Holbrook v. Allen

ANDERSON, Chief Justice, delivered the opinion of the Court, as follows: This was an action of assumpsit, instituted in the Circuit Court for Leon County by B. F. Allen, against Holbrook and "Archer, Assignees of the mercantile firm of Lloyd & Flagg. The following statement of facts was agreed upon at the, trial:— Galphin, on the 18th of March, 1848, drew upon Lloyd & — 90 — Flagg, in favor of one Neeley, for the sum of $167 20. The draft was payable on the 21st of December, 1848. It was endorsed by Neeley to the plaintiff, Allen, and was accepted by Lloyd and Flagg, and duly charged to the debit of Galphin on their books. Lloyd & Flagg were the factors or merchants of Galphin, who is a planter, and were in the habit of accepting bills for him and making him advances,, receiving his crops when made. These were either purchased by them or sold by them on Galphin’s account, and the proceeds of the sale placed to his credit. The bill in' question was presented to the acceptors about the time of its maturity, but was not paid. No notice of this non-payment was given to the drawer. On the 10th of January, 1849, the acceptors failed and assigned all their property to the defendants in this suit, in trust, to pay their debts according to certain priorities specified in the deed. On the 11th of January, 1849, Galphin sold to Holbrook, one of the assignees, the cotton which had been delivered prior to the assignment, and which was stored in the yard of Lloyd & Flagg. The proceeds of the sale were placed to the credit of Galphin on an account due by him to Lloyd & Flagg. At the time of the assignment Galphin was indebted to' his factors, (Lloyd & Flagg,) by note- $2,326 43, and a current open account of about $600, in which last sum was included the amount of the draft. The cotton was insufficient to pay the entire indebtedness of Galphin, and a new note was given by him to the assignees for the balance. It was further agreed that one Footman had drawn on the same parties for $83 60, at the same time and under the same circumstances. The material facts are the same in this case as in the other, except that the proceeds of the-sale of Footman’s cotton exceeded the amount of his indebtedness to Lloyd & Flagg, and the excess was placed to — 91 — the credit -of Footman, by agreement between him and the -assignees. These facts are specially set out by the plaintiff in two -several declarations, and he avers that by the respective payments made to the assignees by Galphin and Footman, they, the assignees, became indebted to the plaintiff in the amount of the two bills, with interest. The declaration -also contains the common money counts and, among them, the count for money had and received by the defendants, to '-and for the use of the plaintiff. The defendants plead in each case non assumpsit. The ■Judge of the Court below was of opinion that the law was with the plaintiff, and judgment was rendered in his favor against the defendants for the sum of $278 12, with costs. From this judgment an appeal was taken to this Court. The action for money had and received is a species of equitable action very much in favor with the courts. Its principles are liberal beyond those of any other known to the law tribunals. It lies in almost all cases when a person ■has received money which, in equity and good conscience, he ought to refund. The want of privity is no objection to this action, for the law will imply a contract from the equity of the claim. “ If the defendant,” says Lord Mansfield, “be “ under an obligation, from the ties of natural justice, to re- “ fund, the law implies a debt and gives this action, founded “ in the equity of the plaintiff’s case, quasi ex contractu, as “ the Roman law expresses it.” 2 J. Burrow, 1015. The plaintiff, then, in the case before us, may assert his claim in the perfect confidence that the courts will afford him sufficient remedy against the defendants, if his demand against them is equitable and just. The money which he seeks to recover is the amount paid by Galphin and Footman to the defendants, in consideration of the acceptance by Lloyd & Flagg of their respective bills of exchange, drawn in favor of Neele) and endorsed to the plaintiff — 92 — In investigating the nature of Allen’s claim to this money it is necessary to consider, in connection with it, the claim which is in conflict with his. This conflicting claim is not that of Lloyd & Flagg, nor that of Galphin and Footman, nor that of the defendants to this suit. These last have no-personal interest in this controversy. They represent, so far as this case is concerned, the preferred creditors of Lloyd & Flagg, and it is the justice and equity of the claim of these creditors to the fund in question that is really in conflict with the claim of Allen. The relation in which they stand to the other creditors of Lloyd & Flagg, as entitled to priority of payment, is fully sanctioned by well established principles. A debtor in failing circumstances, in making an assignment of his property, has undoubtedly a right to give preference to one creditor over another. 2 Story’s Equity, 302. To determine between the respective rights of these preferred creditors and Allen, it is necessary to refer to the circumstances under which the fund in dispute was paid to the defendants. Upon the acceptance of the two bills of exchange by Lloyd & Flagg, they became the primary-debtors to Allen, and Galphin and Footman became the sureties of the debt, being only secondarily liable. “ As be- “ tween the acceptor and the payee it is not a collateral, “ but an original and direct undertaking. The payee accepts “ the acceptor as his debtor, and he cannot resort to the “ drawer but upon a failure of the payment of the bill.— “ The engagement of the drawer, therefore, may more prop- “ erly be termed collateral.” 2 Wheaton, 387. Allen became, then, with his own entire consent, the creditor of Lloyd & Flagg, though retaining for a while his right of ultimate recourse upon Galphin and Footman, as sureties for the payment of the debt. But even this relation ceased between them after the 21st of December, 1848. On that day the bills fell due but were not paid, and no no — 93 — tice of non-payment was given to the drawers. There does not seem to have existed any sufficient excuse for the omission of this notice, the acceptors being the factors of the drawers and receiving the crops when made, and the effect of the omission is a very familiar principle of commercial law. When a bill is duly presented for payment on the day it is due, and it be not paid, notice must be given to the drawer; otherwise he will be discharged from all liability, not only to pay the instrument itself, but also the debt in respect to which he became a party to it. Chitty on Bills, 465. From this period, then, all privity between Allen and the drawers of the bills was at an end. By the consent of all parties, and by the operation of well known and well settled rules, Lloyd & Flagg became the sole debtors to Allen, and Galphin and Footman were indebted to Lloyd & Flagg, and to'no one else. While these parties stood in this relation to each other, the rights of the other creditors of Lloyd & Flagg intervened and became vested in the defendants, Holbrook and Archer, as trustees. These rights were regulated by the deed of assignment made on the tenth of January, 1849, and it may be inferred from the statement, of facts, as it was admitted in the argument, that Allen’s claim as creditor was postponed to those of others more favored. The debts of Galphin and Footman to Lloyd & Flagg were a portion of the effects of the latter, and were conveyed with the rest to the defendants to be applied for the benefit of preferred creditors. Should they not be so applied ?