Case ID: va_12/html/0518-01.html
Source: Caselaw Access Project
Author: {"author": "JUDGE TUCKER. JUDGE ROANE JUDGE FLEMING.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Fletcher v. Pollard.
    Friday, May 20, 1808.
    Partnership — Settlement of Accounts — Submission to Arbitration. — If, pending a suit in Chancery brought by one of three mercantile partners against the other two, for a settlement of the accounts of the copartnery, the. plaintiff and one of the defendants agree to refer all .matters in difference between them, relative to the subject in controversy, to arbitrators, (whose award is to be the decree of the Court,) according to which agreement an order of reference is made; and the arbitrators make a report that they had examined and stated the books of the copartnery, and award the payment of certain sums by the other defendant, as the only debtor to the plaintiff and to the defendant, who agreed to the reference; and state that the payments already made by that defendant discharge him from any further claim of the plaintiff on account of the copartnery; such report ought to be considered as an award, and sufficiently final and good between the who to the reference.
    Same — Same.—In settling the accounts of a mercantile concern, in a controversy between the partners only, it is sufficient to examine and state the books of the copartnery, without requiring vouchers in support of each specific item.
    On an appeal from a decretal order made by the Judge of the Superior Court of Chancery for the Richmond District, on the 1st of June, 1803, whereby an award of referees chosen by the parties was set aside, and a new account directed to be taken.
    Robert Pollard filed his bill in the late High Court of Chancery against Thomas C. Fletcher and Richard C. Pollard, stating that a copartnery had existed between himself and the defendants under the firm of Fletcher and Pollard ; that he was a creditor partner to a considerable amount; that Fletcher undertook to keep the books in a regular and ^mercantile manner, which had not been done, inasmuch as there were various entries in them in which the sums had not been extended; that Fletcher had executed a deed of trust on a tract of land and sundry slaves to indemnify the complainant for his advances to the copartnery; and had assured the complainant, during the progress of the business, that it was a profitable one; notwithstanding which the company were involved in debt and perplexed with law-suits, which a proper attention, on the part of the said Fletcher might have prevented. The object of the bill was for an account, and to subject to sale the property conveyed in trust by Fletcher as an indemnity to the complainant.
    (fhe answer of the defendant Richard C. Pollard was a mere echo of the complainant’s bill.
    Fletcher, in h'is answer, denied that he had undertaken to keep the books, or that it was more obligatory on him than the other defendant, or the assistants in the store; that he did not know .of any loss which had been sustained by blank entries in the books; and expressly denies that any debts had been lost through his neglect. He admits, that during the copartnery he told the complainant they were making" money because they sold their goods at a high advance, but avers, that the losses, afterwards sustained arose from circumstances over which he had no controul; for-being compelled, for the re-establishment of his own health and that of his family, to leave the place at which their store was. kept, the other defendant, on whom the whole business devolved, advertised the-goods for sale at public auction, and did not even attend the sale himself, having previously thereto gone to the Western Country on business of his own and of the complainant; and that the goods were sold much below cost; that he has paid large sums of money since the dissolution of the-partnership without the assistance of the. complainant or the other defendant, although he holds the complainant’s obli- • gation to exonerate him from more. than one-third of the debts; *and that he has always been willing to come to a settlement of the accounts, which had hitherto been prevented by the non-attendance of the other partners.
    The cause being set down for hearing, the following entry was made: “Pursuant to an agreement in writing between the. plaintiff and the defendant Thomas C. Fletcher,, filed with the papers in the cause, the Court doth refer all matters in difference between those parties relative to the-, copartnery of Fletcher and Pollard to Nathaniel Anderson and Hudson Martin, and, in case of their disagreement, to such umpire as they shall choose, whose award is. to be made the decree of the Court.”
    The referees reported that they had examined and stated the books of the copart-nery of Fletcher and Pollard, (an account of each partner with the firm being annexed,) the result of which was, that Fletcher had overpaid his proportion, that Robert Pollard was á creditor partner to a considerable amount, but that the debtor-partner was Richard C. Pollard. The referees finally proceeded to award, that. Richard C. Pollard shall pay to Fletcher 101. Os. 8 l-2d. and to Robert Pollard 8191. 6s. 5d. they then make provision for the distri--bution of the outstanding debts when collected. In making their report they" expressly state, that the payments made by Fletcher leave a balance due to him, after discharging his proportion of the partnership debts, of the above sum of 101. Os. 8 l-2d. and discharge him from any further-claim of the complainant on account of the-copartnery.
    The plaintiff filed exceptions to the award: 1st. Because it was not final, the interest account being still unsettled; 2dly. Because the items of the account were unsupported by vouchers.
    The Chancellor was of opinion, that the-referees had neither pursued their authority, nor completely performed their function ; that the plaintiff had ascribed the losses of the company to the negligence of Fletcher, to which he gave an evasive answer; that the bill alleged, that the legal *costs with which the complainant would be burthened might have-. been avoided by the sedulous attention of Fletcher to his duty, to which he gave no. answer; yet the referees had overlooked these articles; that they had debited the plaintiff with interest, although some of the accounts stated by them shewed that he had advanced more than his proportion of the joint stock, so that had his copartners been equally provident, interest as well as costs would have been saved ; and although, too, the defendant Fletcher flattered the plaintiff with a prospect of gain, instead of warning him of a danger of loss. The Chancellor, therefore, rejecting the report, which he says was improperly called an award, the prefatory words of its authors being, “We have examined and stated the books of the copartnery of Fletcher and Pollard, the accounts of which, from our report, appear as follows,” &c. made a new reference of the accounts to a commissioner. From which opinion the defendant Fletcher prayed an appeal, which was allowed.
    The Attorney-General,- for the appellant.
    The opinion of the Chancellor was founded on a misapprehension of facts. Every allegation in the bill was as fully answered by Fletcher as it was possible from the nature of the case. All the matters in controversy were referred to arbitrators, and they, after reporting upon the state of accounts, proceed to make up an award between the parties. This was complete and final, and ought to have been made the decree of the Court. Justice and sound policy require, that, after men have chosen their own Judges, their decision shall be binding. Ho sufficient reason has been assigned for setting aside this award. As to the first exception, that the interest account was unsettled, it was altogether a mistake; interest was given to both parties: and with respect to the second, that the items of the account were unsupported by vouchers, it was not necessary that they should be; but even if it were, it does not appear that the books were the only documents before the referees.
    *Randolph for the appellee,
    admitted that some of the reasons given by the Chancellor for his decree were untenable, but contended that the result was correct.
    On the face of the award it appears, that the referees have taken the books as conclusive evidence, instead of requiring vouchers in support of each item. These books were kept by Fletcher; and it was therefore incumbent on him to produce evidence to establish the several entries. Robert Pollard, being a creditor of the firm to a much greater amount than Fletcher, ought to have been allowed interest for his superior advance. The award ought therefore to have settled this question of interest, which has not been done.
    Again: Robert Pollard was in advance for the firm, considerably over his proportion of the debts; notwithstanding which he has been subjected to an equal proportion of interest and costs. This is neither legal nor equitable. He ought to have been exempted from the payment of interest and costs, inasmuch as his money was in the hands of the other partners. Mr. Randolph concluded by observing, that he asked an affirmance of the decree, for tjie purpose only of having a new account taken.
    
