Pond v. Smith

Bristol, J. The object of this bill is to apply a separate demand in favour of Adam Pond, individually, against Smith & Hubbell, to the satisfaction of a demand in favour of Smith & Hubbell against Charles H. & A. Pond jointly. This application is founded on the insolvency of Smith & Hubbell, which is alleged in the bill, and found by the committee. As a separate demand in favour of C. H. & A. Pond, against Smith & Hubbell, could not be applied at law, by way of set-off, to the demand in favour of Smith & Hubbell against the two Ponds, it would be inequitable, that the former should recover satisfaction for their whole demand; leaving A. Pond to pursue his remedy against them, when, from the intervention of insolvency, no satisfaction of the demand could be obtained. Hence, the interference of a court of chancery is indispensible; and it becomes necessary to inquire to what extent Adam Pond has succeeded in establishing his demand against Smith & Hubbell. It is hardly necessary to observe, that Adam Pond, to obtain the set-off which he seeks, must establish his debt against Smith & Hubbell, as effectually, as though he had sued them in a court of law. Whether he pursues his remedy at law, or in chancery, in either case his demand must not rest on a violation of law for its foundation: it cannot arise out of illegal acts, opposed to laws, which he is bound to obey; nor depend or conduct contra bonos mores, or sound policy. The demand in favour of Adam Pond, to which the attention of the court is first called, arises out of a voyage to the Gulph of Mexico. The plaintiff sailed as captain of the El — 303 — len Tooker, owned by S. A. Lawrence, Smith & Hubbell and C. H. & A. Pond, with a cargo of fire-arms and munitions of war. The object of the voyage was, to sell this cargo, either to the Patriots, who were then in arms against the royal government of Spain, or to any other persons, who might purchase the same. This cargo was, undoubtedly, contraband of war; and would be liable to confiscation, if captured either by the patriot or royal forces. But, it does not from thence follow, that the voyage was illegal, so as to deprive the captain of his wages, or defeat any other demand, which may arise out of the purchase or shipment of the cargo. It may be said, that the law of nations is a part of the municipal law of every sovereign or independent state; and by that law, commerce in contraband of war, is prohibited to the citizens of a neutral country. In answer to this argument, Kent, J. (in Seton & al. v. Low, 1 Johns. Ca. 1. 5.) observes, that though this reasoning may be plausible, the fact is, that the law of nations does not declare the trade in contraband to be unlawful. It only authorizes the seizure of the contraband articles, by the belligerent power: and this it does from necessity. A neutral nation has nothing to do with the war; and is under no moral obligation to abandon or abridge its trade; and yet, at the same time, from the law of necessity, as Vattel observes, the powers at war have a right to seize and confiscate the contraband goods; and this they may do from the principle of self-defence. The right of the hostile powers to seize, does not destroy the right of the neutral to transport. They are rights, which may, at times, clash and injure each other. But this collision is the effect of inevitable necessity; and the neutral has no just cause to complain. A trade by a neutral in articles contraband of war, is, therefore, a lawful trade; though a trade, from necessity, subject to inconvenience and loss. I see, therefore, nothing in the voyage to the Gulph of Mexico, which can stamp it with the character of illegality; or deprive the plaintiff of the reasonable reward, which has been ascertained by the committee. The proportion, therefore, of these wages, which is due from Smith & Hubbell, ought to be applied, in part satisfaction of their demand, against A. & C. H. Pond, unless some sufficient reason to the contrary can be shown. It has been urged, that Smith & Hubbell have a claim upon Adam Pond for the German linens, sold for something over 2,000 dollars, at Buenos Ayres; which is more than sufficient — 304 — to counterbalance the demand for wages; and, of course, no decree can be passed in favour of the plaintiff. At the time when the German linens were shipped, the instructions relative to privateering were communicated to A. Pond; viz. that the surplus, after remitting the prime cost, might be employed in fitting out privateers from Buenos Ayres. If these instructions extended to the German linens, as well as the rest of the cargo, the shipment would be illegal; as will be afterwards shewn, in examining another part of the case. But whether the illegal instructions did, or did not, extend to these goods, is, in my opinion, immaterial. As the committee have found, that the German linens were sold, by the plaintiff, and the avails employed in fitting out the Ellen Tooker as a privateer, in violation of the act of Congress; and as this employment of the funds arising out of the German goods, has been subsequently approved, by Smith & Hubbell, it must now be taken, that they were shipped originally under an agreement to employ the proceeds in illegal enterprizes; and after they have been thus employed and lost, Smith & Hubbell can have no right, in law or justice, to recover the amount of Adam Pond, or to oppose this demand to any other lawful claim, which Adam Pond may have on them. The shipment of German linens, therefore, does not defeat the plaintiff’s right of set-off, so far as respects his wages on the voyage to the Gulph of Mexico. But the plaintiff has attempted to establish other demands against Smith & Hubbell, which, in my opinion, cannot be supported. The plaintiff, upon his arrival at Buenos Ayres, became naturalized in that country, and immediately proceeded to fit out the Ellen Tooker, under the name of the Cyripo, to cruise as a