Z. and T. were merchants at New Orleans; B. was a resident
merchant at Baltimore. B., in 1818, the owner of the ship
Fabius, sent her to New Orleans, consigned to Z. and T.,
who procured a freight for her, and the ship having been attached
for a debt due by B. in New Orleans, Z. and T., in order to release
her, and enable her to proceed on her voyage, became security for
the debt, and were obliged to pay the same by the judgment of a
court in New Orleans. B., on being informed that Z. and T. had
become security for his debt, approved of the same and promised to
indemnify them for any loss they might sustain. On 23 December,
1819, Z and T. instituted a suit against B in the Circuit Court of
Maryland for the recovery of the sum paid by them, and in the same
month B. made application for the benefit of the insolvent act of
Maryland, and received a discharge under the same. In May, 1821, a
judgment was rendered by confession in the suit in favor of Z. and
T. for $3,113. And by consent of the parties, a memorandum was
entered of record: "This judgment is subject to the legal operation
of the defendant's discharge under the insolvent laws of Maryland."
By the Court:
"The sole effect of this agreement is to save to the party
whatever rights he may claim from the legal operation of the
insolvent laws of the State of Maryland. It neither admits their
validity nor varies any rights of Z. and T., if they are entitled
to them."
The agreement of B. to indemnify Z. and T. is not in
contemplation of law a Maryland contract, but a Louisiana contract,
by which B. undertook to pay the money, in the place where Z. and
T. resided, and not in Maryland. The agreement of Z. and T. by
which they procured the relief of the ship
Fabius was
within their authority as consignees of the ship.
Such a contract would be understood by all the parties to be a
contract made in the place where the advance was to be made, and
the payment, unless otherwise stipulated, would also be understood
to be made there. The case would in this aspect fall directly
within the authority of
Lanusse v.
Barker, 3 Wheat. 101,
16 U. S.
146.
The effect of a discharge under an insolvent law of a state is
at rest so far as it depends on the antecedent decisions made by
this Court. The ultimate opinion delivered by MR. JUSTICE JOHNSON
in the case of
Ogden v.
Saunders, 12 Wheat. 213,
25 U. S. 258,
was concurred in and adopted by the three judges who were in the
minority on the general question of the constitutionality of state
insolvent laws. So far, then, as decisions upon the subject of
state insolvent laws have been made by this Court, they are to be
deemed final and conclusive.
The bill filed by the appellant in the circuit court stated,
among other matters, that certain persons at New Orleans, trading
under the firm of Vincent, Nolte & Co. having attached
Page 31 U. S. 636
a brig belonging to the plaintiff for a debt alleged by them to
be due from said plaintiff, and which brig was consigned to the
defendants, they the said defendants became security for the
complainant on the said attachment, and the same having been
ultimately decided against the complainant, the defendants paid the
amount of the debt and expenses, amounting to $3,113.80. That on 31
December, 1819, the complainant obtained a final discharge under
the insolvent laws of Maryland, and that afterwards, to-wit, at the
May term, 1821, of the said circuit court, the defendants obtained
a judgment against him for the said sum of $3,113.80, which
judgment was entered upon the docket of said court, and agreed to
be so received, subject to the legal operation of the discharge of
the complainant under the said insolvent laws of Maryland. That
execution had been sued out upon said judgment, and a writ of
fieri facias had been placed in the hands of the marshal
of the district, with directions to levy the same on property
acquired by the complainant subsequently to his so obtaining his
final discharge under the insolvent laws aforesaid, notwithstanding
the said entry on the docket of its being confessed, and the
confession being received, subject to the legal operation of the
insolvent laws of Maryland. That besides the above facts, the
defendants had also caused to be issued out of some court in
Louisiana an attachment upon the same debt or claim against the
complainant, and had laid the said attachment in the hands of
persons indebted to the complainant in a large amount, which
persons had refused to pay any part of the debts due by them to the
complainant, in consequence of the laying of said attachment in
their hands. The bill further stated that by the provisions of the
insolvent laws of Maryland, the complainant was entitled to be
protected in the enjoyment of all property acquired by him since
the date of his discharge under the said insolvent laws except such
as he might have acquired by gift, descent, or in his own right by
bequest, devise, or in any course of distribution, and that he had
not since his discharge aforesaid acquired any property in any of
the modes thus specified. And further that no property whatever of
which the complainant was possessed or to which he had any
Page 31 U. S. 637
title could be lawfully taken in execution under the said
judgment until a
scire facias containing proper averments
of the acquisition of property by him in someone of the above
mentioned modes should be first issued and the facts found to be
true either by confession or by verdict of a jury or otherwise
according to law. And the bill prayed an injunction to be granted
restraining and prohibiting the defendants from levying their
execution, and the injunction to that effect was granted and served
in due form.
