Seth Spring v. South Carolina Insurance Company Gray & Pindar William Lindsay John Haslett

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United States Supreme Court

21 U.S. 268

Seth Spring  v.  South Carolina Insurance Company Gray & Pindar William Lindsay John Haslett

APPEAL from the Circuit Court of South Carolina.

This was a bill of interpleader, filed by the South Carolina Insurance Company in the Court below, on the 25th of April, 1816, against the appellants, and Gray & Pindar, William Lindsay, and John Haslett, praying, that they might file their answers, and interplead, so that it might be determined to whom the proceeds of a certain policy of insurance should be paid. It appeared by the pleadings, and the evidence in the cause, that this policy had been made on the 6th of May, 1811, by the respondents, the South Carolina Insurance Company, upon a vessel called the Abigail Ann, then lying at Savannah, on a voyage to Dublin, or a port in St. George's Channel, for account of John H. Dearborne, and the respondents, Gray & Pindar, the latter of whom were merchants residing at Charleston, South Carolina, and at that time part owners of the ship, but, on the 27th of May, 1811, sold their interest therein to Dearborne. On the 5th of July, 1811, the vessel sailed on the voyage insured. It appeared, that the respondent, Lindsay, as the agent of the parties, had procured this policy to be underwritten. It also appeared, that Lindsay had delivered the policy to Gray & Pindar, for the use of Gray & Pindar, and Dearborne, without at the same time expressly claiming any lien upon it.

After the sailing of the Abigail Ann, Dearborne, and Gray & Pindar, jointly purchased and loaded another ship, called the Levi Dearborne, of which vessel and cargo Dearborne owned two thirds, and Gray & Pindar one third. In September, 1811, this vessel sailed from Savannah for Europe, and Dearborne went in her. Before sailing, D. had drawn bills on England, some of which were endorsed and negotiated by Lindsay, which were returned protested for non-acceptance, and Lindsay was compelled to pay them. Haslett also made advances to Dearborne, and took his bills on England, secured by a bottomry bond on the ship Levi Dearborne. These bills also returned protested.

Before Dearborne left Savannah, certain misunderstanding arose between him and Gray & Pindar, which it was agreed should be referred to arbitrators. On the 21st of September, 1811, the arbitrators, and one Harford, as umpire, awarded that Gray & Pindar should execute a bill of sale of the ship Abigail Ann to Dearborne, and deliver to him the policy of insurance thereon, without unnecessary delay. Before he sailed, Dearborne directed Harford to transmit to his wife, in the District of Maine, to the care of Seth Spring & Sons, the bill of sale, and policy of insurance, which had been thus awarded to him. The policy was subsequently sent by Harford to Lindsay, to be put in suit against the South Carolina Insurance Company.

The ship Levi Dearborne was obliged to put into New-York by stress of weather, and there Dearborne, on the 28th of October, 1811, made an assignment of the Abigail Ann, and of his interest in the ship Levi Dearborne, and of the policies upon both vessels, to S. Spring & Sons, to secure the payment of a debt due by Dearborne to them, amounting to about 16,000 dollars. The handwriting of Dearborne, and of the subscribing witness to the deed of assignment, were both proved; and one Maria Teubner, who testified to that of the subscribing witness, swore that she was one of his creditors, and had taken pains to obtain information of where he was, but without success. The last account of him was, that he had entered on board of an American privateer, during the last war, and had not been heard of for four years. The assignment was made subject to pay out of the cargo of the Abigail Ann, if it reached the hands of his correspondents in England, certain bills which he had drawn on them, in the confidence that they would be paid out of the cargo of the Levi Dearborne. Nothing was realized from that vessel and cargo, and the Abigail Ann was lost at sea. An action was brought upon the policy on the Abigail Ann, in the names of Dearborne, and Gray & Pindar, against the South Carolina Insurance Company, and judgment obtained against the latter, in 1815, for the sum of 9,800 dollars. Dearborne died in March, 1813. On the 24th of February, 1812, Lindsay, on the return of the bills endorsed by him, issued an attachment under the laws of South Carolina, against Dearborne, who was then absent from that state, and served a copy upon the South Carolina Insurance Company. On the 21st of May, 1812, Haslett also issued an attachment against Dearborne, and served a copy on the South Carolina Insurance Company. No appearance was entered for Dearborne in these attachment suits, and judgment was obtained on Lindsay's on the 19th of April, 1813, and on Haslett's on the 10th of June, 1815.

