Hylton v. Hunter

First page of the opinion Hylton v. Hunter, in Decisions of Cases in Virginia by the High Court of Chancery, with Remarks upon Decrees by the Court of Appeals, Reversing Some of Those Decisions, by George Wythe. 2nd ed. (Richmond: J. W. Randolph, 1852).

Hylton v. Hunter, Wythe 195 (1793), was a dispute over the sale of a debt.

Background

James Hunter loaned Jamaican resident John Dixon money. Both people agreed that Dixon would repay Hunter using annual payments. On July 30, 1762, Dixon signed fifteen bonds, each bond a promise that Dixon would pay Hunter in Jamaican currency. The value of each bond was £700 plus interest, except for the last one, which had a value of £1747. The due date for each bond was August 1, the next bond coming due one year after the previous one. Each bond would charge six percent interest after the due date. Payment for the last bond was due on August 1, 1784. Dixon mortgaged his title to a Jamaican estate called Salem to use as collateral. The bonds and the mortgage for Salem were deposited with Hunter's Jamaican attorneys, Hibbert and Jackson, who would collect the payments.

James Hunter received the principal and interest due on the first five bonds, and died some time afterwards. Adam Hunter and Abner Vernon were named executors of James's estate (Adam was also James's legal heir, who would inherit any part of James's estate not designated to someone else). Hibbert and Jackson received all of the principal and interest due on the sixth bond, and some of the principal and interest due on the seventh bond (which was due on August 1, 1775), but Hibbert and Jackson did not pass the money on to Hunter's estate, and Hibbert refused to account for the money.

On April 25, 1785, Adam Hunter sold the Dixon bonds and his right to the Salem mortgage to Daniel and William Hylton for £5500 at the current value in Virginia, payable in gold and silver. Hunter also gave Hylton the rights to any interest earned from the Dixon bonds. The agreement also said that any payments that had been made to Hibbert and Jackson against Dixon's debt to James Hunter would be refunded to the Hyltons. The Hyltons agreed to assume the risk of collecting the bonds and not to sue James Hunter's estate, Adam Hunter, or Vernon if Hylton was unable to collect the money from Dixon or Hibbert and Jackson. The April 25 agreement said that Hunter's estate was transferring nine bonds to the Hyltons, along with the Salem mortgage.

Hunter and Vernon filed a bond registering their part of the agreement on April 27, 1785. This bond said that James Hunter's estate was transferring their rights to the bonds and "the interest accruing thereon, (that) still remained due and unpaid". This document valued the Dixon bonds at £7347.

The Hyltons filed a bond registering their part of the agreement on June 21, 1785, valuing the Dixon bonds at £7317. This bond also said that the Hyltons understood that there was a risk in trying to collect on the Dixon bonds, and so the Hyltons agreed that they would have no recourse against Hunter's estate, against Adam Hunter, or against Vernon.

Also on June 21, 1785, Adam Hunter and Vernon signed a statement that the current value of the bonds they had sold to the Hyltons, including principal and interest, was £9561 in Jamaican currency. This statement listed nine bonds total.

On August 1, 1785, Daniel Hylton executed three bonds worth £1833 each that would form the Hyltons' payment to James Hunter's estate. The first Hylton bond would be due on February 16, 1786; the second on November 16, 1786; and the last one on November 16, 1787.

William Hylton demanded that Hibbert pay interest on the money Hibbert and Jackson had received for payment on the sixth bond and part of the seventh bond. Hibbert sent a reply letter dated November 19, 1785; in the letter, Hibbert said that he would send the £920 Dixon originally gave Hibbert and Jackson. Hibbert said he had always been ready to send that money, and thus refused to pay any interest on it beyond the day Hibbert and Jackson originally received the payment. If anything, Hibbert thought that he should be compensated for keeping the money safe through five hurricanes. In the letter, Hibbert also sent William Hylton a statement that the rest of the bonds were currently worth £7815, including principal and interest. So, at this point, the total value of the Dixon bonds by Hibbert's accounting was £8735 in Jamaican currency, or £826 less than what Hunter said it was. Hibbert's accounting, however, showed that the Hyltons actually received the rights to ten bonds, not nine, from Hunter's estate.

