Rapalje v. Emory, 2 Dall. 51 (C. P. Phila. Cty. 1790)

This cause having been argued at large, upon a motion for a new trial, the facts and arguments were recapitulated, and the opinion of the court delivered in the following terms.

Shippen, President.—The case was shortly this. Reuben Fairchild, in the year 1775, sailed from New York, master of a vessel belonging to the plaintiff and himself, on a circuitous voyage. He was likewise the factor of the plaintiffs, and had discretionary orders to trade for them and to sell the vessel as well as the cargo. In the course of the voyage he sold both vessel and cargo, and made some remittances to his owners. While he was at St. Eustatius, and when he was about to leave it, he put his affairs into the hands of William Smith, then a merchant there, with power to collect his outstanding debts, among which were four debts due upon note, or bond, payable to Fairchild; but which Smith believes arose from the sale of the cargo belonging to the plaintiffs. These notes, together with some other papers, were delivered to Smith, inclosed in a cover, on which Fairchild had made the following memorandum: "Van Bibber & Harrison, Thomas Wallace, Archibald & John Blair and Thomas M'Farran's obligations, are on account of Messrs. Jacob Van Voorhis, Ram Rapalje, and Peter Mercier, merchants of New York, together with outstanding debts; this is in case any accident happens to me." After Fairchild's departure from St. Eustatius, and in the years 1777 and 1778, Smith collected the outstanding debts; and, among others, those due on the four notes payable to Fairchild. This money remained in Smith's hands till September 1779; when a foreign attachment was sued out by Benjamin Amory, the present Defendant, against the effects of Fairchild, in the hands of William Smith, for a private debt of Fairchild due to Amory. Smith appeared to the action, employed counsel to defend it, and on the hearing, the court there confirmed the attachment, and condemned the garnishee to pay to the plaintiff in the attachment the money due to him from Fairchild; which money was accordingly paid, and the present action is brought by Rapalje & Mercier, to recover back from Amory the money so recovered and paid to him by Smith, as for money had and received to the plaintiffs' use.

The principles on which the action is brought are, that the money arising from the notes were really the property of the plaintiffs, and not of Fairchild; that Smith had no money of Fairchild in his hands, but what arose from those notes; and that it was therefore wrongfully and, against conscience, received by Amory as the property of Fairchild.

On the trial of this cause, the merits were not at all investigated on the part of the defendant; who suffered a verdict to pass against him without opposition, relying on the point of law, that he was protected by the judgment of the court at St. Eustatius. This point was therefore reserved for the consideration of the court.

It is contended on the part of the Defendant, that his money, having been attached in the hands of Smith, as the property of Fairchild, and on the trial adjudged to be his property, that judgment cannot be reversed here in a collateral action. That the judgments of foreign courts must necessarily bind ours, and be considered as conclusive, at least in those cases, where the aid of this court is not asked to carry their judgments into effect. And that if our courts were to reverse the judgments of foreign courts, they might reverse ours; which would introduce a kind of warfare between the judicatures of different countries, to the risk of the public peace, as well as to the ruin of the contending parties. To this it is answered by the Plaintiffs' counsel, that however definitive a sentence of a foreign court may be, as between the parties to the suit, it cannot bind third persons. That the present plaintiffs were no parties to that suit, and cannot therefore be bound by any judgment in it; they having had no opportunity of maintaining their right to the property in question.

The discussion of this point on the argument, led to others not taken notice of on the trial; but which must necessarily be considered by the court on a motion for a new trial.

Great reliance has been had on the part of the Plaintiffs, on the manifest equity which they alledge appears on their side of the question; and, it is contended, that the court ought not to set aside a verdict upon a point of summum jus, where it is not to attain the justice of the case.

This has naturally led us to consider the equity, as well as the law, arising upon the case. Taking it up in a general view, there does not appear to us to be any great preponderancy of equity on either side; both Plaintiffs and defendants were fair and honest creditors of Fairchild; the Plaintiffs entrusted him as their agent, the Defendant as his debtor. It was natural and fair for each side to take every legal measure to obtain payment of their demands; and whoever in such a case has got a legal advantage, this court cannot say he is not entitled to hold it.

