Case Name: Adam Tunno and others, Assignees of Joseph Hargreaves, a bankrupt, vs. Angus Bethune
Court: Court of Chancery of South Carolina
Jurisdiction: South Carolina
Decision Date: 1804-11
Citations: 2 Des. Eq. 285
Docket Number: 
Parties: Adam Tunno and others, Assignees of Joseph Hargreaves, a bankrupt, vs. Angus Bethune.
Judges: [Present, Chancellors Rutledge and Marshall.]
Reporter: South Carolina Equity Reports
Volume: 2
Pages: 285–290

Head Matter:
[Present, Chancellors Rutledge and Marshall.]
Adam Tunno and others, Assignees of Joseph Hargreaves, a bankrupt, vs. Angus Bethune.
A joint owner in a vessel and cargo, accidentally in possession of the papers, the insurance, &c. or in -whose hands they were left, for the. joint benefit shall not be deemed to have alien on them, so as to give him a preference over other creditors of the other owners ofthe vessel and cargo, who have become bankrupts, for certain endorsements on notes not connected with the transactions relativeto the vessel & cargo.
This was a bill to compelí defendant to account for the proportion of a certain vessel and cargo, in which the bankrupt was concerned, together with the defendant, into whose hands the whole had come.
The bill stated that in December 1802, Joshua Hargreaves and Joseph Hargreaves, copartners under the firm of Joshua and Joseph Hargreaves, and Angus Bethune, all of Charleston, merchants, purchased the schooner Samuel Treadwell, Barney master, and shipped on board a cargo of merchandize, and sent her on a voyage to the -coast of Africa; that they were equal-jy interested in the said vessel and cargo, and the profits of ^er voyage. That the said vessel proceeded on her voyage, and arrived at her destination in safety, and traded accorc¡jng. t0 the objects of the party aforesaid with great success and gain; and that she arrived in the port of Charleston returning from the coast of Africa, in July 1803, laden with a valuable cargo.
NOVEMB. 1804.
That for the more convenient management of the con? cern of said adventure, the immediate government thereof was placed in the hands of the said Angus Bethüne, and in order thereto, all the invoices, bills of lading, policies of insurance and other papers and documents'relative thereto, were also left in his hands, and committed to his care, none of them remaining with the said Joshua and Joseph Hargreaves. That some time after the said vessel departed for her voyage, the said Joshua Hargreaves died, to wit, on or about the of 1803, and that the said Joseph became bankrupt on or about the 15th of March, 1803, some time heforesaid vessel’s arrival in Charleston, as aforesaid, with her said cargo. That your orators were duly appointed assignees of the estate and effects of said bankrupt. That on the arrival of said vessel, the said Angus Bethune took possession of her and her cargo, and disposed thereof, but without consulting with your -orators, though they were equally interested as assignees of said bankrupt; and he hath ever since retained to himself the proceeds of both vessel and. cargo, refusing to account with your orators, and declining to pay over to them that portion thereof to which they are entitled as aforesaid. And your orators shew unto your honors that they have repeatedly applied to the said Angus for said account, and to have the share of the said bankrupt paid over to them, well hoping that they would have complied with such their reasonable requests. The bill charges combination, and states that the said Angus still refuses to give such account, or to pay over to them such part of said proceeds of the said vessel and cargo as they are entitled to, alleging that the estate of said bankrupt being indebted to him, he is entitled to discount his claims on the estate against the monies which he has received as the proceeds of said vessel and cargo. Whereas your orators aver that the demands of the said Angus have become due to him long since the bankruptcy of the said Joseph % whereon by the assignment to your orators, the whole estate was vested in your orators to be distributed according to law : In the first place, to such claims as have preference, and in the second, in average and proportion among the creditors generally of said bankrupt — among the latter of which, the said Angus must claim without any preference whatever ; and your orators further shew unto your honors, that though the debt had been due the said Angus by the said bankrupt, before the bankruptcy — yet in as much as the property came into his possession long after the bankruptcy, and it can in no wise be considered as a mutual debt at the time of the Bankruptcy, the said Angus cannot detain, but must prove his debt, and come in under the commission with the other' unpreferred creditors ; and further, that the said Angus, so far from considering himself as having any claim on the said vessel and cargo, that after the bankruptcy, he advised with one of your orators, to wit: Adam Tunno aforesaid, about effecting insurance on said vessel, and actually did effect insurance, both on the estate’s and on his own account, not denying, but admitting that your orators were" equally interested in the said vessel and cargo — all which doings tend to the injury of your orators. The bill therefore prays a subpcena, and that said Angus may be compelled to discover and submit to thé inspection of complainant the papers and documents relative to the said vessel and cargo, and pay over to them their proportion of the proceeds and profits thereof.
