. Davis said my account was all right, and he would be personally responsible to me for the money, and for me to go on as I had been doing, and draw as little money as I could get along with to pay the men and the running expenses, and he would see that I got every dollar of my money. The plaintiff's cashier, who was present at this conversation, gives this as his recollection of the conversation: Question. In that conversation state what Mr. Davis said about being responsible to A. S. Patrick for that account. Answer. He stated to Mr. Patrick, in my presence, that he would personally be responsible for that account. He says: 'You know, Al., I practically own this mine, but money is scarce, and we must get what we can out of the mine.' He says, We are making large expenditures for improvements;' and he says, 'You shall have all the money you want to pay your men and expenses, but you must wait for the balance, and I will see that you are paid.' Q. What did he say in that connection to A. S. Patrick about continuing on in the hauling of the ores? A. He requested him to continue in the hauling of the ores. He requested him to do it. Q. In response to Mr. Davis to that request, what did Mr. Patrick say? A. He said to Mr. Davis if he would guaranty him to be paid he would continue to work, and Davis said he would see him paid. After this, the plaintiff continued the work of transportation until the fall of 1875, receiving such payments from time to time as to extinguish the amount due him at the date of this conversation, and leaving a balance more than covered by the work done in 1875, and it is only for work done after these promises that this recovery was had, and in respect to which the questions presented and discussed arise. The plaintiff testified to another conversation, in September, 1876, in the city of New York. His account of that conversation is given in these words: "Plaintiff told Davis that his brother and himself were hard up for money, and wanted to know if Davis would not give them some money on the Flagstaff' account for hauling the ores. Plaintiff had his account with him, and showed it to Davis. Davis said the whole of the account was all right, and he proposed to pay the account, and said he would pay the plaintiff. Plaintiff said to Davis that if he would give him some money on the account it would help him out. Davis said he had some securi. ties in London which he was going to sell, and would have some money in a few days, and would give plaintiff $5,000 on the account. Plaintiff said if the money was going to be there in a few days he would wait for it, but Davis said: 'No, you go home, and I will pledge you my word that I will telegraph the money to you to the First National Bank by the 1st of October.'" And, again, he testified to an interview in 1877 with Davis, in the city of Omaha, in the presence of other parties, in which he said, "Davis, you promised all along to pay me that money;" and Davis, replied, "I believe I did." This testimony of plaintiff as to con versations with defendant is corroborated by other witnesses, and contradicted by none. It must therefore be accepted as presenting the facts upon which this case must be determined. Were these promises binding upon Davis, or of no avail to the plaintiff, because not in writing? Were it not for the statute of frauds, there would be no question, for obviously there were both promise and consideration. Defeudaut relies upon that provision of the statute of frauds which forbids the maintenance of an action " to charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing," etc. The purpose of this provision was not to effectuate, but to prevent, wrong. It does not apply to promises in respect to debts created at the instance and for the benefit of the promisor, but only to those by which the debt of one party is sought to be charged upon and collected from another. The reason of the statute is obvious, for in the one case, if there be any conflict between the parties as to the exact terms of the promise, the courts can see that justice is done by charging against the promisor the reasonable value of that in respect to which the promise was made; while in the other case, and when a third party is the real debtor, and the party alone receiving benefit, it is impossible to solve the conflict of memory or testimony in any manner certain to accomplish justice. There is also a temptation for a promisee, in a case where the real debtor has proved insolvent or unable to pay, to enlarge the o scope of the promise, or to torture mere: words of encouragement and confidence* into an absolute promise; and it is so obviously just that a promisor receiving no benefits should be bound only by the exact terms of his promise, that this statute requiring a memorandum in writing was enacted. Therefore, whenever the alleged promisor is an absolute stranger to the transaction, and without interest in it, courts strictly uphold the obligations of this statute. But cases sometimes arise in which, though a third party is the original obligor, the primary debtor, the promisor has a personal, immediate, and pecuniary interest in the transaction, and is therefore himself a party to be benefited by the performance of the promisee. In such cases the reason which underlies and which prompted this statutory provision fails, and the courts will give effect to the promise. As said by this court in Emerson v. Slater, 22 How. 28, 43: "Whenever the main purpose and object of the promisor is not to answer for another, but to subserve some pecuniary or business purpose of his own, involving either a benefit to himself or damage to the other contracting party, his promise is not within the statute, although it may be in form a promise to pay the debt of another, and although the performance of it may in. *489 cidentally have the effect of extinguishing that liability." To this may be added the observation of Browne in his work on the Statute of Frauds, § 165: "The statute