Mumford v. Murray , 1822 N.Y. LEXIS 191 ( 1822 )

The Chancellob.

The rehearing was prayed for, and granted, in this case, for the purpose of giving in evidence a letter from the defendant to the intestate, J. P. M., dated at Paris, in 1797, and which, by mistake, or by reason of some misunderstanding between the solicitors, was not made an exhibit, and read in evidence at the former hearing.

The receipt of the letter was acknowledged by J. P, M., on the 4th of November, 1797, and it has been produced, and read upon the rehearing. The question now raised and discussed is, whether that letter contained sufficient notice of the order upon Charles Murray, mentioned in the former decree, to conclude J. P. M., and his representatives, from charging the defendant with any part of the moneys received by John Innes Clark, under that order.

The order was drawn by Robert Murray & Co., and purports to bear date at New-York, June 24th, 1797, and was drawn upon Charles Murray, at London, in favour of the defendant. It directed him, “ to pay to the defendant, or order, 24,000 pounds sterling, or as much as he might receive on their account, by virtue of their claims on the British government, for property taken on board the barque Two Brothers, the snow Harmony, the brig Rachel, the schooner Ariel, and the ship Favourite, by the ships or vessels of his Britannic majesty, and which claims the said Charles Murray was authorized, as their attorney, to make on their behalf, under the treaty of amity and commerce, &c. for value by them received of the defendant.”

I assume it to be a fact, conceded throughout the case, that the house of Robert Murray & Co. was, at that time, insolvent, and was largely indebted to the defendant, and to the house of Murray & Mumford, for debts previously contracted, and responsibilities assumed. The order contained no direction as to the application of the funds covered by it, and the defendant had, consequently, a just right to apply them, when received, to the payment of those debts, and to the discharge of those responsibilities. The order must be presumed to have been intended for those purposes, and the defendant had no right to apply them to any other purpose, so far as the house of M. & M. was interested in the application of those funds, until that purpose was answered. The defendant, in an áffida-* vit, made and read in this Court, op the áth o('Bepétnber, 1817, (and which is ap exhibit in this cituse,) Stared, that previous to, and at the time of the failure of Robert Murray & Co., they had dealings with the defendant, in his separate capacity, and with the house of Murray & Mumford, and that all the debts and responsibilities charged in the account exhibited before the master, in the cause of Riggs and others against the defendant, by the defendant, and by M. & M., against Robert Murray & Co., were due, and the responsibilities incurred, before the date of the order. It was stated, in the report referred to, that there was due to the defendant, and to M. & M., from the house of Robert Murray & Co., after all credits allowed, on the 1st of September, 1814, the sum of 95,688 dollars 25 cents, and which, with interest, amounted, at the date of the report, on the 1st of July, 1816, to 102,548 dollars. I refer to this fact merely for the purpose of showing, what I have assumed to be undisputed, that the claims of the defendant, and of the house of M. & M., at the time of the order, were co-extensive with it in amount. The defendant stated further, in the affidavit referred to, that he went to Europe, in 1797, at the request of Robert Murray & Co., to aid in the recovery of their property, and the prosecution of their claims upon the British government, and their claims against Bird, Savage & Bird, and “ under an agreement, that what he might receive in the premises should be retained and credited on account of debts and responsibilities, as well of himself, as of Murray & Mumford

This admission of the defendant coincides with the necessary import and legal operation of the order, and shows, conclusively, that the order was drawn and accepted for the benefit of himself, and of the house of M. & M., of which he was a member, as creditors of the house of Robert Murray & Co. He says further, in that affidavit, that the moneys received from the British government were “ actually and in truth received under the order or authority directed to Charles Murray, and through whom the said payment (referring to thé sum of 31,699 dollars 80 cents, which he had previously mentioned as received on account of the claims of Robert Murray & Co. upon the British government) was made to his agents in London.”

The main question agitated upon this rehearing, now occurs: had J. P. M. due and seasonable notice of this order, so as to preclude him, in consequence of his subsequent discharge to the executors of J. I. Clarice, from calling on the defendant to account for the entire proceeds of that order, according to the legal effect of it ?

