Case ID: cow_6/html/0497-01.html
Source: Caselaw Access Project
Author: {"author": "Sutherland, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jaques and others, assignees of Bussing, an insolvent debtor, against Marquand.
    ALBANY,
    Oct. 1826.
    Assumpsit ; tried at the New- York circuit, February lith and 6th, 1824, before Edwards, C. Judge.
    An insolvent debtor, who has released all claim to a surplus, is a competent witness for his assignees.
    A partner, who bolds money in his indvi-Uial ripdit, in trust- for another camol subject the fi'-m to an action for the money, by applying it io the u-e of the firm, without the knowlM^'1 or piiviiv oí !heo!her «uemijoroi members of his firm. Otherwise, where it is applied with their knowedjje or privily.
    Where a partner bo rows money on his individual credit, and afterwards npulics it *o the payment of;, artnership debts, or lends i: to the firm, this does not make the original lender a creditor of the firm. •*
    ./'• Hut where a nartuer borrow? money g-merady. W'ihoiu- saving f<K whom, the fact of its \ J being used in the business oi the partnership, w, prima/uctc, evidence to sustain an action / % against the firm.
    An insolvent discharge, under the act of 1813, is constitutional as to debts contracted after the act.
    
      The declaration contained the common money counts» only, laying a promise by the defendant to Bussing, the insolvent; and also to his assignees, under the actforgiv-*n§ relief *n cases of insolvency.
    Plea in abatement, that the promises laid, if any, were made by the defendant and one Cornelius Paulding, jointly, &c. and issue.
    The plaintiffs, at the trial, offered Bussing as a witness, who had released all his interest in his estate assigned.
    The defendant objected, that the plaintiffs were first bound to prove the assignment, before they could proceed. This objection was overruled, on the ground that the plea admitted the assignment. The defendant then objected to the competency of Bussing, on the ground that his discharge, which was under the act of 1813, was void by the constitutioivof the United States ; and he is still liable, therefore, to pay his debts. He stated on his voire dire, that all the debts which he owed, had been contracted since the passage of the act under which he was discharged ; and the judge admitted him to testify.
    The plaintiff then produced an instrument in writing, dated December 20th, 1816, signed by the defendant alone, certifying that on the 12iAof April, 1814, one Crump, on the recommendation, and through the agency of the defendant, borrowed and received of Bussing, 200 shares of the capital stock of the New-York Manufacturing Company, which the defendant engaged to have returned and reconveyed to Bussing, within 30 days from the time of the loan ; that default having been made in the return and reconveyance, Crump, at or about the expiration of the 30 days, placed in the defendant’s hands sufficient property to indemnify Bussing, the proceeds of which, the defendant was to have applied to that object; but that he had converted the property into cash, and appropriated the proceeds to the use and business of the firm of Marquand and Paulding. That there was, at the date, due to Bus-sing on the account aforesaid, $7763,89. (Signed,) Isaac Marquand.
    
    
      Bussing swore that this certificate was given to him by the defendant, and signed by his own proper hand and name.
    
      The defendant then moved for a nonsuit, on the ground that the certificate was no evidence of money for the sole use of Bussing, or his assignees. The judge overruled the motion.
    The parties then went into further evidence, upon the question, whether the transaction out of which the above certificate arose, was one of Marquand and Paulding, the latter of whom was the Cornelius Paulding mentioned in the plea ; or whether it was an individual concern of the defendant. This evidence is sufficiently stated in the opinion of the court.
    
      Bussing had, by mistake, as he swore, in his proceedings to obtain his discharge, inventoried the debt in question as due from the firm of Marquand and Paulding.
    
    The judge charged the jury, that notwithstanding the debt being so inventoried, still, if it was in fact due from the defendaut alone, the plaintiffs were entitled to recover ; and that even if the proceeds of the property in question were originally received by Marquand and Paulding, and applied to their use, still if the property was assigned for the satisfaction of Bussing’s claim against Marquand, the plaintiffs were entitled to recover from Marquand solely.
    The defendant excepted to this charge, and the jury-found for the plaintiffs, $11,656,76.
    The parties made a case, agreeing that it might be turned by either, into a special verdict, or bill of exceptions, so far as respects the exceptions to the opinions and charge of the judge.
    A motion was now made for a new trial, on behalf of the defendant on three grounds ; 1. That Bussing was not a competent witness ; 2. That the defendant never was individually responsible; but that Marquand and Paulding were liable ; 3. That the charge of the judge was incorrect.
    
