Case ID: ny-super-ct_49/html/0152-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—O’Gorman, J. Sedgwick, Ch. J.—(Dissenting.)", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

FANNIE WOTHERSPOON, as Executrix, &c., Respondent, v. GEORGE WOTHERSPOON, Appellant.
    
      Partnership—accounts—individual liability of partner, evidence of.—Nonjoinder, waiver of.—Domestic relations.
    
    In 1867 plaintiff’s testator was credited upon the books of W. & Co. upon the direction of the defendant W., who was a member of said firm, with the sum„of $10,000, and thereafter his account was regularly kept on said books, and from time to time accounts current were rendered to him, showing the amount due him, including percentage of profits, etc., each account beginning with the balance carried forward from the preceding account, during which time several changes were made in the membership of said firm. In 1880, defendant, having associated with him other partners, and being the only member of the original firm remaining in the business of W. & Co., was applied to for a statement of the account of plaintiff’s testator; and he rendered a statement entitled as an account of W. & Co. with plaintiff’s, testator, which carried forward the balance of the preceding account and which also contained charges for moneys purporting to have been paid by defendant individually for the use of plaintiff’s testator.
    
      Meld, in an action against defendant individually to recover the balance appearing on said account which was alleged to have been received by him and wrongfully detained from plaintiff’s testator—that the admission in the said account was the admission of defendant individually, that the amount therein named was in his hands. Further held, that such an admission must be taken by one seeking to recover on it in its entirety, and as it stands, allowing all debits and credits.
    Sedgwick, Ch. J., dissenting, holds upon a review of the evidence, that the judgment for plaintiff cannot be upheld, for the reason that it does not rest upon any cause of action stated in the complaint and supported by the testimony, or upon any cause of action stated in the findings of fact; that the evidence was not sufficient to show that plaintiff’s testator was a member of the original firm of W. & Co., which fact was necessary to uphold the cause of action stated in the complaint.
    In an action against a member of a firm, the objection that the other partners are not joined as parties, will be deemed waived, if not taken advantage of by answer or demurrer.
    An agreement to pay for board will not be implied where a son and his family are living with the son’s father.
    Before Sedgwick, Ch. J., O’Gorman and Ingraham, JJ.
    
      Decided April 9, 1883.
    Appeal from a judgment in favor of the plaintiff for $8,934.68. The action was tried by Judge Truax, without a jury. The facts.are stated by the court.
    
      J. P. Kingsford and Stephen P. Nash, for appellant.
    
      Tracy, Olmstead & Tracy, for respondent.
    —The answer stated no objection for defect of parties. The denial, therefore, that defendant did not alone constitute the firm of “ Wotherspoon & Co.” was immaterial (Kingsland v. Braisted, 2 Lans. 17; Code, §§ 498, 9; Wigand v. Sickel, 3 Keyes, 120). It appeared that the $10,000 which defendant by his answer alleged he had “placed to the credit of” plaintiff’s decedent, was credited to said James Wotherspoon, in the “ account current” for 1867, under the date of 5th of March, and that the balance of each year’s “account current” was carried forward to the next year, and that the “account current” annexed to the complaint, began with such a balance at James Wotherspoon’s credit on the 2d January, 1879, of $9,841.23, and which balance was proved to be correct. The case, as proved by plaintiff, therefore, fell within the rule laid down in Stephens v. Waite (10 N. Y. W. D. 421).
    The action was not for an accounting as between partners, but was for the recovery of a sum of money which an account, as rendered by defendant, showed to be due to plaintiff’s decedent.
    The $10,000 item was credited in an “ account current,” as so much money placed to the credit of James Wotherspoon, and the testimony was that “ it was given to him to be placed in the concern.” There was no proof whatever of a revocation of any such alleged gift, but, on the contrary, it did appear that if the transaction was a gift, the gift was executed. Not only were the amounts credited to, James Wotherspoon upon the firm’s books, but accounts containing such items as having been actually passed to his credit were rendered by the defendant, prepared under his direction.
    The defendant’s counter-claim for the value of the board and lodging of his son in his own house was properly disallowed. It was inconsistent with his defense, that the money was due from “ Wotherspoon & Co.” The evidence showed clearly that it was at defendant’s own request that his son and his son’s family lived in his house, and that plaintiff herself rendered an equivalent in her own services. In such a case the ordinary presumption of a quantum, meruit does not obtain (Williams v. Hutchinson, 3 N. Y. 312; Sharp v. Cropsey, 11 Barb. 324; Elliot v. Gibbons, 30 Id. 498).
   By the Court.—O’Gorman, J.

