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"The Federal Cases, comprising cases argued and determined in the circuit and district courts of the United States from the earliest times to the beginning of the Federal Reporter, arranged alphabetically by the titles of the cases and numbered consecutively" Cases 12,137 to 12,805, Runaways - Shore; Vol.21, pgs.1208 to 1210 (California State Law Library 12/2003)
SHEAFE et al. v. KIMBALL et al; Case No. 12,729a; District Court, S.D. New York; 21 F. Cas. 1208; March 24, 1851.
BETTS, District Judge. The libel charges that the co-partnership of E. W. Kimball, consisting of Edward W. Kimball, Michael P. O'Hearn and Thomas Dunkin, at New York on the 17th day of May, 1849, by their agent John F. Schwander, chartered of the libellants the ship Alhambra, for a voyage from New York to Liverpool and back to New York, and for the charter or freight on the voyage out and back engaged to pay the libellants $1800 and pay all incidental expenses, &c., and to furnish the ship with cargoes of lawful merchandise or passengers on both voyages. The libellants aver a full performance on their part of the terms of the charter-party and they charge that the respondents refused to fulfill it on their part in not supplying the cargoes in New York agreed to be furnished, and when the ship arrived at Liverpool refusing to receive the consignment of her as stipulated, pay her expenses, a portion of the freight, &c., and to load and dispatch her to New York, and claim damages to the amount of $3854, satisfaction of which sum with interest from October, 1849, is demanded. The warrant of arrest was served on O'Hearn and Dunkin. Kimball was returned not found, and a supplemental libel was filed praying process of foreign attachment. It was issued and certain effects attached to compel his appearance, but he did not appear or offer any defence. The other respondents answer separately and by different proctors.
O'Hearn admits the charter of the vessel by the firm by Schwander, but does not know that it was in behalf of the libellants. He is ignorant of the transactions in Liverpool, but alleges the master of the ship by due diligence might have procured a charter there which would have protected the respondents from loss. He admits that on the return of the ship the libellants claimed damages to $3854, and that the matter being in dispute an adjustment was finally made by the respondents giving their two promissory notes dated October 25, 1849, and for $1850 payable in thirty days and one for $1000 payable in 60 days, which notes the libellants still hold and have never restored to respondents or offered so to do; and insists the maritime character of the contract was thereby merged, and the libellants have no right to resort to the original consideration of the notes, nor recover beyond their amount; and denies the jurisdiction of the court.
Dunkin in his answer denies that the firm of the respondent were engaged in chartering vessels for Liverpool, and that, although he is informed and believes one of the firm executed the charter party articled upon, he had no authority to bind the copartnership thereby and the respondent had expressly refused to give authority or be concerned therein. As to the matters of detail he is ignorant, except that he admits the friends of the firm to whom the ship was consigned in England refused to accept the consignment, or take any charge or responsibility on account of the ship, and so notified her master. That the said copartnership was dissolved on the 23d August, 1849, by the respondent retiring therefrom, of which the libellants had notice, and that subsequent thereto the libellants through their agent Schwander settled their demand against the firm of E. W. Kimball & Co. by taking notes in the name of the new firm (continued by other parties) which notes the libellants have still in their possession. That at the settlement the libellants by their agent insisted that the notes should be endorsed by the respondent, but finally consented to take them without such endorsement, whereby he was discharged and the jurisdiction of this court was taken away. That the ship was not of the tonnage stipulated in the charter-party, and that her freight lists on the voyages were sufficient to satisfy her full value. That he never assented to the said charter party, but always dissented therefrom as being contrary to his express agreement with his co-partners. It was executed in his absence. That at the time he was under the age of 21 and did not attain his majority until 30th day of October, 1849, and has never in any way ratified or confirmed the charter-party, but has at all times protested against and repudiated it.
A general replication was put in by the libellants and they also filed interrogatories to be answered by O'Hearn.
