Brooks v. Ahrens

Alvey, C. J., delivered the opinion of the Court. This action was brought by the plaintiff, the appellee here, as surviving partner of William Stirling and Theodore Ahrens, trading as Stirling and Ahrens, against the defendant Brooks, the appellant on this appeal, to recover money had and received by the defendant, to the plaintiff’s use. The pleas were, never indebted, and never promised, as alleged. The case was tried before the Court, without the assistance of a jury ; and nearly all of the material facts of the case were agreed upon by the parties.

The findings and judgment of the Court below were for the plaintiff, and the defendant has brought the case here on appeal for review. Both parties, at the trial below, submitted legal propositions for the acceptance and government of the Court, but all such propositions were rejected, and the Coirrt proceeded to state at large its conclusions of fact, and the legal- principles applicable thereto, resulting in the judgment for the plaintiff. ²¹⁷ It appears that the firm of Stirling and Ahrens was formed in 1852, and continued in active business until the 31st of December, 1867. Adolph Ahrens, the plaintiff, is the sole surviving partner of that firm; hut from the 31st of December, 1867, to December 1870, a new firm existed, under the name and style of Stirling and Ahrens, composed of the former members of the firm and George A. Ahrens. In December, 1870, this firm was dissolved, and a new firm formed, under the name and style of Stirling, Ahrens and Company.

Subsequently other changes took place in the membership of the firm, though none in the firm name ; and on the 26th of August, 1875, the firm of Stirling, Ahrens and Company, then consisting of William Stirling, Adolph Ahrens and Henry E. Zollickhoffer, committed an act of bankruptcy, and on the 7th of December, 1875, the firm was adjudged bankrupt, by the United States District Court for the District of Maryland. Thereupon, on the 24th of December, 1875, the defendant was appointed assignee in bankruptcy of the bankrupt firm, and of each member thereof individually, and duly assumed the trust. The firms of Stirling and Ahrens, and Stirling, Ahrens & Co., were largely engaged in commerce in the City of Baltimore, as shippers and general commission merchants, and their shipping trade was carried on between the port of Baltimore and the ports of the West Indies and of South America. And as merchants engaged in the shipping business, the original firm of Stirling & Ahrens, between the dates of the 13th of April, 1861, and April 9th, 1865, paid large sums as extra or enhanced premiums for insurance, properly denominated “ war premiums,” against loss or capture of vessels and cargoes by Confederate cruisers.

The amount thus paid by that firm, within the period just mentioned, over and above the ordinary or peace rates of marine insurance, after deducting for a limited reimbursement received from the insurance companies by ²¹⁸ way of dividends, was the sum of $57,162.17, inclusive of interest. Of this amount, the defendant as assignee in bankruptcy of the firm of Stirling, Ahrens & Co., and of the members of that firm, has received, by the judgment and award of the Court of Commissioners of Alabama Claims, as re-established under the Act of Congress of the 5th of June, 1882, the sum of $19,881.31; and it is to recover of the defendant this latter sum that this action is brought. Without stating subordinate, questions, there are two main or principal questions presented by the record : Eirst, assuming that the payment of premiums of insurance for war risks constituted such right or claim as would pass to an assignee in bankruptcy, under the late Bankrupt law, whether the plaintiff, as surviving partner of Stirling and Ahrens, the firm that paid the premiums for war risks, can maintain this action against the defendant,— the plaintiff having been a member of the partnership of Stirling, Ahrens & Co., that was adjudged to he bankrupt, though the firm of Stirling and Ahrens never was so adjudged? Second, Whether the payments of premiums for war risks, such as are provided to be allowed out of unappropriated moneys of the Geneva award, by the Act of Congress of the 5th of June, 1882, constituted such nature of claim or right in the bankrupt, as to form part of his estate, and to pass to his assignee for the benefit of his creditors, though at the time of the bankruptcy declared, there ¿were no legal means whatever for realizing any such claim ?

We shall consider the second question first; for if we conclude that the claim for payment of premiums, for war risks, was not of a nature to pass to the assignee in bankruptcy for the benefit of the creditors of the bankrupt, we could have no difficulty in holding that the plaintiff, as surviving partner of Stirling and Ahrens, and liable to ²¹⁹ account to the representatives of his deceased co-partners, may maintain this action against the defendant. The case has been very fully and ably argued at the bar, and much assistance has been derived from the discussion. But without attempting to examine in detail all the positions assumed and contended for in argument, we shall direct our attention to what appears to us to be the salient and controlling points of the case. It is important, in our view, to notice the history of the fund, out of which the claims for payment of premiums for war risks were allowed; how that fund was created, and for what purpose it was originally intended.

