author: Piebbepont, J. Hoffman, J.

text:
    Elizabeth Fallon, Plaintiff v. John H. McCunn, Defendant.
    1. A creditor of an assignor, when sued by the assignee for taking the assigned property on an attachment against the assignor, may show as a defense that the property was assigned with intent to defraud the assignor’s creditors; and his attorney directing the levy may avail himself of the same defense.
    2. The statutes relating to the process of attachment, issued by the. Marine Court in the city and county of New York, stated and' considered by Hoffman, J.
    (Before Hoffman, PiErrepont and Robertson, J. J.) ■
    Heard June 4,
    decided June 30, 1860.
    This case comes before the court on questions of law arising at the trial, and there ordered to be first heard at the general term. It was tried on the 23d of June, 1859, before Mr. Justice Slosson and a jury.
    The complaint states that the plaintiff is the assignee of the property and effects of Richard B. Harney, and as such assignee was, and since October 23, 1851, had been possessed of certain goods and chattels therein specified; that the defendant on the 12th of December, 1851, wrongfully took, carried away, and • converted the same to his own use, to plaintiff’s damage in the sum of- $2,500, for which it prays judgment.
    The answer denies each allegation of the complaint, and then states as a further defense, that on the 30th of October, 1857, an attachment was issued out of the Marine Court, in the city and county of New York, directed to the sheriff of said city and county, for $423.68, in favor of one William Dick, against the property of Richard B. Harney, and that said sheriff, by virtue thereof, on the 12th day of December, 1857, did “ attach certain goods and chattels of the kind designated in the complaint, the same being in the possession and under the control, and the property of the said R. B. Harney, and not of the plaintiff in the action,” and not of any greater value than the sum of $475. .
    Evidence was given by the plaintiff tending to show that the sheriff attached the property by the personal direction of the defendant, and by the latter tending to show that he was the attorney for Dick in the attachment suit, and gave no personal directions to the sheriff, other than to communicate the wishes and instructions of his client.
    The attachment was read in evidence, and the defendant produced the papers on which it was granted, but the judge, on objection, excluded them, and the defendant excepted.
    The defendant requested the judge to charge, that if the assignment from Harney to the plaintiff was made with intent to defraud the assignor’s creditors, the-plaintiff cannot recover. The judge refused to so charge, and held “ that the defendant was not in a position in the suit to raise” the question, and the defendant excepted to the decision.
    The judge charged, that by the assignment, the plaintiff became vested with the title to the property in question.
    That if the defendant personally directed the sheriff to take the goods, and he took them, he is liable in this action. To each of these rulings the defendant excepted.
    The judge also charged, that “ if the defendant, acting in a professional capacity only, communicated to the sheriff the instructions of his client, as instructions received from his client to be communicated to the sheriff, to take'the goods under the attachment, and did nothing else, then the defendant is not liable in this action, although the attachment is void.”
    The attachment does not purport to have been issued on the application of an attorney. The particulars of it, and of the papers on which it was granted, appear in the opinion of Hoffman, J.
    The case does not intimate that any objection was made at the trial, that the pleadings did not contain any allegation that the assignment was made with intent to defraud; or that the answer did not sufficiently claim the benefit of the attachment as a protection to defendant; and-no such objections were taken in the plaintiff’s printed points.
    The jury found in favor of the plaintiff the sum of $1,300, and the judge ordered the questions arising on the exceptions to be first heard at the general term, and the entry of judgment in the meantime suspended.

      D. J). Field, for Defendant.
    Contended that the .exceptions raised, the question whether an attaching creditor, seizing assigned property, could attack the assignment for fraud, and that the court was in error in its ruling on that question, and cited Thayer v. Willet, (9 Abb. 325 ; 5 Bosw. 344.)
    Also that the charge, to the effect that if defendant personally directed the sheriff to take the goods, he is liable in this action, was erroneous. (Ford v. Williams, 3 Kern. 577.)

      Nelson Smith, for Plaintiff.
    Insisted, that the Marine Court had no jurisdiction to issue the attachment. That it being void, it was not error to exclude the papers on which it was granted. That the attachment being void, the defendant was a naked trespasser. That he had the full benefit of the rule stated in 3 Kernan, 511, though not entitled to it.
   Piebbepont, J.

—The plaintiff, as assignee for the benefit of creditors, sues the defendant for the conversion of per-so nal property which had been assigned. The defendant denies the charge and alleges that the property in question was taken by the sheriff, who seized it by virtue of an attachment against the assignor, and that the assignment to plaintiff was void as against creditors, for fraud, and that the defendant acted as the mere attorney of the creditor who caused the attachment to issue.

On the trial, the learned judge ruled, that as the attaching creditor was not a judgment creditor, he could not attack the assignment as fraudulent; to this ruling the defendant excepted. Since the trial, the case of Thayer v, Willett has been decided by the general term of this court, (9 Abbott, 325,) which settles the law the other way.

There seems much confusion in the case as to when this attachment was levied, by .whom levied, and- as to dates connected with it, which may become important, and which, upon a new trial, can probably be made clear.

As a new trial must be granted, we do not think it necessary at this time to pass upon the questions raised as to the validity of the attachment, the facts connected with which are now uncertain, and may be rendered certain by a new trial. The costs of the former trial should abide the event.

Hoffman, J.

—The learned judge at the trial, refused to admit in evidence the papers produced from the files of the Marine Court relating to the issuing of the attachment under which the. defendant justified.

He also refused to charge, either of three propositions which would have authorized the jury to pass upon the question of fraud in the assignment by Harney to the plaintiff.

He excluded evidence which tended directly to prove that the plaintiff, in whose favor the assignment was made, being first to be paid in full, was not a creditor.

