#### Ross’s Ex’or v. M’Lauchlan’s Adm’r & als. Same v. Haden’s Adm’r.

April Term, 1850,

Richmond.

(Absent Brooke, J.)

1. Equity Practice — Partnerships—Final Settlement— Errors on Face—Partners.—Under tile circumstances of the case, and after the time which had elapsed, the Court refused to enquire into errors which were alleged to appear upon the face of a final settlement of a partnership between the former partners. L

2. Same—Same—Same—Case at Bar.—In a suit by the ex’or of one partner against the ex’or and his sureties of the other partner, under the circumstances, the sureties not allowed to set up a credit, which had been set up by the partner and again by his ex’or, and had been disallowed by the Court in both instances.

*3.*Compromise—ignorance oi Facts—Efíect.—A party to a compromise entered into in ignorance of important facts connected therewith, not held hound by it.

4. Same—Same—Payment of 'lore Than Bound to Pay-Recovery.—A party to a compromise entered into, in ignorance of important facts connected therewith, hinds himself to pay, and does pay, more than he was originally bound to pay. He is entitled to recover back the amount he has overpaid, with interest thereon from the time oi payment.

*5, Equity Practice—Bonds—Application of Payments,*—A debtor by four bonds payable at successive periods, makes payments to his creditor, which upon a settlement after tile death of the debtor, are ascertained to amount to more than is sufficient to discharge the first bond. The creditor will not be permitted to apply the amount remaining after discharging the first bond as a credit upon tb e fourth; but the Court will apply it to the second bond in relief of a party bound as surety for the amount of the second bond.

6. Same—Same—Same—Case at Bar.—A creditor by two judgments and a bond files a bill against the ex’or of his debtor, and obtains a personal decree against the ex’or for the whole amount. Upon an execution which issued upon this decree a part of the money is made. The judgments being debts of highest dignity, the money so made is to be applied as a credit upon them, in relief of a party who is hound as a surety for the judgments.

7. Same—Same—Same—Judgments.—In this case the ex’or sells lands of his testator, and pays the proceeds to the creditor. As the judgments were liens upon the lands, the payments are to be applied as credits upon the judgments.

The principal case is cited in Harner v. Price, 17 W. Va. 548, upon the subject of mistake.

In 1783 a partnership was entered into by David Ross and Duncan M’Lauchlan, for carrj’ing on a country store at the Point of Forks, now Columbia, in the county of Fluvanna. In this partnership David Ross was to be interested two thirds, and M’Lauchlan one third; and M’Lauchlan was the acting partner in conducting the business. This partnership was renewed and continued until 1794, when it was finally dissolved. M’Lauchlan continued to carry on business at the same place on his own account, and was employed in winding up the affairs of the partnership.

In 1802, the partners not having had a final settlement, an accountant was employed by them to settle up the books, and when he had finished his task Ross sent up an agent for the purpose of finally adjusting the business; and he submitted in writing a scheme of settlement, which was accepted by M’Lauchlan, in June 1802. The only provisions of this scheme which it is necessary to state, are, that M’Lauchlan was *44to take all the debts of the concern, and was to be allowed 7j>¿ percent, upon Ross’s two thirds of the *good debts for the expense and trouble of collection. And having had the slaves belonging to the concern in his possession since the dissolution of the partnership in 1794, he was to be charged with two thirds of the hires, with interest upon them; and he was to take the slaves and to be charged with two thirds of their value. In March 1803, Ross and M’Uauchlan met in Columbia for the purpose of executing the agreement of June 1802, when a statement of the account was made. In this account the good debts are set down at *£*1098. O. 6., and the interest up to the 1st of April 1802, at *£*467. 15. 9. = *£*1566. 1. 9. : but it does not appear on the face of the account, that the deduction of *7%*per cent, on two thirds thereof was made, but M’Uauchlan is charged with the whole two thirds. In the same account the valuation of the slaves is stated at *£*1085. ; the hires are stated at *£*590., and the interest thereon at *£*128. O. 8. ; and M’Uauchlan is credited with *£*30. for expenses of young negroes, and *£*558. 6. 8. for one third of the slaves, their hires and interest thereon.