(1) The evidence of John Dunkin the paternal uncle, and of Hester Paret the maternal aunt, and of John T. Dunkin, the brother, of the respondent Thomas Dunkin, is satisfactory proof that this respondent did not attain the age of 21 until the thirtieth of October, 1849. The charter-party was executed in May, 1849, and the notes given on the adjustment of the contract were given the 25th October of the same year. This was after Dunkin had withdrawn from the partnership, and after that the old partners had no authority to bind the retiring partners by giving notes in the partnership name. And therefore it is of no consequence in this case whether Dunkin [became of age] before or after the 25th of October, if he did not till after the 17th of May. At both these periods the respondent was a minor, and not bound by the contract, even if entered into by him personally. There is no distinction between the maritime law and common law in respect to the construction and obligation of contracts. The difference in the two laws consists in the remedy afforded for enforcing a contract.
It is proved by James B. Gager that the respondent, a month or two before the charter-party was executed, told the witness in a friendly conversation that he was then married, the father of two children and twenty-five years of age. If this conversation is correctly recollected by the witness, it is evident it must have been mere trifling on the part of the respondent. His brother proves that he was not married till the spring of 1848 or 1849, and had no child at the time of the alleged conversation. Besides the conversation had no relation to any dealings of the respondent, or his capacity to enter into a contract, and worked no deception or wrong to the libellants.
The charter-party or notes cannot therefore be enforced against this respondent without a direct or implied affirmance of them after he became of age.
(2) The charter-party was a maritime contract, for breach of which an action lies in this court against the adult parties. Giving and receiving promissory notes for the amount due between the immediate parties does not change the character of the contract. The notes whilst outstanding suspend the remedy in admiralty, but upon being cancelled or surrendered, the libellant is reintegrated to his original privilege, and can pursue his remedy in this court. It is sufficient if the libellant produces in court and surrenders or cancels the note, on the hearing.
(3) On the 23d August, 1849, public notice was given in the newspapers in the city that the defendant Dunkin had retired from the copartnership, and a witness for the libellant proved that when the notes were given, Dunkin was not a member of the firm. The witness drew the notes and they were signed by O'Hearn in the name of E.W. Kimball & Co., which continued to be the name of the firm after Dunkin retired. Does that change of the responsibility of parties merge the former contract in the new one, and thus take away the remedy of the libellants upon the first?
The new notes did not bind Dunkin, no special authority from him to the former parties to use his name after the dissolution being proved; nor the old copartnership itself. And therefore they must stand solely upon the footing of obligations of the new firm of G.W. Kimball & Co.; and I take it upon the evidence, that the new firm consists solely of the members of the preceding one who were alone liable in law upon the charter-party.
The debt and obligations created by that contract were accordingly operative as against G. W. Kimball and O'Hearn, they standing, because of the infancy of Dunkin, the only contracting parties in the undertaking. On the retirement of Dunkin from that firm, therefore, no change in the relation of the creditors of the old firm, or in respect to the competency of the continuing members to bind themselves for their own debts, was effected. The debt in question was all the while the debt of G. W. Kimball and O'Hearn and not of Kimball, O'Hearn, and Dunkin. If, then, the new notes given for that debt, had been executed by Kimball and O'Hearn, no question in law could arise whether it operated as an extinguishment of their antecedent debt. The notes appear, however, to have been executed by O'Hearn alone, Kimball not being present; and as Kimball is not arrested and made a party to this suit personally, it is fairly inferable that giving the notes is the single act of O'Hearn without the presence or assent of Kimball.
In neither aspect of the case does it seem to me that the former debt is extinguished by giving these notes. If they are merely the notes of Kimball and O'Hearn, then the transaction amounts to no more than substituting a direct promise to pay a debt already due by them, and this most clearly does not extinguish or merge the original indebtment.
All the cases are examined and discussed in those decisions, and the result is that joint debtors giving their joint notes or the note of one of them for a debt antecedently due, does not extinguish their liability on the original debt. The distinction established by the decision of the court of errors is, that if the new note is accepted in payment of the debt, then it extinguishes the liability of the parties who do not sign it, upon the former indebtedness. If the new notes given are really obligatory only upon O'Hearn then they fail operating an extinguishment of the prior debt, because there is no proof they were accepted on any such agreement. They were evidently intended to have no other effect than to liquidate the amount due upon the transactions between the parties, and perhaps afford the payees a more ready method of collecting the amount. This does not constitute a different consideration or relation between the original debtor and creditor which affects the right of the latter to resort to the primitive debt. And without the express engagement to accept them as the notes of O'Hearn and in satisfaction they do not affect the title of the libellants to the prior debt. In my opinion therefore the libellants have a right to maintain their action upon the original contract, on surrendering the notes given by O 'Hearn; but I think the arrangement then made must be regarded a definitive adjustment of the amount the libelants are entitled to demand, and the recovery must accordingly be limited to that sum.