—The plaintiff is the widow and executrix of James Wotherspoon, a son of the defendant, who died May 2,1881 ; and the action is brought by her as such executrix to recover from the defendant the said sum as being money which belonged to her testator and received by the defendant and wrongfully detained by him. Before May 1, 1866, the «deceased had been a clerk in the employment of the firm of “Wotherspoon & Co.,” which then consisted of George Wotherspoon, D. A. McTavish and D. O. Wotherspoon, as partners. On that day a memorandum was signed by them, of which the following is a copy :

“ Memoeahdum.—From the first of May, 1866, the following are the shares of the respective partners of the firm of Wotherspoon & Co., of the net profits of the business, all expenses, salaries and subsidiary allowances being first deducted: D. A. McTavish and D. O. Wotherspoon to receive one-fourth each and George Wotherspoon- one-half.

“New York, 17th May, 1866.
(Signed) G. Wotherspoon,
D. A. McTavish,
D. O. Wotherspoon.

“Allowance to James Wotherspoon, $2,000 per annum, and 5 per cent, of net profits.”

On March 5, 1867, the deceased James Wotherspoon married the plaintiff, and on the same day he was, by direction of the defendant, credited on the books of the said firm with the sum of $10,000 to be placed in the concern of Wotherspoon & Co. Soon afterward, the deceased became incapacitated, by reason of illness, from rendering any service to the firm, and in 1872 he and his wife went to Europe, where they remained until June, 1874. They then returned and took up their abode with the defendant, who occupied a house on Staten Island. The deceased had become paralyzed and imbecile, and so remained until his death, which occurred on May 2, 1881. From the time of his return he and his wife and children continued (with the exception of a few months), to reside in the house of defendant.

In 1870, McTavish, and in 1872, D. O. Wotherspoon left the firm of Wotherspoon & Co. From 1872 to 1876, the business was carried on by defendant alone. In 1880, the firm was composed of George Wotherspoon and F. W. Scherr, the latter having been a partner since May, 1876. He left the firm on December 6, 1880. From December 6, 1880, to January 1,1881, the firm was composed of George Wotherspoon alone, when Mr. Allien went in with him.

From the time of the signing of the memorandum above set forth, regular accounts were kept on the books of Wotherspoon & Co., between that firm and the deceased, and copies thereof were regularly rendered to him. In the first of these accounts so rendered, deceased is credited with said sum of $10,000 cash, under date of March 5,1867, with interest thereon, $403.96—with salary $2,000—with 5 per cent, from net profit $2,417.60, and with a balance in his favor of $10,166.46 on January 1, 1868. Further accounts are in evidence, carrying on this balance crediting the deceased with interest on the balances in his favor, and for sums due to him as his percentage of the net profits, debiting him with various sums paid on his account, and showing a balance in favor of the deceased on January 1, 1875, of $12,653.70. After January 1, 1869, no amount was-credited to the deceased on account of allowance, but his percentage of the net profits was increased from 5 to 15 per cent. These accounts passed through defendant’s hands, and were prepared by his direction and their correctness testified to by Scherr, the book-keeper of the firm, who became a partner in May, 1876.

About July, 1880, a year before her husband’s death, the plaintiff applied to the defendant for a settlement of accounts, and received from the defendant an account in writing purporting to show the pecuniary relations between her husband and the firm of “Wotherspoon & Co.,” on April 30, 1880. This account shows a balance in favor of deceased on 'that date, of $7,300.50, after charging him with various sums of money—including $1,600 under the head of “house expenses per Gr. W.” and this entry is dated April 30, 1880. The plaintiff alleges in her complaint that “ having no means of verifying said account, and being ^informed that the books of said firm had been destroyed, she is willing to accept the said account as correct, except as to the sum of $1,000 charged there on April 30, 1880, for “house expenses for Gr. W.,” which sum plaintiff states on information and belief should not be charged in said account, and is not a proper and valid charge or claim against the estate of said James Wotherspoon. This charge of $1,600 was a subject of discussion, from time to time, between plaintiff and defendant, until October, 1880, when she proposed to remove her husband from the defendant’s house, and herself to return to her parents, to which defendant objected and said they had better go on as they were till spring. Afterwards, about March or April, 1881, she received from defendant a further account in writing as between Wotherspoon & Co., and James Wotherspoon,' carrying forward the last balance, $7,300.51—charging against said James Wotherspoon various further sums for expenses incurred by her after the date of the former account, and including one other charge under the head of “deducted proportion of bad debt in 1868, 5 per cent, on $20,000 and interest $700—$1,700,” and reducing the balance in favor of the deceased on December 31,1880, to $4,606.84. No evidence, however, was offered to substantiate the last charge.