privateer against the subjects of the king of Spain. This enterprize proved unsuccessful. The privateer and her prizes were all lost. He purchased others, with his own funds, which were no more successful; and finally, after many disasters, the whole money, invested for this purpose, was totally lost. He now seeks to recover a proportion of the money thus expended from Smith & Hubbell, under a claim that they were jointly concerned in the enterprize, or, in other words, to set off this demand against the debt due from C. H. & A. Pond to Smith & Hubbell. From the facts reported by the committee there can be little doubt, that these enterprizes were originally authorized by Smith & Hubbell, — 305 — or subsequently approved; and that the real understanding was, that they should be jointly interested in the concern. The difficulty, therefore, in this part of the case, attending the claim, does not arise from the privateering being unauthorised by Smith & Hubbell, but from the illegality of the objects on which the money was expended. The law of the land will leave the parties, as it respects these expenditures, where it finds them. It will not be endured, that parties should engage in unlawful acts, contrary to positive law, compromitting the peace and honour of the country, and then call upon a court of chancery to settle their accounts, adjust the respective balances and enforce payment. But, it is said, there was a running account between the plaintiff and Smith & Hubbell, and, therefore, the latter ought not to be permitted to recover their demand, while they refuse payment to Adam Pond. If Smith & Hubbell have a legal demand upon C. H. & A. Pond, capable of being enforced in a court of law, it is not readily seen how a court of chancery can arrest their proceedings, because Adam Pond may have expended money, partly for their benefit, but under such circumstances that payment of it cannot be enforced, either in law or equity. The circumstance, that the demand of Smith & Hubbell is a book account, can make no difference. They have as good a right to a fair demand on book, as though it were due by bond or note: and it would exhibit a novel principle in our law, were it to be established, that a demand growing out of an illegal contract, which could lay the foundation of no recovery, either in law or equity, might still be enforced, by a plea of set-off at law, or would be a good foundation for a proceeding in chancery, to obtain an injunction against a legal demand. It is urged, by the defendants, that as the plaintiff has brought his bill to obtain a settlement of the accounts; as all the parties are before the court, and a full investigation has been had; it will be proper, that the decree should settle the sum to which Smith & Hubbell are entitled in the suit at law. This claim has not been opposed, by the counsel for the plaintiff; and upon a supposition that this course may be correct, it becomes necessary to examine the account of Smith & Hubbell, for the purpose of ascertaining the amount due them, and on what principle that amount is to be ascertained. In discussing the claim of the plaintiff for wages on the voyage to the Gulph of Mexico, it has been shewn, that that — 306 — voyage was lawful; that the cargo being contraband of war, did not render the voyage illegal as between the owners, but merely subjected the cargo to confiscation, if taken by either of the belligerents. The same principles govern in examining the demands of Smith & Hubbell, so far as respects the money expended for C. H. & A. Pond on the voyage to the Gulph of Mexico. Neither the cargo, nor the objects of the voyage, were illegal; and whatever money Smith & Hubbell expended, either in the purchase of the cargo, or for outfits and insurance on that voyage, or in closing that voyage after her return, abandoning to the underwriters, &c., is, in the opinion of the court, a legal charge against all concerned; to a proportion of which Smith & Hubbell are well entitled in the suit at law. The outfits and insurance on the voyage to Buenos Ayres, present different questions; and are attended, perhaps, with more difficulties. The vessel sailed upon this voyage, upon the 20th of September, 1817, under instructions authorizing the plaintiff to employ the whole proceeds of vessel and cargo, in privateering against the commerce of Spain, after first remitting to Smith & Hubbell a sum equal to the prime cost and expenditures. If the disbursements by Smith & Hubbell, in fitting the vessel for the voyage to Buenos Ayres, were originally made in pursuance of this illegal determination, the court are of opinion, that no recovery can be had for such outfits, although an understanding did exist, that the prime cost of the enterprise should be remitted to New-York, before the privateering was to commence. But if the disbursements for the outfits were honestly made, by Smith & Hubbell, with a sole view to some legal voyage merely, and not with any design, at the time, of employing the avails of the enterprize as above I do not readily perceive, how a subsequent illegal agreement would deprive Smith & Hubbell of their claim on the other owners for a reimbursement of the outfits. The right of Smith & Hubbell to charge the other owners, arises from making the disbursements, and at the time when the disbursements are made; and it would seem, that their right to recover for such disbursements, could not be impaired, by a subsequent agreement of the owners to convert the proceeds of vessel and cargo to illegal purposes. The insurance on the voyage to Buenos Ayres is understood to have been made by the procurement of Smith & Hubbell, subsequently to the sailing of the vessel for that place, and af — 307 — ter the illegal orders given to the captain relative to privateering; and, upon the principles adopted by the court, cannot be allowed. The question still occurs, was the determination to employ the avails of the Ellen