Allen v. Hammond

by John McLean

United States Supreme Court

36 U.S. 63

Allen  v.  Hammond

APPEAL from the Circuit Court of Rhode Island. In the circuit court, the appellee, John Hammond, filed a bill, praying that a certain instrument in writing, executed by him and the appellant, in January 1832, by which he had stipulated to allow to the appellant a compensation for establishing a claim on the Portuguese government, for the illegal capture of a vessel belonging to him, should be cancelled; the consideration for the said stipulation having failed; the bill also prayed for further and other relief.

The instrument referred to was an irrevocable power of attorney from Hammond to Allen, to receive from the government of Portugal, or of the United States, and of and from all and every person and persons whomsoever, a certain claim or demand which said Hammond had, for and on account of the capture and condemnation of the American brig Ann, of Boston, and her cargo, on a voyage from New Orleans to Goree (intending to stop and trade at Fayal, Madeira and Teneriffe), by the Portuguese squadron cruising off the island of Terceira, and condemned by the tribunal sitting at Lisbon, under the authority of the Portuguese government, on the 22d of December 1831. The agreement was made on the 27th day of January 1832, between Hammond and Allen, by which Hammond agreed to pay Allen ten per cent. on all sums recovered, until the amount should equal $8000, and on all sums, over that amount, thirty-three per cent.; and Allen agreed to use his utmost efforts to bring the claim to a favorable issue, and to receive the aforesaid commission in full compensation for his services and expenses, already incurred, or thereafter to be incurred, in prosecuting the claims.

The bill, amongst other things, alleged, that on the 19th of January 1832, in consequence of measures taken by the representatives of the government of the United States, at Lisbon, the Portuguese government recognised and admitted the complainant's claim to the amount of $33,700, of which he alleged he was ignorant, until the month of March 1832. That the power of attorney was executed in consequence of certain representations made by Allen, that he could render important services in prosecuting the claim against the Portuguese government, without which services, the claim would be lost; and that Allen proposed to Hammond to appoint him his agent; that he was then ignorant his claim had been recognised, and also, that the agreement was executed, while he remained ignorant of the fact.

The bill also charged, that the claim has not been liquidated or paid, in consequence of any interference or exertions of the defendant, or through any agency or influence on his part. That both said instruments were executed, without due consideration, and when the complainant was ignorant of the situation of his claim on the Portuguese government. That the contract of January 27th, 1832, 'was entered into and executed, without any adequate consideration or services to be by the said Crawford Allen paid or performed,' under mistaken views and ignorance of the then situation of the complainant's claim; and was hard, unconscionable and unequal, and ought, on that account, to be set aside, even if said claim had not been liquidated by the Portuguese government, at the time said contract was made and executed.

The answer gave the history of the acquaintance between the complainant and defendant; showed the measures to enforce this claim, which the defendant had taken, as the agent of the complainant, prior to the execution of the power of attorney; that those measures were approved by the complainant; that the power was read to him; that three copies were executed; and that the complainant saw all the letters which the defendant had received. It alleged, that the defendant relinquished all claims for commissions and services, amounting to $268, then due him; and that the consideration to the complainant, for executing said instruments, was the defendant's relinquishment of the immediate payment of the money then in his own hands, of what was then justly due to him for commissions and for services already rendered in regard to the reclamation of said vessel from the Portuguese government, and the agreement on the part of said defendant, to use his 'utmost efforts to bring the aforesaid claim to a favorable issue,' and to sustain all the expenses in prosecuting said claim. The defendant expressly denied, that it was any part of the understanding or agreement between him and the complainant, that the defendant was not to receive said stipulated sums, in case there should be little or no trouble in obtaining said money. On the contrary (he stated), the understanding and agreement was, that the defendant was to receive said sums and no more, even though his trouble and expenses should much exceed said sums, and to receive said sums also, if his trouble and expenses should be but very small; and both parties fully understood, that the value of the bargain to the defendant depended on these contingencies and the defendant averred, that he had no knowledge, at the time, of the situation of the claim, except that derived from the letters annexed to his answer, that all the information he had was made known to the complainant and was common to them both; that it was made known to the complainant in conversations, and by exhibiting said letters; and he denied that the agreement, when executed, was to depend for its validity on any subsequent information, from any source whatever. 'On the contrary, it was fully understood, that contingencies like the one which unexpectedly happened, or others of an opposite character, might render the agreement very advantageous, or very disadvantageous, to the defendant.'