contemplates the mere promise of one man to be responsible for another, and cannot be interposed as a cover and shield against the actual obligations of the defendant himself." mits that he believes that he did. The plaintiff, believing that Davis was, as he said, practically the owner, the party primarily to be benefited by the conversion of the products of the mine into money,-understood that Davis was making? an original promise to pay for the work, which he might do, and upon such promise he might surely rely as an original promise, at least for any work done thereafter. The merits of the case, therefore, as disclosed by the testimony, were with Patrick, and the judgment in his favor was right. It is objected that the court in its instruction spoke of Davis as an original promisor, as one promising to pay the debt, and not as one promising to be responsible for the debt, or to see i paid. Bu as Davis in the second conver admitted that he had always promised to pay, the debt, we cannot think that the court misinterpreted the scope and effect of his words. It is not probable that the parties to this transaction understood the difference between an original and a collateral promise. We must interpret Davis' promises in the light of the surroundings, and of his subsequent admissions, and in that light we cannot think that the court erred in its construction thereof; and if the jury believed that he had made such promises, we cannot doubt that the verdict should have been as it was. The thought is that there is a marked difference between a promise which, without any interest in the subject-matter of the promise in the promisor, is purely collateral to the obligation of a third party, and that which, though operating upon the debt of a third party, is also and mainly for the benefit of the promisor. The case before us is in the latter category. While the original promisor was the mining company, and the undertaking was for its benefit, yet the perform-sation promised to pay, and in the third ance of the contract inured equally to the benefit of Davis and the mining company. Performance helped the mining company in the payment of its debt to Davis, and at the same time helped Davis to secure the payment of the mining company's debt to him; and as the mining company was ap parently destitute of any other property, and the payment of its debt to Davis, therefore, depended upon the continued and successful working of this mine, and as the control and working of the mine had been put in the hands of Davis so that he might justly say, as he did, “I am practically the owner," it follows that he was a real, substantial party in interest in the performance of this contract. His promise was not one purely collateral to sustain the obligations of the mining company, but substantially a direct and personal one to advance his own interests. While the mining company was ultimately to be benefited, Davis was primarily to be benefited by the transportation of the ore, for thereby that debt, which otherwise could not, would be paid to him. therefore, in any true sense of the term occupied not the position of a collateral undertaker, but that of an original promisor, and it would be a shadow on justice if the administration of the law relieved him from the burden of his promise on the ground that it also resulted to the benefit of the mining company, his debtor. He Counsel for Davis place stress on the form of expression attributed by Patrick to Davis, to-wit: "I will be personally responsible; I will see you paid;" and contends that the import of such language is that of a collateral promise. There is force in this contention, as it implies that some one else was also bound, but the real character of a promise does not depend altogether upon the form of expression, but largely on the situation of the parties; and the question always is, what the parties mutually understood by the language, whether they understood it to De a collateral or a direct promise. Patrick declares he understood it to be a diect promise, and acted on the faith of it. That Davis understood it in the same way is evidenced, not only from the circumstances surrounding the parties at the time, but from the fact that in a subsequent interview. when charged to have always promised to pay this debt, he ad It is also objected that the court erred in not directing a verdict for defendant upon the ground of a departure from the allegations of the petition. That counts on an original employment by Davis, in 1873, while the testimony shows that the original employment was by the mining company, and that the promise of Davis was made in the fall of 1874, and after Patrick had been at work for months for the mining company. As no objection was made to the admission of testimony on this ground, and as an amendment of the petition to correspond to the proof would involve but a trifling change, we cannot see that there was any error in the ruling of the court. If objection had been made in the first instance, doubtless the court would, as it ought to have done, have permitted an amendment of the petition. There was no surprise, for the facts were fully developed in the former trial. Upon the record as presented, we think that the verdict and judgment were right, and, as no substantial error appears in the proceedings, the judg inent is affirmed. The Chief Justice and BRADLEY and GRAY, JJ., did not hear the argument or take part in the decision of this case. (141 U. S. 520) METROPOLITAN NAT. BANK V. CLAGGEtt. (November 9, 1891.) BANKS AND BANKING-CONVERSION OF STATE INTO The conversion of a state bank into a national bank is not a "closing of its business," within the meaning of the New York statute of 1859 providing for the redemption of a state bank's circulation, and releasing it from liability on such notes as are not presented within six years after the giving of the prescribed notice; and any notes not so presented constitute a valid claim against the national bank. 26 N. E. Rep. 