Case ID: mass_2/html/0270-01.html
Source: Caselaw Access Project
Author: {"author": "Sedgwick, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

* Crowell Hatch and William Clap versus Peter Chardon Brooks.
    A draws his order on B, an insurance broker, directing him to pay to C and D, in proportion to their respective demands against A, the balance that may intimately be due to A, on his insurance account, when B should be in cash for the same— also any other moneys which B might afterwards receive on A’s account — to the amount of C and D’s just demands against him. B accepts the order. Such acceptance will support an action by C against B, for C’s proportion of the moneys received by B.
    The declaration was “ in a plea of the case for that whereas James Tisdale, of, &c., on the 8th day of January, A. D. 1798, drew his certain order or memorandum in writing of that date, directed to said Brooks, and therein and thereby requested him to pay to said Hatch and Clap, in proportion to their respective demands against him, said Tisdale, the balance that might ultimate!) be due to him, the said Tisdale, on his insurance account in the said Brooks’s office, when he, the said Brooks, should be in cash for the same; also any moneys which he, said Brooks, might afterwards receive on his, the said Tisdale’s account, to the amount of the said Hatch and Clap’s just demands against him; and the said Hatch and Clap thereafterwards, on the 29th day of the same January, duly presented said order to him, the said Brooks, who then and there, by his memorandum in writing at the foot thereof, accepted the same. Now, the plaintiffs aver that there has ultimately become due to said Tisdale, from said Brooks, the sum of 10,000 dollars ; and that much more than that sum is now due unto them. Yet though requested,” &c.
    At March term, 1806, the parties agreed to a statement of facts in substance as follows: —
    Prior to the 8th of January, 1798, James Tisdale had underwritten various policies of insurance, and had caused himself to be assured by various policies underwritten by other persons in the office of the defendant, who was an insurance broker.
    The notes given for premiums on all such policies are made payable to said Brooks, or his order; who pays any losses on policies underwritten in his office, with the consent of the underwriters, whenever he has funds of theirs in his hands.
    On the 8th of January, 1798, Tisdale, being in insolvent cir cumstances, and it being known to the parties that he was embarrassed in his affairs, and he being largely indebted tc [ *294 ] the * plaintiffs, drew his order on the defendant in the words following: —
    
      “ Boston, January 8, 1798.
    “ Mr. Peter C. Brooks,
    
    “ Please to pay to Crowell Hatch and William Clap the balance that may be ultimately due me on insurance account, when in cash for the same; also any moneys that you may receive hereafter on my account, to the amount of any just demands that they may have against me, or as far as any funds of mine as aforesaid you may possess will extend in the payment of said demands, paying to each in proportion to the amount of their several claims.
    
      “ Your obedient, humble servant,
    
    
      “ James Tisdale.”
    On the 29th day of the same January, the defendant accepted said order in the words following, viz., “ Accepted, P. C. Brooks
    
    
      Tisdale died September, 1798, insolvent. The plaintiffs have proved the whole amount of their respective demands against his estate before the commissioners appointed to receive the same, viz., Hatch 3669 dollars 87 cents, and Clap 25,062 dollars 72 cents, since the commencement of this action, without any deduction or allowance on account of said order, or of their demand on the defendant in virtue thereof; and a dividend has been since ordered by *he Probate Court to be paid to all the creditors of the said estate.
    The defendant has in his hands a balance of 1000 dollars, which he has received since the death of Tisdale, arising partly from premium notes taken as aforesaid, partly from sums received by the defendant in his said capacity of insurance broker, being restitutions lor illegal captures ordered under the last British treaty, in virtue of assignments made to him by said Tisdale and others prior to the date of said order, and partly from losses on said Tisdale’s own vessels insured in the defendant’s office, the amount of which was passed to the credit of Tisdale in account, by the defendant, prior to the date of the order.
    *It was submitted to the Court whether, on the fore- [ *295 ] going facts, the plaintiffs are entitled to recover that balance, or any part thereof.
    The cause was argued at the last March term, by Otis for the plaintiffs, and the present Chief Justice for the defendant.
    
