Case ID: barb_58/html/0177-01.html
Source: Caselaw Access Project
Author: {"author": "\n      By the Court, Talcott, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Short vs. Barry.
    A complaint stated that the plaintiff and defendant, being copartners in business, dissolved their copartnership, on a day specified, when it was agreed that an inventory should be taken of the assets of the firm, including the notes and accounts due to it, and that the defendant should pay the plaintiff one half of the amount of the inventory, deducting one half the liabilities of the firm, which the defendant assumed to pay; that such inventory was taken; the precise amount due to the plaintiff ascertained and agreed upon; and the defendant went into and remained in possession. The prayer was for an account of the partnership dealings, and that the plaintiff have judgment for the balance which should be found due him, on such accounting. 
      Held that the complaint was clearly in an action at law; and the demand for an accounting was merely nugatory, it being not only wholly unsupported by any allegations in the complaint, but inconsistent with the case made by the complaint, which asserted that the account was adjusted, the amount liquidated, and the balance agreed to be paid.
    
      Held, also, that although it appeared from the findings of the referee that an account was necessary to settle the equities between the parties, and an action might be maintained for that purpose,' if the defendant should refuse to render such account, or to pay the balance ; yet that such was not the cause of action set up in the complaint, which was assumpsit, at law, and not an action of purely equitable cognizance. And that the referee erred in proceeding to take an account,
    An action at law, for goods sold and delivered, cannot be changed into an action in equity for an account between the parties.
    APPEAL, by the defendant, from a judgment entered upon the report of a referee.
    
      D. O’Brien, for the appellant.
    
      N. Whiting, for the respondent.
   By the Court, Talcott, J.

The complaint in this action was clearly in an action at law. It states that the plaintiff and defendant were copartners in mercantile business; that they dissolved their copartnership in December, 1868, at which time it was agreed that an inventory should be taken of the assets of the firm, including the notes and accounts due to it, and that the defendant should pay the plaintiff one half of the amount of the inventory, deducting a certain debt due from the plaintiff to one McCormick, and also deducting one half the liabilities of the firm, which the defendant assumed to pay; and that thereupon such inventory was taken, the precise amount due to the plaintiff ascertained and agreed upon, and the defendant went into possession, and has ever since held the possession. The complainant also claimed to recover for the services of his minor son, who, he alleged, had been employed by the firm, on a quantum meruit agreement; and he avers the value of the son’s services. For this aggregate amount he demands judgment. On this complaint, and affidavits tending to show that the defendant was about to depart the State with intent to defraud his creditors, the plaintiff obtained an order of arrest; a motion was made at special term to vacate the order of arrest, which was denied. The case is reported in 39 How. 326. The order of the special term was affirmed, at the last June term of this department.

The demand for judgment also contained a demand that an account of the partnership dealings be taken, and that the plaintiff have judgment for the balance found due him on such accounting.

The answer sets up that the agreement was that the defendant should take the goods and pay the debts of the firm, and should pay the plaintiff one half the value of the goods after the debts were paid; and that the notes and accounts due the firm were to be left with the defendant for collection, and the plaintiff’s one half was to be paid over to him on collection. The referee found the agreement to have been different from the statement of either party. He found that the plaintiff sold out his interest in the stock of goods of said firm to the defendant, without specifying the time for the payment thereof; that an inventory was taken of the goods, and they were left and remained in the possession of the defendant; and that it was also then agreed that the notes and accounts due the firm should be kept in the possession of the defendant, and he should collect the same, and should pay the debts due by the said firm. That they were so left, and that the defendant had collected a large amount thereof, and had paid all the debts of the firm, and the debts due from the plaintiff to McCormick, which he finds were paid at the request of the plaintiff, without finding that it was a part of the agreement on the dissolution, that it should be so paid. Upon the state of facts so found by him, the referee determined, as matter of law, that the interest of the plaintiff in said stock of goods was to be paid for immediately by the defendant; and that an account should be taken between the parties, of the business of said firm ; and he thereupon proceeded to take an account, as in equity, and as of the date of his report, charging the defendant, in the account, with more than $700 for moneys collected by him after the action was commenced, and rendering a judgment against the defendant for $1359.22, as the balance of the account due from the defendant to the plaintiff: at the date of the report, and reporting that there was then still uncollected, quite an amount of the notes and accounts due the firm ; the precise amount of which he did not and could not ascertain, and in respect to which he makes no, provision whatever. In various forms, and at various stages of the case, the defendant objected to this taking of an account, and excepted to the referee’s ruling on the subject.

If this were an action for an account in equity, the judgment ordered by the learned referee would, I think, be imperfect. In such a case, the final judgment between the parties should fully settle and finally determine all the questions between them, arising upon an accounting in respect to the affairs of the copartnership. In this case the referee has left open the door for an indefinite number of further suits concerning amounts which may hereafter be collected, or adjudged to have been collected, on the notes and accounts still remaining uncollected, and the number, amount or value of which are wholly undetermined by the 'judgment. In such a case a receiver should have been appointed to collect or sell the uncollected assets, and the final judgment should have disposed of all accounting between the parties as to such remaining assets. But I am of the opinion that the referee erred in going into th^ proceeding to take an account.

The complaint was upon a promise to pay an agreed and specified "balance on the sale and delivery of personal property. It did not allege that there was an open or unsettled account between the parties; nor did it contain any allegation, such as fraud, accident or mistake, upon which an account stated and adjusted is to be opened and retaken; nor did it even allege that the defendant had ever neglected or refused to account, or any fact or circumstance showing the taking of an account to be necessary or proper. The demand for an accounting was merely ' nugatory; it was not only wholly unsupported by any allegations of the complaint, but was inconsistent with the case made by the complaint, which asserted that the balance was adjusted, the amount liquidated, and the balance agreed to be paid. On the findings of the referee, it is no doubt true, that an account is necessary to settle the equities between the parties; and an action might be maintained for that, provided the defendant should refuse to render such accounting, or to pay the balance; but that is not the cause of action set up in the complaint. It is a wholly different cause of action, being one of purely equitable cognizance; whereas the present action is an assumpsit at law.

As to the claim set up in the complaint, on account of the services of the minor son of the plaintiff, the referee finds against the plaintiffs, and that he has no claim on that account, either against the firm or the defendant, as he finds that instead of the agreement on that subject being as set out in the complaint, it was agreed between the parties, that the services of the son should be set off against the rent of the store occupied by the parties, and which belonged to the defendant; so that the cause is disembarrassed of whatever doubt might have been thrown over the character of the action by the fact that such claim was set up, and which, as stated in the complaint, would seem, if it had any existence, to be a claim against the firm. At the last June term we reversed a judgment on the report of a referee, where a complaint stated a case for accounting between copartners, and the referee found there had been no partnership, but gave the plaintiff judgment as in an action at law, for the price of an engine, which in the complaint was alleged by the plaintiff to have been furnished by him to the alleged firm, of which he claimed to be a member; and our decision was based upon the ground that the complaint, being an action for an account in equity, could not be changed into an action at law to recover the price of goods sold and delivered. This case presents the precisely converse attempt, namely, to change an action at law for goods sold and delivered, into an action in equity for an account between parties.

[Fourth Department, General Term, at Rochester,

September 5, 1870.

There are various other questions, as to the admission of evidence, and the findings of the referee, touching the accounting, but as I am of the opinion that the judgment must be reversed, for the fundamental error in going into the accounting at all, I have not considered them.

The judgment should be reversed and a new trial ordered, costs to abide the event.

Mullin, P. J., and Johnson and Talcott, Justices.]