M'Vickar v. Wolcott , 4 Johns. 510 ( 1808 )

Van Ness, J.

Several questions, on the argument of this cause, were presented for our decision ; but as I am of opinion that the appellants have, by their answer, denied the whole equity of the bill, it is unnecessary for me to notice many of them.

A suit was commenced by the appellants, in the supreme court, upon the contract entered into between the present parties, on the 20th September, 1803. Issue was joined in the cause, and after being noticed for trial, it was by mutual consent, referred to three persons nominated and elected by the parties.

The referees proceeded to the hearing of the cause ; both parties appeared before them, and after their proofs and allegations had been exhibited, and after a full discussion of the merits, two of them made a report in favour of the appellants.

Soon after the decision of the referees, the present bill was filed, and the appellants were injoined from further proceedings in the suit at law.

Upon the filing of the answer,- an application was made to the chancellor, to dissolve the injunction, which was denied; and his decision on that application, is the subject of the present appeal. This is a summary of the proceedings, before the cause came into this court.

The counsel for the respondents admit, that the suit in the supreme court was not referable under the statute. The submission therefore to the referees, was in the nature of an arbitration, and the report in relation to the merits of the controversy is final and conclusive between the parties.

Whether the contract of the 20th September, 1803, enured exclusively to the benefit of Cruden, or whether, in the event of the non-arrival of the cargoes, the appellants acquired a concurrent right with Cruden, to resort to that contract, to reimburse their advances, it is not necessary here to decide ; for in either case, the injunction ought, in my opinion, to be dissolved.

If the contract was exclusively for the benefit of Cruden, although the remedy at law upon it must necessarily be pursued in the name of the appellants, yet the recovery would be for the use of Cruden. In that case, the respondents might have availed themselves, at law, of every defence which would have been admissible, provided Cruden had himself been a party upon the record ; and if the construction of the contract contended for by the respondents be the true one, we are to presume, that such a defence was made and relied upon.

And here I will dispose of another point, as connected with this part of the case. One ground upon which the respondents seek relief against the report of the •referees is, that they have not had an opportunity of using the evidence of the trial at law, which Cruder?s answer to a bill of discovery would have afforded. Granting for a moment, that such answer would have furnished the respondents with a complete defence, still as they omitted to take the necessary steps to possess themselves of that answer, before the trial at law, which they might, and, if they deemed it important, ought to have pursued, they are now too late. I am satisfied, that the appellants, notwithstanding they have answered the bill, are a,t full liberty to avail themselves of this objection.

If the contract of the 20th September, in the event of” the non-arrival of the cargoes, was an accumulative remedy for the appellants, to indemnify them for their advances to Hopkins, then Cruden's answer could not, either in. the trial at law, or in the court below, prejudice the rights of the appellants. Whatever, therefore, may be the true construction of the contract, (upon which, for the reason I have mentioned, I give no opinion, though I have formed one,) the result must, in reference to the question now before this court, be the same.

I am of opinion, therefore, that the order for the injunction, ought to be reversed.

Spencer, J.

This appeal is from an order of the court of chancery, continuing an injunction after answer, and directing the payment of costs by the appellants to the respondents, for resisting the motion to dissolve the injunction, issued on filing the bill.

It has been objected preliminarily, that no appeal is maintainable upon an order like the present. The 32d article of the constitution, and the 8th section of the act, regulating proceedings on appeal and error, have been cited. The constitution does not profess to specify any regulations upon the subject; but directs, that a court shall be instituted, for the trial of impeachments and the correction of errors, under the regulations which shall be established by the legislature. The section of. the statute referred to, declares that all persons aggrieved by any sentence, judgment, decree or order, of the court of chancery, or court of probate, may appeal from the same, or any part thereof, to this court.

The decision of the chancellor, in denying a dissolution of the injunction, directing it to be retained, and awarding costs against the appellants, brings this case within the terms of the statute. An order of that court has intervened, in relation to which, the appellants are' aggrieved by the payment of costs, if that order is not justified on legal principles.

That orders may be appealed from, it is now too late to controvert; the practice of this court, in hearing such appeals in a variety of cases, has given a construction to the statute not to be shaken. Without undertaking to draw the line between such orders, as may or may not be appealed from, in my opinion, this is an order from which an appeal lies ; in coming to a decision on a motion before the court of chancery, there must necessarily have been an examination into the merits of the case, as disclosed by bill and answer, and the appellants have sustained a gravamen, in the payment of costs.