The circumstances that led to the negotiation of the Treaty of Washington, of the 8th of May, 1871, between Great Britain and the United States, are matters of public history, and are familiar to us all. Great loss and destruction had been suffered by owners of American ship ping, from Confederate cruisers upon the oceans, fitted out in British ports, in violation of the laws of neutrality; and the principal questions for settlement were: 1st, to what extent the duty of neutrality, as defined by the law of nations, required Great Britain to be diligent within her own jurisdiction to prevent the injury; and, 2d, the extent of the damage suffered, for which that government should be liable, by reason of the fact that she had failed to fulfil her duties as a neutral government. The treaty provided for arbitration for the settlement of these questions; but, in advance, it proposed and declared the three celebrated Rules for the guidance of the arbitrators. Consistently with those rules, the Tribunal created by the treaty had full power to decide every question referred to it, and to decide what claims were within the scope of the submission, and for which allowance could be made.

Each government made up its case, and presented the same to the Tribunal. In that presented by the United States, the claims were classified, as those for direct losses caused by Confederate ²²⁰ cruisers, including those subsequently designated as the - “ exculpated cruisers; ” those for indirect, losses, including payments for enhanced premiums for war risks ; and those of a miscellaneous nature. But upon objection on the part of Great Britain to considering the claims for the indirect losses, embracing the claims for enhanced premiums paid, such claims were rejected by the Tribunal, and altogether excluded from consideration, for the reason, as stated by the Tribunal, and entered of record, that they “ did not constitute, on principles of international law applicable to such cases, good and sufficient foundation for an award of compensation or computation of damages between nations.” And this determination and recorded judgmentof the Tribunal was accepted and fully acqueisced in by the government, of the United States. The award, dated the 14th of Sept., 1872, was of a gross sum of $15,500,000, in gold, “ as the indemnity to be paid .by Great Britain to the United States, for the satisfaction of all the claims referred to the consideration of the Tribunal, conformably to the provisions contained in Article Yllof the aforesaid treaty.” It thus appears that the claims for indirect losses,embracing payment of enhanced premiums for war risks, were rejected as not being within the submission; and therefore no sum whatever was awarded in respect of such claims.

The amount awarded was in respect of other and a diiferent class of claims, recognized as for direct losses caused by the Confederate cruisers Alabama, Florida, and their tenders, and the Shenandoah, after- her departure from Melbourne, on the 18th of Feb., 1865. The first Act of Congress, that of the 23rd of June, 1874, providing for the distribution of the award, contemplated the fund as being intended for the satisfaction of claims for losses “ directly resulting from damage by the so-called insurgent cruisers,” Alabama, Florida and Shenandoah. It was only after all such claims were passed upon, that it was ascertained that there still remained in the Teasury, ²²¹ of the Geneva award fund, about the sum of $9,500,000, undistributed. Then came the Act of Congress of the 5th of June, 1882, entitled “An Act re-establishing the Court of Commissioners of Alabama Claims, and for the distribution of the unappropriated moneys of the Geneva award.” By the 5th section of that Act, two classes of claims are provided for: 1st.

For damages directly resulting from acts done by Confederate cruisers, other than those provided for by the eleventh section of the Act of 1874; and, 2nd, for the payment of premiums for war risks, paid after the sailing of any Confederate cruiser. It was under this latter Act, and by the Court of Commissioners re-established thereby, that the money sued for in this case was awarded to the defendant, as assignee in bankruptcy. That judgment, however, has no effect as res judicata. At most it could have but a prima facie effect; the parties claiming the money being left at liberty to contest the right to it in the appropriate tribunals.

Comegys vs. Vasse, 1 Pet., 191, 212 . Having thus briefly shown the facts in relation to the Geneva award fund, and in respect to what claims that fund was originally awarded, and by what means the money sued for in this case reached the hands of the defendant, we are brought to the inquiry, as to the effect, if any, of the provision of the late bankrupt law of the United States, upon the right to the money in question. That law (Rev. Sts. U. S., sec. 5046,) contained the following provision in regard to the rights and estate of the bankrupt that should pass to and become vested in the assignee for the benefit of creditors: “ All property conveyed by the bankrupt in fraud of his creditors; all rights in equity, dioses in action, patent rights, and copyrights; all debts due him, or any person for his use, and all liens and securities therefor; and all his rights of action for property or estate, real or personal, and for any cause of action which he had against any per ²²² son arising from contract or from the unlawful taking or detention, or injury to the property of the bankrupt; and all his rights of redeeming such property or estate ; together with the like right, title-, power and authority to sell, manage, dispose of, sue for, and recover or defend the same, as the bankrupt might have had if no assignment had been made, shall, in virtue, of the adjudication of bankruptcy and the appointment of his assignee, * * * be at once vested in such assignee.” Now, what right either vested or contingent, existed in the bankrupt, at the date of his bankruptcy declared, to receive reimbursement for the enhanced or war premiums paid by him, during the Civil War?

As against whom did any such right, either at law or in equity, exist? If there was in reality no such right in the bankrupt, at the time of bankruptcy declared, it is difficult to perceive how the claim of the defendant, as assignee, to the fund in question can he founded in the terms of that provision of the statute just recited. The statute is clear that it was only existing