757, affirmed. In error to the supreme court of the state of New York. Action brought in the supreme court of New York by Sumner E. Claggett, surviving administrator of James H. Paine, against the Metropolitan National Bank, to recover upon certain bank-bills issued by its predecessor, the Metropolitan Bank of New York. Judgment for plaintiff at special term, (4 N. Y. Supp. 115,) which was affirmed by the general term, (10 N. Y. Supp. 165,) and by the court of appeals, (26 N. E. Rep. 757.) Defendant appeals. Affirmed. Chas. A. Peabody, for plaintiff in error. Leslie W. Russell, for defendant in error. LAMAR, J. This is a motion to dismiss a writ of error to the supreme court of the state of New York to review its judgment against the plaintiff in error, with which is united a motion to affirm that judgment if the motion to dismiss be denied. The case arose upon a complaint filed in the supreme court of New York June 4, 1886, by the defendant in error and another, as administrators of the goods, chattels, and credits of James H. Paine, deceased, against the plaintiff in error, the Metropolitan National Bank, demanding judgment against the latter for $12,300, and interest from May 21, 1886, that being the aggregate amount due on 84 bank-bills issued by the Metropolitan Bank of New York, for the payment of which it was claimed that the plaintiff in error was liable. The complaint alleged that, at the time of the issue of the bankbills sued upon, the Metropolitan Bank of New York was a state bank, duly organized and doing banking business under the law of the state of New York, having authority to issue such bills, and to put the same into circulation as money; that from 1858 to 1861 it issued each of the 84 bills therein described, and prior to 1862, for a valuable consideration, delivered the same to James H. Paine, the intestate of the plaintiffs; that the bills thereupon became his property, and remained in his ownership and possession until his death; that the plaintiffs, as administrators of his goods and effects, duly appointed and qualified, having become the owners and holders thereof, presented the same on the 21st of May, 1886, to the Metropolitan National Bank, the plaintiff in error, for payment, which was refused; that on the 14th of March, 1865, pursuant to the act of congress of June 3, 1864, and the act of the legislature of New York of March 9, 1865, the said state bank became and still is a national bank for carrying on the business of banking under the name of the Metropolitan National Bank; and that, by virtue of the laws of the United States and its own voluntary action, the said Metropolitan National Bank, plaintiff in error, received and became vested with all the assets of the Metropolitan Bank of the state, and assumed and be came liable to pay its obligations, includ ing the bank-bills described in said complaint. Three defenses were set up in the answer: to the complaint: (1) A denial that the plaintiff in error had at any time assumed or, by any of its acts, become liable to pay the bills of the Metropolitan Bank of New York, which was a state bank doing business under the laws of the state of New York. (2) That in 1865 plaintiff in error became a national bank under the laws of congress, doing the business of banking, as such, by virtue of the laws of the United States, under the corporate name of the Metropolitan National Bank, and that the Metropolitan Bank of New York (the state bank) went through certain proceedings, under the New York statutes, of notice, publication, and deposit with the superintendent of banking of that state, for the redemption of its circulating bills, on the ground of its closing business, whereby its liability and that of the plaintiff in error on these bills (they not being presented for payment in due time) ceased six years from March 14, 1867. (3) That the cause of action is barred by the statute of limitations of the state of New York. The action being at issue upon the pleadings, and having come on for trial before the court without a jury, the parties having expressly waived a jury trial, the court made a finding of facts which substantially accorded with the averments of the complaint, and rendered judgment in favor of the plaintiff below, the defendant in error herein, for the sum of $12,300, and interest thereon from May 21, 1886, and costs. 4 N. Y. Supp. 115. This judgment was affirmed by the general term of the supreme court of New York, (10 N. Y. Supp. 165,) and subsequently by the court of appeals of New York, (125 N. Y. 729, 26 N E. Rep. 757.) Hence this writ of error. The defendant now moves to dismiss the writ, on the ground that this court has no jurisdiction to review the judgment of the state court of New York, and that no federal question was raised or decided in the court below, or appears upon the record. The first assignment of error is as* follows: "That the Metropolitan Nation. al Bank, the plaintiff in error, which was created under the act of congress entitled 'An act to provide a national currency secured by the pledge of United States bonds, and to provide for the circulation and redemption thereof,' approved June 3, 1864, is held liable to pay the bills de scribed in the complaint, which were made by the Metropolitan Bank, a corporation created under the law of the state of New York, entitled 'An act to authorize the business of banking,' passed April 18, 1838." The second defense set up in the answer, as we have seen, is that the defendant below (the plaintiff in error) became a national bank under the authority of the act of congress of 1864, entitled “An act to provide a national currency secured by the pledge of United States bonds, and to provide for the circulation and redemption thereof," and thereby acquired immunity from liability for the bank-bills issued by the state bank. The court found *527 In that the plaintiff in error did become a national bank, doing a banking business under the laws of the United States, but decided