At the hearing in the Court below, after the depositions, and regularly proved exhibits in the cause had been read, an order signed by Harford, as agent for Dearborne, and S. Spring & Sons, on Lindsay, in favour of Haslett, was read in evidence, without notice to the appellants, or an order for its being read at the hearing.

The Circuit Court decreed, that the demand of Lindsay should be first satisfied, and paid out of the fund; that of Gray & Pindar next; that of S. Spring & Sons next; that Haslett was entitled to the surplus, if any; and that S. Spring & Sons should account, and prove their claims against Dearborne, either by filing a cross-bill, or by answering upon interrogatories.

From this decree an appeal was taken by S. Spring & Company to this Court.

     Feb. 13th.

Mr. Wheaton, for the appellants, stated, 1. That he would first clear the case of all extraneous matters, and for this purpose would throw out of it both Haslett's and Lindsay's claim. The former was justly postponed to that of S. Spring & Sons, by the Court below; he has not appealed, and could have no claim under the attachment suits, for Dearborne died before his suit was even commenced. The claim of Lindsay, (so as it arises from his attachment,) must also be rejected on two grounds: 1st. The policy of insurance on the Abigail Ann had been transferred long before his suit. 2d. It was abated by the death of Dearborne. This was understood to be the local law, as established by the decisions of the Courts of South Carolina. Crocker v. Radcliffe, 3 Brev. 23. The order, dated the 23d of May, 1813, and signed by Harford, as Dearborne's agent, and read in evidence as an exhibit, must also be excluded from the cause. There is no evidence that he was the agent of Dearborne for this purpose; and even if he had been, the paper was irregularly introduced. It is the settled practice of the Court of Chancery, wherever any thing like a regular practice prevails, that no exhibit can be proved at the hearing, without satisfactory reasons why it was not proved in the usual way, before the examiner; and if proved at the hearing, a cross-examination of the witnesses is always allowed. And an order must be previously obtained, or, at least, notice given. Consequa v. Fanning, 2 Johns. Ch. 481, and the cases there cited.

2. The decree below seems to be mainly founded on Harford's order, thus irregularly interpolated into the cause. Before the pretended liens of Gray & Pindar, and of Lindsay, had attached, the assignment had vested the property in the appellants, S. Spring & Sons. Lindsay, after he had delivered up the policy, and an intermediate transfer of it to bonae fidei purchasers, could not, by again obtaining possession of it, without the consent of such purchasers, regain his lien, even if he ever had one. His possession was wrongful; and if rightful, he had no right to retain for a general balance. The lien of a policy broker is confined to his general balance on policy transactions, and does not extend to other debts. Olive v. Smith, 5 Taunt. 57. Properly speaking, there is no such thing as a lien by contract. Liens are created by the law, and pledges by contract. But no express pledge is proved in this case. Neither can the analogy of the law of stoppage, in transitu, be applied, where the property has already been transferred to a creditor or other bonae fidei purchaser.

3. In a bill of interpleader, all the parties are actors. Each party states his own claim, and the admission of no one is evidence against another. The appellants are not bound by the admission of the other co-defendants. They do not admit any such liens as are set up by the other parties, and no evidence is produced of their existence, except the order of Harford, which cannot be admitted. Non constat when that order was executed. It might have been at the very moment before the hearing; and the bare possibility of this shows the danger of permitting it to be read in evidence without notice, and without cross-examination.

4. There are, besides, several formal objections. The plaintiffs below do not offer to bring the money into Court, nor is there any affidavit accompanying the bill, and showing that it was filed without collusion. The want of this was a ground of demurrer, and they are clearly not entitled to their costs out of the fund. 1 Madd. Ch. 174, 181. The appellants are the only parties who, in answering, insist on their rights; the others merely pray to be dismissed.