      Otis, for the plaintiffs,
    said that, from these facts, it appeared that Tisdale, at the date of the order, was indebted to the plaintiffs, and was at the same time owner of a fund then in the hands of the defendant, the precise amount of which then neither was, nor could be, ascertained. At the instance of these creditors, he assigned his interest in this fund to them, by the most perfect and effectual act in his power, to be distributed between them in proportion to their respective demands upon him. Having made this assignment Brooks, who held the fund, was notified of the transaction, and explicitly declared his assent to it. A contract perfectly legal, fair, and equitable, being thus completed, the plaintiffs derived under it all Tisdale’s share in the fund. All the sources which were to con tribute to the fund were known and defined, and, by virtue cf prenous transactions, they were all under the control of the defendant. Here, then, was a complete bargain between all these parties, that Brooks should pay over to Hatch and Clap these funds, as they should grow. A transaction thus perfectly fair in itself, and so frequent in mercantile negotiations, the Court will support, unless restrained by some principle of law, and none such is known or apprehended.
    A chose in action is assignable in equity, and, if the debtor be privy and consenting to the assignment, it is assignable at law also ;  and this where the debt arises on a specialty. It is not contended that this order has the nature or properties of a regular bill of exchange; but that it will operate as an assignment of so much of the particular fund on which it is drawn as is covered by it, and bind, appears from the case of Clark vs. Adair, 
       where the facts are extremely like those in the present case. There [ * 296 ] the administrator of the drawer of the order * brought his action against the drawee, to recover the money, to the amount of which the bill had been drawn, and it was ruled that the holder of the bill had a title to the money; and the defendant had a verdict.
    Notwithstanding the strictness of the English bankrupt laws, and although a chose in action cannot strictly be assigned at law, yet the courts of law as well as equity will support the assignment, to a creditor, of a debt due to the bankrupt, made before the bankruptcy, for a valuable consideration and without fraud, against the assignees under the commission, — and this, whether it be of a simple contract debt, as by a drought upon a particular fund, or of a debt by specialty, as by assignment of a bond. 
    
    
      Parsons, on the other side,
    contended that the facts stated ought to be such as would support an action in some regular form, and that if the Court were not satisfied that some known and legal mode of declaring would be supported by these facts, the plaintiffs were not entitled to judgment. This assignment, it was insisted, was a mere nullity. It is not a bill of exchange, for the fund on which it is drawn is contingent; it is not for value received, nor is it payable to order. Not only are the formal words, “ for value received,” omitted in this order, but it is plain, from the case stated, that no valuable consideration whatever was given for this order, without which such an assignment is clearly void.  Notwithstanding this order, and the acceptance of it, the plaintiffs go on and prove their whole demands against Tisdale’s estate, and receive a dividend, as if the order had never been drawn. They will therefore suffer no loss by failing in this action, but will stand on equal ground with the other creditors of Tisdale, in conformity to the equitable principles of our laws concerning insolvent estates.
    This order was calculated not only to embrace any funds existing at the time in Brooks’s hands, but all such as should thereafter- come into his possession. Tisdale might have gone *on underwriting, and all his gains, by force of [ * 297 J this memorandum, were to pass immediately to the benefit of the plaintiffs. Surely such a transaction cannot be supported against creditors ; and the creditors of Tisdale, by his administrator, are the real parties in defence here, it being perfectly indifferent to Mr. Brooks to whom he pays this money, provided he is legally discharged.
    
      Otis, in reply.
    
    The necessities of commerce frequently require securities to be given and taken for unliquidated debts, by droughts on unascertained and contingent funds. Courts of law will therefore lean in their favor, when given, as in the present case, with the concurrence of all concerned in interest, to secure a just and legal demand. A mere possibility is assignable.  But here was an acknowledged fund existing at the time of the transaction.
    The case of Perkins vs. Parker arose on speciál pleading: the Court held that a consideration ought to be set forth. It has no bearing on the present case, a sufficient consideration being here shown.
    , That this is no bill of exchange was agreed in the opening, and it is conceded that, unless the plaintiffs could recover in an action of indebitatus assumpsit, they cannot recover in any form of action.
    It does not appear but that the plaintiffs gave to Tisdale a receipt for this order, which was a sufficient consideration; so is their being eventually accountable for whatever sums they may receive.
    The claiming the amount of their demands before the commissioners on Tisdale’s estate cannot be viewed as a waiver of this demand. It was, at that period, uncertain whether any thing would ever be received by virtue of this order, nearly all the funds having been realized by Brooks at a posterior period. The assignment of this fund may be considered in nature of a pledge or [ * 298 ] collateral security for their demands, and as such * did not prevent them from using other legal methods to procure payment.
    The supposition that this was to operate on the future earnings of Tisdale is too extravagant to need reply. The order was drawn on funds then existing only, all which, from the course of business, as stated in the case, were under the control of Brooks. The premiums were paid by notes given in his name ; the claims under the British treaty had been assigned to him; and he held moneys m his hands to respond all losses arising on policies made in his office.
    After looking into the case, the Court suggested an objection, which had not been started at the bar, that, supposing the plaintiffs severally entitled to recover, yet they could not join in an action. This occasioned the following addition to be made to the agreement on file, viz.: —
    
      “ It is further agreed between the parties, that judgment may be rendered in this action, as if William Clap had been the only original plaintiff, and had declared for his own proportion only of the money in the hands of the defendant.”
    At this term the cause was again spoken to by Otis for the plaintiffs, and Jackson for the defendant.
    
