Conard v. Atlantic Insurance Company of New York
26 U.S. 386

Annotate this Case

U.S. Supreme Court

Conard v. Atlantic Insurance Company of New York, 26 U.S. 1 Pet. 386 386 (1828)

Conard v. Atlantic Insurance Company of New York

26 U.S. (1 Pet.) 386

Syllabus

It is not necessary that a respondentia loan should be made before the departure of the ship on the voyage, nor that the money loaned should be employed in the outfit of the vessel or invested in the goods on which the risk is run.

It matters not at what time the loan is made nor upon what goods the risk is taken if the risk of the voyage be substantially and really taken, if the transaction be not a device to cover usury, gaming, or fraud, if the advance be in good faith for a maritime premium, it is no objection to it that it was made after the voyage was commenced, nor that the money was appropriated to purposes wholly unconnected with the voyage.

The lender on respondentia is not presumed to lend on the faith of any particular appropriation of the money, and if it were otherwise, his security could not be avoided by any misapplication of the fund where the risk was bona fide run upon other goods and it was not a mere contract of wager and hazard.

It seems that the common and usual form of a respondentia bond is that which was used in this case.

What is the nature and effect of the priority of the United States under the statute of 1799, chap. 128, sec. 65.

It is obvious that the latter clause of the 65th section of the act of 1799 is merely an explanation of the term "insolvency" used in the first clause, and embraces three classes of cases, all of which relate to living debtors. The case of deceased debtors stands wholly upon the alternative in the former part of the enactment.

Insolvency in the sense of the statute relates to such a general investment of property as would in fact be equivalent to insolvency in its technical sense. It supposes that all the debtor's property has passed from him. This was the language of the decision in the case of United States v. Hooe, 3 Cranch 73, and it was consequently held that an assignment of part of the debtor's property did not fall within the provision of the, statute.

Mere inability of the debtor to pay all his debts is not in insolvency within the statute, but, it must be manifested in one of the three modes pointed out in the explanatory clause of the section.

The priority, as limited and established in favor of the United States, is not a right which supersedes and overrules the assignment of the debtor, as to any property which the United States may afterwards elect to take in execution so as to prevent its passing by virtue of such assignment to the assignees, but it is a mere right of prior payment out of the general funds of the debtor in the hands of the assignees, and the assignees are rendered personally liable, if they omit to discharge the debt due to the United States.

It is true that in discussions in courts of equity, a mortgage is sometimes called a lien for a debt, and so it certainly is, and something more; it is a transfer of the property itself as security for the debt. This must be admitted to be true at law, and it is equally true in equity, for in this respect equity follows the law. The estate is considered as a trust, and

Page 26 U. S. 387

according to the intention of the parties as a qualified estate and security. When the debt is discharged, there is a resulting trust for the mortgagor. It is therefore only in a loose and general sense that it is sometimes called a lien, and then only by way of contrast to an estate absolute and indefeasible.

It has never yet been decided by this Court that the priority of the United States will divest a specific lien attached to anything, whether it be accompanied by possession or not.

The case of Thelluson v. Smith, 2 Wheat. 396, turned upon its own particular circumstances, and did not establish any principles different from those which are recognized in this case. And it establishes no such proposition as that a specific and perfected lien can be displaced by the mere priority of the United States.

It is not understood that a general lien by judgment on lands constitutes per se a property or right in the land itself. It only confers a right to levy on the same to the exclusion of other adverse interests subsequent to the judgment, and when the levy is actually made on the same, the title of the creditor relates back to the time of the judgment, so as to cut out intermediate encumbrances. But subject to this, the debtor has full power to sell or otherwise dispose of the land.

This was an action of trespass brought in the Circuit Court for the District of Pennsylvania by the Atlantic Insurance Company of New York against John Conard, the Marshal of the District of Pennsylvania, for taking and carrying away certain teas imported from Canton into the port of Philadelphia on board the ships Addison and Superior. Pleas the general issue and a special justification under a fi. fa. against the goods as the property of Edward Thomson. The suit was instituted and tried under an agreement, which is recited in the following bond.

