Potter v. President of Yale College

Hosmer, Ch. J. The questions in the case, relate to the construction and validity of the written contract. 1. It was, in the first place, insisted, by the defendants, that persons not parties have an interest in the subject matter of the suit, and should have been joined with the plaintiffs. The objection was overruled, by the court on the circuit, and the contract was read in evidence to the jury. The agreement was made between the plaintiffs, of the first part, “as they are a committee of the subscribers to raise a .fund for the benefit of the congregational society, in Plymouth;” and by “James Hillhouse, treasurer of Yale-College, for and in behalf of the President and Fellows of Yale-Collegc,” of the second part. It contains several stipulations, keeping up the description of the plaintiffs being the party of the first part, and James Hillhouse, authorised as aforesaid, being party of the second part; and was signed by Daniel Potter, in behalf of himself and the rest of the committee, and by Mr. Hillhouse, as treasurer of Yale-College. [60] The defendants’ objection concerning the party plaintiff, is founded on the supposition, that the plaintiffs are the agents of the before mentioned subscribers; that the agreement was made for the exclusive benefit of the-subscribers; and therefore, that the action should have been brought in their names. I think it very clear, that the agreement was not made with the subscribers, in any sense. That the contract was made expressly with the plaintiffs, does not admit of a question. From the beginning to the end of it, the stipulations are to Daniel Potter, and the rest of the committee, by name; and they are called, throughout, the party of the first part. The expression immediately succeeding their names, that is, “as they area committee of the subscribers to raise a fund for the benefit of the congregational society in Plymouth,” makes no difference in the case. It is merely a descriptio personarian; and is analogous with a common expression in a promissory note taken by an administrator, in which the promise is made to him, as administrator of the deceased person, whose estate is committed to his trust. The point has often been adjudged. Burrell v. Jones & al. 3 Barn. & Ald. 47. Peter v Cocke, 1 Wash. 257. Talmage v Chapel & al. 16 Mass. Rep. 71. Com. Dig. tit. Pleader. 2 D. 1. In the case of Buffum v. Chadwick, 8 Mass. Rep. 103., an action was brought on a promissory note made payable to Arnold Buffum, agent of the Providence Hat Manufacturing Company. It was determined, that the promise was to the agent personally; and that the adding of the character to his name was only a descriptio personce. This determination is directly in point for the plaintiffs. That this was the intention of the agreement, it is difficult to doubt. A stipulation to pay to the subscribers, the money advanced by the committee, would seem to be a resumption of it, and an annihilation of the fund. It was contended, and on this was the main stress of the argument, that the contract was entered into for the use and benefit of the subscribers; and of consequence, that theirs is the legal interest and right of suit. I admit the principle, that where an agreement is made with an agent, for the sole and exclusive benefit of his principal, the principal has the legal interest. 1 Chitt. Plead. 4. Piggott v. Thompson, 3 Bos. Pul. 147. Gilmore v. Pope, 5 Mass. Rep. 491. Taunton & South Boston Turnpike Co. v. Whiting, 10 Mass. Rep. 327. This is according to the intent and effect of the engagement. [61] 3 Stark. Ev. 1589. 1590. Shaw v. Sherwood. Cro. Eliz. 729. On the other hand, it is equally well established, if an agent has a special property and personal interest in an agreement made with him, that his is the legal interest and right of action. Atkyns & al. v. Amber, 2 Esp. Rep. 493. Duke of Norfolk v. Worthy, 1 Campb. 337. Both of these principles rest on the same grounds of immutable justice and legal construction. Had the subscribers paid the subscription money, they would have no right to resume it; and their legal interest, independent of positive contract, would be confined to the application of the fund in advancing the prosperity of the congregational society, and not to a restitution of the sums advanced. It is clear, that the agreement contemplated no such event; and hence the provision, that the dividends should be received, “for the use and benefit of said fund.” In the supposed legal right of the subscribers, waiving all other considerations, there is a radical defect. It does not appear,, nor can the fact be presumed by the court, that they have ever paid any part of the sums subscribed by them. On the defendants, it devolved to exhibit proof to this effect, if it existed; but no attempt of this kind was made. From all the facts appearing, it is a warrantable inference, that the plaintiffs advanced their own money on the aforesaid agreement, upon the credit of the subscription; and that they have not, in any manner, been reimbursed. It follows, therefore, that they have not only a personal interest in the contract, but the sole and exclusive interest, and of consequence, the legal right of action. 