Upon this account the amount for which M’Uauchlan was to be responsible to Ross was *£*2413. 18. 9., for which he executed to Ross his four bonds bearing date the 3d of March 1803, payable the 1st of April 1803, 1804, 1805 and 1806, each for the sum of *£*603. 9. 8%., with interest from the 1st of April 1802. And at the foot of the statement of the account the parties agreed that if there was any error the same should be rectified on both sides.

In May 1806, Ross recovered judgments against M’Bauchlan in the County court of Fluvanna, on the two bonds due in 1804 and 1805; whereupon M’Uauchlan obtained from that Court an injunction to these judgments, and executed an injunction bon'd with John Quarles and Joseph Haden as his sureties. The grounds on which the injunction was asked, were first that there was an error in the settlement of 1803, made *by charging him with a large sum as cash on hand, when the books shewed that at a previous period there was a much larger balance in his favour which had not been carried forward; and second, that various credits to which'M’Bauchlan was entitled had not been allowed him on that settlement; and he claimed to have them set off against the judgments. These credit's are stated in an account annexed to the bill.

Ross answered the bill, and replied specially to the claims set up.. Those which existed before the settlement he objected to as concluded by that settlement; and as to the most important of them, that they had either been passed upon in the settlement or were without any foundation of evidence or justice. He admitted certain credits arising out of payments made and claims bought up since the settlement, and said that to meet these he had held up the bond first due, upon which these credits would be allowed: And he admitted one payment of 200 dollars through Forbes, which had been directed to be applied to the second bond; and which he had so directed to be so applied before the judgment thereon was recovered.

M’l/auchlan having died soon after the injunction was obtained, John Quarles qualified as his executor; and the injunction was dissolved early in the year 1807..

In March 1807 Ross revived his judgments against Quarles as the executor of M’Uauchlan, but the executions thereon were returned “no effects;” and he, in February 1808, instituted a suit in the late Chancery court of the Richmond district against Quarles the executor, to have a settlement of his administration account, and the payment, not only of his judgments, but of the fourth bond.

In this suit Quarles set up the same offsets to the plaintiff’s claims that were set up in the injunction suit in Fluvanna County court; but they were rejected; and when the bill was afterwards amended and his ^sureties in his official bond were made parties, they also set up these offsets; and they also insisted that there was error in the settlement of March 1803, in not allowing M’lyauchlan credit for a commission of seven and a half per cent, upon the two thirds of the good debts, for collection, according to Ross’ proposition in March 1802, which was accepted by M’Uauchlan, and which was the basis of the settltement of March 1803; and that there was error also in not allowing M’Uauchlan his full one third of the price, hires and interest thereon, of the slaves.

In 1808 the defendant was directed to settle his administration account; and in June 1810 there was a decree against him for *£*1509. 12. 7j>£.,. with interest on *£*1206. 19. 5. from the 1st of February 1810 until paid; and he was allowed to go before the commissioner to establish his set-offs to the residue of the plaintiff’s demand. In June 1812 there was another decree in the cause, in which the Court, approving so much of the report as rejected the defendant’s discounts, decreed against him, in favour of the plaintiff, for the further sum of *£*302. 16. *9)4-,*with interest from the 8th day of May 1810 until paid. And in 1815 there was a further decree, recommitting the commissioner’s reports previously made in the cause, on the grounds that they were made before the sureties of Quarles had been brought before the Court; and that these sureties should have an opportunity to shew that they were erroneous. Accordingly, two reports were subsequently made: one by commissioner Parsons and the other by commissioner Shore; but it is unnecessary to give the details of either.

The cause lingered on the docket until March 1842, when it was transferred to the Circuit court of Fluvanna: It having been in the meantime revived, first in the name of Thomas T. Bouldin, executor of Ross, and on his death, in the' name of *45Frederick A. Ross, as ^'executor of Ross, and'Thomas Shores, late sheriff of Fluvanna county, and as such administrator de bonis non of M’Eauchlan, and Basil M. Jones, administrator of Quarles.

