DUMONT 11. FRY.
293
in estate, or upon an account stated as the result of all their joint dealings; but such new proof should not be allowed except upon paymeBt by the claimant of the costs already incurred in this proceeding, nor except upon a statement in detail of the acof the joint transactions since the last actual settlement between the parties, upon which any balance ma.y cla.imed; and in any proceedings for the re-examination of such new proof of debt, if made, the testimony already taken, or any part thereof, may be used by either party.
DUMONT
and others
'V. FRY,
Trustee, etc., and others. November, 1882.)
(Oircuit Court,8. D. New York.
1.
BANKRUPTCy-SURETY GUARANTYING ANY UNPAID BALANCE-APPROPRIATION OF DIVIDEND.
C. & Son hypothecated certain bonds to S. & Sons upon agreement that the bonds to the extent of $100,000 should be held by the latter as a continuing securrity for any ollerdraft or unpaid balance that might arise upon the account of the New Orleans National Banking Association with S. & Sons. The New Orleans National Banking Association and S. & Sons having gone into bankruptcy, the claim of 8. & Sons against said association, amounting to $195,315.13, was proved, and a dividend of 55 per cent. thereon paid to their trustee. Held, that the whole of this dividend should be applied to discharge the unsecured portion of the claim of S. & !:lons against the banking association, and not ratably upon that part secured by the collaterals as well as upon that part unsecured. 2. SAME-GUARANTY OF PART OF DEBT.
Where a surety guaranties a limited part of a debt and not the unpaid bal· ance of a debt, with a limitation as to the amount of the liability in case of insolvency, whatever is paid as a dividend arising from that part of the debt must be applied to discharge thA.t portion; but when the guaranty contemplates the protection of the creditor against any ultimate balance that may arise upon the dealings between the debtor and the creditor, this rule does not apply.
E. A. Hutchins, for complainants. Platt tt Bowers and Man tt Parsons, for defendants. WALLAOE, C. J. The question now raised upon the settlement of the decree was not suggested at the hearing of the cause or upon the briefs of counsel, doubtless upon the assumption that there would be no controversy in regard to it, the principal contention being disposed of. It was decided that the hypothecation of the collaterals made by Cavaroc & Son to Schuchardt & Sons was upon the agreement that the bonds, to the extent of $100,000, should be held by the latter as a continuing security for any overdraft or unpaid balance that might arise upon the account of the New Orleans National Banking A.ssocia.
tUm with Schuchardt &;, Sons.
The bonds were held by Schuchardl;1
& Sons pursuant. to,the terms of the h.ypothecation until the suspen-
sion of the banltingassooia:tion,when the latter went into liquidation. As was subsequently' aEicertained, the unpaid balance of the account due from the banking association to Schuchardt & Sons was the' sum (adding interest) of $195,315.63. Thecomptrol1 of the currency, r pursuant tothe of the laws of congress'respecting national banking associations, pr<;lceeded to appoint a receiver of the New Orleans National Banking Association, and to wind up its affairs. By section 5236, Rev. St., the comptroller is required to make a ratable dividend of the moneys arising from the assets of such associations upon all claims proved to his satisfaction. Fry. as trustee in bankruptcy of Schuchardt & Sons, proved their' debt of $195,315.63 against the banking association to the satisfaction of the comptroller. The comptroller thereafter declared a dividen,d of 55 percent. to the creditors of the banking association, and'paid Fry such a dividend upon the claim prbved by him. The question now is whether Fry can apply the whole payment thus received, 'first. to discharge the unsecured portion of the claim of Schuchardt & Sons against the bank· ing association, or whether he must apply it ratably upon that part secured by the collaterals as well as upon the part unsecured. Obviously this is not the ordinaq case when a creditor holding two d!3mands against his debtor, one of which is secured and the otter is not, may exercise his right to appropriate a payment in the absence of any application made by the debtor at the time. Nor is it the case neither party having made application of a voluntary payment. it devolves upon the court to make the just and equita.ble appropriation. The payment here was not made by the debtor, alid the case, therefore, is not controlled by the rules ordinarily governing the appropriation of payments made to credit<:>rs by debtors. The payment here was made by the law-the statutes of congress which vested the comptroller of the currency with authority to distribute the assets of the banking association, and which prescribed the mode of distribution.' Neither the debtor hbr the creditor could exercise the rigllt to determine the application of'the dividends. If the case turned merely upon the law oltha appropriation of payment, it would not be a. doubtful one. ' The' general rule is that where the payment is'llota. voluntary one, but is made under legal proceedings, it is to be appropriated to all the demands against the debtor ratahly, (Black. s'ttlne v. Hill; 10 Pick:. 129; Com. Bank v. Cunningham, 24 Pick. 210';)and'it would 'seem clear that as each dollar of the demand