It is in evidence that the plaintiff took care and management of defendant’s establishment and kept house for him, a service which perhaps he needed, being a man between eighty-five and eighty-six years of age.

The learned trial judge disallowed this charge of $1,600 for “house expenses,” set forth in the account dated April 30,1880, but allowed a charge of $1,285.67, being for moneys expended for the plaintiff and family, after April 30, 1880, and found a balance due to her, as executrix of her deceased husband, by defendant, of $8,443.89, and being in the defendant’s hands on April 30, 1880.

At the close of the plaintiff’s case, the defendant moved for a dismissal of the complaint on the ground, among others, that plaintiff’s claim should have been made against the partners comprising the firm of “ Wotherspoon & Co.” at the time of the beginning of the accounts; and that there was no proof of any individual liability on the part of the defendant, George Wotherspoon, in favor of the plaintiff’s testator, and also because the accounts produced were rendered by the said firm, and are not sufficient evidence to charge the defendant individually with the balance appearing therein. Defendant also claimed that the amounts placed to the credit of said James Wotherspoon on the books of the firm of “Wotherspoon & Co.” by direction of the defendant, were never reduced to possession by said James Wotherspoon, and said amounts were never transferred to him; and that, as between the defendant and said James Wotherspoon, there was not a valid •gift of said amounts. Defendant also claimed that he was entitled to charge the estate of James Wotherspoon for his board and lodging for six years preceding his death, as a counter-claim in this action.

This is an action -for money of the plaintiff’s testator received by the defendant as a member of and representing the. firm of Wotherspoon & Co., and wrongfully retained by him, and the question is whether there is sufficient evidence on which that charge can be sustained.

As far as the firm of Wotherspoon & Co. is concerned, their accounts rendered from time to time are sufficient admission that they recognized the right of James Wotherspoon to have credit for $10,000, as deposited in his name in the concern—for interest on the same from year to year —and credit also on the other sums regularly entered in the books of the firm for his percentage of the profits. These accounts showed a balance in his favor on January 1, 1875, of $12,653.70.

The account rendered by the defendant on behalf'of Wotherspoon & Co., and in their name, to the plaintiff, in July, 1880, showed a balance in favor of her testator oh April 30, 1880, amounting to $7,300.51. This is an admission on the part of the defendant as a member of that firm, that he held that amount of the testator’s money in his hands.

It is alleged in the complaint that he was the only member of the firm, which was carried on by himself alone, at the time of the commencement of the action. But if that were otherwise, and there were in fact other members of the firm who should have been joined as defendants, yet that objection must be deemed to have been waived by reason of the failure of the defendant to take advantage of it either by demurrer or by answer (Code, §§ 498, 499 ; Kings-land v. Braisted, 2 Lans. 17). ,

But apart from that waiver of the objection, there are " other reasons for holding that the accounts rendered by or in the name of the firm bind the defendant as fully as if they were rendered in his own name. When in June, 1881, he received letters from the plaintiff inquiring about the" state of her husband’s accounts, none of the persons who had been partners when the account between James Wotherspoon and “ Wotherspoon & Co.” was opened, had any connection with that firm ; one of them had left it in 1870, and the other in 1872, and there is no evidence that. they retained any interest in the firm or were liable for its transactions. From 1872 to 1876, the defendant had carried on the business alone; Scherr joined the concern in 1876, and left it in December, 1880; and Allien, who had been its book-keeper, seems to have become a partner in January, 1881. Under these circumstances, and in answer to plaintiff’s request, an account is furnished to her, entitled : “Mr. James Wotherspoon, in account with Wotherspoon & Co.,” commencing on the credit side with an entry of a balance in his favor of $9,841.23, and closing with a credit in his favor, “By balance carried forward to new account, $7,300.51.” In this account James Wotherspoon is debited with “ House expenses per G. W., $1,600,” and if the firm name of “ Wotherspoon & Co.” therein, represented any persons or person other than the defendant, this entry, purporting to be an entry of moneys paid out by him individually for the use of James Wotherspoon, would have been out of place, and wholly inconsistent with the argument of the defense, that “ Wotherspoon & Co.,” and the defendant, George Wotherspoon, were two separate and distinct entities.

