Case ID: bur_1/html/0131-01.html
Source: Caselaw Access Project
Author: {"author": "Judge Ikvin", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

AUGUSTUS A. BIRD, pl’ff in error, vs. HENRY FAKE and LESTER H. COTTON, def'ts in error,
    
    | Error to Milwaukee county.
    The sixth and seventh sections of the statute of Michigan to regulate taverns, approved 23d April, 1833, which prohibited the trusting of any person except travellers or lodgers, for drink or other tavern expenses over §1 25, and made void any note or other security for the same, affected the remedy only, and being repealed, such prohibited charges made while it was in force, may no w bo sued for and recovered.
    The prohibitions of that act did not vest any right in the party trusted, within the saving clause of the repealing statute.
    A dormant partner need not be joined with his co-partners in an action to recover the partnership demands; and the fact that the defendantknew him to bo a partner does not alter the case; to make it necessary that he should be joined, the defendant must have known the dormant partner as such in the transaction which is the subject matter of the suit.
    Otic partner cannot bind another in the transfer of accounts, and the settlement of the business of the firm, as between the partners, without his consent; to make such transfer or settlement binding as between the partners, they must all consent to it.
    A writ of attachment was sued out in the Milwaukee District Court, in the name of Henry Fake, against Bird, in December, 1840. There appear to have been no steps taken in this proceeding, as between the original parties, after the levy and return of the writ.
    In October, 1841, Fake & Cotton filed their declaration in assumpsit against Bird, under Fake’s attachment. Accompanying the declaration was a bill of particulars of charges by the plaintiffs as keepers of the American Hotel at Madison, against the defendant, a large portion of which was for liquors and tavern expenses, the last item of which account was dated-SOth August, 1839. Bird pleaded the general issue to this declaration, and gave notice of set-off, and that tho amount of the plaintiffs’ demand had been paid and applied by the defendant, at their request, upon the discharge of a debt owing by the plaintiffs for rent of the American Hotel. An objection was raised on the trial to the non-joinder of James Morrison as a co-plaintiff.
    The deposition of Morrison had been taken in the cause, and was read upon tho trial in tho court below; which, after proving a written agreement between him, as the owner of the American Hotel, and Fake & Cotton, which is embodied in the opinion of the court, proved further: that Fake presented to him an account due from Bird to tho American Hotel while it was kept by Fake & Cotton, under said agreement, amounting to ‡255 15, being the balance due from Bird as stated by Fake, which amount deponent assumed as part payment of his share of the profits of the house, and credited Fake & Cotton with their proportion of said account at their request, and charged the same to Bird. It was the understanding that by this arrangement Bird was released from all claims of Fake & Cotton. This arrangement was made on 30th or 31st August, 1839. Bird’s account was charged in deponent’s book and posted in his ledger. Fake & Cotton were in no other business than keeping tho hotel, while the account accrued, to his knowledge. At tho time of the arrangement, deponent told Fake that if Bird acknowledged the account to be correct, he would receive it in payment of his proportion in part of the profits of said house. lie afterwards saw Bird, who said it was correct, and deponent agreed to receive it as payment from Fake, as above stated. The account is charged against him in Fake & Cotton’s books. Bird and deponent have an unsettled account, and Bird has put property in his hands to securo that and all other debts. Tho above transfer was agreed upon between Fake and deponent, but they did not effect a full settlement of other matters in relation lo tho American Hotel. There has never been any difficulty between deponent and Fake & Cotton in relation to the transferor Bird’s account.
    It was also proven on the trial, that the plaintiffs below kept She American Hofei under file name and firm of Fake & Cotto'n; that they so advertised, made and paid their bills, áse. That Morrison lived thirty miles from Madison, and did not take any activo part in the business of tho hotel; and that the account against Bird was correct for the balance of $235 15.
    After the evidence was closod, the court charged the jury:
    “Tho objection to the writ in this casecar.not defeat the action at this stage. The declaration was filed by both plaintiffs confor-mably to tho affidavit for the writ, to which the defendant pleaded the general issue. The causo is regularly at issue between the plaintiffs, Fake & Cotton, and tho defendant.”