The decree will be in favor of the libellants for $2850, with interest from the 25th of October, 1849, and costs against G.W. Kimball & Co., the original debtors, and that the libel as to Dunkin be dismissed. I do not think under the circumstances Dunkin is entitled to recover costs. I should award them against him had he directly or personally taken part in the chartering of the vessel or adjusting the balance payable; but as no act of his is proved misleading the libellants, as to his liability for the demand, further than standing before the public as a general partner in the firm, I do not think he should be subjected to the costs of the suit.
"The Federal Cases, comprising cases argued and determined in the circuit and district courts of the United States from the earliest times to the beginning of the Federal Reporter, arranged alphabetically by the titles of the cases and numbered consecutively" Cases 2,375 to 2,953, Cana - Coffin; Vol.5, pgs.968 to 972 (California State Law Library 12/2003)
CLARKE et al. v. JOHNSTON et al.; Case No. 2,856; Circuit Court, S.D. New York; 5 F. Cas. 968; 8 Blatchf. 557; September 12, 1871.
BLATCHFORD, District Judge. The prayer of the bill, in this case, is, that the defendants, as executors of the last will and testament of James Boorman, may come to a just and fair account of the settlement of the estate of James R. Smith, the great-grandfather of the plaintiffs, James Boorman having been an executor, and the last surviving executor, of the last will and testament of James R. Smith, and may be ordered to deliver to the plaintiffs a certain legacy, alleged to have accrued to them under the will of James R. Smith, or, if that be impossible, to pay to them the just and present value of certain real estate, alleged to have accrued to them under such legacy.
James R. Smith, who was a merchant in the city of New York, died early in June, 1817, leaving a will executed January 23d, 1817, and a codicil executed May 30th, 1817, which were duly probated before the surrogate of the county of New York, June 11th, 1817. James R. Smith left surviving him four children: (1.) Jeanet, then the wife of the Reverend John X. Clarke, and who then had a child living, George Augustus Duncan Clarke, who was the father of the plaintiffs; (2.) Hannah, then the wife of Matthew St. Clair Clarke, and who then had children living; (3.) Elizabeth, then a minor, and unmarried, who afterwards became the wife of Joseph Duncan; (4.) James C.R., then a minor. By his will, James R. Smith appointed, as his executors, his widow, Hannah, and Andrew Foster, John Thomson, James Boorman, and Matthew St. Clair Clarke. Letters testamentary were granted to all of them but Foster. By his will, James R. Smith authorized his executors, in their discretion, to sell the whole, or any part, of his estate, real or personal, and directed that the residue of his estate, after the payment of his debts, should, unless the same, or any part thereof, should be otherwise disposed of, by codicil or codicils to his will, be distributed according to the laws of the state of New York, in the same manner as in case he had happened to die intestate. By the codicil, James R. Smith ratified and confirmed the will in all respects, except so far as any part thereof might or should be revoked or altered by such codicil. The codicil, after making various devises and bequests, in eleven clauses, proceeds as follows: "Twelfth. All the rest, residue and remainder of my estate, of every kind and nature whatsoever, and wheresoever situate, I give, devise and bequeath unto my said executors, in trust that the same shall be equally divided to and amongst my four children, share and share alike, and to their respective heirs. My will further is, that my son James and my daughter Elizabeth shall each have the sum of fifteen hundred dollars set apart by my said executors for their support and education, until they arrive at the age of twenty-one, and, if that sum shall not be found sufficient, my executors shall take such further sum, from their respective shares of my estate, as shall be necessary; and I do hereby give the tuition, care and guardianship of my said son James and my daughter Elizabeth to my said wife. My will further is, that my son James shall not come to the full possession and enjoyment of his portion of my estate until he shall arrive at the age of twenty-five years, nor shall he have the power to pawn, pledge, mortgage or dispose of it in any way, the same or any part thereof, before the expiration of that time, but shall be entitled to receive