Boykin, Parmer & Co. v. W. J. Maddrey & Son

Bukwicll, J.: The plaintiffs brought this action to recover of the defendant firm, W. J. Maddrey & Son, a sum of money that they alleged was due to them from defendants, and which they had refused to pay. What amount was so due to the plaintiffs was ascertained at the trial to the satisfaction of both parties, it seems, for no objection is naade to the judgment rendered so far as it declares the indebtedness of defendants to plaintiffs. These appeals concern, not the main action, but the ancillary remedy of “arrest and bail,” the aid of which the plaintiffs invoked in order the better to secure the fruits of their recovery. In Travers v. Deaton, 107 N. C., 500, it is said of paragraph 2 of section 291 of The Code: “This provision is plain and very comprehensive in its terms and purpose. It intends, certainly, to embrace all cases where the relation of trust and confidence- in respect to money received by or personal property in the possession of one party for the benefit of another is raised and exists between such parties [99] by reason of their contract express or implied. The purpose is to give the more efficient remedy where the cause of action involves a breach of trust on the part of the defendant sustaining a fiduciary relation to the plaintiff.” In that case, as well as in the cases of Chemical Co. v. Johnson, 98 N. C., 123, and Powers v. Davenport, 101 N. C., 286, it was decided that where between the plaintiff and defendant there was such a contract as in this case is admitted to exist between the parties, a fiduciary relation was created, and that a violation of such a contract by defendants was a breach of trust. Inasmuch, then, as this action is founded upon an alleged violation of such a contract — a breach of trust — it follows that the plaintiffs, having made proper affidavits and given the required undertaking, had a right to an “ order of arrest ” for the defendants. According to the provisions of section 316 of The Code, .as amended by the Act of 1889, ch. 497, the following issue'was submitted to the juiy: “Have defendants or either of them, and if so, which one, embezzled and fraudulently appropriated to their own use property hold by them in trust for plaintiffs, or held by them as agents, etc., under the contract, and applicable to the payment of plaintiffs’ debt?” To this issue the jury responded, “Yes, as to W. C. Maddrey,” and the Court refused to vacate the order of arrest as to W. C. Maddrey, and because of such refusal he appeals from that judgment, alleging error in the admission of testimony. We will first consider and dispose of his appeal. The evidence, to the introduction of which he objected, tended to show that he had conducted himself, in his dealings with others towards whom he stood in the same relation as he did towards the plaintiffs, just as he had done toward them — that he had disposed of other property besides that of the plaintiffs in violation of the contracts [100] under which he held it — that he had committed other breaches of trust similar to.the one charged against him in this action and about the same time. The record discloses the fact that the defendants were allowed, over-the objection of the plaintiffs, to offer testimony to show that, when they-did the acts complained of, they had no intent to defraud the plaintiffs; and it was in reply to that evidence as to intent that the plaintiffs offered the evidence to which the defendants objected. His Honor admitted it for that purpose only, and cautioned the jury to consider it on that question alone. If the intent witli which a trustee commits a breach of trust were at all material in such an- inquiry as this, authorities might be found to sustain the ruling of which this defendant complains'. But we need only say here that his intent was entirely immaterial. The law gives to a plaintiff, whoso money or property has been put beyond his reach by his agent or trustee, by an act in violation of his duty, the remedy of arrest and bail, that he may the better compel his unfaithful agent or trustee to make amends for his unfaithfulness, and it “turns a deaf ear” to one who would excuse himself-by asserting that he did not mean to do.wrong -when consciously doing that which was a breach of the trust reposed in him, or by alleging that he honestly believed that lie would be able to replace the misapplied funds, so that no loss would eventually come to the plaintiff. ' Doing such wrong is, -in- such a case, incompatible with meaning to do right. The assertion of an intention to replace the fund is an admission of consciousness that its use was a misapplication. Good intentions do not at all lessen the wrongfulness of a breach of trust, or, rather, the law will not allow one to say that he violated its plain precepts with good intentions. Therefore, the ruling of which the defendant complains was harmless. [101] And, indeed, so far as tlie record discloses, there was no evidence whatever introduced by the defendants to show any canse for .the vacating of the order of arrest as to W. C. Maddrey. All the evidence went to show that he had coip-mitted a breach of trust, his conduct being judged by the principles established by the cases cited above, which must control us in the consideration of causes such as this one. From what has been said it follows not onl.y that there was no error in that of which the defendants complain, but also that there was error in that of which the plaintiffs complain — the vacating of the order of arrest as to W. J. Maddrey. It is true that one partner cannot be arrested for the fraud of his co-partner of which he had no knowledge and at which lie-in nowise connived. McNeely v. Haynes, 76 N. C., 122. Hence if upon the re-trial of the issue of fraud as to W. J. Maddrey it shall appear that the breach of trust committed b}r the firm of which he was a member was in fact done by his co-partner without his knowledge, assent or connivance, then the order should be vacated as to him. The firm of W. J. Maddrey & Son assumed towards the plaintiffs a fiduciary relation as to tlie property committed to them under this contract. Did W. J. Maddrey know of this contract? The law presumes that he did. Did he know that the managing partner was disposing 'of this property and the proceeds of its sale in a manner that was violative of its provisions ? Did he assent to or connive at such conduct? When he joined his co-partner in the execution of the assignment to S. N. Buxton, trustee, did he know or did he have reasonable ground to believe that by that assignment the firm was transferring to that trustee effects that should have been applied to the use of the plaintiffs? If he had this knowledge the act of misappropriation by his co-partner became his act, and his intent to [102] commit a breach of his trust is conclusively presumed for all the purposes of this remedy of arrest and bail from such knowledge and such act. The instruction which the plaintiffs asked should have been given, while those asked by defendants should have been refused. It is adjudged that there was, in the defendants’ appeal, no error. In plaintiffs’ appeal it is adjudged that as to W. J. Maddrey there shall be a New Trial.