Ludlow v. Simond

2 Cai. Cas. 1 | Court for the Trial of Impeachments and Correction of Errors | 1805

Spencer, J.

In the discussion of this cause the counsel have rested their arguments on two principal points.

1st. Whether the court of chancery had jurisdiction of this cause ?

• 2d. Whether the respondent, Simond, has, from the facts proved, been discharged from his responsibility on the contract entered into between the appellants, Leremboure, and himself t

I shall not enter into a particular consideration of the first question, because, it is immaterial, in the view I have taken of the subject, whether the court of chancery had, or had not jurisdiction. I wish, however, to be explicitly understood as not subscribing to the proposition, that that court had cognizance of the cause on any of the grounds urged by the appellants’ counsel; and did-it rest solely on that point, the strong inclination of my opinion is, that the appellants’ relief, if any they are entitled to, is at law.

It cannot be controverted, but that Simond is a surety, or guarantee for the performance of Leremboure’s contract, so far forth as respects the indorsement of a note which the latter stipulated to give Daniel Ludlow Co. for the deficiency of the proceeds of the sales of the goods mentioned in the contract. He is a surety merely, without the chance of reaping any benefit from the enterprise ; he has no interest in the adventure, and does not appear to have been indemnified by any security for this gratuitous undertaking, and although it was suggested, that he might have been interested or secured, yet no facts appear in the case, to warrant those suggestions, and the court'are to judge secundum-allegata et probata. I proceed, therefore, on the fact, that Simond was a surety, without any interest in the subject matter of the contract, and without any counter security.

It has been correctly urged, that sureties are favourites of courts of equity, and that those courts will not bind them, where they are not strictly bound at law. It may, in the same sense, be said, that they are favourites of courts of law; and that there they will not be bound beyond the scope of their engagements. These maxims, if I may so call them, grow out of the consideration, .that in the various transactions of life, men are liable to be called on to render acts of neighbourly kindness, without any interest or expectation of reward; that they are frequently called on to become bail, indorsors of notes, guarantees in various modes, and when, in such cases, the principal turns out to be insolvent, it becomes a question, which of two innocent parties shall sustain a loss. Both courts of equity and law will cast the responsibility on the surety, if, by the terms of his engagement, he has assumed it ; but neither of them will do this where he is not brought within the precise scope of his undertaking.

The authorities on this subject are very uniform; they speak a language not to be misunderstood, and, without detaining the court by an enumeration of them, I am fully justified, by those cited, in saying, that, both in law and equity, contracts, involving the rights of sureties, will, so far as respects them, re ] ceive a more rigid and less liberal construction, than between the original contracting parties.

I shall not unnecessarily repeat the facts in this cause. The material ones are, that by the contract, subscribed by the respondent, it was stipulated, that Leremboure should put on board one or more vessels, tobacco and sugars at certain fixed prices, of the value of 40,000 dollars. xThat these goods should be consigned, under bills of lading, to Buildemciker Co. the appellants’ correspondents at Hamburgh, to be sold for the account and risk of leremboure ; that he should insure them, and assign the policies to the appellants, who should receive from the underwriters the amount of the losses to reimburse themselves, the appellants stipulating to furnish their notes to Leremboure for the 40,000 dollars, payable, the one-half at four months, the other half at six months, and if the proceeds of the shipments should exceed the amount due the appellants, they were to be answerable to Leremboure for the difference when in cash.

If the policies did not furnish a mode of reimbursement, then the appellants were authorised to draw at sixty days sight on London, twenty days before their notes respectively became due, at the then current exchange, and to order the necessary remittances to be made by Buildemaker Co. at the risk of Leremboure, both as to the validity of the bills, and the solvency of the house in London, to whom the same should be made, and should the proceeds of the sales at Hamburgh, so disposed of, not prove sufficient to reimburse the appellants the amount of their several notes, together with what interest might be due them on their advances, their commissions, and all other charges attending the negotiation, Leremboure agreed to make good the deficiency, as soon as ascertained, by giving his note to the appellants payable at 60 days, to be indorsed by the respondent, who agreed thereto.

The shipments were made on the 11th of March, and the 6th of April, 1799, at which time the appellants gave their notes stipulated to be given by the contract. The cargoes shipped and consigned to Buildemaker & Co. arrived safe in the summer of that year; previous to the arrival of the cargoes, a great change had taken place in the market at Ham-, burgh, and many failures had happened among the principal traders there. Buildemaker Co. without any directions from the appellants, sent 219 hogsheads of tobacco to Rotterdam, where they were sold in December, 1799, and the summer of 1800, in the name of the appellants. The proceeds of the sales were insufficient to reimburse the appellants, the amount of their notes, with interest, commissions and •charges, and for that deficiency the suit below was instituted against Leremboure and the respondent. It appears that, after the accounts had been received fromBuildemaker & Co. the appellants presented them to Leremboure, who overlooked them, and said they were right, but that, having “become insolvent, and being then confined for debt, he refused to give his note for the deficiency, and both he and the respondent refused, after the time had elapsed when such note, if given, would have become payable, to pay the ap^ pellants the balance, which the appellants claim to be 24,044 dollars 82 cents.

The only proof of the price of tobacco at Ham-burgh,, is derived from the deposition of John H. Schmidt, who states, that the price of Virginia tobacco there, from the month of October, 1799, to the latter end of the year, was, from three and nine-pence to four shillings a pound, Hamburgh currency; but that he does not know the price in the summer of that year, although Maryland tobacco was considerably higher than Virginia, during that period. It would seem that the sending the tobacco to Rotterdam has saved those interested in the proceeds from 3 to 6,000 dollars, if the price at Hamburgh, in the summer of 1799, was not higher than in the fall of that year, and the year ensuing. ■

There is no proof in the cause, that, on account of the failures at Hamburgh, the tobacco was unsalea. ble ; on the contrary, it appears that the sugars-were sold, and- that in October, 1799, tobacco was sale-able.

From this state of facts arises the question, whether the respondent is to be holden responsible for the deficiency of the sales ? and, in my opinion, he is not responsible. The contract he has entered into, obliges him to indorse Leremboure's note for the deficiency of the proceeds of the sales at Hamburgh. The place of the sales is, in my conception, not only a condition precedent, but it enters into the substance of the contract. It may not appear, at fii st view, at all material where the sales were made, provided, the goods were sold for the best price that could be obtained ; but it will, on examination, appear extremely important to the respondent, that the sales should have been made at Hamburgh, rather than Rotterdam. Whether, however, this be, or be not material, if Hamburgh was agreed by the contract to be the place of sale, then on principles, as applicable to sureties, the respondent is discharged.

