WILLIAMSONv. DICKENS,27 N.C. 259(1844)
ROBERT P. WILLIAMSON ET AL. v. STEPHEN M. DICKENS.
Supreme Court of North Carolina
1. The provision in the bankrupt law which prevents a debtor from being discharged under the commission of bankruptcy when the debt is of a fiduciary character extends only to special trusts, but does not extend to implied trusts, such as those of agents, factors, etc.
2. When a creditor has a claim which he might enforce, either by an action of assumpsit or intort, if he sues intorthis action shall not be barred by a discharge under the bankrupt law.
3. The creditor is not barred by this discharge when, although hemighthave proved his claim under the commission, he was notboundto do so.
4. In every such case theformof the action brought is decisive of the question, whether the discharge is a good bar or not.
APPEAL from PERSON Fall Term, 1844;Pearson, J.
This was an action on the case in which the plaintiffs declared intortfor breach of contract, and also introverfor the conversion of certainPage 188bonds, notes, and attorneys' receipts which the plaintiffs had placed in the hands of the defendant, to be by him collected for them. The breaches assigned in the first count were, first, failure to use due diligence in collecting; secondly, failure to pay over moneys collected. The defendant relied upon the pleas of the general issue and his certificate of discharge under the bankrupt law, which he obtained in January, 1843. The facts as disclosed upon the trial were as follows: In 1836 the plaintiffs placed in the hands of the defendant the bonds, notes, and attorneys' receipts referred to, which were then due to the estate of the plaintiffs' intestate from persons living in the State of Alabama, which bonds, notes, etc., by his receipt for the same he agreed to collect or return. The defendant proceeded to the State of Alabama in the autumn of 1836. While there, he collected a part of the said bonds, etc., and left a large residue in the hands of his brother Robert M. Dickens, who was a partner in trade in that country with the defendant and (260) others. Of the notes and bonds so left in his hands, Robert M. Dickens by his deposition proves that he collected a large amount, which in part he paid over to the plaintiffs' agent, but leaving a balance unaccounted for by him to the plaintiffs of about $900. It further appeared that this balance of $900 was used by Robert Dickens for the benefit of the firm of Dickens, Webb Co., of which the defendant, as above stated, was a member; and upon the failure of the said firm, which took place in 1839, a general assignment of the effects of the firm was made for the benefit of their creditors, and this balance of $900 was, by a schedule annexed to the said assignment, admitted to be due the plaintiffs for claims left in the hands of Dickens, Webb Co. for collection. It was also proved that the assets of the said firm were not sufficient to pay the said sum of $900. The plaintiffs also proved a demand before action brought.
On behalf of the defendant, the testimony of John A. Hogan was introduced. Mr. Hogan stated that in February or March, 1837, at the request of one of the plaintiffs, he had an interview with Mr. Robert Dickens in regard to the funds above mentioned. In that interview Mr. Robert Dickens told him that he, Dickens, would visit North Carolina in the course of the ensuing summer, and would adjust the matters in regard to these funds with the plaintiffs and the defendant. Mr. Hogan further stated that in the course of the winter of 1838 he had another interview with Robert Dickens in Alabama in relation to these funds, and Dickens then informed him that a portion of the funds was in the hands of Colonel Irving (an attorney), and that he, Hogan, could call on Mr. Irving and obtain them. Mr. Hogan accordingly obtained from Mr. Irving the amount of $2,175, or thereabouts. Mr. Hogan further stated that Mr. Robert Dickens, previously to his obtaining this sumPage 189from Irving, informed him (Hogan) that the funds which were to be collected by Stephen Dickens for the plaintiffs were collected or wereconsideredby him (Robert Dickens) as collected; that one of the debts was not actually collected, but was due to the plaintiffs from his overseer, and that he would at the end of the year retain his debt (261) out of the overseer's wages. The amount of this debt was $400 or $500, and soon after the first of January, 1839, Mr. R. Dickens sent Mr. Hogan a draft for $500, which was duly paid on presentment. Mr. Hogan further testified that Mr. R. Dickens said that he ought to pay the funds he had collected to the plaintiffs, but that he had no funds at the time which were available for that purpose; that his northern debts were pressing him, and that the payment he could make to Mr. Hogan depended upon what arrangement he could enter into as to his northern debts, and what collections he could make as to the debts due to the firm. In the first interview between Hogan and R. Dickens, the latter spoke of having made remittances to the defendant, and stated that what he owed the plaintiffs would depend upon the application the defendant had made of those remittances. Mr. Hogan further stated that when the plaintiff Williamson first requested him to give his attention to these matters in Alabama, he stated, after showing Mr. Stephen Dickens' receipt, that Stephen Dickens had placed the debts mentioned in the receipt in the hands of Robert Dickens for collection. In one of his interviews with Robert Dickens, Mr. Hogan told him that his brother Stephen would probably be sued by the plaintiffs for the debts he had to collect. To this suggestion R. Dickens replied that he regretted, or that his brother ought not to be sued, for that he, Robert, had the funds in his hands. The plaintiff Williamson authorized Hogan to treat with Mr. Robert Dickens in regard to these debts.