The defendant, in a letter, dated at Paris, August 10th, 1797, after a long and desultory detail of his complaints and misfortunes, adds, under the date of the 13th, these words : “ 1 have at length got an assignment of claims on the British government, which, by their calculation, amounts to about 22,000 pounds sterling, as security for your and my bail for Wheaton & Jonathan Russell, for my bills on B. S. & B., drawn last year, about 2400 pounds sterling, which Mr. Clarice and I are accountable for, our endorsements to Maulé &f Bullock, the residue, which will be nothing, is to be divided between C. & N., L. & T., and ourselves.” The order was upon Charles Murray, the agent of Robert Murray & Co,, and this letter is silent as to the nature of the instrument, or on whom drawn, and only says, “ 1 have got an assignment of claims.” The order was upon specific property, on board of five vessels, particularly named, and the letter is silent as to the specification of the funds, and only says, “ claims on the British government.” The order was for 24,000 pounds sterling, or as much as the agent might receive, and the letter varies on this point, and only says, that, “ by their calculation, the claims amount to about 22,000 pounds.” The order was without appropriation of the funds to any specific object, and left them to be applied according to the previous agreement, and the legal effect of the order, to the entire debts and responsibilities of the defendant, and of M. M. The letter diverts the funds to other objects and persons, and says, that the assignment was given as security for one particular engagement of his own, viz. the bills on B. S. & S., and for two particular responsibilities of M. & M., viz. their obligation as bail for Wheaton & Russell, and their endorsements to M. & B; and that the residue, “ which would be nothing,” was to be divided between C. & N., and L. & T., and themselves. And could the defendant have written this letter, with the order in question before him ? It is a mutilated, inaccurate, and deceptive account of the contents of the order, if, indeed, it did in fact refer to the order in question. The defendant asserts, in the petition for a rehearing, that the order, notwithstanding its date, was written at Paris, and drawn by one of the house, then there with him, and was drawn at or about the time of the date of his letter of the 13th of August, 1797. Why, then, it may be asked, did he not furnish his partner with a copy of the order, and let it speak for itself? it would have been as easy to copy the order, as to give the very erroneous account of it, which has been mentioned. In the affidavit already referred to, the order is set forth at large, and he there states, that it was given upwards of eight months before the date of the trust deed of the 23d of March, 1798. This would carry back the time of giving the order beyond the 23d of July, 1797; but assuming it to have been really drawn on the 13th of August, 1797, when he wrote the addition to the letter under that date, it is altogether unaccountable, upon any fair and reasonable ground, why the true nature and character, and terms and value of the order, should have been so entirely misrepresented, and that, too, to the prejudice of the rights and interest of his partner, when the order itself must have Iain under his eye. It would not seem to he very just or reasonable, for the defendant now to be enabled to say, by the aid of this Court, that the paragraph in that letter was, of itself, notice to J. P. M. of that order, sufficient to charge him with a waiver of his claims under it against the defendant, for a misapplication of the funds, when he made the agreement with the executors of J. I. C. in 1809. There is good reason to believe that J. P. M. never understood or appreciated his interest under that order, and that the representation in the letter was so inaccurate and so delusive, as to throw him entirely off his guard, and, to mislead him as to the value of his rights.

