Case ID: scl_35/html/0069-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Curia, per O’Neall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Smith Mowry & Son v. F. A. & S. C. Schroder.
    
    In an action on the case, a recovery cannot be had on a contract, so as thereby to charge a dormant partner with a debt of the firm.
    A statement in a count, that defendants, as partners, bought goods on credit, then fraudulently denied the partnership, and the ostensible dealer transferred to the other the goods, is no cause of action.
    In case on a fraud, whereby the plaintiffs allege that their whole debt is lost, it is immaterial whether it was due or not at the commencement of the action.
    The defendant would have given in evidence the record of a .mortgage executed to him by his brother, although this was collateral to the issue, but it was held he must account for it, by showing the destruction or loss of the original, before the secondary proof could be let in.
    The statement that one of the defendants, and he who contracted the debt with the plaintiffs, fraudulently assigned to the other defendant his whole estate, to defeat the plaintiffs’s debt, and this fraud was consummated by collecting the choses, selling and removing the goods, &c. is not enough perse to entitle the plaintiffs to recover.
    
      Before Evans, J. at Edgefield, Spring Term, 1849.
    This was an action on the case. The first count charged the defendants as partners in trade ; and the second, with a fraudulent combination to cheat the plaintiffs out of a debt due them by F. A. Schroder. The facts of the case, as disclosed by the evidence, were these: The defendant, F. A. Schroder, was about the town of Hamburg, a year or two, before 1840. In that year whilst the bridge was being repaired, he used a boat to ferry persons across the river, which he rowed himself; and to all external appearances was poor. In the fall of that year, he set up a small grocery and barroom, with a stock worth from three to five hundred dollars. His business was gradually increased, and in a few years he took a large house, and separated the drinking establishment from his grocery. The sign over the door was “ F. A. Schro-der and all accounts were made out in his name. i In the summer of 1846, he went to the north and purchased there, ( and in Charleston, goods to the amount of 12,000 or 15,000 dollars, as variously estimated by the witnesses. This stock, some of the witnesses said, was much greater than their business would warrant, or the demands of the market required. Of this stock more than six thousand dollars was proved to have been on credit, and never- paid for; with it he opened his business in the fall, and on the 7th January, 1847, he conveyed his whole estate, consisting of a house and lot, furniture, goods and debts — valued at 10,000 dollars— to his brother, S. C. Schroder, in payment of certain notes, given by F. A. Schroder to S. C. Schroder, for a large amount.
    Among the creditors who were unpaid, were the plaintiffs, who had sold to F. A. Schroder, in the course of the year 1846, goods to the amount of $1757 28. For a part of this debt, a note for 541 dollars was taken at four months, and was not due until March, 1847. Immediately after assignment, (.on the Ilth January,),the plaintiffs sued out their writ against both the defendants. They were held to bail. One Metheney was their bail, to whom S. C. Schroder transferred a part of the goods as collateral security. The balance of the goods, and other property, S. C. Schroder sold out; and finally left the country in July,' 1847. Metheney surrendered F. A. Schroder. He was committed to jail under the bail writ. He applied for the benefit of the Prison Bounds Act— was convicted of fraud, and finally escaped by cutting a hole through the ceiling and roof of the jail. There was no evidence that S. C. Schroder was known as a partner, or that any credit was given to him as such, in the sale of the goods. The purchases were made by and in the name of F. A. Schroder, and the other defendant was wholly unknown to the plaintiffs. The defendants were brothers, and said to be Danes. S. C. Schroder, the younger brother, came to Hamburg about the year 1843, from New Orleans, where, according to his own account, he had done a considerable business ; but whether a successful one, the witness did not know. He was genteelly dressed, and continued to dress in the same way, as long as he remained. He assisted in the store, and from the interest he took in it, and the authority he exercised, and some expressions which he used, the witnesses considered and believed him a partner.
    
      H. A. Kenriclc said that S. O. Schroder took an interest in the concern.. It was apparently conducted jointly, but he never heard him say he was a partner. Heard him say there were a good many loafers about the place — that his brother had been supporting them, and he would put a stop to it.— He said, I am not going to support them. He was the most business man of the two; and the other seemed to defer to him. He exercised the authority of a principal in the store. Heard him object to the mode of doing business in Hamburg. Said he could do better in New Orleans. In July, 1844, F. A. Schroder said he was going away. He left, and was gone some time. S. C. Schroder carried on the business whilst he was gone. In the fall of 1846, S. 0. Schroder said, we have sold 20 hogsheads of sugar in Savannah, at a cent per pound profit, which was better than bringing it to Hamburg ; but such an expression might be, and is often, used by a clerk.
    Never heard he was a clerk.
    