    “The statute of Michigan, forbidding the collection of tavern bills, is a statute affecting the remedy, and being repealed, does not now operate against the plaintiff’s recovery.”
    “ It probably would not have boon improper to include the name of James Morrison, but it was not necessary, and the action is well brought without it. A defendant is not obliged to plead in abatement the non-joinder of a partner who ought to have been made a co-plaintiff, but may take advantage of it on the plea of general issue. But it must appear affirmatively that such partner was an acting partner, for if ho was merely a dormant partner, ho need not be joined. An actual, without an apparent interest in the profits of a concern, constitutes a dormant partner.”
    “ Tho several members of a firm cannot transfer to one of them their apparent interest in a joint debt so as to enable him to sue and recover it in his own name. The original relation of debtor and creditor cannot ho changed without the consent of the debtor. If this were a transfer of this account by the plaintiffs to Morrison, without the consent of the defendant, Morrison would have io sue in the name-of the partners, which a judgment in this case in favor of Bird would defeat. It might be competent for Morrison to collect and receive this debt, but it does not appear that it has been actually paid by Bird. Then, as it has not been paid by Bird, and there is no allegation that Lester II. Cotton, one of the plaintiffs, ever consented to, or engaged in the aliedged arrangement between Fake and Morrison, the plaintiffs’ recovery in this action, cannot thereby bo defeated.”
    The defendant asked the court to instruct the jury: “ That Lester H. Cotton is bound in this matter by the act of Fake, they being co-partners.” To which the Judge replied, and charged the jury: “ Cotton in this matter, is not bound by the act of Fake,, without his consent.”
    Thedefcndant also asked the court to instruct the jury: “ Thai if the debt to Fako <& Cotton has been paid at their request, and has been credited by Morrison, to them, then the plaintiffs cannot recover.” To which the Judge replied, and charged thojury:
    “ This is a debt to the whole firm, and if paid in any way by defendant, the plaintiffs cannot recover.”
    The jury returned a verdict in favor of the plaintiffs, upon which the court rendered judgment.
    Exceptions were taken to the various decisions of the court in the progress of the trial, and Bird has prosecuted this writ of error to reverse the judgment of the court below.
    AitNonD, for plaintiff in. error:
    The charge of the Judge to the jury, in relation to the tavern expenses charged in the plaintiffs’ bill of particulars, is not consistent with sound principles of law. The fair construction of the statute of Michigan, in force at the time, will make such sales and charges void, ah initio. The sixth section of the act, (Laws of Michigan 126,) prohibits the trusting for such charges, and declares that the tavern keeper shall lose the debt, and be incapable of suing for it.. The seventh section makes void any note or other security taken for such charges, and affixes a penalty for taking it. The policy of the law, and the manner in which it is framed, show that it was the intention of the legislature to make all such contracts absolutely void; and a contract that is void at the time, under a prohibitory penal statute, cannot be made valid by a subsequent repeal of the statute, and no promise afterwards made to pay it is binding.
    The court erred in instructing the jury that the action was well brought without joining Morrison as a co-plaintiff. We admit, that a dormant partner, not known at the time or dealt with as such, need not be joined. 3 Cowen 84. 4 Cowen, 717. But if the dealing was with a dormant partner, known to bo one of the firm, he should be joined; 2 Whart. Dig. 323. This account was due to the American Hotel company which was composed of Morrison, Cotton and Fake. Bird knew them to be partners, for ho signed the agreement, and he dealt with them as such. From his knowledge, and dealings, Morrison was not, as to him, a dormant partner. See 4 Watts, 455,456. Whether Morrison was an active Oí a dormant partner, was a question of fact for the jury alone to decide. The court below decided the fact, and took the question from the jury by the instructions given.
    Again, the court assumed a matter of fact, in charging the jury that it aid not appear that the debt had been paid by Bird. It is error, for the court to assume a matter of fact to be true, that can. only be ascertained by the verdict of a jury.
