Bunting v. Ricks

• Decision Date: 31 December 1838
• Citation: 32 Am.Dec. 699,22 N.C. 130,2 Dev. 130
• Court: North Carolina Supreme Court
• Parties: WILLIE BUNTING, et al. v. JOHN RICKS, et al.

2 Dev. & Bat.Eq. 130

22 N.C. 130

32 Am.Dec. 699

WILLIE BUNTING, et al.

v.JOHN RICKS, et al.

Supreme Court of North Carolina.

December Term, 1838.

Much less than actual or particular knowledge in detail is sufficient to convert a person into a trustee, who co-operates with a dishonest trustee in an act amounting to a breach of trust. If any thing appears calculated to excite attention or stimulate inquiry, the party is affected with knowledge of all that the inquiry would have disclosed. Hence one who assists an officer of a court in misapplying the proceeds of an ordinary negotiable note held by the officer in trust for others, will be affected with notice of the breach of trust, although he was ignorant of the character in which the officer held the note, if he knew that it was given for property sold by a commissioner under an order of the court.

The sureties of an insolvent clerk of a court upon a breach of trust by their principal, will in equity be entitled to all the remedies and securities that were in the power of the cestui que trusts, or creditors, against one who co-operated in the breach of trust, and this even before they have paid to the cestui que trusts or creditors, the amount misapplied by their principal.

A counter demand in the nature of a set-off, cannot be allowed as such, unless it is mutual.

A claim set up as a counter demand, cannot be allowed as a set-off, where there are no allegations upon which it can be seen that the plaintiff is legally responsible for that sum.

THIS cause was heard upon bill and answers. From the pleadings it appeared, that in a cause by petition in the County Court of Nash between Zaney Lewis and others, there was an interlocutory decree, that a certain slave should be sold for the purposes of the suit, and Bolin Melton was appointed commissioner to make the sale on a credit of six months. In conformity with the decree he made the sale on the 17th day of December, 1836, to John B. Bunn, for $1106; and took the note of the purchaser and one Cooper, as surety, of that date, payable to himself or order. At the succeeding February term, Melton reported the sale, and delivered the note into Court, that is to say, into the hands of Arthur Whitfield, then the Clerk of the Court. By an order in the cause the sale was approved, and the Clerk directed, when the note should fall due, to collect the money, so as to have it subject to the further order of the Court. On the 10th or 12th of June, 1837, Whitfield applied to the defendant Ricks, to discount the note for him; which the latter at first declined, upon the ground of the want of funds. Whitfield was much embarrassed and pressed for money, as was known to Ricks; who indeed suspected, as did other persons generally, that Whitfield was insolvent; and it so turned out within a few weeks afterwards. He again urged Ricks to make the discount, and as an inducement to him, proposed that about $500 of the proceeds should be applied to debts which Whitfield then owed Ricks. The answer of Ricks stated, upon this part of the case, that he, Ricks, knew the note was taken by Melton for the price of the slave sold by him as commissioner under the order of the Court, but he did not know that it had been returned to Court or that Whitfield held it as Clerk for collection; that Whitfield told him the fund was to be kept at interest during the life of Zaney Lewis for her benefit, and at her death the capital was to be divided among the other parties in that cause; and that he, Whitfield, had given to Melton satisfactory security to pay the interest annually, and at the death of Zaney Lewis, the principal sum, and thus had become entitled to this note for his own use. Ricks still declined taking the note without the endorsement of Melton, which the other assured him, he could readily obtain. On the 13th of June, Whitfield applied to Melton for his endorsement, representing that it was necessary to enable him, as ordered, to bring suit or receive the money; and for that reason, and without any other consideration, Melton made an endorsement to Whitfield, of that date. On the 17th of June, Whitfield renewed his application to Ricks, and repeating his declarations that he had taken this note from Melton, and for it had given his own bond with good security, upon which he would have to pay only the interest half-yearly while Zaney Lewis lived, he showed to Ricks the note with Melton's endorsement on it; which was regarded by Ricks, as he says, as a confirmation of Whitfield's statements, and at all events, made Whitfield the legal proprietor of the note, competent to transfer it. He then made an advance in cash to Whitfield of $170, and took the note into his possession as a security. On the 19th of June, however, Ricks finally agreed to discount the note, taking off ten per centum, and applying the proceeds in the following manner: the sum of $270 to the satisfaction of a debt to the defendant Ricks, for money received by Whitfield as Clerk, of which the sum of $147 was received in February, 1837, at which time the present plaintiffs were the sureties of Whitfield in his office; and the further sum of $230, in part satisfaction of a note given to Ricks by Whitfield and by one of the plaintiffs, Bunting, and one Arrington, as sureties; and the residue was paid in cash to Whitfield. Whitfield then, viz. on the 19th, endorsed the note without recourse, but antedated it, as of the 14th of June.

Shortly after the transaction between Whitfield and Ricks, the former absconded, and the Court allowed the official bond of the Clerk to be put in suit against his sureties for the benefit of the parties in the petition, as relators; which was accordingly done. Pending that suit, Ricks recovered judgment against Bunn and Cooper, but refrained from levying the money, because the parties to the petition gave him notice, that they should claim the money, and would sue him at once, if he proceeded to raise it. It was therefore agreed that it should remain as it was, until it could be seen whether the relators would succeed in the suit against the sureties; in which case they would interfere no further, and the sureties and Ricks might contest the matter between themselves.

The present bill was then filed by those sureties against Whitfield, Ricks, Melton, Zaney Lewis and the other relators in the action at law, submitting that the plaintiffs were liable to the relators, but insisting that there was a primary liability on the part of Melton and Ricks as the wrongful disposers and holders of the fund belonging to the relators; and that the relators ought, therefore, to have recourse to them or one of them.

The prayer was that the debt of Bunn and Cooper might be declared to belong in this Court to the relators at law, and that the money, if raised by Ricks, or, if not now raised, that the same might be raised and might be applied to their satisfaction, in exoneration of the plaintiffs.

Battle, for the plaintiffs .

The Attorney General, for the defendant Ricks .

B. F. Moore, for the other defendants .

RUFFIN, Chief Justice, after stating the case as above, proceeded as follows:

Several matters are quite evident in this case, which, we think, are sufficient to authorize the relief of the plaintiffs. The debt which is the subject of the controversy, justly and equitably belongs to the parties to the suit in the County C...