Mumford v. Murray

6 Johns. Ch. 1 | New York Court of Chancery | 1822

The Chancelloe.

The defendant is called upon to account to the plaintiffs, as the representatives of his deceased partner, for moneys received by him in trust for the partnership.

If a preliminary objection, as to the want of parties, can lie properly overruled, then the question upon the merits is, not whether there shall he a decree to account, hut as to the directions to be given to the master.

The defendant objected, in the first answer, and, also, at the hearing, to a want of parties; and he contends, that the cestui que trusts, mentioned in the deed of the 31st of ■May, 1800, ought to have been made parlies to the bill.

The cestui que trusts referred to, and provided for, in that deed, were required to become parties to it within twelve months, to entitle themselves to the benefit of its provisions. The deed bears date the 31st of May, 1800, and the caption, preceding the signatures of the creditors, bears date the 29th of April, 1801; and the creditors, if they subscribed within the year, must have subscribed between the 29th of April, and the 31st of May, following. There is no evidence in the case, at what time or when they subscribed, and, perhaps, it would not be too rigorous to require proof, in positive affirmance of the fact of the 'subscriptions within the year, by a defendant, who, at this late day, raises the objection of a want of parties. But, admitting the presumption of a seasonable subscription, the strongest answer to the objection is, that the creditors, referred to in the fifth clause of the trust deed, and who subscribed to the conditions of the deed, have lain by since May, 1800, and have suffered twenty years to elapse, Without asserting their claims against the trustees under that deed. In that interval of time, there has been almost -a continued controversy between the assignees of Robert Murray &f Co. and the defendant, touching those funds. The presumption, now, is, that the claims of those creditors have been satisfied or abandoned. This seems to be .a necessary inference from the lapse of time and the continued silence of the creditors, during all the litigations concerning the right and title to those funds. It would have been almost impossible for them to have slept quietly during the din of the controversy, if they had subsisting and valid claims. Wc cannot, in sound discretion, suspend this cause, merely to compel the plaintiffs to bring in parties, resting on such stale demands, and with such presumption against them. And the defendant ought, particularly, to be excluded from the benefit of this indulgence, since he has admitted, that all the trusts, having priority to that in favour of M. &/• M., except the annuity to Mary Murray, was satisfied; and since he has repeatedly engaged to account with the intestate, and as repeatedly represented that all the trust funds, for which he was accountable, belonged to the house of Murray fy Mumford.

It is too late, after a lapse of twenty-years, to object, at the hearing, that other cestui que trusts were not made parties.

I shall, accordingly, overrule the objection; and, if the plaintiffs can establish one point, which was principally discussed at the hearing, and which is, that the funds, specified in the order of the 24th of June, 1797, were received, and are to be accounted for under that order, then this question, concerning parties, becomes quite unimportant, because, most of the funds sought for, in this case, were covered by that order.

The original bill considered the moneys, for which the defendant was to account, as having been received by him as trustee under the trust deed of 1800; but the supplemental bill charges the defendant to have received under the order above referred to, more than sufficient to satisfy all the objects of it, and to have received upwards of 90,000 dollars under it, and that he has misapplied those funds, and kept the intestate in ignorance of the receipt and application of the funds under that order.

One great question in the case is, whether the defendant shall not be held to account for the funds specified in that order, on the foot of the order. The order was drawn by Robert Murray Sf Company, upon Charles Murray, in favour of the defendant; and the moneys received for the property specified in it, must have been received under it, and could not have been received under either of the trust deeds, because, the order was a specific appropriation of the property, and that property was not, in fací, covered by the trust deeds. If I am not greatly mistaken, there is nothing in the original trust deed of 1798, or in the deed of the 31st of May, 1800, founded on the prior deed, that touches the property mentioned in the order. If the fact be so, it is decisive on this point, and the account must be taken on the foot of the order of 1797, and not under the subsequent trust deeds.

