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Hunt v. Rousmanier’s Administrators
United States Supreme Court
21 U.S. 174 (1823)
Hunt (plaintiff) loaned money to Rousmanier in exchange for several promissory notes. Rousmanier also offered to execute a mortgage of his interest in two ships as collateral security for the notes. However, legal counsel advised Hunt and Rousmanier that a power of attorney was preferable to a mortgage and would be equally sufficient as a security interest. The two men agreed that Hunt would receive from Rousmanier a power of attorney as a security for each loan. If Rousmanier defaulted, both men intended that Hunt use those powers to sell or join in the sale of the two ships to recoup any outstanding debt owed by Rousmanier. Rousmanier died insolvent months after the loan agreements were executed. Rousmanier’s debt was largely unpaid. Hunt attempted to sell the two ships, but Rousmanier’s administrators (defendants) refused the sale. Hunt brought suit to compel the administrators to join in the sale. The administrators demurred. The lower court sustained the demurrer, granting Hunt leave to amend his bill (complaint). Hunt’s amended complaint provided detail on the intent of Hunt and Rousmanier to execute the powers of attorney as essentially an equivalent security interest to that of a mortgage on the advice of legal counsel. The administrators demurred again. The lower court sustained the demurrer and dismissed Hunt’s complaint. Hunt appealed to the United States Supreme Court.
Rule of Law
Holding and Reasoning (Marshall, C.J.)
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