the income arising from his portion between the years of twenty-one and twenty-five. I further direct, that my daughters Jeanet, Hannah, and Elizabeth, if she should arrive at the age of twenty-one years, shall have the privilege of expending and appropriating, by and with the consent of the executors, one-third part of their portion of my estate herein devised to them, in such manner as they may think proper, and over which, when so appropriated, they shall have absolute control; and the remaining two-thirds of the portions or shares of my daughters shall be held separate and distinct, and not liable to the control, debts, or engagements of either of their husbands which they now have, or may hereafter have, as well those who are married as she who may hereafter marry, giving, however, to the husbands of either or all of them, in case the wife shall die first, either with or without issue, the income of said reserved part of my estate, as long as he shall live, arising from his wife's portion, and, after his death, then to the child or children of my said daughter so dying, and, if either of my daughters shall die without lawful issue, or having issue which shall not attain the age of twenty-one years, and without issue, then the share or portion of my said daughter, after the death of her husband, or if there be no husband living at her death, shall go and be divided among my other children, share and share alike, and to their issue, in case of the death of either of them, share and share alike, such issue to take the portion that would have belonged to his, her or their father or mother." John X. Clarke, the grandfather of the plaintiffs, died in 1824. His wife, Jeanet, the grandmother of the plaintiffs, died in September, 1847. George Augustus Duncan Clarke, the father of the plaintiffs, was born in November, 1815, and died in October, 1855.
The question involved in this case arises under the twelfth clause of the codicil. The plaintiffs contend, that, by the will and the codicil, the residue of the estate of James R. Smith, after the payment of debts and legacies, was devised to his executors, in trust, to be divided equally among his four children, share and share alike, and to their respective heirs; that each of the four children was to take one-fourth of the estate; that the son, James C.R., was to take his one-fourth in fee; that each of the three daughters was to take one-third of her one-fourth in full ownership, and a life estate only in the other two-thirds of such one-fourth, with remainder over, after such life estate, to her husband, if he should survive her; and that, after his death, the fee of such two-thirds of his deceased wife's one-fourth was to go to her child or children, if they attained the age of twenty-one years, and, if they died before that age, and without issue, then to the other children of the testator, or their surviving heirs. This suit concerns the fee of the two-thirds of the share of the plaintiffs' grandmother, Jeanet, in which two-thirds the plaintiffs claim that their grandmother had only a life estate, and which fee they claim passed to their father on the decease of their grandmother. They allege that James Boorman, by his acts as executor, in wilful default, in conjunction with Matthew St. Clair Clarke, acting as executor, in like wilful default, placed such two-thirds of the share of the plaintiffs' grandmother, Jeanet, which two-thirds consisted wholly of real estate, in such a position that the title to such real estate passed into the hands of bona fide purchasers for a valuable consideration, without notice, whereby the plaintiffs and their father were deprived thereof entirely, and that, therefore, the estate of James Boorman must respond to the plaintiffs for such breach of trust, in the present value of the property of which they have been so deprived. By 1829, James Boorman and Matthew St. Clair Clarke had come to be the sole acting executors of the will of James R. Smith, the widow and Thomson having died, and Foster never having acted as executor. On the 1st of October, 1829, James C. R. Smith having attained the age of twenty-five years, and all the debts of the testator having been paid, a partition, division, and valuation of his estate, into four parts equal in value, was agreed upon by the parties interested in it, namely, the three daughters, the husbands of Hannah and Elizabeth, and James C.R. By a deed of November 15th, 1829, all those parties, other than James C.R., conveyed and confirmed to him certain real estate described in the deed, which he thereby