The defendant has, again and again, admitted, that the funds for which he is called upon to account for, or the principal part of them, were received under the order of 1797, and belonged to the house of Murray Mumford. Thus, in an affidavit made by the defendant, and read before this Court on the 8th day of December, 1817, (and which appears in the exhibit in this cause, containing the defendant’s case on appeal, in the cause of Riggs and others against Murray,) he admitted, that in June, 1797, Robert Murray Company had property to a great amount seized and detained by the British government, and that on the 24th of June, 1797, they drew the order in question on Charles Murray, their agent in London, for claiming the property, in favour of the defendant, for 24,000 pounds sterling, or as much as he might receive for their account, by virtue of their claims on the British government, for property taken on board the barque Two Brothers, the snow Harmony, the brig Rachel, the schooner Ariel, and the ship Favourite. He stated further, in that affidavit, that all the debts due to him, and his copartner, (the intestate,) under the firm of Murray &/■ Mumford, were upon engagements and responsibilities entered into for Robert Murray Company, and that it was agreed, that whatever sum the defendant might receive from the said claims on the British government, should be retained and credited, on account of the said debts and responsibilities. He stated, further, in that affidavit, that the British government did pay large sums of money, whereof the 31,099 dollars and 80 cents, mentioned in the master’s report, (referred to in the pleadings and proofs in this cause,) were a part. It appears, further, in addition to tiiis affidavit, that in the case made and signed by the defendant’s counsel, and read in the Court of Errors, in the cause of Riggs v. Murray, already referred to, it was stated, and averred as a fact, and which averment we must intend was made upon the information and instruction of the defendant, that the sums received from the British government, amounting to 31,699 dollars and SO cents, were received under a lien .in favour of the defendant, given in 1797, nearly a year before the first deed to Claris and Murray. So, again, in his first answer in this cause, the defendant admits, that the sum last mentioned, was received from the British government on account of illegal captures of the property of Robert Murray cy- Company, under a lien made or created on that fund, by the order aforesaid, and that the cestui que trusts under the fifth clause of the trust deed of 1800 were not entitled to any portion of that ■sum.

In his subsequent answers, the defendant seemed inclined to escape from the effect of this admission, for he says, in Iiis second answer, that he cannot say under what instrument the 31,699 dollars and 80 cents were received. He •contends, that the order was given to secure his individual claims, or those belonging to him as one of the house of M. M., and he admits, in another place, that his individual claims at that time were inconsiderable. He says, further, that he, and his co-trustee, under the deed of 1800, gave Mullett Co., of London, authority to receive those funds of Charles Murray. He says, in his third answer, that as there was no particular appropriation of the funds contained in the order, he considered the order was intended for his own benefit, whether individually, or as one of the house of M. M.

These admissions of the defendant ought certainly to ■conclude him, and they are, also, in entire consistency with the legal operation of the instruments under which he ■acted. He says, he does not recollect whether he presented the order to Charles Murray; yet, he admits, that the funds specified in it were received, and held by him, in pursuance of that lien and authority. If he did not present the order duly, nor use due diligence to recover and secure the funds appropriated to him under it, he is still responsible to the representatives of his copartner, for the moneys which he might have received and secured under that order, with reasonable care and diligence. If he suffered those funds to pass improperly into the hands of «7. I. Clark, he is chargeable for any loss which such an act of negligence, or abuse of his trust under the order, may have occasioned. (Shipbrook v. Hinchenbrock, 16 Vesey, 477. Underwood v. Stevens, 1 Merivale, 712.)

It is true, that the intestate always seems to have considered the defendant as responsible to him by virtue of the trust deeds, but that arose from the ignorance in which he was kept by the defendant, of the facts connected with his duty as trustee. The correspondence between the parties, as detailed in the pleadings and proofs, sufficiently excuses the intestate from acting under the want of a precise and accurate knowledge of his rights. There is no surmounting the conclusion that follows from the fact, that the trust deeds did not reach and cover the funds specified in the order. The defendant had no authority to interfere with those funds, but under the order, and it related only to the one fourth of the property captured, as the other three fourths had been acquitted, and passed into the hands of Bird, Savage &f Bird. This one fourth was not touched by the deed of 1798, and that was the only deed that conveyed any property. It assigned the three fourths, but did not assign the one fourth in the possession of the British government. The deed speaks for itself on this point$ and that one fourth was, by the order, assigned for the benefit of Murray fy Mumford; and the defendant, by the acceptance of the order, became a trustee to his copartner for a moiety of the funds which were, or might have been received under that order, at least, so far as the just claims of M. M., upon the house of Robert Murray Com,PamJi would exhaust those funds. All the moneys which ^ouse °f Mullet fy Company received from those funds, must have been received under that order, and by virtue of the authority of the defendant. That house could not have received those funds under any other authority. And if the defendant has unduly mingled those moneys with other moneys proceeding from other sources, and subject to other trusts, and has suffered these moneys to pass into the hands of J. I. Ciarle, or any other person, without the authority of his late partner, he must, notwithstanding, account with the plaintiffs for a moiety of all those moneys.