At the time of the drawing of the order, M & M. were large creditors of the house of Robert Murray & Co., and that house had then failed, charged with debts exceeding 700,000 dollars, and Robert Murray, the head of the house, was then in prison in the city of New-YorJc. These facts appear in the pleadings, in the cause of Riggs v. Murray, so often referred to by the defendant in the course of this cause. It was, therefore, extremely important to the house of M. & M. to have a valid lien, in preference to other creditors, upon the proceeds of the property taken on board of the five vessels named in the order, and then in the possession of the Rritish government. That lien the house of Robert Murray & Co. agreed to give before the defendant went to Europe, and that lien, or security, was given, to the amount of 24,000 pounds sterling, by the order on Charles Murray. The moment that order was drawn and received, it became the duty of the defendant to act under it effectually, and to give his partner a true and full account of the security. His partner had a great stake and interest in the faithful performance of that 'trust, and I regret to say, that I am obliged to draw a very unfavourable inference, from the manner in which that order was treated, and the letter dictated, which is now set up as a full and sufficient notice of the order. The order was not stated truly. Information was withheld as to the character of the assignment, and as to the specific property covered by it, and as to the nature and amount ©f the interest ¡of M. & M. in it. The order was stated untruly, when it was represented as covering the interest of third persons, and when the residuary interest of M. & M. was exhibited as of light and casual importance.

It is remarkable, that the defendant never 'mentioned or alluded to the order, or to any assignment of claims on the British government, in any part of his subsequent voluminous correspondence with his partner. The answer of the plaintiffs, to the cross-bill, filed to obtain-discovery of the letter of the 13th of August, refers to as many as sixteen letters, (and which are in proof,) from the defendant, written between August, 1797, and January, 1799 ; and there is not, in one of them, the most distant allusion to that order. This is very surprising. Here was an absolute lien obtained from a bankrupt bouse, to the value of 24,000 pounds sterling, upon specific funds, in favour of the defendant, and of him and his partner, and yet not one solitary word of consolation is given to his partner, by allusion to this order, though his letters are replete with pathetic representations of their losses, disappointments, responsibilities, distress, and ruin. On the contrary, those letters most manifestly and strongly discouraged J. P. M. from expecting any relief from any of the resources of Robert Murray &/ Co., in Europe, and suggested various modes of providing for some of tlie trusts, which he had specified in his letter of the 13th of August, as provided for by the assignment. Thus, in his letter, dated August 16, 1797, he states to J. P. M., “ that he will have to provide for M. 8/ B.'s suit in JYew-Yorh, and must use the funds arising from the sale of all property from this country.” This, we are to observe, was one of the responsibilities which he had stated as being provided for by the assignment. So, in his letter of the 17th of August, 1797, he says, “ We have received accounts from C. M., which contain such information as gives us all reason to hope, that the money in B., S. BJs hands, will yet be released from the attachments, and made subject to the disposal of R. M. &/ Co. If so, we are safe.” It is worthy of notice, that here also he silently passes by the recent assignment as a thing of no importance, and on which none of his hopes rested. In his letter of the 20th of August, 1797, he says, “ I am promised here, that every thing in America shall go to the discharge of M. &/• B.’s bill.” He also adds, in relation to the being bail for Wheaton, “ my very bread depends on the arrival of J. R. W. before the 18th of October.”

All those letters are stated in the answer to the cross-bill of discovery, as having arrived at the same time, and in the same vessel with the letter of the 13 th of August; and, it requires but very ordinary observation to perceive, how extremely well calculated those letters were to detach the mind of J. P. M. from placing any reliance or importance on the assignment, stated, in the letter of the 13th of August, to have provided for those objects.

In bis letter of the 30th of August, 1797, dated at London, he says, his journey to Paris had been attended with as little success as he could have expected. Indeed, no one has been there to much less purpose, as I have not realized as much as my expenses. I have some distant views of success, but so little confidence have I a right to place in those for whom we have hazarded so much, that I will not be sure of any tiling, till I have it in hand. I again repeat, that you and R. must take care of M. 8f B.’s bills, as no effort will be made in Europe by those who have had it in their power, so long ago, to have provided for it, and who, during my stay with them, never acquiesced in any one proposal of mine, except that of my coming away.”

This letter, it will be observed, was written from London, where Charles Murray, on whom the order was drawn, resided, and not one word is said about it, nor whether it was presented; and, he loudly complains, that nothing liad been done for him, or was to be expected. And yet, It was but a few days before that time, that one of the house of Robert Murray &/ Co., while he was at Paris, had given him an order, according to agreement before he left JYcw-York, on funds belonging to that house 5 and hs admits, in one of Ms answers in this suit, that funds to the amount of 19,393 pounds, seven shillings, and one penny, sterling, were realized from the property covered by that order.

