Opinion
(December Term, 1830.)
1. A debt existing before the depreciation in currency which took place in the Revolutionary War might have been discharged in that currency. But if not paid or tendered during that period, upon the subsequent resumption of cash payments the whole sum is to be paid, without reference to the depreciation.
2. A debt contracted while the currency was depreciated, upon the resumption of cash payments must be discharged according to the rate of the depreciation at the date of the contract.
3. But an agent charged with the collection of debts is responsible only for what he collects; and if he received a debt in the depreciated currency, upon a settlement made after the resumption of cash payments, he is to account only for the value of the currency at the time it was received.
4. And where a collecting partner owed a debt to the copartnership, contracted before the Revolutionary War, and also collected money due to the copartnership during the depreciation of the currency, upon a settlement of his accounts allowance was made for the depreciation upon money collected, but not upon the debt due from himself.
5. A debtor is liable to pay interest, by virtue of his contract, whether he made it or not. An agent or trustee is liable only because he made it, or might have made it, and for gross neglect. As where a collecting partner, in obedience to the confiscation acts, bona fide paid the share of his alien partner into the treasury: It was held, that whatever may be the effect of the treaty upon such payment of the principal debt, the collecting partner was not liable for interest thereon.
6. The treaty of 1733 revived the rights of British creditors, and restored them the right to sue, as if the confiscation acts had not been passed. The war of 1812, there being no new confiscation acts, did not affect those rights otherwise than to suspend the right of suing.
7. Whatever may be the effect of the treaty of 1783 upon the mutual rights of copartners, where the whole partnership property, or a portion of it, belonging to an alien partner, was seized under the confiscation laws, yet where the copartnership owed the alien partners for advances, the resident partner's share of these advances constituted, in equity, a debt which he owed his copartners, and which is within the treaty.
8. One of several administrators, who assents to the delivery by his coadministrator of the assets to the next of kin before the payment of debts, is guilty of a devastavit. So, also, if the assets were delivered over in obedience to the decree of a court, unless he shows that it was in invitum.
From CHATHAM. The original bill was filed in 1800 by Ebenezer McNair, in his own right and as the executor of Ralph McNair, deceased, against the defendants, as the administrators of Richard Kennon, deceased. Having abated, it was revived by the present plaintiff, who is the administrator de bonis non of Ralph, and the administrator of Ebenezer McNair. It charged that in August, 1771, a copartnership was entered into by articles under seal, and set forth in the bill, between said Richard and Ralph, by which another partner might be admitted by the latter; and that accordingly the said Ebenezer was admitted; that the business was pursued until August, 1774, when it was dissolved, and that Kennon had possession of the books and effects to close (518) the concern, as by the articles he was bound, and did proceed therein until 10 April, 1777, when a balance account of the concern was made up, signed and delivered by Kennon to the other partners, who adhered to the enemy, and were about leaving and did shortly thereafter leave this country. The bill charged that Ebenezer McNair was admitted a partner, as a member of the firm of Ralph and Ebenezer McNair, of Hillsboro — that is, Ralph two-sixths and Ebenezer one-sixth. A copy of the balance account was exhibited with the bill, by which it appeared that the funds of the firm then outstanding, or in Kennon's hands, were of the value of £ 3069 0s. 10d. And the firm owed a debt to the firm of Ralph and Ebenezer McNair, for goods furnished to Richard Kennon Co., of £ 1853 5s.3d., and that the profit then apparent was the sum of £ 1215 15s. 7d., whereof one-half was Kennon's; the sum of £ 405 5s.2d. was Ralph's, and the sum of £ 202 12s. 6d. was Ebenezer's. It was admitted that by a payment the debt was reduced to £ 1701 15s.2d. on 1 July, 1777. It was charged that Kennon collected the whole effects, and died in 1794 intestate, and that the defendants jointly administered on his estate and received his assets sufficient to discharge the plaintiff's demand. The death of Ralph was then charged, and that Ebenezer was his executor. And the bill prayed an account of the copartnership and payment of all sums due. It was not stated when Ralph died nor when Ebenezer returned to this country.
Seawell and Gaston, with whom was Badger, for plaintiffs.
