Court Opinion

ID: 7182471
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:49:28.664508+00
Date Added: 2024-06-11T16:15:57.643480
License: Public Domain

SmuELii, J.
Stanfield owed Robinson $10,000. To enable Robinson to pay" himself, Stanfield transfen-ed to him notes of C. Aubert, bearing ten per cent interest, amounting to about $17,000. On a settlement between Robinson and Aubert, it was found that Aubert was entitled to credits which reduced Stan-field’s claim to $13,657 12, for which amount Aubert gave Robinson new notes, payable to Robinson’s order, and bearing ten per cent interest from the date of the settlement, 1st April, 1842, until paid. A portion of these notes has been paid; some are yet unpaid, but are all considered good. The defendant admits that plaintiff is entitled to $3657 12; but contends that Robinson’s estate can only be held to pay five per cent interest, from 1st April, 1842. The plaintiff asserts a right to ten per cent interest..
Under the assignment, it was the duty of Robinson to collect the'debt due by AuberU apply the fund to the payment of his own claim, and account tó Stan-field for the surplus. Robinson was, therefore, a trustee for Stanfield. As such trustee, he stood towards him in the relation of agent to principal; and not the less so because his authority was coupled with an interest. Stanfield could not revoke the authority, without paying Robinson ; but, on the other hand, the latter could do no act inconsistent with the mandate which he had accepted, *415and the trust with which the fund was clothed. Keeping in view these relations of trustee and agent, the solution of the controversy is free from difficulty.
Robinson’s mandate was to collect the debt from Aubert. He violated this mandate by taking the new notes of Aubert, and thus novating the debt. The right of Stanfield, by reason of this violation, was two fold: He could either consider Robinson as having made the Aubert debt his own, and claim the surplus at once from him; oi’, if he chose, adopt the transaction, and, treat the new notes as acquired for his benefit. There is nothing to show that Stanfield, or his representatives, did any act to deprive them of this choice. The present action, in my opinion, adopts the novation, and claims the benefit of it. I think, he is clearly entitled to it; for it is a benefit made from his own property.
It is true that our Code contains a provision that: “ The attorney is answerable for the interest of any sum of money he has employed to his own use, from the time he has employed it; and for that of any sum remaining in his hands, from the day he becomes a defaulter, by delaying to pay it over.” If the rights of the party are to be controlled exclusively by this article of the Code, it might be beyond our power to allow any thing more than five per cent interest, the legal interest there contemplated. But this article of the Code must be construed in connection with other principles of the law of agency. It was undoubtedly enacted in the interest of the principal, not to shield the unfaithful agent; and should not, therefore, conflict with other rules, adopted by the law in favor of the principal, and for the purpose of securing that strict good faith, which is exacted from him who stands in a situation of confidence with regard to another.
It is a familiar principle of the law of agency that, profits which are made by the agent, in the course of the business of the principal, belong to the latter. When the profits, says Mr. Stray, are made by a violation of duty, it would be obviously unjust to allow the agent to reap the fruits of his own misconduct; and when the profits are made in the ordinary course of the business of the agency, it must be presumed that the parties intended that the principal should have the benefit. Treatise on Agency, § 207. In the same spirit our Code speaks: “ He is bound to restore to his principal whatever he has received by virtue of his procuration, even should he have received it unduly.” C. C. 2974.
It is true that cases might occur, where it would be impossible to ascertain and identify the profits made by the agent, by the use of his principal’s money or other breach of duty; and, from the necessity of the case, the court would then be restricted to the mere allowance of interest. But where there has been such an appropriation of the trust property that it can be clearly and unequivocally identified, the’change which it has undergone in point of form should not be permitted to frustrate the just pursuit of the principal, and put a profit into the pocket of the agent or trustee, at his expense. Bona; fidei hoc congruit, ne de alieno lucrum sentiat.
But for what time are we to allow the ten per cent interest? The debt due by Aubert is the trust fund, which Robinson has had under his administration for the purposes contemplated in the agreement of the parties. This' debt bore ten per cent interest. No part of it was paid before 1845, and a part is still unpaid. Ten per cent has been collected on what was paid; and will be collected on the residue, for the debt is admitted to be good. Robinson had a right to pay himself first, to the amount of $10,000 ; and as the defendant has not thought proper to furnish an account, it does not appear that there was, at the date of the suit, enough realized to leave a surplus after paying Robinson’s claim. It was part of the agent’s duty to render this account, and he must take the conse*416quences of liis silence. As a portion of the Aubert notes is still unpaid, and their amount is not shown, we will consider that amount as equivalent to the plaintiff’s interest in the fund ; and as that fund will be collected, with ten per cent interest from 1842, it is right that the plaintiff should have interest from that date. If it had appeared that the entire fund had been collected by the trustee, before he was put in default, I should probably have allowed ten per cent interest down to the time at which it was actually collected from Aubert, and not more than five per cent thereafter.
As the plaintiff adopts the novation, the defendant must have the privilege of giving the unpaid notes of Aubert in payment, pro tanto, if he thinks proper to do so.