Whatever may be the inaccuracy of expression or the inaptness of
the words used in an instrument in a legal view, if the intention
to pass the legal title to property can be clearly discovered, the
court will give effect to it and construe the words
accordingly.
A shipment of tobacco was made at New Orleans by the agent of
the owner, consigned to a house in Baltimore, the shipment being
for the account and risk of the owner, he being at the time
indebted to the consignees for a balance of account. The owner of
the shipment drew two bills on the consignees, and on the same day
made an assignment on the back of a duplicate invoice of the
tobacco in the following words:
"I assign to James Jackson [the drawee of the bills] so much of
the proceeds of the tobacco alluded to in the within invoice as
will amount to $2,400 [the amount of the two bills] to I. and L.
$600, &c., and Messrs. Tiernan & Sons [the consignees] will
hold the net proceeds of the within invoice subject to the order of
the persons above named as directed above."
The bills were dishonored. This assignment, by its terms, was
not intended to pass the legal title in the tobacco or its proceeds
to the parties, but to create an equitable title or interest only
in the proceeds of the sale for the benefit of the assignees, and
they cannot maintain an action against the consignees in their own
name for the same. The receipt of the consignment by the consignees
did not create a contract, express or implied, on the part of the
consignees with the assignees to hold the proceeds for their use so
as to authorize them to sue for the same.
The general principle of law is that choses in action are not at
law assignable. But if assigned, and the debtor promise to pay the
debt to the assignee, the latter may maintain an action against the
debtor as money received to his use.
In
Mandeville v.
Welsh, 5 Wheat. 277,
18 U. S. 286,
it was said by this Court that in cases where an order is drawn for
the whole of a particular fund, it amounts to an equitable
assignment of that fund, and after notice to the drawer, it binds
that fund in his hands. But where the order is drawn either on a
general or a particular fund for a part only, it does not amount to
an assignment of that part or give a lien as against the drawee
unless he consents to the appropriation by an acceptance of the
draft or an obligation to accept may be fairly implied from the
custom of trade, or the course of business between the parties, as
a part of their contract. The Court was there speaking in a case
where the suit was not brought by the assignee, but in the name of
the original assignor for his use, against the debtor, and it was
therefore unnecessary to consider whether the remedy, if any, for
the assignee was at law or in equity.
Until the parties receiving a consignment or a remittance under
such circumstances as those in this case had done some act
recognizing the appropriation of it to the particular purposes
specified and the persons claiming
Page 30 U. S. 581
had signified their acceptance of it so as to create a privity
between them, the property and its proceeds remained at the risk,
and on the account of the remitter or owner.
James Jackson, the defendant in error, on 30 April, 1824,
instituted in the circuit court an action of assumpsit against the
plaintiffs in error, Luke Tiernan & Sons, Merchants of
Baltimore.
The declaration was for money had and received; the defendants
pleaded
nonassumpsit, and issue being joined, the cause
was tried in December, 1828, and a verdict and judgment rendered
for the plaintiff for the whole amount of his claim under
instructions given to the jury by the court, to which instructions
the defendants excepted and thereupon prosecuted this writ of
error.
The circumstances of the case were the following:
Luke Tiernan & Sons were in 1819 the creditors of Thomas H.
Fletcher, a merchant of Nashville, in the State of Tennessee, for a
balance of account current, admitted to amount to $4,906.83. Mr.
Fletcher was at the same time largely indebted to Luke Tiernan
& Co., of which firm Luke Tiernan was the surviving partner,
and other merchants in Baltimore, Philadelphia, and elsewhere.
In consequence of the failure of a house in Nashville and of
other heavy losses in business, Mr. Fletcher became unable to meet
his engagements, and on 10 April, 1819, through Messrs. Tiernan
& Sons, he made a statement of his affairs to his creditors in
Baltimore and proposed an arrangement for the satisfaction of their
claims in these terms:
"I hold a very large amount of good paper of the most
unquestionable kind, the greater part of it now due. The drawers
are merchants to whom I have sold goods. It is not payable at bank.
I wish to give you paper of this description for your claims
against me. This arrangement will at once free me from my present
difficulties and at the same time enable you to get your money much
sooner than I could possibly pay you. This plan will also save me
from being
Page 30 U. S. 582
harassed and also put my creditors to much less trouble. In the
above proposition, I ask no abatement in amount. I offer
unquestionable paper for my own. The only injury you sustain by the
arrangement is that you will not get your money quite as soon as
was expected originally. I will also endorse the notes I transfer
to you, thus making myself still liable."