      A. Thomas ;
    
    after the assignment, he asked F. A. Schroder if he had any mackerel; said yes, but paused, and said no; but my brother has. Seemed more cautious than before.— Was oiten in the store and would have applied as soon to one as the other. Has heard both of them direct Brooks, the clerk. F. A. Schroder, after the assignment, remained in the store as before. Would as soon have applied to buy a hogshead of sugar, to one as the other ; but not to Brooks, the clerk.
    
      Charles Gray,
    believed them partners. Had sued them as such, but failed in his action for want of proof. In 1846, asked F. A. Schroder to let him have 150 dollars worth of groceries on a credit. He said, “ hold on,” and went out, as witness supposed, to consult his brother. He returned and said he could have them. They had his note. Whilst F. A. Schroder was gone to the north, in 1846, Brooks wrote to him to come and pay; he came, but S. C. Schroder was absent and had the keys of the desk where the note was.— Brooks and F. A. Schroder he has seen with their coats off, rolling barrels, whilst S. C. Schroder looked on and directed. Has seen S. C. looking over whilst Brooks was making out bills. He looked more as if the whole affair belonged to him; but all bills and notes were made out in the name of F. A. Schroder.
    
      Oliver Simpson
    
    F. A. Schroder, came to Hamburg before 1835. He had been security for F. A. Schroder for the price of a house and lot. They were sued. He urged him to pay. Ho said they had bought a large stock of goods. He could not take the money out of the store, as his brother was not willing. He could only take out by piece-meal. He would pay after awhile, which was done. He (F. A. S.) said, before he went away, that he did not expect to return, and had sold the store to his brother. Witness applied to him, in 1844, to buy liquors. He said he must see his brother— when he returned he said his brother was not satisfied with the price offered; and he had to give a cent or more on the gallon. Could not buy from S. C. at the same low price that he could from F. A. Witness and F. A. Schroder were in goal together. He said that he and his brother had been partners, but it could be proved only by two or three men. The witness afterwards qualified this, by saying that he did not think he used the word partner, but that his brother was interested in the business.
    
      William Spires
    
    borrowed money from S. C. Schroder, which was taken out of the store desk. He repaid it to him. Saw others borrow in the same way — he was about the store acting as the other did. He once borrowed money from a clerk in one of the stores in Hamburg, and gave the clerk a due bill for it.
    In the defence, Mr. Yancey, who wrote the assignment, proved that he was applied to by S. C. Schroder to draw it. He produced, as the consideration, the following notes signed by F. A. Schroder, and payable to S. C. Schroder, viz :
    One note dated at N. Orleans, 30th June; 1838, for 3000
    One note dated at Hamburg, July 7, 1844, 2,800
    One note dated at Hamburg, 12th May, 1844, 3,500
    One note dated at Hamburg, 4th January, 1845, 1,800
    11,100
    Mr. Yancey said:
    when they came to his office F. A. Schroder was reluctant to sign the assignment. The other insisted, and they quarrelled about it — but it was signed.
    
      A. Richster said that in the spring of 1844 he was in S. C. Schroders room. He saw him have a heap of money, gold and bank bills. Wished witness'to exchange some English gold for Spanish 16 dollar pieces. He had more than $>1000 in gold, and a roll of bills as large as he could grasp in his hand, of 10, 20, 50 and 100 dollar bills. F. A. Schro-der increased his business after his brother came. He had several transactions, and was always referred by S. C. to F. A. to settle his bills. He was a shoemaker — a German by birth ; and the Schroders and he spoke the same language.
    The books were produced, and Mr. Parrott proved the writing of Brooks, the clerk, who wrote “ F. A. Schroder” on the beginning page. And on the book, kept after the assignment, the name of S. C. Schroder was written by Brooks, the clerk, who has removed to Memphis.
    
      J. J. Kennedy
    
    Lived in Hamburg ; the business was conducted in the name and under the sign of F. A. Schroder. Never saw anything which indicated that S. C. Schroder was a partner. Thought he was a clerk, in the fall of 1846, he applied for some fish — in payment of an account of F. A. Schroder — -to S. C. Schroder, who declined to pay the account until his brother was consulted.
    
      Addison Wray said he never heard any intimation that S. C. Schroder was a partner ; but did not know they were not. The business was conducted and the goods marked in the name of F. A. Schroder.
    