Whilst this cause was pending in the Chancery court at Richmond, David Ross, in 1815, instituted an action in the Circuit court of Fluvanna against Joseph Haden, upon the injunction bond executed by M’Eauchlan, with Quarles and Haden as his sureties, upon obtaining the injunction above mentioned in the County court of Fluvanna in 1806. Whilst this action was pending, Ross and Haden had a meeting in the City of Richmond, when Ross made a statement of the debt for which Haden was bound, making the amount due on the 23d of December 1815, *£*1888. 12. 4., after credit in the claim with *£*600. the price of a tract of land purchased from the executor Quarles by Jacob Myers, and settled with Ross; and they entered into an agreement under seal, by which Haden agreed to pay Ross this sum in two equal payments, the first on the 23d of December 1815, and the second on the 23d of December 1816. And to facilitate the payments, Ross agreed to take young negroes at valuation.

In February 1816 Haden paid to Ross in negroes 3800 dollars. Between that time and the fall of 1818 Ross died; and Haden not having paid the balance appearing due upon the settlement of 1815, the suit in the Circuit court of Fluvanna was revived in the name of 'Thomas T. Bouldin, the executor of Ross; and at the fall term of the Court a judgment was rendered against Haden for the whole amount of the two judgments enjoined, with interest and damages; but the judgment was to be subject to any equitable credits which the defendant might have against it. In November 1818 Haden obtained an injunction to this judgment. In his bill he stated the pendency of the suit of Ross against Quarles the executor of M’Eauchlan, and that it was then believed *'that there was but an inconsiderable amount due from M’Eauchlan to Ross. He insisted that he should not be subjected to pay the judgment recovered against him until the real balance due to Ross was ascertained. 'That he had probably overpaid Ross, and was entitled to have such overpayment refunded. That Ross, in one of his amended bills, admitted he had made upon the execution which issued on the decree of 1810 against Quarles, near 500 dollars; that there were other payments which appeared from the commissioner’s reports; that Ross had received through Myers 2000 dollars, and that he himself had paid 3800 dollars ; both of which [ sums should be credits upon the judgment. He does not allude at all in his bill to the settlement made by Ross and himself in 1815.

Bouldin, in his answer, stated that he had heard of the payment by Haden in slaves before the judgment was recovered, but was not informed of the amount; and expected that the defendant in the action would produce the receipt on the trial, which, however, he had not done; but that he could at any time have obtained the credit by applying either to the respondent or his counsel. He stated that Ross and M’Eauchlan had a full settlement of their accounts in 1803. That Haden and Ross had a final settlement in 1815 of the amount which Haden was to pay, after giving him credit for *£*600. paid by Myers; which amount was *£*1888. 12. 4. : And he exhibited that settlement and agreement with his answer.

This cause also slept upon the docket until March 1842, when it was transferred to the Circuit court of Fluvanna. In that Court the two causes came on to be heard together, and the Court set aside the report of commissioner Shore, and directed a special statement to be made according to the views of the Court. Of this statement A is intended to shew the state of the accounts as between Ross’s executor and the administrators *of M’Eauchlan and Quarles; and statement B is intended to shew the state of the accounts as between Ross’s executor and Haden. In both these statements there is a credit to M’Eauchlan for 7^ per cent, upon the amount of two thirds of the good debts belonging to Duncan M’Eauchlan & Co. at the time of the settlement in March 1803; which by Ross’s proposition was to be allowed M’Eauchlan for collecting them. This amounted to *£*78. ,6. 1. There was also a credit on account of charges for slaves *£*42. 13. 6j¿. ; it appearing on the face of the account stated in 1803, that the credit allowed M’Eauchlan was that much less than one third of the charge for the price and hires of slaves and interest thereon. These two sums amounting to *£*120. 19. *7¡£.*deducted equally from the four bonds executed at the time of the settlement, reduced them from *£*603. 9. *8%.*to *£*573. 4. *9%.*There was also a credit to M’Eauchlan for certain tobacco and wheat amounting to *£84*6.' 5. This tobacco and wheat was alleged to have been delivered to Davis, the agent of Ross, the day after he completed his settlement with M’Lauchlan in 1802, and it did not appear in the settlement of March 1803. But the same credit had been set up by M’Eauchlan in his injunction suit in the County court of Fluvanna, and also by Quarles before the commissioner in 1810, and had been rejected by both Courts. There was also a credit for the costs in the actions at law on the second and third bonds.

