Statement of the Case.

plainant's agent in New York City the invoice which accompanied the consignment of September 18, 1867, for the purpose of preparing and making proof of the loss. The insurance companies refused to pay the policies on various grounds, which need not be noticed here.

The complainant returned to New York in March, 1868, and learning that the insurance companies contested their liability for the loss, arranged with the defendants to institute suits against the companies to recover on the policies held by them respectively. The defendants employed Mr. Da Costa to sue upon the policies held by them, while the complainant employed Mr. Parsons to sue upon his, and the lawyers were to coöperate and assist each other in the prosecution of all the suits.

About the time this arrangement was made the complainant opened a bank account with the defendants, and thereafter made deposits with and drew checks and drafts upon them as his bankers down to the latter part of 1875.

The litigation against the insurance companies continued until September 13, 1876, when the last collection upon the policies was made. During the progress of the litigation the complainant turned over, or assigned, to the defendants such judgments as he had obtained, and such policies standing in his name as had not been reduced to judgment, as alleged, for the purpose of convenience in collection and settlement, and with the view of having the amounts collected thereon placed to his credit. The funds collected upon all the policies, amounting to about $109,000, went into the hands of the defendants. The complainant claims that his interest and that of defendants in the amounts recovered is in the ratio of $152,266 to $29,327, that being their relative proportion in the total amount of insurance, and that the defendants ought to account to him according to that proportion, and pay their just share of the expenses incident to the collection thereof, as well as compensate him for his services in connection with the suits. These and other smaller items of account constitute the matters in controversy.

While admitting the general facts in respect to the transac

VOL. CL-21

Statement of the Case.

tion, the defendants set up in their answer that by the terms of the contract the complainant became the insurer of the goods, and was bound thereby to either sell them in Mexico and account for the proceeds, or to return them to New York free of all expense to the defendants; and that, recognizing such liability, the complainant insured all the goods, making no distinction in the manner of such insurance between his individual goods and the consigned goods; and that the policies transferred to the defendants by the complainant were transferred as collateral security for the performance of the contract, which was upon a gold valuation, and that no part of the policies was held in trust for the complainant.

On this theory the defendants kept their account of the transaction in the name of the "Mexican Arms Account," in which the goods consigned were charged at the price of $39,887.60, and to this was added the premium upon gold at 45 per cent, amounting to $17,949.42; and on the aggregate of these two sums interest was computed from September, 1867, to May 1, 1882, amounting to $53,801.28. This account was also charged with the expenses connected with the suits on the policies turned over to them, amounting with interest to $16,710.72. These expenses consisted of attorneys' fees and sundry outlays for witnesses in connection with the suits. These various items were not charged or entered as debits against Sturm until 1876, when they were transferred from the "Mexican Arms Account" to his account.

The defendants' construction of the contract and method of keeping the account was not communicated to the complainant until some time in 1876, when he promptly denied its correctness. The court below adopted the defendants' interpretation of the contract, holding that the consigned goods were at the risk of complainant; that he was responsible for their loss, although arising from inevitable accident, because he had undertaken to return them if not sold, and that, being so responsible, the defendants had a right to charge him with the value thereof, and treat the policies turned over to them as collateral security for this liability; and were furthermore entitled to charge him with the expenses of collecting such

Argument for Appellees.

policies, so that the complainant was entitled to credit only for the net amounts collected thereon. For this and the further reason as the court assumed that the complainant had given testimony in the insurance cases and made admissions under oath which were inconsistent with his present claim, and which should repel him from a court of equity, his bill was dismissed.

If, by the terms of the contract, as embodied in the letters of September 18 and October 24, 1867, the title to the goods vested in the complainant, or they were to be at his risk during their transit to Mexico, then it is conceded that upon an adjustment of the accounts between the parties on that basis with the allowance to the defendants of a premium of 45 per cent for gold- there is little or nothing due to the complainant, and no substantial error in the decree dismissing his bill; on the other hand, if the title to the goods delivered did not vest in the complainant under the terms of the consignment, or he was not responsible for the loss of the same by inevitable accident, then the court below was in error in dismissing his bill and denying the account sought.

Mr. John M. Butler and Mr. Solomon Claypool, (with whom was Mr. William A. Ketcham on the brief,) for appellant.

Mr. Albert Baker and Mr. William D. Guthrie, (with whom was Mr. Clarence A. Seward on the brief,) for appellees.

