U.S. Supreme Court
Noble v. Hammond, 129 U.S. 65 (1889)
Noble v. Hammond
Argued December 3, 1888
Decided January 14, 1889
129 U.S. 65
A, for his own accommodation, asked B to collect money for him without compensation and to keep it until A called for it. B collected the money and, without actual fraud or fraudulent intent, deposited the proceeds to his own credit with his own fends. By an unexpected revulsion, he was forced into bankruptcy before he had paid it over, and made a composition with his creditors. Held that the debt thus incurred by B to A was not a debt created by fraud or embezzlement of the bankrupt, or while he was acting in a fiduciary capacity within the exception provided for in Rev.Stat. § 5117.
The word "fraud," as used in Rev.Stat. § 5117, means positive fraud, or fraud in fact involving moral turpitude or intentional wrong, and not merely implied fraud, or fraud in law.
The court stated the case as follows:
This is an action of general assumpsit originally brought in the County Court of Franklin County, Vermont, by the late firm of Hammond & Burt, of which the defendant in error, DeForest Hammond, is the survivor, against the plaintiff in error, Sylvester C. Noble, to recover the sum of $1,000 in money alleged to have been received by him of and from them. The defendant pleaded the general issue and also gave notice under the statute, as a special defense, of his discharge by composition in bankruptcy, as provided for by the United States statutes. The case was tried by a jury, resulting in a verdict in favor of plaintiffs for $1,149.83, for which, with costs, judgment was rendered. The Supreme Court of the chanroblesvirtualawlibrary
state affirmed this judgment, and the defendant thereupon sued out the writ of error which brings the case here.
The material facts in the case are as follows: in October, 1877, the Central Vermont Railroad Company, having its principal office in St. Albans, Vermont, where the plaintiff in error also resided, was indebted to the firm of Hammond & Burt, residents of Franklin in that state, in about the sum of $3,600. It was the custom of that company to pay its debts of the character of this one in installments, and at its own convenience. Hammond & Burt, having experienced considerable difficulty in collecting prior debts from the company, requested the plaintiff in error, as a matter of accommodation to them, to collect said indebtedness for them, and he consented to do so. In pursuance of this arrangement, they called at his office on the second of October, 1877, he at the time being out, and left for him an order of which the following is a copy:
"ST. ALBANS, VT., Oct. 2, 1877"
"Central Vermont Railroad will please pay to S.C. Noble or order the whole amount due to us."
"HAMMOND & BURT"
Immediately after they had left his office, the plaintiff in error came in and, the order being handed to him, he stepped to the door of the office, called to them as they were crossing the street on their way to the depot, and asked them what he should do with the money when collected. They testified that they then told him "to keep the money until they called for it." He testified that they told him "to keep and use the money until they called for it," or words to that effect.
On this order the plaintiff in error collected $1,000 from the railroad company -- $500 on October 3 and $500 on October 12, 1877 -- and deposited these sums as collected in bank, to his own credit, as he deposited his own funds. On the 26th of the same month, he failed, and on the 6th of November, 1877, on the petition of his creditors, was adjudged a bankrupt. Subsequently, an offer of composition to his creditors was duly accepted and confirmed by a majority of them, but was not accepted by these plaintiffs. chanroblesvirtualawlibrary
It appears from the bill of exceptions that "there was no evidence tending to show any actual fraud or any fraudulent intent in the defendant's mingling the money with his own and using it." The jury returned a verdict for the defendants in error under instructions from the court which authorized such a verdict only if the instructions given by the defendant in error to the plaintiff in error were to keep the money until they demanded it.