Howard v. Cooper — 1 Hill & Den. 44

Majority

p. 44

Howard vs. Cooper.

Headnote

C. borrowed money of H., saying to him at the time, that if a contemplated contract for barrels between C. and H.’s firm was concluded, he would credit the firm with the money; and H. entered the money as a payment to C. on the firm books. The contract was concluded, and the barrels delivered under it to the firm; after which H. and R. his partner, entered into bonds with C., submitting to arbitrators all and all manner of action, causes of action and demands, pursuant to which an award was made; but on the hearing before the arbitrators, it was verbally agreed, that the barrel contract, and any question arising out of it, should be withdrawn from the arbitration; and accordingly that was not passed upon. C. subsequently sued H. & R. for the barrels delivered under the contract, and upon the trial, C. refused to allow the money got of H.; whereupon H. charged it back to himself on the firm books, and now brought his action to recover it. Held, that the action could not be sustained.

If H. had originally the right to apply the money, when and as he pleased, then, under the circumstances, his only remedy was to have it used defensively, in the action of C. against the firm; and whether he had done so or not, and whether it had there been allowed or disallowed, it was barred by that suit.

A'sum of money advanced or applied as payment on a subsisting demand, is not recoverable by action against the payee. It can only be made available by way of answer to an action by the payee.

If the money in question passed as a naked loan, then, not being connected with the barrel contract, nor any question arising out of it, it was not one of the matters attempted to be withdrawn from the arbitrators, and so was barred by the award.

And for the same reason, the award would be a bar, if C. had the option to apply the money or not on the barrel -contract, and had made no election prior to the arbitration.

Where a submission to arbitrators is under seal, a claim within it cannot be withdrawn, by parol, at the hearing, so as to prevent the award operating as a bar to a subsequent suit respecting such claim.

' Assumpsit for money lent, tried at the Albany circuit, December 13th, 1839, before'CusHMAN, C. Judge.

After the general issue, the defendant pleaded a submis

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sion of the matters in controversy to, and an award by, arbitrators. The" submission was by the plaintiff and Ryckman, on the one side, and the defendant on the other,-by bonds conditioned to abide the award, &c. (in the usual form,) “ of and concerning all and all manner of action and actions, cause and causes of action, and demands whatsoever,” &c. The bonds bore date December 25th, 1833, and the award (which was under seal) was made March 22d, 1834. This, among other things, directed that the parties should execute mutual releases of all accounts, debts, dues, claims, causes of action and demands, up to January 15th, 1834.

Replication, that while the parties were before the arbitrators upon the hearing of the matters submitted, the plaintiff, at the request of the defendant, and with the approbation of the arbitrators, withdrew the claim mentioned in the declaration from the arbitrament; in consideration whereof the defendant agreed then and there that the same should remain the subject of further settlement, notwithstanding the submission.

Rejoinder, denying any withdrawal as alleged.

The proof was, that the defendant borrowed $400 of the plaintiff, in July, 1832, telling the plaintiff that, if a certain contemplated contract with the plaintiff’s firm (Howard & Ryckman) to purchase barrels of the defendant should be concluded, he (defendant) would credit the firm with the $400. It was entered by the plaintiff in the firm books, as a payment made to the defendant; but on his refusing to allow it at the hearing before referees, in a suit by the present defendant against the firm, tried in 1835, hereinafter mentioned, it was charged back by the plaintiff to himself on the books of the firm.

The barrel contract was concluded in August, 1832; the barrels delivered accordingly by the defendant to the firm, and various payments made by the firm on that contract.

The plaintiff then proved, that on the hearing before the arbitrators in 1834, pursuant to the submission set forth in the pleadings, it was agreed between the parties, that the barrel contract, and any question arising out of it, should

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be withdrawn, and not submitted; and that, accordingly, it was not passed upon.

An objection, was made that the matter could not be thus withdrawn by parol from the sealed submission. But the judge overruled the objection.

A motion was made, on the plaintiff resting, for a non-suit, upon the ground that the withdrawal of the barrel contract and the questions arising out of it, from the consideration of the arbitrators, did not withdraw the claim for the $400; inasmuch as that claim was not included as an integral part of that contract. The motion, however, was overruled.

It further appeared, that in 1835, Cooper, (the present defendant,) had sued Ryckman and the present plaintiff, (Howard,) in the Albany mayor’s court, for the barrels sold and delivered on the barrel contract. That the cause was referred, and heard in the same year before referees; Howard & Ryckman then insisting on payment, and putting in evidence various receipts. The question was there raised, whether the $400 now in controversy should be appropriated as part payment. Howard offered to set off the $400, and asked Cooper to admit it; but the latter objected, alleging that he remembered nothing of the. claim. “If you can prove I had it,” he said, “and satisfy me of it, I will, allow it, though a private demand. I have no recollection of it,” (fee. Howard spoke of its being connected with the barrel contract: and his counsel said to Cooper in his (Howard’s) presence—“ He did let you have it; for I have seen a credit for. that sum on one'of the bills you have rendered to, Howard & Ryckman.” Cooper replied, “ Produce that bill, and I will allow it.” No such bill or accomit was produced; and Howard then observed, “ If you refuse to allow it, I must reserve it as an individual demand, and sue you for it.”