      It was admitted that Oliver Simpson had been convicted of rendering a false schedule; and a great many witnesses were examined as to his character. They all agreed that it was bad or doubtful. Some said they would not believe him ; and others, that they would not rely on him where he had an interest, or was prejudiced.
    The Circuit Judge charged the jury that he was a partner who participated in the profits of any business, and if the defendants were partners, it was very immaterial whether the creditors knew it or not. If, therefore, they believed that S. C. Schroder was a partner iii the mercantile business, carried on in the name of his brother, they should find for the plaintiffs. On that question there was nothing conclusive in the evidence; but if they could believe Oliver Simpson, his evidence would go far to establish it, as far as the acts and declarations of F. A. Schroder could establish it.
    On the question of fraud, his Honor charged the jury: 1st. That the first enquiry was — was the assignment for a valuable consideration 1 If there was no debt, and the notes were fictitious, then it was .a clear case of fraud ; and they should find for the plaintiffs. 2d. If the notes were for a bona fide debt, then S. C. Schroder was a creditor, and it was not fraudulent for a debtor to prefer one creditor to another, unless there was a fraudulent combination between the Schroders, that F. A. Schroder should buy the plaintiffs’s goods on credit, and transfer them to S. C. Schroder, and thereby defraud the plaintiffs out of their just debt. On the question of how much the jury should find, if they found for the plaintiffs, he thought if there was fraud, the measure of damages was the whole amount of the plaintiffs’s debt. But if they found on the partnership, then it might be, that the plaintiffs could not recover the amount of the note not due; hutas the action was case, and there was no proof that the note had been received in satisfaction of the account, he directed that, in the event they decided in favor of the plaintiffs, to give a verdict for the whole amount of their account. The jury found for the plaintiffs, in conformity-with these directions. A motion was made for a nonsuit, on the ground of variance between the declaration and the proof, which was refused. A copy of the declaration is annexed.
    It should have been stated that the record of a mortgage, in the office of the clerk of the Court for Edgefield district, from F. A. Schroder to S. C. Schroder, to secure the payment of two notes — one for §3500, dated June 30th, 1838; and the other for §1000, dated July 24th, 1843 — was offered in evidence for the defence, and refused by, the Court.
    
      COPY OP DECLARATION.
    
      The State of South Carolina, ?
    
    Edgefield District. $
    To wit : Ferdinand A. Schroder and Segismond, otherwise called Seizman C. Schroder, the defendants, were attached to answer to Smith Mowry & Lewis D. Mowry, merchants, trading under the name and style of S. Mowry & Son, the plaintiffs, of a plea of trespass on the case, and-so-forth. And thereupon, the said S. Mowry & Son, the plaintiffs, by Bauskett, their attorney, complain for that whereas the said plaintiffs, being merchants in the city of Charleston, and State aforesaid, and the said defendants being partners in trade, and carrying on trade as grocers in the town of Hamburg, in the name and style of F. A. Schroder; they, the said defendants, heretofore, to wit: on the day of in the year one thousand eight hundred and forty-six, at Edgefield Court House, in the district and State aforesaid, represented and held themselves out to the plaintiffs as being worthy of credit and responsible for whatever amount of goods they, the said defendants, might purchase of said plaintiffs, on time and credit. And the said defendants, by means of their said credit with the plaintiffs, and with the view and intention to defraud and injure said plaintiffs, after-wards, to wit: on the day and year and at the place aforesaid, and on divers other days and times between that day and the commencement of this action, purchased from the said plaintiffs large quantities of goods, wares and merchandise, suitable for the occupation and business of defendants, on credit, and to be paid for by defendants at certain reasonable and specified times thereafter, which said goods, wares and merchandise were of great value, to wit: the value of two thousand dollars — and the defendants intending not to pay the plaintiffs the amount of the value of said goods, wares and merchandise, but to defraud the plaintiffs out of the value thereof, afterwards, and while the said sum of two thousand dollars, being the price of said goods, was still in arrear and unpaid to the plaintiffs, to wit: on the day of January, in the year one thousand eight hundred and forty-seven, at the place aforesaid, agreed to hold and did hold themselves out to said plaintiffs, as not being partners in trade, or jointly liable for the said goods, wares and merchandise, and alleged and pretended that the said Segismond C. Schroder was not a partner of the said Ferdinand A. Schroder, and that the said goods had been purchased of said plaintiffs on the sole and individual account of said Ferdinand A. Schroder; and the said Ferdinand A. Schro-der, at the time and place last aforesaid, conveyed, transferred and assigned to the said Segismond C. Schroder, with the view and intent to fraudulently injure the plaintiffs, all the property and estate of the said Ferdinand, being of great value, to wit: twelve thousand dollars ; and the said Seizman, then and there, accepted of said conveyance and assignment, and of the estate and property therein specified, with the same covert view and intention to defraud the plaintiffs out of their just demands ; and has sold or removed the same beyond the limits of this State, and to parts unknown. And the said plaintiffs aver that all the said actings and doings, herein before stated, of the defendants and of each of them, were by their mutual concert and agreement; and were, by them jointly, intended to deceive and defraud the said plaintiffs out of and to the amount of the value of the said goods, wares and merchandise, so sold and delivered by said plaintiffs to the defendants ; and the plaintiffs, further, aver that they have not received from the defendants, or either of them, the amount due them for said goods, wares and merchandise, or any part thereof, although the day of payment has long since past. But that the same is unpaid and lost. Whereof the plaintiffs allege that they have been injured and damaged by the defendants by means of the premises aforesaid.
    