    The instructions of the court that Cotton should have consented to any arrangement to settle the account in order to bind him, and that he was not bound by the act of Fake, were not according to the principles of law. One partner has power to bind the firm in matters relating to the partnership property and the settlement of partnership debts. 3 Kent’s Com, 20, 21,22, 24, 25. 4 Bin-ney, 375. And a release from one partner of a debt due the firm will bind all the co-partners. 3 Kent, 24. 14 John. Rep. 387. 3 John. Rep. 68. 17 John. Rep. 58. In this case, Cotton & Fake, asoné party, contracted with Morrison, and were jointly bound to him. They were, themselves, co-partners, as to Morrison, and Fake was acting for himself and Cotton in settling the business with Morrison. The arrangement was for Cotton’s benefit, and independently of the power to bind him, his consent ought to have been presumed; at least the question ought to have been left to the jury for them to decide. _
    Tweedy, for defendant in error:
    This cause is more deceptive in understanding the facts, than in their application. The business was done in the name of Fake & Cotton; the account was made out in their names, and the balance was admitted by the defendant to be due. The account was duly proven on the trial, and the first ground of defence taken is, that a large part of the account is for liquors and tavern expenses, prohibited by law when the charges were made. This law does not say that the tavern keeper shall not sell, but that if he does sell on credit, he shall not recover. The statute simply withholds the remedy in such case, and now that it is repealed, the remedy is restored. The articles furnished were sufficient to impose a moral obligation to pay for them, and this is a good consideration for a promise; and Bird has acknowledged the balance of the account sued for to be just, long since the repeal.
    The principal question to be determined is, whether the suit is properly brought without joining Morrison as a co-plaintiff. We consider the law to be settled, that in case of a dormant partner tho active partners may or may not join him, at their own option, Collyer on Part. 394. Tho law is thus laid down, that if the dormant partner is a party to the particular contract, then he must he joined, because in such case be is an actual party, as well as a party in interest. It is admitted that Bird knew Morrison to bo a partner, but that does not alter the case, for tho contract was not made with him, hut with the active partners, and Morrison being dormant, it was not necessary to join him. 2 Whart. Dig. 323i 4 Watts, 335. 4 Cowen,?17. 3 Cowon, 84. 4 Wendell,408. 1 Chitty’s Plead. 13. 2 Vermont Hep. 65. 3 Greenlcaf, 394. 3 Law Library, 39.
    The plaintiifs having proven their demand, it became incumbent on the defendant to prove that it was paid. No arrangement between Morrison and Fake in relation to tho debt would amount to payment; nothing but actual payment would extinguish the demand. If Bird and Cotton had boon both present, and assented to the transfer, and Bird had have made a now promise, it might have boon sufficient. But such an arrangement as was made could not extinguish the debt. Cotton was no party to it, and although ono partner can collect a debt due the firm, yet he cannot release or remit it, especially if ho bo a dormant partner. It is said that one partner can hind another. This is true as a general principle, but it does not apply to the arrangement of the business of the firm between the partners. In this case, the arrangement was made by Fake in Cotton’s absence, and Cotton cannot bo bound by it; 9 Cowen, 639. Tho partners were settling business between themselves, and not doing business with the world. The arrangement itself did not amount to payment,and the charge of the court was right according to tho law.
    Wells in reply:
    The portion of tho account that is for tavern expenses, was void, and not merely voidable, by the law when it was created. If void, the bare repeal of the law since cannot make it valid. It was not intended that the repealing act should have any such effect in this or any other case, for it saves the rights of all persons as they existed under the laws repealed. Slat. Wis. 470.
    It is said that Morrison was a dormant partner, and that he need not to have boonjohiod in the action. They wore all known to Bird as partners, and he dealt with them as such throughout tho partnership. But whether he was a dormant partner or not, and if so, whether the facts in the transaction were such as to make it necessary to join him in the action, and whether Bird had paid the debt, were all questions of fact for the jury to ascertain. But the court, in its charges, decided these facts for the jury, and left them nothing to do but return a verdict for the plaintiffs in obedience to the instructions.
   Judge Ikvin

