[Present, Chancellors Ruteeboe and Makshasí.(¡

#### Thomas Shubrick and Robert Smith, Executors of Thomas Shubrick, *vs.*James Fisher, Josiah Smith N. Russell and others, Members of the South-Carolina Insurance Company.

Articles of agreement that the members of an insurance company should each bear his proportion of the losses (without any negative words that they should not be liable for more, in case of insolvency of some of the partners) is an ordinary copartnership; the members are bound in solido, each for the whole; not only as to strangers, but as *io*members ofthe company, who have procured insurance.

An arrangement by *76*solvent shares (outoflOO shares) to pay the whole loss, was not a new agreement to enlarge the liability of the members; but evidence of their own sense oftheir liability.

A member of the company appointed by the company to collect from the members, is their agent, and if he collects, and does not pay over to a creditor of the company, it is their loss; though that creditor acquiesced in the appointment, and dealt with him as the agent. The insured has nothing to do with, the insolvencies. He must be paid by the company. ' ' ' '

THE bill stated that James Fisher and the other gentlemen above mentioned, formed a company, called “ The South-Carolina Insurance Company,” for the purpose of insuring vessels and cargoes. And being so associated made certain articles of agreement, the original of which is in the possession of defendants.

That Thomas Shubrick in his lifetime being tbe owner of a brig, called the Effingham, then about to sail from Charleston on a voyage to foreign ports, and being desirous to have said brig and cargo insured did on 1-3th *149Feb. *1T7T,*cause her and her cargo to be insured, by a policy ofinsurance, by tbe said company, to tbe amount *of10,0001.*currency on goods, and 5000/. on the vessel, on a voyage “ at and from the port of Charleston in said state, to any port of France, or in tbe Bay of Biscay.”

JULY, 1802.

That said policy was signed by the said company, (by Edward Lightwood one of the said cbmpany, and for himself and the others, and as their agent for such pur*poses*specially constituted,) as appears by said policy marked A. and filed.

That said Thomas Shubrick afterwards, to wit, on the 11th of April, in same year, caused another policy of insurance to be opened, to insure on the body of said brig a further sum of 2000/. currency, which was presented to' said company, .who through Samuel Legare, one of said company, for himself and the others, and as their agent, signed the same in due form, as appears by said policy, marked B. and filed.

That the said Thomas Shubrick shortly afterwards, on the 23d of May in the same year, at Charleston, wishing to insure the further sum of 3000/. currency on the said brig and cargo, on the same voyage, had another policy made out, which (through Josiah Smith as agent for the said company, and for himself as a member of it,) said company signed in due form.

That the said Thomas Shubrick paid to the said company as a premium for the risks against which they insured in the aforesaid policies, the sum of 20/. for every 100/. insured on the said brig and cargo.

That shortly after said policies were signed, the said brig proceeded on the voyage described in the policies, and not having deviated from the true course of her said Voyage, was taken, captured by a British armed vessel,- and condemned as a good prize to the captors, whereby the whole vessel and cargo were totally lost to the said Thomas Shubrick.

That by said capture and loss to said Thomas Shu-brick, the said South-Carolina Insurance Company be*150came liable to pay the said sums of money in the different policies mentioned, agreeably to their engagements therein

That conceiving the said Insurance Company bound to pay for the losses accruing by the capture aforesaid, not only the said Thomas Sliubriclc, in his lifetime, but complainants have often called for payment, and having been frequently refused, were compelled to bring a suit upon •one of the policies, against Edward Lightwood, agent as aforesaid, in the Court of Common Pleas; that a judgment was entered against him for the sum of 3037/. 11s. *Id.*-sterling, with interest thereon from the 1st of July, 1793.

That the said Edward Lightwood and Samuel Legare, having since died insolvent; and the said Josiah Smith, another agent as aforesaid, not thinking proper to pay the said losses, the complainants called upon the defendants or their legal representatives to make up and contribute amongst themselves as members of the said company, their several proportions of the losses aforesaid, according to an account delivered them.

But the defendants have refused or declined to make any settlement with complainants : some of them alleging that they had paid into the hands of said Edward Light-wood, monies to pay their respective proportions of said losses ; and that they are in consequence discharged from any claim or demand of the claimants, whether they received the money from said E. Lightwood or not.

The bill prays that the defendants may be compelled to pay the complainants the amount of the said losses with in-, terest. And that in case any members of the said company or their estates should have become insolvent, then that each of the solvent members or their estates may be made liable to pay the whole, as being bound in solido, or jointly and severally as for a copartnership debt, or that they maybe compelled to contribute amongst themselves the payment of the said losses upon just principles.

