Spring v. Gray

| U.S. Circuit Court for the District of Maine | Oct 15, 1830

STORY, Circuit Justice.

The present case in the actual posture, in which it is presented to the court, resolves itself purely into a question of law; and has. accordingly, been so argued by the parties. And I shall at once proceed to declare the opinion, which I have formed on the point, and if the parties are dissatisfied with it, it is a great consolation to me, that the amount in controversy is sufficiently large to enable them to have it revised by the supreme court upon a bill of exceptions.

I own myself to be one of those, who consider the statute of limitations a highly beneficial statute, and entitled, as such, to receive, if not a liberal, at least a reasonable construction, in furtherance of its manifest object. It is a statute of repose; the object of which, is to suppress fraudulent and stale claims from springing up at great distances of time, and surprising the parties, or their representatives, when all the proper vouchers ■and evidences are lost, or the facts have become obscure, from the lapse of time, or the •defective memory, or death, or removal of witnesses. The defence therefore, which it puts forth, is an honorable defence, which does not seek to avoid the payment of just claims and demands, admitted now to be due; but which encounters in the only practicable manner such as are ancient and unacknowledged; and, whatever may have been their original validity, such as are now beyond the power of the party to meet, with all the proper vouchers and evidence to repel them. The natural presumption certainly is, that claims which have been long neglected, are unfounded, or at least, are no longer subsisting demands. And this presumption, the •statute has erected into a positive bar. There is wisdom and policy in it, as it quickens the diligence of creditors, and guards innocent persons from being betrayed by their ignorance, or their over confidence in regard to transactions, which have become dim by age. Yet I well remember the time, when courts ■of law exercised what I cannot but deem a most unseemly anxiety to suppress the de-fence; and when, to the reproach of the law, ■almost every effort of ingenuity was exhausted to catch up loose and inadvertent phrases from the careless lips of the supposed debtor, to construe them into admissions of the debt. Happily, that period has passed away; and judges now confine themselves to the more -appropriate duty of construing the statute, rather than devising means to evade its oper•ation.

It appears to me also, that it is the duty of the court to adhere to the very terms of the ■statute, and not, upon imaginary equitable considerations, to escape from the positive •declarations of the text. No exceptions ought to be made, unless they are found therein; and if there are any inconveniences or hardships growing out of such a construction, it is for the legislature, which is fully competent for that purpose, and not for the court, •to apply tiie proper remedy. The statute of •limitations of Maine (Laws 1821, c. 62) enacts that “all actions of account and upon the case, other than such accounts as concern the trade of merchandise between merchant and merchant, their factors, or servants, &c., shall be commenced and sued, &c. within six years next after the cause of such actions and suits, ■and not after.” The statute is pleaded in bar of the present suit, and the replication is, that it is a case of “merchants’ accounts” within the exception, upon which the parties are at issue. And the question is, whether the facts prevent a case within the exception of merchants’ accounts in the statute. The Maine statute is a mere transcript on this head of that of 21 Jac. I. c. 16. Upon that ¡statute, an early doubt arose whether any -other actions than actions of account were within the exception. The earliest decisions confined the exception to mere actions of ae-count, which were at that time the common remedy for unsettled accounts. So it was held in Farrington v. Lee, 1 Mod. 269, 2 Mod. 312, and for a considerable time afterwards. Chevely v. Bond, Carth. 226, 4 Mod. 105; 1 Show. 341; Martin v. Delboe, 1 Mod. 71. But the doctrine is now well established, that it applies to actions of assumpsit, as well as of account. See 2 Saund. 125, etc., and notes 6 and 7 of Serg. Williams; Peake, 164; Mandeville v. Wilson, 5 Cranch [9 U. S.] 15. The exception was undoubtedly made for the benefit of merchants, and probably had principally in view cases of foreign trade, carried on through the instrumentality of factors and agents; for there was at that time very little inland commerce in the kingdom of England. In the course of such transactions, accounts would naturally arise, which, from the distance of the parties,- might remain unsettled for many years. In Webber v. Tivill, 2 Saund. 125, Jones, who argued for the defendant, and whose argument was adopted by the court, said, — “The reason was, because it often happens that merchants, who are as partners, or hold correspondence one with the other in several parts of the world, may have accounts current between them for several years before they have an opportunity of meeting to state their accounts, and therefore the statute does not mean to limit their accounts.” Every part of the exception is equally material; and it is not sufficient, that a plaintiff brings himself within one part of the description, if all parts are not applicable to him, in the predicament in which he stands before the court. He must by his replication aver, that it is a case of accounts; of accounts, which concern the trade of merchandise; of accounts between merchant.and merchant, their factors, or servants.