These rulings were upon the ground, that the creditor for whose benefit the attachment was issued was not a judgment creditor, or in a position to dispute the assignment, or, raise those questions concerning it.

The attachment itself had been read in evidence on cross-examination of the plaintiff’s witness without objection. It corresponded with that set up in the answer.

In this decision of the learned judge there was error, as settled in the case of Thayer v. Willet, (9 Abbott, 325, and 5 Bosw. 344,) at the general term of this court. Parties or officers acting under an attachment may impeach the validity of an assignment under which' the adverse party claims.

It is then answered that the attachment and proceedings upon it were absolutely void, not merely irregular; that the justice had no jurisdiction. The attachment was tested on the 30th of October, and made returnable on the 2d of November, 1851. It is insisted, that such an attachment could only be issued against a non-resident defendant, which the present defendant was not.

The proceedings were as follows : On the 24th of October the plaintiff took out a summons, which he attempted ineffectually to serve. On the 28th of October an affidavit was made, parts of which are hereafter noticed. On that day a summons was taken out returnable the 31st of October. On the 30th the sheriff returned thereon that he had made diligent search and that the defendant could not be found in his bailiwick. This was strengthened by an affidavit of Collins, deputy sheriff, made the same day. On this 30th of October an order was made for an attachment, and such attachment was tested that day, and returnable the 2d of November. On the 4th of November another summons was tested, returnable the 6th of November.

To understand this point, an examination of the provisions of law respecting the Marine Court and its process is necessary. The Marine Court arose from “ the justice’s court of the city of New York,” established by the 105th and 106th sections of the general act to reduce the laws relating to the city of New York, &c. (2 R. L. 1813, 381.)

The 112th section directed, that the fh;st process should be in the same manner as directed by the 88th and 90th sections of the act, in like cases. The 88th section provided for a summons in the cases of freeholders and inhabitants having families, (with certain exceptions,) to be served at least six days before the day of appearance. Section 90 provided for a warrant to issue where the party was in danger of losing his debt, or the freeholder or inhabitant was about to depart from the city of New York. A non-resident plaintiff could have a warrant returnable immediately upon giving security. By the 116th section, the warrant, when issued, was to be made returnable forth-' with. Under the 118th section bail could be given for an appearance at the next court day, but if bail was not given, and the party was imprisoned, he could not be detained in ■custody for more than forty-eight hours.

The act of April 15, 181*7, extended the jurisdiction of this court to one hundred dollars. By the act of the 26th of March, 1819, this court was to be known by the name of “The Marine Court of the city of New York.”

The statute of April 12, 1822, contains no provision bearing upon the question before us. Then came the act of April 26, 1831, to abolish imprisonment for debt, and the amendment thereof by the act of the 29th of March, 1842. (Chap. 10*7, Laws 1842.)

By section 33 of the first act, whenever by the provisions of the 30th section of the same act, no warrant can issue, and the defendant shall reside out of the county, he shall be proceeded against by summons or attachment, returnable not less than two nor more than four days from the date thereof, which shall be served at least two days before the time of appearance mentioned therein; and if such defendant be proceeded against otherwise, the justice shall have no jurisdiction of the cause. The present case could. not have been brought within the provisions of the 30th section.

- By the 34th section, in addition to the cases in which suits may now (then) be commenced before justices of the peace by attachment, any suit for the recovery of any debt or damages arising upon any contract, express or implied, or upon any judgment for $50 or less, may be so commenced, whenever it shall satisfactorily appear to such justice that the defendant is about to remove from the county any of his property with intent to defraud his creditors, or has assigned, disposed of, secreted, or is about to assign, dispose of, or secrete any of his property with the like intent, whether such defendant be a resident of this State or not.

By the 47th section, these provisions apply to process out of the Marine Court. On the 28th of October, the defendant made an affidavit, which was produced in evidence by the plaintiff, in which he states certain facts as to the assignment, the continued possession of the assignor’s wife and family, and his belief of its being with the intent to delay and hinder creditors. This was the affidavit on which the attachment was applied for and granted on the 30th of October. A bond was given as prescribed.

This meets the question of jurisdiction. The affidavit purported to make a case within the 34th section. Whether the court ought to have allowed the attachment on it, was matter of judicial discretion, with the exercise of which we have nothing to do, collaterally!

Much is said in the papers, of the. defendant concealing himself to avoid service of process. I do not find how this ground of attachment, which is a provision of the Code, (section 229,) is made applicable to process in the Marine Court. The 23d section of the act of April 5, 1813, for the recovery of debts to the value of twenty-five dollars, if in force, (1 R. L. 398, 2 R. S. 1830, page 230,) would cover the case. But these provisions do not extend to the city of New York, (2 R. S. 230 and 267.)

There is nothing in the 34th section defining expressly the time for the service of an attachment issued under it, and it might be contended that the analogy of the 33d section should prevail, and not less than two nor more than four days be the period.

But the 36th section gives rise to a difficulty. It provides that every attachment issued by virtue of this act, shall be served in the manner now provided in said article, meaning article 2, title 4, chapter 2, part 3, of the Revised Statutes, as mentioned in section 35. By turning to those provisions (2 R. S., 230, sections 30 and 31) we find, that the attachment is to command the constable to make return of his proceedings at a time therein to be specified, not less than six, nor more than twelve days from the date thereof; he shall execute the same at least six days before the return thereof; and he shall immediately make an inventory, an4 leave a copy of the attachment and inventory at the last place of residence of the defendant. The 36th section of the non-imprisonment act alters this so that it must be served upon the party personally, if he can be found in the county.

The explicit language of the 33d section may very well prescribe another rule where the attachment is against a non-resident; but under the 34th section, it seems difficult to say that the regulation is not absolute and imperative.