The answer of the defendants, the appellees, stated that in the
latter part of the year 1818, the complainant consigned to them at
New Orleans a brig called the
Fabius, and that they
procured a freight for her to Liverpool; that after the cargo was
actually laden on board of her, and she was about to sail, she was
attached at the suit of Vincent, Nolte & Company, for a debt
due to them by the complainant, and they, the defendants, and one
Richard Relff, with a view to the benefit of the complainant,
became security for the complainant and procured the release of the
brig. The complainant approved of their acts, and undertook and
promised to indemnify them for any loss they might sustain on his
account. He afterwards gave the defendants a security for their
liability on 1 May, 1819.
The contract of indemnity was as follows:
"I will see Messrs Zacharie & Turner paid whatever sum they
have to pay Vincent, Nolte & Company on account of a bill drawn
by them on Hugh Boyle for disbursements of the ship
Mohawk, original bill amount, $5,451, of which the said
Hugh Boyle paid $3,000; the balance, the said Hugh Boyle contends,
is not due to Vincent, Nolte & Co. When decided ,it shall be
paid."
"Baltimore, 1 May, 1810"
Hugh Boyle, the complainant, and Lemuel Taylor, soon after this
circumstance, became insolvent, and the defendants afterwards paid
to Vincent, Nolte & Company the sum of $3,113.80, the amount of
the judgment obtained by them against the complainant.
The defendants further stated that they afterwards
instituted
Page 31 U. S. 638
a suit in the Circuit Court of the United States for the
District of Maryland against the complainant, and obtained judgment
against him for the amount so paid by them on his account, and
proceeded thereon as stated in the complainant's bill. They say
that the discharge of the complainant by the insolvent laws of the
State of Maryland does not prevent their having the full benefit of
the execution issued against the complainant's property, which has
been acquired to a large amount since the discharge, all of which
is liable for the payment of his debts.
The court granted the injunction as prayed for.
The answer admits the issuing of the attachments in New Orleans
against the supposed property of the complainant, but states that
the defendants in the same denied having any funds, and the
proceedings were dismissed.
On 19 May, 1829, the cause was set down for final hearing in the
circuit court, and after argument it was decreed that the
injunction should be dissolved, and the complainant's bill was
dismissed. From this decree the complainant appealed to this
Court.
Page 31 U. S. 641
MR. JUSTICE STORY delivered the opinion of the Court.
The material circumstances are as follows. Zacharie & Turner
are, and at the time of the transactions hereafter to be stated
were, resident merchants at New Orleans, and Boyle a resident
merchant at Baltimore. In the year 1818, Boyle being the owner of
the brig
Fabius, sent her on a voyage to New Orleans,
consigned to Zacharie & Turner, where she arrived and landed
her cargo, and Zacharie & Turner procured a freight for her to
Liverpool. After the cargo was put
Page 31 U. S. 642
on board and the brig was ready to sail, she was attached by
process of law at the suit of Messrs Vincent, Nolte & Co. of
New Orleans as the property of Boyle for a debt due by him to them.
Zacharie & Turner, with one Richard Relff, with a view to
benefit Boyle and enable the brig to perform her voyage, became
security for Boyle upon the attachment, and thus procured the
release of the brig. Upon information of the facts, Boyle approved
of their conduct and promised to indemnify them for any loss they
might sustain on that account. Messrs. Vincent, Nolte & Co.
recovered judgment in their suit, and Zacharie & Turner were
compelled to pay the debt and expenses, amounting to $2,113.30, and
afterwards, on 23 December, 1819, they instituted a suit against
Boyle for the recovery of the same in the Circuit Court of
Maryland. On the 31st of the same month of December, 1819, Boyle
made application for the benefit of the Insolvent Act of Maryland
of 1816, ch. 228, and eventually received a discharge under the
same. On 1 May, 1821, judgment by confession was rendered in the
suit in favor of Zacharie & Turner for the sum of $3,113.80,
with interest from 15 November, 1819, and costs of suit, and a
memorandum was entered of record, by consent of the parties, as
follows, "this judgment subject to the legal operation of the
defendant's discharge under the insolvent laws of Maryland." The
judgment having remained unexecuted for more than a year, it was
revived by a
scire facias, and writs of
fieri
facias were issued and renewed from time to time until 12
December, 1827, when a
fieri facias was delivered to the
marshal, who levied it on the ship
General Smith,
belonging to Boyle, on 31 March, 1828, and returned it to the May
term of the Circuit Court of the same year.