In the first place, it must be a case of accounts. The saving, as has been justly remarked long ago, is not of actions, but of accounts. Webber v. Tivill, 2 Saund. 125; 1 Mod. 269, 270. The statute did not mean to except actions generally, between merchants, &e., but only such actions as respected accounts. This is the natural interpretation of the text, and it is confirmed by the preceding words; for the action of account, out of which the exception is carved, is founded solely on cases lying in account. The case, therefore, must be such as is properly matter of account, and not any special contract, which the party may afterwards throw into the shape of an account. The action of account at the common law lay only against bailiffs, receivers, guardians, and partners in trade, and other persons standing in the like relation, who received goods, merchandises, monies, &c., of the other party, to render an .account thereof. But it was never supposed, that a special contract, which might alternately require an examination of accounts, or might be pressed into that shape, was within the reach of the exception. We must understand the statute, in its obvious sense, as saving accounts proper; that is, such as consist of debits and credits,.properly arising in account, and not as saving all eases, where one man is accountable to another for his performance or non-performance of a special contract. That was so decided in Chevely v. Bond, Carth. 226, where a suit was brought on a bill of exchange, and there was a replication, to a plea of the statute, of merchants’ accounts. But the court held, that bills of exchange for value received, are not such matters of accounts as are intended by the exception. The true object was to save such accounts only, for which an action of account would lie. It may be necessary in many eases, to make out an account, in order to decide a claim arising upon a contract; but that will not make it a matter of account. For instance, in ascertaining a partial loss, or average upon a policy of insurance, an account may be necessary; but no one supposes that would, as between the assured and the underwriter, constitute a case of •‘merchants’ accounts” within the statute.

Then, under what circumstances does the exception apply to accounts? Does it apply to all matters properly and originally matters of account, without reference to the question, whether they have been stated, or closed, or are now open and current? The language of the statute is “accounts” generally, without any qualifying adjunct. But it has been held from the earliest times, that the exception does not apply to stated accounts. It was so decided in Webber v. Tivill, 2 Saund. 125, and that decision has never,. on this point, been departed from. See Sandys v. Blodwell, W. Jones, 401; Martin v. Delbo, 1 Sid. 465, 1 Mod. 70; 1 Vent. 89; 1 Lev. 298; Farrington v. Lee, 2 Mod. 311, 312, 1 Mod. 268; Chievly v. Bond, 4 Mod. 105. The ground of that decision was, that as soon as an account is stated, and a balance agreed, it becomes a dead debt; and for this an action of debt will lie; and by parity of reason, an action of assumpsit also. It may also be illustrated by considering, that where an account has been stated between the parties, an action of account no longer lies (Com. Dig. “Accompt,” E, 3; Godfrey v. Saunders, 3 Wils. 73, 94; Fitzh. Nat. Brev. 117, and note d), for the defendant may then plead quod plene computavit; and yet it is plain, that the exception was intended to be carved out of cases, for which an action of account lies, otherwise it would be nugatory.