Besides these credits, there were others about which there was no question that they were proper credits in statement A, which included a charge of the fourth bond as well as the second and third; but which the plaintiff insisted were not properly credited in statement B, in which only the second and third bonds were charged. These credits the plaintiff insisted he had a right to apply to the discharge of the fourth bond, first, because the debtor had directed no particular *application of the pay*46ments; and, second, because by the settlement between Ross and Haden, the latter was concluded from insisting on these credits; especially as in that settlement Ross had allowed him a credit for the payment made by Myers, to which it was insisted he was not entitled. These credits were first *£*150. 18. 1. Upon a settlement made in 1810, it appeared M’Uauchlan had overpaid the first bond to this amount. Second, *£*149. 17. 10%. made under an execution issued on the decree of 1810. Third, the proceeds of a lot in the town of Columbia, which belonged to M’Uauchlan’s estate, and was sold in 1810. There were other credits about which there was no dispute. The statement A, after crediting the amount paid by Haden, shewed still a balance due from M’Uauchlan’s estate to Ross of *£*483. 15. 3%.; and statement B shewed that Haden had overpaid on the 8th February 1816, the amount for which he was responsible to Ross *£*632. 17.

The two causes came on to be finally heard in April 1844, when the Court confirmed the statements A and B, and made a decree against the sureties of Quarles the executor of M’Dauchlan, for the sum of *£*483. 15. 3%., with interest thereon from the 8th of February 1816 until paid; but declined to make a decree against the representatives of M’Bauchlan or Quarles for said sum with interest, because the decrees before rendered in the cause against Quarles exceeded the amount due as aforesaid.

And in the second suit the Court reinstated the injunction granted to the plaintiff Haden so far as it had been dissolved by previous orders in the cause, and made it perpetual, and further decreed that the plaintiff in this suit should recover of Ross’s executor, to be paid out of the assets of his testator in his hands to be administered, his costs and the further sum of *£*632. 17., the amount overpaid by Haden to Ross, with interest *thereon from the date of the decree until paid: the Court being of opinion that it was not competent to give interest on the same from the date of such overpayment. From the decree in both cases Ross’s executor applied to this Court for an appeal, which was allowed.

Cooke, for the appellant.

Irvine anfi Stanard & Bouldin, for the appellees.

*

Equity Practice—Application ot Payments,—Upon this question, see *foot-note*to Howard v. McCall, 21 Gratt, 205; Chapman v. Com., 25 Gratt. 721. The principal case Is cited and followed in Norris v. Beaty, 6 W. Va. 484.

AUIvFN, J.,

delivered the opinion of the Court.

The Court is of opinion, that in the statement A, referred to and adopted as the basis of the decree in the first of said suits, the Circuit Superior court erred.in allowing as credits to reduce the amount of the debt due from Duncan M’Uauchlan to David Ross, the sum of *£*78. 6. 1. for commissions on two thirds of good debts, and also the sum of *£*42. 13. 6%. short credit for interest on the hires of slaves: and, therefore, there was error in reducing the amount of each bond' from the sum of *£*603. 9. 8%. to *£*573. 4. 9%., and making such reduced amount of the bonds the basis of calculations. The Court is further of opinion, that after the decree dissolving the injunction and dismissing the bill, and the decree against John Quarles, ex’orof D. M’Uauchlan, and the proceedings had in this cause, it is too late to set up the credit of *£*84. 6. 5. for tobacco and wheat, allowed in said statement A, and that said Court erred in allowing said credit, and also the credit of *£*4. 14. 10%. costs at law on the second and third bonds. The court is further of opinion, that when the Circuit court properly set aside the report of commissioner Shore, and caused the statement A to be made out as exhibiting the true balance due to the estate of D. Ross, for which the securities of John Quarles, the executor of D. M’Uauchlan, were liable, they should also have been debited with the sum of 166 dollars 11% cents, or *£*49. *17. 3., the amount of costs decreed to said Ross against said Quarles on the 20th of June 1812, it appearing on the face of said proceedings, that said costs were recovered by said Ross in a suit instituted to obtain an account of the assets, and charging a devastavit, and were, therefore, a proper charge against the securities. The Court is, therefore, of opinion, that the statement A, and decree based thereon, are erroneous in allowing the credits above designated, and in omitting the charge for *£*49. 17. 3. costs aforesaid; and as a consequence, that all the calculations of interest and damages in said statement A, based upon the allowance of such credits and omission of such charge, are also erroneous. It is therefore considered, that the decree in the first of the above cases be reversed with costs to-the appellant, and the cause remanded to the Circuit court, with instructions to commit the accounts to a commissioner, who is to-take the statement A above referred to, as the ba'sis of his report, and correcting the same so far, and so far only, as it is herein before declared to be erroneous, and modifying the calculations of interest and damages so as to conform with the true sums after disallowing the credits so as aforesaid improperly allowed, and charging the sum improperly omitted, and rejecting all other claims for charges or credits on either side, other than those appearing on the face of said statement, or herein mentioned, the balance so appearing, will be the amount for which, with interest, the appellant in the first -of said suits will be entitled to a decree.