      Otis,
    
    after going over much the same ground as in the former argument, and observing on the fairness of the transaction, and the great convenience to merchants that contracts of this kind should be supported by courts of law, concluded by stating that it appeared in the case that the defendant had a sum of money in his hands growing out of his agency for Tisdale. He has a lien upon all Tisdale’s property coming into his hands, to answer all contracts he might lawfully make on Tisdale’s account. Here is a contract thus made, and it is for him to show why he should not respond, so far as he has moneys in his possession belonging to this fund.
    
      Jackson
    
    having understood that it had been at the former argument contended that this transaction was fraudulent as against the creditors of Tisdale, said he should not attempt to add to the observations then made as to that point.
    [ * 299 ] * This paper bears no resemblance to a bill of exchange, to constitute which it ought to' be for a sum certain, payable in all events, and at a day certain, or, what is the same thing, which can be made certain. If this is a valid contract, it is so only as an assignment. But if it is an assignment of a 
      chose in action, the suit ought to be in the name of the original creditor, or his executor, for the benefit of the assignee, who can never maintain an action in his own name.
    
      Brooks
    
    has received all this money since his acceptance of the order, which differs this case greatly from the assignment of a balance of account ascertained, or capable of being ascertained, at the tune. An assignment made to secure an existing debt ought to show the amount of such debt. But here was no liquidation of the plaintiffs’ demands upon Tisdale, and they are under no obligations to submit to the arbitrament of Brooks. For aught appears, this order might have covered a larger amount in Brooks’s hands than was due to the plaintiffs from Tisdale, and the other creditors of Tisdale have no means of protecting themselves against such a fraud.
    This money is made payable to Hatch and Clap in certain proportions, which there is no means to ascertain. An assignment to trustees for the benefit of creditors is void, unless each creditor’s demand is ascertained and expressed ; the plain reason of which is the impossibility, in a court of law, to adjust such demands. Put the case that Clap had brought his action severally; — on trial he must prove not only the- amount due to him from Tisdale, but also the amount due to Hatch, and the amount of Tisdale’s effects in Brooks’s hands. Suppose all this done, the next day Hatch’s action goes to trial. He is not bound by the former verdict in Clap’s action, and he proves a larger amount due him from Tisdale. Brooks must pay Hatch according to the proportion settled by this second verdict. This inconvenience would not have arisen if a joint action could have been maintained by the parties.
    
      Otis, in reply.
    The amount of the .argument on the other side seems to be that this, being an assignment of an unliquidated demand to satisfy a debt, the amount whereof is unascertained, is a fraudulent transaction, and cannot be [ * 800 J countenanced in a court of law. This position is novel, and leads to very mischievous consequences. Negotiations of this kind are in every day’s practice among merchants,, and to declare them void would be a very great inconvenience to the commercial part of the community. But what is there in this whole transaction that has the appearance of fraud, according to the rules of the common law ? The policy of the bankrupt laws has nothing to do with the case.
    Here Brooks was known to be the trustee ana debtor of Tisdale. The plaintiffs, apprehensive of Tisdale’s circumstances, claim this fund to be appropriated to the discharge of their demands. Tisdale assents to it, and Brooks agrees to hold the fund, from that time, foi the particular use of these two persons. What ground has he now to refuse payment ? Shall he hold the property, against his own engagement, until the demands of the plaintiffs are precisely ascertained, although he is well satisfied that they are vastly more than the amount in his hands ?
    As to the difficulty in ascertaining these several demands, there seems not much in it in the present case; for in the case stated, the three sums, viz., the amount due from Brooks to Tisdale, and from the latter to Hatch and Clap, respectively, are all stated, and it inquires no learning beyond the rule of three to ascertain the amount which each of these plaintiffs has a right to recover.
    
      
      
        Fenner vs. Meares, 2 W. Black. 1269.
    