The subsequent statutes which relate to the Marine Court, do not aid us in this enquiry. The law of March 27, 1849, and that of April 11, 1849, do not touch it. The Code speaks only of the jurisdiction. The act of April 17,1852, is equally void of any provision upon the point.

The act of July 21, 1853, extended the jurisdiction to the sum of $500 ; and it was decided in Churchill v. Marsh, in the Court of Common Pleas, (4 E. D. Smith, 370,) that this act enlarged the power of the Marine Court to issue an attachment in actions demanding a recovery to that amount, in the case of non-resident debtors.

In other respects, the act dqes not bear on the case before us.

And lastly, the statute of April 7, 1857, has not a word in it respecting attachments, except that in the seventh section the clerk is authorized to charge $1.00 at the time of issuing any summons, attachment or warrant.

From this review, it appears to me, that some few points are reasonably clear. Attachments issued by the Marine Court, are only to be issued under the provisions of the non-imprisonment act of 1831, or the amendment of 1842.

Such an attachment is process for the commencement of an action. It was original process under the act of 1813. The justice, on its return, was to hear the cause as on a summons returned personally served. Sections 36, 31, and 38, proceed on the idea of its being original process. The cases- of Taylor v. Harker, (1 E. D. Smith, 391,) and of Churchill v. Marsh, (4 Ibid. 370,) confirm this view. When personal service of the attachment has been made, the suit is effectually commenced without anything more.

When the attachment is against a non-resident, the attachment must be served in not less than two, nor more than four days before the appearance day, or the justice has no jurisdiction, (Robinson v. West, 11 Barb. 309.)

Where the attachment, as in the present case, is under the 34th section, the question seems open and doubtful, what is the rule for its test, return and mode of service ? The attention of counsel is called to this point.

If the attachment was in this case regular, then the cause was duly commenced in the Marine court so that it' possessed jurisdiction; and then the question whether it properly exercised the jurisdiction on the case before it as made by the affidavit of Mr. McCunn, cannot thus collaterally arise ; and then also, the regularity or irregularity of the summonses issued, cannot enter into our judgment of this case.

An eminent judge has said in the Court of Appeals, upon one section of this statute, that the presumption undoubtedly is, that the Legislature understood what they intended; if so, the knowledge did not survive their dissolution, Hall v. Kellogg, (2 Kern. 334.)

A new trial must be had.

RoBEETsqu, J., concurred in granting a new trial.

Ordered accordingly.


source: Caselaw Access Project

author: By the Court. Robertson, J.

license: Public Domain

text:
    Albert L. Phillips and Hiram H. Clark, Plaintiffs and Respondents v. William A. Godfrey, Defendant and Appellant.
    1. A judgment recovered in a court of another State of the United.States being a court of record and having jurisdiction of the parties and of the action, is conclusive in a suit brought upon it in the courts of this State.
    2. In a suit'brought in a court of this State upon such a judgment, the defendant cannot litigate the question whether the complaint contained in the record of-that judgment states facts sufficient to constitute a cause of action; nor whether such cause of action arose in this State, and by its laws is one on which no recovery could be had.
    3. Uor can such judgment be impeached by proof that it was recovered upon an allegation of misrepresentation and warranty of the quality of merchandise sold by the defendant to the plaintiffs, and proof that before the action in which it was'recovered was commenced, he sued the plaintiffs in a justice’s court of the same State, and recovered a judgment thprein before the trial.of the action against him, for the balance due upon the. contract price of such merchandise.
    (Before Hoeemar, Pierreport and Robertsor, J. J.)
    Submitted June 12,
    decided June 30, 1860.
    Appeal, by the defendant, from a judgment against him, rendered on a trial had on the third day of June, I860, before Mr. Justice Pierrepont, without a jury.
    The complaint states, as a cause of action, u that in the Circuit Court, which was and is a court of record and of general jurisdiction for Racine county, State of Wisconsin, at the October term of said court, A. D., 185*7,” the plaintiffs recovered judgment against the defendant for $38*7.22, in an action in that court commenced by “ summons duly and personally served upon said defendant; that he appeared by attorney therein and defended the same; that the court had jurisdiction both over the defendant and the subject matter of the action, and duly gave judgment' therein as aforesaid that the judgment is in full force and wholly unpaid, and prays judgment for $38*7.22, with interest from October 1, 185*7, with costs.