accepted as his one-fourth part of the estate. The two acting executors, described therein as surviving executors, joined in this deed. By a deed of the same date, executed by the two acting executors, and by Matthew St. Clair Clarke and his wife, James C. R. Smith and his wife, and Joseph Duncan and his wife, and which recited that the debts of the estate had all been paid, that the residue of the estate of James R. Smith consisted principally in real estate, that the daughters of the testator were desirous to appropriate their respective one-third parts of their respective portions of the estate, that the executors were willing that they should do so, that it was universally admitted by all the heirs and devisees, namely, the three daughters, the son, and the husbands of Hannah and Elizabeth, that a sale of the estate to convert it into money would be very injurious to all concerned, and that, by agreement among the heirs, the whole of the real estate had been parted, divided, and valued, in four distinct and equal parts, the grantors conveyed to Jeanet Clarke certain real estate, in satisfaction of the one-third part of her portion, authorized by the will to be appropriated to her, and over which, when so appropriated, she was to have absolute control. By a deed of the same date, executed by the two acting executors, and by Jeanet Clarke, Hannah Clarke and her husband, and James C. R. Smith and his wife, and containing like recitals as the last named deed, the grantors conveyed to Elizabeth Duncan and her husband certain real estate, in satisfaction of the one-third part of the portion of Elizabeth, authorized by the will to be appropriated by her. By a deed of the same date, executed by the two acting executors, and by James C. R. Smith and his wife, Jeanet Clarke, Hannah Clarke and her husband, and Elizabeth Duncan and her husband, and which expressed a consideration of $8,948.68, and contained no recitals except that the executors, in pursuance of the power contained in the will, had sold to the grantee, for such consideration, the real estate described in such deed, the grantors conveyed to one Robert Dyson such real estate. By a deed of the same date, containing no recitals, and expressing a consideration of $8,948.68, Dyson conveyed the same real estate to Hannah Clarke and her husband, to have and to hold to them and to the heirs and assigns of Hannah forever. These two deeds, the one to Dyson and the one from him, though not so expressed, were, in fact, conveyances of the one-third part of the portion of Hannah, authorized by the will to be appropriated by her, and were so given and received. By these conveyances, and others made at the same time or previously, the entire estate of James R. Smith was disposed of, except the two-thirds of the shares of each of the three daughters.
On the 26th of December, 1829, the two acting executors, James C. R. Smith and his wife, Jeanet Clarke, Hannah Clarke and her husband, and Elizabeth Duncan and her husband, conveyed to Robert Dyson, by deed, certain real estate therein described, which was in fact all the residue of the real estate left by James R. Smith. This deed expressed a consideration of $64,710.59, paid by the grantee to Matthew St. Clair Clarke, and stated that the executors had, for such consideration, and in pursuance of the power contained in the will, sold to the grantee the described real estate. On the same day, Dyson, by a deed, expressing a consideration of $21,573.13, conveyed to Jeanet Clarke certain of the real estate so conveyed to him; and, by another deed, expressing a consideration of $21,614.56, conveyed to Hannah Clarke and her husband certain other of the real estate so conveyed to him; and, by another deed, expressing a consideration of $21,522.90, conveyed to Elizabeth Duncan and her husband the residue of the real estate so conveyed to him. These deeds were all of them deeds in fee. It is of this conveyance to Dyson that the plaintiffs complain, as having disposed of the reserved two-thirds of the share of their grandmother, so as to deprive them and their father of the fee of such two-thirds. The real estate so conveyed to Dyson passed into the hands of bona fide purchasers. Such real estate represented the two-thirds of the shares of the three daughters, as agreed upon in the partition, and each of the three deeds from Dyson represented one-third of such two-thirds. As a part of this arrangement, it was agreed among all parties, that all the heirs should enter into a bond of indemnity to Mr. Boorman, to save him harmless on accourt of making