The circuit court gave a decree in favor of the complainant; and the defendant appealed to this court. The decree required the defendant to bring the agreement of January 27th, 1832, into the clerk's office, within ninety days, for cancellation, and enjoined the defendant from asserting any title, at law or in equity, under the same; and it also ordered the payment of $268, by the complainant to the defendant.

The case was agued by Green and Ogden, for the appellant; and by Webster, for the appellee.

Green and Ogden, for the appellant, contended, that this decree ought to be reversed, because it appears by the evidence in the cause: 1. That the agreement was fairly made, and for a valuable consideration, and is not unconscionable or oppressive. 2. That it was made with an equal knowledge of all the circumstances on the part of each of the contracting parties. 3. That the fact that the claim might have been allowed by the Portuguese government must have been contemplated by the parties, when the agreement was made, and was one of the contingencies which might make it more or less profitable to the defendant; and that the allowance of the claim of that government did not relieve the defendant from other duties to be performed, and expenses to be incurred, under the agreement; nor was the recognition of the claim, or even obtaining its payment, the sole consideration for the agreement. 4. That the defendant, by his acts, affirmed the agreement, after he had full knowledge that the claim had been allowed by the Portuguese government.

The evidence fully shows that the agreement was fairly made, and for a valuable consideration. The consideration was a relinquishment of a debt of $268, due by the appellee, and of a compensation for services in prosecuting a claim. Heavy expenses would be incurred in the prosecution of the same; and at the time the arrangement was made, the issue of the undertaking of the appellant was very doubtful. The agreement was made with an equal knowledge of all the facts, by both parties to it. At the moment the agreement was made, both parties might have supposed the Portuguese government had recognised it; as it was known to both, that the government of the United States had made the injury done to the appellee the subject of diplomatic complaint, and had demanded satisfaction for it. Thus, the objection to the rights of the appellant, founded on a want of consideration, or too great a compensation, for services done, or to be done, by him, which was sustained by the circuit court, should not have prevailed. The contract was made with a view to every court, should not have that of an actual acknowledgment of the claim having been made, was one of those contingencies contemplated by the parties. There was also a sum of money actually paid for the contract; this the appellant was not to have returned to him under any circumstances. The situation of the claim of the appellee on the Portuguese government, at this time, even since its acknowledgment, and an agreement to pay the amount admitted to be due, shows that there was more in uncertainty than the mere fact that the claim was not allowed. But one of the instalments has been paid; and although the period for the payment of further sums has arrived, nothing more has been received. The government of Portugal is convulsed by intestine divisions, and is without the means of discharging its obligations. The appellant has, under his contract, duties yet to be performed; he is bound to keep an agent in Portugal, whose efforts are constant to procure the payment of the remaining sums due to the appellee.

Webster, for the appellee, contended, that at the period of the contract with the appellee, there was no state of things existing, which could furnish a consideration for the sum agreed to be allowed to the appellant. He was to prosecute the claim on the Portuguese government, for the capture of the property of the appellee. In doing this, it was expected, he would be obliged to pay considerable sums for expenses; to devote much time to the object; to employ agents; and yet, at the instant it was agreed to pay him for all these services, or to provide for all these expenses, nothing was to be done; for all had been accomplished, without his agency. Thus, no foundation for the contract existed. As to the sum of $268, paid by the appellant, the same principles which prevent his obtaining anything from the appellee under the contract, entitle him to have that sum repaid to him, with interest. Where a fact of leading importance to parties entering into a contract, was supposed to exist, and did not exist, the contract formed on the belief that it was in existence, should be set aside. This was the case between these parties; nothing remained to be done by the appellant. It cannot be contended, that the payment of the sum of $268 to the appellee, was a consideration which entitled him to receive the thousands of dollars the contract was to give him, and which he now claims. In Hitchcock v. Giddings, Daniel's Exch. 1 (s. c. 4 Price 135), the principles upon which this case is rested by the appellee, are sustained by the court. If the contingency which was the object of the contract has happened, the contract is void

McLEAN, Justice, delivered the opinion of the court.

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