Mr. Cheves, contra, stated, that there were four claims in this case.

1. That of Haslett.

2. That of Lindsay.

3. That of Gray & Pindar.

4. That of the appellants, S. Spring & Sons.

1. The decree adjudges the surplus, if any, to Haslett, after payment of the other claims. But he has no claim upon the fund in controversy, unless it arises under his attachment. The case of Crocker v. Radcliffe, referred to on the other side, is not before the Court in a shape in which the precise point decided can be known. The point said to have been ruled in that case, appears to have been determined otherwise in a previous case; [e] and the principle of this last decision appears to be correct. The proceeding by attachment is a proceeding in rem, and, therefore, ought not to abate by the death of the party. It is probable, that in Crocker v. Radcliffe, nothing had been attached upon the process, and, therefore, the suit was adjudged to abate by the defendant's death; but, in the present case, the fund in question was attached, and is bound by that attachment, subject only to the previous liens.

2. Lindsay's claim is supported by the law of liens. [f] Though he may have parted with possession of the policy for a time, upon regaining it, his lien was re-established. [g] But if the lien of Gray & Pindar, to whom he parted with the possession, be established, that will cover his claim, they being prior endorsers on the bills which form his demand, and their claim also embracing those bills.

3. The claim of Gray & Pindar is supported by express contract, as well as the general law of lien. The express contract is supported by the testimony of Harford. The implied lien is supported by the possession of Lindsay, which was the possession of Gray & Pindar until he delivered it to them, and afterwards by the possession of Harford, whose possession also was their possession. Their lien embraces as well the bills which they endorsed for Dearborne, that were returned protested for non-payment, and were paid by Lindsay, as the sums they have actually paid. The case of Mann v. Shiffner, 2 East's Rep. 523 covers the whole of this claim. Manual possession is not necessary. It is the power to control the possession which gives the lien. [i] The award did not impair the lien, without the acquiescence of Gray & Pindar, and the surrender of the possession of the policy. It did not even give a right to the possession. The only remedy was an action on the award. [j] But the award itself was not valid. The testimony of Harford proves, that the indemnity of Gray & Pindar for their endorsement of Dearborne's bills, was one of the points submitted, and as it was not determined, the award is void. [k]

4. The claim of the appellants, S. Spring & Sons, is not sufficiently proved. They have not proved either the deed of assignment under which they claim, or the debt for which they claim. The subscribing witness to the deed is not produced or examined. 5 Cranch 13; 4 Taunt. 46. The testimony to prove his handwriting is doubtful and improbable. The assignment alleges a debt of about 16,000 dollars. The evidence shows only that the appellants paid 2900 dollars for the assignor, three or four years before, and that they became his surety for 1200 dollars more at the time of the assignment. These, and many other circumstances, give good reason to doubt the integrity of the transaction.

The objections to the form of the bill, and to the answer of the three first mentioned claimants, cannot be sustained. (1.) The only consequences of not offering in the bill to bring the money into Court were, that the parties interpleaded might have moved the Court to order the complainants to pay it into Court; or, perhaps, they might have demurred. They have done neither, and they are now too late with their objection. (2.) The same answer is applicable to the objection for want of an affidavit, that the bill was exhibited without fraud or collusion. They might have demurred, but they have not done so. (3.) As to the omission of the answer (except that of the appellants) to pray for a decree other than their dismissal with costs: this is the common form prescribed by the books of practice, and will sustain a decree for the defendants other than a decree of dismissal with costs. And even though the objection were, in general, well founded, it could not affect this decree, if it can be sustained on the merits; because, as to the appellants, they can only be satisfied after payment of Lindsay, and of Gray & Pindar; and as to Haslett's claim, after the others are satisfied, his attachment will bind the surplus.

Mr. Webster, for the appellants, in reply, argued, that in this form of suit, being a bill of interpleader, even if S. Spring & Sons made out no title, it did not follow that the decree must be affirmed. For aught that appeared, the right party might not yet be before the Court. The personal representatives of Dearborne may be necessary parties. Every distinct claim stands on its own merits; and even if Spring & Sons are not entitled, the fund cannot be decreed to others, unless they prove themselves to be entitled.