"I therefore wish you to forward your claims against me to this
place without delay, that I may pay them in the way above pointed
out. I wish you all to forward your claims to the same person, as I
can settle much easier with one person than with a dozen. I propose
that you all forward your claims by mail immediately to Mr. Ephraim
H. Foster, attorney at law, of this place. He is a man of integrity
and high standing both as a man and as an attorney, and is withal a
gentleman of large fortune, free from all embarrassment and
unconnected with trade, and bound for no person. In his hands your
money will be safe and your business ably attended to."
These propositions were on 3 May following accepted by Messrs.
Tiernan & Sons and by Mr. Luke Tiernan for Luke Tiernan &
Co., and on 21 May, 1819, Mr. Fletcher paid the whole amount of
their claims on him in promissory notes delivered to Mr. Foster as
their agent, and took the receipts of Mr. Foster for the same.
Soon after this adjustment, Mr. Charles Tiernan, one of the
plaintiffs in error, arrived in Nashville, and on his arrival was
dissatisfied with it. But, as it had been made by Mr. Foster in
conformity with directions from his father, Mr. Luke Tiernan,
before he left Nashville, he expressed his approbation of it.
In the letter of Mr. Fletcher to his creditors in Baltimore,
dated Nashville, April 10, 1819, containing the proposition for the
adjustment of their claims, he informed them:
"My cotton and tobacco at Orleans have all been sold or shipped
and advances had on it, and I have received the money arising from
the sales and shipments, but that money I am in honor bound to
apply to the payment of my notes at bank here with the view of
preventing injury to my endorsers, as I cannot reconcile it to my
feelings to permit a friend to suffer who endorses my paper from
motives of friendship. "
Page 30 U. S. 583
By the evidence of Mr. Fletcher, it appeared that in April,
1819, Jouett F. Fletcher, his agent in New Orleans, shipped per the
schooner
Mary to Luke Tiernan & Sons ninety-five
hogsheads of tobacco for the account of T. H. Fletcher, and drew on
them against this shipment, two bills, one for $2,000, the other
for $2,600. These bills were endorsed by Bernard McKeirnan at the
instance of Mr. Thomas H. Fletcher, and fearing that this tobacco
would be attached for his debts in Baltimore, Mr. Fletcher, on the
same day he procured the endorsement, assigned the shipment on the
back of the invoice in favor of Mr. McKeirnan for the proceeds
thereof. This assignment was not communicated to Mr. McKeirnan, but
was filed away by Mr. Fletcher.
Jouett F. Fletcher, as the agent of Thomas H. Fletcher, drew
another bill for $2,000 against the shipment of the tobacco per the
Mary in favor of Joseph Fowler on Luke Tiernan & Sons.
This bill was accepted and paid by the Messrs. Tiernan & Sons;
the two bills endorsed by Mr. McKeirnan were not paid.
When the adjustment of the claims of Tiernan & Co. and
Tiernan & Sons was made through Mr. Foster, they were not
informed of the particular shipment of tobacco by the
Mary
or a shipment made to them by the brig
Struggle.
On being informed of the dishonor of the bills endorsed by Mr.
McKeirnan, Mr. Fletcher consulted counsel in Baltimore on the
effect of the assignment to McKeirnan, and then for the first time
made the same public.
After this, Tiernan & Sons wrote to Mr. Foster and to Mr.
Thomas H. Fletcher, urging that the settlement and payment in notes
should be cancelled with a view to enable them to hold the proceeds
of the tobacco, and a conditional arrangement was entered into,
subject to the rejection or acceptance of the defendants, and the
notes which Mr. Foster had received were placed in the hands of R.
C. Foster, there to remain until they should make known their
determination in relation to the arrangements; this was on 19 July,
1819, and under date of 4 September, 1819, they accepted of the new
arrangement, and the receipts which Mr. Foster had given to Mr.
Fletcher were returned to him and he returned all the notes except
one for $2,000 on
Page 30 U. S. 584
Thomas D. Crabb, which he retained on behalf of Tiernan &
Sons, as was supposed for their ultimate security.
On 8 May, 1819, Jouett F. Fletcher, as the agent of Thomas H.
Fletcher, shipped on board the brig
Struggle from New
Orleans for Baltimore 81 hogsheads of tobacco, amounting, per
invoice, to $6,065.67. The invoice stated the same to be
"Shipped by McNeil, Fiske & Rutherford on board the brig
Struggle, Nathan Stone, master, bound for Baltimore by
order of Thomas H. Fletcher, through his agent Jouett F. Fletcher,
consigned to Luke Tiernan & Sons."