295
its· ratable proportion of the 8umrealized froi}i·the&.ssets of the debtor, the sum earned by one portion of thedamandcould· not be credited to the should ba applied ratably upon eaoh dollar of the' demand, whethe'l!-Ejecured or unseoured. But the question hel'edepend;s, not upon the law Of the: appropriationof payments, but upon the effect of the agreement between the sureties and the creclitors-. If Cavaroc &; Son had become ties' for $100,000 of any advance that Schuchardt &Sons should make to the New' Orleans National Banking Association, and the Hchnchardts hadadvanoed$200,000, it would· be plain, upon authority, that the dividend earned by the whole advance should be applied ratably. .As .between the surety and the creditor that would be a case where the latter held two distinct demands, and ing from one·of them could not be applied to the other without divertingitfrClln its propel' fund. ·But here the Cavaroos agreed with the Sohuchardts tha.t'the latt-er might advance any sum' they might see fit to the New Orleans NationarlBanking Association, and that the Cavarocs' bonds, to the extent of $100,000, should be security for any unpaid .balance of the advances. The law can make no application of the payments received on account of the adva.nc6s contrary 'to the agreement between the pltrties; and" as it was agreed that ·the Cavarocs should be sureties to the extent of $100,000 for any unpaid ·balance arising between the primary parties, .the general doctrines of the appropriation of payments cannot be invoked to defeat the agreement.Acareful reading of ·the ·English authorities supports this conclusion. The result is· determined by the character of the undertaking of the suretyin each case. Ex parte Hope, 8 Montagu, D.& D.720; Midland Bankin,g Co. v. Chamber8, 88 Law: J. Ch. 478. As is held in Ellis v. Emmanuel, 1 L. R. Exch. Div. 157,. "it is a question of conEitructionon which the court'is ·to say whether the intention WillS to ·guaranty the whole debt, with a limitation on the liability of the surety,ot to guaranty a part of the debt only." In Hobson v. Bass, 6L. R. eh. App. 792, the undertaking of the surety,was construed as though it read·: "I guaranty the payment .of aU goods supplied, but my liability is not to be inoreased by their amount exceeding £250." In Ex pavte Rushforth, lOVes. Jr. 409, the sanie interpretation, sub·stantially,; was placed on thenndertaking of theslirety. In Paley v: 'Field, 12 Ves. 'Jr. 434, the engagement the surety recited the intention·ofthe p8irties to bankers shblildJiot ·be indeIIlniiiedby the surety!or. any·l08s which thEly should; sustain
of
296
FEDERAL REPORTER.
by giving credit to the principal debtor beyond the SUitt of £1,500. The master of the rolls says: "The instrument marks distinctly that the sum for which the surety was to be answerable was a8 against him to be considered as the whole amonnt of the creditor's demand." BardweU v. Lydall, l> Moore & P. 327, is decided on the authority of Paley v. Field, but upon the facts cannot be reconciled with it, the guaranty being to secure a running balance of account. In Raikes v. Todd, 8/Adol..& E. 846, and in Thornton v. McKcwan, 1 Hem. & M. 525, the guarantee was to hold the plaintiff ha,rmless for advancing a specified sum to the debtor from time to time, as he might require. In Gee v. Pack, 33 Law J. (N. S.) 49, a note was pledged as security to repay an ad vance of £300 "now or hereafter to be made" on a banking account with a third person. COBURN, C. J., holds thai the "document amounts to a promise to be liable for an advance to the extent of £3UO," and "not a general promise to pay £300 on any balance, however arrived at, or that may remain due on a general advance to the principal." In all these cases an advance was made in excess of the sum guarantied, and upon the debtors becoming insolvent the creditor received a dividend on th£J whole advance, and it was held that the dividend was to be applied ratably on the secured and unsecured portion of the whole demand. They all proceed upon the distinction that the surety had guarantied a limited part of a debt, and not the unpaid balance of a debt, with a limitation as to the amount of liability,-a distinction which seems subtle, but which rests on the supposed intention of the parties. In a guaranty of a limited part of a debt the parties to it do not contemplate, as between themselves, any augmentation of the debt. Whatever is paid, therefore, as a dividend arising from that part of the debt must be applied to discharge that portion. As between the surety and creditor it is as though no other debt were held by the creditor against the debtor. To apply the same rule when the guaranty contemplates the protection of the creditor against any ultimate balance that may arise upon the dealings between the debtor and creditor, would be to ignore the intention of the parties to the guaranty. The conclusion is therefore reached that the bonds of the CaveIoc8, having been pledged to secure any unpaid balance arising upon the acconnt of the New Orleans National Banking Association to Schnchardt & Sons, it is quite immaterial to the former how, when, or by whom part of that balance has been paid, 80 long as $100,000 re.