The bill of the plaintiff was filed on 7 April, 1828, and stated
most of the preceding facts, and prayed for an injunction to the
further proceedings to enforce the execution of the judgment and
for general relief. The grounds relied on by the plaintiff for this
purpose were first that his property is exempted from the levy by
his discharge under the insolvent act; secondly, that he is
entitled to credit for certain
Page 31 U. S. 643
commissions accruing to him for certain business done for
Zacharie since the judgment and agreed to be deducted therefrom,
and thirdly, for the amount of losses sustained by the plaintiff in
consequence of Zacharie & Turner's having caused certain
attachments for the same debt to be issued in Louisiana against the
property of the plaintiff in the hands of certain debtors of the
plaintiff in that state. An injunction issued on the bill on the
8th of the same April.
The answer of the defendants (now appellees) having come in, the
cause was set down for a hearing on the bill and answer (by which
the facts stated in the answer must be taken to be true), and it
was decreed by the court that the injunction be dissolved and the
bill dismissed without costs. From that decree the present appeal
has been taken to this Court.
The first point presented for argument, and indeed that which
was the principal ground of the appeal, is as to the effect of the
discharge under the insolvent act. This question is of course at
rest so far as it is covered by the antecedent decisions made by
this Court. The ultimate opinion delivered by MR. JUSTICE JOHNSON
in the case of
Ogden v.
Saunders, 12 Wheat. 213,
25 U. S. 358,
was concurred in and adopted by the three judges, who were in the
minority upon the general question of the constitutionality of
state insolvent laws so largely discussed in that case. It is
proper to make this remark in order to remove an erroneous
impression of the bar that it was his single opinion, and not of
the three other judges who concurred in the judgment. So far, then,
as decisions upon the subject of state insolvent laws have been
made by this Court, they are to be deemed final and conclusive.
It has been suggested that the memorandum of agreement
accompanying the judgment that it should be "subject to the legal
operation of the insolvent laws of Maryland," ought to be deemed an
acquiescence on the part of Zacharie & Turner, in the validity
of that discharge, or at least a waiver of any claim in repugnance
to it. We do not think so. The sole effect of that agreement is to
save to the party whatever rights he may claim from the legal
operation of those laws. It neither admits their validity nor
waives any rights of Zacharie & Turner, if they are
unconstitutional.
It has in the next place been argued that the contract upon
Page 31 U. S. 644
which the judgment is founded is, in contemplation of law, a
Maryland contract, and not a Louisiana contract; that Boyle
undertook to pay the money in the place where he resided, and not
in the place where Zacharie & Turner resided. Our opinion is
that this argument cannot be maintained. We do not admit that the
original undertaking of Zacharie & Turner in giving security in
behalf of Boyle, was an unauthorized act and beyond the scope of
their just authority as consignees of the
Fabius. It was
an act obviously done for the benefit of Boyle, and indispensable
to enable the vessel to perform her voyage, and naturally implied
from the relation of the parties as owner and consignees. It must
have been intended by the owner that the consignees were to be at
liberty to do any act for his benefit which was or might be
required in order to dispatch the vessel on the voyage. And Boyle
himself seems to have admitted this to be true, for in the answer
of Zacharie & Turner (which is evidence in the cause) it is
expressly stated that Boyle,
"so far from disapproving of the acts of these defendants, as
above stated, thanked them for their prompt and correct management
of his business and undertook and promised to indemnify them from
any loss which they might sustain on his account."
Now that could scarcely be deemed a prompt and correct
management of the business of the principal, which was wholly
beyond the scope of the authority delegated to the agents. In this
view of the matter, the contract of indemnity would clearly refer
for its execution to Louisiana, as much so as if Boyle had
authorized Zacharie & Turner to advance money there on his
account, for which he would repay them. Such a contract would be
understood by all parties to be a contract made in the place where
the advance was to be made, and the payment, unless otherwise
stipulated, would also be understood to be made there. The case
would in this aspect fall directly within the authority of
Lanusse v.
Barker, 3 Wheat. 101,
16 U. S. 146;
see also Coolidge v. Poor, 15 Mass. 427;
Consequa v.
Fanning, 3 Johns.Ch. 587.
But if the contract had been unauthorized and beyond the agency,
still the subsequent ratification of the transaction by Boyle would
have the same operation according to the well known maxim that
subsequent ratification is equivalent to a
Page 31 U. S. 645
prior order, and when made, it has relation back to the time of
the original transaction and gives it as full a sanction as if it
had been done under an original authority. The ratification of this
contract by Boyle was complete and perfect, and he treated it as a
Louisiana contract of indemnity, for his benefit, by which he was
bound, and which he ought to discharge in that state.
As to the credit for commissions, that is no longer relied on;
for the defendant's answer asserts distinctly that the amount has
been already credited.