On the part of the plaintiffs it was contended that they had made out their case against the defendant, and had a right to recover, notwithstanding his discharge in bankruptcy: first, because the defendant, by his undertaking to collect as the agent of the plaintiffs, established between himself and the plaintiffs a fiduciary relation which, under the bankrupt law itself, precluded him from the benefit of his discharge; secondly, the plaintiffs having declared intort, as they had a right to do under the facts of this case, the discharge in bankruptcy (262) was no bar to the action. But his Honor having intimated an opinion against the right of the plaintiffs to maintain their action, the plaintiffs submitted to a nonsuit and appealed to the Supreme Court.
Kerr and Venable for plaintiffs.E. G. Reade and Iredell for defendant.Page 190
NASH, J.
The plaintiffs' declaration contains two counts, one introverand the other intort, for breach of contract. The case was: the plaintiffs put into the hands of the defendant a number of notes and bonds which they held upon sundry persons in Alabama, and in his receipt the defendant bound himself to collect or return them. The defendant being one of a firm in Alabama engaged in merchandising, placed the papers in the hands of Robert Dickens, another partner, who collected the money and appropriated the amount now claimed from the defendant to the payment of the partnership debts. The firm is insolvent, and so is Robert Dickens. Mr. Hogan, as the agent of the plaintiffs, applied to Robert Dickens in Alabama for the money collected by him, and received a considerable sum. The defendant pleaded the general issue and his discharge as a bankrupt under the bankrupt law of the United States. The right of the plaintiffs to a recovery is resisted, first, upon the ground that they had recognized Robert Dickens as their agent in the collection of the debts, and thereby discharged the defendant. We do not agree to this proposition; we see nothing in the transaction as disclosed by Mr. Hogan showing that they had so recognized Robert Dickens. They did receive from him, by their agent, a part of what he had collected, and to that extent have discharged the defendant, but no further. In so doing, they did not thereby substitute Robert Dickens for the defendant as their agent. Moreover, this point was not raised on the trial, and is not open here. The second plea is that the defendant has been regularly discharged under the bankrupt law, which is a bar to the action. The fact of his discharge is not controverted by the plaintiffs, but its effect in protecting the defendant from this (263) claim is denied: first, because the defendant was acting in a fiduciary character; secondly, because the demand of the plaintiffs is not such a debt as he was bound to prove under the defendant's commission. The first section of the bankrupt law provides that "all persons whatever residing in any State, Territory, or District of the United States, owing debts which shall not have been created in consequence of a defalcation as a public officer, or as an executor, or administrator, or trustee, or while acting in any other fiduciary capacity," shall on compliance with the requisites of the bankrupt law be entitled to a discharge under it. The argument here is that the defendant was acting in a fiduciary capacity, and is, therefore, expressly within the exception of the statute. We do not think so, and if that alone were in his way, we should unhesitatingly give him the benefit of his plea. What is the fiduciary character or capacity embraced by the act? Does it extend to all classes in which money has been received to the use of another? If so, few debts would be left on which the law would operate; for in all such cases the money is received in faith or trust to be paid over; in otherPage 191words, in a fiduciary capacity. Surely, it could not have been the intention of the National Legislature, in passing the act with a view to the relief of bankrupt debtors, so to restrict its operation. But the act shows us itself what was meant in the use of the words "other fiduciary capacity." Taken in connection with the words preceding them, it is evident that only such trusts were meant as are special, and not simply implied, as "the defalcation of a public officer" or of an "executor" or an "administrator." Upon the principle, then, ofredendo singula in singulis, the words "other fiduciary capacity" must refer to trusts of the same class, to wit, special, and not implied trusts. InChapman v. Forsythe, 2 Howard, 206, the Supreme Court of the United States decided that the words do not embrace a factor; andMr. Justice McLean, in his able opinion, repudiates the idea that they can apply to (264) agencies. I repeat, then, if this were the only obstacle in the defendant's way, the judgment of the court below would very