delivered the opinion of the Courts

This cause which was tried and decided in the District Court of Milwaukee, came up on error, as set forth and complained of, in exceptions taken to the several decisions ar.d directions of the court to the jury,both in its general charge and specialinstructions asked for. When instructions to the jury are asked for upon a particular point of law, as connected with the case generally, or upon the law, connected with a particular point in the evidence, and exceptions to the instructions given are taken, the inquiry of the appellate or court of error, is generally confined to the particular and more circumscribed matter thus presented; but when the exception is taken to matter of the general charge of the court to the jury, as well as particular instructions asked for, the inquiry in the appellate court necessarily becomes more extended, and sometimes apparently diffuse, as the general charge rests upon the views taken of (he whole case, as presented.

The first exception taken in the court below, is in this court abandoned, so far as the writ is concerned, and will not, therefore, be considered in that particular-.

By a provision of the statute of the Territory, when a creditor sues out a process of attachment against his debtor, any other creditor of said defendant may, at or before the second term of the court after the return of said process served, file his declaration, and proceed therein to judgment as in other cases. This appears to bo a case of that kind, and in which the defendants in error seek to recover of the plaintiff in error the amount of a bill of particulars through the medium of a declaration in assumpsit, to which the defendant pleaded the general issue.

In the progress of the trial, it appears that Fake & Cotton were the keepers of a hotel at Madison, called the American Hotel, and as such keepers sold and furnished to Augustus A. Bird, the items mentioned in said bill of particulars, among which wore charges for spirituous liquors, which account of items commenced on the 30th of November, 1838, and terminated on the 30th of August, 1839. Up to the 4th of July, 1839, the laws of Michigan were in force in this Territory, when they ceased by repeal. In this case, Bird, the plaintiff in error, relied for a part of his de-fence on the sixth and seventh sections of an act to regulate taverns.” See Laws of Michigan, page 126, revision of 1838. As further defence in the court below, Bird, the plaintiff in error, introduced an agreement purporting to be made and entered into by James Morrison, of the first part, and L. H. Cotton and Henry Fake, of the second part, which was signed and scaled by L. II. Cotton and Henry Fake, and James Morrison by A. A. Bird, by which the American Hotel was leased to Cotton and Fake, and which regulated and disposed of the profits arising from said hotel, between the said Morrison, the lessor, and the skid Cotton & Fake, the lessees. This was introduced for tho purpose, 1st, of showing that Morrison was a partner in the keeping of said hotel, and should have been joined in the action; and 2d, that his acts as such partner, bound the firm keeping tho American Hotel.

The sixth section of the law of Michigan above referred to, is as follows: “If any tavern keeper shall trust any person other than travellers, above the sum of one dollar and twenty-five cents, for any sort of strong or spirituous liquors, or tavern expenses, he shall lose every such debt, and be incapable of suing for the same, or any part thereof, and if any such tavern keeper shall sue therefor, the person may plead this act in bar, or give it in evidence under the general issue, and if the plaintiff shall become non-suited, or a judgment shall be given for the defendant, every such plaintiff shall pay double costs.”

The seventh section makes void all securities taken upon such trusting, and among other things makes an exception in favor of the tavern keeper in the case of lodgers and travellers.

The agreement referred to is as follows: “An agreement made 'and entered into at Madison, this 21st day of November, A D. 1838, between James Morrison of the county of Iowa and Territory of Wisconsin, party of Lhe first part, and L. II. Cotton and Henry Fake, of the town of Madison, county of Dane, and Territory aforesaid, party of the second part, witnessed!: That the said Morrison, party of the first part, for himsplf, hiSj heirs and assigns, doth hereby agree to furnish the house now known as the American Hotel, in Madison, in a suitable manner for the accommodation of guests, and will also furnish one laboring man to cut firewood for said house, and doth hereby lease the same to the above named party of the second part, they comply-, ing with the following conditions, to wit: the said party of the second part, for themselves, their heirs and assigns, agree to take the above mentioned house on a lease of one year from the date of this article, after having been furnished as above described, and will furnish all necessary help and keep the same in as good a manner as possible, and at the expiration of each three months during the term of said lease, will divide the nett profits that may accrue equally with the said party of the first part, and return the furniture in as good order as when taken, excepting the natural wear and tear thereof ; and the said party of the second part furthermore agrees to pay one-half of whatever the cost may be of insuring the furniture againstloss and damage by fire, the same to be insured as soon as possible. And it is further understood, that each party is to be at half the expense of furnishing provisions, liquors, and all necessary eatables for1 said house.” And which is signed and sealed, as before noticed, and witnessed by two witnesses.

It further appears from the testimony returned with the exceptions taken in the cause, that some time in the summer .of 1839, Fake and Morrison attempted a settlement of the matters arising out of the keeping of the said hotel, when Fake proposed that Morrison should take the account charged against Bird, which was then declined; nor does it appear that the parties, Fake and Morrison, ever liad another interview about it. Morrison, in his deposition herein taken, says: “I afterwards saw Mr. Bird, who said, (in allusion to the account against him,) it was correct, and I agreed to receive it as a payment from Mr. Fake, as above stated;” but with whom he agreed does not appear. Thus stand the prominent matters in this case, to the understanding of which a statement is made necessary from the dusultory and unsatisfactory manner in which the exceptions wore taken below, exceptions in most part taken to the general charge of the court to the jury, which we are bound to presume was given from a full view of the whole case.

The errors are assigned merely by reference to the exceptions in their numerical order.