The bill of lading stated the shipment and consignment to be for
the account of Thomas H. Fletcher, Esq., of Nashville.
Mr. Fletcher stated in his evidence that upon this consignment
on 21 May, 1819, he drew two bills upon the consignees, one in
favor of James Jackson, the defendant in error, for $2,400, and
another bill for $600 in favor of Ingram & Lloyd. On 26 May,
1819, he made the following assignment on the back of a duplicate
invoice, and on the same day acknowledged it before a notary and
delivered it to Mr. Jackson.
"Nashville, May 21, 1819"
"I assign to James Jackson so much of the proceeds of the sale
of the tobacco alluded to in the within invoice as will amount to
$2,400; to Ingram & Lloyd, as above, $600; and the balance,
whatever it may be, to G. G. Washington and Co., and Messrs. L.
Tiernan & Sons will hold the net proceeds of the within invoice
subject to the order of the persons above named as directed
above."
"THOMAS H. FLETCHER"
In reference to his transactions with Mr. Jackson, to the bill
for $2,400 in favor of Mr. Jackson, and to this assignment, Mr.
Fletcher also stated that in the fall of 1818, he had sold to Mr.
Jackson a bill of exchange for $5,000, drawn by him on his agent in
Philadelphia, which was protested for nonpayment; on its return he
liquidated it by his notes, which he paid. Mr. Jackson required no
security against the bill for $2,400,
Page 30 U. S. 585
as he showed him Mr. Foster's receipts that he owed Luke Tiernan
& Sons nothing, and he satisfied him he had actually made the
consignment. When he sold the bill for $2,400 to Mr. Jackson, he
was greatly embarrassed, but did not consider himself insolvent,
because he had made large shipments of tobacco to Europe and hoped
they would turn out well. He did not know what opinion Mr. Jackson
entertained of his circumstances, but in the month of May, 1819, he
voluntarily endorsed his, Mr. Fletcher's, note for $10,000 without
having any interest in the transaction.
Messrs. Tiernan & Sons refused to accept or pay the bill for
$2,400, and it was regularly protested.
The tobacco per brig
Struggle arrived in Baltimore on 7
June, 1819, and was sold by the consignees, the net sales amounting
to $4,335.35, for which sum they were in cash on 11 February,
1820.
Soon after the arrival of the tobacco by the brig
Struggle, the plaintiffs in error and Luke Tiernan sued
out a foreign attachment in the Baltimore County Court against
Thomas H. Fletcher and attached the tobacco in their own hands. In
these suits, judgments were obtained at March term, 1821, for the
debts due by him to Luke Tiernan & Sons and to Luke Tiernan
& Co.
At the trial in the circuit court, the defendants by their
counsel prayed the court to instruct the jury,
"1. That the assignment made by Thomas H. Fletcher, dated May
21, 1819, and acknowledged and delivered on 26 May, 1819, and
endorsed on the copy of the invoice, as stated in the evidence, did
not pass such a legal title to any part of the proceeds of the
tobacco shipped by the brig
Struggle as will enable the
plaintiff to support this action in his own name."
Which instruction the court refused to give, but instructed the
jury that such an assignment, connected with the character of the
consignment of the cargo of the
Struggle to the defendants
was sufficient to enable the plaintiff to support this action in
his own name.
Page 30 U. S. 586
"2. That the invoice, letter of advice, and bill of lading,
taken together, do not constitute such a special appropriation of
this cargo of the brig
Struggle or of the proceeds thereof
to the order of Thomas H. Fletcher as will enable his assignee in
this case to maintain this action in his own name upon the
assignment of May 21, 1819, which instruction the court refused to
give."
"3. That unless the jury finds from the evidence that Jouett F.
Fletcher ordered the said cargo or the proceeds thereof to be paid
to the order of Thomas H. Fletcher or in some other manner
authorized the defendants to deliver the cargo or the proceeds
thereof to him, the said Thomas H. Fletcher, that then the
assignment of the said Thomas H. Fletcher to the plaintiff dated
May 21, 1819, does not pass such an interest to the plaintiff as
will enable him to maintain the present action in his own
name."
Which instruction the court refused to give, as it appeared on
the face of the documents accompanying the consignment, with the
bill of lading, invoice, and letter of instructions, that the
tobacco was the exclusive property of Thomas H. Fletcher, and that
Jouett F. Fletcher was merely the agent of Thomas H. Fletcher.