      The answer (first) denies that plaintiffs recovered such a judgment, or that defendant was served with process, or appeared in the action stated in the complaint. It states (second) that the alleged judgment “was, if recovered at all, recovered upon an alleged transaction happening in the State of New York, and upon which, by the laws of the State of New York, no cause of action whatever accrued against this defendant.” It states (third) that the plaintiffs owe defendant $350.10 and interest, “for goods” sold by him to them, May 19, .1856, on a credit of four months; and (fourth) that they owe him the further sum of $350.10 and interest, “ for brandies, liqtíors, wines, goods, wares and merchandise,” sold by him to them May 19,1856, “ and converted by them to their own use.” It states* (fifth) that plaintiffs owe him $110 upon a judgment he recovered against them “ about the month of April, 1851,” in the justice’s court of Eacine county, Wisconsin, upon contract.
    A reply was put in to the parts of the answer setting up counterclaims.
    The issues joined were tried before the court without a jury, a jury being waived by consent.
    It was proved, that the defendant, on the 19th day of May, 1856, sold to the plaintiffs a bill of liquors amounting, with the charges for cartage and insurance, to $350.10, (the price of the liquors being $345.53,) and that the plaintiffs gave their note at four months therefor.
    That prior to June 4, 1851, the plaintiffs had paid said note except a balance of $91.68, and that on said 4th of June, 1851, the defendant recovered judgment against the plaintiffs before a justice of the peace of Eacine county, Wisconsin, for said balance of $91.68, and $3.15 costs, in all, $101.43.
    That on the 9th of May, 1851, the plaintiffs sued the defendant in the Circuit Court for Eacine county, in the State of Wisconsin, and in his complaint therein alleged the sale by defendant to them, of the aforesaid bill of liquors, upon “ a representation and warranty,” on which the plaintiffs relied, that they were good, pure, andunadulterated liquors; and then averred that they were not good, pure and unadulterated liquors as represented by the said defendant, but were poor, worthless and adulterated liquors, and of no use or value whatever to the said plaintiffs, all of which the said defendant then and there well knew to be the fact, to the plaintiffs’ damage, $350.
    The record of the judgment in that suit was produced in evidence on the trial of this action, and showed that the summons therein was served on the defendant personally, on the 9th of May, 1857; that Paine & Millet appeared as his attorneys therein, on the 15th of May, 1857, and put in an answer; in which answer the defendant admitted selling a bill of goods at the time and for the price alleged, and averred that the plaintiffs gave their note therefor, for the sum of $350.70, and had made payments thereon, reducing it to about $100 ; that before that suit was brought, he sued them.before a justice of the peace of said Racine county, to recover the balance due on the note; and that in the action before said justice, the plaintiffs set up the alleged warranty and breach thereof by way of counterclaim, and that the action in said justice’s court was then still pending, and then denied every other allegation in the complaint in that action contained.
    The record contained a reply dated May 28, 1857, which, denied that the plaintiffs had set up said warranty and the breach thereof, as a counterclaim in said justice’s suit. It showed a trial .by jury of the action, a verdict for the plaintiffs therein, for $350.70, with $34.09 interest, making a total of $384.79 ; that the plaintiffs filed a remittitur by which they remitted the sum of $35 ; that the defendant moved for a new trial ; that such motion was heard and denied, and that judgment was thereupon perfected for $349.79 damages, and $37.43 costs; total, $387.22.
    The evidence in the present action being closed, the defendant moved to dismiss the complaint on the grounds:
    1. That the supposed judgment record on which this action is brought, does not show any cause of action by the plaintiffs against the defendant.

      2. That the supposed cause of action shown by said judgment record, is not recognized or enforcible by the law of the State of New York.
    3. That the plaintiffs were precluded from recovering in this action by the judgment recovered against them by the defendant.
    4. That the plaintiffs are liable to the defendant in the full value of the merchandise sold to them by the defendant.
    The motion was denied, and the defendant excepted.
    The judge found as facts, the facts above stated; and gave judgment for the plaintiffs for the difference between the amounts due on the two judgments. The defendant excepted to the conclusions of the judge, and appealed from the judgment to the general term.
    The appeal was submitted without argument, on the fol. lowing points.

      P. J. Joackimsen, for Appellant, m
    The defendant, a merchant in New York, sold to the plaintiffs, doing business in Wisconsin, a quantity of liquors, for $345.53.
    The plaintiffs paid .a portion of the price, and were called on by the' defendant, in person, in Wisconsin, for the balance.
    They failing to pay, the defendant brought a suit against them, in Wisconsin, and recovered a judgment for such balance.
    The plaintiffs then turned round and sued the defendant in the courts of Wisconsin, for a fraudulent representation as to the quality of the liquors.
    And though the plaintiffs had not returned or offered to return the liquors, but had sold them (for what sum does not appear), and though the plaintiffs had not paid the whole price, yet they recovered judgment for the whole amount of the price, with interest.
    And, on that judgment, this action is brought.
    The question now is : whether the defendant can escape a recovery for the amount of that judgment, deducting only the defendant's recovery for the balance of the price ?
    He insists that he can, because:
    I. The judgment recovered by the plaintiffs in Wisconsin, and on which this action is brought, appears to have been for a matter not actionable in this State. The goods were sold and delivered in this State. It is not alleged that

      a. There was an express warranty, or

      b. That the goods delivered were unmerchantable, or
    c. That the plaintiffs offered to return the goods to the defendant, so as to put all parties back to their original position.
    The judgment thus recovered in Wisconsin, could not, therefore, be the ground of an action in this State, because :

      First. The courts of this State have jurisdiction only of causes of action recognized by the laws of this State.

      Second. The implied promise or debt on the judgment is void, for want of a good consideration.
    II. The, judgment recovered by the defendant against the plaintiffs, in Wisconsin, is an estoppel .to this action, because:

      a. It was a controversy between the same parties upon a contract.

      b. It arose out of and related to the same transaction.
    c. Was recovered before a court of competent jurisdiction.

      d. In a suit in which the defendants (now plaintiffs) were duly served with process, and had a day to be heard in court.
    Under such circumstances, the decision of the court upon the same subject matter is conclusive against the plaintiffs. The plaintiffs’ suit in Wisconsin, against the defendant, was brought after the commencement of the suit and before the recovery of the judgment of the defendant against the plaintiffs, and for that reason the defendant’s judgment could not be pleaded or answered in bar of that. suit.
    III. There is no doubt that the defendant delivered his property, of the value of SSSO.YO, to the plaintiffs, at their request, which they never returned, but actually consumed, and for which, if the plaintiffs’ claim in this action is1 enforceable, the defendant has never been paid. This amount must necessarily be allowed to the defendant, and forms a good counterclaim.
    IY. The judge, at special term, erred in overruling every proposition of fact or of law insisted on by the defendant. The judgment at special term should be reversed, and judgment ordered for the defendant, and for a balance in his favor, against the plaintiffs, with costs.

