Case Name: Luther Faulkner et al. versus Samuel Waters et al.
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1831-10-13
Citations: 11 Pick. 473
Docket Number: 
Parties: Luther Faulkner et al. versus Samuel Waters et al.
Judges: 
Reporter: Massachusetts Reports
Volume: 28
Pages: 481–483

Head Matter:
Luther Faulkner et al. versus Samuel Waters et al.
A contract was made between the respondent and a manufacturer, by which the respondent was to invest a certain sum in a manufactory to be owned by him, and the manufacturer was to be employed by him for a salary, and was to deposit in his hands a sum of money to indemnify him against loss in the business. The contract was to determine upon the request of either party, and so much of the sum deposited as should not be required to indemnify the respondent against loss, was to be repaid with interest. Held, that the contract was not fraudulent per se as against creditors; and that the respondent was not liable in a process of foreign attachment served on him while the contract was in operation, as the trustee of the manufacturer for the sum deposited, it being contingent whether any part of that sum would ever become due to the manufacturer.
Scire facias against the defendants, who had been summoned in a process of foreign attachment as trustees of John Morse. The defendants, Waters and Sibley, stated in their answers, that they, as copartners, made a special contract with Morse, dated June 5, 1827, by which he was to be employed in their service in the business of manufacturing; that they were to pay him a salary, varying according to the profits made ; that in consideration of such employment and payment, he agreed to deposit and did deposit, in their hands $ 300, to indemnify them against loss “by fire or other casualties, depression in the market, or change of times or any other causes ; ” that in case of loss, so much of the $ 300 as should be necessary, was first to be applied to meet it, but if not wanted, was to be repaid to Morse with interest; mat the business was to be continued during the pleasure of the parties, but was to be closed and settled up, on the request of Morse or either of the defendants ; that the defendants were to invest $j 2000 and be the. owners of all the property, and that the net profits, after paying Morse’s salary, were to be equally divided between the defendants ; that “no contract made by Waters, Sibley or Morse in behalf of the company, was to be binding on the same as individuals composing it, unless the contractor should be authorized by both of his associates so to contract; ” that Morse was employed by the defendants till May 1829, when the business closed with a loss of $ 1300; that at the time of the service of the original writ, the business had just begun, and it would have been a losing concern to have then closed it, because of the defendants’ expenses in fitting up their establishment; and that the final loss was occasioned by bad debts, depression of their manufactures in the market, and loss on the sale of machinery.
Oct. 13th.
Oct. 12th.
Merrick, for the plaintiffs,
said the respondents were liable as trustees, for the $ 300 deposited in their hands, for it was not competent to the parties to make such a contract as the one disclosed. It was a fraud upon the creditors of Morse. New England M. Ins. Co. v. Chandler, 16 Mass. R. 275.
But if it was valid, Morse had a right to determine it at his pleasure, and his creditor might do the same thing by the in tervention of the trustee process, which would give him a right in so much of the money deposited as should be due to Morse at the time of the service of the writ.
Morse was a copartner of the defendants, and they are an swerable in this process for the sum which was due to him when the writ was served. Fisk v. Herrick, 6 Mass. R. 271.
Sibley and C. Mien, contra,
cited on the point that the interest of Morse was contingent, and so not attachable by the trustee process, Wentworth v. Whittemore, 1 Mass. R. 471 ; Davis v. Ham, 3 Mass. R. 33 ; Frothingham v. Haley, ibid. 68 ; Willard v. Sheafe, 4 Mass. R. 235 ; Wood v. Partridge, 11 Mass. R. 488.

Opinion:
Putnam J.
delivered the opinion of the Court. If the contract made by Morse and the respondent trustees, is per se an arrangement of property which would be legally fraudulent and void as against creditors, the argument of the plaintiffs' counsel should prevail. But we do not perceive any thing unusual or fraudulent in the contract. Morse had skill as a manufacturer, and the supposed trustees had property; and the amount of $300 was deposited as some security for the losses which they might, sustain ; and Morse, desirous of ob taining employment and having confidence in the success of his enterprise, agreed that it should remain, to be applied subject to the contingencies which are therein contained. Now it seems to us, that this was a contract which was, at the time, apparently mutually beneficial to the parties, and evidently for the benefit of the public ; for skill and capital would be brought into active operation, which otherwise might lie dormant. This being in itself a reasonable and lawful contract, it is not competent for a creditor of Morse to put an end to it against his consent. The parties had a right, for a reasonable time at least, to proceed in the execution of their agreement.
But the money which was deposited, was to be paid upon contingencies, which are contained in the contract, and so is not liable to this process. It was as contingent as were the cases cited relating to seamen's wages, and adventures upon half profits, which were attached before the termination of the voyage. The creditor could not avail himself of the foreign attachment, because the wages might never be earned, or the adventure might be lost; because, in short, it was not a debt certainly due, but a matter contingent. And so is the case at bar. It was just as uncertain, when the supposed trustees were summoned, whether Morse would ever be entitled to recover the $ 300 deposited, as it was, in the cases cited, whether the seaman would earn his wages or the shipper his half profits. The seaman could maintain no action until the termination of the voyage, nor could Morse have maintained any before this concern was closed.
We are all of opinion that the trustees should be discharged.
See Guild v. Holbrook, ante, 101; Tucker v. Clisby, 12 Pick. 22; Meacham v. McCorbilt, 2 Metc. 352; Wheeler v. Bowen, 20 Pick. 563; Holbrook v. Waters, 19 Pick. 354; Stone v. Hodges, 14 Pick. 81; Taber v. Nye, 12 Pick 105.