That Hamburgh was the designated place of sale is manifest, not only from the words of the contract, but from its plain and evident meaning. The goods were consigned to Buildemalcer & Co. to be sold ; the consignment to this house, transacting business at Hamburgh, a great commercial city, imports, in itself, that the sales were to be there. The insurances extending no further than to Hamburgh, is still more demonstrative of the sense and understanding of the parties, that they were to go no further. The want of provision in the contract for any other market, and, above all, the express terms ,of the contract, whereby the respondent engaged to indorse Leremboureh note for the deficiency of the proceeds of the sales at Ham-burgh, leave, I think, not a particle of doubt on that subject.

This case is, then, perfectly analogous to the case in 2 Chan. Ca. 22, where a bond was given by a principal and his surety, to pay such sum as N. H. a master in chancery, should report. The master agreed, on, died without making a report. The chancellor determined on the principle I have stated, that the surety, not being bound at law, should not be holden in equity.

The sales not having been made at Hamburgh, is, I think, matter of substance. I have observed already, that the appellants gave their notes on the 11th of March, and 6th of April, 1799. The first became payable the 14th of July, and the last the 9th of October, in that year. The appellants contemplated, beyond a doubt, to meet these notes by drafts on London, at sixty days sight, and for that purpose Leremboure authorised them to draw bills, twenty days before their notes respectively became due, and to order the necessary remittances to be made by Buildemaker Co. to their friends in London, on whom they might value to meet their drafts. From this arrangement the respondent must have contemplated, when he entered into the contract, that the cargoes thus shipped were to be sold, so as to form a fund for the payment of the bills to be drawn by the appellants, and that the term of his responsibility would not be extended beyond the last of the year 1799. Instead of this, by the transportation of the goods to Rotterdam, the period of his responsibility was enlarged to the 30th of September, 1800, a time far beyond any ideas he could have formed from the provisions of the . iiii contract. Had it not been thus enlarged, and the goods been sold for the lowest possible price at Ham-burgh, he might, for aught that appears, have secured himself before Leremboure became insolvent. As in the case of Rees v. Berrington, 2 Ves. J. 543, so here, in the language of Lord Loughborough, “ we cannot try the cause by inquiring what mischief it may have done (to send the goods to Rotterdam ) for that would go into a variety of speculation, upon which no sound principle could be built.”

To hold the respondent liable, notwithstanding the terms have not been complied with, on which alone his responsibility was to arise, would be substituting another contract in lieu of the one the parties have made. It is impossible to say, that a contract, agreeing to be responsible for the deficiency of the proceeds of sales at Hamburgh, ought to be construed to be a contract to be responsible for the deficiency of the proceeds of sales at Rotterdam.

It has been urged by the appellants’ counsel, that Buildemaker Co. were not exclusively their agents, and that they acted without their directions, in sending the goods to Rotterdam, and that they had, by law, a right to send them to a neighbouring market for a better price.

It will not, I trust, be contended, that had the appellants ordered the goods to Rotterdam, in case a higher price could have been there obtained, that, then, the respondent would have been liable. If, in that case, all responsibility would have been gone, how can it alter the case, as respects the respondent, w^at means the goods were sent there ? He had no controul over them ; and if his responsibility is . 1 J extended beyond the terms of his contract, however hard the case may be as regards the appellants, it would be harder as respects him. If, by law, an agent receiving a consignment of goods to sell, may send them to another market, which I am not prepared to admit, then the appellants may be chargeable with negligence in not instructing Buildemaker & Co. to sell at Hamburgh. But if, as I incline to think, they could not, as consignees, have sent their goods to another market, they would, under the facts proved'in this case, be responsible to the appellants, unless they have affirmed their acts, and thus concluded themselves. “A man may,” says Chief Justice Wittes, in his reports,p.407, “in many cases, either consider another as a wrong-doer, or as a receiver of money for his use, as he thinks best, and most for his advantage.” In this case, the appellants have, it appears to me, affirmed the acts of Buildemaker Ss? Co. in selling the goods at Rotterdam,, by receiving their accounts, and passing the proceeds of the sales there, to the credit of Leremboure. This fact appears by the accounts exhibited by the appellants. It then turns out to have been a sale at Rotterdam, contrary to the contract, assented to by matter ex post facto by the appellants, and this I consider another insuperable difficulty to their recovery.

The amount in demand, and the learned and ingenious arguments submitted to the court, have induced all the research and examination in my power to bestow. The clear and decided result is, that the respondent is discharged from his responsibility on the eontract; and, although I perceive that the appellants have conducted themselves with perfect good faith; that the loss is, to them, a severe misfortune, I am unwilling to restore them their losses, by inflicting art injury on a man having a perfectly legal and meritorious defence. In my opinion, therefore, the decree of the chancellor must be affirmed with costs to be taxed.

Thompson, J.

This case naturally divides itself

into two general subjects of inquiry. 1st. As it respects the remedy, whether, if any, it ought tobe in a court of law, or in a court of equity ? 2d. As it re - spects the rights of the parties.

The first may be considered, in some measure, as matter of form; the second as matter of substance; and although it might be deemed more correct, in point of order, to determine the right before the remedy, yet, as I shall examine both questions, not knowing the course that may be pursued by other members of the court, the order of examination becomes immaterial.

There are several grounds, I think, upon which the appellants had a right to go into equity for relief.

It is undoubtedly important to the ends of justice, that the boundary between the jurisdiction of courts of law, and courts of equity, should be plainly marked, and strictly pursued. Were, indeed, the present an attempt to overleap the boundaries heretofore established, it might present a different question; but that, I think, is not the case here. By the anciént rule, according to Lord Coke, 4 Inst. 84, the jurisdiction of the court of chancery, was confined to frauds, accidents and trusts. So in 10 Mod. Rep. 1. But that jurisdiction has been gradually extended, and Fonblanque, in the first volume, page 8, of k'g valuable treatise, observes, that the English courts of law are, equally with their courts of equity, chargeable with having extended their jurisdiction by the aid of fiction ; and that if courts of equity, professing to proceed upon the ground of the party being remediless at law, do take cognizance of some matters, of which courts of law would now take cognizance, they will be found originally to have derived their jurisdiction from the narrow decisions of courts of law, and having once strictly possessed it, courts of law ought not to be at liberty at pleasure to deprive them of it. The jurisdiction, he again says, page 11, exercised by courts of equity may be considered, in some cases, as assistant to, in some, concurrent with, and in others, exclusive of, the jurisdiction of courts of common law.

