Swamscot Machine Co. v. Partridge

Woods, J. That the trustees are chargable in this case, admits of no doubt. It is not even denied by themselves. A loss having been suffered by Partridge & Rude by fire, and the amount of damages having been ascertained and voted to be paid by the corporation, the same have assumed the character of a debt due from the insurance company to the assured, which may well be attached by the trustee process. Partridge & Rude, according to that state of facts, are the acknowledged creditors of the trustees for an ascertained and liquidated sum. It is no longer a mere claim for an indemnity for the loss sustained and something sounding in damages, but has become a liquidated debt. But the defendants, by way of set-off’ to the sum in their hands found due to the defendant, claim to be allowed sundry sums, and among them the amount of three assessments made by their directors upon the premium note given by the principal defendant to the trustees as the consideration — 373 — for the policy, to meet certain losses which had occurred during the period of time expressed in the policy, but since the loss happened for which the damages were claimed by the defendant and allowed by the corporation. That the assured is liable for assessments ordered in such a case, was decided in this court in the case of the N. H Mutual Fire Ins. Co. v. Rand & Cummings, 4 Foster’s Rep. 428. In that case there was ap admitted total loss of the property insured, and yet the court decided that the defendants were liable for the payment of assessments made upon their premium note for their just proportion of all losses sustained by the corporation during the entire period mentioned in their policy of insurance. The reasons and grounds of the decision were then fully stated, and need not be repeated. It is sufficient to say that that decision, we think, was in conformity with the plain provisions of the charter, and is not in conflict with the justice of the case, and we see no reason to question its correctness ; and besides, we think the cases in other jurisdictions uniformly and fully sustain the opinion. Horne v. Boyd, 1 Sandf. Sup. Ct. Rep. 481; Smith v. Saratoga Co. Mutual Fire Ins. Co., 3 Hill. 508; Neely v. Onondaga Co. Mutual Fire Ins. Co., 7 Hill 49. That trustees may retain any sums which they are entitled to receive at the hands of the principal defendant, at the date of the disclosure, upon claims or contracts existing prior to the action, cannot admit of doubt. It is too well settled to be further questioned, that they may be allowed to retain, of the funds found in their hands, an amount equal to all sums which might be properly claimed by way of set-off if the action were brought by the principal defendant to recover the amount of his claim against the trustees. The rights and liabilities of trustees are not changed to their prejudice by the fact that the action is commenced by the creditor of the principal defendant and not by the principal defendant himself. The only object and legitimate — 374 — effect of the trustee process is to enable the creditor to secure and apply to the discharge of his claim against the principal defendant, such sums of money as may be found to be legally or equitably due from the trustee to the principal defendant, or such other credits or goods of the defendant as maybe found in his possession beyond what may be due from the principal to the trustee. In fact, a trustee is entitled to retain or to set-off against the debt which he may owe the principal, any demand which he might set-off, or of which he might avail himself by any of the modes allowed either by the common or statute law if the action were brought by the defendant himself, or if the proceedings were wholly between the trustee and principal defendant. Lamb v. Stone, 11 Pick. 527, 533; Hathaway v. Russell, 16 Mass. Rep. 473; Boston Type Foundry v. Mortimer, 7 Pick. 166; Smith v. Stearns, 19 Pick. 20; Boardman v. Cushing, 12 N. H. Rep. 105. And where, in order to protect his rights, it was necessary for the trustee to bring a cross action and take judgment against the principal defendant, the court in Massachusetts granted a continuance to enable the trustee to obtain a set-off of judgments and executions. Boston Type Foundry v. Mortimer, 7 Pick. 166, before cited. No doubt then exists that in the present ease the trustees have a right to retain of the funds found in their hands, sufficient to meet the amount of the several assessments made upon the deposit note. That amount was an ascertained debt, as we have seen, justly due from the principal to the trustees at the date of the disclosure, by virtue of a prior contract. It is every day’s practice, in accordance with express statutory provisions to that effect, to allow trustees to retain the amount of their reasonable costs incurred in the trustee proceedings, and to issue execution only for the balance found in their hands. The trustees’ claim, then, to be al — 375 — lowed their costs out of the money in their hands, must be sustained. An objection is taken to the allowance of the sums claimed by the trustees, based upon the idea that the defendants have set up the right to deduct from or diminish the amount voted to be paid to the defendant, in violation of the 13th article of the by-laws of the corporation, and that such is the effect of allowing them the set-off claimed in the case. But we think there is no sufficient foundation for the objection, so far as the same relates to the assessments upon the deposit note. They ask only to retain so much of the sum ascertained and voted to be paid as the loss of the principal defendant, as shall equal the amount that may be found legally due to them from said