The defendants by their counsel prayed the court to instruct the
jury:
"1. If the jury finds from the evidence that by the terms of the
settlement between Thomas H. Fletcher and Ephraim H. Foster, the
agent of the defendants, the said Fletcher was to continue still
liable to the defendants for the money due to them from the said
Fletcher, that then the assignment of the notes and the receipts
mentioned by the said Fletcher in his deposition did not extinguish
the original debt due from him to the defendants on account of
which the said notes were assigned. Which instruction the court
accordingly gave."
"2. That if the jury find that at the time the cargo of the brig
Struggle came to the possession of the defendants in the
manner stated in the evidence, Thomas H. Fletcher, on whose account
the said shipment was made, upon a balance of accounts was indebted
to the defendants in a sum exceeding the value of the whole cargo
for advances made and liabilities incurred
Page 30 U. S. 587
by the defendants, as the factors and agents of the said Thomas
H. Fletcher, that then the said defendants had a lien upon, and
were entitled to retain the proceeds of the said cargo for the
balance due them as aforesaid, notwithstanding the assignment made
by the said Fletcher to the plaintiff on 21 May, 1819, as stated in
the evidence."
Which instruction the court refused to give.
"3. That upon the whole evidence offered, the plaintiff is not
entitled to recover in this suit."
Which instruction the court refused to give.
Page 30 U. S. 592
MR. JUSTICE STORY delivered the opinion of the Court:
This is a writ of error from the Circuit Court for the District
of Maryland in which the defendant in error was the original
plaintiff.
The suit was an action for money had and received, brought under
the following circumstances. The defendants, Luke Tiernan &
Sons, of Baltimore, were factors of Thomas H. Fletcher, of
Nashville, in the State of Tennessee. In the course of their
business transactions, Fletcher became indebted to them, and to
another house, in which Luke Tiernan was surviving partner, in a
sum of money exceeding $9,000. On 8 May, 1819, Fletcher, through
his agent, Jouett F. Fletcher, shipped at New Orleans 81 hogsheads
of tobacco on board of the brig
Struggle, bound for
Baltimore, consigned to Tiernan & Sons. The invoice and bill of
lading were enclosed in a letter of advice to Tiernan & Sons,
by the
Struggle. In the invoice it was stated that the
shipment was made by order of Thomas H. Fletcher through his agent
Jouett F. Fletcher, and in the bill of lading that it was for the
account and risk of Thomas H. Fletcher and consigned to Tiernan
& Sons. The letter of advice was as follows:
"New Orleans, May 8, 1829"
"Messrs. Luke Tiernan & Sons"
"Gentlemen -- Herewith we hand you invoice, bill of lading, 81
hogsheads of tobacco, for account of Thomas H. Fletcher, by order
of Jouett F. Fletcher, which you will please receive and hold
subject to the order of the latter. We are yours, &c., McNeill,
Fisk, and Rutherford, per Jacob Knapp."
A short time before, there had been a like shipment of tobacco
on account of Thomas H. Fletcher to Tiernan & Sons by the
schooner
Mary. The consignment by the
Struggle
arrived on 7 June, 1819, sometime after that by the
Mary
had been received. Previous to the arrival of either of
Page 30 U. S. 593
these shipments,
viz., on 10 April, 1819, Thomas H.
Fletcher, at Nashville, wrote a letter to Tiernan & Sons
enclosing another to his creditors at Baltimore, informing them of
his embarrassments, in consequence of the failure of a house at
Nashville and offering a proposition for the liquidation of their
debts. The letter, among other things, stated that his cotton and
tobacco at New Orleans had all been shipped, and advances had on
it, and that he had received the money arising from the sales and
shipments; that he held a large amount of good paper of the most
unquestionable kind, the greater part of which was then due; that
he offered to give paper of this description for their claims
against him. He then proposed that the creditors should appoint Mr.
Ephraim H. Foster of Nashville their agent to negotiate the
business, and added, "in all cases such of you as hold my notes
must forward them to Mr. Foster as they must be taken up when I
give him other paper." Tiernan & Sons, on the same day they
received the letter, accepted the proposition, and wrote a letter
to that effect. In consequence of this arrangement, Thomas H.
Fletcher, on 21 May, 1819, paid to Mr. Foster in promissory notes
the claims of the two houses of the Tiernans, and took receipts in
full from Mr. Foster as agent. At the time of this payment and
settlement, Tiernan & Sons did not know of the consignment by
the
Struggle, but Mr. Charles Tiernan arrived at Nashville
shortly afterwards, and expressed his satisfaction at the mode of
payment. At a subsequent period, in July 1819, this payment and
settlement were rescinded by the parties, and the receipts given
up. But in our view of the case, it is unnecessary to trace these
transactions further.