      Mead §■ Taft, for Respondents.
    I. The recovery of the judgment, upon which this action was brought, in the State of Wisconsin, and that the court pronouncing it had jurisdiction of the defendant by actual and personal service of process upon him, and by his appearing in and defending the action, are proved by the exemplified copy of the judgment record. (Greenleaf on Evidence, vol. 1, § 504; Hatcher v. Rocheleau, 18 N. Y. R. 86, 90, 94.)
    This judgment can only be impeached by showing want of jurisdiction in the court, or fraud; neither of which has been done in this case. (Rocco v. Hackett, 2 Bosworth’s R., p. 579; Greenleaf on Evidence, vol. 1, § 504; Hobson v. Pearce, 2 Kernan’s R., p. 156.) The defendant established no defense to the judgment.
    II. The defendant established no other counterclaim Than the one that was allowed.
    The goods spoken of in the third division of the answer were paid for, except the balance for which the judgment was recovered before Justice Hinds, and which was allowed as a counterclaim.
    The -goods spoken of in the fourth division, are the same goods that are mentioned in the third. Judgment should be affirmed, with costs.
   By the Court. Robertson, J.

—The judgment upon which this action is brought, was obtained in a court of a sister State, upon due notice personally served therein upon the defendant, to defend the same. It is now proposed to enquire into the validity of it, collaterally in • this action, and to assail its foundation by establishing that the cause of action set forth in the complaint in such action-in which the judgment was obtained, was such as could not be sued upon in the courts of this State; in other words, to demur to such complaint. But, as the Constitution of the Federal C-overnment requires full faith and credit to be given in every State to judgments of each State, when jurisdiction has been obtained of the person, the objection is hardly worth noticing. The courts of this State have, it is true, jurisdiction only of causes of action recognized by its laws, but, among them, is a judgment obtained in a sister State. The right of action on a judgment needs neither promise nor consideration to create or support it.

The second objection seems to me equally frivolous. The judgment obtained by the defendant against the plaintiffs, concluded the plaintiffs on nothing except that they owed the price of goods bought; which is perfectly consistent with the defendant’s being liable for damages for misrepresenting their quality or purity. The plaintiffs were not bound to recoup, and did not, but chose to avail themselves of the right of suing for this wrong. The defendant was probably not prevented from availing himself of the recovery of the judgment by him in Wisconsin, if it had been of any avail for the purpose, in answer to the claim of the plaintiffs against him; notwithstanding the latter was sued upon after his suit was begun and before judgment had been obtained, as he could have' set it up by plea puis darrein, or supplemental answer. At all events, it is too late now, after judgment has been obtained against him. I do not see any great hardship in the defendant’s altogether losing the price of adulterated, articles sold as pure ; but that was a question disposed of by the courts of Wisconsin, with which we have nothing to do, except to enable the parties in whose favor judgment was rendered, to enforce it in this State.

The judgment appealed from must be affirmed, with costs, to the respondents.

Ordered accordingly.


author: Pierrepont, J. Hoffman, J.

text:
    Thomas L. Braynard, Plaintiff and Respondent v. Ely Hoppock, Defendant and Appellant.
    1. A written contract by which H. agrees to advance to B. $1,500 “on the brig Sophia * * loading in New York and bound for San Francisco,” and by which B., for the use of the money, agrees to pay to H. twelve per cent, commission and seven per cent, interest, and as security to assign to H. policies on the ship, and on freight, and also to make a bill of sale of the ship, is usurious.
    2. In a suit brought to obtain a re-assignment of the policies and brig, and recover the moneys collected by H. on policies assigned to him pursuant to’ the agreement, it is no objection to the right to recover, that the suit was not commenced until more than a year after the policies had been assigned to H. . .
    (Before Hopeman, Pierrepont and Robertson, J. J.)
    Heard June 8,
    decided June 30, 1861.
    Appeal by the defendant from a judgment against him rendered January 14, 1854, for $2,303.25, on a trial before Mr. Justice Hoffman, without a jury.
    This action was commenced in November, 1851, and the complaint sets forth, in full, a written contract dated May 16, 1859, between the plaintiff and defendant, by which the latter agreed to advance to the former $1,500, “ on the brig ‘ Sophia,’ Harwood master, now loading in New York, and bound for San Francisco,” and the plaintiff, for “the use of”, that sum, thereby “ agreed to pay said Hoppock twelve per cent, commission, and interest at seven per cent. per. annum from date, until the said amount is paid to said Hoppock in New York.” Braynard also thereby agreed to transfer to Hoppock, an insurance policy on the brig for $8,000, also insurance policy on freight, bills of lading of the cargo, “ together with bill of sale on vessel for $1,500,” and consign the brig to J. B. Biddleman in San Francisco, who was to do her business, charge customary commissions, and remit to Hoppock, from net proceeds of vessel’s^account the said $1,500, and twelve per cent., commission “ and interest, and interest added, until (the funds can be placed in said Hoppock’s hands in New York.”
    It also sets forth in full a further written ' contract between the same parties, (attached to the foregoing one,) dated December 5, 1850, which recites that Hoppock has advanced to Braynard “ $366.06, on the brig Sophia, for repairs and expenses incurred in the Island of St. datharine,” for the “use of” which sum Braynard thereby “agreed to pay said Hoppock fifteen per cent, commission, and interest at seven per cent, per annum, until the said amount is paid to said Hoppock in New York,” which “ agreement (as it states) is to be governed by the same regulations (regarding policies of insurance, bills of lading, &c.) as the agreement to which this is attached,” viz : the said agreement of May 16, 1850. ■
    It also alleged that the plaintiff had assigned to the defendant two policies on the ship, one on the freight of its cargo, (describing them,) and had made and delivered to him a bill of • sale of said ship; that defendant had received moneys on the policies, and that Biddleman had sold the ship and cargo, and collected the proceeds thereof, and prayed that defendant account for and pay to plaintiff “ all the proceeds of the sale of the said brig and her cargo, freight and earnings received by him;” also the .moneys received on the policies of insurance, and that he re-assign the brig and the policies to the plaintiff. The summons is dated November 17th, the verification of the complaint November 18th, and of the answer December 27, 1851, and of the reply January 17, 1852.
    During the trial evidence was given by three witnesses, without objection, to the effect that “ a reasonable compensation or commission upon advances upon vessel, freight or cargo, from New York to San Francisco,” is not less than 12 per cent. One witness, on cross-examination, said “the commission is large on account of the hazardous nature of the business. If the borrowers gave their individual securities, of course it would make a difference. We have refused to advance for fifty per cent.”
    The judge found as facts, that the said agreements were made; that Hoppock advanced the $1,500 under the first agreement, and also the sum of $300 under the second one. That Braynard, in pursuance of said contract of'May 16, 1850, assigned to Hoppock two several policies of insurance on the brig, for $4,000 in the aggregate, and a policy on the freight of the brig for $4,000, and made and delivered to him a bill of sale of the brig; and that Hoppock took no personal obligation of the plaintiff for the re-payment of the money.
    He also found that the defendant received on the 14th of November, 1851, on one of the two policies on the brig $862.15, and on the other the further sum of $862.15 ; and, on the policy on freight on the 8th of May, 1852, the further sum of $1,853. The judge held the transactions usurious, and that the plaintiff was entitled to recover said three sums with interest; to. a re-transfer of the policies, and of the brig, and of defendant’s interest therein, and ordered judgment accordingly, with costs.
    The defendant duly excepted “to the decisions and conclusions of law,” and appealed from the judgment to the general term.

