It would seem, from a C8bUal of tbe patents in question. that it would bardly bepossibletocombine.in one structure aU tbe in.. ventiODl! therein claimedjbut j if 'the defendants do so infringe, tbere should be 'an·appropriate allegation to that, effect. Tbe,deI1lurrer is allowed, the complainant·to amend within 20 days.
(Dilftrict (Jourt, 8. D. New York.
January 17, 1887.)
PAYMENTS-APPLICATION OF-BOTTOMRY BOND-GENERAL ACCOUNT-SUIP'S AGENTS-NECESSARY ADVANCES-:'MASTER'S DRAFT DISCOUNTED.
Payments by the debtor will be applied according to the intent of the parties, where that can be determined with reasonable certainty.1
The steamer M., belonging to the Stettin-Lloyd line, having arrived in New York, subject toa bottomrI bemd, S."the owper of the lipe, being in embarrassed circumstances, engaged' W; & Co. to act as resident agents of the line , ip provided they,wouldarrange. to takeupaIl,d hold the b.ottomry " bond,' to which W. & Co. agreed; having first arranged that tl;le master oftha .M. upon S. for £1,70Q.i!1 favor of.W.& Co. payable in Germany, four day,s M.'s arrf,val there, which draft was discopnted for W. & Co.'s ben$f.it.A,draftwll$dJ;!'wp. byW. & CO."also I,n order to procure the Iliscount,and t1;le next day W. ,8fCo. UR tP'E!, bottomry bond, advancing therefor about $5,000, the excess 6ver the money's received upon the draft. The proceeds of the draft were put by W. & Co. to the credit of S. 'in their "general account." A different special account was kept, as respects the bottomry. W. & Co. soon after made large advances.infttting out the vessel, and accepted various accommodation for, S. ill the current business. Held, upon the circumstances and contlictibt evidence, that the draft 'was designed to aid W. & Co., both in taking the as'slgnment of the bottomry bond and also in, m,aking,t,heir, necessary,"advan,ces i,n,,fi, tting ou,t the, ships of the line for their frQm port; tlllltt it wall designed be applied, first, against these riecess!iW'adV'sncesand li'l1bilities'f\lCurred by W.& Co. in the current businegs" aner the balance only; ,together with any balance of profits from the curTentlwsinqss, wall ,to be applied upop,bottomfY,;. that the proceeds of the draft were not a payment by S., llor hisnioneys, until the draft was actually flaid by him;' 'and at :the date of'such payment, W. & Oo.'sadvances and liabilIties in the 'current business b'eingequalto the proceeds Of the draft, none of it was thep, ,applicable ,upon. the bottomry lien; that, anapcount having been made upt6 the first of January fi>llowing, upon which a halance was stated 8S'dueto W. & Co, upon "all the various accounts," the credit to S. appearing in theit· genera) account, must be' deemed applicable' to thebotto1Dry lien, after discharging-the debts belonging to the current bl1siness. Held,fU'l'ther, that two'speCial debit accounts, one of them being a draft of £600. the SUbject of one of the above suits, being !found to belong strictly to current business, properlyJormed apart of the general account, and the, credit balance on that acc;:ount .applicable t);lereto. and that the draft, of £600 was thereby paId' andextlllguished. .. , .
Ed,'wardiH. Hobbs, for lib61ant.
See Magarity v. Shipman, (Va.) IS. E. Rep. 109.
EdUJard Salomon, for claimant.