On 21 May, 1819, Thomas H. Fletcher, being indebted to James
Jackson of Nashville (the plaintiff), drew a bill of exchange in
his favor upon Tiernan & Sons, as follows:
"$2 400 Nashville, May 21, 1819"
"Sixty days after sight of this my first of exchange, second
unpaid, pay to the order of James Jackson, $2.400, value received.
Thomas H. Fletcher. To Messrs. Luke Tiernan & Sons,
Baltimore."
This bill was presented and protested for nonacceptance on 9
June, 1819, and was at maturity protested for nonpayment. On the
same day the bill
Page 30 U. S. 594
was drawn, Fletcher drew the following assignment on the back of
a duplicate invoice of the shipment by the
Struggle.
"Nashville, 21 May, 1819"
"I assign to James Jackson so much of the proceeds of the sale
of the tobacco alluded to in the within invoice as will amount to
$2,400; to Ingram & Lloyd, as above, $600; and the balance,
whatever it may be, to G. G. Washington & Co., and Messrs.
Tiernan & Sons will hold the net proceeds of the within invoice
subject to the order of the persons above named, as directed
above."
"Thomas H. Fletcher "
This assignment was not delivered to Mr. Jackson until the 26th
of the same month, and all persons named therein were creditors of
Fletcher.
There are many other facts spread upon the record, but these
appear to us all that are material to dispose of the questions
argued at the bar.
The first question is whether the assignment so made to Jackson
on 19 May passed the legal title in the tobacco so as to make the
same or the proceeds thereof presently the property of Jackson and
the other persons named. This is a question essentially depending
upon the intention of the parties to be gathered from the terms of
the assignment, for whatever may be the inaccuracy of expression or
the inaptness of the words used, in a legal view, if the intention
to pass the legal title can be clearly discerned, the court will
give effect to it and construe the words accordingly. Thus, if a
man grant the profits of his land, it is said that the land itself
passes. Co.Litt. 4; Com.Dig. Grant, E. 5. At the time when this
assignment was made, the tobacco was
in transitu, and if
there had been an absolute assignment of the proceeds, so that the
tobacco was immediately put at the risk of the assignee, and the
assignor was to have no further control over the management of it,
we do not mean to say that it would not pass the legal title and
property in it to the assignee. But can such an intention be
gathered from the words used in this instrument? We think not. The
words are, "I assign, &c., so much of the proceeds of the sale
of the tobacco, &c., as will amount to $2,400." The parties,
then, contemplate a sale, and the assignment is to be not of the
tobacco itself presently, but of a portion of the funds arising
from the sale of it at a future period.
Page 30 U. S. 595
Could the assignee or assignees have countermanded the
consignment to Tiernan & Sons? Or, putting aside the factor's
claim of a lien, could they have demanded the property of the
factors before the sale? We think such was not the intention of the
parties. The claim of Jackson was not to an undivided portion of
the property, but to a specific account of the proceeds arising
from a sale. Suppose before sale the tobacco had been lost or
destroyed, would the loss have been his or Fletcher's? We think it
would have been Fletcher's. The assignees were all creditors, and
there is no evidence that they took the assignment in satisfaction
of their debts or otherwise than as security therefor. And the fact
that, contemporaneously, Jackson took a bill of exchange on Tiernan
& Sons for the same amount demonstrates that he did not
understand the assignment as extinguishing his debt or as operating
more than as collateral security. Upon the dishonor of that bill,
he had a right of recourse against the drawer. In this view of the
transaction, Fletcher had an immediate interest in the sale. The
larger the amount of the proceeds, the further they would go to
extinguish his antecedent debts. It is perfectly consistent with
the terms of the instrument that he should retain the legal title
in the tobacco and that his factors would have a right to make sale
thereof in the best manner they could for his benefit, giving the
assignees an equitable title in the proceeds of the sale. Our
opinion is that upon the terms of the assignment, it was not
intended by the parties to pass the legal title in the tobacco or
its proceeds, but to create an equitable title or interest only in
the proceeds after sale for the benefit of the assignees.
Assuming, then, that an equitable title only to the proceeds of
the sale, amounting to $2,400, vested by the assignment in Jackson,
still if there has been any agreement on the part of Tiernan &
Sons to hold so much of the proceeds for the benefit of Jackson, he
may maintain the present action, for under such circumstances, upon
the receipt of the proceeds after the sale, so much thereof would
be money had and received to the use of Jackson, and it will make
no difference under such circumstances whether Tiernan & Sons
have a lien for any balance of accounts or not, for such
Page 30 U. S. 596
an agreement will bind them, and amount to a waiver of their
lien
pro tanto in favor of Jackson.