the deed to Dyson; that James C. R. Smith should give to Matthew St. Clair Clarke an indemnity bond to the same import; and that Jeanet Clarke, and Elizabeth Duncan and her husband, should execute mortgages of certain property to Mr. Boorman and Matthew St. Clair Clarke, as an indemnity to the latter and further assurance to Mr. Boorman, such mortgages to hold until the trust named in the will concerning the two-thirds of the portions of the three daughters should have been legally extinguished or complied with. The mortgages contemplated were not given. But Matthew St. Clair Clarke, James C. R. Smith, Jeanet Clarke and Joseph Duncan executed, on the 10th of July, 1830, an instrument of indemnity to Mr. Boorman. That instrument recites the provisions of the twelfth clause of the codicil, the conveyance of real estate to the son for his one-fourth share, the conveyance of other real estate for the one-third part of the share of each daughter, the conveyance to Dyson, December 26th, 1829, of "all and singular the remaining two-third parts of the portions or shares of the daughters of the said testator, comprehending all the rest, residue and remainder of his real estate," the fact that no portion of the consideration of the sale to Dyson had been received by Mr. Boorman, but that it had, with the consent of all parties interested, gone exclusively into the hands of Matthew St. Clair Clarke, and the fact that Mr. Boorman had accounted for all the effects of the estate which had come to his hands, and had discharged himself of all the trusts reposed in him by the will and the codicil, and then provides, that Matthew St. Clair Clarke and Duncan, for themselves and their wives, and the others for themselves, discharge Mr. Boorman from all moneys which he could have received in his trust, and from all claims concerning the estate of the testator, or any trust relating thereto, and agree to indemnify him from all demands by reason of his having executed any of the conveyances thereinbefore mentioned, or by reason of any other thing by him done, committed or suffered, concerning the estate of the testator, whether under the trusts in the will and codicil, or otherwise. On the 30th of June, 1830, a mortgage was executed by Elizabeth Duncan and her husband to Jeanet Clarke, Hannah Clarke and her husband, and James C. R. Smith. It recites the provisions of the twelfth clause of the codicil as to the two-thirds of the shares of the daughters, and then proceeds: "And whereas, by mutual and universal agreement of all the parties interested, the whole of the said two-thirds of the real estate of the said James R. Smith, deceased, has been parted and divided, and, by divers conveyances, has been vested absolutely in the respective daughters and their heirs and assigns, and whereas, it is the wish and intention of the said parties of the first part, that this indenture shall operate and be a security on the part of them, the said parties of the first part, for the faithful fulfilment of the provisions contained in the said recited portion of said will and testament and codicil." The consideration of the mortgage is $10,000, and it covers certain real estate in the city of New York. Its condition is, that the provisions contained in the recited portion of the will and codicil shall be fully and faithfully fulfilled on the part of the mortgagors, they to retain the right to rent and lease the property for a period not exceeding twenty-one years. This mortgage was recorded October 2d, 1830, and was satisfied of record January 19th, 1835. On the 10th of July, 1830, two other mortgages were executed, one by Jeanet Clarke to Hannah Clarke and her husband, James C. R. Smith, and Elizabeth Duncan and her husband, and the other by Hannah Clarke and her husband to Jeanet Clarke, James C. R. Smith, and Elizabeth Duncan and her husband. These mortgages contain similar recitals and provisions, and a like condition, mutatis mutandis, with the mortgage from the Duncans, and cover real estate in the city of New York. They were recorded October 2d, 1830, and were satisfied of record March 26th, 1835.
At the time the two-thirds of Jeanet Clarke's share of the estate was thus conveyed to her in fee, her son was but fourteen years of age. So far, therefore, as Jeanet Clarke's share was concerned, Mr. Boorman needed indemnity against the contingency that such son might die under the age of twenty-one years and without issue, in which case the mother and sisters of Jeanet Clarke, or their issue, would come to take the two-thirds of the share of Jeanet Clarke.