"Know all men by these presents that we, the Atlantic Insurance Company of New York, are held and firmly bound unto the United States of America in the sum of $42,000 lawful money of the United States of America, to be paid to the said United States of America, their certain attorneys, successors, or assigns, to which payment, well and truly to be made and done, we bind ourselves and our successors firmly by these presents, sealed with our seal of incorporation and dated this 9 October in the year of our Lord 1826."

"Whereas the goods and merchandise described in an invoice, a copy of which is annexed, imported in the ship Addison from Canton, safely arrived at the port of Philadelphia, have been levied on by the Marshal of the Eastern District of Pennsylvania by virtue of an execution on a judgment in favor of the United States against Edward Thomson of Philadelphia as the property of the said Edward Thomson, and whereas the Atlantic Insurance Company of New York claims to be the owners in law or equity of the said goods and actually holds the bills of lading and invoice thereof, under which the said goods have been duly entered at the custom house and the duties thereon secured to be paid according to law. And whereas it has been agreed by and between the Secretary of the Treasury in behalf of the United States and the said Atlantic Insurance Company that a suit shall be instituted by the said named company against the said marshal in which the sole question to be tried and decided shall be whether the United States or the said Atlantic Insurance Company is entitled to said goods and the proceeds thereof, and whereas it has been further agreed that the said goods shall be delivered to the said Atlantic Insurance Company without prejudice to the rights of the United States under the said execution

Page 26 U. S. 389

or otherwise, and that they shall sell and dispose of the same in the best manner and for the best price they can obtain therefor and for cash or upon credit as they may judge expedient, and that the moneys arising from the sales thereof, deducting the duties and all customary charges, and commissions on such sales, shall be deposited by the said Atlantic Insurance Company as soon as received from and after the sale in the Bank of the United States to the credit of the president of said bank, in trust, to be invested by the said president of the said bank in the stock of the United States in the name of the said president in trust, so to remain until it shall judicially and finally be decided to whom the said goods or the proceeds thereof do in right and according to law belong, and on the further trust that whenever such decision shall be made, the said president of the said bank shall deliver the said moneys, or transfer the said stock to the party in whose favor such decision shall be made. And whereas, in pursuance of the said agreement, the said goods have been this day delivered to the said Atlantic Insurance Company of New York, it being understood and agreed that such delivery of the goods shall not prejudice any existing right of the said company."

"Now the condition of this obligation is such, if the said Atlantic Insurance Company of New York shall comply with the said arrangements and well and truly sell and dispose of the said goods, and cause the moneys arising from the sales thereof, deducting therefrom the duties, charges, and commissions as aforesaid, to be deposited in the bank in trust according to the true intent and meaning of the above recited agreement and for the purposes therein set forth, this obligation to be void; otherwise to be and remain in full force and virtue."

"[Signed] ARCH. GRACIE, Prest. [L.S.]"

"Attest, GEO. B. RAPELYE, Secretary of the Atlantic Insurance Company of New York."

The facts as they appeared by the record were as follows:

On 21 June, 1825, the plaintiffs below lent to Edward Thomson the sum of $21,000 upon respondentia by the Addison, for which the following bond was executed and delivered to the company:

"Know all men by these presents, that we, Edward Thomson, of the City of Philadelphia, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey, of the City of New York, are held and firmly bound unto the Atlantic Insurance Company, of New York, in the sum of $42,000, lawful money of the United States of America, to be paid to the said The Atlantic Insurance Company of New York, their certain attorney, successors, or assigns, to which payment, well and truly to be made we do bind ourselves and each of us, our and each of our

Page 26 U. S. 390

heirs, executors, and administrators, jointly and severally, firmly by these presents. Sealed with our seals, and dated this 21 June, 1825."

"Whereas the said the Atlantic Insurance Company of New York has this day lent and advanced to the above named Edward Thomson, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey, the sum of $21,000, lawful money of the United States of America, upon the goods, wares, merchandise, and specie to that amount laden or to be laden, on board the American ship called the Addison, of Philadelphia, whereof Hidelius is master, or which may be laden on account of the said Edward Thomson, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey on board the said vessel at any time during her intended voyage hereinafter mentioned."

"And whereas the said vessel is now bound on a voyage at and from Philadelphia to Canton and at and from thence back to Philadelphia, with the usual privileges for trade and refreshments."