The question, then, is whether there are any ingredients in this
case furnishing sufficient proofs of such an agreement. Such an
agreement may be express or it may be implied; if the circumstances
of the case, coupled with the acts of the parties, necessarily lead
to such a conclusion. That there has been an express agreement on
the part of Tiernan & Sons is not pretended. On the contrary,
having received the shipment on 7 June, 1819, they attached the
property by a writ of garnishment on the 8th of the same month on
their own account as the property of Fletcher, and they dishonored
the bill drawn in favor of Jackson on the succeeding day; nor did
they, after the notice of the assignment, on the 15th of the same
month, ever give any express assent to hold the proceeds according
to the terms of it.
But it has been argued that the receipt of the consignment with
the bill of lading, invoice, and letter of advice amounted to an
implied engagement to conform to the terms of the latter and "to
receive and hold the tobacco subject to the order of" Jouett F.
Fletcher, the agent of Thomas H. Fletcher, and that it being the
case of a mere agency, it is in contemplation of law subject to the
direct order of the latter, without the intervention of his agent.
Now assuming that a factor upon receiving a consignment is bound,
as between himself and his principal, to conform to the orders of
the latter, which cannot well be denied in point of law, the
question still recurs whether that implied obligation can enure to
the benefit of a third person so as to entitle the latter, upon
obtaining an order at a future period, to maintain an action
against the factor as upon an agreement in his favor. And
a
fortiori whether in case of a dissent or refusal
contemporaneous with the receipt of the consignment, such an
implied obligation can supersede the legal effect of such dissent
or refusal. If an assent is to be implied from the duty of the
factor in ordinary cases, may not his dissent be shown by acts
rebutting the presumption? In the present case, the letter of
advice contains no authority to sell, but only to receive and hold
the tobacco subject to the order of the party. If a power to sell
be implied, it must be
Page 30 U. S. 597
implied from the antecedent course of business and relation of
the parties as principal and factors. The implied obligation, then,
from the receipt of the consignment is no more than the terms of it
express,
viz., to receive and hold the tobacco subject to
order; not to pay over the proceeds to order. But waiving this
consideration, how stands the general proposition in point of
principle and authority?
The general principle of law is that choses in action are not at
law assignable. But, if assigned, and the debtor promise to pay the
debt to the assignee, the latter may maintain an action for the
amount against the debtor, as money received to his use.
Independently of such promise, there is no pretense that an action
can be sustained. Have Tiernan & Sons, since notice of the
present assignment, made any such promise to Jackson? No express
promise is shown, and the acts antecedently done by Tiernan &
Sons repudiate the notion of any intentional implied promise, for
those acts appropriate the property to their own claims, and to
meet their own lien.
But it is said that if a party agrees to hold money or goods
subject to the order of the owner, it raises an implied promise to
the holder of the order, upon which he may maintain an action at
law. The case of
Weston v. Barker, 12 Johns. 276, has been
relied on for this purpose. But in that case, the party receiving
the money under the assignment made an express promise to hold the
same subject, in the first place, to the demands of certain
specified creditors, and next the balance subject to the order of
the assignor. The court held that in such case the holder of the
order subsequently drawn had a right to the money as money had and
received to his use, notwithstanding there was a counterclaim, or
set off of the assignee accruing before the assignment. The case of
Walker v. Birch, 6 Term 258, is somewhat complicated in
its circumstances, but it turned upon similar principles. There,
the agreement was express, to hold the property for a particular
purpose, and that, in the opinion of the court, excluded the right
of the factor to assert a lien upon it for any demand due to him,
which was inconsistent with that purpose. Lord Kenyon there said
the parties may, if they please, introduce into their contract an
article to prevent the application of a
Page 30 U. S. 598
general rule of law to it. In the note given by the factors in
that case, they acknowledged that they had received the goods for
sale and promised to pay the proceeds of them, when sold, to J. F.
or his order. J. F. was the agent of the owners, and they having
become bankrupt, their assignees brought an action not for the
proceeds (for the goods were not sold), but for the goods, and they
recovered upon the footing of the original special contract. That
case also differs from the present in one important fact, and that
is that the suit was brought by the assignees of the bankrupt
owners, and not by a holder of the order. In the case of
Mandeville v.