On February 27, 1787, one of the Hyltons told Adam Hunter about the discrepancy between Hunter's June 21, 1785, accounting of the Dixon bonds' value and Hibbert and Jackson's valuation of the bonds. Hylton mistakenly told Hunter that the difference was £1055, so Hunter credited two of the Hylton payment bonds a total of £1055 to compensate. Hunter made an endorsement on the two bonds saying that he had credited each of them £527. Hunter later discovered this error made on the amount of the difference and mentioned it to Daniel Hylton. Daniel sent a letter to Hunter on September 18, 1788, saying that "every mistake should be rectified", but apparently he did not follow through to Hunter's satisfaction. Hunter sent the issue of correcting the mistake to three sets of arbitrators: first Henry Banks and William Hay; next, Jerman Baker and John Marshall; and finally, George Weir. The arbitrator(s) then issued a report with their proposed solution. After the arbitrators issued their report, but several days before the Hyltons' last payment bond to James Hunter's estate would become due, Hunter's estate filed suit in Henrico County Court to collect the money due on the £5500 in bonds the Hyltons had used to pay Hunter. Daniel Hylton did not oppose a judgment for Hunter and did not claim the £1055 in credit the Hyltons had asked for earlier.

After the Henrico County Court entered its judgment for Hunter's estate, Daniel Hylton filed a bill in equity with the chancery side of the Henrico County Court asking it to enjoin the judgment for Hunter's estate. Hunter's estate admitted in their answer that Hylton's claim for a deduction was valid to the extent that there was a difference between Alan Hunter's June 21 estimate of the bonds' value and their true value.

The County Court granted Hylton's request, and Hunter's estate appealed the case to the High Court of Chancery. In a supplementary answer with the High Court of Chancery, Hunter's estate took back their earlier statement that Hylton's claim for a deduction was valid.

The Court's Decision

On May 25, 1793, Wythe awarded Hunter's estate £948 from Hylton's second payment bond, and also ordered Hylton to pay Hunter's estate interest on £936 of the second payment bond dating from November 21, 1791. Wythe also ordered Hylton to pay the value of the entire third bond (£1833) plus interest dating from November 16, 1787. Wythe also ordered Hylton to pay the court costs for Hunter's estate in both the county court and the High Court of Chancery due to Hylton's pointless delay tactics.

Hylton's request for a £1055 credit

Wythe rejected Hylton's request to deduct his payments to Hunter's estate by £1055.

All of the arbitrators who heard Hylton and Hunter's dispute rejected Hylton's demand for a £1055 credit on his payment because of the difference between the actual value of the Dixon bonds and Hunter's original estimate of their value. When arguing before the first two sets of arbitrators, Hylton said the difference was £779. When arguing before Weir, Hylton calculated the difference at £821.

Wythe said that no matter which value he went with, Hylton was not entitled to a £1055 credit. Wythe believed that Hylton's credit should be proportionate to the difference in value, not a one-to-one equivalent. If the difference in value was £779, then Hylton should get a £448 credit. If the difference was £821, then Hylton should get £472. The difference in value between Hunter's estimate of the Dixon bonds' worth and the actual value would need to be £1833 for Hylton to get a credit of £1055.

Wythe said that the potential amount of the credit was irrelevant, however, because Hylton was not entitled to a credit on his payments at all. James Hunter's estate transferred title to all the Dixon bonds, including one not mentioned in the agreement. The total value of the bonds, no matter whose calculation one used, was more than the £7347 described in the original agreement. The money that had been paid to Hibbert and Jackson for the sixth and seventh Dixon bonds was refunded to Hylton. Therefore, Hunter performed all his duties under the agreement.

Hylton claimed that he should have received credit for the interest Hibbert and Jackson refused to pay on the money they had collected for the sixth and seventh bonds. Hylton said that Adam Hunter and Vernon's April 27, 1785 bond giving Hylton the rights to the bonds and "the interest accruing thereon, (that) still remained due and unpaid" gave Hylton the right to interest on the money that had been sitting in Hibbert and Jackson's office, so under the agreement Hunter's estate was required to reimburse him for the missing interest. Wythe rejected Hylton's reading of this clause as inconsistent with the April 25, 1785 agreement. Wythe read the clause to mean that Hylton was entitled to collect interest on any bonds that remained unpaid by Hibbert and Jackson, acting as Dixon's agent. If Hibbert and Jackson did not give Hylton all the money they had received from Dixon, then Wythe agreed that the contract required Hunter's estate to compensate Hylton. Wythe refused to infer, however, that the contract also required Hunter's estate to compensate Hylton for interest that Hibbert and Jackson did not get from Dixon and refused to pay themselves to Hylton.