      H. D. and R. Sedgwick for the motion,
    cited 15 Mass. Rep. 75, 331.
    
      G. Griffin, contra,
    cited 1 Mont, on Partn. 198,9. G&w on Partn. 344, 348.
   Curia, per

Sutherland, J.

Bussing was a competent witness. He was discharged from all his debts on the 30th of September, 1822, under the act of1313 ; and it appeared that all the debts, which he owed at the time of his discharge, had been contracted since the passage oí that act. According to the repeated decisions of this court, that discharge was valid, not only as to the person of the insolvent, but as to his future acquisitions. Those decisions, it is true, have been questioned, and cases are now understood to be pending in the supreme court of the United States, in which the unconstitutionality of the whole series of our insolvent laws is broadly maintained. What the decision of that court will be, it is not for us to anticipate ; but until its judgment is pronounced, we are not only authorized, but bound to presume that it will be in accordance with our own.

Bussing released to the plaintiffs all his interest in the surplus of the property assigned, &c. He was properly admitted as a witness.

The instrument of December 20th, 1816, signed by the defendant, contained sufficient evidence of money had and received by him solely, to the use of the plaintiffs, to entitle them to recover, he acknowledged by that instrument, that Crump placed in his hands sufficient property for the indemnification of Bussing, which he was to have applied to that object. But that, instead of this, he converted the property into cash, and appropriated the proceeds to the use and business of the firm of Marquand and Paulding. He also admits, by that instrument, that there is now due to Bussing the sum of $7763,89.

The firm of Marquand and Paulding had two houses; one at New-York, where Marquand resided, and carried on business ; the other at Neio-Orleans, under the direc-ton of Paulding, who resided there. Paulding had no knowledge of any part of the transaction in question. It originated as follows : Reuben Crump, of the firm of Kel-so and Crump, on the 12th of April, 1814, borrowed of Bussing, upon the receommendation, and through the agency of the defendant, 200 shares of the capital stock of the New-York Manufacturing Company. Crump gave the following note, for the 200 shares : “ Within 30 days from date, I promise to transfer to Mr. Isaac Marquand, or order, two hundred shares of N. York Manufacturing Company stock, for the same number transferred to me by Mr. Abm. Bussing. Reuben Crump.

New-York, 12iA April, 1814.”

Endorsed thus: “Transfer the within shares to Mr. Abm. Bussing. Isaac Marquand.”

Crump having failed to pay this note, at or about the time when it fell due, gave Marquand an order for a quantity of cotton, sufficient to pay it. He acknowledges that he received it for that purpose, realized the money, and applied it to the use and business of the firm of Marquand and Paulding. The order for the cotton was in favor of Marquand-and Paulding. It was sent to auction in their names, sold on their account, and the proceeds applied to their benefit. But it was all done by Marquand, and under his exclusive direction ; Paulding being in New-Orleans, and knowing nothing of the transaction. The question is, whether Marquand is individually responsible for the amount, which he acknowledges has been received for the benefit of Bussing ; or whether the action should have been brought against the firm of Marquand and Paulding.

There can be no doubt, that in the origin-of this transaction, when Marquand became security to Bussing for the return of the stock borrowed by Crump, he acted in his individual Capacity, and not on behalf of the firm. Crump's note was payable to him individually; and by him individually endorsed or transferred to Bussing. If an action could have been sustained at all upon this guaranty, it must undoubtedly have been brought against Marquand individually, and not against the firm. Crump testifies that when he received the transfer of the stock from Bussing, the defendant alone became security for the retransfer of it; and that the giving of such security, was the individual transaction of the defendant. Bussing also testified that he considered the transaction as with Marquand, the defendant, and not with Marquand and Paulding.