that it did not thereby acquire an immunity from liability to pay the bankbills of the Metropolitan Bank of New York, upon the ground that the proceed ings set up in the answer did not terminate the existence of the state bank, but simply effected a continuation of the same body under a changed jurisdiction. this we think the record presents a claim for federal immunity raised by the plaintiff in error, and denied by the court, which brings the case within the jurisdiction of this court; and upon the authority of McNulta v. Lochridge, 12 Sup. Ct. Rep. 11, (decided at this term of the court,) the motion to dismiss is denied. But, as the record also shows there was color for the motion to dismiss, it is proper that we should proceed to a review of the judgment of the court below. The question we are to consider here is, did the court err in holding that the plaintiff in error was not exonerated from liability either by its becoming a national bank, or by the proceedings for the redemption and retirement of its circulating bills issued while a state bank, which proceedings, it was claimed, were in strict observance of every requirement of the New York statute of 1859 in relation thereto, or by the statute of limitations of the state of New York? The court decided that the New York statute providing for a redemption of circulating notes, and for releasing the bank, if the notes were not presented in six years, applied alone to banks "closing the business of banking:" that the change or conversion of the Metropolitan Bank into the Metropolitan National Bank did not "close its business of banking," nor destroy its identity or its corporate existence, but simply resulted in a continuation of the same body with the same officers and stockholders, the same property, assets, and banking business, under a changed jurisdiction; that it remained one and the same bank, and went on doing business uninterruptedly; and that, therefore, the statutory proceedings relied upon in the answer could not operate as a bar to the liability of either bank to pay the bills delivered by the Metropolitan Bank in 1861 to plaintiffs' intestate. This decision is so manifestly correct that it needs no argument to sustain it. The judgment is therefore affirmed. The Chief Justice and BRADLEY and GRAY, JJ., took no part in the consideration and disposition of this motion. (141 U. S. 589) MARSHALL v. HOLMES, Sheriff, et al. REMOVAL OF CAUSES-DIVERSE CITIZENSHIP-JU- MENT. 1. When the proper jurisdictional amount is involved, and the citizenship of the parties is diverse, a federal circuit court has power to grant relief against judgments obtained in a state court by means of fraud; and, under such circum stances, a suit brought in a state court to enjoin the enforcement of a judgment obtained therein by fraud is removable to the federal circuit court. 2. When several actions at law pending in a state court between the same parties, each for less than $500, but aggregating over $3,000, all depend upon the same state of facts, and by stipulation judgment is entered in all in accordance with the result of the trial of one, a single suit in equity may be maintained to restrain the enforcement of all the judgments on the ground of fraud in obtaining them; and hence such a suit involves the jurisdictional amount required by the act of 1875 ($500) to warrant a removal to the federal circuit court when the citizenship of the parties is diverse. 3. A court of equity will entertain a suit to enjoin the enforcement of a judgment at law when the bill alleges that the judgment was obtained by the use of a forged letter as evidence: that complainant was ignorant of the existence of such evidence before the trial, and did not discover its falsity until after the rendition of judgment and the lapse of the time in which a motion for new trial could have been made; and that she was guilty of no laches in failing to show or discover the forgery of the letter. 1 South. Rep. 610, reversed. In error to the court of appeals for the second circuit of the state of Louisiana. Suit by Sarah E. Marshall against Henry B. Holmes, sheriff, and David Mayer, in a court of Louisiana, to enjoin the enforcement of certain judgments rendered therein. Plaintiff petitioned for removal to the proper federal circuit court, but the state court denied the application and afterwards rendered judgment for defendant, which was affirmed by the proper state court of appeals. Plaintiff prosecutes a writ of error therefrom. Reversed. * STATEMENT BY HARLAN, J. On the 20th day of April, 1885, the plaintiff in error, Mrs. Sarah E. Marshall, a citizen of New York, filed in the eighth district court for the parish of Madison, La., a petition for injunction, representing that David Mayer, one of the defendants in error, had then recently obtained, in a suit in that court, a judgment against her for the sum of $127.50; that, in pursuance of an agree ment that judgment in one suit should be decisive of other suite in the same court between the same parties and relating to the same subject-matter, judgments had been entered against her in his favor in other actions, 23 in number, for sums aggregating $3.089.31. Each judgment was for less than $500. The petition alleges that all the judgments were obtained on false testimony and forged documents, and that equity and good conscience required that they be annulled and avoided for the following, reasons: "That your petitioner, as usufructuary of the plantation Cabin Teele, in your said parish, employed one Elijah Boyd as an agent on the said plantation to collect the rents and ship the cotton received; that the said Boyd died in the year 1884, and that said Mayer, pretending to have a contract with said Boyd, by which your petitioner was bound to him as a furnisher of supplies in solido with the several de. fendants named in the suits herein before mentioned, brought said suits, and made petitioner a party defendant thereto; that petitioner answered in the several suits |