Lockwood v. Beckwith

• Decision Date: 09 December 1858
• Court: Michigan Supreme Court
• Parties: Thomas W. Lockwood v. Henry W. Beckwith and another

6 Mich. 168

Thomas W. Lockwood v. Henry W. Beckwith and another

Supreme Court of Michigan

December 9, 1858

Heard October 6, 1858; October 7, 1858 [Syllabus Material] [Syllabus Material]

Appeal by defendant Beckwith from the Wayne Circuit in chancery.

The defendant Thomas, having deposited with Barstow &amp Lockwood, as attorneys, certain notes, mortgages, and other claims for collection, subsequently, on the 12th of May, 1849, executed and delivered to the firm of W. C. & A. A. Hunter a note for $ 2,000, and two months thereafter, by an assignment under seal, transferred all the claims in the hands of Barstow & Lockwood to the Hunters, as collateral security for said note, stating in the assignment that the note was given for borrowed money. This assignment was deposited by the Hunters with Barstow & Lockwood; and they having collected some $ 800 on the claims, Thomas notified them not to pay the same to the Hunters, nor to deliver to them the claims, as he had paid the note, and the purposes of the assignment were accomplished.

On the 24th of August, 1850, the Hunters made a general assignment to Beckwith, for the benefit of their creditors. The $ 2,000 note was passed to Beckwith among their assets; and he claimed the moneys so collected by Barstow & Lookwood to apply upon it.

Barstow & Lockwood thereupon filed their bill of interpleader to determine to whom they should pay the money and account for the proceeds of the claims in their hands.

Barstow having died pending the suit, it was revived and brought to a hearing in the name of Lockwood, as survivor.

Beckwith and Thomas answered, setting up the facts upon which their respective claims were founded, the important portions of which are substantially as follows:

On the 25th of October, 1848, Thomas entered into an agreement with a firm by the name of Enos & Co., to furnish them a quantity of wheat, which they were to manufacture into flour, and sell on his account. The performance of this agreement on the part of Thomas was guarantied by A. A. Hunter, one of the firm of W. C. & A. A. Hunter, by a writing attached thereto.

On the 15th of November, 1848, Thomas gave Enos & Co. a note for $ 850, which was also guarantied by A. A. Hunter. On the 16th of the same month, A. A. Hunter delivered to Thomas a paper, of which the following is a copy:

"I take half int. [interest] 3,000 barrels of flour, more or less, proceeds of wheat in Enos's hands, grinding for E. Thomas.

"Buffalo, Nov. 16, 1848. A. A. Hunter."

Thomas insists that this whole business was a joint operation between himself and the firm of W. C. & A. A. Hunter, and not the individual undertaking of A. A. Hunter, and he having met with a loss of some $ 4,000 under the Enos contract, for which judgment recovered against him subsequent to the assignment by the Hunters to Beckwith, he contends that the half of this sum should be applied in satisfaction of the $ 2,000 note.

On the 25th of July, 1850, Thomas made his draft on the firm of W. C. & A. A. Hunter, for $ 1,000, payable sixty days after date, which was accepted by the drawees, but remained in his hands unpaid, and not due, at the time the Hunters assigned. Thomas claims that this, also, should be set off against the $ 2,000 note.

In his answer, Thomas alleges that this $ 2,000 note was given for the balance of an account of W. C. & A. A. Hunter against him, while Beckwith insists that it was given for borrowed money; but no testimony was taken on this point.

The firm of W. C. & A. A. Hunter had, in 1848, two offices--one in New York, under the charge of W. C. Hunter, and one at Buffalo, conducted by A. A. Hunter; and they were principally engaged in the produce and commission business. The sign over the office in Buffalo was that of the firm.

There was evidence in the case that A. A. Hunter stated that the firm were interested in the Enos contract, and that he several times made purchases of produce, etc., in his own name, making the payments in the checks of the firm, or in drafts drawn upon the firm, and that he represented these purchases to be made on behalf of the firm.

Decree of the court reversed, and a decree entered for Beckwith, with costs.