Winston and Nash for defendant.
To this bill the defendants originally put in a plea of an account stated on 10 April, 1777, and relied on the statute of limitations from that time. This plea was overruled in 1819. It specified the precise sums stated in the account exhibited in the bill, and that it was of the same date.
Upon the overruling of the plea, the defendant Ragland alone answered. The material parts of the answer were that a copartnership between Kennon and Ralph was admitted; but not the particular articles, nor Ebenezer's participation, nor his executorship. It contained no account of the partnership, and averred that the few (519) papers which Kennon left concerning it were taken by the defendant Hines, who had removed to Georgia, and that he (Ragland) was unable to render any account. He denied that he had any of Kennon's assets, and said that the administratrix and the other administrator took the whole; that he never interfered further than to join in the inventory and aid in making sales, and that the others received the bonds and collected the money on them. He then stated that pending this suit, by some proceeding in Chatham County Court, a division of the negroes and other parts of the estate was made amongst Kennon's children, to whom the whole was delivered. He did not set forth what agency he had therein, nor whether he assented or objected thereto. The answer further alleged that Kennon, in April, 1781, paid into the treasury the sum of £ 1941 3s.2d., under the confiscation acts, and claimed a credit therefor against both Ralph and Ebenezer.
The bill was taken pro confesso as to the other defendants.
Upon the case thus made, a reference was ordered, and the master made a report in which he submitted several points for the decision of the Court. Besides those, others were made by exceptions on the part of the defendants.
The master charged Kennon to R. and E. McNair, with the sums of £ 1701 15s.2d. (the balance due for merchandise or stock) and £ 607 17s. 9d., their shares of the profit, as a debt due from Kennon to them on 1 July, 1777. He gave him credit for £ 160 10s. 11d., being one-half of the debts to the firm not collected, and found a balance of £ 2125 2s. 0d., on which he charged interest from 4 July, 1782, to the taking of the account. He stated the account in the present currency, viz., at ten shillings (520) to the dollar. He did not credit Kennon with the sum of £ 1941 3s. 4d., said to be paid into the treasury, but stated that the defendant produced the receipt of Matthew Jones, treasurer, therefor, without finding whether the payment was actually made or what was Jones's official character. The receipt itself was expressed to be "in part of Ralph and Ebenezer McNair's confiscated property."
The master submitted, first, whether the sum due to the plaintiff was to be computed at eight or ten shillings to the dollar; secondly, whether the depreciation of the paper money, in which Kennon probably collected the debts, was to be allowed; and, thirdly, whether Kennon was entitled to a credit for the money paid to Jones. The defendant excepted to the charge of interest before the filing of the bill, and likewise to the charging Kennon with the effects of the firm, as so much money in his hands on 1 July, 1777.
The books of the firm were produced, and upon inspection appeared to have been regularly and fairly kept by Kennon up to the time of his death. In them a cash account appeared balanced monthly; and the several periods of receiving the money, from whom received, and how invested, are also stated. Likewise the account of R. and E. McNair, in which the item of £ 1741 3s. 4d., is charged to them, corresponding with Jones's receipt.
Upon these facts and the points submitted, several questions of law have been raised, some of which are of real difficulty; on which able and full arguments have been made at the bar. Others have not been so fully discussed as the Court, in considering the case, think they merit; and, therefore, a further opportunity will be afforded for such additional investigation as their importance to the parties seems to call for. The Court, however, will proceed now to decide most of the questions involved, in order that the future attention of the counsel and the Court may be confined to as few points as possible.
Undoubtedly, the pound, during the time this copartnership did (522) business, was computed at $2.50. Their dealings were at that rate. At the time the state of the concern was taken, that is, 10 April, 1777, the dollar had depreciated to one and a half for one. But if Kennon was debtor to the plaintiff before that day, and then ascertained the balance, but did not pay it, he cannot avail himself of the depreciation. If he had then tendered the money, the creditor must have received it, depreciated as it was. And if he had contracted a debt at that day, its value must have been estimated, after the resumption of payment in specie, as of the time of contracting the debt. But as these were previous transactions, if they be regarded as creating a debt from Kennon to the plaintiff, the depreciation does not affect them, since they have not been paid before the depreciation ceased. It must now be paid in dollars at eight shillings, and not at twelve shillings.