And in the second of said suits of Ross’sex’or against the representative of Joseph Haden deceased, the Court is of opinion, that the statement B, made out and adopted! as the basis of the decree rendered in the last suit, was erroneous in allowing as credits to reduce the bonds the sums of *£*87. 6. 1. and *£*42. 13. 6%., and there-fore there was error in reducing the amount of each bond from *£*603. 9. 8%. to *£*573. 4. 9%. and, making *such reduced amount of the bonds the basis of calculation. The' Court is further of opinion, that the security in the injunction *47bond was precluded by the decree dissolving the injunction and dismissing the bill, from setting up credits passed upon by said decree between the creditor and his principal, and therefore the Court erred in allowing a credit for *£*84. 6. 5. for tobacco and wheat. The Court is therefore of opinion, that said statement B, and the decree based thereon, are erroneous in allowing the credits aforesaid, and as a consequence, that the calculations of interest and damages in the statement B, based on the allowance of such credits, are also erroneous. The Court is further of opinion, that notwithstanding the agreement of the 21st of October 1815, between said J. Haden and D. Ross, it was competent for the former or his representative, to shew that the same was entered into by him in ignorance of the true amount due on the judgments enjoined, and that by a proper application of the payments received by Ross out of the proceeds of his debtor’s estate, the amount due on said judgments enjoined, was less than the sum set forth in the agreement of the 21st of October 1815. And the Court is further of opinion, that as the judgments constituted a lien on the real estate, and a debt of the highest dignity against the assets, it was the duty of said Ross to apply the pay ments received principally from the sale of the real estate to the credit of the judgments, and if, by his failure to do so, the security in the injunction bond, has been induced when ignorant of the misapplication of the payments by the creditor, to enter into a compromise by which he bound himself to pay, and did pay a larger sum than could rightfully have been demanded from him, such compromise and payment should not prevent the security from recovering back the money so overpaid by mistake; and upon sums so overpaid by mistake as aforesaid, the party is entitled to recover interest. The *Court is therefore of opinion, that said decree is also erroneous to the prejudice of the appellee in not allowing interest on the sum which it was ascertained he was entitled to recover back. It is therefore ordered and decreed, that the decree is erroneous, and the same is reversed ; but as it is manifest the appellee, by the allowance of interest on the sum overpaid by him, will be the party substantially prevailing, as the sum, though reduced by the principles of this opinion, to which the appellee will be entitled, together with interest from the time when the same was paid to the period of rendering the decree, it is apparent, will exceed the amount of the decree appealed from, it is further ordered and decreed, that the appellee recover his costs to be levied, &c. And the cause is remanded, with instructions to commit the accounts to a commissioner, who is to take the statement B, above referred to, as the basis of his report, and correcting the same so far only as the same is herein declared tobe erroneous, and modifying the calculations of interest and damages so as to conform to the said statement as corrected, and rejecting all other claims for credit or charges on either side, than such as appear on the face of the statement; for the balance ascertained by the statement so corrected, and calculations so modilied, to have been overpaid byT the said J. Haden, with interest thereon as aforesaid, the representative of said Haden will be entitled to a decree against the appellant, which is ordered to be certified.