The first question to be considered is the proper construction of the provision of the twelfth clause of the codicil as to the two-thirds of each daughter's share. So far as Jeanet Clarke's two-thirds of her share is concerned, the fact that the plaintiffs' father survived his mother, and died when over twenty-one years of age, leaving issue, defeated the limitation over to her brother and sisters and their issue, in any view that may be taken of the provision for such limitation over. The only practical question, therefore, is, as to what estate Jeanet Clarke took in the two-thirds of her share of the estate. The controlling provision is thus worded: "The remaining two-thirds of the portions or shares of my daughters shall be held separate and distinct, and not liable to the control, debts or engagements of either of their husbands which they now have, or may hereafter have, as well those who are married as she who may hereafter marry, giving, however, to the husbands of either or all of them, in case the wife shall die first, either with or without issue, the income of said reserved part of my estate, as long as he shall live, arising from his wife's portion, and, after his death, then to the child or children of my said daughter so dying." It is impossible to say that there is, in this provision, or in any part of the twelfth clause of the codicil, the expression or indication of any intention on the part of the testator that there should be a limitation over in favor of the children of a daughter who should survive her husband. The two-thirds of the daughter's share is to be held separate and distinct, so that it may not be liable for her husband's debts, and so that, if he survive her, he may have the income of it for his life. If he does not survive her, the fee of such two-thirds is freed from all possibilities in favor of her children, and remains subject only to the contingent provision in favor of the other children of the testator and their issue. The provision in favor of the child or children of a daughter "so dying," is one that is expressly made to take effect only after the death of the husband of a daughter who survives such daughter. Jeanet Clarke survived her husband. His death terminated the operation of the provision for his life estate, and the operation of the provision in favor of the child or children of his wife. It is admitted, on the part of the plaintiffs, that they have no cause of action unless Jeanet Clarke took only a life estate in the two-thirds of her share, and unless, at her death, such two-thirds passed to the plaintiffs' father. As the two-thirds of her share did not pass to the plaintiffs' father, it follows that the bill must be dismissed, with costs.
"Cases Argued and Decided in The Supreme Court of the United States, December term 1872 and October term 1873; Book XXI; United States Supreme Court Reports Vols. 82, 83, 84, 85" by Stephen K. Williams; Vol.21 Lawyer's Edition pgs.142 to 146; Vol.82 U.S. pgs.165 to 177 (El Dorado Co. CA Law Library 12/2003)
WILLIAM B. DUNCAN et al Appts. v. MARY T.B. JAUDON; and NATIONAL CITY BANK, Appt., v. MARY T.B. JAUDON; Supreme Court of the United States; 82 U.S. 165; 21 L. Ed. 142; 15 Wall. 165; December, 1872, Term.
Appeal from a decree of the Circuit Court for the Southern District of New York. The case was thus:
In 1833 Commodore William Bainbridge, a resident of Philadelphia, died, leaving four daughters, one of whom was Mary T.B., subsequently the wife of Charles Jaudon. By his will he left to two trustees a considerable sum of money, directing them to invest the same in the stocks of the United States, or the stocks or funds of any individual State, and to hold the same in trust for his several daughters; one-fourth for his daughter Mary, the interest to be paid to her, "for her sole use and benefit during her natural life, and at the end of her natural life, the amount so invested to be equally divided between her children." The property left by the Commodore was invested by his trustees as the will directed, chiefly in five per cent. loans of Pennsylvania, and the interest was properly paid to the daughters. The interest received from the Pennsylvania loans, five per cent., was less than the cestui que trusts were content with; but the trustees appointed in the will would not depart from the directions imposed on them by it as to the class of investments in which they could invest; and becoming thus unacceptable to the cestui que trusts, they were discharged, in 1835, at their own request, from their trust, and surrendered the estate under their care to Samuel Jaudon, whom, on the consent of Mrs. Jaudon, the court appointed, without security, to be trustee, in the place of the trustees named in the will. (note: The new trustee was a brother of Charles Jaudon, the husband of Mrs. M.T.B. Jaudon.)
The Pennsylvania five per cent. stock was now soon sold, and the proceeds invested by Samuel Jaudon in the stock of the Delaware and Raritan Canal Company, according to an arrangement previously made with the cestui que trusts; the new stock being one of a high character in its class, and which has paid for many years, with great regularity, ten per cent. a year dividend, with occasional large extra dividends. Mrs. M.T.B. Jaudon got thus finally 117 shares of this stock. The certificates, or which there were several, all ran thus: "This is to certify that S. Jaudon, trustee for Mrs. Mary T.B. Jaudon, is entitled to seventy shares in the capital stock of the Delaware and Raritan Canal Company. . . Transferable on the books of the Company, and on surrender of this certificate only by him or his legal representative."