"And whereas the said the Atlantic Insurance Company of New York is content to stand and bear the risks against which the said company usually insure by their cargo policies on the said sum so lent and advanced on the said goods, wares, merchandise, and specie laden or to be laden on board of the said vessel as aforesaid during the said voyage, so as the same do not exceed the term of twelve calendar months, to be computed from the day of the date of the bill of lading, viz., 21 April, 1825."

"Now the condition of this obligation is such that if the said ship laden with the said goods, wares, merchandise, and specie does and shall, with all convenient speed, proceed and sail on the said voyage from Philadelphia to Canton, and at and from thence back to Philadelphia, and return and come to Philadelphia having on board the above stipulated amount in value, in specie or merchandise, as the case may be, on the respective passages, both outward and homeward, to end her voyage there by or before the end or expiration of twelve calendar months, to be computed from the date aforesaid, and that without deviation (the dangers and casualties of the seas excepted), and if the above bounden Edward Thomson, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey or either of them or either of their heirs, executors, or administrators shall and do well and truly pay or cause to be paid at the City of New York to the above named the Atlantic Insurance Company of New York, their attorney, successors, or assigns, the full sum of $21,000 lawful money as aforesaid immediately upon the first and next return and arrival of the said

Page 26 U. S. 391

ship at the port of Philadelphia or at and upon the end and expiration of twelve calendar months, to be computed as aforesaid, whichever shall first happen, together with the sum of $2,205, lawful money as aforesaid, that being the stipulated marine interest and premium, on the said loan; or if the said Edward Thomson, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey or either of them, their or either of their heirs, executors, or administrators, shall and do immediately upon the first and next return and arrival of the said vessel, at the port of Philadelphia as aforesaid, provided such return and arrival happen within the space of twelve calendar months, to be computed as aforesaid, give security satisfactory to the said the Atlantic Insurance Company of New York to pay at the City of New York to the said the Atlantic Insurance Company of New York, their successors or assigns, the said sum of $21,000, together with the said sum of $2,205, within three months from the time of such return and arrival, with lawful interest thereupon, from the time of such return and arrival, and shall and do well and truly pay the same accordingly at the expiration of the said three months, or if in the said voyage and before the end of the said twelve months, to be computed as aforesaid, a total loss of the said goods, wares, merchandise, and specie, by the risks against which said company usually insure by their cargo policies shall unavoidably happen, and the said Edward Thomson, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey, their heirs, executors, or administrators, shall, and do well and sufficiently abandon, transfer, and assign, to the said the Atlantic Insurance Company of New York, their successors or assigns, all the said goods, wares, merchandise, and specie of the said Edward Thomson, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey, so laden, and to be carried from the said port of Philadelphia, on board the said ship, and all other goods, wares, merchandise, and specie, which shall be acquired during the said voyage by reason of or from the proceeds of the said last mentioned goods, wares, merchandise, and specie, and the net proceeds thereof, and well and truly do account for and pay, upon oath or affirmation, within four calendar months, to be computed from the time of such loss, to the said the Atlantic Insurance Company of New York, or their successors, a just and proportionable average on all the said specie, goods, wares, and merchandise, and proceeds, if any salvage average or allowance shall be obtained by reason of or upon the same notwithstanding such loss, then this obligation to be void; otherwise to remain in full force and virtue."

"It being first declared to be the mutual understanding and

Page 26 U. S. 392

agreement of the parties to this contract that the lenders shall not be liable for any charge, damage, or loss that may arise in consequence of a seizure or detention for or on account of any illicit or prohibited trade or any trade in articles contraband of war, but that the lenders shall be liable to losses and averages, and entitled to the benefit of salvage in the same manner, to all intents and purposes, as underwriters on a policy of insurance, according to the usages and practices in the City of New York, and that in like manner the borrowers shall be subject to all the duties imposed on the assured by the usual policies of insurance, and the customs and practices of the said city."

"Sealed and delivered in the presence of us,"

"PETER MACKIE"

"CHARLES MACKIE"

"To the signature of Edward Thomson"

"J. H. CLINCH"

"H. W. NICOLL,"

"To the three last named"

"EDWARD THOMSON [L.S.]"

