Duncklee v. Greenfied Steam Mill Co.

Eastman, J. Tbe finding of tbe auditor, in this case, presents tbe claims of tbe plaintiffs, and tbe questions arising upon tbe same, under two beads, and we shall consider them in tbe order stated. In tbe first place, .the report finds due tbe plaintiffs, on tbe fourteenth of August, 1847, for goods sold and delivered to tbe defendants, prior to that time, tbe sum of $340.84. At this time, John J. Duncklee was a member of tbe firm of J. J. Duncklee & Co., tbe plaintiffs, and also one of tbe directors of tbe Steam Mill Company, tbe defendants. Tbe firm consisted of Duncklee, and John Jones. Duncklee could transact business in a three-fold capacity; as a member of tbe partnership, as a director in tbe corporation, and as an individual. On that day, the directors of tbe Steam Mills, made a note to tbe New-Ipswicb Bank for $2500, signed by them jointly and severally, in their individual capacity, and at tbe same time agreed that if tbe money could be procured from tbe bank, tbe debt due tbe plaintiffs should be paid. This note, tbe auditor finds, was taken to tbe bank, and tbe money procured thereon, by Duncklee, “ as one of tbe directors ” of tbe Steam Mills. Tbe fact does not appear in tbe report, but probably, after tbe note was signed by tbe directors, as individuals, some arrangement was made by which it became tbe property of tbe corporation. Of this money procured at tbe bank, as we understand tbe facts, about $265.00, and no more, were paid over by Duncklee to tbe plaintiffs, and credited on their books. This sum together with some other small items of set-off, being allowed, would leave $72.16 of tbe $340.34, unsatisfied, and now due; unless tbe receipt of tbe money at tbe bank, by Duncklee, under tbe agreement, before the note was discounted, that tbe plaintiffs’ debt should be paid, can operate as a payment of tbe whole sum then due. And we think it cannot. Duncklee took tbe note to the bank, as agent of tbe directors. They entrusted him with [249] the business, and the money when procured was theirs ; but he mignt appropriate it to his own private purposes, (wrongfully of course,) or he might pay over to the firm, the amount of their debt and return the balance to the directors or treasurer of the corporation, or he might pay the whole to- the corporation. The latter course, was undoubtedly the correct one. What Duncklee did with the money, does not appear. The auditor finds, that he paid out and appropriated the whole within three weeks after its reception, but to what purposes he does not find, only that he did not appi’opriate it to the debt of the plaintiffs, beyond the $265.00. The defendants themselves, for aught that appears, may have had the whole of the balance, or Duncklee may have used it for his private purposes. At all events, inasmuch as the plaintiffs have received only the $265.00, we think we- are not called upon to say, that in view of all the facts, they shall be compelled to allow beyond that sum. To arrive at the conclusion that the whole debt must be regarded as paid, we must hold, that, notwithstanding Duncklee took the note to the bank, as one of the directors, yet the reception of the money wrought an instantaneous change in his legal position, from that of director or agent of the corporation, to that of partner in the firm. This we are not prepared to do. We will now pass to the consideration of the second general matter stated by the auditor. Subsequently to the fourteenth of August, 1847, and prior to the twelfth of November, following, the plaintiffs sold, and delivered to the defendants, goods to the amount of $486.45 ; and the defendants paid towards the same, on the eight of October, 1847, thirty dollars ; leaving a balance of $406.45, due the plaintiffs. In the early part of October, the Steam Mill Company appointed auditors to settle the accounts existing between them and Duncklee, and he at that time presented the claims of Duncklee & Co., to account for the funds of the defendants in his hands. It appears that Duncklee was, at that time, indebted to the Steam Company, over and above the account of the firm, but no settlement was then made. On the twelfth of November, 1847, Duncklee and John Jones, the ¡fiaintifis, assigned the claims they had against the Steam Company,, [250] together with other demands, to Joseph Jones, the real plaintiff in this suit, to secure the payment of notes which he held against John Jones. Both of the assignees declared at the time of the assignment, that the Steam Company were indebted to them according to the account. Duncklee was then a director of the company, and the other directors were notified of the assignment, the day after it was made. But after this assignment and notice, Duncklee, under date of October 12th, 1847, receipted and dischai’ged the plaintiff’s claim against the company, without any real consideration being paid. Such, is a succinct statement of the facts; and it appears to us quite clear that the company have no reliable defence to this branch of the claim. After the assignment and notice, the demands- became the property of Joseph Jones and were not subject to be defeated by any subsequent action by the partnership or the corporation. In the absence of fraud between the assignors and assignee, and none is here suggested, the assign-’ ment was good against all defences that did not in equity exist at the time it was made. The equitable interest of assignees is protected in courts of law against all interference of the original parties, after notice of the assignment. Sanborn v. Little, 3 N. H. Rep., 539 ; Jones v. Witter, 13 Mass. Rep., 304; Jenkins v. Brewster, 14 Mass. Rep., 291; Sweet v. Green, 4 Greenl. Rep., 384 ; Briggs v. Dorr, 19 Johns. Rep., 95 ; Anderson v. Van Alen, 12 Johns. Rep., 343; Johnson v. Bloodgood, 1 Johns. Ca., 51; Andrews v. Beecker, 1 Johns. Ca., 411; Raymond v. Squire, 11 Johns. Rep., 47 ; Bishop v. Holcomb, 10 Conn. Rep., 444. At the time the auditors met, no settlement was made of the accounts between Duncklee and the corporation, or the partnership and the corporation, and no adjustment had taken place up to the time of the assignment. It was perfectly competent for Duncklee and Jones to make the assignment, and the act of Duncklee in executing the discharge at a subsequent time, although the receipt bore a previous date, was entirely nugatory. The questions presented by the report are quite as much matters of fact, as of law, but in whatever light we view them, we [251] think the plaintiffs entitled to judgment on the report for the full amount found by the auditor. Judgment for the plaintiffs.