2. The defendants’ next objection is, that the agreement, on the face of it, evinces a trust between the parties; and that, for this reason, the plaintiffs cannot throw the loss of the stock on the defendants. The court charged the jury, that no trust was disclosed on the face of the contract. The correctness of the charge does not admit of dispute. So far from evincing a trust, the writing exhibits an agreement of an ordinary character; on the one part, to advance money, and on the other to permit the reception of certain dividends, and to repay, when demanded, the money advanced. 3. In the next place, the defendants insisted, that the trans. action between the parties in fact involved a trust, and was a fraud on the law authorizing the subscription for shares of the Eagle Bank, by charitable corporations. In proof of this, parol testimony was adduced, which, in substance, went to show, [62] that at the time the agreement was made, it was the object of the plaintiffs, in which the defendants co-operated, as all the privileged stock of the bank had been taken up, to purchase thirty shares of the stock standing in the defendants’ names, the same not being transferable; and that it should remain in their names, they being the plaintiffs’ trustees. This evidence the court adjudged to be inadmissible. Of the propriety of this determination, there exists no reasonable question. The defendants attempted, by parol evidence, to contradict and vary a written agreement. Vide 3 Stark. Ev. 993. to 1013. By the writing, the plaintiffs, so far from contemplating a purchase of the stock, were entitled only to the dividends; and this agreement was determinable on notice by either party. The offered testimony to show, by parol, an intended purchase and ownership of the stock, was in palpable opposition to the written contract. Nor is this the only objection to the evidence. If a fraud was perpetrated on the Eagle Bank, which I do not admit, as the stock was originally procured by a fair subscription, it is clear, that the defendants’ mouth was stopped from making the allegation, that they, in combination with the plaintiffs, had agreed to commit the fraud alleged. Philips v. Biron & al. 1 Stra. 509. Smith v. Bouchier & al. 2 Stra. 993. 4. Lastly, it was proved by the defendants, that when the contract between the parties was made, the market value of Eagle Bank stock was, and for several years before, had been, ten per cent above par; and that the dividends averaged seven per cent, per annum. Upon these facts, the defendants claimed, that the contract was usurious. The jury were charged, that the contract per se was not tainted with usury ; but if an arrangement was entered into, with a view to evade the statute of usury, and to obtain unlawful interest, that this would render it usurious. The jury found their verdict for the plaintiffs; and this negatives any actual intention of evading the law. Was the contract, then necessarily, or by legal construction, usurious? There was a contingency rendering it entirely uncertain whether the plaintiffs would obtain more than six per cent, on the money advanced, or even any thing. The defendants, founding themselves on Roberts v. Trenayne, Cro. Jac. 507., and other cases comprising similar doctrine, have argued, that where the casualty goes to the interest only, and not to the principal, it is usury. The doctrine is well established; but it is inapplicable to this case. In all the cited cases, it will [63] be found, that more than lawful interest was expressly reserved; and that, to obviate this explicit reservation, a contingency which might lessen or annul thé interest, was relied on. The contract between the parties, was for one to give, and for the other to receive, unlawful interest. But in this case, no amount of interest was the subject of stipulation; and the verdict of the jury proves, that there was no arrangement made, founded on an intention to evade the law. It is impossible to say, that a corrupt agreement was made to obtain unlawful interest, when for any specific sum or interest, there was no agreement whatever. On the whole, the transaction in this case was not a loan on interest, but it was a bona fide purchase of dividends. I do not advise a new trial. The other Judges were of the same opinion. New trial not to be granted.