D. C. Holbrook and R. P. Toms, for Beckwith:

1. Where a party deals with a partner in his individual name, and not in the name of the firm, such name being known to the party, the firm, is not liable: Story on Part., §§ 102, 134, 136. Even if the firm was interested in the Enos contract, Thomas having contracted with A. A. Hunter individually, he can only look to him for indemnity: Story on Part., § 140, and cases cited.

2. If, as Thomas swears in his answer, the $ 2,000 note was given in settlement of accounts between him and the Hunters, the presumption is that the Hunters were not at that time indebted to him: 5 Denio 304; 16 Johns. 226.

3. As the $ 1,000 acceptance was not due or payable at the time of the assignment by the Hunters, it could not have been then set off against the note, had it been brought. And as the demands were wholly unconnected, and no credit existed by which one was to pay the other, a set-off can not be now allowed in chancery: 2 Story Eq. Juris., §§ 1434, 1435; Shermerhorn v. Anderson, 2 Barb. 584; Keef v. Lord, 2 Duer 78; Hicks v. McGrouty, Ibid., 295. The insolvency of the Hunters has nothing to do with the case--the right of set-off by reason of insolvency is denied and repudiated: Howe v. Shepard, 2 Sumn. 409; Gordon v. Lewis, Ibid., 628; Greene v. Darling, 5 Mason 201; Story Eq. Juris., § 1436, and cases cited in note.

H. K. Clarke, for Thomas:

1. "Mutual credit" is the ground of a set-off in equity, especially where there are equitable circumstances which support its application. For what is understood by "mutual credit," see 2 Story Eq. Juris., § 1425; 1 Atk. 230; 37 T. R., 507; 5 Paige 595. As to the equitable doctrine: 5 Ves. 108; 1 P. Wms., 326; 3 Hare 568; 4 Y. & C., 351; 8 Ala. 206; 6 Dana 31; 4 Day 472. Insolvency is one of the circumstances which courts of equity regard as justifying an equitable set-off: 5 Cush. 194; 20 Mo. 298; 2 Paige 581; 4 Edw. 537; 2 Barb. 258.

2. A general assignee for the benefit of creditors is not a purchaser for value. He can claim no other rights than those which his assignor might assert, if acting in his place. A debt not due at the time of the assignment may be set off against the assigned claim: 10 B. & C., 777; 3 T. R., 435; 13 Ves. 67.

3. A partnership may be bound by a transaction in the name of one partner, as well as by the joint name, if it be within the scope of the partnership business: 12 Pick. 430; 5 Pet. 529; 1 B. & C., 146.

4. One member of the firm can not lawfully carry on the business in which the firm is engaged on his separate account: Story on Part., §§ 174, 177, 178; Coll. on Part., §§ 179, 184, 185, 186, 212.

5. The partnership being established, the acts and declarations of one partner in matters relating to the affairs of the partnership will be evidence against the firm: Coll. on Part., § 779; Story on Part., § 107; 16 Wend. 505; 1 Greenl. Ev., § 112; 4 D. & R., 7; 1 Taunt. 104.

6. Special circumstances will sometimes create an equity which will justify the set-off of a joint against a separate debt: 3 Meriv. 617; Story Eq. Juris., § 1437; 11 Ves. 24; 12 Ves. 346; 1 Gallis. 630. The special circumstances in this case are found in the series of transactions between Thomas and the Hunters, from which Thomas might reasonably infer that he had the obligation of both in all his dealings with A. A. Hunter.

Martin, Ch. J. Manning and Christiancy, JJ. concurred. Campbell, J. did not sit in this case.

OPINION

Martin Ch. J.:

Two questions are raised by the parties interpleading, for our determination: 1st, whether Thomas is entitled to set off the one-half of the judgment obtained on what is called the Enos contract, being about two thousand dollars, against the note for two thousand dollars, in Beckwith's hands; and, 2d, whether he is entitled to set off the one thousand dollar acceptance of the Hunters against such note.

The claim to set off the...