      Charles W. Sandford, for Appellant.
    I. The agreement created no personal liability on the part of the plaintiff for the re-payment of the money advanced, and no bond or note was given therefor. The agreement must be corrupt, or it is not usury. The loan was solely an advance upon the property. There was, therefore, no usury in the transaction. (Chesterfield v. Janssen, 1 Atk. 340; Robin v. Tremaine, Croke James, 507; Comyn on Usury, 39.)
    II. The interest was only to be paid out of the remittances from California.

      III. The securities were based solely upon the property upon which the advances were made, and were subject to all the usual risks attending such securities.
    IY. The plaintiff’s claim is inequitable and unconscionable, and every intendment of law and fact should be taken ag’ainst him. (Beach v. Fulton Bank, 3 Wend. 584.)
    Y. The action to recover money received upon an agreement alleged to be usurious, must be brought within one year after the transfer of the securities. (Schrceppel v. Corning, 10 Barb. R. 576, and 2 Selden, 108; Seymour v. Marvin, 11 Barb. R. 80.)
    YI. In such a case, the excess over the money advanced only is recoverable. The advances here were not repaid. (1 Johns. Cas, 158 ; I Paige, 639; 1 Story Eq. Jur., § 345; 2 Hill,.524; 7 Met. 525.)

      E. W. Stoughton, for Respondent.
    I. The only question in this case is, whether the two several agreements entered into between the parties, by which the plaintiff was to lend and advancdto the defendant, in all, the sum of $1,800, were usurious? If they were, the decree must stand.
    By the very terms of these contracts, twelve per cent, in the one case, and fifteen in -the other, with seven per cent, interest upon the sums advanced, were to be paid by the defendant to the plaintiff; and these payments, together with the repayment of the principal sum, were to be made absolutely, and were not, nor was either of them, dependent upon any contingency whatever.
    They were, therefore, usurious and void, and the custom sought to be proved that the sums charged by way of commissions were reasonable and usual, was inadmissible.
    1st. Because an usage cannot be resorted to for the purpose of contradicting the terms of a written agreement, and by the language of this agreement those sums were to be paid for the use of the money advanced ; and
    2d. Because the custom sought to be established would be contrary to the terms and policy of the statutes against usury, and therefore unlawful and void. (4 Comstock, 485.)
    The only question upon which a re-argument has been ordered is, whether the plaintiff is entitled to recover from the defendant certain moneys by him collected from securities which were deposited in his hands by the plaintiff, as security for, and at the time of making, the usurious loan mentioned in the complaint ?
    II. These securities were not delivered to the defendant voluntarily, but in judgment of law were exacted by him, for his own use, and as his own property, and were held in exclusion and defiance of the plaintiff. Hence, the latter might have immediately brought trover for their conversion, without any previous demand or refusal. (Schrceppel v. Corning, 5 Denio, 240, &c.; Same v. Same, 2 Selden, 112, &c.)
    III. If the receipt of these collaterals by the defendant constituted a conversion, it can hardly be contended that their actual collection and conversion into money makes their original receipt lawful.
    Where the borrower has voluntarily paid the loan, he cannot recover such payment back, and this rule would be applied in a case where it should appear that the borrower had expressly authorized the collection of collateral securities, and had directed their application to the extinguishment of the usurious' loan. (See, Seymour v. Marvin, 11 Barb. 87; 2 Selden, 112 ; see, also, 5 Denio, 244-248 ; see 4 Comstock; 485.)
    IY. In this case, however, no authority to collect the collaterals in question was given by the plaintiff at any time subsequent to their deposit as security (see 2 Selden, 113); nor has the plaintiff ever acquiesced in permitting the defendant to apply the moneys received by him, on' account of the usurious loan. (Hargreaves v. Hutchinson, 2 Adol. & Ellis, 12; Tregorning v. Attenborough, 7 Bing. 97.)
    The plaintiff is, therefore, entitled to judgment for the full value of the securities in question.
   Pierrepont, J.

—The question in this case is, whether the contracts upon which this action is founded were usurious ?

