Case ID: va_7/html/0599-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Broddus v. M'Call & Elliot.
    [Thursday, July 8, 1790.]
    Equitable Relief- Fraud — Case at Bar. — If A. agree to furnish B. with goods at 85 per cent, on the prime cost, payable in cash, or tobacco at the market price; and B. is informed of the prices, and takes some and rejects others; and several settlements are made, and a bond taken for the balance; yet if B. afterwaids discovers that A. laid an advance upon the goods before they were shipped, and that the tobacco credited at 10 or 15 per cent, less than the selling prices, a Court of Equity will grant relief.
    Some time in the year 1761, John & Robert Broddus, two planters in the county of Caroline, having determined to engage in trade, and to retail goods in partnership, and having no correspondent or acquaintance in Europe, applied to Archibald M’Call, the principal factor of a considerable Scotch house, carrying on trade and merchandize under the firm of John & William M’Call, and made a verbal agreement with him, the purport of which Broddus states to be, that they might take up, what goods they wanted, to be discharged at eighty-five per cent, on the first cost, or sterling prices, either in cash, or tobacco, at the general market price, he, said Archibald M’Call, assuring them that they should not be imposed on, but dealt with fairly and honestly. Notice of this agreement was given to William Snodgrass, who kept a store for the M’Calls at Todd’s, and he promised to conform to it. Archibald M’Call soon after quitted the business, and was succeeded by William Snodgrass; and the store at Todd’s was conducted by Robinson Dangerfield. Goods to a considerable amount were taken up by the brothers, until some time in the year 1762, when William Broddus quitted the business, but John Broddus continued to carry it on as usual for nine years. During this time, the balances were frequently ascertained, bonds given, and very large payments made in money and tobacco. In the year 1770, the M’Calls declined their trade, Robinson Dangerfield called on John Broddus for his bond, which was executed for 10371. 10s., the balance alleged by Dangerfield to be due. M’Call & Elliott, to whom the bond was given, instituted a suit and obtained a judgment thereon in the County Court of Caroline, which judgment was injoined by the said Broddus, in the same Court, who, in his bill, alleged, in addition to the circumstances *above stated, that he was unacquainted with the prime cost of goods ; that he had placed great confidence in the honor and integrity of the merchants with whom he traded; that in the various settlements which had been made, he had never inspected the particular prices of articles, or enquired of other merchants concerning the prime costs of such articles as he had received; that he always believed the sterling price, marked on the goods he purchased, was the real original price, according to a genuine invoice ; that, in truth, (as he had since the execution of the bond, discovered,) the goods were sold to him at a price compounded cf the prime cost, and 25 per cent, thereon, on which compound price the same per cent, was laid, as he had stipulated to pay on the prime cost; and, that the tobacco he had sold was credited to him below its market price. He prayed that an account might be taken of all the transactions between them; that the settlement should conform to the agreement; and that the money unjustly received should be refunded.
    Several partners of the house of M’Call & Elliot, residing in Scotland, filed their answer, denying any knowledge of the agreement, and admitting that they had in their several invoices advanced the prime cost of their goods variously as they would bear it, and declaring their inability at that time to say what particular advance had been laid on the goods purchased by Brod-dus.
    Archibald M’Call filed his answer, denying the agreement stated by Broddus; and averring, that he had never pretended to sell by an invoice stating the prime cost of the goods; but, on the contrary, that he told him that there was a small advance on all the goods; that the price would be told him when he should purchase; and that he might take them or let them alone.
    Robert M’Candlish, who had sold a large proportion of the goods to Broddus, stated in his answer, that he always supposed the invoice by which *he sold to contain an advance on the prime cost, nor did he ever pretend to the contrary: That it was customary for Broddus to examine the invoice; to take such goods as pleased him; and to reject such as he disliked; or thought too high charged.
    William Snodgrass, in his answer, averred, that he repeatedly informed Brod-dus, that he did not pretend to deal by original cost invoices; and that those, by which he dealt, were advanced. He also stated, that Broddus examined the price of all the goods he purchased; and was determined, in taking or rejecting them, by his approbation, or disapprobation of the price.
    It was proved, that Broddus had made with M’Call such an agreement as is stated by him, and that the invoice by which the goods were sold to him, was advanced variously, from about ten to twenty-five per cent, on the prime cost. It was further proved, that in very many instances, the credit, given Broddus for tobacco delivered, was about ten or fifteen per cent, below the selling price.-
    In May; 1787, the County Court of Caroline appointed “auditors to settle' the account between the parties, of the dealings in the bill mentioned, from the commencement thereof in the year 1761, to their conclusion, allowing the complainant twenty-five per centum sterling on the amount of the purchases of the goods from the defendants, turning the said sterling money into. current money, at 85 per cent, advance, and interest from the day twelve months therein, after making such purchases to the time of making up the said account, he having charged interest from the said period:
    “That the said auditors, in making .up the said account, do also allow the complainant the general current prices for the tobacco, of the inspections whereat the tobacco was inspected, at the several periods of making payment of that article; . *that the. said defendants do produce to the said auditors, the amounts, of the .price of the .goods delivered, and at what date, together with the amounts and date of each payment; and that the said auditors report the same to. the Court, stating such matters specially, as either party might require, in order for a final,decree. ”
    In• August-,, 1787,, a report, was returned conforming t,o the principles of the interlocutory decree; by which the defendants were shewn . to -have, received 245Í. 2s. 8d. more than they ought to have received.
    The counsel for the defendants now offered in evidence written articles to shew, that the dealings comprehended in the report were for a time with John & William M’Call; for a time with John M’Call & Co.; and for a time with M’Call & Elliot: And it was contended, that the bond given to M’Call-& Elliot should not. be subject to a deduction on account of dealings with John & William M’Call, and with John M’Cal-1 & Co. The complainant objected to the admission of these papers, alleging that they were offered too late; but they were admitted and read. It, however, appeared, that there was no other'material alteration in the company but its name, as' the partners were nearly the same, and M’Call & Elliot, in their answers, had not alleged themselves to be exempt from account, for transactions in the name of the other firms. . In August, 1787, a final decree was made, perpetuating the injunction, and ordering the defendants to pay the complainant the said sum of 2451. 2s. 8d. with interest; from which decree, the defendants appealed to the High Court of Chancery.
    In March, 1789, the cause came on to be heard in the High Court of Chancery, where the decree of the County Court was reversed, q.nd the High -Court of Chancery decreed, “That the injunction ^obtained by the appellee be dissolved, except as to payments made, after the execution of the bond, an account of which payments was ordered to be made up before the Commissioner, who was directed to examine, state and settle the same, allowing for the payments in tobacco so much mone3r as the same were valued at by the referees; and to report the same to the Court, stating such matters specially, as either party might require, or as he might think fit.”
    Erom this decree, the appellee prayed an appeal to the Court of Appeals, where the cause was argued by Mr. Taylor, for the appellant, and Mr. Baker, for the appellee.
    
