Potts v. Trotter, 17 N.C. 281, 2 Dev. Eq. 281 (1832)

Dec. 1832 · Supreme Court of North Carolina

17 N.C. 281, 2 Dev. Eq. 281

John W. Potts et al. v. Thomas Trotter.

A trustee wlio is obliged to employ an agent, and does so in good faith, is not responsible for any loss to the trust fund, arising from the subsequent insolvency of the agent.

This was a bill filed by the plaintiffs as executors and residuary legatees of Ralph Potts, deceased, against the defendant, also an executor, praying an account of monies received by the defendant under an assignment by one Scoli, of three vessels and their cargoes, upon trust to pay a debt due him, and after the satisfaction of that, a debt due the testator.

The defendant in his answer, submitted to an account, and a reference was made by the court of Equity for the county of Beaufort, and a report was filed at Fall term 1829, from which, and the pleadings in the cause, it appeared that the defendant, who resided in Beaufort, had insured one of the vessels assigned to him, in Norfolk; that lie had employed one Armistead, a man then in good credit, to effect this insurance, and not having the money, had sent him, Armistead, his note for the premium, which had been subsequently taken up; that the vessel and her cargo was lost, and after a tedious law-suit, a recovery was effected upon the policy; that it was the» discovered, that Jlrmistead had never paid the insurers the amount of premium, but was dead insolvent, and it had been deducted from the amount recovered. The commissioner allowed the defendant the amount thus paid by him to Jlrmistead, and charged him with only the nett sum received from the insurers. The plaintiffs filed several exceptions, which it is unnecessary to state, further than that the first presented the question as to thepropriety of the above allowance of the commissioner.

Gaston, for the plaintiffs,

moved at this term, to be allowed to file additional exceptions, supporting his motion by a reference to the report, and the exaggerated amount of sundry allowances made the defendant, to which he intended the proposed exceptions to apply.

Hogg and J. II. Bryan, for the defendant.

Rttffin, Judge.

The first exception- of the plaintiff is founded on the idea, that as the premium of insurance was deducted by the insurers when they paid the loss, Trotter cannot be allowed for it again as having been previously paid to Jlrmistead.

Jlrmistead ivas the agent of Trotter to effect the insurance ; to whom the latter, not having the money by him sent his note for the amount; and instead of paying Trotter's note to the company, he kept it and gave his own. Trotter in due time, remitted cash to take up his note, but Jlrmistead did not pay it to the insurers, and converted it to his own use. When the loss afterwards arose, the amount of Jlrmistead's notes for the premium was taken out of the sum assessed for loss, according to the usage in such cases ; and wras lost to all parties by the failure and death of Jlrmistead.

Trotter was under the necessity of employing an agent to effect the insurance, and the evidence is, that Jlrmis-tead was in good credit, both in point of ability, and personal character. It was in the usual course to send him the money to make the payment subsequently, nor does it appear that Trotter knew or had reason to suspect that payment had not been made to the insurers, until the failure of Jlrmistead and the loss, had both happened. Trotter acted in good faith and in the common course of those who have to effect insurance at other places; and is entitled to a credit for the' money paid to Jirmistead. Some difficulty has 'been made upon the question of fact, whether Trotter’s note to Jirmistead was for the premium. But there seems no reason to doubt that. The sums do not agree precisely; but are so near that a small commission, postage and the like, might make the difference. And it seems certain that Trotter must have given that note, or another sum in cash, to Jirmistead for the notes of the latter, which were.given for the insurance. Money was not paid to the insurers, but Jirmistead’s notes were deposited as a security. How were they obtained? Jirmistead would not have given them without a counter security from Trotter. That he had in Trotter’s note to him and the subsequent payment. The first exception is therefore overruled.

A party having filed exceptions, will not be permitted to extend them, unless originally prevented from completing them by accident or surprise.

The counsel for the plaintiff has applied for leave to file fusther exceptions. This application is not founded upon an affidavit setting forth any special grounds, as surprise or accident, which prevented him from excepting to the items now objected to, when he excepted to others; but merely on the unreasonableness of the allowances themselves. The application must be refused. The order of proceeding is essential to a right decision. Parties have a right to know the points in controversy, and the court has a right to require that their attention shall be directed to the questions to be contested. The same reasons which would prevent the court from looking into the accounts without any exception, forbid an exception to be now taken upon such a ground ; for that would be to leave the whole matter open to the last moment, and would be a surprise on the other party, and a great inconvenience to the court. Exceptions must be taken at the proper time, and parties must know, that the court cannot take care of them, if they will not take care of themselves.

Per Curiam. — Let the first exception of the plaintiffs be overruled, and their motion to file additional exceptions, be disallowed.