      2nd. Count. — And also for that whereas the said Ferdinand A. Schroder, being a merchant in the town of Hamburg, in the District and State aforesaid, heretofore, to-wit: on the first day of January, in the year one thousand eight hundred and forty-seven, at Edgefield Court House, in the District and State aforesaid, was indebted to the plaintiffs in a large sum of money, to-wit: two thousand dollars, for divers goods, wares and merchandise, by the plaintiffs before that time sold and delivered to the said Ferdinand A. Schroder, and was also seized and possessed of a large estate, property, choses in action, cash and other effects of great value, to-wit: twelve thousand dollars, which was sufficient to pay and discharge as well the said debt due by the said Ferdinand A Schroder to the plaintiff's, as all other debts which he, the said Ferdinand. A. Schroder, owed to his other creditors ; and the said Ferdinand A. Schroder, being so indebted to the piaintiffs, and being so seized and possessed of said property and effects to the value aforesaid, they, the said Ferdinand A. Schroder and Segismond C. Schroder, the defendants, afterwards, to-wit : on the day and year and at the place last aforesaid, concocted, confederated and conspired together to defraud the said plaintiffs, and deprive them of their said debt due to them by the said Ferdinand'A. Schroder as aforesaid, and af-terwards, to-wit: on the day and year and at the place aforesaid, both of said defendants, intending and designing to injure the said plaintiffs and defraud them of their said debt against the said Ferdinand A. Schroder, and thereby cause a total loss of the same, the said Ferdinand A. Schroder conveyed, transferred, assigned and delivered to the said Segis-mond C. Schroder, all the estate, property, choses in action, cash and othei effects and assets of him the said Ferdinand A. Schroder, without receiving any valuadle consideration thereof whatever ; and he, the said Segismond C. Schroder, then and there accepted and received of and from him, the said Ferdinand A. Schrader, the conveyance and assignment, and also all the said estate, property, choses in action, cash and other effects and assets of or belonging to the said Ferdinand A. Schroder, without paying or giving to him, the said Ferdinand A. Schroder, any adequate or valuable consideration thereof; and therefore the said defendants, with the view and intention still to defraud the plaintiffs of their said debt due them by the said Ferdinand, give out, pretended and alleged that the said Ferdinand A. Schroder was wholly bankrupt and insolvent, and that he, the said Segismond C. Schroder, was the bona-fide owner and proprietor of all the said estate, property, cash and other effects and assets which bad been so conveyed, assigned and delivered to him by the said Ferdinand A. Schroder as aforesaid. And the said Segismond C. Schroder, with the consent and approbation of the said Ferdinand, afterwards, to-wit: on the day and year and at .the place last aforesaid, sold and removed beyond the State and to parts unknown, the whole of the said estate, property, cash, effects and other assets. And the plaintiffs aver that the ac-tings and doings of the defendants, and each of them, (in this count before stated) were done and committed by them, with the purpose and intent to defraud the plaintiffs of their just debt and demand against the said Ferdinand A. Schroder, and they have not received the same or any part thereof, and the said Ferdinand A. Schroder has no known or visible means of paying said debt or any part thereof; and that the same has been by the said fraud and misconduct of the defendants wholly lost to the plaintiffs • whereupon the said plaintiffs say that they have been injured and have sustained damages to the amount of three thousand dollars; and therefore they bring suit and-so-forth.
    