With the wisdom or the policy of the statute against usury we have nothing to do. The immorality and injustice of this statute were earnestly pressed upon us at the argument of this cause, as often before. Our duty is to declare the law as we find it, without regard to the hardship of its operation in a particular case, and without reference to its restraint upon trade or to its facility in enabling a borrower of money to escape the payment of his just debts. These are considerations proper to be addressed to the Legislature, but which the court cannot consider in the construction of the statute.

Under the law, as it has stood ever since 1831, this contract is usurious and void. Money was advanced by the defendant, upon which the plaintiff agreed to pay “ interest at the rate of seven per cent, per annum, from date, until the said amount is paid to said Hoppock, in New York,” and a commission of twelve per cent.

To secure this advance, interest and commission, the plaintiff transferred to the defendant policies of insurance upon the vessel and cargo, and also a bill of sale of the vessel.

Damage, caused by the perils insured against, was paid to the defendant by the underwriters, which amounted to more than the original advance by the said Hoppock. These moneys were paid over to the defendant in November, 1851, and May, 1852, and .this action was commenced immediately thereafter ; but, as the assignment and delivery of the bill of sale and policies to the defendant, were made in the year 1850, (more than a year before the commencement of this action,) the defendant contends in his fifth point, that:

“ Y. The action to recover money received upon an agreement alleged to be usurious, must be brought within one year after the transfer of the securities.”

The statute upon which this proposition is advanced, is in these words:

“ Every person who for any such loan or forbearance shall pay or deliver any greater sum or value than is above allowed to be received, and his personal representatives may recover in an action against the person who shall have taken or received the same and his personal representatives, the amount of the money so paid or value delivered, above the rate aforesaid, if such action be brought within one year after such payment or delivery.” (R. S., 5th ed., vol. 3, p. 72, sec. 3.)

But this statute has no application whatever to the case before us; the transfer of securities collateral to a usurious loan, and made at the time of the advance of the money, is not a payment, and has never been so held. On the contrary, such transfer of collaterals is void, and the receiving of them is a conversion by the lender, for which trover will lie. (Schrceppel v. Corning, 5 Denio, 236; Schrceppel v. Corning, 2 Selden, 112, and 4 Oomst. 485.)

There is no ground for considering this agreement a contract in the nature of bottomry, nor as an agreement of any sort, where the entire capital was at absolute risk.

The judgment must be affirmed, with costs.

Robertson, J., concurred in this opinion.

Hoffman, J.

—There are two questions for consideration. Was the transaction between the parties usurious ? If so, can the present action be maintained ?

It is insisted on the part of the defendant, that the agreement was a bottomry bond, and thus any maritime interest was allowable; or if not strictly of that character, yet that the principal was at his risk; was not, at all events, to be repaid, and hence the transaction was legal.

No doubt, as stated by Justice Burnett in Chesterfield v. Janssen, (1 Atkyns, 140,) there may be cases of risk analogous to bottomry which will be free from the statute of usury, as there may be an apparent bottomry designed to evade it. And Chief Justice Lee observes, “ where there is an absolute hazard of the principal money, the case is out of the statute. If the profit the lender is to have is for the hazard, not for the forbearance, the contract is not usurious.” (Ibid.)

As to bottomry. It is an essential ingredient of a bottomry bond where marine interest is reserved, that both principal and interest should be put at risk. The lender runs the maritime risk to earn the maritime interest. The lender bears the risk of a loss from the perils enumerated in the contract. The high interest, .usura maratima, is denominated in the Roman law, periculi pretium. Justice Story defines bottomry, a contract for a loan of money on the bottom of a ship at an extraordinary interest, upon maritime risks, to be borne by the lender, for the voyage, or for a definite period. The Draco, (2 Sumner, 157.) Th,e form of an instrument of bottomry varies in different countries. In some, it binds the owners personally.. In England and the United States, it does not do so; and if the terms render them responsible, they would be inoperative. They will only be liable for g,ny funds which may have come to their hands arising from the ship which was, pledged. The ship Virgin, (8 Peters, U. S. Rep. 538; 1 Haggard, 169.) The money is at the risk of the lender during the voyage, and the right to demand payment depends on the safe arrival of the vessel. (1 Paine C. C. Rep. 671.)

In the present case, the defendant, besides the pledge of the vessel in the instrument, received, first, a separate bill of sale of the vessel. In Robertson v. The United Insurance Company, (2 John. Ca. in Error, 250,) the insertion of the words “ bargain and sell the said ship to the said A. B.”in, an instrument, otherwise clearly a bottomry, was held not to affect it.

He received in the second place, a transfei; of the bills of lading of the cargo. Thus he became entitled to receive the freight from the shippers.

Next he took an assignment of a policy on the vessel, and of one on the freight, the premiums for which had been paid by Braynard, the borrower.

The effect of all'these instruments wa,s, that if tffe ves.r sel arrived in safety without an intermediate bottomry, the lender would be repaid. If, as did happen, there was an intermediate bottomry, he had the extra value of the vessel, (as the second bottomry could supersede his own) and in addition, the freight earned from the shippers. If the vessel was lost by reason of the perils insured against, (being the perils which as lender on bottomry he was to assume,) he had the policy of insurance to resort to. If the freight was lost, he had the policy on the freight as a source of indemnity.

Can it be said that the principal money of the lender was here so at risk; so dependent upon the safety of the ship as to make it a case of maritime interest, on the ground of maritime peril ?