"EDW. H. NICOLL, per"

"ROBERT SMITH, att'y [L.S.]"

"FRANCIS H. NICOLL [L.S.]"

"FLOYD S. BAILEY [L.S.]"

At the same time the following memorandum, bill of lading, and assignment thereon were also executed and delivered to the company:

"Whereas it hath been agreed that the bills of lading for the goods, specie, wares, and merchandise, mentioned in the within obligation shall be endorsed to 'The Atlantic Insurance Company of New York' as a collateral security for the loan within mentioned: "

"And whereas it has been further agreed that the property to be shipped homeward as aforesaid, being the proceeds of the said loan, shall be for the account and risk of us the said borrowers, or some of us; that the bills of lading therefore shall express the same, and shall also express that the said property shall be deliverable to the order of the shippers, and that the same shall be endorsed in blank, and shall be placed in the hands of the said 'Atlantic Insurance Company of New York' either before or on the arrival of the said ship at Philadelphia, to be held by them as a continuation of such collateral security, to the performance of which we do bind ourselves: "

"Now by this instrument it is expressly declared that such endorsement or consignment shall not be held to exonerate the persons of the obligors, nor compel the said 'The Atlantic Insurance Company of New York' to accept the goods and merchandise which may arrive under such bill of lading and consignment

Page 26 U. S. 393

in discharge of such debt, but it shall be lawful for the said 'The Atlantic Insurance Company of New York' to receive and hold the said goods, specie, wares, and merchandise, for the space of ninety days after their arrival at the port of Philadelphia."

"And in case the principal, interest, and premium, in the within obligation mentioned shall not be paid or satisfied within the said time, to dispose of the same at public auction and to charge the obligors with the balance that may remain due after deducting from the amount of said sales the freight, duties, commissions, and all other just and proper charges."

"Sealed and delivered in presence of us,"

"PETER MACKIE"

"CHARLES MACKIE"

"To the signature of Edward Thomson"

"J. H. CLINCH"

"H. W. NICOLL,"

"To the three last named"

"EDWARD THOMSON [L.S.]"

"EDW. H. NICOLL, per"

"ROBERT SMITH, att'y [L.S.]"

"FRANCIS H. NICOLL [L.S.]"

"FLOYD S. BAILEY [L.S.]"

"Shipped in good order and condition by Edward Thomson in and upon the ship called the Addison, whereof Hidelius is master for this voyage, now lying in the port of Philadelphia and bound for Canton, seven kegs containing three thousand Spanish dollars for account and risk of the shipper, a native citizen of the United States of America, being marked and numbered as in the margin, and are to be delivered in the like good order and well conditioned, at the aforesaid port of Canton (the danger of the seas only excepted) unto John R. Thomson, Esq., or to his assigns, he or they paying freight for the said goods, at the rate of nothing, with primage and average accustomed. In witness whereof the master or purser of the said ship hath affirmed to the three bills of lading, all of this tenor and date, one of which being accomplished, the other to stand void. Dated at Philadelphia 21 April, 1825."

"ANDREW HIDELIUS, JR."

"No. 5. [E. T.] 38 a 44, 7 kegs containing 3000 each."

An assignment endorsed thereon, dated the 21 June, 1825, as follows:

"(COPY)"

"For value received, I do hereby, assign and transfer to the Atlantic Insurance Company of New York the within bill of lading and the specie, goods, wares, and merchandise, to be procured thereon, or thereby, and any return cargo to be obtained

Page 26 U. S. 394

by the within mentioned outward cargo and specie, or the proceeds thereof, and all the return cargo to be taken on board the within named ship by or for my account, as collateral security, according to an agreement, duly executed and adjoined to a respondentia bond given by myself, Edward H. Nicoll, Francis H. Nicoll, and Floyd S. Bailey, dated this 21 June, 1825, for the sum of $21,000. Witness my hand and seal, this 21 June, 1825."

"EDWD. THOMSON"

"PETER MACKIE"

"BARCLAY ARNY, Witnesses"

The Addison sailed from Philadelphia for Canton on or about 21 April, 1825.