But although such be the rule in relation to debts, and must be applied to the present demand, as far as any part of it shall be found debt, properly speaking, yet in relation to the firm, Kennon did not stand as debtor, but as acting partner and trustee. Immediately after April, 1777, the paper money depreciated rapidly, and continued to do so until it reached 800 for one in 1782. In collecting the debts, Kennon did not make himself chargeable with good money for bad. He is only charged with what he received, or with converting what he received. He stands in this respect precisely as any other agent whom all of the partners had appointed. Such an agent would have been liable to pay to each partner his share of the effects actually collected. If they turned out, by the depreciation, to be of no value, then there would have been a total loss of the copartnership effects; and when the copartners came to settle among themselves their demands against each other would have been adjusted on the footing of a total loss. In ascertaining the final profit or loss of the business, then, the depreciation of the money (523) must be taken into account. The profit apparent upon the balance account of 10 April, 1777, is not a real, ascertained profit. The business was not then closed. The profits might have been subsequently increased by interest, purchases of land in payment of debts, or other means. They might have been altogether sunk in insolvencies of debtors, or destruction of property during the war, or in the depreciation of money at the time it was received or afterwards. This loss is not to be thrown entirely on the collecting hand. If Kennon were now living, he might and would be required to state in what funds the payments were actually made. The parties are at liberty now to prove, if possible, that fact. Some of the debtors may be living. Some of Kennon's receipts may be found, expressing specie payments. Some deeds for land belonging to the firm may be traced, in which the consideration will exhibit the truth. The money actually received is that with which he is chargeable. But in the absence of all evidence, the history of the times, as well as the scale of depreciation fixed by law in 1783, must guide us. The books show the periods of receiving the money, and its value must be determined by that. There is no other mode, at this remote day, of arriving as nearly at the truth. And the Court feels the less reluctance in relying on Kennon's entries for this purpose because, on looking into the books, it is obvious that he meditated no advantage of his absent partners, but in good faith kept the accounts and protected their interests, as far as he could or thought himself justified. He refrained until 1781 (probably as long as he was allowed) to submit their share to the operation of the confiscation acts. He then charges just the sum paid to their individual account. He afterwards kept that account open, and continued his cash account, and made several entries in it. Had he lived, unquestionably this controversy would not have arisen — at least by his fault, if we are to judge by the acts of his life. The depreciation is therefore proper to be allowed in (524) ascertaining the value of the partnership effects which came to Kennon's hands.
The charge of interest would be properly made, if this were a debt, and if it be a debt not affected by confiscation. But at present it is not material to consider the latter point, because, clearly, for the reasons already given, Kennon was not a debtor, at least to the extent of the partnership funds left in his hands. It is repeated that he was a trustee. He is therefore chargeable with interest only in two cases: first, if he made it; secondly, if he was in duty bound to make it, might have made it, and did not. As far as the debts increased by interest before collection, that attached itself to the principal, and became principal in his hands. But if it be apparent that a trustee did not make interest, and could not; that he was prevented by law from doing so; that the effects were seized out of his hands, he is not upon general principles chargeable with interest. A debtor is obliged to pay interest because it is a part of his stipulation. Whether he makes it or not, whether he has the money in his desk or not, whether he lays it out in funds bearing interest or not, neither charges him nor discharges him. His contract obliges him. An agent or trustee stands upon a different footing. He is liable prima facie for interest made, or for grossly neglecting to make it. If, therefore, Kennon did in fact pay into the treasury funds in his hands bona fide, he is not liable for interest, as a partner, until the bill filed. He is not chargeable for unfaithfulness where he was not unfaithful. The Court holds this position, although the treaty of 1783 should operate upon that part of the demand which is principal money. That treaty may include a trust fund, like that in dispute. Its obvious import respects debts. But for the present the Court does not mean to determine whether in its extent it is broad enough to render one copartner personally liable to another for the share of the latter, seized out (525) of the hands of the former by the sovereign. Be that as it may, it cannot have the effect of turning an agent into a debtor, and compelling him to pay interest; nor the obedience to the law by a trustee, acting bona fide, into a breach of trust rendering him liable for consequent damage. The opinion of the Court on this point does not rest on the strength of confiscation acts, as confiscations, whereby Kennon is discharged from a demand to which he would be otherwise liable. On the contrary, he was never liable for interest, because he did not contract, as a debtor, to pay it, and because, as trustee, he did not make it, and could not make it.