Tooker and cargo in privateering from Buenos Ayres, entered into, by the owners, previous to the time when the outfits were furnished by Smith & Hubbell? If the outfits were supplied after this determination, they were furnished for an illegal purpose; and they are not entitled to recover this part of their account. The committee find, that the parol orders or instructions relative to privateering, were given at the time when the vessel sailed from New-York for Buenos Ayres: and from this it might, at first, appear, that no illegal design or agreement was entered into, before this time. The orders to the captain do not, however, constitute the illegal agreement itself, but are the evidence from which such agreement is to be inferred. Generally speaking, the instructions given to the captain on the eve of sailing, must be regarded as evidential of the objects and purposes of the owners, which led to the voyage; not merely the purposes and designs of the owners at the time of giving such orders, or at the instant when the vessel is about to sail; but also, those which induced the owners to project the voyage, and in pursuance of which the disbursements for the enterprize must be presumed to have been made. Should a vessel be fitted out, and when every thing is ready for sea, should the owners unite in a letter of instructions to the captain, directing him to proceed to the coast of Africa, purchase a full cargo of slaves, transport them to the Havanna or New-Orleans, and dispose of them in slavery, to the best advantage; and should one of these owners after-wards bring an action against the rest, to recover their proportion of the outfits; no one can doubt but a jury, from this letter, might and would infer, that the original object and design of the voyage was unlawful; and would, consequently, find the plaintiff not entitled to any contribution. To suppose that the vessel was fitted for sea, upon some legal voyage, and that the parties had suddenly changed their minds, and resolved to employ her in the slave trade, at the instant of sailing; and that till that moment, no unlawful design or purpose had entered their minds; would be doing violence to probability; and to encounter so violent a presumption of the enterprize being illegal, in its origin, would require strong ev — 308 — idence of the real design and purpose of the voyage; and why the original purpose was abandoned, and a new and unlawful one substituted, in its place. In addition to the inferences to be made from the instructions at the time of sailing, the ready approbation of Adam Pond's conduct, expressing no dissent to his proceedings, receiving a part of the prize property, and embarking in further enterprizes of the same illegal character, greatly strengthen the idea, that the original object of the voyage to Buenos Ayres was illegal; and that the outfits were furnished in pursuance of the same unlawful object. The allegations in the plaintiff’s bill, however, do not appear to me sufficiently broad to justify the Court in rejecting the charge for outfits on the voyage to Buenos Ayres.—The bill, after detailing the proceedings of Adam Pond at Buenos Ayres; his fitting out the Ellen Tooker, as a privateer, and cruising against the subjects of the King of Spain, &c. &c. proceeds to allege, that all this was done “in pursuance of an original agreement, entered into, by the original owners, at the time she sailed from New-York to Buenos Ayres.” The committee find the instructions given to Captain Pond, at the time of sailing, and the subsequent ratification of Captain Pond's conduct, in pursuing the unlawful enterprizes against the subjects of the King of Spain; and it has been shown, that from these facts, the illegal purpose or design of the owners probably existed, at a time anterior to the date of the illegal agreement stated in the bill, and previous to furnishing the outfits for the voyage to Buenos Ayres. If it did in fact exist previous to the supply of these outfits, and they were furnished to carry the unlawful enterprize into effect, this item of the account would be likewise illegal. Under such circumstances, when the report of the committee appears to carry the illegal agreement further back than is stated in the bill, what course should the Court, in the exercise of a sound discretion, adopt, for the purpose of doing justice between the parties? It has been with a view to the exercise of this discretion, and not for the purpose of intimating prematurely an opinion on the weight of testimony, that some of the foregoing remarks have been made on the facts contained in the report of the committee; and upon the inferences to which these facts naturally lead. The plaintiff in his bill, seems to have had no view of avoiding the demand of Smith & Hubbell, on the ground of illegali — 309 — ty; but of opposing to their entire demand a claim of his own, to a much larger amount, which has failed him, on the ground of illegality insisted on by Smith & Hubbell. And on this account, his counsel may have been less careful with respect to allegations in their bill, which imphedly concede the legality of the claim for outfits on the voyage to Buenos Ayres. But as, on the one hand, the Court have been obliged to reject that part of the plaintiff's demand, which is illegal; so, on the other hand, we think that the plaintiff should be permitted, if he thinks proper, to amend his bill, by stating that the illegal agreement between the owners was made prior to the time when Smith & Hubbell furnished the outfits for the voyage to Buenos Ayres, and that the outfits of that voyage were furnished by Smith & Hubbell in pursuance of such unlawful agreement: and if this amendment should be made, that this new fact, thus introduced, should be again investigated, either by a committee, or the court, as the superior court, in their discretion, may direct. The other Judges were of the same opinion. Case remitted to superior court.