Every presumption, therefore, is in favor of the suppo-shi°n that the cotton which Crump delivered to Mar-quand in trust for Bussing, and by way of indemnity a§ainst his guaranty of the delivery of the stock, was delivered to him in the same character in which his responsibility was incurred. It must be borne ⅛ nAd, that the order for the cotton, though in favor of the firm of Mar-quand and Paulding, was, in fact, delivered to Marquand, who was the sole partner in New-York. Marquand alone directed it to be sold, and he alone, in fact, received-the proceeds. If he applied them to the purposes of the firm, which he seems to have done, it was without the knowledge or privity of his co-partner. It is, then, the case of one partner being a trustee, bringing trust money into the firm, without a knowledge or privity on the part of his co-partner, of its being trust money; and it has been repeatedly held, in such cases, that it does not create a joint debt on the part of the firm, which can be proved against their joint estate. For, although the partner abuses his trust,, apd advances the money to the partnership, it will not raise a contract between the firm and the cestui que trust, nor- convert the innocent partners ihto implied trustees. In Ex parte Apsey, (3 Bro. Ch. Cas. 265,) the case was this : Edivard Allen, of the firm of Edward and James Allen, was assignee, together with the petitioner, Apsey, under a commission of bankruptcy, issued against one William Tory. As such assignee, he received between 4 and 500 hundred pounds, belonging to the estate, and applied it in discharging the debts, and in other purposes of the firm. The Allens afterwards became bankrupts, and Apsey, the co-assignee of Edward Allen, petitioned the chancellor, (on appeal from the decision of the commissioners,) for leave to prove the sum received by his co-assignee, and applied to the payment of the partnership debts, under the joint commission against the partnership. But lord chancellor Thurlow refused the petition ; and remarked : “ here one, by abusing his trust, advances trust money to the partnership ; that will not raise a contract between the partnership, and the person whose money it is.” But where the application of the trust money to the purposes of the firm, is made with the knowledge and priyity of the other partners, they are all jointly liable. (Smith v. Jameson, 5 T. R. 601. Boardman v. Mosman, 1 Bro. Ch. Cas. 68. Ex parte Clowes, 2 id. 595. Ex parte Watson, 2 Ves. & Bea. 414. 3 Bro. Ch. Cas. 112.)

Where one partner borrows money on his individual credit, and afterwards applies it to the payment of partnership debts, or loans it to the firm, it does not entitle the original lender to consider himself a creditor of the firm, and to enforce payment against them. (Exparte Hunter 1 Atk. 223. Parkin v. Carruthers, 3 Esp. Rep. 250, per Le Blanc, J.)

Where one of a firm borrows money, the fact of its being used in the business of the partnership, is, prima facie, evidence that the debt is joint, where no express separate contract was made with the individual partner. (8 Ves. 540. Gow on Partn. 343 to 349.)

I do not consider this case as at all varied by the circumstance, that the order for the cotton was drawn by Crump in favor of the firm, instead of Marquand alone. The consideration for the order, the whole transaction out of which it grew, was an individual one, on the part of Marquand, in which he did not profess, and, indeed, had no authority to act for the firm : and it is worthy of remark, that it is Marquand himself, who denies his individual responsibility ; and not the partnership, seeking to get rid of a claim which might, with some plausibility, have been preferred against them.

The application of the cases cited by the defendant’s counsel, from 15 Mass. Rep. 75 and 331, is not perceived. In those cases the question was, whether Gore was liable as one of the firm of Gore and Grafton, in an action for money had and received under the following circumstances : They were general partners ; and Grafton made a note in the partnership name, payable to Thomas Cush-ing, or order; and forged the endorsement of Cushing, and raised money upon it. The endorsee brought an action on the note, the declaration also containing the general counts. The court held that he was entitled to recover under the general counts, though there was no evidence that the money was actually applied to the purposes of the firm; because Grafton had an authority to raise money upon the credit of the house. Gore had reposed that confidence in him, and ought to suffer the consequences.

The exceptions to the charge of the judge are not well taken ; and the mption for a new trial must be denied.

New trial denied.