Welch, 5 Wheat. 277,
18 U. S. 286,
it was said by this Court that in cases where an order is drawn for
the whole of a particular fund, it amounts to an equitable
assignment of that fund, and after notice to the drawee it binds
the fund in his hands. But where the order is drawn either on a
general or a particular fund for a part only, it does not amount to
an assignment of that part or give a lien as against the drawee
unless he consent to the appropriation by an acceptance of the
draft or an obligation to accept may be fairly implied from the
custom of trade in the course of business between the parties as a
part of their contract. The Court was there speaking in a case
where the suit was not brought by the assignee, but in the name of
the original assignor, for his use, against the debtor, and it was
therefore unnecessary to consider whether the remedy, if any, for
the assignee was at law or in equity.
The case of
Farmer v. Russell, 1 Bos. & Pull. 295,
so far as the point before us is concerned, asserts the principle
that if A receives money from B to pay to C, it is money had and
received for the use of the latter. In such a case it is immaterial
whether the promise to pay over be express or implied, for by the
very act of receipt, the party holds it not for A, but in trust for
C.
See also Schermerhorn v. Vanderheyden, 1 Johns. 139;
Onion v. Paul, 1 Harris & Johns. 114;
Pigott v.
Thompson, 3 Bos. & Pull. 146, 149, note.
The case of
Neilson v. Blight, 1 Johns. 295, resolved
itself substantially into this: that the defendant, who was a
sub-agent, had received the goods in question upon condition of
paying to the plaintiff out of the first proceeds a certain sum due
to him according to a written contract with
Page 30 U. S. 599
the agent, of which he had notice, and to which in a letter
addressed to the plaintiff he admitted his obligation to comply,
and the court held the plaintiff entitled to recover the amount in
an action for money had and received. This was the case, then,
either of an express promise by the sub-agent or at least of an
implied promise, irresistibly established and creating a privity
between the parties in a manner clear and unequivocal.
All these cases are distinguishable from the present. They are
either cases where there was an express promise to hold the money
subject to the order of the principal or there was an implied
promise to pay it over as it was received to the use of a
particular person. The express promise to pay to order bound the
party and excluded any claim for a lien and any defense on account
of want of privity between him and the holder of the order. The
receipt of the money for the use of a particular person necessarily
imported a promise or obligation to hold it in privity for such
person.
In the case at bar, no such irresistible presumptions exist.
There was, as we have seen, no express promise to hold the proceeds
of the sale subject to order, and no implied promise positively and
necessarily flowed from the circumstances; on the contrary, the
acts of Tiernan & Sons, contemporaneous with the receipt of the
consignment, negatived it, and the actual assignment was subsequent
to those acts.
The question is certainly a nice one, and confessedly new in the
circumstances of its actual presentation. On this account we were
desirous of making some further researches into the authorities,
and we have found two cases not cited at the bar which seem to us
fully in point. The first is
Williams v. Everett, 14 East
582. There, K abroad remitted certain bills to his bankers in
London, directing them to pay certain sums out of the proceeds,
when paid, to certain specified creditors. The bankers received the
bills, and before they were paid, the plaintiff (one of the
specified creditors) called on the bankers and stated that he had
received a letter from K directing three hundred pounds to be paid
to him out of the bills sent, and proposing to the bankers to
indemnify them if they would deliver to him one of the bills to the
amount, but the bankers refused so to do or to act upon the
letter,
Page 30 U. S. 600
although they admitted the receipt of it and that the plaintiff
was the person to whom the sum of �300 was directed to be
appropriated. The bankers afterwards received the money on the
bills, and the plaintiff brought an action for money had and
received to recover the amount of the money so appropriated to him.
The court held that the action was not maintainable. Lord
Ellenborough, in delivering the opinion of the court, said:
"The question which has been argued before us is whether the
defendants, by receiving this bill, did not accede to the purposes
for which it was professedly remitted to them by K, and bind
themselves so to apply it, and whether, therefore, the amount of
such bill paid to them when due did not instantly become, by
operation of law, money had and received to the use of the several
persons mentioned in K's letter as the creditors, in satisfaction
of whose bills it was to be applied, and of course as to �300 of
it, money had and received to the use of the plaintiff. It will be
observed that there is no assent on the part of the defendants to
hold this money for the purposes mentioned in the letter, but on
the contrary an express refusal of the creditor so to do. If, in
order to constitute a privity between the plaintiffs and defendants
as to the subject of this demand, an assent express or implied be
necessary, the assent can in this case be only an implied one, and
that too implied against the express dissent of the parties to be
charged. By the act of receiving the bill, the defendants agree to
hold it until paid, and its contents when paid to the use of the
remitter. It is entire to the remitter to give, and countermand,
his own directions respecting the bill as often as he pleases, and
the persons to whom the bill is remitted may still hold the bill
till received, and its amount, when received, for the use of the
remitter himself, until by some engagement entered into between
themselves with the person, who is the object of the remittance,
they have precluded themselves from so doing, and have appropriated
the remittance to the use of such person. After such a
circumstance, they cannot retract the consent they may have once
given, but are bound to hold it for the use of the appointee. If it
be money had and received for the use of the plaintiff under the
orders which accompanied the remittance, it occurs as fit to be
asked when
Page 30 U. S. 601
did it become so? It could not be so before the money was
received on the bill becoming due. And at that instant, suppose the
defendants had been robbed of the cash or notes in which the bill
in question had been paid, or they had been burnt or lost by
accident; who would have borne the loss thus occasioned? Surely the
remitter K, and not the plaintiff and his other creditors, in whose
favor he had directed the application of the money according to
their several proportions to be made. This appears to us to decide
the question."