Then again, does the exception ■ apply to accounts closed, or only to accounts current? It may be admitted, as was decided in the case of Mandeville v. Wilson, 5 Cranch [9 U. S.) 15, that an account closed by a cessation of dealings between the parties is not an account stated. But that does not dispose of the question; for it is still open to consideration, whether any but current accounts are within the exception. Upon this point the authorities, both in England and America, are not uniform. The decision in [Mandeville v. Wilson] 5 Cranch [9 U. S.] 15, is, that the exception applies as well to closed, as to current accounts. That has been followed by the supreme court of Massachusetts, in Bass v. Bass, 6 Pick. 362; and of Maine, in Davis v. Smith, 4 Greenl. 292. But in an earlier case, Union Bank v. Knapp, 3 Pick. -96, 112, the former court held a different opinion. See, also, Cogswell v. Dolliver, 2 Mass. 217" court="Mass." date_filed="1806-11-15" href="https://app.midpage.ai/document/cogswell-v-dolliver-6402959?utm_source=webapp" opinion_id="6402959">2 Mass. 217, and 5 Dane, Abr. p. 395, c. 161, art. 6, § 4.

In Sherman v. Sherman, 2 Vern. 276, Eq. Cas. Abr. 13, it was agreed, that though lapse of time might be a bar to a bill in equity for an account long after all dealings had ceased between the parties (see, also. Bridges v. Mitchell, Bunb. 217, Gilb. Eq. 224; Foster v. Hodgson, 19 Ves. 180); yet, that the statute of limitations was not pleadable, if it was a case of merchants’ accounts. The same conclusion may be deduced from other early cases, though some of them probably turned upon other considerations. See Sandys v. Blodwell, W. Jones, 401; Martin v. Delboe, 1 Lev. 298, Sid. 465; 2 Keb. 674, 696, 717. Lord Hardwicke seems at one time to-have inclined to the same opinion. See the case cited in 19 Ves. 185. But his deliberate judgment in Welford v. Liddel, 2 Ves. Sr. 400, was, that where all accounts have ceased for more than six years, the statute is a bar, and the exception applies only to accounts running within the six years; and ■then the whole account is saved as to antecedent items. He there said, that the -object of the exception was to prevent dividing the accounts between merchants, when there were running accounts unsettled. This last opinion appears to have become, since that time, the prevalent opinion in England; and has been acted on by very eminent judges, not indeed without exception, for Lord Kenyon seems to have held a different doctrine (Catling v. Skoulding, 6 Term R. 193); but with such a weight of authority, as leaves little-doubt, that it will- be adhered to. I do not go over the cases. They are very ably collected by Mr. Chancellor Kent, in his judgment in Coster v. Murray, 5 Johns. Ch. 522" court="None" date_filed="1821-12-10" href="https://app.midpage.ai/document/coster-v-murray-5550489?utm_source=webapp" opinion_id="5550489">5 Johns. Ch. 522. I have travelled over the same ground, and find nothing to add to, or subtract from, his observations. His own conclusion was, that the statute is a bar in all cases, where the-merchants’ accounts are closed, and not running within six years. If this case turned upon the point now under consideration, my official judgment would be controlled by the-local decisions already adverted to, in Massachusetts and Maine; supported, as they are. by that of the supreme court of the United States. At the same time, 1 cannot but express a hope, that the question may be again re-examined, if it should ever be presented in any case from a state, where it is not yet fettered by any local -authority. There • is-enough of doubt about it to justify an ample-inquiry. See Astrey’s Case, Freem. Ch. 55..