      
      See monographic note on “Partnership’’ appended to Scott v. Trent, 1 Wash. 77.
      
    
   Monday, May 23. The Judges delivered their opinions.

JUDGE TUCKER.

In this cause, the Court of Chancery, pursuant to an agreement in writing entered into between these parties, referred all matters in difference between these parties relative to the co-partnery of Fletcher and Pollard, to Nathaniel Anderson and Hudson Martin, who returned their award pursuant thereto, which the Court of Chancery rejected, on the ground that the arbitrators had not adverted to the subjects in controversy, except in one particular instance; and referred the accounts between the parties to a commissioner. From which opinion Fletcher prayed and was allowed an appeal.

x'Upon examining the award, it appears to me not to be liable to the objection made to it by the Chancellor, or to any other. I think it final, as to the subjects of controversy, though it was objected at the bar that it was not so. And I also think it perfectly just and equitable, and therefore that it ought to have been made the decree of the Court.

JUDGE ROANE

was of opinion that the award was good, and ought to have been confirmed by the Chancellor. He was, consequently, in favour of reversing the decree*

JUDGE FLEMING.

The award now under consideration was made by referees or arbitrators, chosen by the parties themselves, and under a special order of the High Court of Chancery, which Court had, at a preceding day, referred the accounts of the copartnery in the bill mentioned, to one of the commissioners of the Court, in the usual form.

The referees, in pursuance of the special order, which was made on the 271 h day of May, 1801, proceeded to examine and state the accounts between the parties, from the books of the copartners' of Fletcher and Pollard; the only grohnd, in my apprehension, on which they ought to have proceeded. The award appears to be perspicuous and just, and ought, in my opinion, to be conclusive, at least, between the parties who agreed to the special reference. The plaintiff however, filed two exceptions to the award; 1st. That it was not final, the interest account not being settled; and 2dly. That the items of the account were unsupported by vouchers. With respect to the first objection, it appears, from the general accounts stated by the referees, that the credit of 1,5241. 17s. 2 l-2d. due to Robert Pollard, was for advances by him made with interest to the first of September, 1801 ; the period to which interest on all the accounts was calculated.

As to the second exception, It appears a novel doctrine to me, that in the settlement of accounts from the books *of a copartnery, where all the partners of the company are equally interested, vouchers for the specific items should be required.

The opinion of the Court was, that the decree of the Superior Court of Chancery was erroneous in rejecting and setting aside the award made by the referees Nathaniel Anderson and Hudson Martin. Decree reversed at the costs of the appellee in the Court of Appeals; the award of the referees confirmed as between the appellant and appellee; the bill of the appellee as against the appellant dismissed, as to so much thereof as relates to the settlement of the accounts between the said parties, as partners in the house of Fletcher and Pollard ; and each party to pay his own costs in the Court of Chancery.