Hylton also claimed that Adam Hunter's and Vernon's statement on June 21, 1785, that the Dixon bonds were worth £9561 was a guarantee of the bonds' value. Wythe rejected this argument, saying that Hunter and Vernon's June 21 statement was only an accounting, not a binding guarantee. There was no language in Hunter and Vernon's June 21 statement creating a warranty of value or altering the original deal. On top of that, the Hyltons' June 21, 1785, bond released Hunter and Vernon from any obligation to make good on anything besides the money Hibbert and Jackson had received.

Hylton argued that Adam Hunter's endorsement on two of Hylton's payment bonds crediting Hylton with £1055 prove that Hunter agreed to deduct that amount from Hylton's payment. Wythe said that Hunter should not be bound by such an agreement, because when he made it he did not know that he had transferred ten, not nine, bonds to Hylton. In addition, even if he were held to it, Hylton's later letter promising that "every mistake should be rectified" would release Hunter from that agreement.

Hylton also said that the answer from Hunter's estate during the trial at the Henrico County Chancery Court, which said that the claim for a deduction was valid, proves that Hunter's estate agreed to compensate Hylton for the difference in the bond's estimated and actual values. Wythe disagreed, noting that Hunter's estate subsequently changed their answer, and at any rate, when Hunter's estate filed the earlier answer, they did not know that ten bonds were transferred instead of nine.

Hunter's estate's request for a £62 credit

Alan Hunter and Vernon said that they should get a £62 credit in Jamaican money because the amount of money Hylton was eligible to recover from the ten bonds he actually received was £62 more than the value of the nine bonds the April 25, 1785, agreement said Hylton should receive. Wythe agreed that Hunter and Vernon were entitled to a credit, which would be awarded in proportion to the amount of money the Hyltons paid for the bonds and converted to Virginia currency.

When did Hylton's payment bonds begin collecting interest?

Hylton claimed that Hunter's estate began charging interest on his payment bonds too soon. Even though the bonds themselves were due on the 16th of the relevant month, Wythe said that the evidence showed that the transfer of the rights to the Dixon bonds occurred on the first of the month, as that is when Hylton executed his payment. Since the original agreement on April 25, 1785, called for payment due a given number of months after the rights transferred, Wythe saw no reason why interest should not begin accruing on the first of the month.

Hylton had two objections to Wythe's conclusion. The first objection was that the document Hunter's estate created assigning power to their attorneys in Jamaica were ineffective, so the transfer on the first of the month was invalid. Wythe said that the burden was on Hylton to prove this, which he did not. In addition, Wythe said that Hylton accepted the transfer of rights at the time, Hunter's estate performed its duties in good faith, and Hylton did not seem to suffer any harm from the supposedly ineffective assignment of power. It would be improper for a court of equity to deny Hunter's estate the interest under these circumstances.

Wythe dismissed Hylton's second objection with little comment, other than it had something do with Hunter's endorsements on Hylton's payment bonds, but Wythe found no basis for the objection in the endorsements.

Expenses for authenticating assignment of power documents

Hylton asked the court to award him credit for the costs he incurred authenticating the second document Hunter's estate created to assign power to their Jamaican attorneys. Hunter's estate applied for credit for the costs it incurred getting a copy of that same document.

Wythe rejected Hylton's request and approved the request by Hunter's estate. Wythe said that he already determined that there was no proof that the first assignment of powers to Hunter's Jamaican attorneys was ineffective, so there was no need to authenticate the second assignment. Therefore, Hylton had no need to authenticate the second assignment of powers, and should not be able to get reimbursed for it. By the same token, Hunter's estate should not have been burdened with the need to come up with the second assignment of powers, so it should be reimbursed.

Attorney fees

Hylton and Hunter's estate negotiated reimbursement with the arbitrators for the fees Hylton paid his attorneys, Shoolbred and Moody. Hylton said he was not responsible for all of the attorneys fees, and so would not pay for half of all of them. Wythe said that the arbitrators' report said that the parties agreed to divide the entire expenses equally, so he allowed Hunter's estate to be reimbursed for half of all the fees paid to Shoolbred and Moody.