Again; in his letter of the 16th of December, 1797, ho says, that “ the sum recovered against I. R. W.'s bail, is about the amount I expected, to the satisfaction of which, must be applied the property in the Ariel, and such other as Robert shall point out. If this is not done, my other property will be sacrificed, and my family distressed.” It is to be observed, that this bail responsibility was one of the subjects which he stated in the letter of the 13th of August, as provided for by the assignment $ and this letter must have impressed his partner with the belief, that the provision was of no avail, for Robert Murray was to point out the property to be applied to it. This property of the Ariel was, likewise, part of the specific property covered by the order, and yet no notice was given to his partner of that fact.

In his letter of the 17th of Fehnary, 1798, he says, “ I am at a loss to account for the idea which you seem to entertain, of putting in execution such various plans, since I have been so very explicit in stating to you the entire deficiency of every resource that was contemplated when I left home. When my situation will be bettered, if ever, I begin to doubt, since every resource of our own, and to none other have we to look, has not failed to be attended with unprecedented disappointments

His numerous letters are filled with language of the like import; and, to assume, that the defendant has a right to charge J. P. M, with being duly apprized by him of the contents, and, consequently, of the force and effect of the order on Charles Murray, would be to act without any colour of reason or justice, and directly against the truth of the fact. The defendant now says, in his petition for a rehearing, that he never presented the order to Charles Murray, and that it was never, in any manner, acted upon ; and yet, in his affidavit, in 1817, he swears, that all the moneys received from the British government were actually, and in truth, received under it, and that, through Charles Murray, the payments were made to his agents in London. The inconsistent stories, and the. contradictory assertions of the defendant, in respect to that order, are truly astonishing. Let us attend, for one moment, to the various statements of the defendant on that subject.

In his first answer in this suit, he says, that the 31,699 dollars 80 cents, credited to the trust estate, in the account (A.,) were received from the British government on account of illegal captures, made by British subjects, of the property of Robert Murray Co.; and were received under a lien made or created on that fund by Robert Murray Co., in favour of the defendant, prior to the execution of any of the trust deeds. He says, also, that M. M. ought to be credited with the balance of that sum, after deducting certain charges, mentioned in schedules (G.) and (H.,) and that the cestui que trusts, mentioned in the fifth clause of the trust deed of the 31st of May, 1800, are not entitled to any portion of that sum.

The admissions in this answer, appear to me to destroy all pretence of a waiver by J. P. M., of his right as a partner, to the funds received under that order, for it is admitted, that the house of M. &f M. was entitled to the 31,699 dollars 80 cents, as part of the proceeds, of the property covered by the lien; and, if they were entitled to that part, they were equally entitled* to the whole sum of 19,393 pounds, 7 shillings and 1 penny, sterling, which is admitted, in the third answer, to have been received from the proceeds of the property covered by the order. The claim to the whole rests precisely on I he same foundation a» a claim to the part admitted by the answer. If the cestui que trusts, in the trust deed of 1800, had no right to the 31,699 dollars 80 cents, they had no right to any part of the residue of those funds. The inference is irresistible; and it never occurred to the defendant, when he put in this answer, to set up the pretence of notice, in 1797, as a bar to the claims of J. P. M.

In his second answer, the defendant sets forth, at large, the order on Charles Murray, as being the lien referred to in the first answer ; and here we have another and a different view of the objects of the order from that stated in the letter of the 13th of August, 1797. He states, that it was given to secure him against all his liabilities, as bail for Robert Murray and John R. Wheaton, and for all other claims which the defendant might have in his individual capacity, or as one of the firm of M. fy M., against Robert Murray Sy Co. He is silent about its being given as security for bills on Bird, Savage Sy Bird, and for the endorsements of M. Sy M. for Maulé Sy Bulloch, and that the residue was to be divided between Clark Sy Nightingale, Loomis Sy Tillinghast, and M. Sy M. All these objects are now withdrawn from the purpose of the order, and it proves, that the character which he gave of the order, in his letter, in 1797, was fallacious and untrue. He says, further, in this answer, that from the great confidence which subsisted between him and Robert Murray Sy Co., it was not deemed necessary to make a particular statement of the manner in which the funds, which might be received under the order, should be applied, and that Robert Murray Sy Co. had full confidence, that he would fairly account with them for all moneys which he might receive under the order.