To this the defendant put in the following answer: The answer states that it admits all and singular, the several matters contained in bill, relative to the joint concern of sáid Joshua and Joseph Hargreaves, with this defect* dant in the schooner aforesaid, and of the purchase and shipping on board her, a cargo of merchandize (being joint* ly concerned) and sending her to Africa, and that the said1 vesgej traded on the coast of Africa, and returned with a cargo. . It also admits that the said.Angus Bethunehad the immediate government and controul of the said adventure, and that the invoices and other papers so purported him to have: and that in order to the due fulfilment of the said trust on his part for their benefit and use, the said R. Barney executed and delivered a certain bond bearing date 27th Nov. X 802, for §600, to be paid to the said Joshua and Joseph Hargreaves, and the said Angus-, on or before 1st Aug. 1803, which bond was also in possession of said Angus. The answer further admits that the said Joshua died, and that the said Joseph became bankrupt, at the times mentioned in the bill; and that complainants were appointed assignees of said bankrupt. Admits also, that on said vessel’s arrival, the said Richard Barney finding the bond aforesaid in the hands of said Angus, delivered up to him said vessel and cargo, in consideration of the said Angus, cancelling the bond of said Richard Barney; and thát the defendaiit disposed of the same — and saith further that in the interim, between the departure, and return of said vessel, and before said bankruptcy, in order to accommodate said Joseph, and to enable them to borrow money from the banks, the said Angus was induced to become the indorser of two promissory notes of said Joshua and Joseph Hargreaves, and of one promissory note signed by Stephen Brown, and indorsed by said Joshua and Joseph Hargreaves, the former of which were afterwards 'renewed, and to which two notes so renewed said Angus, continued endorser as aforesaid; and said three notes áre dated respectively the 2d and 9th March, and the . day of 1803; two of which signed by said Joshua and Joseph Hargreaves for §1000 each, and that signed by Stephen Brown for §2000; but on which at present there is only a balance unpaid of §507 37, all payable in 60 days after their respective dates. That the said notes being of the proper debt of said Joshua and Joseph, the said Angus, upon their failing to pay the same, was obliged to pay the whole amount at the banks which had discounted them; but has been since paid by the said Stephen Brown, so much of the note signed by him as leaves only a balance of $507 37. Admits also that proceeds of sales of both vessel and cargo remain in his hands ; but denies that defendant refused to account with complainant, or to submit to them the invoices of the original cargo, or of the return cargo and sales thereof, and of the vessel. But on the contrary that he hath ever been willing to'render an account, provided said, assignees would allow him to retain the amount paid by him on the notes aforesaid ; and the same account is contained in the exhibit B. filed with the answer: admits that defendants declined to pay over to complainants the whole amount of proceeds of said adventure, because he insisted on his right of being reimbursed thereout the amount of said notes of which he was endorser as abovementioned; and defendant submits to this honorable court, that out of the said proceeds, he had for so much, a lien and right of equitable set off, which he hopes this court will support: that he now is and ever hath been ready to pay said complainants the balance if any of said proceeds after such discount, and prays to be dismissed with costs.

Opinion:
Chancellor Rutledge
delivered the decree of the court.
Upon considering this case, the court are of opinion, that in the investigation of it, no evidencé has been adduced to shew that there was any agreement between the • j u bankrupts and the defendant, that their part of the vessel and cargo should be considered as a security to indemnify him for endorsing their notes, and thereby to establish a specific lien on them. On the contrary, Mr. V. who delivered the papers relative to'the vessel and cargo to defendant, and who was the clerk of the bankrupts, did it without anj' orders from them, and merely because he was a. partner in tbe business, and not with a view to secure de?-fendant as an endorser. Another circumstance is, that' the vessel and cargo did not come into the" defendants pos- ° r session until July. That he could not therefore be looked upon as having a legal lien on them before he had possession ; four months previous to which, the Hargreaves had been bankrupts,'and their rights transferred to their assignees'. Had defendant been in possession of the property at the time he endorsed the notes, or had he endorsed them on account of the concern', the case would Have been widely different. He can therefore only be viewed in the light of a common endorser: but though not really a bona fide creditor at the time of the bankruptcy, yet as he was liable to pay the notes, and has been obliged ultimately to pay them,-he must come in as a general creditor in consequence of the liberal construction which has always been given to the 42d section of the bankrupt law.- He must therefore account before the master for the bankrupts share' of the vessel and cargo.
Peace & Ciieves for complainants.
DicicinsOn for defendants.