readily be affirmed. The important inquiry here is, Did the defendant at the time of his discharge owe such adebtto the plaintiffs ascompelledthem to prove it under the commission? If so, then, very clearly, the certificate of the defendant is a clear bar to the plaintiffs' action; if it was not such a debt, but a claim, for the securing of which the law gave them a choice of actions, and they were at liberty to sue either in tort or in debt, and their damages would not necessarily be the same in each form of action, their election of the former will deprive the defendant of the protection of his discharge as a bankrupt. In this case the plaintiffs have not declared on the contract, but have brought action in tort, making the neglect of duty on the part of the defendant thegravamenof their claim. This, then, is not a suit to recover, strictly speaking, a debt, and is, therefore, not within the words of the bankrupt act.Parker v. Norton, 6 Term, 695, is in strong analogy with this. It was an action of trover. The plaintiff had placed in the hands of the defendant a bill of exchange to be presented to the drawer at maturity and the money to be paid over. The defendant, before the day of payment, discounted the bill with the payee and delivered it up, taking less than the bill called for, and applying the money to his own use. The plaintiff had his election either to sue the defendant in assumpsit or bring trover for the bill. He chose the latter; and on the trial the court refused to give defendant the benefit of his discharge as a bankrupt, because the plaintiff had an election, and had sued in tort, and the damages would not be the same necessarily. In this case the Court recognizes the correctness of the rule laid down byLord MansfieldinGoodtitle v. North, Doug., 583, that the form of the action in that case was decisive as to the effect of the certificate in bankruptcy.Mr. JusticeGrose, in delivering his opinion, declares the question is not whether the plaintiffmighthave provedPage 192his debt under the defendant's commission, but whether he was (265)boundto do so. And all the Court agree that when a plaintiff has an election as to theformof his action, the choice of the action is decisive of the question. So inParker v. Crole, 2 M. and P., 150, and 5 Bing., 63, it was decided that when the defendant, a broker, sold out the stock of the plaintiff contrary to his orders, the plaintiff had an election either to affirm the sale and sue the defendant for the money received by him or to bring an action of tort, and as he had brought the latter action, the defendant was not protected by his certificate of bankruptcy. These cases abundantly prove that when the plaintiff has an election, he is notboundto prove his claim as a debt under the defendant's commission, though he may; and when he sues intort, the defendant cannot avail himself of the protection of the bankrupt law. In this case the form of the action is not objected to; it is not controverted but that the plaintiff can sue intort;seeGovett v. Radnidge, 3 East, 62, and it was important to them to adopt this form of action, not alone as to the present question. The defendant was their agent to collect a variety of claims put into his hands. He had wrongfully transferred them to Robert Dickens, who had received the whole of the money, and applied a portion of it to the payment of the debts of the firm, of which the defendant was one. It is this misapplication of their funds of which the plaintiffs complain and for which they bring their action. It is by no means certain, if they had sued in debt, that they could have recovered. There is nothing to show that this misapplication was made by Robert Dickens with the knowledge of the defendant, or that he, after it was done, assented to it or took any benefit from it, and if he had he would have been liable to the claim of the plaintiff under a different contract than the one we are now considering. Be this, however, as it may, the plaintiffs have made their election to sue intort;they claim, not the money, but damages from the defendant for a breach of duty in the management of his agency. These damages are unliquidated, and can be ascertained only by a jury.
(266) They may give the full amount of the sum misapplied by Robert Dickens, or they may give less, if they should be satisfied the plaintiffs are entitled to less. We are of opinion that the defendant's discharge under the bankrupt law is no bar to the plaintiffs' action, and that there is error in the judgment of the Superior Court.
PER CURIAM. Reversed.Cited: Ledbetter v. Torney,33 N.C. 295;Bond v. Hilton,44 N.C. 311;S. c.,47 N.C. 150;Froelich v. Express Co.,67 N.C. 4;Hervey v.Devereux,72 N.C. 467;Solomon v. Bates,118 N.C. 315;Peanut Co. v. R.R.,155 N.C. 166;Mule Co. v. R. R.,160 N.C. 220.Page 193
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