Then, again, does the exception apply to cases-of account, wliere the account is all on one side, or only to mutual accounts, or cases where there are mutual debits and credits? The doctrine of Jones, in Webber v. Tivill, 2 Saund. 125, was, that accounts between merchants only, (by which he meant mutual accounts,) and not contracts merely, were excepted; and his argument was adopted by the court. In Cotes v. Hams, Bull. N. P. 149, Mr. Justice Denison also held, that the exception extended only to mutual accounts and reciprocal demands. Mr. Chancellor Ivent, in Coster v. Murray, 5 Johns. Ch. 522" court="None" date_filed="1821-12-10" href="https://app.midpage.ai/document/coster-v-murray-5550489?utm_source=webapp" opinion_id="5550489">5 Johns. Ch. 522, adopted the same doctrine; and it was confirmed by the opinion of Mr. Chief Justice Spencer, in his well reasoned opinion in the same case upon the appeal. 20 Johns. 576" court="None" date_filed="1822-11-15" href="https://app.midpage.ai/document/murray-v-coster-6145241?utm_source=webapp" opinion_id="6145241">20 Johns. 576, 582. The supreme court of Pennsylvania, have followed it in a very recent case. Ingram v. Sherard, 17 Serg. & R. 347. There are, perhaps, some decisions admitting of a different interpretation; but the present case does not require an absolute opinion upon this point. See Godfrey v. Saunders, 3 Wils. 94; Marston v. Cleypole, Runb. 213; Martin v. Delboe, 1 Lev. 298; Sid. 465. The accounts must also be “such as concern the trade of merchandise,” by the very terms of the statute. It is plain, therefore, that it does not cover all accounts. What are accounts, which concern the trade of merchandise? It seems to me, that they are such as concern traffic in merchandise, where there is a buying and selling of goods, and an account properly arising therefrom. Merchants may mutually buy and sell to each other, and mutual accounts may thus arise between them. Factors may buy and sell for the benefit of their principals; and thus may have debits and credits in account with them. Indeed, it is the common duty of factors and stewards to keep accounts, as well of what they receive, as of what they pay. That the exception applied only to the trade of merchandise was clearly the opinion of Lord Hardwicke, in Sturt v. Mellish. 2 Atk. 612, where the transaction was not a buying or selling of merchandise, but the mere receipt by the defendant of monies, which he was authorized to receive from a foreign government. In Bridges v. Mitchell, Bunb. 217, Gilb. Eq. 224, the court strongly inclined to think, that accounts between partners were not within the exception, as partners do not deal as merchants with each other, but as one merchant with others. Whether this doctrine as to partners be correct or not, the case still'shows, that the court looked to the case of a traffic in merchandise, as the proper foundation of the account. In Crawfurd v. Liddel, cited in 6 Ves. 583, where the bill prayed an account of transactions under a patent for extracting oil from tar, and a plea of the statute was put in with an averment, that they were not “merchants’ accounts,” Lord Rosslyn allowed the plea as good. Indeed, it seems impossible to extend the exception to any other accounts than those, which concern the trade of merchandise, or buying and selling goods, without a departure from the sense and import of the words, equivalent to an entire rejection of them.

There is yet another qualification in the exception, and that is, that the accounts must not only concern the trade of merchandise, but be “between merchant and merchant, their factors, or servants.” Who is a merchant within the sense of the statute, it is not now necessary to consider (see Marston v. Cleypole, Bunb. 213; Bridges v. Mitchell, Id. 217; Sturt v. Mellish, 2 Atk. 612; Anon., Freem. Ch. 22; Murray v. Coster, 20 Johns. 576" court="None" date_filed="1822-11-15" href="https://app.midpage.ai/document/murray-v-coster-6145241?utm_source=webapp" opinion_id="6145241">20 Johns. 576; 1 Mod. 270; 2 Ch. Cas. 132; Cranch v. Kirkman, Peake. 164; 2 Inst. 379); for the parities to the present suit are admitted to be merchants; and the question is, whether the present was a transaction between them as merchants, or as merchant and factor, coming within the other descriptive words of the exception. It appears to me very clear, that the present transaction is not a case within the exception of the statute. It is not a case of accounts concerning the trade of merchandise. The plaintiffs were not the owners of the goods sold; but Gray was the sole owner. He was not their factor to sell or dispose of them. The goods were his own, and shipped on board of the vessel of the plaintiffs, who had no interest in them; but were merely to be paid freight according to the ratio of the profits made upon the adventure. There was, as between the plaintiffs and Gray, no trade or traffic of merchandise; but a mere special contract to receive half profits in lieu of freight. That Gray might be compelled to account to them for the half profits, so far as to ascertain the freight, does not bring the case within the exception. A mere bailiff may be compelled to account, and so a bailee, or depository; but this does not bring the case within the exception. The matter to be accounted for must concern the traffic of merchandise between the parties. It must be a case, where there arise properly debits and credits between them, on sales, or purchases, of goods. Unless this limitation be adopted, the exception in the statute would cover all contracts, however special, between merchants, from which there might arise some accidental accountability on some pecuniary claim between them; a doctrine, which has never yet been broached, and would be subversive of the leading objects of .the statute, the security of all persons against stale demands. Upon a special contract, like the present, there is no ground to assert, that an action of account, at the common law, would lie; for Gray was not chargeable either as bailiff, or as receiver of the goods or monies of the plaintiffs. What he received was for his own account. He was not even to pay any part of the money, received as half profits, to the plaintiffs. It was all his own. He was only liable upon his special contract, for a sum to be paid to the plaintiffs in lieu of freight, equal to the half profits. The half profits, as such, did not belong to the plaintiffs; they were refereed to only as a mode of ascertaining the amount of freight, which might become due.