On 14 July, 1825, the plaintiffs also lent to Edward Thomson the sum of $13,960 upon respondentia by the Superior, for which a similar bond, and memorandum, and a corresponding bill of lading and assignment, were executed to the lenders. The Superior sailed from Philadelphia for Canton on or about 6 June, 1825.

There was no difference between these two operations except this, that the entire loan of $21,000 by the Addison was paid by the company to the agents of Thomson, whereas the loan by the Superior was applied, with his consent, to pay a previous loan on respondentia by another ship of Thomson which had fallen due.

On 19 November, 1825, Edward Thomson, being very largely indebted to the United States upon duty bonds and for duties on teas not bonded, made a general assignment of all his estate and effects to Richard Renshaw and Peter Mackie in trust for his creditors, and on 13 March, 1826, he confessed a judgment to the United States for half a million of dollars, upon which a fi. fa. was issued on the same day.

In the month of March, 1826, and a few days before the arrival of the Addison, the assignees of Thomson received, under a blank envelop addressed to him, a duplicate bill of lading and invoice of a shipment homeward by that vessel for the teas in question in this suit, and delivered them to the agents of the Insurance Company. They were respectively dated 22 November, 1825, deliverable to the order of the shipper at Canton, R. Fisher, attorney for John R. Thomson, and by him endorsed in blank. The invoice stated the account and risk to be for Edward Thomson. That the teas in this invoice were the returns of the outward specie in the bill of lading assigned to the company was proved by means of the words and figure No. 5 on the homeward invoice, and the same number and figure on the outward bill of lading, which were the means concerted

Page 26 U. S. 395

between Edward Thomson and his supercargo in Canton to fix the identity. The original bill of lading and invoice were received by the assignees on the arrival of the Addison, and in like manner delivered to the company. In the same month, Peter Meckie, one of the assignees, received from Canton the homeward bill of lading and invoice of a shipment of teas, &c., by the Superior, dated 2 December, 1825, deliverable to his own order, and Barclay Arny, a clerk in the service of Thomson, received a bill of lading and invoice of another shipment by the Superior, bearing the same date and deliverable to his order. These returns, being, as was proved at the trial, purchased with the specie in the outward bill of lading by the Superior, assigned to the company, the consignees Mackie and Arny, on 22 March, 1826, endorsed the papers to the plaintiffs; the rest of the shipment of $13,960 was expended for ship's disbursements in Canton.

Both shipments by the Addison and Superior were levied upon by the Marshal under the fi. fa. before mentioned, on 15 March, 1826, while the ships were below in the river, and taken into his custody, where they remained until the arrangement recited in the bond of 9 October, 1826, in consequence of which they were given up.

It further appeared upon the trial that the Addison brought with her, addressed to Thomson, a general bill of lading for her entire cargo, deliverable to Edward Thomson or assigns but not signed by the captain, and also a general invoice stating the cargo to be for his account and risk and deliverable to his order. The manifest which had been made out in Canton by the agent of Thomson, stated the cargo to be consigned to Thomson and not to order, and when the agent delivered it to the captain, he told him that it was done to save him the necessity of overhauling his papers at sea and that he might rely on it as being correct. The captain however, on receiving a letter from the assignees, upon his arriving on the American coast, examined his bills of lading, and finding that they were deliverable to order, altered his manifest in conformity. The object of these double papers, it was alleged, was to enable Thomson, after settling with the lenders on respondentia, as he had done upon former occasions, to cancel the particular bills and invoices, and after procuring the signature of the captain to the general bill of lading, to enter the cargo as consigned to him.

The preceding statement is all that is necessary to introduce the points of evidence and law that were raised upon the record, and which came up for revision in this Court.

The plaintiff's counsel having offered at the trial to give evidence of the respondentia bond by the Addison, it was objected

Page 26 U. S. 396

to until they had proved that the company were duly incorporated according to law. The plaintiff's counsel then gave notice to the defendant's counsel, the district attorney of the United States, to produce the bond of 9 October, 1826, and gave in evidence the agreement of counsel for entering the action, wherein it was stated that the question to be tried was whether the plaintiffs or the United States were entitled to the goods mentioned in the declaration or the proceeds thereof, and that the merits should be determined without further form. The bond not being produced, the plaintiffs' counsel called Austin L. Sands to prove the delivery of that bond to the district attorney and also its contents, and began by asking him if he was an agent of the Atlantic Insurance Company. To this question the counsel for the defendant objected, and the court overruled the objection. To this opinion of the court a bill of exceptions was tendered and sealed.

