Stewart v. Stebbins

HaNDY, J., delivered the opinion of the court. The controversy in this case is intimately connected with the case of Stebbins et al. v. Niles, heretofore before this court, and reported in 25 Miss. 267. Pending the litigation in that case, Stewart and Sandford, as — 79 — assignees of Niles, filed this bill, claiming tbe interest of Niles in tbe enterprise entered into by bim, and Stebbins and others, and praying for a settlement of accounts, and a distribution of tbe profits between tbe assignees of Niles, and tbe other parties in tbe land speculation. Tbe interest of Niles, which passed by bis assignment to Stewart and Sandford, is claimed by tbe bill to be tbe amount due Niles, for expenses and advances in attending to tbe business of tbe company, and tbe amount of tbe net profits of tbe enterprise, being one-tbird of tbe profits. Niles was made a defendant, and answered, denying that tbe amount due bim for expenses and advances passed by tbe assignment. Stebbins and tbe other members of tbe company were also made defendants, who answered, making their answer a cross-bill against Niles and Stewart and Sandford, and claiming to charge tbe interest of Niles assigned to Stewart and Sandford, on account of losses which be caused to tbe company, on tbe following grounds: First, because it was bis duty under tbe contract with the company, to procure good and valid titles to fifty sections of land, but that in eight of tbe sections which be purchased, be neglected to do bis duty in obtaining proper deeds, and therefore no valid title to those lands was conveyed to tbe company: Second, that be was bound by bis contract to procure fifty sections of land, of 640 acres each, for which tbe company agreed to pay, and did pay $1000 per section, but in tbe fifty sections furnished by Niles, there, is a deficiency under six hundred and forty acres per section, amounting to two and a quarter sections; and for that deficiency Niles’s interest in the concern is chargeable. _ To tbe first ground set up in tbe cross-bill, Niles’s executor pleaded, that that claim bad already been determined against Stebbins and others, in tbe former suit of Niles against Stebbins and others; and Stewart and Sandford answered, relying on tbe Statute of Limitations, and a bond of indemnity, executed by tbe company to Niles, which was a release of tbe claim. To tbe second ground set up in tbe cross-bill, Niles’s executor demurred, and relied on tbe Statute of Limitations; and Stewart and Sandford make tbe same defence by answer, and also demur generally to the bill in their answer. — 80 — The first question for consideration is, whether the decision of this court in the case of Stebbins et al. v. Niles, is to be held an adjudication that the written indemnification executed by Stebbins and others was, in legal effect, a release by Stebbins and others, of all claim against Niles, founded on the defective title to the sections of land. It is admitted that that point was fully presented in the pleadings in that case, and that it was urged by the counsel for Stebbins and others, in this court, as ground of error, that they had not received allowance in the account taken in the court below, for their claim against Niles, arising from the defective title to the lands in question. It also appears that their claim was denied by the adverse party, on the ground that it had been released by the written instrument executed to Niles. But it is now insisted, in behalf of Stebbins and others, that the point was not properly before this court, because in the interlocutory decree for an account between the parties, the right of Stebbins and others, to charge Niles, on account of these sections of land, was expressly reserved, and not decided, and that it was excluded for that reason, from the account taken by the commissioner under the decree. The record of that case, however, shows that Stebbins and others excepted to the report of the commissioner, on the ground of the omission of this claim; and when the case was brought to this court, it was urged that it was error not to allow the claim in the decree. In this state of the case, what were the questions which this court, was required to determine ? Certainly the main question was, whether the decree, and the account taken under it, were a proper settlement of the questions at issue, between the parties, as presented by the record of the whole case, especially with reference to the claim of Stebbins and others, touching the sections of land to which they obtained no title. And by the submission of the parties, this depended upon the effect to be given to the written instrument, made by Stebbins and others, to Niles. If that instrument was a release in law, the decree and account were correct; if not, the decree was erroneous in not allowing it, and the exception to the commissioner’s account should have been sus — 81 — tained, and the case remanded' with directions, that the claim should be allowed in a new account to be taken. The effect of the instrument of indemnity, upon the claim asserted was, therefore, absolutely necessary to be determined by the court, whether the question be considered in reference to the propriety of the decree and account, as a final settlement of the point in controversy, or in reference to the duty of the court, to settle the principles to govern the case, in any further proceedings that might have been deemed necessary to be taken in the court below, in disposing of the case. We think it