BlujWN, ,J. In May, 1886. Schultz, the owner 'Of the Stettin-lloyd between New York and Stettin, having failed in busiline Of ,the,s#=!amer Martha, then in this port, was libeled upon numerous claim:S, includinK the above suits, upon one of which she was sold,and her proceeds ($50,000) deposited in the registry of the court. The libel £lrst aoove named is to recover it balance of $9,175.87, alleged to bEidue oU: llbott'omty bond executed upon the steamer at Halifax, in February, 1885, in the principal sum of $12,115.40. The,secOrtd suit is upon the master's draft for £600, given to the libelants at New York, April 25, 18'85, purporting to be drawn "for necessary repairs and silpplies." The petitioners, a German bank, holding a mortgage upon the steamer, were allowed to'iptervene for the protection of their interests, in the determination of the amount due. They contend that, in the subsequent dealings between the libelant and the owner of the Martha, a larger sum than is credited should be applied in payment of the bottomry bond. In the second 8uittheyclaim that the draft was without authority, because the libelants had already funds in their hands sufficient for the supplies in question;, ahdblso that it has been paid. I shall not attempt to indicate more than a few of the leading facts of this contplicated case. On the arrival of the Martha in New York, subject to bottomry; the evidence' leaves no doubt that Schultz was in pecuniary embarrassment; and that the arrangement made with Wright & Co. was for the douJ?le purpose Of preventing the speedy sale of the ship for the payment 'of the bottomry bond, and also to enable Schultz to continue to carry on the business of his line. With this double end in view, he engaged the libelants' firm, Wright & Co., to act as the resident agents of the line in New York,upon their taking up the bottomrybond, and obtaining an assignment of it to themselves, with the agreement on his part that there 'was no defense against it, and that the lien thereof sh,ould not be prejudiced by any delay of W & Co. in enforcing it. As a part of the ,same arrangement. also, Wright & Co. were to negotiate a draft drawn by the master of the Martha upon Schultz, at Gothenberg, payabJeifourdaysafter arrival of the Martha, for £1,700. The draft was aGcqrdingly drawn, but Wright & Co. were unable to raise the money upon it, except upon a collateral draft of their own, drawn by them upon Schultz for the same amount, which they gave; and upon both drafts together they obtained, on the second of March, 1885, the sum of $8.117 .50, On the following daythey paid the holders of the bottomry $13,152.55, the amount due upon it, took an assignment of the bond to themselves, and thereafter attended to the business of the line, until the failure of Schultz, in May, 1886. When the bottomry bond was taken up by Wright & Co., it was pected that ll. considerable sum would be received to the credit of the ship on account of the bond, from the general average contributions dne from the cargo. During the following year the sums received from this source >amounted to $6,410.97, .which, with 6785.31 received. from policies,
were applied by the libelants upon the, bottomry accoullt, reducing it to 89,175.87, the amount here claimed, after the payment of considerable charges,. not here other sUJnsfor premiums The. the amount ,raised upon the draft of £1,700 should be applied. upon account of the bottomry bond. Schultz testifies that,sjlch, was the while the libelant testifies it was intended to go to the credit of the line on general account, for the purpose of giy-ing the line credit in New York, and to enable them to conduct its business as agents, without being always largely in advance; and also as security for four notes given by Schultz to them, payable in 30, 60, 90, and 120 days, for ,a previous debt of about $1,700. From the evidence it is p1l;tin that there was nothing in the negotiation itself, or in the express contract of the parties, that amounted to any specifiq appropriation ofthis air its proceeds, to the one acco:t;liQ,t rather than to, the other. Itwas therefore applicable to either, or both, ,as justice should require. ' , For the mortgagee, it is contended that it would necessarily be applied by law to a debt already due, rather than to a debt not due, and still more to the bottomry, as against a mere prospective or contingent ljability; and that as the bottomry bond was due, and as there was no other obligation of Wright & Co. then actually existing, the whole amount is necessarily applicable upon the bottomry bond, from the start. Stooe v. Seymour, 15 Wend. 19-23; 4 Kent, Comm. (11th Ed.) 468, note. , Without questioning at all principle invoked, in a case presenting the simple alternative.as regards the application ola payment to a. debt due, or to a contingent or expected obligation, the principle cannot be justly applied here-Ji7irst, because this is not a case of payment at that time by the debtor; and, secand, because that would manifestly be contrary to the intention of the parties. This intention must in every case control, where it can be determined with reasonable certainty. , In the case of Nationai 13ank v. Mechanics' Bank, 94 U. S. 437, 439, the court say: "The rule settled by this court, as to the application of payments, is that the debtor or party paying the money may. if he