Case Name: M. Rowand, survivor, vs. John Fraser & Co.
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1845-01
Citations: 1 Rich. 325
Docket Number: 
Parties: M. Rowand, survivor, vs. John Fraser & Co.
Judges: Butler and Wardlaw, JJ. concurred.
Reporter: South Carolina Law Reports
Volume: 30
Pages: 325–335

Head Matter:
M. Rowand, survivor, vs. John Fraser & Co.
Two partners, on settlement with a creditor of their firm, after dissolution, gave their separate bonds to the creditor, each for one-half of the debt, and agreed that the amount which might be recovered on a certain chose in action, in the hands of the creditor, which belonged to the firm, should be applied to the payment of the bonds. Held, that the joint interest of the partners, in the chose in action, was severed by the agreement, and that one partner afterwards had a right to direct his half to be applied to the payment of his bond, and that the creditor had a right so to apply it.
Defendants agreed, as “agents and creditors” of the plaintiff, to collect a demand due the plaintiff, and apply it towards the payment of a bond which they hold against him. They collected the demand, but failed to inform the plaintiff of it, or credit it on his bond, and afterwards sued him on the bond, and recovered judgment for the whole amount. Held, that the plaintiff was not barred by'the recovery against him, from suing the defendants for the amount they had collected on his account.
Before Frost, J. at Charleston, Fall Term, 1844.
This was an action of assumpsit, for money had and received.
On the 19th day of December, 1826, Fraser & Co. effected insurance for $3000, on ninety-five bales of cotton, on board the Steam Boat Pendleton, in Savannah River. The cotton was the property of Tamplet & Rowand, and was consigned to Fraser & Co. who had accepted bills drawn against it by Tamplet <fc Rowand ; and the insurance was effected in their own names, on account of themselves and all concerned, as well for their security as that of the owners. The cotton was injured on the voyage, and a claim made against the company for a partial loss of forty per cent. Tamplet & Rowand were then insolvent, and closed their business after this transaction. Fraser & Co. were their only creditors unpaid; and on the 6th July, 1827, they came to a settlement with Fraser & Co. in which settlement they were found indebted in $4177, 72, and entered into separate bonds for half the amount— each of the bonds being guaranteed by the other partner. When this settlement was effected, the policy was then in the hands of John Fraser Co, and the amount of the demand on the company was taken into view, and it was agreed that the policy should be sued, and that the money that might be recovered should be applied to the payment of the bonds. In the books of Fraser & Co. the account of Tamplet &, Rowand was closed by these bonds. Fraser & Co. sued the insurers in the name of Tamplet & Row- and. The action was commenced in December, 1827, and carried on by Fraser <fc Co. altogether at their own expense. In June, 183U, a verdict was recovered for $1139 87, and Fraser & Co. received, after deducting expenses, $1041 38, and gave a receipt therefor, in which they styled themselves agents and creditors. But previous to the recovery of the verdict, John P. Tamplet had made a composition with Fraser & Co. The terms of the composition were, that Fraser <fe Co. would give him up his bpnd, upon receiving 25 per cent, on the amount, and would retain the policy and the right to apply one-half of what might be recovered as a further payment on the same account. In pursuance of this arrangement, Fraser Co. received of Tamp-let $625, and gave up his bond. But the witnesses differed as to the time of the payment, which was supposed by one to have been made in January, and by another, in May, 1830.
The money received from the insurers was entered in Messrs. Fraser & Co’s, books to the credit of the bonds of Tamplet & Rowand, and the balance of those bonds carried to the account of profit and loss. But no entry was made on the bond of Rowand. Tamplet afterwards died. In 1839, Rowand’s circumstances having changed for the better, he was called on to pay his bond, and on his refusal, an action was commenced and a verdict recovered, on the plea of non est factum. A statement was rendered by the plaintiff’s attorneys, after the verdict and judgment, calculating interest from the date, and making the amount $3928 80, and it was proposed to accept $3000 in full of all demands, which, as it was observed, amounted to a deduction of nearly 25 per cent.