The second exception is to this charge of the court: “The statute of Michigan forbidding the collection of tavern bills, is a statute affecting the remedy, and being repealed, does not operate against the plaintiff’s recovery.” In the examination of that statute, which has already been recited, the prohibitions therein contained arc not directed against the actof selling,butof collecting. The right to sell, to any extent, the articles therein mentioned, cannot be questioned, so that it be done for cash, and not trusted, for it says, “ if any tavern keeper shall trust any person,” &c. The right to sell, therefore, cannot be doubted, and the only prohibition being upon the collection, it becomes clearly a matter that relates to the remedy, and the statute being since repealed, and before the commencement of this suit, the inhibition upon the remedy was removed with the repeal. At the time of the repeal spoken of, it was done under a regular revision of the laws, and was accompanied by this general provision which is found in the fourth section of the act, page 407 of the Statutes of Wisconsin, and is in these words: “The repeal of any statutory provision by this act, shall not affect any act done or right accrued or established, or any proceeding, suit, or prosecution had or commenced previous to the time when such repeal shall take effect,” &c. The prohibition upon the remedy was not such a right accrued or established as was contemplated by the act, nor was it a vested right. The court did not, therefore, err in the instruction given.

The third instruction excepted to, is this: “It probably would not have been improper to include the name of James Morrison, but it was not nocessaiy, and the action was well brought without it. A defendant is not obliged to plead ii abatement the non-joinder of a partner who ought to have been a co-plaintiff, but may take advantage of it on the general issue; but it must appear affirmatively that such partner was an acting partner, for if he was merely a dormant partner, he need not be joined. An actual, without an apparent, interest in the profits of a concern, constitutes a dormant partnership.”

It is a principle of law well settled, that a dormant partner, (and the court are satisfied from the evidence that Morrison is nothing more.) need not be joined with the active partners in a suit. 8 S. & R. 55; Morse vs. Chase, 4 Watts, 456. And the fact, that Bird personally know Morrison to be a partner (the fact of partnership being conceded) nothing militates against the principle that a dormant partner need not be joined; for the true distinction we take to be this: that the defendant must know the dormant partner in the transaction which is matter of litigation; that is the knowledge which the law requires in order to make an exception to the general rule; 3 Cowen’s Rep. 34. 1 Chitty’s Plead. 7, 3. 2 Esp. Rep. 468; and 2 Taunt. 324, 326. In this the court did not err.

The fourth exception is to this charge of the court: “The several members of a firm cannot transfer to one of them their separate interests in ajoint debt, so as to enable him to sue and recover it in his own name. The original relation of debtor and creditor cannot be changed without the consent of the debtor. If this were a transfer of this account by the plaintiff to Morrison, without the consent of the defendant, Morrison would have to sue in the name of the partners, which a judgment in this case in favor of Bird would defeat. It might be competent for Morrison to collect and receive this debt, but it does not appear that it has been actually paid by Bird. Then,as it has not been paid by Bird, and as there is no allegation that Lester H. Cotton, one of the plaintiffs, ever consented to, or engaged in the alledged arrangement between Fake and Morrison, the plaintiff’s recovery in this action cannot thereby be defeated.”

The correctness of the instruction here given, is recognized in the case of Morback vs. Huey, 4 Watts’ Rep. 455; in Bun vs. Morris, 1 Caine’s Rep. 54; and indeed it is so clearly recognized in all the authorities, that we do not think it admits of a doubt. In the instruction there is no error.

Thus far, the exceptions were taken to the general charge of the court to the jury. The fifth charge excepted to was upon instructions asked for by the defendant in these words: “That Lester H. Cotton is bound in this matter by the act of Fake, being co-partners;” to which the court replied and charged the jury: “ Cotton, in this matter, is not bound by the act of Fake, without his consent.” That one partner may bind his co-partner in transactions relating to the business of co-partnership, with third persons, is a principle coeval with partnership itself ; and it is equally clear that no arrangement about the partnership business as between themselves, by some of the members of a firm, can bind those who do not concur therein. Were it otherwise, it would, at any time, be in the power of one partner of a firm to ruin the balance.

Arnold and Wells, for plaintiff in error.

Tweedy, for defendants in error.

The sixth, and remaining instruction asked for by the defendant, and excepted to as given, is this: “That if the debt to Fake & Cotton has been paid at their request, and has been credited by Morrison to them, then the plaintiff cannot recover.” To which the Judge replied: “This is a debt to the whole firm, and if paid in any way by defendant, tho plaintiffs cannot recover.”

This we consider a self-evident proposition, and no error.

We cannot see, under a careful examination of the whole case, that the District Court committed any error in any'of the charges or instructions or opinions given. The judgment of the District Court is therefore affirmed with costs.