A trustee, who trOt pass^ into the co-trustee, is ra°of loss ™

Nor did Mumford, the intestate, conclude himself, by his being a party to the discharge of the executors of Ciarle, on the 22d of February, 1810, because, that discharge related only to moneys received under the trust deeds, nor was it intended to operate to release the defendant from any of Ms pre-existing responsibilities. Those responsibilities were expressly retained. It was the folly or fault of the defendant to mingle together in his accounts the moneys received by Mullett Co., under the order, and the moneys received under the trust deeds, and to settle with Ciarle as though all .those moneys were received under the trust deeds. Mumford, by a prolonged series of concealments, or studied reserve on the part of the defendant, was kept in profound ignorance of the fact, that the funds were so blended. He knew nothing of the order until the appeal, in 1818. The defendant never produced the order before the master when he accounted, in the suit of Riggs and others v. Murray ; but the accounts were taken generally, under the erroneous assumption produced by the acts and conduct of the defendant himself, that the moneys and accounts were all referable to the trust deeds. The truth of the case, and the legal evidence of title to the funds received from the British, government, and the explicit and repeated admissions of the defendant, since the accounting before the master in the former cause, render it now a duty of the Court, and an act. of justice to the plaintiff, to have the accounts between the parties to this suit taken upon the proper basis.

3. Another question raised, and discussed at the hearing, related to the charges of the defendant of his expenses in going to Europe, and his charge of commissions.

A partner, who goes abroad on his own personal affairs, is not entitled to charge his expenses to the partnership.

The defendant received a compensation of 5000 dollars, and that threw the expenses upon himself; and, besides, the object of the voyage was personal. It was principally to induce a person, for whom he was bail, to come over to this state and surrender himself. While he was absent in Europe, his partner here was attending to the business of the concern. There is no justice in the charge of his personal expenses abroad, to the house of Murray Mumford. As to commissions on moneys received for,, and on behalf of his partner, they are inadmissible, according to the settled doctrine of the Court, when charged by a trustee.

A trustee is not entitled to commissions ; and if he uses the trust money as his own, he must pay interest.

The defendant is, likewise, to be charged with interest on the moneys, from time to time received; and for this plain reason, that he mingled the moneys belonging to his partner with his own, and used those moneys as his own. It forms, therefore, a very just and clear case for interest.

I shall, accordingly, direct a reference upon the following principles: (1) That the defendant account for the funds, or the proceeds of the property specified in the order of the 24th of June, 1797, and which the defendant has received, or might have received, with reasonable diligence, and that he account for it, as under that order $ inasmuch as the order was delivered, to provide not only for the individual claims of the defendant on bert Murray fy Co., but also for the claims of Murray Mumford ; and the defendant became a trustee under that order, to the extent of his partner’s [Mumford) interest therein ; and that no allowance be made to the defendant for funds, which, by his consent, went into the possession, or under the control of John Innes Clark, and was misapplied or lost to the purposes of the trust; and that in taking the account under the order, the defendant be not allowed to charge against the funds arising under that order, for any individual debt or claim of his against Robert Murray, or Robert Murray 8f Co., which had been provided for by any previous assignment from Robert Murray &f Co., whether of the cargo of the Jefferson, or otherwise, until the defendant shall have first accounted for all moneys received, or which, with reasonable care and diligence, might have been received by him, under any sufch prior assignment.

(2) That all claims by the defendant for commissions, on moneys received for, or on account of his own claims, or those of the house of Murray &f Mumford, be disallowed.

(3) That the defendant be charged with interest on all moneys received by him, and for which he is accountable to the complainants.

(4) That an account be also taken and stated, of the moneys and effects received by the defendant under the trust deeds in the pleadings and proofs mentioned, and not duly-applied according to the provisions and directions off the trust deed of 31st of May, 1800; and that such account be taken upon the principles already declared; and with this further direction, that the defendant be charged with the amount paid out of the funds of Murray &/■ Mumford, for his personal expenses in Europe, in the years 1797 and 1798; and that his charge of 5000 dollars, mentioned in the pleadings, and claimed by defendant, as a compensation or salary, and deducted by him out of the funds arising under the trust deeds, he allowed to him j and further, that the charge of the defendant of 1412 pounds, 5 shillings and 7 pence sterling, mentioned in the pleadings as deducted and retained by the defendant, out of the trust funds under the said deeds, on account of salvage said to be due to’ insurers, be disallowed 3 inasmuch, as no such salvage has been paid, and is not now presumed to exist as a valid demand.

(5) That the master have the usual power to examine the parties on oath, and to make to them all just allowances not inconsistent with the particular directions in this decree, and to call for books', entries, vouchers, and papers, m the custody or power of the parties, and requisite to a just and full account, and to require the production of them upon oath 3 and to report with all convenient speed,

&C-.

Decree accordingly.