■ The composition was accepted, $3000 were paid, and satisfaction entered on the judgment. Rowand then commenced this action to recover the sum of $1041 38, as money received to his use in July,'1830. The defendants insisted that the money so received was a payment, and that the rendering a statement for more than was due, did not render the defendants liable in this action, unless they had actually been overpaid. Whereas, in fact, Tamplet’s bond, on which Rowand was guaranty, was discharged by the receipt of part of the principal only, and on'Rowand’s bond, as correctly stated, i e, after deducting his half of the amount recovered from the insurance company, as a payment made in 1830, there was due, in February, 1840, $3327 87, and only $3000 were paid.
His Honor admitted evidence to prove that Rowand was the creditor of Tamplet, in order to raise an equity against the defendants; and charged the jury, that the lien of Fraser Co. on the policy, was extinguished, by taking bonds of the debtors. That the judgment in the case of Fraser & Co. vs. Roioand, was no bar to this action — and that the plaintiff’s case was the same with respect to his right of recovery, as if he had paid off the judgment in full. Under the charge, a verdict was found for the plaintiff for the full amount received from the insurance company, with interest from the 19th July, 1830.
The defendants appealed, and now moved for a new trial, on the ground,
That the charge of his Honor was erroneous, in the particulars above stated.
Petigru, for the motion.
The defendants, by taking the bonds, did not waive their lien on the policy. 7 Taunt. 14 ; 5 Bin. 538 ; 4 Peters, 369.
The money, when raised on the policy, must be regarded as payment. As such, it constituted a defence to the action on the bond, and the plaintiff having failed to make that defence, is now precluded from bringing an action to recover it. The judgment and satisfaction are a bar to this action. Mont, on Set-off, 1; 3 T. R. 599; 2 Bay,, 481;. Bail. Bq. 514; 1 Esp. 279; 7 T. R, 265,
Ex equo et bono plaintiff is not entitled to recover. He now morally owes defendants more than he claims.
Orimke & Bailey, contra.
The lien on the policy was waived by the acceptance of the bonds. 5 Bin. 538; Story on Ag. 378; 2 Leigh N. P. 1419.
Fraser & Co. had no right to apply the amount recovered on the policy to the payment of the bonds. 1 McC. 368; 2 Str, 1194; 14 East, 242; 2 McC. 293. If they had such right, then they have not done it, and the law will now dispose of the fund according to its own views of justice. 9 Wheat. 737.
The judgment and satisfaction are no bar to the recovery. 5 Coke, 117.

Opinion:
Curia, per
Evans, J.
There are two questions to be decided in this case.
1. Have the defendants a right to retain Tamplet's half of the money received from the insurance company ?
2. Has the plaintiff a right to recover the half which was due to himself?
1st. It was proved on the trial, that when Tamplet & Rowand settled with Fraser & Co. and each gave his several bond, guaranteed by the other, for half of their joint debt, it was agreed that the amount which might be recovered on the policy, should be applied to the payment of the bonds. The only rational interpretation of this agreement is, that whatever Fraser & Co. should receive on the policy, should be applied, one half to Tamplet's and the other half to Rowand's bond. By this agreement, the fund was appropriated to the payment of the bonds in equal portions, and neither of them had any right to direct or make any other disposition of it; and their joint interest was as completely severed as if they had received it, and each had paid over to Fraser his part, on account of his several bond. It is, therefore, wholly immaterial whether Fraser tfe Co. retained their lien on the policy, after the severence of the partnership debt, by taking the bonds. The amount, when received, was, by the agreement, as much theirs, as it would have been by virtue of the lien, which they unquestionably had before the bonds were given. If, then, (and it seems to me there can be no doubt about it) this agreement was a severance of their joint interest in the money which might be collected on the policy. Tamplet had a perfect right, when he compounded with Fraser & Co. for his bond, by paying 25 per cent, to agree with them, as he did, that his share of the insurance money should be applied towards the payment of his bond. If there had been no composition, then I presume Fraser Co. would have had an undoubted right to have applied the money according to the original agreement. It is only because they agreed to discharge Tamplet from his bond, that there is any pretence of claim on the part of the plaintiff to recover Tamplet's share from the defendant. If Fraser & Co. had discharged Tamplet from his bond, on the payment of 25 per cent, without any reference to this insurance claim, then their right to retain when they after-wards received it, might be more doubtful; (although, in my own judgment, they would then have had the right.) Yet, when it was clearly proved that it was a part of the condition on which they agreed to release Tamplet and deliver up his bonds, that they were to retain Tamplet's half of the insurance money, the case seems to my mind very clear and satisfactory.