I. The bill was properly dismissed for want of equity. The actions against the insurance companies were prosecuted, and the payment of the policies was ultimately compelled, upon the claim that the legal title to the consigned goods was in the complainant Sturm by purchase; that the shipment was at his risk, and that he was liable to the defendants, Hermann Boker & Co., for the invoice value of the consigned goods, payable in gold. If the claim as made in the insurance litigation was true, the complainant concededly and indisputably has no cause of action in this suit. Sturm, in the

Argument for Appellees.

course of that litigation, repeatedly swore that he was the owner of, and liable for, the value of the consigned goods; but he now pretends that these oaths were false, and virtually confesses that the New York courts were then deceived and the insurance companies defrauded for the benefit of himself and the defendants.

It must be borne in mind that this perjury in the insurance cases was for the purpose of fastening liability upon the insurance companies, and recovering on the basis of legal ownership and liability, on Sturm's part, for the value in gold of the consigned goods; that this position was vital to the insurance cases as then framed, without which nothing could have been recovered, because he could not have established sufficient insurable interest; and that the parties have succeeded in collecting from the insurance companies on that basis. It matters not from what aspect we look at the bill of complaint herein whether brought for an accounting of the $109,126.27 collected from the insurance companies, or brought to obtain reimbursement for expenses and payment for services. The money was collected by perjury; the expenses were incurred and the services rendered in the perpetration of a fraud. Even if we assume that the complainant's charge that the defendants participated in this fraud is true, we are, nevertheless, entitled to the benefit of the maxim, "in pari delicto, potior est conditio defendentis." Dent v. Ferguson, 132 U. S. 50; Creath's Administrator v. Sims, 5 How. 192; Wheeler v. Sage, 1 Wall. 518; Selz v. Unna, 6 Wall. 327; Kitchen v. Rayburn, 19 Wall. 254; Bartle v. Coleman, 4 Pet. 184; Hanauer v. Woodruff, 15 Wall. 439; Higgins v. McCrea, 116 U. S. 671; Cragin v. Powell, 128 U. S. 691; Prince Mfg Co. v. Prince Metallic Paint Co., 135 N. Y. 24; Stephens v. Robinson, 2 Cr. & Jer. 209; Harmer v. Westmacott, 6 Sim. 284; De Metton v. De Mello, 12 East, 234; Post v. Marsh, 16 Ch. D. 395; In re Great Berlin Steamboat Co., 26 Ch. D. 616.

II. The consigned goods, under the original contract between the parties, were shipped at Sturm's risk, and, upon their loss at sea, he was liable to pay for the same at the invoice value thereof.

Argument for Appellees.

The legal effect of the agreement to return the consigned goods free of all charges and expenses to the defendants was to make him liable as purchaser in case of failure to return. Such was the practical interpretation acted on by the parties, sworn to by Mr. Sturm in the insurance litigation, acquiesced in for at least nine years. The contract, therefore, as so interpreted and acted upon, was not a bailment, but a conditional sale, with the option to return if not sold. Moss v. Sweet, 16 Q. B. 493, 494; Martineau v. Kitching, L. R. 7 Q. B. 436, 455; Schlesinger v. Stratton, 9 R. I. 578, 581.

If it be insisted that the title did not pass to the vendee, the intention that the risk should be assumed by him will nevertheless prevail and be given full effect. Fragano v. Long, 4 B. & C. 219; Castle v. Playford, L. R. 7 Ex. 98; Martineau v. Kitching, supra; Stock v. Inglis, 12 Q. B. D. 564.

The appellant's counsel may urge that the conduct of the parties, until the present litigation, proceeded upon an erroneous construction and misconception of the complainant's legal rights, and that the complainant acted honestly but mistakenly in the insurance litigation. In view of his own testimony in this case, such a claim is preposterous. But, even if there had been no fraud, and the meaning of the original understanding was doubtful, the court would not set aside the practical interpretation of the parties themselves at the time of the shipment and during the following nine years. If we add to this practical construction, the proceedings, testimony, and arguments in the insurance litigation, the conclusion must be irresistible that the invoice recited truly what had been understood and agreed, namely, that the goods were to be shipped at the risk of Sturm. Chicago v. Sheldon, 9 Wall. 50; District of Columbia v. Gallaher, 124 U. S. 505; Knox County v. Ninth Nat. Bank, 147 U. S. 91; Topliff v. Topliff, 122 U. S. 121.

III. The Circuit Court properly held that the bill of complaint was based upon an agreement alleged to have been made after the contract of consignment.

Reference to the bill of complaint will show, beyond question, that the claim for expenses and for services rendered is alleged to be based upon an express oral agreement entered