The notes in question were made payable to Fairchild himself; they were put into the hands of Smith for collection; the money when collected remained in Smith's hands above a year as the money of Fairchild; there was no assignment of these notes to the Plaintiffs, in any other way than by endorsing a memorandum on the paper which inclosed them, that in case of accident they were obligations on account of Rapalje & Mercier, merchants in New York. Smith was the agent of Fairchild and not of Rapalje & Mercier. When he received the money on the notes he carried it to the credit of Fairchild, and not to the credit of the Plaintiffs. In the receipt which he gave Fairchild for the notes, he promises to re-deliver them to him or his assignees, and no mention whatever is made of the plaintiffs. In his account current with Fairchild, he charges him with the amount of divers invoices of goods shipt for him, and credits him with the money received, as well from some other persons, as from those who gave the notes, and finally strikes a balance in favour of Fairchild. If all these matters appeared to the court at St. Eustatius, as probably they did, it is not much to be wondered at, that they should determine that Smith, as garnishee in the attachment, had effects of Fairchild in his hands.

In point of law the court entertained a considerable doubt, whether under the circumstances of the case, an action for money had and received was at all supportable against the defendant. As the counsel for the plaintiffs appeared sanguine in the cause, we directed a new argument upon this point, and it has accordingly been argued ably and ingeniously; but, on full consideration, we must retain our former sentiments, that it cannot be supported. If this had been the case of a specific article, the property in which had been the subject of dispute between Amory and Fairchild, any decision with regard to that property, would certainly not have prevented the plaintiffs, being third persons, not parties to the suit, from supporting an action of trover, if they could have shewn better right. But the contest in St. Eustatius did not regard any specific property; but was an attachment against the general effects of Fairchild, and the action brought here is not an action of trover, detinue, or replevin, for any specific property, but an action for money had and received to the use of the plaintiffs. The distinction between specific property and money is well established; in the one case the true owner will have a right to recover it from any person who is found in possession of it; but in the case of money (the medium of commerce) to enable the party to recover, there must be either some privity between the owner and receiver, or there must be a mala fides, an unjust receipt of the money, or at least a receipt of it without a valuable consideration. In those cases, but in no other, the true owner by identifying the money, and tracing it into the hands of the receiver may support an action for money had and received, against an utter stranger; and under such circumstances, money is considered in the nature of specific property. This distinction is fully explained by Lord Mansfield in Cowper's Reports, p.200.

In this case there was no privity between the plaintiffs and the defendant; there was no contract, either express or implied, between them; the money was not received as the money of the plaintiffs; the defendant was a creditor of Fairchild, who recovered and received his debt in a due course of law, by the judgment of a court having jurisdiction of the cause; there was no fraud or collusion, no mala fides, no want of consideration; an honest debt was due; and though a distinction has been made between a past consideration, as a debt, and a present consideration given, no such distinction can hold in a case of this sort; as the mala fides, which could alone make the defendant answerable, would be alike wanting in either case. There seems no difference in point of fairness, between the defendant's receiving the money under a judgment of court, without fraud or collusion, and his receiving it from the hands of Fairchild himself. If Fairchild had received the money on these notes himself, and paid it voluntarily to Amory, it could not be pretended that the plaintiffs, although the money ought to have been paid to them, could have any recourse to Amory; for, if it might be the subject of controversy when a man receives a debt, whether the debtor pays it out of his own money or another's, who would be safe in receiving money? The nature of money, and the nature of commerce, forbid such an enquiry. The payment by Smith, the agent of Fairchild, was in effect a payment by Fairchild; and its being made in consequence of a judgment of court, could, at least, not weaken the defendant's right of receiving it.

For these reasons, we are of opinion, that the present action is not supportable against Amory, and consequently that the verdict was against law. The motion for a new trial is therefore granted.^*