Matters of account form one class of cases, wherein courts of law and equity, exercise concurrent jurisdiction. Blackstone, 3 Com. 437, lays it down as extending to all matters of account; and it is a subject, I think, over which the jurisdiction of a court of equity ought to receive a liberal construction, because, the mode of proceeding is more peculiarly adapted to a deliberate examination, and correct settlement. All parties in the present case, were interested in having the account stated. The result was the basis, upon which the respective rights, and responsibilities of the parties depended. The account being to be stated by the appellants themselves, cannot alter the question. The other party had á right to contest if, and the same examination might be involved as if the defendants below had been called upon to account. In matters of account both parties are actors. 1 P. W. 363. Hence it is, that after a decree to account, a defendant may revive the suit; because, say the authorities, in such case the defendant is considered as an actor ; for, until the account is taken, it is not known where the balance lies. Although the account, as stated, was admitted by Leremboure, it was not by Simond.

The necessity of a discovery might originally have been the foundation of the jurisdiction of a court of chancery, in matters of account; still I cannot discover from authorities that it is now restricted to cases of that description. Mitford, 111, says, that in matters of account, equity has a concurrent jurisdiction with courts of common law, in cases where no difficulty would have attended the proceeding in those courts. S. P. 1 P. Will. 251. n. A. And I can see no good reason why a trustee, who is desirous of having his accounts settled, should not be at liberty to call the cestui que trust into a court of equity for that purpose.

There is another ground, I think, for sustaining the bill. Leremboure had refused to give his note for the deficiency, and it may be doubtful, whether a specific performance in this respect, was not necessary for the purpose of charging Simond. If also, any fraud or collusion had been practised between them, it would, in a peculiar manner, be an object of chancery jurisdiction.

The transaction was complex, the remedy at law, difficult. 1 Stra. 733. Mr. Justice Buller, when sitting for the Lord Chancellor, in the case of Weymouth v. Boyer, 1 Ves. J. 424, says, “ we have the authority of Lord Hardwicke, that if a case be or the remedy at law difficult, he would not pronounce against the jurisdiction of this court, and the same principle has been laid down by Lord Bathurst.” Matters of account are proper subjects for a court of equity. 1 Atk. 128. It does not follow, that because a court of law would give relief, that a court of equity loses the concurrent jurisdiction, which it has in matters properly cognizable there. 3 Bro. Ch. Ca. 224. In Wright v. Hunter, 5 Ves. J. 794, the master of the rolls says, “ I would not lay it down, that because courts of law may entertain actions upon such subjects” (a case of contribution among partners) “ a party may not file a bill for contribution ;” for though he thought the question more proper to be tried at law, the plaintiff was very well justified in coming there, “ for,” he adds, “ this court has never given up its jurisdiction.”

Independent, however, of the foregoing considerations, I am inclined to think, the respondent comes .too late with an objection to the jurisdiction of the court, he having answered, and contested the merits, the subject matter of the bill being within the jurisdiction of the court. This appears to me, to be a reasonable rule, and calculated to save expenses. It is a good general principle, that where a party objects to the jurisdiction of a court, he ought to do it at the earliest opportunity. I would not, however, be understood to extend this rule, to cases where the subject matter is not within the. jurisdiction of the court. Baron Gilbert, in his history and practice of the court of chancery says, page 219, " where the common law would give the same relief as a court of equity, there, if the defendant would deny the deed, and demur to the relief, the demurrer would be allowed ; but if the defendant doth not demur to the relief, the court will decree for the plaintiff on the hearing, after the deed is properly proved ; because the defendant admitted the jurisdiction by answering and putting it in issue, and not demurring.” Again, page 51, where a plaintiff goes into a court of equity, for damages, which are uncertain and not to be settled but by a jury, the defendant may demur to the relief after having first answered to the damages ; because it is alieni fori, since the court cannot settle the damages.” But this must be ante litis contestationem; for if he answers and contests with the plaintiff, he can take no advantage of it at the hearing ; for he has submitted to the jurisdiction of the court, and the court will not try at law the quantum of damages by a feigned action, 1 Vez. 446. I am therefore of opinion, that the objection to the jurisdiction of the court was-not well founded.

But as the result of my opinion is with the respondent, it is of little moment, as it respects the present case, whether the appellants have resorted to the proper forum for redress or not.

The first question presented, on this part of the case, relates to the execution of the contract, on the part of the appellants. It purports to have been executed in the name of Daniel Ludlow & Co. being the name of a firm, composed of Daniel & Gulian Ludlow. The signature must -necessarily have been written by one only of the company, and as it is a settled rale of law, that one partner cannot bind his copartner by seal, it is contended that the 1 contract is invalid. Had the execution been by one of the firm, without the assent of the other, the objection might be well grounded; but from the testimonv, the fact appears otherwise. Two witnesses . testify, that they saw Daniel Ludlow and Gulian Ludlow, execute the contract. It is said, however, that this testimony is equivocal; that the witnesses intended probably to be understood, that they executed it in the usual and ordinary mode, in the course of the partnership concerns, by one only of the company. This inference appears to me, not warranted by the language of the witnesses. They speak of the parties individually, not as a company; and had not Daniel Ludloxv and Gulian Ludlow both been present, and assented to the execution, the language of the witnesses, doubtless would have been, that they saw the contract executed by the one, who subscribed the name of the company. The interrogatory part to the witnesses was, “ did you or not, see Daniel Ludlow and Gulian Ludlow execute the deed?” Taking it for granted, from the evidence, that Daniel and Gulian were both present, and assented to the execution, and probably both acknowledged the seal, I think the contract well executed, according to the principles settled in Lord Lovelace's Case Sir W. Jones, 268, and Ball v. Dunsterville, 4 D. & E. 314.

I shall next examine the character which the respondent, Simond, assumes in this contract. This becomes necessary; because, from the whole current of authorities, it is manifest, that where a party is charged as surety, he has a right to avail himself of a strict and literal construction of his contract, in order to exonerate himself from responsibility.