The judge charged the jury, that if, from the testimony, they believed that the plaintiff had loaned the $400 to the defendant, and that the latter had a right to apply the $400 on the barrel contract or not, at his option, then, although

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the bonds of submission were broad enough to embrace the $400, yet the withdrawal of the barrel contract was a withdrawal of the $400, as necessarily connected with the barrel contract; and the plaintiff had no cause of action for the same till the defendant’s refusal to allow it. That, in the mean time, the plaintiff’s, right of action was suspended and imperfect; therefore the submission and award did not preclude the plaintiff’s right to recover. But if the jury came to the conclusion that the defendant had not the option to apply the $400, as aforesaid, but that the plaintiff had the right to make the application when and as he pleased, or that the $400 had been applied, then they should find for the defendant.

The defendant’s counsel requested the judge to charge the jury, that, if they believed the plaintiff treated the $400 as an individual demand against the defendant, then it was covered by the submission. But if they believed that the $400 constituted a credit, applicable on the barrel contract, or that the defendant had at any time given a credit for that sum to Howard & Byckman, on account of the barrel contract, on any bill" or account rendered them, the plaintiff could not recover.

The judge declined so to charge, or in any maimer to alter or modify his charge as before given, except that if the jury found the agreement to have been, that the defendant had not the right to apply the $400 on the barrel contract, then their verdict should be for the defendant.

Exceptions were taken to the above decisions and charge; and the jury gave a verdict for the plaintiff. The defendant now. moves for a new trial on a bill of exceptions.

S. Stevens, for the defendant.

J. Holmes, for the plaintiff.

The judge charged correctly, that if Howard had the right to apply the $400, when and as he pleased, or if it had in fact been applied, then the plaintiff could not recover. ‘ This is not denied. He was

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bound, to introduce the credit defensively before the referees, and whether he had done so or not, and whether it had there been allowed or disallowed, an .action for the sum was barred by the suit and proceedings in the mayor’s court. Indeed, independently of that, a sum of money, advanced or applied as payment on a subsisting demand, is not recoverable by the payor in an action against the payee. The only way in which it can be made available is, by way of answer to an action by the payee.

On the other hand, if the money had passed by a naked loan, it would have been the subject of an action originally, but was barred by the submission and award. Not being at all connected with the barrel contract, it was not withdrawn from the consideration of the arbitrators; for the only matter attempted to be withdrawn, was, the barrel contract and any question arising out of it: So far, most clearly, the plaintiff in avoiding Scylla, is necessarily drawn into Charybdis.

The jury have, however, found the middle ground—that the defendant had an option either to treat the advance as an independent loan, or to apply it; and finally, when he came to the reference, he refused to do the latter. In the mean time, did the $400 make a part of the barrel contract, or was it any way connected with it? Does the present action for the money raise any question which would arise out of the barrel contract; or any point of litigation in regard to that contract ? The learned judge thought the nature of the claim for the $400 was suspended between the character of a loan and a payment, from the time of the advance till 1835, when the defendant refused to apply it; that up to that time, it stood on the option of the defendant, whether it should be applied as a payment on the barrel contract, or treated as an independent loan. The loan was cleatiy independent in the first instance. It then had nothing to do with the barrel contract; and the only way in which the defendant could connect it, was by crediting it on the barrel account. That he did no't do. He might have connected it, but did not; and being in no wise connected with the contract at the time of the arbi

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tration, how can it he said to furnish any question arising out of such contract? The contract of loan was one thing; the contract to deliver barrels another; and the only option which could bring them into one, was never exerted. Till exerted, the contract of loan continued such; and although suspended, it seems to me an action would have lain for money lent, at any time before being actually applied as a payment. It was but borrowing money, with leave to set it off against a future debt to become due from the lender to the borrower. But it was never actually set off. A question on the previous debt can no more be said to arise out of a suit or arbitration concerning the latter, than if there had been no agreement, but the set-off had been left upon the legal right. Whether it should be set off, would in either case be optional with the borrower.

It appears to me, therefore, that the judge erred in charging that an option to set1 off, so Connected the loan with the barrel contract, that the withdrawal of the latter took the former along with it; and that therefore he should have directed a verdict for the defendant, on the, ground that, admitting the barrel contract was effectually withdrawn, still the loan was left for the consideration of the arbitrators, and so this action barred by the award.

Another objection taken is, that admitting it to have been connected with the barrel, contract, yet even the latter could not be withdrawn by parol, but only by revocation under seal, on the maxim eo ligamine quo ligitur. No doubt the maxim entirely applies to a sealed submission, as well as to a sealed contract. It is out of the power of both parties to alter the legal effect of the one or the other, without seal. (Creig v. Talbot, 2 Barn. & Cress. 179, per Holroyd, J. and the cases cited by him; and vid. Allen v. Jaquish, 21 Wend. 628 , and the cases there cited.) The submission must therefore be taken to have stood the same as if the parties had said nothing of the barrel contract; and the award would, in that view', be a bar

New trial granted.

Cases cited

Allen v. Jaquish 21 Wend. 628 N.Y. Sup. Ct. p. 49