The answers of James Fisher, Josiah Smith, Nathaniel *151Russell, ancl others, admit that the several persons in the bill mentioned, formed the company called the South'-Carolina Insurance Company, for the purpose ‘ of insuring marine risks ; and they signed by their agents the policies of insurance stated in the complainant’s bill, and that by the capture of-the ship and cargo, a total loss was sustained, for-which the complainant’s testator had a claim against the said company for indemnity. But they do not admit that the members of said company were bound' in solido* as for a copartnership debt: for although they were “ jointly concerned,” yet it was agreed by the' articles of association to which the complainant’s testator was a party, (he being a member of the company) that in case of loss, it was to be “ borne, paid and sustained by each and every of the several subscribers or members, &c. in average or proportion to the sum or sums of money by them subscribed.” They further say that the capital stock of the said company has been exhausted in the payment of losses; and that the individual members are not bound for the loss in the present case beyond their average and proportion, according to the number of shares respectively held by each of them, according to the original articles.

The defendants do not admit that complainants or their testator made any demand of payment under these policies for many years, having neglected them altogether.

They further admit that a suit was brought many years after the loss against Edward Lightwood, who had signed the first policy on behalf of the company, and judgment recovered against him, as stated by the bill.

That although at a meeting of the surviving members of the company, it was stated that there then existed but *76*solvent shares out of the 100, of which the company, was composed, and it was agreed that the said *76*shares would pay the whole of the said loss to be proportioned amongst themselves, and the sum of 44-/. 19s. was adjusted by consent of both parties, (the complainants and these defendants) as the sum which each share was to pay; yet that such agreement was not made on the ground of any sup*152posed liability of the said members beyond their own seve» ral shares in said company; nor was it meant to extend in any manner the personal liability of said members beyond their several and respective shares in the company; but it was solely intended to divide amongst themselves, a loss which might otherwise have borne hard on the said Edward Lightwood, who has subscribed the policies, and ar gainst whom alone a suit had been instituted, and a judgment recovered. And if any attempt should be made to open the said account to extend the liability of the said company, they will hold themselves justified in opening the said account wholly, and availing themselves of all just grounds of defence.

That at the said meeting it was also agreed by the committee who managed the affairs of the company, and by Thomas Shubrick, (one of the executors and complainants) that the said E. Lightwood should collect from the individual members their several proportions of the loss so adjusted, (except seven shares which said T. Shubrick himself undertook to collect) and should pay over the same to the said Thos. Shubrick: and that the said E. Lights wood, by such arrangement, became the agent of the said Thomas Shubrick, and responsible to him for all sums of money so collected : and they would not have entered into such arrangements, but upon the ground that on said. Lightwood’s collecting, (with the acquiescence of complainants) the persons who should make payments to him under the agreement, would be discharged of all further' liability to the company or to complainants.

The defendants further answering say, that in pursuance of such agreement, many of them did pay to the said Lightwood, with said approbation of the complainants, the ascertained and adjusted proportion of the said loss for which they have receipts ready to be produced. And to evince to the court that the said E,_ Lightwood was the agent of said complainants as well as of the said defendants, the]r submit to the court that in several instances the said E. Lightwood did not receive money from the defen*153dants, but procured discounts for the said T. Shubrick, on demands which some of the defendants had against him or bis father’s estate, which were by his direction admitted in ’ *f*, payment; which were conclusive on the said Shubrick *;*and these defendants hold themselves absolved from all responsibility.

That if said complainants had used due diligence in demanding and receiving payment from the said E. Light-wood, of the sums he collected from the members of the company, the whole might have been obtained from him; the said E. Lightwood having paid large sums of money to his creditors subsequent to such judgment; and if as is alleged, the said complainants cannot now recover the sums collected and received by the said E. Lightwood, the fault is imputable to the complainants.

The defendants further answering say, that even if they had been originally bound in solido, and liable as copart-ners, (which they deny,) yet they insist that injustice and equity they ought not to be held liable under the circumstances of this case, for more than their average and proportionate loss, according to the number of shares held by each member; because if the complainant had used due diligence in a reasonable time after the said loss, almost all of the said company would have been competent to have paid their proportions *;*instead of which, if the complainant should succeed, the loss would fall heavily on a few, as about one third of the shares of said company are now insolvent.

The defendant James Fisher, in his answer, admitted the allegations of the bill, but denied that the members of the company were bound in solido as copartners, and insisted that by the articles of agreement by which the company was united together, (and to which complainant’s testator was a party) in case of loss, it was to be borne by each member in average and proportion to the sum or sums by him subscribed.

