Court Opinion

ID: 5649177
Source: CourtListenerOpinion
Date Created: 2022-01-11 21:53:55.181094+00
Date Added: 2024-06-11T08:38:30.084792
License: Public Domain

Woodruff, J.
My examination of this case has not been very satisfactory, but it has produced a very decided conviction that injustice has. been done to the appellants.
1. In the appropriation of payments made by Isaac L. Hunt to George M. Chapman, after the dissolution of the firm of Hunt, Thomas & Co., and the retention of the assets by Hunt, upon his agreement for the payment of debts.
*233In my judgment, the retiring partners were entitled to claim, that payments, thereafter made by Hunt to Chapman —in general account—not specifically appropriated when the payments were made—should be applied in order of payment to the earliest indebtedness. This would apparently greatly reduce—not entirely extinguish—the liability of such retiring partners to the intestate, the original plaintiff. But in stating the account, the debits and credits have been, without any such appropriation, carried' down successively to June, 1861, and because a balance of the whole of the transactions is, by reason of more recent charges, found due, which exceeds the amount of the plaintiff’s claim, it is thereupon inferred that the whole of her claim is unpaid.
2. It is apparent that the referee has proceeded upon the idea, or has reached his conclusions upon the theory that Mrs. Chapman, the mother, is unaffected by the acts of George M. Chapman in the transactions after the assignment, in which he was substituted as assignee, and assumed the administration of the trusts.
He. was not only her agent (if it is true that the moneys which she claims in this action were, in fact, her separate moneys), but the arrangement by which he became trustee had her assent, and as between her and the appellants, she cannot refuse to be affected by what George M. Chapman did therein. The creditors could not take the assets and the trust created by Hunt into their own hands, and administer them as they saw fit, and- hold these appellants liable as original debtors, without regard to the manner in which the assigned funds were appropriated and the trust administered.
As between them and the plaintiff, property and funds coming to the hands of George M. Chapman, are to be applied, or, in equity, deemed applied, according to the equitable rights of the appellants, under the trust created by Hunt for the payment of debts, for some of which the appellants were liable.
3. It is difficult to discover what has been done with the large amount of funds traced to the hands of George M. Chapman.
*234I do not attempt to state an account with him, nor to prove my conclusion that the judgment should be reversed upon an attempt to charge him with the amount which apparently came to his hands, but deeming the plaintiff affected by his acts, both as her agent and .trustee, I am much impressed by the testimony which bears upon this subject. The former assignee testifies (and he was not, in this, I think, contradicted), that he paid G. M. Chapman, hardware, received as cash, $22,741.68; cash and assets, received as cash, $22,093.93; and afterward, a further $3,000; making $47,835.61. Chapman states that he collected $10,000. Whether this is in addition to the other sums is not very clear. What has he done with this large amount?
The former assignee testified that he paid, under schedule A, annexed to the assignment, his own and other debts to the amount of' $43,947.20. When it is observed that the whole of the debts provided for in that schedule amount, as stated in the schedule itself, to less than $50,000, it is palpable that there came to the hands of George M. Chapman a very large excess (over and beyond the balance of $7,000 or thereabouts in schedule A), directly applicable to the payment of the debts named in schedule B, among which is the debt for $31,865, claimed to include moneys due to the plaintiff ; and I think it clear that, for what, under the arrangement by which he took the property, he received, which was, by the assignment, applicable to the debts in schedule B, his mother, whose agent he was, and who had assented to the arrangement, was bound (in favor of these appellants) to credit her proportionate share. In other words, whatever came to George M. Chapman’s hands, which, according to the trusts in the assignment, was applicable to the debt due to the plaintiff, is to be charged to her; the receipt thereof by her son, in the relations existing between her and him and these appellants, is to be deemed a receipt thereof by herself, so far as these appellants are concerned.
Indeed, in ascertaining the amount applicable to debts in schedule B, it is to be further noticed that, under the arrangement by which G. M. Chapman was substituted in the place *235of the former assignee, he was only to. be paid what it cost him to purchase the debts, and not their full amount; if, therefore, he purchased the residue of the debts named in schedule A, at a discount, there would be a still increased amount received by him, applicable to the plaintiff’s debts.
I call attention to these considerations,'-notwithstanding they seem to involve some discussion of the facts, upon the state of the proof. If it was clear that the facts thus deduced were as they present themselves to my mind, then a question of law would arise, which is within our province to consider, and I should have no hesitation in saying upon that question that the appellants were entitled to a considerable credit which has not been given them. And, although this view of the facts is not suggested as the ground of reversal, the suggestions may be useful in the further history of the case.
4. The ground upon which this judgment must be reversed' is, that, if the other facts are assumed in the plaintiff’s favor, it appears, that, George M. Chapman having purchased the debts unpaid in schedule A, and the debts mentioned in schedule B, the trusts created by Isaac L. Hunt’s assignment, in which these appellants had a large interest, were entirely perverted, and were perverted by George M. Chapman, the agent of the plaintiff, and the trustee constituted by her assent, in the place of the former assignee.
It is not only proved, but expressly conceded by the respondent’s counsel, that G. M. Chapman (instead of applying the assets received to the satisfaction of the debts provided for in the assignment, in relief of the liability of the appellants, computing, for the purpose of pro rata distribution, those which he purchased,' at the price which he paid for them) in fact applied those assets first to reimburse himself mfull for what he paid in the purchase of those debts, leaving, or attempting to leave, the claim of the plaintiff wholly unpaid, and for that whole amount it is now sought to make the appellants chargeable.
This was a plain violation of their equitable rights, and, as to them, it is no justification that in making him the substituted trustee, the other parties agreed to it.
*236The circumstance that they did so agree is, of itself, very strong evidence of the novation of the debt, which was insisted upon by the appellants, as proved. It tended in a high degree to show that, in the entire transactions, after Isaac L. Hunt, with the clearly proven knowledge of George H. Chapman, had assumed the payment of the debts of the firm, and especially in the arrangements by which the latter was substituted as trustee, the parties were looking solely to Isaac L. Hunt and his assets for the payment of the debts, and acted for that reason in the appropriation of those assets as they thought proper, without consulting the appellants or having any reference to their interest in the matter. It is difficult to explain this consistently with honesty and fair dealing, otherwise than on the ground that, at that time, they did not regard the appellants as debtors, or as having any interest in the matter.
Be this as it may, if the appellants remained liable to the plaintiff, then they had a clear right to have the assets which came to the hands of George M. Chapman, ratably applied in redemption or extinguishment of their liability, as above indicated; and, deeming the plaintiff affected by the acts of George M. Chapman, for reasons above stated, the moneys received by him, applicable to her claim, are, in favor of these appellants, to be deemed received by her.
The judgment is plainly erroneous, and a new trial must be ordered.
Judgment reversed.