In examining this question, we have principally to resort to the contract itself. In expounding it, the cardinal rule is, that the intention of the parties ought to be sought after, and carried into effect, and to govern the construction, where, from the instrument itself, that intention can be discovered. In viewing the general nature and object of this contract, and the parties who were to be beneficially interested in the speculation, I can consider Simond in no other point of light, than in the character of a mere surety. It is the essence of a partnership transaction, that each partner should be entitled to the gain, as well as exposed to the loss resulting from the concern. That was not the case here, for it is expressly provided, that if the proceeds of the several shipments, shall exceed the amount due Daniel Ludlow & Co. it shall be paid to Leremboure. Every feature of the contract shows, that Simond was not concerned in interest. The shipments were to be made by Leremboure. The notes to purchase the cargoes were to be furnished to them. The sales were to be made on his account, and at his risk. The policies of insurance were in his name, and by him to be assigned. The loss, if any, at the winding up of the speculation, to be borne by him ; for the contract expressly states, that “ A. M. Leremboure agrees to to make good the deficiency when ascertained.” The mode of doing it, however, was by giving his note, with Simond's indorsement. The appellants, in their bill, pray, “ that the accounts between them, 41 and the said Leremboure, arising under the said agreement, may be taken and stated.” Not that the accounts between them, and the said Leremboure and Simond, might be taken and stated, which would have been the prayer, had they conceived Simond beneficially concerned. .In addition to this, Simond, in. his answer, under oath, solemnly denies having any interest in the contract, and this is not contradicted, or in any manner rebutted, by the appellants.

Simond, then, being considered a mere surety, it becomes necessary, in order to determine his liability, further to examine the contract, and see what was to be done by the parties respectively, for the purpose of.determining, how far each one has complied with his obligation imposed by the contract, and the law applicable to this case. There is no necessity, however, of minutely examining all the stipulations, contained in the agreement; no breach of them is alleged on either side. Leremboure, on his part, purchased and shipped the cargoes pursuant to his contract ; caused them to be insured, and duly assigned the policies to the' Ludloxvs. The Ludloxvs, on their part, furnished Leremboure with the means of purchasing these cargoes, and consigned the bills of lading, which were given to them, to Buildemaker Co. their correspondents at Hamburgh, according to the stipulations of the said agreement- But the principal controversy relates to the time and place of selling these shipments ; and whether, in that respect, there has been any laches, on the part of the appellants, so as to take áway their right of calling on the surety to make good the loss. Here I would premise, as it was made a topic of argument by the counsel, that I see no ground for alleging fraud or collusion, either against the complainants, or the respondent. But the case presents an honest struggle, to shift the,burthen of a very heavy loss.

There is no time expressly limited by the contract, within which the shipments were to be disposed of; but from the other provisions in the agreement, I think the intention of the parties in that respect, may easily be discovered. It is fairly to be presumed, that the complainants did not intend to advance cash, for the purchase of these cargoes; but only to lend their names and credit to Leremboure, for that purpose. The first shipment was made on the 11th of March, 1759. The notes furnished by the complainants of that date, payable in six months, according to the contract, would fall due the 14th of September, and those payable in four months, would fall due the 14th of July. The second shipment was on the sixth of April, 1799. The notes furnished of that date, payable in four months, would fall due the 9th of August. The amount of the complainants notes, furnished to Leremboure, xvas 36,431 dollars 88 cents, which fell due in the proportion, and at the times folloxving, to wit: 2,697 dollars 99 cents, on the 14th of July ; 13,733 dollars 89 cents, on the 9th of August, and 20,000 dollars on the 14th of September-According to the usual course of a voyage, between New- York and Hamburgh, calculating on a ready market, the proceeds of these shipments xvould have been received in season to answer the complainants engagements. This is fortified by the appellants’ own showing, in the account current annexed to their bill of complaint. From that it appears, that they must, as early at least as the 16th of July, have received the certificate of the sugar’s having been landed at Hamburgh, which was necessary to entitle them to ° ^ J the drawback. The sugar was shipped on the 6th of April; from that to the 16th of July, is but little more than three months. rl 'he appellants’ pores were payable at 4 and 6 months, making an allowance for unforeseen delay. Hence I think it reasonable to conclude, that the appellants calculated to meet the payment of their notes, with the proceeds of these shipments, and that Simond, the surety, pi obably made the same calculation. In case Daniel Ludlow Es? Co. should not be reimbursed by the policies of insurance, they were authorised to draw for that purpose at sixty days sight on London, twenty days before their notes respectively became due. According to those data, the last draft might have been made on the 24th of August; the answer to which, making very liberal allowances, would, probably, have been received here as early as December, at which time Simond had a right to calculate that the .speculation would have been wound up, and the result of his responsibility known.

'The contract, I think, carries stronger internal evidence with respect to the place, than with respect to the time of sale. There can be but little doubt, but that the contemplated place of sale was at Hamburgh. The appellants stipulate to make the consignment to their correspondent at Hamburgh. That part of the contract providing for the deficiency, declares, that “ should the proceeds of the sale at Hamburgh, not prove sufficient,” &c. The vessel saikd for Hamburgh, and the insurance was for the same place. The last is a strong circumstance, showing the understanding of the parties, with respect to the place; because, the policies were to be assigned to the appellants as security, which would altogether have failed, had a loss happened after the vessel left Hamburgh, on a voyage to another market.

Another question for examination is, the relation . in which Buildemaker &? Co. must be considered as standing to the respective parties.

The object of the appellants manifestly was, to have the. disposition of these shipments, and the proceeds completely under their controul and management.— They themselves might be considered as trustees for Leremboure, with a lien upon the property, for their advances and commissions. It would not, however, have been in the power of Leremboure to have called the property out of their hands, or counteracted their orders, until such lien had been discharged. There is nothing in the transaction showing that Buildemaker &? Co. knew any other persons than the appellants, were interested in'the shipments. The bills of lading were in their names. The consignment made by them. They to order with respect to the remittances ; and, in short, to have the uncontrouled direction for the purpose of reimbursing themselves. Under such circumstances, I can conceive Buildemaker Ss? Co. in no other light than as the immediate agents of the appellants. It would be incongruous to consider them the agents of Leremboure, and still he to have had no controul over them ; and to have permitted him to have had any controul, might have defeated the Ludlows’ security in some measure. But admitting Buildemaker &? Co. to have been the joint agents of the appellants and Leremboure, it cannot affect the rights of Simond. His liability could not be prolonged or increased without his assent.