That although it may be said that at the meeting of the Company in July, 1793, it was stated that there existed but' *15476 solvent shares out of the 100, of which the stock was composed, and it was then agreed that the loss should be home by the said 76 shares, and the accounts stated ac- ***’ cordingly; yet he had not then seen the original articles for many years, and did not recollect precisely the terms of subscription, and submits to the court that all mistakes ought to be rectified, and the defendant held liable for no more than his original subscription.

The defendant further submitted that he had received from the complainant Thomas Shubrick, the following statement: Estate of John Edwards, dr. to estate of Thos. Shubrick 20th Dec. 1798, to amount of nine shares in the South-Carolina Insurance Company, on sundry policies of brig Effingham, settled and allowed on the 1st July, 1793, say 404/. 11s.; interest on do. to 1st of Jan. 1799,155/. 14s.' *10d.*— making 560/. *5s. 10d.*

James Fisher dr. to estate of T. Shubrick, 1798, Dec. 20. To amount of three shares'in the South-Carolina Insurance Company, on sundry policies on brig Effingham, settled and allowed on the 1st July, 1793, say 134/. 175. in-tereston do. to 1st Jan. ’99, 51/. 18s. *3d.*making 186/. 15s. 3c/. That he paid part thereof, and holds a receipt in these words. Received 2d of April, 1799, 600/. on account *of*James Fisher, and estate of John Edwards, signed Thos. *Shubrick;*which plainly shews that the complainants looked to the individual and not to the company, for payment-of the respective proportions of the loss.

At the hearing of the cause, it was argued for the complainants that this was a copartnership, subject to all the rules on that branch of law, and that one great rule is that each of the copartners is liable for all the debts of the co-partnership. They are bound jointly and *severally;*and the members of a ,company cannot affect third persons by any agreement among themselves diminishing the legal liability.

That the complainants testator, though he was a member of the company, was a perfect stranger to it in re*155spect to the insurances he procured to be done by the company, on his vessel and *cargo;*and his representatives are entitled to the full responsibility of. the members of the company, as the law establishes it, and not according to the limitted liability contended for by the members, under an, agreement, the object of which was to establish a rule of proportion among themselves, and not to affect third persons.

That there was no agreement on the part of the complainants to release or in any way give up their right to be paid by the company, the whole loss sustained.

That at the meeting in July, 1793, the defendants were *so*sensible of the liability of the solvent partners for the whole debt, that they partitioned it among themselves, andas the company had no joint stock, appointed one of their own members, E. Lightwood, to collect the proportions from each. That this was done by the company, for their own convenience, and as the only way of collecting the money from the members. But this act was the act of the company, 'and the member appointed to collect was their agent.

The complainants could not and did not object to this act of the company, as it was the necessary means of the *collection;*but their acquiescence did not constitute Mr. Lightwood the agent of the complainants.

Nor did his settling some of the shares by discounts, amount to any relinquishment of his full claims on the company. Lightwood being their agent, the complainants were willing to allow of settlements in the way most convenient to the members ; and when not inconvenient to themselves, the complainants undertook to settle with several of the *members;*as in the case of Mr. Fisher. But they never gave up their right to demand payment of the whole sum from the company, in case of additional, insolvencies among them, or of the non-payment to complainants, of the sums collected by their agent.

For the defendants it was contended that this Insur ■ *156anee Company was formed on a peculiar plan, by which. was agreed that the members of the company should not hound in solido, but each for his individual proportion and no more. That all persons dealing with the A " ‘ . 1 . . . company, and knowing the terms or their, association, would be bound by them. It was a consent to the liability of the members being restricted to the limits stated in the agreement. But that even if this were questionable as to mere strangers, it could not be so as to the members *themselves;*and the complainants testator could not net up a pretence that the members were Hable beyond the extent expressly stipulated by the deed, or agreement 'of association, to which he was a party himself. He and his representatives- are estopped from averring any thing against that deed, or claiming a different responsibility from the members, than that fixed by the deed. See Watson, 29, 50,361.