— Any right that Allen might have once had to this particular fund he had voluntarily abandoned when, on the 21st of December, 1848, by omitting the notice of non-payment, he released Galphin and Footman from their obligation to him, and was content to look to Lloyd & Flagg alone for the payment of the bills they had accepted. The preferred creditors certainly had a claim which might have been en — 94 — .forced against the assignees for the fund in question, since these had received it as a portion of the effects of the assignors, and were bound by the provisions of the deed of assignment to pay it to those creditors ; and it is difficult to conceive in what respect this claim can be called inequitable. Allen had abandoned his claim to it and contented himself with retaining his claim against Lloyd & Flagg alone. But Allen, in his declaration, alleges that this money was paid to the assignees by Galphin and Footman by mistake, and he bases his right to recover it upon that allegation.— It is true that an action for money had and received will -lie for money paid by mistake. Buller v. Harrison, Cowper, 567. But in this case is there any such mistake as the law here contemplates ? It may be, that when Galphin .and Footman paid the money, they were under the impression that their respective biffs of exchange had been paid, and that if they had been informed that such was not the case, they might, in ignorance of their legal rights and obligations, have declined paying the assignees. But this was a mistake as to the law which imports nothing ; and their mistake or ignorance of the facts was not material. Though they might have hesitated to pay the money due by them, its payment could have been enforced by the assignees. Therefore it is that Allen is in no wise concerned in the mistake made by them, if any was made. He could not make them pay him, and they would not have volunteered to do so, when they found that they could be compelled to pay the assignees. The right of the assignees to enforce payment against Galphin and Footman, is derived from the nature of the contract of these last with Lloyd & Flagg. The acceptance by this firm of their drafts was the consideration for their indebtedness to him — the amount was charged to them on the books of the firm. After the 21st of December, 1848, they were released from all liability to Allen — Lloyd & — 95 — Flagg were substituted in their stead, as the sole debtors of Allen, with Allen’s consent, and this, as we have said, was a sufficient consideration for the debt. Chitty on Bills, 85. Lloyd & Flagg’s liability tó pay Allen still exists — their bankruptcy and assignment have not relieved them from it,, and no delay or omissions of notice, on the part of Allen, will release them, until, by the operation of the statute of limitations, a presumption arises that payment has been; made. We think, then, that, regarding the rights of all the parties to this transaction, true equity dictates that Allen should be confined to the position he has selected for himself, that of a general creditor of Lloyd & Flagg, and that any attempt to relieve him, would only be at the expense of the' paramount equities of others. A case' reported' in 1st Barbour’s Supreme Court Reports, at page 486, was relied on by plaintiff’s counsel, as establishing Allen’s right to look to the cotton, which is mentioned in the statement of facts, as the proper fund out of which the draft which he held should be paid. In the case-referred to, a draft was drawn by a consignor of cotton, upon the consignee, on account of such consignment, and-was discounted by a bank, upon the faith of its being paid out of the proceeds of the cotton, and was accepted by the' consignee — it was held, upon the failure of the consignee,, that his assignees held the cotton,- as a trust fund applicable-to the payment of the draft. This was a proceeding in a Court of Equity. We are at a loss to-discover in what material points this case resembles the one before us, even if we disregard the difference between the tribunals. In the New York case, the draft was- discounted on the credit of the cotton, and not of the consignee. In this, the cotton, which is claimed by Allen as an equitable fund for the payment of his drafts, was not in existence, and had not probably been planted at the date of the drafts. It does — 96 — not appear that the drafts were drawn in reference to any particular cotton, even in embryo, nor, indeed, upon the faith of cotton at all. They may as well have been supposed to be drawn on the corn, the tobacco, or the sugar, which the drawers during the year either did, or might, have sent to their factors to be sold ; and still less does it appear that Allen’s drafts were to be paid out of this particular cotton, rather than the remainder of the $2,936 21 due by Galphin, and the $283 60 due by Footman. All who dealt with the firm of Lloyd & Flagg, and became their creditors during the year 1848, were entitled to the same lien upon this cotton as Allen — that is to say, the lien belonging to them as general creditors, and nothing beyond, until a change was made by the operation of the deed of assignment. All traded with them alike, upon their general credit as merchants, and not upon the faith of any specified fund for security, as in the New York case. The Supreme Court cannot take original jurisdiction, of a cause, even by consent of the parties, but an appeal from a final judgment of the Circuit Court may be heard and determined here, whether brought up regularly, according to prescribed forms, or when such forms are dispensed with by agreement. Where a ease is submitted to the Court, upon an agreed state of facts, for its judgment on the law, such submission is equivalent to a demurrer to the evidence. But where facts alone are submitted, and the Court is only called on to weigh the evidence, and decide accordingly, there being no question of law upon which the merits of the case depend, an appeal, or writ of error, does not lie. We think, therefore, that the Court below erred in deciding that the law was with the plaintiff, and in giving him judgment against the defendants. It must be set aside, and judgment for the defendants with costs.