It has been argued, that the plaintiffs and Gray were partners in the transaction, because they were to divide the profits. But it is clear, that no partnership was contemplated between them. They were not to divide the profits as such. But the profits were merely a mode ■of ascertaining the compensation for freight. And it has been often held, that such a case does not constitute a partnership. Gow, Partn. 19. 20, etc.; Rice v. Austin, 17 Mass. 197" court="Mass." date_filed="1821-03-15" href="https://app.midpage.ai/document/rice-v-austin-6404968?utm_source=webapp" opinion_id="6404968">17 Mass. 197, 206. It has been argued, that the master, being the consignee of Gray, may be deemed a factor; and that all the plaintiffs are liable, as his co-factors or joint contractors, for his acts as factor. But the case is not so. The contract with the plaintiffs as ship-owners, for the shipment of the cargo on half profits in lieu of freight, did not bind them for the acts of Andrew M. Spring, as factor of Gray, although he was one of the owners. The .contract between him and Gray, as consignee, was as distinct, as if he had not been a part owner or master of the vessel. The ship-owners, as such, are only liable for the acts of each other as ship-owners, and of the master, as master. If another character or agency is superinduced, the acts of the party in that character are res inter alios acta, and they are in no wise responsible therefor. The acts of Andrew M. Spring, as factor, did not affect the other plaintiffs with any responsibility, or create a privity with him in that character. If the present case can be maintained as a case Of accounts within the exception, then in all cases of special contract, where by any ingenuity ' an account may be raised, or where there may arise collaterally, any form of ultimate accountableness, all security from the statute is gone. The statute may be evaded at the option of the party. He has only to change, not the form of his remedy, but the form of his declaration, to declare upon an indebitatus assumpsit upon an account, instead of declaring specially in assumpsit upon the original contract, and the bar of the statute is demolished. In the present case, if the plaintiffs had declared in assumpsit upon the special contract according to the facts, the statute would have been a perfect bar to such a declaration; for, (as was justly observed by Jones, in the argument in 2 Saund. 125,) the exception is not of contracts, but of accounts. By declaring in the shape of an indebitatus assumpsit, upon* an account arising upon the very same contract, and the very same facts, according to the argument pressed upon the court, the bar is defeated. Thus, the original contract is, or may be, extinguished, when it is specially set up as the foundation of a suit; and yet it will be deemed to subsist as a perfect title, when it is introduced collaterally, though it then constitutes the sole foundation of the suit’. It will be dead in form and substance as a contract, but will revive in form and substance as an account. If these difficulties could be overcome, (and to me they seem insuperable,) the other considerations above alluded to would be of very great weight. Here, the account, if any, was closed more than six years; it was not mutual; but all on one side. It was a single transaction, and open to all the objections, which weighed so strongly in Coster v. Murray, 5 Johns. Ch. 522" court="None" date_filed="1821-12-10" href="https://app.midpage.ai/document/coster-v-murray-5550489?utm_source=webapp" opinion_id="5550489">5 Johns. Ch. 522; 20 Johns. 576, 582.

My judgment is, that the case established in evidence by the plaintiffs, is not sufficient to support the replication of merchants’ accounts, and that the jury ought to find that issue for the defendants.

The district judge concurs in this opinion, and a direction will therefore be given to the jury accordingly.

The jury gave a verdict for the defendants upon the issue upon the replication; and gave no verdict upon the general issue, as it was thought unnecessary, the former amounting to a bar of the action.

[The judgment of this court was affirmed by the supreme court, where it was carried by writ of error. 6 Pet. (31 U. S.) 151.)