    
      
       1 Espinasse, Dig. 26.
    
    
      
      
        Cullen's Prin. of the Bankrupt Law, 189, cites Row & Dawson, 1 Ves. 331 — Peters & Soame, 2 Vern. 428.— Winch vs. Keely, 1 Term R. 619.
    
    
      
      
         Parkins vs. Parker, 1 Mass. T. R. 117.
    
    
      
      
        Cullen's Bank Law, 178
    
   The opinion of the Court was delivered by

Sedgwick, J.

In this case, at the former argument, it was suggested by the Court to the parties, that this action was misconceived ; that, if the plaintiffs had merits, their actions ought to have been brought severally; and that a joint action could not be supported. To obviate this difficulty, it is now agreed that judgment may be rendered in this action, as if William dap had been the only original plaintiff, and had declared for his proportion of the money in the hands of the defendant.

By the agreemént of the parties, all objections to the form of the action are waived ; and the question referred to the Court [*801 ] * is, whether Clap, who is now to be considered as the sole plaintiff, is entitled to recover his proportion of a balance in the defendant’s hands due to James Tisdale, deceased.

(The judge then recapitulated the facts, and proceeded.)

The first question which presents itself on this state of facts is, whether the money due from "the defendant to Tisdale, which was intended to be subject to his order, on its coming into the defendant’s hands, as it had done previous to the commencement of this action, ought to be paid according to the direction of Tisdale, and his own assent to that direction by the acceptance of the order.

The balance which should come into the hands of Brooks, as the agent and trustee of Tisdale, was Tisdale’s property, and he had a right to make any fair and honest disposition of it. That which he attempted was such. It was to satisfy bona fide creditors, as far as it would go, their honest debts. There could be nothing criminal or wrong in the defendant, in agreeing to pay, as he should receive it, the money of Tisdale to hjs creditors. The contract was understood by all the parties interested. It was perfectly fair; and, like every other contract of that character, ought to be carried into effect, if there be no positive rules of law to forbid it ; and none such aré believed to exist. The money which belonged to Tisdale, and which, by the nature of the transaction, was to pass through the hands of the defendant, he had a right to appropriate to any honest purpose, such particularly as the payment of his debts; and it became the duty of Mr. Brooks, after he had undertaken to obey the orders of Tisdale, to perform his engagement. According to this engagement; — the acceptance of the order, — as money belonging to Tisdale, and by him intended to be controlled by it, came into his hands, it was money by him received to the use of Hatch and Clap.

It has been objected against the right of the plaintiffs to recover, that, at the time of the transaction, it was known to them that, Tisdale was in embarrassed circumstances; and it is an agreed fact that he was then insolvent. But there can be no pretence that, by the insolvency of Tisdale, or the knowledge of the plaintiffs tho' his circumstances were embarrassed, the transaction * was rendered fraudulent. As honest men, they might [ * 302 ] seek to obtain security, and as provident men, it was their duty to do it. And there can be no pretence that the consent of Tisdale to give them this security was fraudulent.

It is objected further that Clap, having, since the death of Tisdale, proved his whole debt under a commission of insolvency on his estate, cannot recover in this action. We are of opinion that this objection is not well founded. We do not undertake to say what effect a judgment in this case may have as to any demands which Hatch and Clap may have on the estate of Tisdale in the hands of his administrator; but no reason has been suggested, nor can we comprehend, how any demand which they have made of that kind can discharge the defendant from paying over to them the money which, from the nature of the transaction, he had received to their use.

In the last place, it is said that a court of law is incompetent, from its modes of procedure, to decide on a transaction of this kind In many instances I have perceived and lamented our want of a court of equity; but I do not perceive it in this case. It is said that Hatch and Clap cannot maintain a joint action. It is true. And it is further said that neither will have it in his power, in a several action, to ascertain conclusively what is the amount of the debt of the other, and, therefore, that their respective proportions cannot, in a trial at law, be ascertained. That difficulty is in this case obviated; for all the parties concerned, all who are interested in the subject of controversy, agree what the respective claims of Hatch and Clap are to the fund in the hands of the defendant.

As the aggregate of the debts of Hatch and Clap is to the money received by the defendant, so is the debt of Clap to what he has a right to «¡cover by his judgment.

It is understood that Mr. Brooks has defended this action merely as an indifferent stakeholder for the respective claimants, Hatch and Clap on the one hand, and the administrator of Tisdale on the other; and it was right for him so to do, until the question was decided.

Judgment was entered for William Clap for the sum of 872 dollars 72^, cents damage, and for his costs. 
      
      
         Tucker vs. Welsh, 17 Mass. Rep. 160.