What can we say, to such a tissue of contradictions, in respect to that order, and the funds it covered, as are contained in the letter of the 13th of August, 1797, the affidavit of the 8th of December, 1817, the first and second answers, and the petition fór a rehearing. The language of ti uth is uniform, and all its accounts will for ever harmonize and agree. To charge J. P. M. with notice of that order from that letter only, when we compare the order with the letter, and take, in connexion with it, all the subsequent correspondence, appears to me to be as absurd as it would be unjust.

In his third answer, he says, that he considered, from the general nature of the order, that he had a right to apply the proceeds to secure him against all liabilities for Robert Murray &f Co., and all claims which he might have in his individual capacity, or as one of the house of M. M., against Robert Murray Co., in such manner as to him should seem meet. That no designation was ever made as to the particular debts or claims which the order was intended to secure or satisfy.

Here we have a still further contradiction of the representation of the order given in the letter of 1797. Now, there was no particular designation of the debts or claims to which the proceeds were to be applied, and this leaves the order to stand, as it was drawn, in its naked simplicity.

These answers do, of themselves, completely destroy all just ground for now setting up the information in the letter, as a sufficient notice to J. P. M. of the order.

The defendant admits, in this answer, that he and J. I C., in 1802, and 1803, as trustees, under the trust deeds, gave a power of attorney to Thomas Mullett &{■ Co., to receive from the British government any moneys which should be paid on account of property of Robert Murray Co., which had been captured, and that Charles Murray was ordered to allow all moneys received from the British government, on account of property mentioned in the order on.Charles Murray, to be paid to Mullett 8f Co. He says, that the reason why so large a portion of the funds of the property mentioned in the order, was permitted to pass to J. I. C., was, that he was ignorant of the amount due from Robert Murray Co. to the defendant, and to M. &/• M., and he supposed the amount paid by Thomas Mullet Co., to him, would cover all the claims of the defendant, and of M. M. It was, therefore, with due recollection of the order, and at his own peril, that he suffered the proceeds of the property, covered by the order, to pass into the hands of Clark.