In what respects, then, has there been a variance in the execution of this contract, from what may reasonably be supposed to have been the understanding and intention of the parties ? I think there has been a deviation both with respect to time and place. The final winding-up of the speculation has been prolonged from some time in December, 1799, to September, 1800 ; and the sales of the tobacco were at Rotterdam instead of Hamburgh. The appellants having the controul over this property, in the characters of trustees for Leremboure, it was their duty to have made use of more diligence in the disposition of it j or if, from a change of circumstances at Hamburgh, any embarrassments were thrown in the way, Leremboure, and his surety, ought to have been apprised of it. The forbearance of a trustee, in not doing what it was his .office to harm done, shall, in no sort, prejudice the cestui que trust, since, at that rate, it would be in the power of trustees, either by not doing, or by delaying to do their duty, to affect the rights of other persons. 3 P. Will. 215.^* It is not reasonable to suppose the appellants were ignorant' of the conduct of Buildemaker & Co. in sending the tobacco to Rofterdam. They had not been reimbursed for their advances; the proceeds of the tobacco, as well as the sugar were to make the fund to which they were, in the first instance, to look for reimbursement. In addition to this, the account current, annexed to the appellants’ bill, shows, I think conclusively, that they must have been apprised of it. .They continue drawing, at different times, on Buildemaker & Co. until the 13th of August, 1799. They then stop, and no further draft is made until September, 1800. Why this delay ? They were not reirnbuised; they must have known the fund, first to be resorted to for that purpose, was not exhausted, or they would have called on Leremboure and Simond for the deficiency. They wait, however, for one whole year, and then draw upon Buildemaker & Co. for the proceeds of the tobacco. By this, I think, they affirm the conduct of Buildemaker & Co. in sending the tobacco to Rotterdam, if it was unauthorised in the first instance. Willes, 407. It is unnecessary here' to say, what ought to be the decision as between Ludlows and Buildemaker & Co. or between Ludlows and Leremboure. It appears to me, however, to be allowing agents a very considerable latitude of discretion to justify so material an alteration of the destination of a cargo, as from Hamburgh to Rotterdam ; from a neutral, to a belligerent port. Yet, where agents act in good faith, a very liberal construction ought to be given to their conduct. Very diffi rent rules prevail when the rights of sureties are involved ; as against a surety the contract cannot be carried beyond the strict letter of it. 2 D. & E. 370. A party cannot oblige a surety to remain such, contrary to his consent, longer than the time first bargained for. 2 Bro. Ch. Rep. 582, 3. Delay granted to the principal will discharge the surety. 2 Ves. J. 542. The engagement of Simond was definite, to wit, to indorse Leremboure''s note for the deficiency of the proceeds of the shipments to reimburse Ludlows. This deficiency, however, to be ascertained, in the manner and within the time prescribed by the contract. This Simond had a right to demand. In the case of Wright v. Russel, 3 Wils. 359, the court said, “ a surety ought not to be bound beyond the scope of his engagement. That courts of equity are favourable to sureties; for, where they are not strictly bound at laiv, a court of equity will not bind them.” This doctrine was recognized, and very much approved of, by Lord Kenyon, in the case of Myers v. Edge, 7 D. & E. 256. Where any act has been done by the obligee, that may injure the surety, equity will discharge him from his liability. 4 Ves. J. 833. In the present case, the appellants, by prolonging the winding-up of this contract, exposed fhe surety to greater hazards, among which the insolvency of Leremboure was no inconsiderable one, as the result has shown. The case of Simpson and Field, 2 Ch. Ca. 22, is a strong one to show the rigid construction adopted bjr courts to protect sureties, and also that equity will not bind them farther than they would be bound at law. The case was shortly as follows : the defendant was bound, as surety, in a recognizance conditioned to pay what should be reported by N. H. a master named in the condition. The master died before the report was made, and, by the strict letter of the condition, the defendant was not suable at law, because the report was not made by the master named, but by another. The Lord Chancellor dismissed the bill, saying, the party is but a surety, and not bound at law. The same principle we find recognized in the cases of Ratcliff v. James, 1 Vern. 196, and Sheffield v. Lord Castleton, 2 Vern. 393, and numerous others that might be cited.

If the view which I have taken of the contract be correct, and the deduction made be warranted by the case, the.respondent stands protected by a host pf author!ties. However honest and upright the conduct of the appellants may have been, they are chargeable with such a deviation from the contract, and such a want of due diligence in winding up the speculation, as will, in judgment of law, exonerate the surety. I am, therefore, of opinion, that the decree of the court of chancery ought to be affirmed.

Kent, Ch. J.

In the discussion of this cavise, two leading questions have been raised, both of which have been very elaborately and ably considered by counsel. The one question relates to the mode of seeking redress, and the other to the merits of the controversy. It is necessary that I should give each of them an examination, and this I shall do in the order in which they are stated.

The first question then is, whether the court below had jurisdiction of the cause ?

I incline to the opinion, that the court had jurisdiction ; 1st. Because matters of account were involved. 2d. Because the remedy, at law, was, at least, doubtful. 3d. Because the defendant, instead of demurring to the bill, submitted to the jurisdiction by putting in an answer to the merits.

The bill stated, at large, the contract between the appellants and Leremboure and Simond, and the history of the commercial adventure which arose out of that contract. It then stated, that a considerable loss happened on the sales abroad, and that the accounts, relative to the transaction, were presented to Leremboure■, who acknowledged them to be just, but refused to give his note as stipulated by the agreement, and that both he and Simond refused to pay to the appellants the balance due them on the contract. The bill further stated, that difficulties would attend their proceeding at law, and prayed that the accounts respecting the transaction might be taken and stated, and the balance paid.