The ground of the opinion of the court below, in ordering the injunction to be retained, was, that George Cruden was a principal in the contract between M'Vickar & Co. and Wolcott & Co. and that M'Vickar & Co. were agents merely, having no interest themselves in the contract; on that principle, the injunction was continued, until the coming in of Cruder's answer. It becomes necessary to ascertain the relation which the appellants-have to Cruden, and their rights under the contract with the respondents, taken in connexion with the contract between Cruden and Jesse Hopkins, and how far forth the hearing before the referees or arbitrators will conclude the respondents.

It is certain, that the letter from Cruden to the appellants, of the 29th of June, 1803, led to the contract of September the 20th, in that year, between these parties. In that respect, the appellants may be considered as the agents of Cruden; his directions were pursued in taking the security, and in adjusting the terms of the contract; and in case of the arrival of the cargoes, the appellants had resort for a reimbursement of their advances, to Cruden alone. If, however, the cargoes did not arrive, according to the stipulations in the contract, then the appellants were possessed of a security to them individually and specifically, by which they had a right in their own names, to reclaim from the respondents the advances they had made under the contract.

The caption of the contract purports, that it was entered into between the respondents, in behalf of Hopkins, and the appellants, in behalf of Cruden. This is merely introductory, and can have no control over the stipulations it may contain, unless there be ambiguity and doubt, as to the effect of those stipulations. The body of the contract is explicit; and by it, the respondents undertook and engaged, on receiving the acceptance of the appellants to Hopkins’ drafts for 1,000 dollars, at 30 days, on account of such cargoes of cattle, shipped and consigned to Cruden, to reimburse the appellants, each and every advance made on whatever cargoes of cattle did not arrive safe to the hands of Cruden, within 30 days from the advice of the same, by either party.

If the casus foederis happened, nothing could prevent the appellants from recurring to their remedy, under the contract; it is true, this money, when recovered, might enure to the benefit of Cruden ; and there might be a state of things in which it would not. If, for instance, the appellants had not drawn on Phyn, Inglis & Co. at all, to reimburse themselves, or if, as is alleged by the answer, their drafts were protested; in either of these events, I cannot conceive that any court could devest the appellants of a security which they had acquired, and of rights -which justice and equity would warrant their holding.

I may, therefore, conclude, that in some respects, the appellants were the agents of Cruden ; and in some respects, they had rights not liable to his control.

The appellants conceiving their right to a reimbursement from the respondents had attached, prosecuted at law; and the cause was referred to three persons mutually agreed upon, not as a case within the provisions of the statute authorising references. Two of the referees reported in favour of the appellants ; and to avoid that report, this suit was instituted. The principal grounds of the bill are, that by the actual agreement between Cruden and Hopkins, cargoes which, by any accident, should fall to the leeward of Barbadoes, should be received at any island where Cruden had an agent residing. That Cruden would cause about 1,000 dollars to be advanced on each cargo, in America, through the appellants ; and for that purpose, he wrote the letter of the 29th June, 1803. That the respondents became Hopkins’ sureties in lieu of the policies, and the agreement of the 20th September was then made. That in August, 1803, Hopkins began to ship cargoes on the contract, and in that and the two succeeding months, four vessels sailed with cargoes, fell to leeward, but arrived at other British islands, where Cruden had agents resident. That Hopkins made four drafts on the appellants, which were accepted and paid. That it is usual for such vessels to fall to leeward, and that the cargoes were of the description and quality, which Cruden was obliged by his contract to receive. That Cruden received one of the cargoes at Antigua, and thus gave a construction to the contract; but improperly refused the other cargoes. That Cruden, with a full knowledge of the facts as to the advances, shipments, arrival and refusal,.and of the suretyship of the respondents, made voluntary remittances to Hopkins. That the appellants and Cruden, during the time that their remittances were making, and until long after Hopkins’ insolvency, never gave the respondents notice that they were held responsible ; and that if timely notice had been given, they might have secured themselves. That the appellants have, in some way, been repaid the advances, and the nature of their credit on Phyn, Inglis & Co. is stated. That the advances made by the appellants, were not on the credit of the respondents, nor charged against them; nor have they relieved Cruden. That Cruden and Phyn, Inglis & Co. were solvent; and that Hopkins was in 1804, and yet is insolvent, and that the respondents have no competent security. That the appellants had sued at law, a reference had taken place, and the referees had reported, and that they prosecute for the benefit of Cruden. That on the hearing, the respondents could not, for want of proof, and of a discovery from the appellants, show at what time Cruden had notice of the advances made by the appellants, or of the non-arrival of the four cargoes ; and were unable to prove that such notice existed, previous to the 3d June, 1804, though they believe the appellants had the means of showing this ; and that the referees, in making up their report, have excluded from their consideration the point arising from the remittances made by Cruden to Hopkins, as not being within the cognisance of a court of common law, but exclusively of equitable jurisdiction,