The bond of 9 October, 1826 being then proved, the counsel for the plaintiffs contended that they were authorized, without further proof, to give evidence of the respondentia bond, of which opinion was the court, and to this opinion also the defendant's council tendered an exception.

Mackie the subscribing witness to E. Thomson's signature to the respondentia bond, memorandum, and assignment of the bill of lading, proved the handwriting of Thomson, his own attestation, and that of Charles Mackie, and also the handwriting of Clinch and Nicoll, the other witnesses to the bond and memorandum, who resided in New York and were not produced. The counsel for the plaintiffs then offered to read that bond in evidence, to which the counsel for the defendant objected, but the court suffered it to be read as the several bond of Thomson, to which opinion an exception was also tendered.

Upon the examination of A. Hidelius, the captain of the Addison, a witness produced on behalf of the defendant, the counsel proposed to ask him the following question -- did Mr. Mackie and Mr. Nicoll make out a new manifest, altering the destination of the Addison, and ask you to enter it as a true manifest at the Custom House? This question was objected to by the plaintiffs' counsel and overruled by the court, to whose opinion the defendant again excepted.

The defendant's counsel proposed then to ask the same witness the following question -- did you see Mr. Mackie pay money to the pilot for being first on board the Addison? Which question was objected to, overruled, and the rejection excepted to in like manner.

The defendant's counsel having then produced an original letter from Thomson to captain Hidelius, with a postscript by the assignee giving the captain a caution in regard to his manifest,

Page 26 U. S. 397

proposed to ask Peter Mackie the following question -- was the greater part of the letter now produced signed by Edward Thomson, and countersigned by his assignees, drafted by the district attorney? This question was in like manner objected to and overruled, and an exception taken.

The same counsel proposed to ask of Barclay Arny, another witness, the following question -- do you know how the money was applied that was borrowed on the Addison and Superior of the plaintiff? This question was objected to unless the application was with the plaintiffs' knowledge, and was overruled. To this opinion a bill of exceptions was also tendered by the defendant.

At the close of the argument to the court and jury on the law and fact of the case, Mr. Justice Washington delivered that following points in charge to the jury.

First. That the bonds given by Edward Thomson to the plaintiffs for securing the loans of $21,000 on the cargo of the Addison, and of $13,960 on that of the Superior, are not invalid as marine contracts for the reason alleged by the counsel for the defendant -- that is to say because in respect to the former, the loan was made after the Addison had sailed upon her voyage, and in respect to the latter, for the same reason, and because the bond was given by the said Thomson for securing a balance due by him to the plaintiffs, on account of preceding loans made to him, and not for money lent at the time the said security was given.

Second. That it is no objection to the validity of the bond given for securing the loan on the cargo of the Addison, upon the ground of usury, that such cargo was known by the parties at the time the said bond was given to have been in safety at and upon the departure of the said vessel from Philadelphia, since the real question for the jury to decide in relation to that subject was whether, upon the whole of the evidence given in the cause, the loan was bottomed upon a fair marine contract, the repayment of which was to depend upon the perils which the plaintiffs assumed to bear, or whether the contract was merely a device to cover an usurious loan. If the risk be inconsiderable or for a part of the voyage only and the marine interest be disproportioned thereto, these circumstances may warrant the presumption of unfair conduct sufficient to avoid the contract. But the mere circumstance of the known safety of the cargo at any particular period of the voyage, or of the assumed risk, is not per se an objection to the contract on the ground of usury. If Edward Thomson was to pay interest from a period antecedent to the loan, there can be no question but that the contract was usurious, and it would be so although

Page 26 U. S. 398

no more than the legal rate of interest was reserved. How that fact is the jury must decide from the evidence before it.

Third. That the loan upon the cargo of the Addison was by the terms of the aforesaid bond given to secure it at the risk of the plaintiffs during the whole voyage, notwithstanding the omission of the words "lost or not lost" in the said bond, there being other and equivalent expressions in the said instrument.

