Davies v. Cram — 6 N.Y. Super. Ct. 355

Majority

p. 355

Davies and Rockwell, Assignees of Wilder, v. Cram and others.

Headnote

Under the code of procedure, an insolvent debtor who has assigned his property to assignees, for the payment of his debts, is a competent witness in an action brought or defended by his assignees in relation to his estate.

Such a suit is not prosecuted or defended for his immediate benefit, within the meaning of the code.

As a general rule, a creditor of the insolvent debtor is also a competent witness in such a suit; though it is possible there may be exceptions; as where there is but a single creditor, who would be entitled to the whole proceeds of the recovery, and where the subject-matter in controversy involves the whole of the assigned estate.

The objection goes td the credibility of the witnesses, rather than to their competency.

Ten persons being the owners of a ship, one of whom was the master, chartered her to W., one of the owners, for a load of cotton from Mobile to Havre, with a stipulation that eight hundred bales should be bought by W. for account of all ■the owners, at a limited price, and to go freight free. , The eight hundred bales were bought and put on board by W., and at Havre sold at a loss. The loss arose from the purchase being at a higher price than that stipulated. The master knew of the price when it was put- on board at Mobile, yet signed a bill of lading expressing in effect that it was for the owners’ account. On a bill by W. to compel the owners to contribute to the loss ; held, that, no one except the master was liable.

The account of the sales of the cotton was made up by the consignees at Havre, on the 26th of Aug., 1641. It did not appear when it reached W. in New York, but it had not been received by him in the latter part of Sept., 1841. Held, that the statute of limitations would not commence running against W. until after the account was received by him; and that a suit having been commenced in his name on the first day of October, 1847, the demand was not barred by the statute.

(Before Duer, Mason, and Campbell, J. J.)

Oct. 10, 11, 12;

Dec. 28, 1850.

This was a bill in equity, filed in the supreme court in 1847, by tbe assignees of Sampson V. S. Wilder, against the defendants, nine in number, to recover the amount of a loss which had occurred upon a shipment of 800 bales of cotton from Mobile to Havre. In February, 1841, Wilder and the defendants being

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the owners of the ship Hottinguer, Wilder chartered her to proceed from New York to Mobile, and there receive a cargo of cotton, and sail thence to Havre; the ship to be consigned to the friends of Wilder at the latter port. Eight hundred bales of the cotton were to be on owners’ account, and freight free. The bill alleged that the defendant, Eleazer Crabtree, was the managing owner and captain of the ship, and that at the time of making the charter-party for the voyage, it was agreed by and between him, (acting with the authority and consent of the other owners,) and Wilder, that Wilder should purchase the whole of the cargo for the ship, and that after the same should be sold by the consignees at Havre, Wilder should settle with the owners of the ship for the 800 bales which were purchased on their account, and if there were any loss thereon, that the owners should be accountable to him, and pay him the amount of such loss; and in case any profit should arise from the sale of the 800 bales, that the owners should be entitled to have and receive the same from Wilder, and the profit and loss were to be borne by and divided amongst the several owners of the ship, in proportion and according to their respective interests in the ship. The bill further alleged, that in pur- . suance of such charter-party and agreement, the ship proceeded to Mobile, and that in March and April, Wilder purchased, or caused to be purchased, and laden on board at that place, a full cargo of square cotton, consisting of 2801 bales, 800 bales Of which were on account of the owners of the vessel; the whole • cost of such cargo being $142,736.38. That the ship sailed from Mobile on the 6th or 7th of May, and arrived at Havre on the 20th of June, 1841. That Hottinguer & Co., the consignees, sold the cargo, and that on the sale of the 800 bales, so shipped on account of the owners, there was sustained a loss of $6425.50, which loss was borne and paid by Wilder. The bill admitted that Wilder, as owner of one-eighth of the vessel, was liable to contribute one-eighth part of such loss; and claimed that the other owners were bound to contribute and pay the other seven-eighths of such loss, with interest.

Eight of the defendants in their answer, which was put in

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under oath, admitted the making of an agreement between them and Wilder that they were to be interested in 800 bales of the cargo; but they alleged that they were to be so interested only on condition that the cotton should be purchased at or below a limited price; and that had the cotton been purchased by Wilder at that price, no loss would have occurred; but that he paid a higher price for it, which caused the loss. The statute of limitations was also set up in the answer. .The defendant, Rockwell, suffered the bill to be taken as confessed. There was nothing in the testimony which disproved these allegations of the defendants. The cause was heard on the pleadings and proofs.

W. Kent, for the complainants.

II. A. Oram, for the defendants.

By the Court.

The plaintiffs filed a bill to compel payment by the defendants of the loss upon a shipment. of 800 bales of cotton to Havre in 1841. In February of that year, Wilder and the defendants, being the owners of the ship Hottinguer, Wilder chartered the vessel to proceed from New. York to Mobile, and there load with cotton and proceed thence to Havre. An agreement was entered into between Wilder and Eleazer Crabtree, master and one of the defendants, that of this cargo 800 bales should be on owners’ account. The defendants admit an agreement to the effect that they were to be interested in 800 bales, but allege in their answ-er that they were to be so interested only on condition that the cotton should be purchased at or under a limited price, and at which, price no loss would have occurred. They also set up the statute of limitations.

The principal witness on the part of the plaintiffs was Wilder himself, who, subsequently to the agreement, failed in business, and made an assignment of all his property to the plaintiffs, who prosecute this suit for the benefit of his creditors. On the hearing, it was urged by the defendants’ counsel that Wilder was not a competent witness.