The allegation in the complaint that the “ former partners had, on their withdrawal from the firm, respectively settled with defendant, so that he vras to retain the assets and business of the firm, including the capital and money of James Wotherspoon, and the profits belonging to him,” is not in the answer distinctly or definitely denied, and there was, in my opinion, enough to warrant the trial judge in inferring, that for all purposes of this action, the defendant and “Wotherspoon & Co.” were one and the. same, and that the money of James Wotherspoon, $7,300.51, admitted to be in the hands of that firm to the credit of James Wotherspoon on April 30,1880, was in fact in the hands of the defendant, and that the admission in the account of “ Wotherspoon & Co,” was in fact and in law the admission of the defendant.

The plaintiff’s claim then rests wholly on the account' rendered by the defendant as of April, 1880, and the admission of the balance therein set forth in favor of testator. But that admission, she must take in its entirety, and accept it as it stands, allowing all debits as well as credits, including the charge of $1,600 for.“household expenses.”

There is no claim on the part of the defendant that the account rendered as of April 30, 1880, was in any way incorrect ; on the contrary, the balance therein, in favor of testator, of $7,300.51, is carried into a later account furnished by defendant, containing entries up to December 31, 1880. This account must be regarded as conclusive and binding on the defendant (Harley v. Eleventh Ward Bank, 76 N. Y. 618).

As to the later account,1 plaintiff admitted all charges on the debit side for payments made after date of the former account, April 30, 1880, and they are all charged against her in the findings of fact, excepting the charge of $1,700 for an alleged bad debt in 1868, which charge the plaintiff disputed, and in proof of which no evidence was offered.

In this view of the case, the claim on the part of the defendant that the sums entered by his direction on the books of the firm to the credit of James Wotherspoon are not an executed or valid gift or received into possession, becomes unimportant, especially when coupled with the allegation in defendant’s answer, that the sum of $10,000 first put to his credit had in fact been spent for his benefit.

As to the claim set up on the part of defendant by way of counter-claim, on account of board, &c., of the testator, it was properly disallowed. There was no evidence of any agreement on the subject, and the mutual relations and obligations of the parties between one another would, in the absence of an agreement, lead to the presumption that no such charge had been contemplated (Williams v. Hutchinson, 3 N. Y. 312).

Except as to the disallowance of the charge of $1,600, I see no error in the rulings of the trial judge

The judgment should therefore be reversed and a new trial ordered, unless plaintiff stipulates to deduct from the judgment the sum of $1,600, and interest from April 30, 1880, in which case the judgment, as modified, should be affirmed without costs of this appeal.

Ingbaham, J., concurred.

Sedgwick, Ch. J.—(Dissenting.)

—In differing with my learned associate, I am of opinion that, as a consequence of applying the ordinary tests, it will be found that the judgment appealed from does not rest upon any cause of action stated in the complaint and supported by the testimony, or upon any cause of action stated in the findings of fact.

The cause of action stated in the complaint, depends upon the averments that the plaintiff’s testator was a partner in the firm of Wotherspoon & Co., and .as such partner had a certain interest in the capital and profits of the business ; that the defendant and certain other persons were, with the plaintiff’s testator, the members of the firm ; that these other .persons left the firm, withdrawing their interests, after settling with the defendant; that thereafter the defendant continued the business, retaining the assets, including the capital and profits belonging to the plaintiff; that in the year 1880, the testator, then alive but unable to transact business, the plaintiff demanded from the defendant an account of the amount of said moneys owing by him to said James Wotherspoon, and then in his possession, on account of the business of said firm, and that said defendant thereupon, on April 30, 1880, rendered and stated his account with the said James Wotherspoon of that date, and delivered the same to the plaintiff on behalf of said James Wotherspoon, a copy of which account is hereto annexed and forms part of this complaint, and in and by said account the defendant admitted himself to be indebted to the said James Wotherspoon on the firm account, at the last mentioned date, in the sum of $7,300.51. That at the time said account was rendered, said James Wotherspoon was of weak and imbecile mind, and unable to transact any business, and plaintiff refused, on his behalf, to accept said account as correct and final, but the plaintiff having no means of verifying said account, and being informed that the books of said firm had been destroyed, is willing to accept said account as correct, except as to the sum of $1,600, etc.”