These accounts embraced the whole process of the adventure, from its commencement to its conclusion,, and, consequently, consisted of a variety of charges ‘ and credits. As, then, one material part of the cause depended on a settlement of accounts, I think it came properly within the cognizance of the court. Chan-j eery has a concurrent jurisdiction with the courts of law in all matters of account. Whether this jurisdiction originally arose from the necessity of obtaining a discovery by the oath of the defendant, or, in order to prevent a multiplicity of suits, is, perhaps, hot now material to inquire, since it has become well established incases where that necessity does not exist, and where no difficulty would attend the remedy at law. Mitf. Treatise, 109,110, 111. 3 Black. Com. 437. The cognizance of all causes that lie in account, does, undoubtedly, give a very broad jurisdiction to the court of chancery, but the exercise of this jurisdiction lias been found in practice so convenient and salutary, thEit it has long since, by general consent, rendered obsolete the common law remedy by a writ of account; and, although our statute prescribes minutely the mode of proceeding by that writ, I doubt whether there ever was an instance of such an action having been prosecuted to effect iti this state. The settlement of accounts, if they are in any degree long or complex, is improper, if not impracticable for a jury. The statute, therefore, in the writ of account, provides, that the accounts shall be submitted to auditors; and, indeed, when questions of account arise at law, in the common action of assunipsit, thty are pretty generally taken from a jury, and submitted by the court to referees, which the courts are authorised to do, with or without the consent of the parties.

I know not of any rule limiting the cognizance of the court of chancery to one species of accounts more than another; or to matters of accounts against persons in any particular relation. Its jurisdiction extends to all matters of account between individuals, in whatever relation they may stand to each other. In this it has no more than a concurrent jurisdiction with the courts of law ; for the writ of account at law, is given by our statute, 1 Rev. Laws, 94, in all cases where one person is liable to account to another as guardian, bailiff, receiver, or otherwise, and this renders the writ more extensive than it was under the English law.

But it was objected upon the argument, that the appellants were in the light of factors or trustees coming into court to have their own accounts stated, and allowed against their principal. This, however, they may well do. In bills to account, both parties are considered as actors, or plaintiffs, and the defendant has the same advantage as if he had himself instituted the suit. Done's case, 1 P. Will. 263. Kent v. Kent, Prec. in Ch. 197. A trustee may go into Chancery to have an allowance made against his cestui que. trust, out of trust monies in his hands. Of this we have an instance in the case of Gould v. Fleetwood, 3 P. Will. 251 n. (A). Guardians of great estates, in England, are said to pass their accounts yearly in the court of chancery, and this is recoinmended in Wood's Inst. 73, as a safe way to justify themselves, when the minor, at full age, shall call them to a general account.

Nor is it necessary that the responsibility of the defendant should be established before you can file a bill for an account. In most cases that responsibility, as well as the stating of the account, will be a point for litigation. It is sufficient that the cause will involve an account in case of the liability of the defendant. Both questions must be more or less connected together in every case; especially as to the extent of the engagement, and how far it will apply in particm lar instances.

It was said, however, that there were no accounts to state and settle in this cause, for the bill charges that Leremboure had admitted the accounts to be just. But the answer of Leremboure declares, he admitted them no further than as to the correctness of the calculations; and if he had, his admissions could not have concluded Simond, who would be entitled to have the accounts reliquidated, and the deficiency stated, before the court would oblige him to perform his part of the contract.

For these reasons, I think the suit below was properly instituted, and I should regret exceedingly, that any opinion which might be given by this court, should tend to embarrass the benign and well settled jurisdiction of chancery, in the unlimited cognizance of accounts.

Another ground upon which the bill might be susytainable is, that the remedy at law was, at least, doubtful. This has been repeatedly held as sufficient to give the court of chancery jurisdiction. Billon v. Hyde, 1 Atk. 128. 1 Vez. 331, Burrows v. Jemimo. 2 Stra. 733. 1 Ves. J. 424.^* The contract is susceptible of two constructions, upon one of which there was clearly no remedy at law. If we take the contract accordingto its grammatical construction, Simond was bound only to indorse the note that Leremboure should give for the deficiency, and the giving the note was a condition precedent to the obligation of Simond. It may be said, however, and that too with great force of argument, that unless Simond was bound thatLeremboure should give the note, as well as that he should indorse it, the security intended by the contract, would in a great degree vanish. If we assume the first construction, there would be no remedy for the appellants, without the aid of the court of chancery, for a suit at law would not lie for not indorsing a note which was never drawn. In such a case, the assistance of chancery would become essential, to compel the making of the note, or to reach the case of fraud or collusion between Leremboure and Simond, in not giving the note. The uncertainty, therefore, and the difficulty of an adequate legal remedy, was a sufficient reason for sustaining the bill.

It may be, also, a matter of doubt whether the contract was valid in its execution, as a sealed instrument or specialty. The proof indeed is, that the witnesses saw the appellants execute the contract, and if we are to understand them as meaning that both the appellants were actually present, and united in executing it, it was a good execution ; for several persons may enter into an obligation and bind themselves by one seal. Lord Lovelace’s case, Sir W. Jones, 268. Ball v. Dunsterville, 4 D. & E. 313.—But it may be well doubted whether the witnesses meant any thing more than that the appellants exe~ cuted the deed, in the usual mercantile way, by one of them doing it in the name of the firm; for the appellants state in theirbill, that they, or one of them, executed it, and that they supposed such execution to be unexceptionable. If the fact really was, that only one of the appellants executed the contract, it was not a good execution at law, and it was necessary to resort to equity, to try how far that informality in the execution might be corrected, as it was clearly founded in mistake. Sheffield v. Lord Castleton and Wife, 2 Vern, 393. Chancery would not help a defective execution of a contract against a surety. Crosby v. Middleton, 3 Ch. Rep. 53, & Prec. Chan. 309, contra, from whence, in 1 Fonb. 37, the point is considered as doubtful.

But admitting these grounds not to have been sufficient, in the first instance, to have sustained the bill, the respondent came too late to object to the jurisdiction of the court, after he had put in his answer to the merits of the cause. By answering in chief, instead of demurring, he submitted his defence to the cognizance of the court; and equity will, and ought, in such Cases, to retain the cause, provided the court be competent to grant relief, and has jurisdiction of the subject matter, as it manifestly had in this case, the controversy being upon a matter of personal contract, and of account. Billon v. Hyde, 1 Atk. 128. 1 Vez. 331. 3 Bro. Pa. Ca. 525. Mitford passim. Gilbert's Treatise on Chan. 51, 3. 219, 220, 1. Penn v. Lord Baltimore, 1 Vez. 446, 7. This' last reason why the cause was sustainable in the court below, appears to me, to be supported on the firmest basis, both from the reason of the thing, and the weight of authorities.

flaying thus disposed of these preliminary or tech~ nical questions, as to the jurisdiction of the court, I proceed, secondly, to examine the merits of the case.