I have been thus minute in detailing the bill, that no part may escape the consideration due to it. It is not material to go minutely into the answer; the appellants deny the existence of the most material facts set up, or declare their ignorance of them. They particularly deny, that they have been reimbursed from Cruden, or by their drafts on Phyn, Inglis Co, for the advances they now claim, though they admit that they did draw on Phyn, Inglis Co. for them; but which drafts, owing to their having exceeded the monthly sum they were authorised to draw for, have been protested for non-acceptance and non-payment, and have been eventually paid for the honour of the drawers. They deny that the suit at law was prosecuted for the benefit of Cruden, but allege it was for their own benefit, and that they look alone to the respondents to be reimbursed; and they insist, that the referees did not exclude any point of defence from their consideration, as being of equitable jurisdiction.

Whether the trial before the referees be considered as a trial, on strictly legal principles, or as before arbitrators of the parties’ own choosing, it may not be very essential to examine. In either view, it draws after it consequences, which, in my opinion, are decisive in the present case; for it is an undeniable proposition, that a defence which might be made at law, and which a party will either omit or decline to make, cannot be the basis of a suit in equity; unless it be in cases of fraud, accident, or trust, peculiarly within the province of a court of equity, or where the jurisdiction of the legal tribunal cannot admit the defence.

In the present case, it was a matter of inquiry, before the referees, whether the cargoes had arrived pursuant to the contract; and whether Cruden was, under the contract between him and Hopkins, bound to receive the cargoes at any other island than Barbadoes, or whatever' island might become British head-quarters. The referees, in reporting in favour of the respondents, must have decided, either that the cargoes did not arrive at all, or did not arrive at the island contemplated and agreed upon between the parties to the contract. Their decision is final upon this point, and no court of law or equity should disturb it.

There is nothing of a peculiarly equitable jurisdiction, in ascertaining whether the appellants were agents to Cruden, and having no rights of their own, distinct from his. This was a proper subject for discussion, even in a court of law ; and at law, the beneficial interest of a third per-son will be regarded and upheld, against even the acts of the trustee. A variety of cases might be mentioned, where this has been done at law ; hence it was a matter which was or might have been brought before the referees, if the respondents were agents without any interest or right in the contract, that Cmden made remittances to Hopkins, to the fraud and injury of the respondents'» It is equally a decisive answer to this ground of equity, that there is no pretence, that the respondents offered evidence to the referees, which could have influenced their decision; for by their bill they state their inability to do so, for the want of proof, and of discovery from the appellants, as to the time that Cmden had notice of the advances made, and the non-arrival of the four cargoes» A court of equity, it is true, is ancillary to a court of law, and would have afforded the respondents its aid in gaining a discovery before trial, but not after; anc$ it appears to me to be novel and unprecedented, to ask a review of a cause, at law or in equity, because a party has gone to trial without sufficient proof, which, if diligent, he might have obtained. There is another answer to this ground of equity; it is denied that the referees did exclude this subject from their consideration, on the ground of its being exclusively of equitable jurisdiction..

In short, the only colourable ground of equity in the bill is, that the suit at law is prosecuted for Cruden’s benefit; and this is pointedly denied by the answer. It is scarcely necessary to remark, that the answer is to be taken as true, in those parts which are answers to interrogatories, until disproved.

The injunction, then, in my Opinion, ought not to have been continued, under any notion that there was an equity stated in the bill, which was not denied; nor upon the idea that the appellants were agents, and not invested with any rights peculiar to themselves. The contract was theirs ; it was an additional security in case of the non-arrival of the cargoes ; and though Cruden was liable to the appellants, the respondents were also liable, when the contingency to make them so happened.

There are cases in which a court of chancery will not dissolve an injunction, until all the defendants have answered•, but those are cases, where the defendants have an identity of interests, and where the act of one will affect the other. In the present case, I have already stated, that there is not an identity of interests between the appellants and Cruden ; the answer of the latter could never be read as evidence against the appellants. It was, therefore, improper to restrain the appellants by an injunction, from availing themselves of a legal remedy they acquired in a due course of law, until Cruder; answer came in. I am, therefore, of opinion, that the order appealed from ought to be reversed.

Kent, Ch. J. declared himself to be of the same opinion.

The majority of the court being of the same opinion, it was thereupon ordered, adjudged and decreed, that the order of the court of chancery complained of, be reversed; and that the complainants’ bill in the said cause, be dismissed with costs ; and that the record and proceedings be remitted to the court of chancery, to be executed according to lav/.

judgment reversed.