Independent of the composition, Rowand would have no right to apply this fund otherwise than had been agreed on between the parties, and he cannot, either in law or justice, demand it of the defendants, on the ground that they have compounded with Tamplet, without allowing them the full benefit of the terms and conditions upon which the composition was made.
In considering the second question, it must be remembered that Fraser & Co. had recovered on the policy several years before they sued Rowand on his bond — that he did not set up this by way of defence; and that the sum which they received in full satisfaction, was less than was due them, after giving him full, credit for his half of the money received. Yet, notwithstanding this, the bond was merged in the judgment, and the judgment is discharged by the entry of satisfaction, and Fraser & Co. must refund what they received on the policy, if they have no right to retain it; and this depends on another question, viz: — Whether Rowand, when sued by Fraser & Co. on his bond, should not have pleaded this matter as a payment; and having failed to do so, is he not now precluded from setting up any demand to it? There is no doubt, I presume, that as a general rule, whatever defence by the rules of the common law a defendant might have made when sued by the plaintiff, so as to defeat the action in the whole, or part, can never be the subject of another action. Thus, if the defendant had paid the debt, or a part of it, and suffered judgment to go by default, or had omitted to set up, as a defence, what he might have done, he is forever precluded from bringing the same matter into controversy again, as much as if he had pleaded it, and it had been decided against him for defect of proof. This rule does not apply in cases of separate and independent demands, or to a distinct matter not connected with the plaintiff's cause of action. Such matters can only be made available under our discount law; and the defendant may, at his election, plead it as a set-off or not. But it would seem, according to what is said in Montagu on Set-off, p. 1, that if the matter of defence be connected with the plaintiff's cause of action, by originating in the same transaction, or by any subsequent agreement, the balance is the debt reco verable by the suit. In this case the agreement was, that the money, when collected, should be applied to the payment of the bond ; and Rowand owed Fraser & Co. at the time he was sued, only the balance due after deducting the payment, and if he suffered Fraser & Co. to recover against him a larger amount than was due, I do not see how it is to be corrected, unless there be some other relation between the parties, besides that of debtor and creditor. In this case, it is clear that Fraser & Co. undertook to act as the agents of Tamplet & Rowand. This appears, as well from the agreement as their subsequent conduct in bringing the action, and in receiving the money as "agents and creditors," as appears by their receipt. The law requires the utmost good faith in agents. The recovery of any thing out of the insurance company was contingent. Nothing might be recovered; and when this Contingency was reduced to certainty, and the money col lected and paid over to Fraser & Co. it was their duty to have applied it as a credit on the bond, or to have given notice to Rowand, neither of which they did. The entry of it in their books was no discharge of their duty as agents. They might as well have made a memorandum of it in any other book ; Rowand had no access to this source of information. He was never informed that the money was recovered from, and paid by, the insurance company, and it seems to have been conceded at the trial, that Row- and, when he was sued, did not know that Fraser & Co. had ever recovered the money due on the policy. The maxim de vigilantibus, is a wholesome maxim, and, in general, a man's ignorance is no excuse for not making his defence when sued, when the relation of debtor and creditor alone existed between the parties; yet, it seems to me, that when the relation of agent is superadded to that of creditor, and the ignorance arises from the concealment of the agent, whether intentional or not, it will constitute an exception to the general rule. I am, therefore, of opinion, the plaintiff has a right to retain half his verdict; but he is not entitled to retain it for Tamplet's half — and a new trial is ordered, unless he releases it.
Butler and Wardlaw, JJ. concurred.