Hence then each share was bound for only 100th part of the loss *sustained;*and complainants can make defendants liable beyond this, only on the ground of a new and distinct Contract. The complainants insist that the defendants have made such a contract; and that at the meeting of the company in July, 1793, it'was agreed that the *76*solvent shares would paythe whole loss *;*and that the company appointed E. Lightwood as agent of the company to collect the money from the members, and pay it over to the complainants. And the complainants bill calls for a discovery of these facts. To this prayer for discovery the defendants haye answered, and their answer must be taken for true, unless disproved by one witness and strong circumstances. The answer admits that it was agreed at the meeting of the company, that the *76*solvent shares would pay the complainants the whole loss. That this was done to save Lightwood, against whom, as the subscriber of the large policy, on behalf of the company, the judgment had been obtained by the complainants. That, the complainants thereupon agreed to suspend their judg-■jpent, and agreed that E. Lightwood should collect these *157assumed proportions from the members, and pay them over to him. That by these arrangements, E. Lightwood became so far the agent of the complainants, that all his collections and receipts were on their account, and abso-lately discharged those who made the paymerts. For though Lightwood was appointed by the company, (and indeed was jointly with Mr. Dawson, treasurer of the company, with authority to them both, to settle all losses and collect monies due) to transact this business, it was with the concurrence of the complainants, who acted and transacted with him in various ways as their own agent they settled with him by discount; they even superceded him, (which they could do with their own agent, but not with one who was wholly the agent of the company) and themselves settled with several of the members, giving them statements of what they individually were to pay on the loss, and received the money and gave receipts to them.

It is true Lightwood also made collections from the members, and in some cases gave receipts as on behalf, or for account of the company — but this only shews what is not denied, that he was the agent of both parties.

The result is, that the complainants must rely on the .original contract of indemnity by the company, constituted as if *was;*or on the new agreement. If he relies on the former, the members are not bound, (as has been shewn) for more than each his own share. And if they had been, the complainants have made their election to pursue Lightwood alone, against whom alone they have brought suit at law, and obtained a judgment, and having done so, they cannot now come on the company. ,

And if complainants rely on the new agreement, the defendant’s answer explains and qualifies that, and is not contradicted or varied by sufficient evidence. By their answer, it appears that Lightwood was the agent of both parties *;*but that it was to complainants alone he was to pay. The authority of the company gave him power to collect the money. When collected, it was the property of the complainants who had agreed that he should receive it on *158their account. If he did not pay it over to complainants^ it was their loss. The complainants neglected to make bim pay as he collected. The laches was theirs, and s® must be the loss.

Chancellor Rutledge

delivered the decree of the court.

- „ . In this case the following questions arise.

First — Whether the members of the Insurance Company are or are not bound in solido to make good the loss sustained by complainant on the'policies in bill mentioned ?

Secondly — Admitting they were so bound, whether the arrangements made by the surviving members in the year 1793, did not make it a new contract, and complainant acquiescing therein, was bound thereby ?

Thirdly — Whether the members who paid to Mr. Light-wood the sums then settled for their shares or proportions of the debt, are not wholly discharged; and Lightwood having since become insolvent, whether the loss should fall on complainant; he being alleged to be the particular agent of complainant ?

Fourthly — Whether, as several of the members have become insolvent since 1793, the loss occasioned by such insolvency should not be borne by complainant; he not having used due diligence to obtain payment from them ?

On the first point it was admitted, that if complainant’s testator had been a stranger to the articles of the company, that no agreements or covenants they made with each other would have been obligatory on him ; but they would all have been bound in solido to make good his loss. It was at the same time contended for defendants, that complainant’s testator being one of the company, and it appearing by the articles that they each covenanted for himself, seve-rallyand notjointly, to make good any loss of the company in average and proportion, to which he subscribed; they are therefore not collectively liable to any individual of the company whose property was insured, because he being a party to the agreement, and knowing the terms of it in case of any insolvencies, he must sustain the loss of those shares *159which ought to have been paid by the insolvent members.

This would be a hard doctrine, even if it could be supported by the words of the articles ; but upon a reference to, and on a fair construction of them, we are of opinion that the inference drawn by defendant’s counsel, is by no means warranted.

The articles set out with stating, that the subscribers agreed to join themselves together, and to become jointly .concerned as a company of insurers, for the purpose of insuring ships and vessels, and goods of any individual or individuals, subject to the regulations thereinafter mentioned : then follow the various covenants. Among others, that each party doth severally, and not jointly, and not one for the other, covenant, that the company shall be called the South-Carolina Insurance Company ; that there shall be a president, vice-president, directors, treasurer and' clerk ; that any one of the directors signing a policy in behalf of the company, the same shall be binding on all the members, in average and proportion to the sums by them subscribed ; that the treasurer shall give security for the faithful discharge of the duties of his office. In case any loss should happen, over and above the sums subscribed and deposited for a capital, such loss shallbe borne by each and every of the subscribers, in average and proportion to the sum by him subscribed.

This is the substance of the covenants contained in the articles, which do not differ in any respect from the usual covenants contained in almost all articles of co-partnership.