The effect upon the principal sum itself, of the payment into the treasury, depends upon the construction of the treaty of peace with Great Britain. Whatever doubts were once entertained upon the operation of that instrument, its construction and obligation have been so long settled by the courts of the Union, and acknowledged by the citizens and courts of North Carolina, in reference to debts, that this Court could not suffer an argument against it. The counsel for the defendants have, very ingeniously, put their case upon a new point as regards the treaty. They argue that the War of 1812 annulled the treaty; that the operation of the confiscation acts was prevented by the treaty alone; and that upon the expiration of the latter, the former revived. If the treaty were to be regarded in the light of a repealing statute, and the war a repeal of that, the argument would be fair and the conclusion sound. But the similitude does not exist. The reason why the repeal of a repealing statute revives the law first repealed is that it necessarily denotes the intent of the Legislature that such shall be the case. There can be no other motive for the repeal of a repealing statute. That has no application to the case of the law and the treaty under consideration. If the war had been declared by this State alone, such an inference could not be drawn. Much less when it was the act of another (526) government, having no power over our State laws. But why suppose that the confiscation acts of the Revolution were intended to be revived by the war, when no new confiscations were enacted? The persons formerly offending had, most of them, been long in their graves; and it is not to be supposed that the hard measure of seizing private property, though enemies', was intended thus indirectly to be effected. The treaty received the rights of the British creditors, and gave them as full force as if the confiscation acts had never passed. It abrogated those acts altogether, and left those rights as those of other friendly aliens. Upon the breaking out of a new war, they depended upon the general doctrine respecting debts to alien enemies. They were not forfeited. There was a temporary disability to sue, which ceased with the war. But even that does not appear to be the case here; for Ebenezer McNair states himself in the bill to be then of the city of Richmond, in Virginia. Upon the general question, however, the Court is clear that the confiscation acts, as continuing laws, do not bar the plaintiff; not because the treaty remains in force, notwithstanding the late war, but because rights arose under the treaty while it was in force which nothing that has been since done has destroyed or was intended to destroy.
What effect this shall have upon the present controversy in all its parts the Court will not now conclusively determine. Whether Kennon shall stand charged with or execused from the £ 607 17s. 9d., stated to be profit, or whatever other sum may, upon taking the accounts, be found to be the profit, the Court reserves to be further considered. It may be that as far as the profit goes, or as far as the McNairs were interested, as partners, in the firm, the confiscation and seizure may be a specific destruction of the trust fund; and that the treaty gives no right (527) to them to seek reparation from their copartner. It might be, if the stock of the partners, as well as their profits, had been equal, that the confiscation might have exonerated Kennon altogether. Or it may be, as a part of the plaintiffs demand is for supplies furnished the store, that Kennon must himself indirectly sustain a part of the burden of the confiscation, by considering the loss of the McNairs the general loss. It may be material, too, to consider that the payment to the public, if made at all, is said to be on account of the confiscated estates of R. and E. McNair, when the act of 1778 mentions Ralph alone. That is an office found as to him; but even if Ebenezer comes within the provisions of the general previous act, a further office must be shown as to him. And then the effect of that, whether the loss shall fall on all or on each separately, will remain to be determined. I am now speaking in reference to the partnership effects being in Kennon's hands, as the acting partner and trustee for the firm. And the Court declines declaring the rights of the parties, because the points were not discussed at the bar, and perhaps the cause may be decided yet without the counsel considering it worth while to enter into that discussion. But all equity on these points is reserved; and in taking the future accounts the parties are at liberty to have any matter stated which will raise the questions.