Fourth. That the above bond given for securing the loan made upon the cargo of the Addison, together with the memorandum endorsed on it the bill of lading outward and the endorsement thereon, are all to be considered as forming parts of one entire contract, and as such they do, upon a fair and legal construction of them, cover that part of the homeward cargo, which was the investment of the outward cargo on which the loan was secured, and that the same principles are applicable to the contract in relation to the Superior. That the above instruments, taken and construed together as forming one contract, vested in the plaintiffs an equitable title to the return cargoes of those vessels if upon the evidence given in the cause the jury should be of opinion that those return cargoes were in point of fact the investment of the outward cargoes of the Addison and Superior, respectively. And that nothing remained to be done to vest in the plaintiffs the legal right to the said property, respectively, but the delivery to them of the homeward bills of lading of the Addison's cargo, endorsed in blank, and an assignment to the plaintiffs by Mackie and Arny of the homeward bills of lading of the cargo of the Superior.

Fifth. That the equitable title of the plaintiffs, so vested in them on 19 November, 1825, when Edward Thomson made an assignment of all his property for the benefit of his creditors, was not defeated or affected by the right of preference which that act gave to the United States to be first paid what was due to them by the said Thomson, and that this equitable title was converted into a legal one by the subsequent delivery to the plaintiffs of the bills of lading endorsed in blank of the Addison's homeward cargo, and of the assignment by Mackie and Arny of those of the cargo of the Superior.

Sixth. That the actual possession of the above return cargoes by the masters of the Addison and Superior until they were levied upon under executions at the suit of the United States against Thomson is not per se in law a badge of fraud which ought to invalidate or affect the title of the plaintiff's to those cargoes.

Seventh. That as to the charge of fraud, which it is insisted by the counsel for the defendant taints this transaction throughout,

Page 26 U. S. 399

that is a subject exclusively for the consideration and determination of the jury upon the evidence laid before it, in deciding upon which it is to observe first that actual fraud must be proved, and ought not to be presumed, and secondly that no fraud which may have been practiced or attempted by Edward Thomson, his captains or agents, ought to affect the validity of these contracts unless it should be satisfied from the evidence that the plaintiffs in some way or other participated in the same.

Lastly. That if the jury should be of opinion upon the whole of the evidence that the transactions between the plaintiffs and E. Thomson which constitute the basis of this action were fair so far as the plaintiffs were concerned in them, and that they stand clear of the imputation of usury on the ground that interest was reserved from a period antecedent to the loan, and if further it is satisfied that the homeward cargoes were the proceeds of the outward cargoes on which the securities were given, then its verdict ought to be for the plaintiff, otherwise not. It was further stated by the judge that he had declined giving a construction of the 62d section of the act imposing duties, or an opinion on the question whether under that section, the consignee of imported goods is liable for the duties on them, considering it to be unnecessary from the view which he had taken of the case.

And in explanation of the charge, the following questions were propounded by the counsel and answered by the court.

1. The defendant's counsel requested the court to charge the jury that if the agreement of the plaintiffs with Edward Thomson was made with the view to deprive the United States of its duties, it was fraudulent, and the plaintiffs could not recover. To which the judge answered that if the agreement was made with that view, such would be the legal consequence, but that he had heard no evidence to warrant that conclusion in point of fact; but that was a subject exclusively for the jury.

2. The court was asked by the same counsel, to charge that if the contract of Edward Thomson with the defendant, was to pay more than lawful interest during a period when there was no marine risk, the contract was usurious and void. To which the judge answered that if the contract was a cover to charge more than lawful interest when there was no marine risk, it was usurious and void. That he did not himself understand the entries from the plaintiffs' books which had been given in evidence, but that the fact upon which the question is predicated was proper for the decision of the jury.

3. The court was then asked by the plaintiffs' counsel to charge that the parties were at liberty to agree for a marine interest greater than the legal rate for the time that the money

Page 26 U. S. 400

was exposed to marine risks, or the loan was at hazard by the marine risk of the goods, on which it was made. To which the judge answered that they certainly were.

To all which the defendant's counsel excepted, and the judges sealed a bill of exceptions.

Page 26 U. S. 434

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