chooses to do so, direct its appropriation. , If he fail, the right devolves upon the creditor. If he fail, the law will make the application according to its own notions of justice. Neither of the parties can make it, after a controversy upon the subject haIJ arisen between them, and, afortiQ11" not at the trial." . Wright &00., in this case, placed. the proceeds of the drafts discounted to the credit of the general account. It is the first item in that account, while a separate and special account was opened in respect to the bottomry bond. Under the circumstances of this case, the fact of placing the draft on the general account I cannot regard as conclusive evidence of ,the.,jI),tention of either party that no part of the proceeds of this draft, on paywent, should in any event go to the credit of the tomryaccount. It was expected, on the contrary, that the business of the line would prove profitable; and, in suspending the payment of the bottomry, was the undoubted implication and expectation that the
net earnings olthe line would go to relieve the ship from this charge. The contemporary letters show this expectation. This draft was, in effect, a draft upon the Martha's outward freights, i. e., upon the Martha's earnings. Like all the other drafts, it is applicable, first, as the accounts correctly show, to pay the current accruing liabilities of the business of the line, and any balance after that should be applied to the bottomry account. Such, I think, was the evident intention. But, until the draft was paid by Schultz, the moneys obtained on it were not his moneys, and the proceeds could not properly be put in any other account than the general account. It is evident, however, that the negotiation of this draft was a condition of Wright· & Co.'s 'undertaking the agency of the line, and of their taking up the bottomry bond. They certainly had the benefit at once of the moneys raised on it. They were intended to have that benefit, and were in donsequence required to advance only about 85,000, instead of &13.,000; at that time, since they did not take up the bond until the day-after they had procured the money upon a discount ofthe draft. But as this draft had not been paid, and was secured by their own collateral, 'it is clear that it could not reasonably be applied at once to the discharge' of the bottomry lien,-a lien, which, if once discharged pro tanto, could not be resuscitated if the draft were not paid. Wright & Co. could not be expected to part with a lien by bottomry, upon the mere discount ofa draft for which they were themselves still responsible. Until payment by Schultz, the £1,700, as I have said, were not the moneys of Schultz; and, in truth, the draft was but a means of assisting Wright & Co., by a discount, to raise the money necessary to enable them to take up the bond at once, as well as to make the other advances needed in fitting out the ships for sea. It aided Wright & Co., but the proceeds could not be definitely applied until the draft was paid by Schultz; and this consideration is also a sufficient reason why, in the agreement given by Schultz at the time, specifying that there was no defense to the bond, nothing waS said about the moneys raised upon the draft. For the outfit of the Martha on her first subsequent voyage, Wright & Co., within a few weeks, advanced the sum of $3,340.16, and other bills remained unpaid; making, in all, about $5,500, all of which were entered as a debit the general account. The precise date when the captain's draft of £1,700 was due does not appear, since the date of the Martha's arrival is not shown; but the draft bears an indorsement "Paid through bill on Lond6n, March 24,1885." It must have been finally paid, and Wright & Co. informed thereof, not long after the first of April, 1885. At tha.t time, the general account of Wright & Co. would show, if both the b;otto:rriryaccount and the dicounted draft were excluded, that they were in advance to Schultz in the sum of about$5,5pO. Crediting the draft in the' general account, they would appear to be in funds, to Schultz's credit, about $2,600; against which still stood the four notes above mentioned, amounting to $1,700, none of which were yet paid, while the necessary disbilrsements for the Katie's twenty-first voyage ",ere'to be soon'pl'ovided for.
There were also two obligations on which Wright & Co. were liable, as sureties for the vessels, totpe amount of about $3,700. But the contract shows that, Wrig,ht& Co. had in,curred these latter obligations as one of the conditions of receiving the agency of the and the contract evidently does not contemplate theirhplding the moneys received from the draft of £1,700 as security for these two contingent liabilitjes, neither of which has even yet been paid. I think they had no right to hold the moneys received from the draft of £1,700 upon account of . those contingent obligations. The letter written by Schultz on March 21st; from Havre,shows clearly that his understanding had been that thif$ draft of £1,700, when paid; would -go to offset Wright & Oo.'s advances in current business, and that only the balance,after paying these aq,vances, .would go on the bottomry account. The lang,uage of. that letter,:is incompatible with the supposition that the whole £1,7QOwould beat once applied upon the bottomry bond. He refers to the difIicultyof pleeting the £1,700 draft, and says:. I may Hhave todrlj,w 011 you for £1,000, at 60 days? sight. * * * If you should not be in funds by the time the note flllls due, you may draw back on me, 60 days, London, or take captain,'s draft," etc. Two days after, he accordingly drew: pu Wright & Co. for the two sums of $2,500 and $1,215.2;>, at 60 day,S from date, which were paid pyWright & Co.wpep. due. Had the £1,700 not been designed in part to oJIset Wright & Oo.'s advanceR "in purrent there could ha,ve betjn 110 such uncertainty as this letter contemplates. A large debit, .aswe have seen, must have existed from .the first. How much .wou1<tremain of the proceeds of the £1,700 $al! the evident uncertainty contemplated, and it was against this excess that Schultz desired to drltw. Wright & Co. were therefore authorized to retain this balance against aU cu.rrent advances, including thedrafts thus drawn by Schultz upon them, instead of applying it upon the bottomry bond, as otherwise sho:uld.have been done. That letter has the weight of a nearly contemporaneous act, and it in part sustains the libelant's contention. The two new drafts made by Schultz more than covered what remained of the £1,700·at the time when Wright & Co. could. have kuown of its payment, and left at that time applicable to the bottomry account. From the general intent and expectation, to which I have above referred, that the net earnings of the Martha, or of the line, should go to reduce the lien. upon bottomry, after first providing for all the current - expenses and liabilities incurred by Wright & Co., it would follow that any such net credit balances as should subsequently appear at the time of rendering all their general and special accounts ought,in justice, to be deemed so applied. It would be most unreasonable to suppose, unless there were some. very clear evidence of the fact,that the parties intendeq. to preserve indefinitely a large cr.editbalance, without any application of it to the outstanding lien by bottomry; and, a& I have said, the early letters of Schultz 'indicate the contrary intention. In October,. 1885, Wright & Co. rendered to Schultz an account of all their various transactions, showing a considerable balance on general.aq..
count, and a net indebtednessw them, "upon all the accounts,' of $5,710.46, with interest and commissions and expenses, in case of bottomryandaverage." But thEl'ittlms omitted are of so considerable importance as to make this statement of no use. To this account, which included the £1,700 in the general account, Schultz, though he made some .other objections, never objected to the inclusion of the proceeds of the draft of£1,700. But as the final balance upon all the accounts was except ItS to interest, commissions, etc., he had no interest in the question where the £1,700 wa,s credited; and but little, if any, weight canther.efore be given to the circumstance that he'made no comment on it. in January following, Wright & Co. rendered a further account, made .pp'to the first of January, 1886. In their letter, inclosing all these accounts, they show, a, balance to the credit ofSchultz, on general oUS,634.96, agaihst which were three separate and specialaccO,unts; bameiy: Tbebottomry bond account, debit balance, $9,753.39; steamer, twenty-first,voY'1'ge, debit, $4,367.40; the Martha, on her third debit, 'They add "(6) A statement of balances." "This shows,"they say, "an amount due January 1st of $8,593;79, which covers all these various accounts inclosed." , The debit on account ,of the :Martha, above referred to, is the same as that bf'tl1E1' draft 'of £600: hi' suit. When the January statement ceived at Stettin,Schultz had arrived in New York, and did not see the account till'long afterwards; and, intheir interviews here, neither party l'eferreq to it. There are some corrections to be made in it on both sides. When corrected, the credit on general account must be applied according to the rigllt$ of the parties as they then stood. . The accounts were merely protested drafts, drawn by the master, upon Schultz,' ill 'flitor' of Wright & Co., in settlement of debit balanceson two of the vOjTll.ges ofthe Martha and the Katie, in the usual .They were a part of the current business of the line. Other items arid balances of tlielle .and.similar voyages were ent.ered in the gen7' eral account; and shown to be peculiar in the nature of these protested drafts that any legal distinction to be made in respect' td them from other items contained in -the general ll.Qcount,sofar as the app'lication.of the credit balance. These two "special accounts" of the Martha and 'the Katie must therefore be first discharged out of the credit balance standing on the general account, because belonging to current business. This would leave a balance of credit of $1,159.60 remaining to be applied on the bottomry account. To this must be added the following items of debit in the general account, which, I think, are not chargeable against Schultz under Wright & Co.'s contract for the agency of the line, viz.: the items of $85, $100, and $100,. under date of March 4, 1885, amounting together to $285. Wright & Co. are also to be credit.ed with the error of $180, referred to in their letter of January 1, 1886, making a difference in Schultz's favor in these items of $105; which, added to $1,159.60, makes $1,264.60. This amount should be applied on the bottomry account, as the result of the accounts submitted up to January 1st; and the moneys subsequently re-