defendant, to be applied by way of set-off in payment thereof to that extent. It is strictly a claim of the right of set-off, and nothing more. Their right to retain for their reasonable costs rests upon the express provisions of the statute relating to the trustee process, not by way of diminishing the sum to be paid by the trustee, but in discharge of a legal claim of the trustee to be paid out of funds of the principal in his hands. This claim of the trustees, then, is not in any legal sense a claim for a reduction or diminution of the sum of the loss below the sum ascertained and voted, but a claim of right of payment or cancellation of it, to the extent of the indebtedness of the defendant to the trustees, and of their just costs, by way of set-off, or by retaining that amount of the loss found for that purpose. Clearly there is no objection to this claim, either in equity or in law. But the trustees claim the right to retain also a further sum of $18,00, being two per cent, per month from the date of the last assessment upon the premium note, upon the balance thereof over the former assessments until the expiration of the term of the policy. This claim is rested by them entirely upon the ground of an alleged usage of the company, in all cases of a total loss, such as the present — 376 — was found to be. It is not pretended that this right exists by the terms of the policy, or by the provisions of the charter or by-laws of the corporation, which are referred to in the policy as forming a part of it, and governing the rights of the parties thereto. The corporation, by the policy, promised the defendant, “ according to the provisions of said act and by-laws of the corporation, to pay and satisfy him and his heirs, &c., the sum of six hundred dollars within three months next after the said property shall be burnt, destroyed, or demolished by fire, due notice thereof given as aforesaid.” The 8th section of the charter provides that “ the directors shall settle and pay all losses within three months after notice shall have been given as aforesaid.” Article 13 of the by-laws provides that “ payment of the loss ascertained shall be made within the time prescribed by the charter, without deduction from the sum decreed by the adjustment.” The contract, then, on the part of the corporation, was an agreement to pay the full amount of the loss by fife, within three months after notice thereof; and no right is reserved to retain the amount of the per centage upon the deposit note, claimed in this case, or any other sum. If the usage, then, can be allowed to have the effect claimed for it, it must have it in despite of the express terms of the contract that the entire sum of the loss sustained “ and decreed by the adjustment ” shall be paid to the assured within the time prescribed in the policy. The question then is, whether a usage can prevail which is repugnant to the express contract of the parties, and wholly inconsistent with and in contravention of the provisions and terms thereof. Upon this precise point the authorities .are entirely clear and conclusive. Mr. Greenleaf, in his treatise upon the law of evidence, (1 Greenl. Ev. 336) states the doctrine thus: — 377 — !< Though usage may be admissible to explain what is doubtful, it is not admissible to contradict what is plain.” Where a policy was drawn in the usual form upon a ship, her tackle, apparel, boats, &e., evidence of usage that underwriters never pay for the loss of boats slung upon the quarter outside of the ship, was held inadmissible. Blackett v. The Royal Exchange Assurance Co., 2 Crompton & Jervis 244. The doctrine upon the subject under consideration is most distinctly and forcibly stated by Mr. Justice Story in an able judgment delivered in the case of the Schooner Reeside, 2 Sumner’s Rep. 567. “ The true and appropriate office of a usage or custom,” says he, “ is to interpret the otherwise indeterminate intentions of the parties, and to ascertain the nature and extent of their contracts, arising not from express stipulations but from mere implications and presumptions and acts of a doubtful or equivocal character. It may also be admitted to ascertain the true meaning of a particular word or of particular words in a given instrument, when the word or words have various senses, some common, some qualified, and some technical, according to the subject matter to which they are applied. But I apprehend that it can never be proper to resort to any usage, or custom, to control or vary the positive stipulations in a written contract, and a fortiori not in order to contradict them. An express contract of the parties is always admissible to supersede or vary or control a usage or custom ; for the latter may always be waived at the will of the parties. But a written and express contract cannot be con- ■ trolled or'varied or contradicted by a usage or custom, for-that would not only be to admit parol evidence to control,. vary or contradict written contracts, but it would be to al- • low mere presumptions and implications, properly arising in the absence of any positive expressions of intention, to control, vary or contradict the most formal and deliberate written declarations of the parties.” — 378 — The case of Aguilar v. Rodgers, 7 D. & E. 421, was an action of assumpsit to recover a return premium upon a policy of insurance. The defendant undertook to return ¿£10 per cent, of the premium “ if the ship sailed with convoy and arrived.” Lord Kenyon remarks thus in delivering the opinion of the court: “ The words here are not equivocal, and we ought not to depart from them; it would be attended with great mischief and inconvenience if in construing contracts of this kind we were not to decide according to the words