      Báuskett, plaintiffs’s attorney.
    The defendants moved in the Court of Appeals for a non-suit or new trial, on the grounds—
    1st. That the statement of their injury by the plaintiffs was not supported by the proof, particularly the allegations that defendants were partners in trade — that the goods of plaintiffs were purchased by defendants on their joint responsibility — and that defendants had removed the goods.
    2nd. That the only fraud in the matters in controversy alleged and proved against S. C. Schroder is his acceptance of an assignment from the other defendant; and this is insufficient to make him liable iii an action upon the case.
    
      3rd. That the debt of the plaintiffs was not due at the time of suit brought. v
    4th. The defendants were not partners.
    5th. That defendants were not liable upon the case laid and proved.
    6th. That the record of a mortgage, executed by F. A. Schroder to Segismond C. Schroder on the 5th of October, 1843, to secure the payment of a note for $3,500, given in New Orleans, on the 30th of June, 1838, ought to have been admitted in evidence on the trial of this case. — And it is respectfully submitted that His Honor erred in refusing to admit the aforesaid record.
    
      Gray & Yancey, for the motions.
    
      Bauslcett, contra.
   Curia, per O’Neall, J.

The grounds of appeal have placed the defendants’s defence in such a way before the Court, that it is manifest the case of the plaintiffs, in the proof, was a great deal more looked to than the record. The charge of the Judge below shows that he and the attorneys concerned regarded the case in a twofold aspect, as first resting on the question of partnership, and then the fraud committed in the assignment. But it is plain, that in an action on the case, properly so called, a contract involving the question of dormant partnership, so as to make one ostensibly not a partner, liable, cannot be set up. Here the gravamen of this case, set out in the first count, is, that goods were bought by the defendants, partners in trade, on credit, and the fraud is alleged to be, in afterwards holding out that they were not partners, and assigning all the property by the one doing business to the other, alleged not to be a partner.— This count is really and truly no cause of action whatever. We suppose it was intended to cover such a case as is described in the 2d paragraph, on page 139, of brother Withers’s opinion, in the case of Gray v. Schroder, 2 Strobhart, and if it had made that case, then, indeed, the plaintiffs would-have had a case which could not be questioned. It is, however, remarkable, that the first ground of appeal does not even seem to question the sufficiency of the count, — it alleges merely that the proof does not come up to the allegations.

The second ground is equally untenable, taken by itself.— For it merely questions the sufficiency of the proof of the fraud, by singling out one specification, when that was only one of many circumstances pointing to the conclusion of fraud. The third ground, too, is a misconception of law.— The plaintiffs’s case is not based upon their contract, — it proceeds upon the fraud, and undertakes to show that, by its consummation, they have lost all possibility of collecting their debt. Whether it was due or not is, in this view, wholly immaterial. But the fact is. that the great bulk of the debt was due before the writ issued. The 4th ground undertakes to allege in fact, that they were not partners.— This could not avail the defendants, if that really were a question in the case. For the proof is quite enough to satisfy us as it did the jury. The 6th ground will be next considered. I have no doubt the Judge’s decision was right.— It is true, on mere collateral questions, a party not in law regarded as in possession of a paper, is allowed to give secondary evidence of its existence and contents; but here the defendant either had or ought to have had the mortgage. If he could not produce it, it was his business to give such an . account of its loss or destruction, as would have let in the secondary proof. The fifth ground is the only one which can avail the defendants, and that only in part. The case laid is defective. The 1st count has already been shown to be a clear misconception. The 2d count is thought, by a majority of the Court, not to state a sufficient case. I confess, however, that after verdict, I should have been much disposed to sustain it. It is true, it is inartificially drawn ; yet the gravamen of the action, the intent to defraud the plaintiffs, in assigning the estate of the ostensible partner to the dormant partner, the collection of the choses in action, the sale of and removal of the goods, seem to me sufficiently to make out a case, helped as it is after verdict, by every in-tendment of the law. Yet, as a majority of the Court think that count states no case, and as there was a clear mistake in saying to the jury, in this action, “ if they believed that S. C. Schroder was a partner in the mercantitle business carried on in the name of his brother, they should find for the plaintiffs,” I agree to a new trial, with leave to the plaintiffs to amend. The motion for a new trial is, therefore, granted, with leave to the plaintiffs to amend their declaration by adding a count or counts which may cover the supposed fraud, and the evidence to be adduced.

The whole Court concurred.

Motion for a new trial granted,