But whatever may be the rule regarding Kennon as a trustee of the fund, it can have no application to a large and, indeed, the most important part of the plaintiff's demand. Ralph and Ebenezer McNair were creditors of Richard Kennon Co. in the sum of £ 1701 15s.2d.; for one-half of which Richard Kennon was personally their debtor, in the event even of a loss of all the profits, and of a total loss of the whole capital — from whatever cause such losses might arise. It is true, they could not sue him at law, nor could they in equity, as for a specific sum, unconnected with the other transactions of the house, because Kennon might, in like manner, be a creditor of the concern. But here the parties have, in fact, so far adjusted the partnership as to show what the (528) firm owed to one partner, and what the other partner owed to the firm. They found the McNairs creditors to the amount above mentioned, and they found Kennon a debtor to the firm in the sum of £ 73 9s. 7d. It remained only to close the concern, so that it might appear what final profit or loss might be made. If a profit, then the McNairs would receive their whole debt, and a share of the profit; if a loss, the McNairs would receive such a portion of their debt as the joint property could satisfy; and of the residue, one-half must be borne by themselves and the other half paid to them by their partners. In the most adverse event, therefore, Kennon is a debtor, not to the firm, but to R. and E. McNair, in one-half of their advance of £ 1701 15s. 4d. after deducting therefrom his own debt to the firm of £ 73 9s. 7d., of which last sum he ought to pay to them the whole with interest, deducting that for the war. It may be said that this money was also in his hands as a part of the trust fund. It is admitted. But it was a trust for his own benefit as well as theirs; and if the fund be lost, he remains a debtor to them for a share of their advance over and above his. And however the confiscation, but for the treaty, might have protected him from that (as indeed it would from any other debt), yet the effect of his fiduciary character cannot be carried so far as to evade the treaty, as respects the debt due from himself. To this extent he was strictly a debtor; for by the articles no particular stock is to be provided by either party. McNair was to import the goods and put them to the firm at a very low advance, and Kennon was to sell them, being allowed at first a salary for his time out of the profits, and each to share equally in gain or loss. Afterwards his salary was given up in consideration of the services to himself of the storekeeper paid by the company. The debt to McNair, therefore, is for goods, and stands on the same footing with a purchase from another person. To this extent, at all events, Kennon's estate is (529) immediately liable to the plaintiff. It will be to a greater if, upon taking the accounts, a profit shall still be found, or less than a total loss; because McNair is entitled to full payment out of the fund, as far as it goes, and, when that fails, to call upon Kennon for half the deficiency. The master reports sundry small payments for McNair, which the Court will not now consider, but leave to be adjusted by an accurate account. In the meantime, as it is certain that the aggregate of principal and interest thus due must exceed the sum of $6,000, a decree must be pronounced therefor presently for the plaintiff, and another reference to the clerk to state the precise sum due on this part of the case. If the plaintiff be satisfied therewith, no further accounts need be taken; but if he should desire it, the master must take a full account of the partnership, to ascertain what the loss or gain was, and adjust it between the copartners. The Court does not think it necessary to distinguish in their opinion the share of Ralph McNair from that of Ebenezer, in the sum now decreed; because the whole is for a debt due to the house of Ralph and Ebenezer McNair, and the distribution between themselves will be made in the settlement of that house, which is not now before us.