Hylton's court costs fighting the suit on his third payment bond

Hylton asked the Chancery Court to reimburse his costs fighting Hunter's estate over Hylton's third payment bond, because Hunter's estate filed the suit a few days before the bond's actual due date on November 16, 1787. Wythe rejected Hylton's request, saying that Hylton waived any objection when he did not plead it at the beginning of the suit. In addition, as Wythe established earlier, the money on the third bond was already due under the contract on November 1, 1787, because that was 27 months after Hunter's estate performed its end of the bargain. The date on the payment bond itself did not override the date set in the initial contract.

Wythe's Puzzling Math

Hylton v. Hunter is a long opinion for its time - 15 pages - and yet Wythe seems to be leaving out important information. Throughout his opinion, Wythe makes it clear that he does not think Hylton was entitled to a discount on his purchase of the bonds. And yet, when it comes to the actual decision, Wythe permanently enjoins Hunter's estate from collecting a judgment awarding it the £1833 on Hylton's first payment bond, and only lets Hunter's estate collect £948 from Hylton's second payment bond. Had Hunter's estate already collected the money on these bonds? Is this what the arbitrators recommended earlier? Wythe doesn't say. The most reasonable inference from reading Wythe's opinion is that Wythe was following the recommendation of the arbitrators who had heard the disputer earlier - Wythe refers to "disallowing the plaintiffs exceptions to the report, and approving the same report corrected". Wythe does not say what exactly the arbitrators' report recommended, or whether Hylton had actually paid the money due on the bonds he gave to Hunter's estate, so it is unclear why Wythe ruled the way he did.

At the Supreme Court of Appeals of Virginia

Hylton appealed to the Supreme Court of Appeals, which issued an unpublished decision that Wythe reproduced in the text of his opinion.

The Supreme Court reversed Wythe on the issue of whether there was a discrepancy between Hunter's estimated value and the actual value of the Dixon bonds. The Supreme Court said that there was a £1435 shortfall in the Dixon bonds' actual value from the value Hunter's estate promised to Hylton. The Supreme Court subtracted the £920 Hylton received from Hibbert and arrived at a balance of £515, plus interest from April 1, 1785, that Hylton could credit against his payments to Hunter's estate. The Supreme Court said that the £515 did not have to be adjusted to a proportional amount of the £5500 payment as Wythe said it should, and that Wythe's use of the rule of proportion would effectively increase or decrease the award and shift the loss onto one party or the other.

Wythe should have allowed both Hunter's estate and Hylton to be reimbursed for their expenses related to the second document Hunter created to assign power to his Jamaican attorneys. Both parties were equally at fault in creating the problem with the first delegation of power to Hunter's attorneys, so each party should equally bear the costs.

Hylton should be reimbursed for his court costs in the chancery side of the Henrico County Court and the High Court of Chancery, since Hylton was ultimately more victorious than under Wythe's decision.

The Supreme Court upheld the other parts of Wythe's verdict, and ordered Hunter's estate to pay Hylton's costs of appealing the case to the Supreme Court.

Wythe's Discussion

Wythe offered the Supreme Court a backhanded compliment on the "oeconomical" efficiency of their opinion. Instead of using Wythe's careful discussion of whether Hylton was entitled to reimbursement for the interest Hibbert refused to pay, the Supreme Court simply said that Hylton had received £1435 from the deal than the Supreme Court thought he was entitled to. Such a bare-bones statement cannot be dissected or refuted.

Wythe defended his use of the rule of proportion, saying that it was mainly used to illustrate that Hylton's claim of £1055 was baseless.

Wythe also defended the part of his order that reimbursed Hunter's estate for its expenses in getting a copy of the second document that assigned powers to their Jamaican attorneys and denied Hylton reimbursement for his expenses in authenticating that second document. Wythe noted that no one had actually proven that the first document was defective. At any rate, the purchaser (here, Hylton) is usually the person who draws up such documents, and if Hylton originally accepted the document and submitted his payment, then Hylton should be the one to bear the expense if he determines later that the document was defective.

Finally, Wythe sounded a note of caution over the idea that a plaintiff could recover all their costs at chancery court even if he only won a partial victory. Wythe readily agreed, however, that Hylton was entitled to recover his court costs to the extent that the court granted him relief.