      
      See monographic note on “Fraud” appended to Montgomery v. Rose, 1 Pat. & H. 5.
    
   By the Court.

In the year 1760, John and Robert Brod-dus entered into partnership: To set this trade on foot, they having no correspondents in Britain, apply to the defendants residing in this country, who were factors for British merchants.

The interests of the firms originating with John M’Call & Co. centered in M’Call & Elliot.

John Broddus had a release, and was no more interested.

The terms o.f the original contract were 85 .per cent, on the prime cost of goods, with liberty to vary as the exchange varied, and payable in cash, or tobacco, at the market price.

Their dealings continued for nine years, during which Mr. Broddus was regularly informed of the price . of the goods he purchased; and tbok what he liked, and rejected the rest. Several 'settlements, too, were made, and finally this bond was executed.

*At some time during their dealings, Broddus discloses his suspicions, that the goods and tobacco were not fairly priced; and proposes an arbitration, which was rejected. The suit was commenced in August, 1772: in June, judgment was confessed, and an injunction granted.

The complainants state, that the average of advance on the goods was 25 per cent. The agreement is clearly proved; and any advance, on the prime cost of the goods to the British merchant in his ware-house before exportation, is a breach of that agreement. That there was such an advance, is plainly proved. The appellee, then, is clearly entitled to relief, if not barred by his. acquiescence under the imposition.

The first objection to granting him relief is, that he saw the goods, and was informed of the price, and might judge for himself.

But neither an invoice, or note of particulars, discovered to him, that the invoice, by which he purchased, was advanced. Even the agents in the store knew nothing of the amount of advance. Under the influence of this ignorance, he settles, and gives repeated bonds for the balance appearing on each settlement to be due. Ought those bonds, now that the imposition is discovered, to bar his relief against it?

It is a general principle, that bonds and other engagements derive their obligation from the consent of the mind of the contracting party. A suggestion of falsehood, or a suppression of truth, is such a vice in their composition, as to destroy their original obligation. Would be have given these bonds, had he known the fraud which had been practised on him? His conduct, subsequent to the discovery of that fraud, shews he would not. In the case of Bosanquett v. Dashwood, Cas. Temp. Talb. 38, Dord Talbot asks, “Must a man keep *money that he has no right to merely because he got it into his hands?” So it may be asked here, Must he recover money, merely because he has a bond.

The cases of Cole v. Gibbons, [3 P. Wms. 294,] and Chesterfield et al. ex’rs of Spencer v. Janssen, [2 Ves. sen. 125, 1 Atk. 354,] have been relied on.

In that of Cole v. Gibbons, any objection, which might lie to the original deed, was totally done away by the second, when the fact was fully disclosed to him; and, with a perfect knowledge of it, he executed the deed.

In that of Chesterfield et al. ex’rs v. Janssen, there was no fraud or imposition in the original contract. It was a fair contingent contract, without deception ; and the risk was perfectly equal. But, be this as it may, the original objection (the distress of Mr. Spencer) was removed, when he confirmed it. The principle of these cases is clearly right; but it does not apply to this case. ‘ Broddus was deceived throughout the whole transaction; and, if he had given fifty bonds under the same deception, his title to relief would have remained undiminished. The Court' is of opinion, that he is entitled to relief.

The County Court has charged 25 per cent., under the idea that that was the just average of advance on the goods. It is alleged, in the bill, that the goods were advanced so as to average 25 per cent. ; and the answer admits an advance, but does not say what that advance was. This is urged by the counsel, with some weight, as* a confession of the advance charged in the bill; but, the Court being about to relieve a man against his bond, will not be rigid. The deposition of Mr. Pollard states, that the goods were, in his opinion, advanced from 15 to 20 per cent. The Court incline to take the mesne advance of V7]4, Per cent., as the just average, and the decree to be as follows:

*'The Court is of opinion, “that there is error, in the decree of the High Court of Chancery in this, that the injunction was dissolved as to all but the payments stated, and an account directed to be taken, in which no deduction was to be made for the average advance in the price charged as the first cost of the goods;.this Court being of opinion, that in taking such account, a deduction ought to be made for such average advance at 17]4 per cent, instead of 25 per cent, in the mode pursued by the auditors; whose account ought to stand in all other particulars, except a change of the deduction from 25 per cent, to 17J4 per cent, as , aforesaid, and of the consequent calculations of advance and interest thereon.”*

Note. It appeared to the Court from the inspection of the account and other testimony in the cause, that the average advance on the prjme cost of the goods, was 17]^ and not 25 per cent.