This investment was made very soon after the new trustee was appointed. A similar one was made for all the sisters, and was perfectly agreeable to them all. Mrs. Jaudon considered that the trustee was "acting very judiciously, and was very glad of it."
In this state of things Samuel Jaudon, who had been dealing largely on his own account in a stock known as "Broad Top Coal and Iron Stock," a speculative stock of no established value, applied in 1865 to the National City Bank of New York to lend him money on 47 shares of this stock. They agreed to do so, and he delivered to the cashier of the bank the certificates standing in his name as trustee, executing also a power of attorney to sell in case of nonpayment of the loan; the power describing him as "S. Jaudon, trustee for Mrs. M.T.B. Jaudon," and he signing himself in the same way. This dealing of Jaudon with the City Bank, based on the stock in question, and commencing in 1865, extended through a term of two years. During this time ten separate loans were made to him on the pledge of the 47 shares of the canal stock. The securities were returned to Jaudon whenever he paid up the amount of a loan, and redelivered to the bank each time a new loan was effected. In December, 1867, when the last loan matured, the bank, being unwilling to renew it, and Jaudon unable to pay it, sold the stock by the direction of Jaudon, and applied the proceeds of the sale to the payment of its debt.
A few months prior to this sale, that is to say, in July, 1867, Jaudon, wanting more money, applied to Duncan, Sherman & Co., bankers of New York, with one of which firm, William Butler Duncan, he had had ancient relations, and with whom alone he spoke in the matter, for a loan of $7000 at 90 days; telling him that he had securities to offer, and naming them, -- the remaining 70 shares of the canal stock, like that pledged to the bank, declared on its face to be "in trust for Mrs. M.T.B. Jaudon." "Upon the faith of the collaterals," and "to oblige" Jaudon, the proposition was accepted by Mr. Duncan, who told his cashier to attend to the matter. The cashier accordingly lent Jaudon the money, taking the certificates for the 70 shares, and a power to sell like those in the other case, in which he both described and signed himself as "trustee of Mrs. M.T.B. Jaudon." Jaudon failing on the maturity of the loan to pay it, the stock was sold. There was no evidence that any of the principals of the house of Duncan, Sherman & Co. had seen the certificates or powers, or had any personal knowledge of the fact that Mrs. Jaudon claimed any interest in them. But their clerk did see the certificates; and it was testified by Mr. W. B. Duncan, that "without the collaterals he certainly would not have made the loan."
Mrs. Jaudon was absolutely ignorant of all that was done, until after the stock was sold, when Samuel Jaudon disclosed the history to her.
There was no doubt that every one of these loans, whether by the City Bank or by Duncan, Sherman & Co., were to Jaudon in his personal character and for his individual use, and that the money obtained was applied to discharge liabilities incurred in the purchase or carrying of the Broad Top coal stock, in which he was at the time dealing on his own account; taking in his own name, and without the exhibition of any trust whatever, certificates for what he bought.
Jaudon being insolvent, Mrs. Jaudon now filed a bill in the court below against him, Duncan, Sherman & Co., and the National City Bank, to reach the proceeds of the property which he had disposed of. Jaudon was himself examined as a witness, and narrated with apparent general candor the history of the transaction. He stated, however, in reply to questions inviting such answers, that from his conversations with his sister-in-law (the complainant), it was his general understanding that any changes in investment which he deemed advisable would be approved by her; and that if the investment in Broad Top stock had resulted as he had anticipated, her income would have been further increased; and that in making a purchase of the stock his intention was "to surprise her by giving her something that was worth a great deal more than all the rest." With all this he stated, however, that he had never had any conversation whatever with his sister-in-law on the subject of changing the investment made in the canal stock.
The court below decreed that Duncan, Sherman & Co. should account for the value of the 70 shares pledged to them and sold, with the dividends and other proceeds that would have been received thereon, including interest on the dividends had they not been diverted from the trust. And that the bank should do the same by the 47 shares pledged to them and sold.
Both Duncan, Sherman & Co. and the City Bank appealed.
... Without pursuing the subject further, we are satisfied that the decrees below should be AFFIRMED.
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