To perceive that Simond had no beneficial interest in the concern, and was but a mere naked surety for the performance of a specific act, requires only a bare perusal of the contract. The formal beginning and conclusion of the contract, do, indeed, seem to carry the agreement of the parties to the whole instrument ; but we must examine the body and the scope of the agreement, to judge of its meaning and effect. On doing this, we shall immediately perceive, that the agreement of each party is to have reference only to such particular parts of the contract, as apply to him; reddendo singula, singulis ; and as Simond was only a surety, it becomes important to consider and understand well, the principles of law, which are applicable to him in that character.

It is a well settled rule, both at law, and in equity, that a surety is not to be held beyond the precise terms of his contract, and, except in certain cases of accident, mistake, or fraud, a court of equity will never lend its aid to fix a surety beyond what he is fairly bound to, at law. Underwood v. Staney, 1 Ch. Ca. 77. 1 Eq. Abr. 93. K. pl. 2. 6. Skip v. Huey, 3 Atk. 91. Crosby v. Middleton, Prec. Ch. 309, are cases where chancery has said it would fix a surety for mistake or fraud. Wright v. Russel, 3 Wils. 530. Lord Arlington v. Merricke, 2 Saund. 411. Myers v. Edge, 7 D. & E. 254. Stratton v. Rastall, 2 D. & E. 370. Simpson v. Field, 2 Ca. Ch. 22. Ratcliffe v. Graves, 1 Vern. 196. Nisbet v. Smith, 2 Pro. Ch. Rep. 579. Rees v. Berrington, 2 Ves. J. 540. Law v. E. In. Comp. 4 Ves. J. 833, are all cases in favour of sureties. This rule is founded on the most cogent and . e ° salutary principles of public policy and justice. In the complicated transactions of civil life, the aid of one friend to another, in the character of surety or bail, becomes requisite at every step. Without these constant acts of mutual kindness and assistance, the-course of business and commerce would be prodigiously impeded and disturbed. It becomes, then, excessively important to have the rule established, that a surety is never to be implicated, beyond his specific engagement. Calculating upon the exact extent of that engagement, and having no interest or concern in the subject matter for which he is surety, he is not to be supposed to bestow his attention to the transaction, and is only to be prepared to meet the contingency, when it shall arise, in the time and mode prescribed by his contract. The creditor has no right to increase his risk, without his consent; and cannot, therefore, vary the original contract, for that might vary the risk.

In the present case, the respondent agrees to indorse a note for Leremboure ; but that note was only to be required upon the happening of a certain event. It was not any note that was to be given and indorsed ; but it was a note to arise on the deficiency of the proceeds of certain sales at Hamburgh, and it was to be given to complete a reimbursement, which the appellants were first to seek for, by other ways and means, precisely defined. The contract provided, with a studied minuteness, the several modes by which the appellants were to seek a reimbursement. They were first to resort to the policies of insurance. made to cover the shipments to ITarnburgJz~ and which policies were to he assigned to them. But this means could only be resorted to in case of loss on the voyage; and there was no such loss, for the goods arrived safe at the port of destination. “ Should this mode of reimbursement not take place,” (to use the words of the contract,) the appellants were then authorised to draw, at 60 days sight, on London, and that too, 20 days before their notes respectively became due, and to order the necessary remittances to be made by Buildemaker & Co. to meet their drafts. These drafts and orders were, of course then, all to be made and completed by the 22d of Aug. 1799, which would be 20 days before the last of the notes became due ; and, allowing the ordinary passage to London, the payment of the last bills there, would have been to be made by the 1st of December, 1799. This was the second mode of reimbursement, provided for by the contract. But should the proceeds of the sales at Hamburgh, “ so disposed of,” to again adopt the terms of the contract, not prove sufficient to reimburse the appellants, Leremboure was to make good the deficiency, as soon as ascertained, by a note, at 60 days, to be indorsed by Simond. This was the last and final mode of reimbursement, and upon which the present controversy has arisen. The returns from London, of the result of the proceeds of the sales at Hamburgh, “ so disposed of,” would have arrived at New- York, in the ordinary course of transmission, by the middle oí January, 1800, and this was the ultimate time which resulted from the terms of the contract, for the completion of the speculation, and which was to determine the extent of the responsibility of Simond. The calculation, as to the time when Simond was to be ultimately called upon, is to be deduced from the contract, with almost as much pre- . . • , . cisión and certainty, as if the contract had expressly fixed it at January, 1800.

The property in question, was intended to answer the bills on London, and reimburse the appellants. The remittances, therefore, were to be made from Hamburgh, by a certain time, because they were to meet a precise object. Both the appellants and Leremboure, must have contemplated the sales at Ham-burgh, to be made in the summer of 1799, in order to guard against the immense loss in damages that might result, if the remittances were not met in London, by the 1st of December, 1799, to save the bills from being protested.

The place of sale was clearly designated by the contract. The property was to be consigned to JBuildemaker ci Co. at Hamburgh, to be sold. The property was insured for Hamburgh. The appellants to order the remittances to be made by Buildemaker to3 Co. to London, and these orders were all to be issued by the 22d of August, 1799. The remittances were to be made at the risk of Leremboure, and the contract further adds, that, should the proceeds of the sales at Hamburgh be insufficient, &c. There was no cover provided for risk in transmitting the property to any other place. The ultimate hazard was to terminate there. From all these facts and circumstances, I consider the intent of the contract to be unequivocal and certain, that the property was to be disposed of at Hamburgh. A place of sale intended, by a contract, is equivalent to a place of sale stipulate ad by a contract. What, indeed, are stipulations in agreements, if they are not acts intended and contemplated by the parties ?