From this review of the facts, we are prepared for the decision of the question, whether J. P. M. concluded himself, by being a party to the agreement with the executors of J. I. C., in 1809, and to the subsequent release of these executors, in 1810, from now asserting his right to call the defendant to account for the proceeds of the property received under that order, to the extent of the claims of M. M. against Robert Murray &/■ Co., and which the defendant wrongfully, and without the assent or knowledge of his partner, suffered to pass into the possession of J. I. C., and to be appropriated to other objects, under the trust deed of 1800. It is entirely clear to my mind, that J. P. M. acted in ignorance of his rights under that order, when he joined in the discharge of the executors of J. 1. C. He only meant and intended to discharge those executors from claims for moneys which their testator had received, as a trustee under the trust deeds of 1798, 1799, and 1800. This is the plain language of the agreement, upon which the release was founded ; and the general language of the release must be construed as intended to be confined to the subject matter of the agreement, and upon which the executors accounted before the master. This was the acknowledged and the only consideration for the release. J. P. M. was no party to either of the suits on which that settlement took place, and he is not to be supposed to have inspected the pleadings and proofs in those causes, or to have been informed of the facts in those cases, any further than they were stated in the agreement, an(j in the release. No further information was requisite , * for him, and he cannot, in common reason or justice, be chargeable with notice of all the facts involved in the voluminous proceedings in those suits. But, if he had notice of all those proceedings, they would not have given him any information of his rights under the order, for they contained none. The schedules annexed to the answers df J. I. C., and the defendant, set forth an account of moneys received by them in trust, for the purposes specified in the trust deeds ; and among the moneys received, the proceeds of the property of the fiv.e vessels, covered by the order on Charles Murray, were mentioned. But, if J. P. M. had seen and read those answers, and the schedules annexed, he would have had no knowledge that the property in those vessels had been covered by the order, for he had never seen the order, nor were the contents of it communicated to him by his partner. He had only been told of the assignment of claims on the British government, by a single obscure paragraph, crowded into a very long letter, written twelve years before; but, he had not been informed in what those claims consisted, nor to what extent the assignment covered them; and whatever the nature of the assignment might be, he was given to understand, that it was for the benefit of other persons, and houses, and that his house had but a very limited concern in it. If the paragraph of the letter had then been before him, he would not naturally have been led to suspect that the proceeds of the five vessels, mentioned in the schedule, were the very identical property alluded to. It is perfectly clear to my mind, that he was kept in entire ignorance of the real character of the order, and of the specific property to which it related, and of the receipt of any moneys under it. No man, as it would appear to me, who has duly attended to the history of this controversy, and to 'the facts in this case, can possibly entertain a doubt on this point. J. P. M. had the best reason to suppose, and conclude, that all the moneys so received, had been truly , .. received under the trust deeds, according to- the uniform assertion of the defendant, and the joint order of the trustees upon Mullett if Go. The defendant did not deal with him frankly, and truly, as became a partner; and nothing would be more unjust than for the defendant now to avail himself of the ignorance or delusion of his co-partner, for which he is solely responsible, and which] he was bound in, duty to remove, and to make that ignorance or delusion a pretext to bar his representatives of their just rights. The first disclosure, by the defendant, of the order, and of the property which he received under it, .was in the. affidavit of December, 1817; but there is no evidence that J. P. M. had knowledge of that affidavit when he filed his bill. It is very clear, from the bill itself, that he had not; and it was not until after the first answer of the defendant, that J. P. M. became acquainted with the real nature and effect of the order. This is averred in the answer to the cross-bill, and that answer being responsive to the bill, is evidence of the fact.

It is painful for me to be obliged to make or confirm a decree, which may, as suggested by one of the counsel for the defendant, be attended with a grievous loss to him and his family. But it is my bounden duty, (and the consciousness of that must be my consolation,) to pronounce strictly and truly upon rights, as they shall be made to appear, uninfluenced by personal considerations. And it is my clear and decided conviction, after bestowing due diligence to the study of the case, that J. P. M. had a vested interest, as a partner of the house of M. if M., in the order in question, and a right to have it duly presented, and the proceeds covered by it, and received under it, faithfully applied. That his representatives are now entitled to require the defendant to account for that interest; and that when J. P. M. joined in the agreement and release to the executors of J. I. C., he acted in ignorance of the order, and of his rights under it. That his partner, the defendant, is chargeable with having wrongfully kept him in that state of ignorance, and that he, and not J. P. M., or his representatives, ought, in justice and equity, to abide the consequences of it.

I am led to entertain a stronger opinion of the justice of the former decree, since the production of the letter, than I had before. If no notice whatever of the order had been attempted to be given, it might have been imputed to accident, or' mistake, or forgetfulness. But to give a grossly inaccurate and deceptive account of the order, when it lay before him, was worse than no account of it, because it “ led to bewilder,” and has the appearance of design, and cannot well be imputed to accident or mistake. If I were to establish the sufficiency of such a notice, in such a case, and under all the surrounding and subsequent circumstances, and were to allow it to operate as the valid means of an enormous sacrifice of the vested rights of Mumford, I should be setting a dangerous precedent, and make the worst possible commentary upon the reciprocal rights and duties of mercantile partners. It would tend to banish confidence in the truth and frankness of their communications with each other, and destroy the necessity of a scrupulous adherence to those virtues.

I shall, accordingly, direct, that the former decree be, in all respects, confirmed.

Decree accordingly.