The question of the liability of the defendant Ragland is then submitted by the clerk, and has been elaborately and ably argued at the bar. The Court does not feel it necessary to enter upon the general doctrine of the liability of one trustee, or executor, for the act of another; nor to say whether that of coadministrators is distinguishable from one or both of them. The facts are but imperfectly reported; and the Court does not choose to lay down any general rule upon the effect of joining in an inventory, or joining in a sale or hiring. But the master reports that in 1802 there were twenty-seven slaves, of the value of $200 each, (530) and the defendant seeks to exonerate himself from answering for their value by saying that they were divided by order of Chatham County Court since the filing of the original bill, and while it was pending, amongst his intestate's next of kin, and that accounts of the estate were taken upon a petition in that court, upon which balances were found due, decreed, and paid to the next of kin; but he has laid none of these proceedings before the master. These facts furnish the specific ground upon which the Court hold that the defendant Ragland is chargeable. Delivering over assets to legatees is a devastavit as to creditors. It is true, one executor may assent to a legacy, and therefore probably his assent might not charge a coexecutor. But one administrator cannot divide the estate without the assent of the other. And if administrators are to be placed within the rule of trustees, it is clear that by that rule, if one assents to a disposition of property, wrongful in itself, and not only made that the other trustee might misapply the proceeds, but constituting, in the very act itself, a misapplication, it is a breach of trust, and renders the party responsible. If this division had been made out of court, there could be no doubt of this consequence. It was a direct concurrence in a devastavit. Nor is it less so when made under decree, unless he shows by the proceedings that he resisted it. For aught we can know, he assented to it expressly, joined in taking the accounts, received commissions, and participated in making the actual division under the decree. The withholding of the record creates every presumption against him. If he was not a party to it, he had it completely in his power to protect himself and the creditors by taking the property into his possession, or suing for it. If he was a party, then he must be taken as assenting, unless he shows the contrary, and that his efforts were (531) real and to the utmost of his power. It is to be recollected that all the proceedings were had whilst the present suit was in progress, and after the defendants, therefore, had complete notice of the demand. A creditor must not thus be defeated; but each person contributing to the attempt must answer to him. He is not hereby charged beyond the value of the specific slaves thus delivered over. When the plaintiff shall attempt to carry it further, the court will act upon the case as it may then be made to appear. At present it is not necessary to lay down any general rule.
As the master has taken no account of the partnership, and has proceeded upon a wrong principle in charging Kennon with the whole effects as money, the whole report is set aside, as far as it contains the accounts, except that part which adopts the statement of the balance sheet of 10 April, 1777, of the debt to R. and E. McNair of £ 1853 5s.3d., and reduces it, from the admissions in the bill, to £ 1701 15s.2d. on 1 July, 1777, which makes it unnecessary to pass particularly on the exceptions of the defendant. And the case must be again referred, to have the accounts taken upon the principles here laid down, if the plaintiff chooses to proceed therein. And the Court reserves all equity arising out of any payment made by Kennon under or by color of the confiscation acts, as far as it respects every part of the plaintiff's demand, except one-half of the said debt of £ 1775 4s. 9d. And also refrains from declaring whether, in fact, he did or did not make such payment.
PER CURIAM. — This cause coming on to be heard on the report of the clerk, and the exceptions, the Court considers that the account stated by the clerk is based upon a wrong principle, in this, that the intestate Kennon is charged with the whole interest of Ralph McNair and Ebenezer McNair in the effects of Richard Kennon Co., as (532) cash in said Kennon's hands, and a debt from him to said R. and E. McNair; and also in this, that no account is stated of the copartnership; and therefore the Court doth set aside the report, etc.
And doth declare that it appears by the balance account of Richard Kennon Co. of 10 April, 1777, that R. and E. McNair were then creditors of the firm of Richard Kennon Co. in the sum of £ 1853 5s.3d., which was reduced, as admitted in the original bill, by payment on 1 July, 1777, to the sum of £ 1701 15s.2d., at the rate of $2.50 to the pound, and that Richard Kennon was debtor of said Richard Kennon Co. in the sum of £ 73 9s. 7d. Declare further, said Richard Kennon liable, in case of the total loss of the other effects of said firm of Richard Kennon Co., to pay to his said copartners the amount of his said own debt towards their said debt of £ 1701 15s.2d., and also (after deducting from the said sum of £ 1701 15s.2d. the said sum of £ 73 9s. 7d.) liable to pay to them one-half of the residue, namely, the sum of £ 814 2s. 9d., with interest on the said two sums of £ 73 9s. 7d. and £ 814 2s. 9d. from 4 July, 1782, as his, the said Kennon's, share of the loss of said Richard Kennon Co., if such total loss did in fact happen; and declare further, that the defendants received assets of their intestate to a larger amount in slaves and other specific chattels (which they now hold, or have wasted,) than is sufficient to pay the said sums and interest as aforesaid; and decree that the defendants pay to the plaintiff the sum of $6,000, in part of and towards the said debt, and that execution issue therefor against their bodies and proper estates; and refer again to the master, etc.
(533)