This being the contract, let u§ next see with what precision it was executed. Instead of winding up the speculation, and ascertaining the deficiency, in January, 1800, it was not done till October, 1800; and instead of having the tobacco sold at Hamburgh, in the summer of 1799, by Buildemaker & Co. it was sent over land, a distance of near 250 miles, to Rotterdam ; most of it not sold till July, 1800, and that too by a different house, Roquette Buildemaker & Co. What reasons are given for this wide departure from the terms of the contract ? It is stated and admitted, that, previous to the arrival of the cargoes at Hamburgh, and which must have been early in June, 1799, many failures had happened among the principal traders there, but the effect that this calamity had upon the market or the price, is not ascertained, and we are left altogether to conjecture.—• There is no testimony as to the price of tobacco there, during the summer. It is only proven, that from the month of October, to the end of the year, the price of Virginia tobacco was from 3s. 4d. to 4s. Hamburgh currency, per lb. and so continued in 1800; while, for the same period, the price of Maryland tobacco was considerably higher. I am willing to admit, that Buildemaker 6? Co. might have sent the goods to a different market in cases of necessity; such as those resulting from fire, pestilence, or the invasion of an enemy. But this necessity must be clearly made out, and a strong case shown to justify a factor in changing the place of sale, and the agents who are to conduct it. He, by this, exposes the property to unforeseen accidents, and, perhaps, disconcerts all the ar1 1 7 rangements. of his principal. No sufficient cause ap- . , p . i p i pears, in the present case, for me conduct of the agents. Notwithstanding these mercantile failures, there was no complaint of a want of market or price, as to the sugars; and it ought not to have been left to inference only, but it should have been made affirmatively to appear, that the tobacco could not have been sold during the summer of 1799. If to seek a better market was discreet, was it requisite to go as far as Rotterdam, and pass by many large commercial neutral sea-ports and cities, that were much nearer? But this was not all. The property was changed from a neutral to a belligerent port, at the very time too, when Holland was perishing under the rapacity of French armies, and the scourge of the Russian and British invasion. This was exposing the property to a new, extraordinary, and, in my opinion, a most un-* warrantable hazard. In addition to the usual perils of a long transportation, and new agents, it was exposing it to the very extremity of war-risks.

Admitting, which I am willing to do, that Builde-. maker & Co. acted with good faith in this transaction, and that the appellants never gave any directions as to the change of the place of sale ; have not the latfc * • • ter done what, in judgment of law, is equivalent-thereto ? It was a point very much litigated upon the argument, whether Buildemaker & Co. were the exclusive agents of the appellants, or only the concurrent agents of them and Leremboure. It does not appear to me, to be very material to determine this question, either one way or the other; for, it is sufficient they were not the agents of Simond. He had no agency or beneficial concern in the shipment, and no agreement, even between the appellants and Leremboure, to send the property to Rotterdam, could have bound him. The contract, as to him, could not have been varied without his consent. But, I think, it results f: om the case, that the appellants have made the act of Buildemaker if Co. their own. They were to draw bills on London, in the summer of 1799, and to order the proceeds of the Hamburgh sales to be remitted there. In this mode, and at this time, they were to seek a reimbursement, and it appears, from the account annexed to the bill, that, during that summer, they drew on their agents for 30,777 dollars 90 cents. It is to be presumed, that they were apprized very early of the determination of their agents to send the goods to Rotterdam ; for, after the 13th of August, 1799, they discontinued their drafts, and, from that time, they remained perfectly silent and passive, waiting for the returns of the Rotterdam sales, until the 18th of September, 1800, when they receive and credit Leremboure wdth the amount of them, and then, for the first time, call on him for the deficiency. This conduct amounted to an affirmance of the acts of Buildemaker & Co. ; for, if an agent steps beyond his authority, the principal may, at his election, and as best suits his convenience, either consider him as a wrong-doer, or he may affirm his act, and consider him as a receiver of money for his use. Willes' Rep. 407. This latter course the appellants thought proper to pursue, and, therefore, the sound, W'ell known rule of Lw applies to them, that the subsequent affirmance, by the principal, of the unauthorised act of the agent, is equivalent to an oilginal ador. This conclusion appears to me to result necessarily from the facts. Buildemaker & Co. were, generally speaking, the exclusive agents of the appellants, in respect . to this mercantile adventure, though, perhaps, under certain circumstances, Leremboure, the cestui que trust, might have interfered. Blit it is not requisite, in the view which I take of the subject,’to maintain absolutely this exclusive agency. It is sufficient to say, that the transaction was so conducted, that Buildemaker ti” Co. became, in fact, the actual and effectual agents of the appellants, and being so, the appellants, not only, in the first instance, directed, but, in the last instance, affirmed their conduct, by a strict acquiesence, for one year, in the sending of the goods to Rotterdam, and then by expressly receiving, at their hands, the proceeds of the Rotterdam sales. If the appellants intended to have pursued strictly the course of their contract, they ought, so soon as they were informed that the tobacco was sent off, and that the proceeds of the Hamburgh sales were insufficient, to have then called on Leremboure with the ascertained deficiency, demanded their note, and left him to have pursued, at his own risk, the property, or the agent who had misused it. They would' then have been entitled to their note, indorsed b\ Simond, for the deficiency, however great it might tu ve been. It is their sanction of the conduct of Buildemaker & Co. that makes it their own. By that means they have so essentially varied the terms of the contract, that the surety is no longer holden.

The case would not be altered, were it really true (of which, however, we have not the requisite proof) that the sending the tobacco to Rotterdam produced a~ better price. This would be a mere accidental re-suit. It might have been otherwise. But it is the principle in the transaction, the variation of the contract, that discharges the surety. This principle is stable and'uniform, not depending upon the fluctuations of markets. Nor will it do to say, that Simond shall have credit according to the best price at Ham-burgh in 1799, and be holden only for the deficiency. The principle that releases a surety, under such cnv cumstances, is not to be modified by such a concession. It appears that Leremboure was insolvent in October, 1800; but how long antecedently he had been so, does not appear. If the contract had been strictly pursued, it is possible that the surety might have indemnified himself, as early as the beginning of the year 1800. The variation of the contract may have thrown him off his guard, and prevented him from holding fast any fund in his possession, or from taking other precautions to indemnify himself, until it became too late to do it with success. As we cannot know or anticipate the possible injuries that may ensue from a departure from the terms of the contract, it is proper that the court should lay down, and adhere to, a general rule on the subject.

For these reasons I am of opinion, that the decree of the court below be affirmed with costs.

Per iotam curiam.

Judgment of affirmance.

* Lechmere v. Earl of Carlisle.

* Weymouth v. Boyer.

Case Details

Case Name: Ludlow v. Simond

Court Name: Court for the Trial of Impeachments and Correction of Errors

Date Published: Feb 15, 1805

Citation: 2 Cai. Cas. 1