used by the contracting parties.” In Leavitt v. Simes, 3 N. H. Rep. 14, Mr. Chief Justice Richardson remarks, “ it will deserve very serious consideration whether the admission of testimony to show the usage and his assent to it, is not to admit parol evidence to vary the terms of a written contract.” Upon the authorities, the object and extent of the rule letting in evidence of usage or custom to aid in construing a contract, are plain and obvious. It is to ascertain the nature and extent of the contract in the absence of express stipulations. It is no part of the legitimate purpose of such proof to vary or control the plain meaning and intention of the parties, as shown by the language used, when that language has a plain and unmistakable meaning. But when the language used is equivocal, or is susceptible of more than one construction or meaning, proof of usage may be resorted to to show what was the real intention of the parties. 2 Sumner’s Rep. 569, before referred to ; Cutter v. Powell, 6 Tenn. Rep. 320; Vallance v. Dewer, 1 Camp. 503; Noble v. Kennoway, 2 Doug. 510. The doctrine as above stated, when applied to the present case, is decisive of it. By the express terms of the contract, the corporation were bound to pay to the, assured $600, the ascertained amount of the loss sustained, without any deduction. If effect were given to the usage claimed, then the sum otherwise to be paid would be limited and diminished by the amount of $18. — 379 — The object and effect, then, of the proof offered of the usage in the case, were plainly to vary and limit the plain and unequivocal terms of the policy, and to control and limit their construction and legal effect. To give the evidence of the usage the effect claimed for it, would be to allow the exact converse of the true and well settled rule of law upon this subject to prevail. It would be to hold that while the contract in express and unmistakable terms provides that the whole loss shall be ascertained and paid to the assured, the usage shall control the express terms, and give them the effect of a contract for the payment of a sum less than the whole loss sustained. It would be to allow the usage to control an express written contract, and to limit its terms and effect, while it is well settled, in accordance with sound reason too, that a usage shall be regarded as waived by the express terms of a contract, when they are in conflict with each other. We find no principle or authority upon which the claim made for the deduction, upon the ground of usage, can be sustained, and we are therefore of the opinion that it cannot be allowed. The plaintiff claims that the trustees are chargable with interest upon the sum found due to the principal defendant and voted to be paid him. Here was no express contract to pay interest. The amount of loss was ascertained and voted to be paid as soon as it could be done by a new assessment. This ascertainment and vote took place December 14,1849. The charter and by-laws provided for the settlement and payment of losses within three months after notice, when there is an acquiescence on the part of the assured in the sum of loss ascertained by the directors. Here the whole amount insured was allowed, and so an acquiescence may well be inferred. More than three months have elapsed since the ascertainment of the loss and vote to pay the amount of it, which may well be taken to be the date of — 380 — the notice, in the absence of other proof. If this action were one brought by the assured, he would doubtless be entitled to interest by way of damages for the wrongful detention of the amount due him, beyond the time prescribed' by the provisions of the policy, as affected by the charter and by-laws, for its payment. Barnard v. Bartholomew, 22 Pick. 291 Dodge v. Perkins, 9 Pick. 368; Cole v. Trull, do. 325; Walker v. Bradley, 3 Pick. 261; McIlvaine v. Wilkins, 12 N. H. Rep. 474; Judge of Probate v. Heydock, 8 N. H. Rep. 491; Pierce v. Howe, 1 do. 179. But in the case of an action against a trustee who is indebted to the principal debtor, where the indebtedness is of such a character that interest can only be recovered upon the ground of a wrongful detention of the principal sum by the debtor, interest is not ordinarily recoverable after the service of the process, for the plain reason that by the service the trustee is ordinarily restrained from paying until the determination of the trustee action. Prescott v. Parker, 4 Mass. Rep. 170; Adams v. Cordis, 8 Pick. 260. It does not appear by the case wheij the present action was commenced, and of course it does not appear that the payment of the money was wrongfully omitted for any period prior to the commencement of it, and consequently no interest can be allowed upon that ground. Neither does it appear by the disclosure that any funds have been in the hands of the trustees under such circumstances as to enable the court to infer that the same have earned interest. Brown v. Silsby, 10 N. H. Rep. 521. Nor can the court say that the corporation ought to have placed the funds intended for this purpose in a situation to have earned interest. Pierce v. Howe, before cited. The corporation is not a corporation whose business it is to employ their funds in trade and business, and we do not see how, upon the facts disclosed, the court can see or determine that the corporation has not in this respect done their whole duty if they shall have the — 381 — Stands ready, upon the determination of this ease, to pay •such judgment as shall be rendered against them. We are of the opinion, therefore, that the trustees are not ehargable with interest in this ease. In accordance with the principles of the foregoing opinion, let there be Judgment for the plaintiff.