Case ID: ohio-st_26/html/0567-01.html
Source: Caselaw Access Project
Author: {"author": "Welch, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William A. Neil v. Oscar J. Greenleaf.
    1. In an action for the recovery of money, the defendant can not, without showing the insolvency of the plaintiff, or some other cause giving the court equitable jurisdiction, have an account or settlement of a partnership between the parties, for the purpose of setting off any balance to be found due him on such settlement.
    2. Where one of two partners, by agreement between them, takes certain specific articles of partnership property, and agrees to pay his copartner for his share thereof a definite sum, at a specified time, the copartner may, if he chooses so to do, maintain an action to recover the amount so agreed to be paid, independent of the settlement of the partnership accounts.
    8. But this right of separate action may be waived, by consenting to a full account of the partnership matters, including the price so agreed to be paid for the goods; and therefore, where the plaintiff brought such an action, and the defendant by his answer prayed an account and settlement of the partnership, and a set-off for any balance found due him, and by agreement of parties the cause was referred to a master to take such full account, and the same was taken and decreed upon accordingly. Held, that the plaintiff waived his right to insist upon his separate action for the price of the goods, and the same became merged in the equity case for an account, and, therefore, that either party had a right to appeal from the decree.
    Motion for leave to file a petition in error to the District Court of Madison county.
    Greenleaf and Neil were partners in the livei’y business. On dissolution of the firm, a division of the horses and other property used in the business was made between the partners, Greenleaf agreeing to pay Neil $402.50 to equalize the value of the property so taken by each. Subsequently Greenleaf sold the part of the property taken by him to Neil for the sum of $8,000, payable in specified installments. Default having been made by Neil in the payment of the $8,000, the action below was brought against him by Greenleaf to recover the same. Neil, by his answer, set up the $402.50, so agreed to be paid to him by Greenleaf, as an offset. He also alleged that Greenleaf was insolvent, and that upon full settlement of the partnership concerns a large amount would be due to him from Greenleaf, and he therefore prayed that such account might be taken, and that any such balance found due to him might be offset against the $8,000, and that he might have judgment for the excess. Greenleaf replied, denying his insolvency, and denying that any balance would be found due from him on settlement of the partnership. And thereupon, by agreement of both parties, the “action” was referred to a master, “ to state an account between the parties of and concerning the matters set forth in the pleadings.” An account was accordingly taken by the master, and returned to the court, in which account was included as well the claim for the $8,000, and the counter-claim for $402.50, as all other matters growing out of or connected with the partnership, and finding a balance of $6,444.43 in favor of Greenleaf. A motion to set this report aside, on the ground that it was not supported by the evidence, was made by Neil, and overruled by the court. Thereupon the cause was heard upon the master’s report, and the court, after • correcting a single item therein, confirmed the report, and rendered a decree thereon in favor of Greenleaf for the sum of $6,399.98. From this decree Neil took an appeal to the District Court, where, on motion of Greenleaf, the appeal was dismissed, on the ground that the cause was one in which the parties were entitled to a jury trial, and therefore not appealable; and the question now presented is, whether the District Court erred in dismissing the appeal.
    
      McCloud $ O’Donnell and J. J. Winans, for the motion,
    claimed there was error in dismissing the appeal, and cited Ladd v. James, 10 Ohio St. 437; Massie v. Stradford, 17 Ohio St. 596; Taylor v. Leith, 26 Ohio St. \
    
      Harrison, Olds § Marsh and George Lincoln, contra:
    The action was for the recovery of money, and a legal set-off was set up in said defense to reduce the amount of the plaintiffs recovery. The issue was therefore one which either party could demand should he tried by a jury, ex debito justitice. Consequently there was no appeal.
    The particular transaction on which said set-off is founded was, by the agreement between the parties, insulated and separated from an adjustment of any unsettled accounts between them, as late partners. And by the very terms of the agreement, the time at which the amount thereby agreed to be paid by Greenleaf to Neil was definitely fixed; and so soon as that time elapsed, Neil was entitled to payment of the amount, whether the unsettled partnership accounts were then adjusted or not; and upon non-payment, Neil could maintain an action at law for money due, upon the express contact. Johnson v. Stopkerd, 2 Crompton & Meeson, 861.
    Partners may separate any portion of the partnership property from the rest, and adjust that portion, and if, upon an accounting and adjustment of such part, a sum is found to be due from one to the other, a promise to pay that sum is binding, and an action may be sustained upon it, notwithstanding the balance so found is not the final balance upon a settlement of the whole account of the partnership. Gibson v. Moore, 6 N. H. 578; Briefly v. Cripps, 7 Carr & P. 709; Copley v. Richardson, 4 La. Ann. 512; Duncan v. Lyon, •3 Johns. Ch. 360; Coswell v. Cooper, 18 111. 532; Venning v. Seckie, 13 East. 7; Parsons on Part. 273.
    Before the code, an unliquidated claim was not the subject of a set-off. And the code has not changed the law as it existed under the statute of set-offs, except as to matters -of equitable defense. Section 92 of the code is limited by section 97. Loans v. Hall, 1 Handy, 434.
    As a general rule, the court of chancery followed the rule of law in regard to set-offs. Still, if the court found a case of natural equity not within the statute, it permitted an equitable set-off, if, from the nature of the claim or from the situation of the parties, it was impossible to obtain justice by a cross-action. 2 Vern. 127 ; Mad. & G. 95; 4 Conn. 302. As, for instance, insolvency of one of the parties, which must be alleged and proved.
    There being an issue of facts joined between the parties, which was triable by a jury, there could be no appeal, Ladd v. James, 10 Ohio St. 437; Sprague v. Childs, 16 lb* 107; Smith v. Anderson, 20 Ohio St. 76; Code, sec. 268; 12 Ohio St. 248.
    As to the joinder of legal and equitable issues and the' order in which they may be tried, see 15 B. Mon. 70; 6 Bush. 192; 17 Minn. 104; 17 Wis. 340; 35 Wis. 631; 33-Iowa, 422.
   Welch, J.

It is well-settled law, that in an action, such as this was originally, an action for the price of goods sold, the defendant can not, without shewing the insolvency of the plaintiff, or some other cause giving the court equitable jurisdiction, have an account or settlement of a partnership between the parties, for the purpose of setting off any balance that may be found due to him on such settlement.

It seems to be equally well settled, that partners may, by special agreement touching any part of the partnership concerns, withdraw the same from the partnership account, and make the agreement, at the option of the parties wishing to enforce it, the foundation of an action at law, independent of the settlement of the partnership. The agreement here was undeniably one of the nature indicated, an agreement to take specific articles of partnership property at a fixed price, and to pay for them in a specified time. The action was, therefore, well brought, and in its inception was clearly one in which the parties would have been entitled to a jury trial. Nor is this character of the action taken away by the defense seeking an account and offset; because that defense could only avail by shewing the insolvency of the plaintiff, which the record here fails to-show.

The difficult question in the case is, as to the effect of G-reenleaf’s agreement of record, to have a full account of the partnership, including the subject of his action. We think he thereby waived his right to insist upon his separate action for the price of the goods, and the same became-by his own. act merged in the equity case for an account. Greenleaf had the option, at any and all times after breach' of the special agreement, to treat it as a matter insulated' from the partnership concern, and make it the subject of a separate action, or to let it run into and form an item in the general account; and we see no good reason why this-option may not as well be exercised after as before the action is brought. It follows that the appeal was well taken, and that in dismissing it the District Court erred.

Judgment reversed and cause remanded.

White, Rex, Gilmore, and McIlvaine,-JJ., concurred.