This language has been quoted at large from its direct
application to all the circumstances of the case at bar. Here,
Tiernan & Sons, before the sale and receipt of the proceeds of
the tobacco, refused to hold the same for the use of Jackson, and
how then could the money, when afterwards received, be money had
and received to his use? If this case be law, it is in all its
governing principles like the present. The case of
Grant v.
Austin, 3 Price 58, is still later, and recognizes in the
fullest manner the decision in 14 East 582. That was the case of a
remittance to bankers, with a request that they would pay certain
amounts to persons specified in the letter. No dissent on the part
of the bankers was shown. But the court held that in order to
constitute an appropriation of the money or any portion of it in
favor of the persons specified, some assent on the part of the
bankers must be shown, and that the circumstances of the case did
not establish it. The remitter was at the time largely indebted to
the bankers, and the account between the parties was soon after
broken up.
It seems to us that these authorities are founded in good sense
and convenience; until the parties, receiving the consignment or
remittance, had done some act recognizing the appropriation of it
to the particular purposes specified, and the persons claiming had
signified their acceptance of it, so as to create a priority
between them, the property and proceeds remained at the risk and on
the account of the remitter or owner.
In this view of the case it is wholly immaterial to decide
whether Tiernan & Sons had a lien on the proceeds or not for
the balance due them, or whether the negotiations, stated in the
record, created a disability on their part to assert it.
Page 30 U. S. 602
For even supposing that they have no available lien, that is a
matter which cannot be litigated in a suit at law, where the only
question is whether the plaintiff has a good right to maintain his
action, whatever might be the case in a suit in equity, brought by
the plaintiff to enforce his equitable claims under his
assignment.
The instructions given by the court decided that the assignment
made to the plaintiff did, in effect, pass the legal property in
the proceeds to the plaintiff, so as to entitle him to maintain the
present action, or that at all events it constituted such a special
appropriation of them as would enable the plaintiff, as assignee,
to maintain it. We are of opinion, that the court erred upon both
grounds, and that therefore the judgment ought to be
Reversed and the cause be remanded to the circuit court,
with directions to award a venire facias de novo.
In the mandate, the errors in the bill of exceptions will be
specially pointed out, but as the principles involved in them are
resolved into the points before stated, they need not here be
particularly commented on.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Maryland and was argued by counsel, on consideration whereof it is
considered by the Court here that there was error in the circuit
court in refusing to instruct the jury upon the prayer of the
defendant's counsel that the assignment made by Thomas H. Fletcher,
dated 21 May, 1819, and acknowledged and delivered on 26 May, 1819,
and endorsed on the copy of the invoice, as stated in the evidence,
did not pass such a legal title to any part of the proceeds of the
tobacco shipped by the brig
Struggle as will enable the
plaintiff to support this action in his own name, and in
instructing the jury that such an assignment, connected with the
character of the consignment of the cargo of the
Struggle
to the defendants, was sufficient to enable the plaintiff to
support this action in his own name. And there was error also in
the circuit court in refusing to instruct the jury that the
invoice, letter of advice, and bill of lading, taken together,
do
Page 30 U. S. 603
not constitute such a special appropriation of the cargo of the
brig
Struggle or of the proceeds thereof to the order of
Thomas H. Fletcher as will enable his assignee in this case to
maintain this action in his own name upon the assignment of May 21,
1819. It is therefore considered by the Court here that for the
errors aforesaid, the judgment of the circuit court be and the same
is hereby reversed and that the cause be and the same is hereby
remanded to the circuit court with directions to award a
venire
facias de novo.
