Phoenix Bank versus John Bumstead, 18 Pick. 77

Wilde J. delivered the opinion of the Court. Upon the facts stated in this case, we think the plaintiffs are clearly entitled to recover the proportion of the sum of $ 18,000, which was paid on account of the two notes on which their present claim is founded, after deducting from the whole sum the defendant’s expenses in his proceedings to recover the amount of such claims.

It is objected, that the question as to Francis’s legal liability to pay those claims has never been determined ; that it does not now appear that he was so liable ; that by the terms of the agreement the defendant was not bound to make any attempt to recover such notes from Francis, except at the request and expense of the plaintiffs ; and that he was not requested by the plaintiffs to commence a suit for the recovery of such notes, at their costs and charges, until the demands were barred by the statute of limitation. These objections have not been pressed by the defendant’s counsel, and are of no avail.

The essential part of the agreement between the parties is, that all moneys obtained from Francis on these notes shall belong to and be taken for the use of the plaintiffs. It is immaterial whether Francis was or was no.t liable, since the money has been fairly obtained from him, and cannot be reclaimed. It is not denied, that the payment was voluntarily made, with a full knowledge of all the facts relating to his supposed liability ; and there is, therefore, no legal or equitable ground on which the defendant can resist the plaintiffs’ claim, for the money expressly received for their use under the agreement.

The only remaining question to be considered is, whether the defendant is liable for any further sum than that actually received. The plaintiffs claim the whole balance due on the notes, because the defendant had no right to make any composition as to these notes, without their consent ; and by giving to Francis a discharge from his supposed liability, or a bond of indemnity equivalent to a discharge, the defendant has rendered himself liable to pay the full amount due on the notes.

Th:s claim appears plausible, but after carefully considering the terms of the agreement, in connexion with the circumstances of the case, we are of opinion, that it cannot be sustained. It is evident, that at the time when the notes in question were transferred to the defendant, and the agreement was made respecting them, the claim upon Francis was considered by the parties as of doubtful validity ; otherwise these and other notes against the manufactory would not have been sold at so great a discount.

The defendant, however, was not required to do any act, or make any attempt to enforce the claim against Francis, except at the request and expense of the plaintiffs ; and for a long time after, no such request was made. But it was expected that something might be obtained by the defendant of Francis without suit.

From these and other facts and circumstances, it seems reasonable to infer, that, there was an understanding between the parties, that the defendant should deal with the notes transferred to him by the plaintiffs in the same manner as he should deal with his other claims on Francis, in which his interest and theirs were in all respects similar. These claims were large, and he had strong motives to make the most of them. He must be presumed to have acted with full consideration, and upon the best advice, and with the belief that the compromise would be beneficial both to himself and to the plaintiffs.

There is no reason for believing that the compromise was not thus beneficial. It does not appear that Francis was liable ; and under the circumstances of the case we think the plaintiffs are not entitled to recover damages of the defendant for discharging Francis from his supposed liability, without showing that he was in fact and by law liable. Without showing this they would be entitled to nominal damages only, although the -defendant had by mistake exceeded his authority. It does not, however, appear that the defendant has exceeded his authority.

He had authority under the agreement, to discharge all the corporators, except Francis, however it might affect the plaintiffs-’ reserved claim against him. The effect of such a discharge would be to exonorate Francis from all liability, except perhaps for his share of the debt, according to the amount of his stock, and the proportion it bore to the whole stock of the company, whether any or all the corporators were insolvent or solvent.

Now, although the defendant has not in fact discharged the other corporators, yet if he could make a 'compromise equally favorable to the plaintiffs, without making such a discharge, we think he had authority so to do, and that the plaintiffs are in no manner prejudiced thereby. On these considerations judgment must be rendered for the plaintiffs ; not, however, for the balance due on the notes, but for their share of the money actually received of Francis by the defendant, deducting their share of the expenses. Judgment for the plaintiffs.