It may be assumed, without discussion, I think, that an account in a book, or a statement of an account from a book, is not a chose in action in itself. It only contains statements or admissions, or evidence of facts. The facts, if they really exist, are the constituents, of the cause of action. The account is but evidence of one kind, subject to explanation, qualification or contradiction, as is any other kind of evidence. To make an account stated a substantive cause of action, it is necessary to allege and prove that the accounting was had concerning prior dealing ; e. g., sums of money, before due and owing by defendant to plaintiff, and then in arrear and unpaid.

In the present case, the testimony showed that the testator had never been a partner, and the account delivered to the plaintiff did not show any amount due to the testator as a partner.,

Among the findings of fact there is none that is equivalent to a finding that the testator had been a partner at any time. If there were, the testimony would not support it. The finding on this subject was, “that during the year 1867, and subsequently, the said James Wotherspoon was entitled to receive and did receive a share of the profits of the business so conducted by said defendant in said firm name, and that said defendant, from time to time during the year 1867, and subsequently, received and held divers sums of money belonging to said James Wotherspoon, consisting in part of amounts adjusted and paid to said James Wotherspoon as his said share of profits, and in part of other moneys belonging to said James Wotherspoon, 'and that January 2, 1879, there was of such moneys of said James Wotherspoon in the hands of said defendant, the sum of $9,841.23; that thereafter the defendant paid and expended for and on account of said James Wotherspoon, the several sums of money in that behalf mentioned-in the statement thereof annexed to the complaint, except the item of April 30, 1880, of $1,600, and that the said statement was rendered by defendant to said James Wotherspoon, as alleged in the complaint, and that the balance of said moneys in defendant’s hand on April 30, 1880, was $8,900.51.” Rot only is there here no finding that the plaintiff’s testator had an interest as a partner, but there is no testimony to sustain what may be alleged to be facts, contained among the findings. There was no proof that the defendant received or held divers sums of money of the kind described by the findings. The testimony, in its most favorable aspect for plaintiff, showed that from time to time, although the testator was not a partner, certain portions of profits were credited to him. The profits had not been received for the testator, but for the firm. If he had any right to the portions credited to him, it could result only from some contract obligation on the part of the defendant, to pay him that portion of the profit. If the result was that he would be entitled to the portion, it would be an inference from the existence of the contract, and it would be necessary to find from the testimony that there was such a contract. The judge did not find that any such contract was made. On the contrary, he refused to find-otherwise than he had already found in the findings already stated, in reply to a request of defendants to find that a memorandum in James Wortherspoon’s handwriting, marked “Exhibit K,” shows the arrangement between him and the firm, and that there never was any other bargain or agreement than this. The memorandum was as follows:

“ From the first May, 1866, the following are the shares of the respective partners of the firm of Wotherspoon & Co., of the net profits of the business, all expenses, salaries and subsidiary allowances' being first deducted. D. A. McTavisli and D. 0. Wotherspoon to receive one-fourth each, and Greorge Wotherspoon one-half.

“New York, 17 May, 1866. Gr. Wotherspoon,
D. A. McTavish,
D. 0. Wotherspoon.

“Allowance to James Worth erspoon, $2,000 per annum, and 5 per cent, of net profits.”

There can be no doubt that this instrument was the original contract between the parties, but it is now referred to to emphasize the statement that the claims of the complaint were not supported by the evidence, and that the findings of fact do not state the cause of action claimed by the complaint, or, in my judgment, any other cause of action countenanced by the testimony.

In what way then can the judgment be sustained ? Only by looking through the evidence to find whether there' are pieces of testimony which might support an action ; for instance, inferences that might be drawn from the accounts that were handed by defendant to plaintiff. It view of all the testimony, it would seem to me, if it were right to pass upon the question, that the only obligation that ever existed between the defendant’s firm and the testator arose out of an employment of the latter, upon the terms, originally as stated in the memorandum that has been referred to. A condition of receiving compensation under that con-, tract was the performance of or the offer to perform the services intended by it. After a time the son became a confirmed invalid, and by the first part of 1874 was unable to perform the services.. Although the father, after that time, continued to give those credits, the amount of a part of which was recovered in the present judgment, the testator was not entitled to such credits, but they were voluntarily, and without consideration, made in the accounts. .If the accounts delivered create a presumption of obligation, the testimony shows that that arose only out of the contract of employment, and the testimony affirmatively shows that the testator had not performed on his part, and that therefore there was, in fact, no obligation on defendant’s part. But I am of opinion that we can examine no other claim than that on which the plaintiff stood at the trial. And the examination of any ether claim must be remitted to the court of first instance.