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The language of the code is as follows :

§ 898. “ No person offered as a witness shall be excluded by reason of his interest in the event of the action.

§ 899. “ The last section shall not apply to a .party to the action, nor to any person for whose immediate benefit it is prosecuted or defended, nor to any assignor of a thing in action assigned for the purpose of making him a witness.”

There can be no doubt that Mr. Wilder is interested in the event of this action; but can it be said that it is prosecuted for his immediate benefit ? The persons first and immediately entitled to the proceeds are the plaintiffs as his assignees. If, after the payment of his debts, any thing remains, such surplus would go to him. As in case of the stockholders of a bank which has failed, and where the corporation is a party. The stockholders have an interest, for the surplus goes to them; bu't the debts must be first paid, and the action in the name of the corporation cannot be said to be for the immediate benefit of the stockholders. Their interest is contingent and possible, not direct and immediate. What is “immediate benefit?” The word immediate, according to Webster, is defined, “ acting without a medium, or without the intervention of another cause or means, producing its effect by its own direct agency.” A recovery in this action would benefit the witness only in the event that the proceeds were applied by the assignees to the payment of his debts. The benefit must be produced by or through the agency of others.

The proviso or exception in the recent English statute, 6th and 7th Yic., chap. 85, § lj is, ‘*any person in whose immediate and individual behalf any action may be brought or defended in whole or in part.” Under this exception, in Hart v. Stephens, (6 Adolph, and Ell. 987,) the husband was admitted as a witness in a suit brought by the wife’s administrator to recover the amount of a promissory note given to the wife before marriage, and upon which the husband, during the lifetime of the wife, had from time to time collected the interest. The husband could obtain nothing, until the assets were marshalled and the debts of the wife paid, and it was held that the action was not

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prosecuted for his immediate and individual benefit. And in Hill v. Kitching, (3 Mann. Grang. and Scott, 299,) Tindal, C. J., said that in that case the witness was competent, because, “ he has no right to lay his hand upon any portion of the money to be recovered in this action.” Yet, in that case, there was an agreement between the witness and plaintiff, that the witness should have one-half of what should be recovered. So in the same case, Maulé, J., says, “ The meaning of the proviso is, that no person who is the formal plaintiff on the record shall be called as a witness, nor any person who though not the formal plaintiff is yet substantially so.” In this case before us, the witness has no right to lay his hand upon any portion of the money to be recovered; nor is he the formal plaintiff; nor is he substantially so. The formal plaintiffs are the assignees, and they may, perhaps, be considered also the substantial plaintiffs. The assignees may be liable for the costs in case of failure to recover. It is only through these assignees, and after the creditors are paid, that the witness can reach any portion of the proceeds. We are, therefore, all of opinion, that according to the law as now established by the code, an insolvent debtor, who has assigned his property to assignees for the payment of his debts, is a competent witness in an action brought or defended by his assignees in relation to his estate.

One of the creditors of Wilder has been examined, and objection was made to his competency. His testimony, we think, in no way material; but if it were, we should consider, for the reasons before stated, that he would be competent. He cannot put his hand upon the fund; he can only obtain, through the assignees, his distributive share after their expenses are paid. He is, with the assignor, interested in the event of the suit, but neither he nor the assignor can at once appropriate to their own use the proceeds of the recovery. The assignees, in another action, may be compelled to distribute; but the money recovered in the suit must, in the first instance, come into their hands. It is possible that there may be exceptions, as where there is but a single creditor, who would be entitled to the whole proceeds, and where the subject-matter in controversy embraces

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the whole of the assigned estate. But, as a general rule in such cases, we think both the assignor and the creditors competent witnesses. The objection must be to their credibility rather than to their competency.

Admitting, then, the competency of these witnesses, we proceed to consider the question of .the liability of the several defendants. (After holding on the evidence that the defendants, Cram and others, were not liable, and that there must be a decree against Rockwell, who suffered the bill to be taken as confessed, the judge proceeded.)

As to the defendant, Eleazer Crabtree, the captain who signed the charter-party, he cannot be charged with the loss on the 800 bales for having exceeded his authority, for the bill- is not framed for the purpose of charging him with such loss, even if it had appeared that he had exceeded his powers, and that proceedings in chancery were proper to establish his liability. But he stands in a different position to that of the other defendants in another respect. He was the captain of the ship. He received the cotton on board at Mobile. He was informed of the prices at which the cotton was purchased, and he signed the bills of lading, which stipulated that the freight was to be paid pursuant to the charter-party — that is, that 800 bales were to be freight free on owners’ account.

We think, therefore, that he must be considered as having assented, as part owner, to take the cotton at the prices at which it was purchased at Mobile ; and that there must be a decree against him for the one-sixteenth of the loss.

The statute of limitations can hardly be a bar in this case. The account appears to have been made up by Hottinguer & Co., the consignees, on the 26th August, 1841, at Havre. When it reached New York does not appear. It had not been received by Wilder when he left the city in the latter part of September. This' suit was commenced the last day of September, or first day of October, 1847, — and as the six years, in our judgment, would not commence running until after the accounts were received by Wilder, it may be fairly inferred that it was commenced within the six years from that time.

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If the parties cannot agree upon the amount, there must be a reference to determine what sums must be paid by Rockwell and E. Crabtaree. As to the other defendants, the bill must be 'dismissed with costs, to be paid out of the assigned estate. We think, under the circumstances, the assignees were justifiable in commencing the suit, and that they ought not to be personally charged .with the costs.