In Jennings v. The Insurance Company of Pennsylvania, (4 Binney, 246) there was what might be treated as a bottomry executed by the master to the plaintiff. Then a covenant, by Scribner, the owner, endorsed upon the bond, binding himself as principal therein, for payment of the sum therein mentioned, till such payment is fully and completely made. Two policies of insurance had been effected, one on the vessel, and one on the goods, for the use of the plaintiff, by his agents; and by a third instrument on the same sheet of paper with the bond, the owner engaged to pay the cost of premium and other charges accruing in making the insurance. The court held that the three instruments proved there, was not a bottomry. In Rucher v. Conyngham, (2 Peters, Ad. Rep. 299,) Judge Peters, in enumerating what is essential to constitute a valid bottomry, says : “ The sum loaned must be at risk, and there must not be a personal responsibility; that is, the money must be advanced on the faith of the ship, and at the sole risk of her loss or safety. It cannot be given as a double security, running along with a personal responsibility. The one excludes the other. The risk being solely confined to the ship, is the only justification allowed by the laws of all commercial countries for the maritime interest.”,

In Thorndike v. Stone, (11 Pick. 187,) the bond contained various conditions and provisions of a special character, and there was a collateral mortgage to secure the fulfilment of the conditions of the bond, not for payment of the advance. ■ The question was whether it was a bottomry bond, or a usurious contract. It was held not to be the latter. “If the ship had been lost immediately after.she sailed, it is perfectly clear that the plaintiff would have lost all his usury.”

In the case of the Hunter, (Ware’s Rep. 251,) it was held, that a bottomry bond was not vitiated by the master-drawing bills of exchange upon the owners for the same sum. They -were not independent securities, payable at all events, but collateral, and subject to the same contingencies as the. bond. Until the vessel arrived in safety, nothing was payable on the bills, more than on the bond. These are all the authorities I have found where the question arose upon securities on vessels, in the nature of bottomry bonds. Some other cases may be noticed.-

In Tyson v. Rickard, (3 Harr. & John. 109,) the Court of Appeals of Maryland, lay down the general rule very explicitly, that a stipulation to repay the-principal in money, is not necessary to constitute a loan; it is enough if the principal is secured, and not Iona fide put at hazard; and it matters not what the nature of the security is, if it is sufficient.

In Pomeroy v. Ainsworth, (22 Barbour, 120,) it was stated as a general rule, that where the principal was Iona fide put at hazard, there was no loan; it was not usury to take more than legal interest. In the case, there was an agreement by which the only source for the repayment of the party’s advances, was the proceeds of the sales of logs and lumber which the other party was to cut and manufacture. Hall v. Daggett, (6 Cowen, 653,) and Quackenbush v. Leonard, (9 Paige, 346,) are cited, and are cases of the same character, plain cases, (as construed by the court,) of a bargain for reimbursement, exclusively out of the proceeds of the business or adventure.

It seems to me, from this review of the authorities, and the principle which pervades and sustains these maritime contracts, that it is not possible to support the present engagement for the payment of marine interest. “ It is essential,” says Judge Betts, “ to the validity of a bottomry transaction, that the money lent should run the hazard of the voyage.” (The William and-Emmeline, 1 Blatch. and How., 66; the JYelson, 1 Haggard, 169.) How has that hazard, in this instance, been incurred ?

It enters into the idea and character of a bottomry, that the owners cannot personally be liable'for the demand, so that eventually, it may be recovered of them. It is not a mortgage with a covenant to pay the amount. If this liability is wanting, does it follow that there can be no extent of security for ultimate payment of the debt in all ordinary events, which will deprive the transaction of .its character of bottomry, and bring it within the statute of usury ? I cannot so understand it. It seems to me that the contract is this: the lender takes his extra interest as the premium or consideration for insuring the vessel, (as to the amount advanced,) against the perils specified. If he secures himself by a policy which the former procures and pays for, his peril is not the one which was paid for, and which alone justifies the marine interest.

Concluding, then, that there was usury in the contract, the next question is, can the moneys sued for be recovered in'the present action?

This question may be thus presented. The borrower, upon a usurious transaction, deposits with the holder various collateral securities. The event having occurred upon which the lender may resort to them, he collects upon them a sum of money not equal to the principal of his advances. Four days after such reception, an action is brought by the borrower to compel payment of such amount.

I understand the cases of Wheaton v. Hibbard, (20 Johnson’s Rep. 290,) Dix v. Van Wyck, (2 Hill’s Rep. 522,) of Schrceppel v. Corning, (5 Denio, 240; .10 Barbour, 576 ; 3 Selden, 108,) of Seymour v. Marvin, (11 Barbour, 87,) and Mumford v. The American Life Insurance and Trust Company, (4 Comstock, 485,) to establish these propositions:

That when a party voluntarily pays a usurious loan, or executes a deed to discharge or secure it, he' cannot sustain an action to recover back the money or the property. That collateral securites placed in the-hands of the lender on a usurious transaction, may be recovered back in an action which would have been an action of trover under the former system; and that moneys received by the lender upon them, may be recovered in an action which would have been an action of assumpsit.

The collection of the money on collateral securities, is not equivalent, of itself, to a voluntary payment of a usurious loan. Pacts may show an acquiescence, recognition and assent, which may make it tantamount.

The third section of the statute respecting the interest of money, (1 R. S. 112,) qualifies the rule that money paid may not be recovered back so far as to allow the excess beyond legal interest to be recovered! and no more. The principal and legal interest may be retained.

The right to reclaim securities deposited as collateral, or to recover the money which may have been collected from them, may be barred like other demands, by the statute of limitation, and that statute will begin to run from the delivery of the securities.

The ground of the plaintiff’s claim in this case then, is : that he had an undoubted right to recover these securities the day before the money was received upon them; that he never assented to the collection of such-money, and has never ratified it since; that it was not a voluntary payment on his part, and hence that his action must be sustained.

I do not see what escape there is from this conclusion, and think that the judgment must be affirmed.

Ordered accordingly.