There are two questions: (1.) Can the decree, so far as it allows Lindsay's and Gray & Pindar's claims, be maintained? (2.) Can their claims be preferred to those of Spring & Sons?

And first, as to Lindsay's claim. So far as it is founded upon the attachment suit, it cannot be supported. The judgment against Dearborne, who was dead at the time, is a mere nullity. Besides, the property in the fund had actually been transferred to Spring & Sons before the attachment was laid. If there was a previous lien, the party does not stand in need of the judgment. If there was not, the property was vested in others by the assignment, and the judgment came too late. But he could have acquired no such lien as that which is now set up. There is no rule of law which declares, that if a creditor gets, by any means whatsoever, possession of the effects of his debtor, he has thereby a lien as of course. There is here no proof of an actual pledge; and a general lien he cannot have, because, although a broker has a lien for his general balance, on account of policy brokerage, it does not extend to other brokerage. The case cited from 5 Taunton, is decisive to this point. If it be said that he is not a broker, then the case is so much stronger against him, for he can have no brokerage balance for which to retain. Besides, he having once parted with the possession of the policy, without insisting on his lien, it does not revive by returning to his possession again.

As to Gray & Pindar's claim. It rests on two grounds. (1.) A general lien. (2.) A special agreement. But how can they claim a general lien? They are not insurance brokers. In order to make out a lien, they must show some course of trade, and some dealing and relation between the parties, to authorize it: a debt, and a liability are not alone sufficient. It is said, they had a lien, because they have never been devested of possession. But, possession does not create a lien. There must be a right to claim. The assignment operated on the policy in the hands of Gray & Pindar, just as if there had been an actual delivery to the assignees. A lien cannot exist by the party merely having the legal control. That control must be coupled with an interest in the thing. A trustee cannot set up a lien for debts generally, merely because the estate stands in his name.

But, even supposing Gray & Pindar once had such a lien, it was defeated by the award, that the policy should be given up by them to the order of Dearborne. The award here pleaded, is perfectly good on the fact of it; it is completely binding on the parties, and cannot be in this way impeached. A party cannot claim, in equity, against an award, without impeaching it by bill. [m] There is here no proof of partiality, or corruption, or excess of power; and nothing else will, in equity, set aside an award. 3 Atk. 529; Ambl. 245; 1 Dick. 474; 2 Ves. jr. 15; 6 Ibid. 282. It is said the award does not bind, because the arbitrators did not award an indemnity; and to support this position, a case is cited where they would not act at all on the claim. That case is not this. There is no evidence that Gray & Pindar ever made any claim for indemnity before the arbitrators; and if they did, for aught that appears, it was rightly refused. The award, then, is clearly a bar to any claim existing before the time of the award. If there was any express agreement for a lien before the award, it is merged in the award; and there is no evidence of any such agreement subsequently made.

As to Harford's order, we do not object to its introduction in point of form, but of substance. It is not proved; and if proved, it is a mere nullity. Harford signs it as attorney to Dearborne, who was then dead, and of Spring & Sons, whose attorney he never was. He never was even Dearborne's agent, for any other purpose than to transmit the policy to his wife.

As to the assignment to Spring & Sons, it is established by the decree, and that part of the decree is not appealed from. Spring & Sons have appealed, on account of the preference given to Lindsay and Gray & Pindar: but they have a right to stand on that part of the decree which declares the assignment to be well proved and valid. But the execution of the assignment is sufficiently proved by the evidence. It is a clear case for admitting secondary evidence.

     Feb. 21st.

Mr. Justice LIVINGSTON delivered the opinion of the Court, and, after stating the case, proceeded as follows:


^e  Kennedy v. Reguet, 1 Bay's Rep. 484.

^f  Whitaker's Law of Liens, 26. 103, 104.

^g  Id. 121, 122.

^i  Whitaker's Law of Lien, 105, 106.

^j  Hunter v. Rice, 15 East's Rep. 100.

^k  Mitchell v. Stuvely, 16 East's Rep. 58.

^m  Dickens, 474.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).