ceiyed specifically on .the bottomry account ,also be credited. ThIs reduces the amount due upon the bottomry acpount to $7,911.29, be held with interest from April28,:L886; and the drl!-ft extinguished by the application of the credit balance, as stated in the account rendered to January 1,1886. The c(;msolidation of all the' accounts in striking a.. final balance up' to January 1, 1886, indicates the understanding of Wright &;Co. that such application of credit balances was to be thus made. ,They requested payment of this final balance. Payment of that balaI:1-ce, at that time, would manifestly have discharged the bottomry. bond. ,The general credit balance of that date must be deemed, therefore, applied at that of July, time, as above indicated. As early as the Schultz had written his belief that, inless than three months, "all will be square," through the receipt of passage moneysj and in the same letterhehad expressed the hope that Wright &, Co., eQuid "hold the old squared by receipts from pasrespectively outside accounts oveJ,' then due. sage moneys." The two drafts of £600 and Even If tJwywere designed, to be embraced in the ternis "old outside accounts," which seems difficult to suppose, they were manifestly designed to be paid from the subseqllent receipts. It was the subsequent receipts thlJ,tmadethe credit baIan<:e on general:llccountof January 1, 1886jand Wright & Co.'s offset. of,them in the statement of the final balance of "all the various accounts " was in accoI'dance with this request. , " , .. ' I find nqthing else in the evidence that should pI'event the application of the balances a& stl;lted in the accounts of 1, 1886. The posed liability 9f Wright & Co. Qnthe captain's qraft foI' $2,653.75 peal'S, at page 92 of the testimony, not to have been mcurred until the ninth of January, after these accounts. were made up., 'The draft was.at paid by at maturity ,as it once negotiated, and does not appear in the present, acoou.nt. All Wright & ,Co.'s liabilities in the current business, up to January 1, 1886, being tbus provided for by their a,ccounts rendered totbat date,' their subsequent dealings must be deel;Ded incurred on· the ordinary risks of the business they had assumed, &n,d independent of , '.,. ' Decrees may be entered in accordance with the result above indicated.
, GALLo· t1.
.DiatrUt Oo1Jlrt, 8. D. New YO'/'k. January 8,188'7.
CnARTER,PARTY-CnARTERER TO ENTER VESSEL-LIQUIDATED DAllAGES.
W"l,lere the act for which damages are stipulated or estimated, by the conIs one calculated to produce injury, and the damages are of a nature not susceptible of easy proof, the amount stipulated will be given, if not clearly unreasonable.
The bark I. G. was chartered to the respondents from Smyrna to New York, the charter providing that the vessel should be" entered at New York, by the respondent's agents, or, on default thereof, the owner should pay £20 esti· mated damages." On arrival at New York, the captain did not report to the charterer's agents at once.nar until the day after the vessel had been reo ported to other agents, and entered by them at the custom·house. H6ld. that the stipulation was a reasouable one. in view of the liability to injury to the charterers through delay in reporting the vessel at once. on arrival; and that the stipulated damages should be allowed without further proof of specific damage than the delay of one day.
In Admiralty. Vllo, Ruebsamen &: Hubbe, for libelant. Wilcox, Adams &: Macklin, for respondent.
:BROWN, J. The libel in this case was filed to recover the su:m of $1.33.54, part of the charter money due on the charter of the bark Idea G., fronlSmyrna to New York, by which the libelant stipulated that his vessel;. on arrival at New York, "should be by the respondent's agents,.or, in default thereof, that the libelant would pay £20estimated damages." The respondent offered to pay the freight, but claimed tQ offset under the stipulation of the because the master had not first reported his vessel to the respondent, as he was bouud to do, in order that the respondent might enter the vessel, or direct her entty, at the custom-house according to the stipulation. The term "estimated damages" is equivalent to the words "liquidated damages," more frequently found in contracts. Upon such a stipulation, where the act for which the damages are given is one that is calculated to pl,'oduce injury to the plaintiff, and does so, and the damages are of a nature not susceptible of easy proof, the settled law is to enforce payment according to the contract, if not clearly unreasonable. Ntelson v.Read, 12 Fed. Rep. 441. The object of the clause in this case was shown to be to prevent the delays and the losses to the charterer's busiwhich often arise from ness, and 'the claims for demurrage or the failure to report the vessel· promptly to the consignees or their agents on arrival. The agreement was in this case plainly violated. The master reported first to his own agents, and the vessel was already by them at the custom-house a. day before any report of her was made to the respon!lent, as agreed; and, though the latter saw in the newspaper a report of her arrival, they had no knowledge where she was. This delay of at least one day is presumptive proof of damage, though