manifest, therefore, that the question of the effect of the indemnity, was properly before the court, and that the decision of it must be held as res adjudicaba, and that it is immaterial in this respect, whether the case was further proceeded with in the court below, or not. The next question arises upon the defence of the Statute of Limitations, and the demurrer to the cross-bill, of Stebbins and others, in reference to the claim founded upon the two and a quarter sections of land. in the former suit between them and Niles, in which the matter of The counsel for' Niles’s executor, and Stewart and Sandford, insist that the failure of Stebbins and others, to assert this claim Niles’s compensation for expenses was settled, must preclude them from bringing it forward in the present suit. This position is founded on a well settled principle of law; and the claim in question must be concluded, unless the failure to assert it in the former suit was in consequence of the fraud of Niles, and there was no laches on the part of Stebbins and others; for it was doubtless their duty to use due diligence to ascertain their rights against Niles. Was there, then, such fraud or concealment on the part of Niles, as would delude them, and prevent them from a diligent ihquiry into his acts? It appears that the relation of principal and agent was dissolved between the parties, in October, 1844. The former suit between them was commenced in November, 1845, and determined by final decree in the court below, in July, 1849. The business relations between them were broken up in such a manner as to show that they placed no confidence in his good faith, in the performance of his duties as agent, and to put them — 82 — upon inquiry in relation to bis acts. Nevertheless, although they appointed an agent in his place, in 1844, who by ordinary diligence might easily have ascertained the deficiency in the quantity of land, in the sections purchased, no effort appears to have been made in that respect, until shortly before the answer was filed in this suit, which was in November, 1854. Under these circumstances, their failure to inquire into his acts is no justification to the effort made by the cross-bill, to re-litigate matters settled by the previous suit, and which, for aught that appears, should have been presented in that suit. We think, therefore, that this claim should not have been sustained. 'Another question to be settled, is as to the propriety of the mode adopted by the commissioners, of calculating interest upon the sum of fifty thousand dollars, advanced by Stebbins and others, to Niles, for the purchase of lands, with reference to the moneys paid from time to time, from sales of the lands, for the company. There can be no doubt that, by the terms of the contract entered into between the parties, the sum of money advanced was to be paid, with interest, to the parties who furnished it, and to that end, that the lands acquired should be sold, as soon as it could be advantageously done, and, if the proceeds should be less than the full sum advanced, that the proceeds should be paid to the individual contributors in equal proportions, with interest. The question then is, should the interest have been calculated upon the sum of fifty thousand dollars, down to the time of making the account, by the commissioners, without ap]fiying the payments which were made from time to time, by the proceeds of sales of the lands, to the interest, or should the payments as they were made have been applied to the interest. There can be no question upon this point, under the statute of June 28th, 1822, Hutch. Code, 643, which provides, that when partial payments are made on contracts bearing interest, “ the interest that has then accrued shall be first credited, and the balance of such partial payment shall be placed to the payment of the principal.” The mode of computing the interest adopted in this case was not in accordance with this rule, and the exception to the account on that ground should have been sustained. — 83 — The only remaining question to be considered is, what interest passed to Stewart and Sandford, by the assignment made to them by Niles, and especially whether what might be due to Niles, for his costs and expenses, in securing the lands to the company, which the company were bound to pay, in addition to the interest he had in the proceeds of the lands when sold, was transferred by the assignment. We think that the terms of the assignment place this point beyond reasonable doubt. The assignment is, of “ all the interest of said Niles, in a certain land purchase, made by said Niles, on joint account with Samuel Stebbins and others, in which said Stebbins and others, have advanced the sum of fifty thousands dollars, and which sum has been invested in the purchase of fifty sections of land, and in which said "purchase, the said Niles is entitled to one-third of the net profits.” It is clear, from the language here employed, that only his interest in the profits of the enterprise was transferred, such as belonged to him as a partner, and that the terms of the assignment cannot embrace a collateral benefit which he derived as agent of the company, or otherwise than as a partner. It follows from the foregoing views, that the decree and proceedings under it were erroneous, and should be reversed and remanded, to be proceeded with in the court below, in conformity to this opinion; and it is ordered accordingly. Smith, C. J., not having heard the argument, did not participate in this decision.