It is then to be considered whether they ought to have a different construction put on them, .as they regard the complainant, from what they would have, with respect to any other individual.

Had there been a clause inserted in the articles, that in case of any insolvency of any member, the survivors should not make good the loss, then the arguments of defendant’s counsel would apply most'forcibly, and complainant could not have any redress ; although a stranger would not have been prejudiced by such a clause. It is *160not reasonable to suppose that at the time of signing these the idea of insolvency was at all contemplated j an ^vidual share did not exceed the value of 150/» sterling: and there was not a person who signed them who did not possess a property of some thousands of pounds more than he subscribed for. And the company being restricted as to the extent of the sum that they could risque at any one time, there was not a probability and scarcely a possibility of the insolvency of any of the members. It is owing therefore to events that have occurred after a lapse of many years, that this defence is now set up, which would otherwise never have been thought of. The articles state that they jointly associated for the purpose of insuring the ships, &c. of any individual whatever, without distinction* Complainant’s testator then having paid the same premia um for insuring his vessel that any other person would, have done, he stands in point of justice and equity exactly on the same footing with any other individual, and is equally entitled to be paid the amount of his insurance by the company in solido. By one of the covenants, the complainants are pledged to stand to any insurance made by their directors. Mr. Lightwood having signed this policy as one of their directors, the complainant had a right to recover, and did obtain a verdict against him for the amount subscribed, and had he been solvent, would have received the whole thereof from him. And would it be contended that he, acting for the company, could not by filing a bill against the surviving members, have compelled them to indemnify him ? Surely not. Nay, so sensible were the surviving members of their liability in solido to pay the debt, that when a suit was commenced against Lightwood to recover it, they had a meeting in *1793,*and settled the proportion that each of them was to pay. Nor1 can we consider the arrangements then made as a new contract, or a deviation from the original articles, judging as we do that they were primarily bound.

It is unfortunate indeed that they did not pursue the directions of their articles, when they chose their treasurer *161in 1793, by obliging bim to give security; in which case, those who paid their shares would not be injured.

■ Jt is insisted that Lightwood was the authorized agent of the complainant to receive the money, therefore the complainant ought to bear the loss of the sums so received.

The contrary appears to be the truth of the case : for we find that Mr. Lightwood, together with Mr. Dawson, were appointed treasurers by such of the members as met in October, 1793, and although they might not have constituted a majority of the company, yet the others seem to have acquiesced in what they did p some by paying the sums which were settled as their proportion, and the rest being willing (as they acknowledge) to pay, had they been called upon. And further, from the testimony of Mr. Ward, it appears that complainant would not authorize him to pay any money to Mr. Lightwood as his agent: so that in no point of view could he be c msidered as the particular agent of complainant: therefore the loss of the money received by L. ought not to be borne by him ; because it was peculiarly incumbent on those who did pay to see that, the money was applied properly.

The laches therefore was theirs; for as much as they might have compelled Mr. Lightwood to pay it over if they had thought fit.

The fourth question respects the insolvencies, since the year 1793. There does not appear to be any particular laches imputable to complainant to make him liable for the whole loss. The members who met at that time, appointed their treasurer to settle all losses, and to recover all monies due to the company. The complainant therefore had no business to look for payment from any other quarter than the treasurer. And it was in proof that he had demanded payment from the treasurer Mr. Light-wood, from whom he received a letter, promising to call and settle with him in a few days.

Upon the whole of this case therefore, we are of opinion that the complainant is justly entitled to receive from the surviving members of the Insurance Company, the *162Sums insured or. his vessel and cargo, with *interest",*no* thing appearing on a fair and sound construction of the ar^c^es t0 cb®er bis case from that of any other person : deducting therefrom his proportion (as a member of the comPany) of all the losses which have happened by the insolvency of members, except the monies received by Mr. Lightwood. There is no reason whatever, why complainant should share in that loss, he not having had any thing' to do with Lightwood’s appointment. The rule of equity being clear, that if one of two innocent persons must suffer, he who trusts most should suffer most. The loss occasioned by -L’s insolvency, would unavoidably fall on those defendants alone who paid the money; but in the adjustment of it, it must be proportioned to the sums,paid by them respectively; for money having no ear mark, it is impossible to ascertain whose it was precisely that he paid to complainant. Ordered, that it be referred to the mas.-ter to ascertain the sum due to complainant, after deducting his proportion of loss, and the money already received by him. And in the settlement of the' account, he is to adjust it on the same principles that were fixed by the jury in their verdict against Lightwood.

Turnbull for complainants.

Besaussure and Ford for defendants.-

The costs to be paid by defendants.