As to the attachments, it is not very easy to ascertain the
grounds upon which Boyle attempts in his bill to assert an equity.
Assuming that a bill would lie to have an equitable offset for
unliquidated damages, occasioned by the misconduct of the creditors
in not prosecuting such attachments with due diligence, where the
debt has been lost by the insolvency of the garnishee in the
intermediate period (on which we desire to be understood as
expressing no opinion), still there must be sufficient facts
alleged in the bill to justify a presumption of loss. Now in the
present bill there is no allegation whatsoever of any insolvency of
the garnishees. The allegation as to one attachment is
"whereby your orator has been deprived of the benefit of any
part of the debt, now due by the said Nelson [the garnishee], being
somewhere about the sum of $1,500, besides interest thereon, from
the said year, when the attachment aforesaid was laid, and which
sum is as completely lost to your orator, as if it had been paid
over to the said Zacharie & Turner, who, for aught your orator
knows, may have actually recovered the whole of it in virtue of
said attachment, and may have refused to give credit for the
same."
And as to the other attachment, the allegation is
"that they also attached property belonging to your orator,
which was in the hands of Messrs Breedlove and Bradford [the
garnishees], for which your orator has never received any credit,
although it has been thus far completely lost to him, amounting, as
he verily believes, to the sum of, &c."
So that the whole gravamen is that the attachments have hitherto
prevented him from receiving the debts and interest due from the
garnishees. Under such circumstances, where Boyle might at any time
have relieved himself from the
Page 31 U. S. 646
effects of the attachment by the payment of the debt due to
Zacharie & Turner, and where he has himself acquiesced in the
delay, without in any manner attempting to speed the suits, and
where no connivance or indulgence is pretended to have existed in
concert with the garnishees, and where there is no allegation in
the bill itself of any undue delay in prosecuting the attachments
by the creditor, it is difficult to perceive any foundation on
which to rest a claim for equitable relief. But the answer of the
defendants shows still more forcible objections against the bill.
This answer explicitly avers that in both of the attachments, the
garnishees denied having any funds of Boyle in their possession,
Nelson generally and Breedlove, Bradford & Co. with the
qualification, any funds liable to the attachment, and the suits
were dismissed accordingly. Copies of the proceedings are annexed
to the answer, which demonstrate (if it had been necessary) the
result of the averment; but it must be taken to be true, as the
hearing was upon bill and answer.
It is added in the answer that the suit against Breedlove,
Bradford & Co. was commenced upon the information and at the
request of Boyle, so that it was not
in invitum, but was
an arrest of his funds upon his own suggestion and with his own
consent. Surely a suit in chancery cannot be maintained in a case
so naked of all real equity. But it is said that the answer of the
garnishees, Breedlove, Bradford & Co., admits that they are
indebted to the plaintiff. But we must take that answer according
to its terms and import, and if so, then the admission is
qualified. It is as follows:
"We do not consider ourselves in debt to Hugh Boyle or to Hugh
Boyle & Co.; we received of Hugh Boyle & Co. some property,
which has been sold, and the proceeds, say twelve or thirteen
hundred dollars, placed to their credit on our books; but one of
the house holds a claim against Hugh Boyle & Co. for upwards of
twenty-five hundred dollars, which amount he refused to admit as a
credit to our partner, but was willing to close Hugh Boyle &
Co.'s account, by charging him and crediting the partner with the
balance due said Boyle, and in this way said balance was held to
pay the claim."
They add, in an answer to another interrogatory, "we have no
property of the defendants in this case, nor do
Page 31 U. S. 647
we know of any." Now it has not been shown at the argument that
in a process of this sort, under the local laws of Louisiana, the
debt due to one partner might not be a good defense for the
garnishees, and certainly the court cannot presume it. And upon
general principles there can be little doubt that in a court of
equity in a suit by Boyle seeking relief, such a counterclaim would
or might, under circumstances, furnish a good defense, if not to
the firm, at least to the creditor partner, to rebut the claim of
Boyle against him. Where there is an express denial by the
garnishees setting up an equity of any property in their hands
liable to the attachment, that allegation ought to be presumed to
be supported by the local law applicable to the facts until the
contrary is explicitly established. But the decisive answer is that
as this suit was commenced at the request of Boyle, and as the
garnishees did not admit that they had property liable to the
attachment, the onus is on Boyle to show that nevertheless, by the
local law, the attachment might have been enforced. He has failed
to establish any such proposition.
Upon the whole it is the opinion of the Court that the decree of
the circuit court ought to be
Affirmed with costs.
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
ordered and decreed by this Court that the decree of the said
circuit court in this cause be and the same is hereby affirmed with
costs.
