Webb v. Walker , 61 Mass. 46 ( 1851 )

Shaw, C. J.

The question for the court is, can this bill be maintained on the ground of trust, or otherwise. The question raised is an interesting one, and has received great consideration from the court.

The parties obviously intended to execute a bottomry bond; but this intention was not carried out. No marine interest was reserved. The vessel was not put at risk, nor did the security of the debt depend upon its safety alone; essential elements of such a bond. The instrument was simply an agreement, that the vendor, of certain personal property might resell it upon non-payment of the purchase-money, and pay himself from the proceeds. Can the main intention of the parties be carried into effect notwithstanding this failure; and did the instrument create such a lien, or declare such a trust, as can be enforced by a bill in equity ? We think not. The stipulation to insure has no effect on the construction of the instrument. As the plaintiff was not to have the benefit of it, it was a clause entirely aside from the main body of the agreement. There are no words of grant, conveyance, pledge, or hypothecation. There is simply a stipulation, that, if one party failed to pay at the time fixed, the other might enter and sell, or might act as his attorney for the sale of the property. Pierce immediately sold to Walker, and when the first note became due, the plaintiff desired to sell, but Walker refused assent, and denied the existence of any vendible interest in Webb. It cannot be upheld as a mortgage, for there was no possession, and no record before the sale. It only gives a power to sell and apply the proceeds to the payment of the notes. This is not a power coupled with an interest, and amounting to an assignment. The vessel must be sold before any proceeds could arise, and it was only in the proceeds, when realized, that the plaintiff had any interest. Such an interest could not. defeat Pierce’s power to sell and pass the property. When a party has conveyed an interest in the thing itself, with a power to sell and appropriate the proceeds, the grantee takes something more than a naked, revocable power; but when only a power to sell is given, without any interest in the subject matter, except in the proceeds arising from the sale, which interest can only be obtained by execution of the authority, it is otherwise.

This case most resembles that of Hunt v. Rousmanier, 2 Mason, 342, 8 Wheaton, 174, and 3 Mason, 294. Rousmanier had borrowed money of Hunt, and by way of security gave him a power to sell two vessels, then at sea, and reimburse himself from the.proceeds. Rousmanier died before the return of the vessels. Hunt brought his bill in equity, in the circuit court, to have a lien on the vessels declared in his favor, to have the vessels sold, and his debt first paid out of the proceeds. The estate of Rousmanier was insolvent, and the question was between the complainant, relying upon such trust, and the general creditors. Upon a demurrer, judgment was given for the defendant, on the ground that the power was a naked power, not coupled with an interest in the vessels, and that it terminated with the death of the party who gave it.

On error to the supreme court of the United States, the cause was argued at great length; and, in an opinion given by Marshall, C. J., the court affirmed both the above propositions, namely, first, that a power to sell a vessel and take payment from the proceeds, was a naked power, not coupled with an interest, and so created no assignment; and, second, that, as a naked power, it ceased with the death of the party who gave it; that it created no trust and no assignment, and of course no lien on the vessels. But as that case came up on a demurrer, and it appeared to be stated by the bill, that the agreement was intended to operate as an effectual security for those loans on those vessels; that both parties so intended; and that the powers were therefore given and taken under a mistake ; and as that court had jurisdiction in equity to correct a mistake, they reversed the decree of the circuit court, sustaining the demurrer, and remanded the case to the circuit court, with leave to the defendants to withdraw the demurrer and file an answer. The case came again before the circuit court, on the answer and proofs; and it was decided by Story, J., that no such mistake was established, and judgment was given for the defendants.

To the only points applicable to this case, the foregoing is an authority for the defendant, and decides that such a power of attorney, given by an owner, though intended as a security for money, constitutes no assignment, no contract for specific performance, and no trust; and therefore will not sustain a bill in equity in this court.

But it is clear that this court has no jurisdiction in equity to afford relief in cases of mistake, even if a mistake in matter of law merely, where the parties have given and taken the security which they intended, but did it under a mistake of the law, as to its effect and operation, were a proper ground of relief in a court of full equity jurisdiction.

In the present case the parties no doubt intended to give and receive a bottomry bond, which, if it had been done, would have been a marine contract, giving jurisdiction to the court of admiralty, by process in rem, to afford relief; but being made, as conceded, without the requisites of a bottomry bond, it could not be thus enforced.

It is not a mortgage, because there were no words of absolute or conditional transfer, no delivery or record; nor an assignment, because no interest in the property to be sold was coupled with the power to sell; nor a pledge or hypothecation, because attended by no delivery or change of possession. The only remaining question is, whether it was a declaration of -trust. As already stated, the court are of opinion that it wras not. It was no more a declaration of trust, binding on thud parties, than would be constituted by an agreement of mortgage, pledge, or hypothecation, without delivery, and without change of possession; it might be good against the original party, if he for whose benefit it was made could get peaceable possession; Bartlett v. Williams, 1 Pick. 288; but could not affect a subsequent purchaser or creditor.

It may be proper to remark, that this power to sell is distinguishable from that class of powers given by wills, which, from the nature of the case, are held to be not revocable by death; and from trust powers derived out of a will; as powers to sell an estate in trust to pay over the proceeds; which must, ex necessitate, be executed after death. But this power was given by a mere executory stipulation, inter vivos, and was therefore revocable.

Our opinion upon this point renders it unnecessary to go into the discussion of the question, whether Walker purchased with notice, upon which considerable evidence was taken.

Bill dismissed, with costs for the defendant.