INGAJ"J"S V. TWill.
297
mains unpaid. If, however, the dividends reduce the balance below the amount of the pledge, the sureties are to have the benefit of the reduction, because upon payment of the debt they would be subro. gated to the creditor's lien upon the bonds. See S. C.12 FED.
REP. 21; 13 FED. REP. 423
INGALLS 11. TICE.
(Oircuit C'ourt, S. D. Nf/l.O l'ork. PATEN'l'S FOR INVENTIONS.
May 2, 1882.)
Where the patentee entered into an agreement whereby he granted to complainants the sole right to sell the patented articles witbin certainspll()ifie<lter. ritory, it do'es not grant any part of the legal estate in tbe patent. Therigb.t of the patentee, not only to make lind use, but to authorize others to make and use, the articles within the specified territory, remains intact.
F. H. Angier, for plaintiff. Kuntzman & Yeaman, for defendant. WALLACE, C. J. The demurrer must be sustained on the ground that the bill does not show the complainants to have such an interest in the patent as is necessary to enable them to maintain suit for an infringement. 'Ihe allegatiou of the bill in this behalf is that the patentee, for a valuable consideration, entered into a written agreement with the complainants "whereby the patentee granted unto said complainants the sole and exclusive right to sell said patented articles" within certain specified territory. The written agreement iBnot set forth. Its legal effect cannot be extended by inference beyond the fair purport of its terms as alleged. It does not purport to transfer to the complainants the right to manufacture the patented articles in the territory described, or the sole right to use the article in that territory. Not being a transfer of an undivided part'of a whole patent, or of the exclusive right to the whole patent, for a. particular territory, it is simply a license. Gayler v. Wilder, 10 How. 477. It is a grant or per· mission for a limited use of the invention within certain territorial limits. The complainants did not acquire any part of the legal estate in the patent. They could not authorize others to make the patented articles. The right of the patentee, not only to make and use, but to authorize others to make and use, the articles within the specified territory, remains intact. As the patentee is not 8. party to the suit, the complainants cannot maintain their bill. Demurrer sustained.
TIlE
AUS1'RIA.
(Two Cases.)
(Distrt'ct Oourt, D·.
ai, 1882.)
Inevitable accident is where a vessel is a lawful avocation in a Jaw· ful manner, using proper precautions against danger, and an accident occurs, It is enoug.h that the caution exercised should be reasonable under the circumstances; such as is usual in similar cases, and which has been found sufficient, by long experience, to answerthe:end in ,view"'"'ithe safety of life and property. The highest degree of caution that can be used is not required. SAME-CASE STATED: Where a fast to a wharf by a competent band o{stevedores by fasts Which, through long experience, are deemed by them sufficil3,nt,-\.hrough the actiori the winds and waves, breaks her fastenings arid drifts towards a moving to a schoon'er, placing the schooner in such imminent. peril that . place she is capsized andfollllders, it is Ii case of inevitable accident.
of'
in
M. Andros, for libelant8. W. H. L. Barnes, for claimants. ,,, , HOFFMAN, D. J. On the eighth of Mareh, 1881, the ship Austria. and the BCow-schoonerModoc were lying at a'pier on the north side ofa slip in Oakland LongWhatf. ,The Modoc arrived about 12 or 1 made fast to the wharf astern of the Austria.-the latterbeirig the wharf, towards its head. At about 4 o'clock p ··M:theModocmoved fnrtherup the .slipto a position south and:abreast of the Austria, with the object of getting nnder her lee, as the 'weather had become threatening. She put out' several lines to th'e' wharf forward and astern of the Austria, Jtnd attached one to the l'atter' vessel about amidships. The wind continued, as night came, on,: to increase inviol:mce, and at abouiB o'clock the Modoc was hailedfroiu the Austria to let go the line attached to thahessel. Before, however, this could be done, the line was cast off by the Aus· The Modoc then harile'd off to the south 'sideofthe slip toaposition'to the south of and not far from abreast of the Austria. A short time afterwards schooner was bailed framtha Austria to gat a.way,aathe latter was drifting. She had in'fa.ct patted her forwa·rd' f3l8M, and her, bow was beginning' to swing ;round towards the seemed' to be imminElnt· dansouth, bdorethe' nol'therly gale. ger:th:atthe,schooner'would be crushed betweerithe Austria and the whlir.f: 8he-i1herefote'commenced out between the Austria's stern and· the stern .of ..the' Transit,! steamer whi.cb 'was attached to the sou:therlypier:of the slip."Irr sodding her:boittwas crushed, but whether by contact with the Aust'ria,;orbythe. falling