Case ID: ohio_19/html/0044-01.html
Source: Caselaw Access Project
Author: {"author": "Spalding, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James and Samuel H. Goodin v. James S. Armstrong.
    If there be a special partnership between A and B, and the principal clerk and book-keeper of A state an account between the parties showing the transaction closed, and a balance of profits in favor of B, it will be held as prima facie evidence of the adjustment of the partnership accounts; and B may sue at law for-the amount due him.
    This is a writ of error to the Supreme Court for Hamilton county.
    The original action was assumpsit, brought by Armstrong against the Goodins, in the commercial court of Cincinnati, where it was tried before the court without the intervention of a jury.
    Judgment was rendered for the plaintiff.
    A motion for a new trial was made by the defendants, which was overruled by the court, and bill of exceptions sealed.
    The judgment of the commercial court was affirmed in the supreme court' for Hamilton county, at the May term, A. D. 1849, and to review and reverse that proceeding, this writ is prosecuted.
    The bill of exceptions shows that the action below was brought to recover of the defendants, who were partners in trade under the name of James and S. H. Goodin, the sum of six hundred and thirty-two dollars and seventy-five cents, with interest, for profits that had accrued to plaintiff in a certain pork speculation entered into in the year 1838, by the said Armstrong and the said James and S. H. Goodin, under the following agreement:
    “ Whereas, J. S. Armstrong, of the city of Cincinnati, has this day drawn a bill of exchange, payable at ninety days date, to his own order, at the Hamilton Bank, Ohio, for five thousand dollars, and accepted by J. and S. H. Goodin, of said city, the same having been discounted by the Ohio Life Insurance and Trust Co., and the-proceeds paid to J. and S. H. Goodin. Now, it is agreed between the parties hereto, that the proceeds of said bill shall be invested in the purchase of mess pork and Mississippi bank notes, for the joint account, and at the joint risk of the said Armstrong, and J. and S. H. Goodin, and the profits thereon, when the same shall have been sold, be divided, that said Armstrong receiving one half, and said Goodins, the other half, and the losses, should there be any loss, be borne in like manner. It is also agreed, that no charge shall be made, by either party, for any services rendered by himself, except for money actually disbursed and paid out on account of said speculation. It is further agreed, that as the assets to meet the above bill are in the hands of said Goodin, to pay the same when due, that no division of profits shall be made, until said bill shall have been paid.
    “Witness our hands, this 27 th day of February, 1848.
    (Signed.) J. S. Armstrong.
    James & S. H. Goodin.”
    To show that the accounts of this special partnership had been settled, and a balance struck, the plaintiff offered in evidence a debit and credit account- kept with the “ Armstrong Investment,” (so called,) by J. & S. H. Goodin, or rather a transcript of the same, made out and delivered to plaintiff by W. D. Peters, now deceased, who was the clerk and book-keeper of J. & S. H. Goodin, which account bears date Oct. 1, 1839, and shows a net profit in the transaction of $1,265.50, one half of which is placed to the credit of J. & S. H. Goodin, and the other half, ($632.75,) to the credit of the plaintiff below, J. S. Armstrong. This account, made out with minuteness, and showing each item of expenditure, and receipt is signed, “ J. &. S. H. Goodin,
    per W. D. Peters.”
    No other evidence was offered, except proof that the account was in the proper handwriting of Wm. D. Peters, that said Peters was at the time in the employ of the defendants, as their book-keeper and clerk, and that he had deceased since the date of said paper.
    The defendants objected to the introduction of this-paper in evidence, but the objection was overruled, and judgment rendered for plaintiff, and this is assigned for error.
    
      Morris, Tilden, and Rairden, for plaintiffs in error.
    The evidence offered by the plaintiff below, proved that his claim consisted of a balance due to him, growing out of the operations of a partnership between himself and the defendants below. Unless the accounts between the partners had been settled by them, and a balance struck and assented to, it is clear the title was not at law. The remedy was in chancery. Denning v. Luckie, 13 East R. 7 ; Beach v. Hotchkts, 2 Conn. 425 ; Clark v. Dibble, 16 Wend. 601; Williams v. Henshaw, 12 Pick. 378; Cary v. Bush, 2 Caine 293 ; Westerloo v. Evertson, 1 Wend. 532, and see 7 Blackf. 258; McArthur v. Ladd, 5 O. R. 514; Emerie v. Gilbert, Wright 764.
    To meet this objection, the plaintiff below offered in evidence the statement of account made and signed by Peters. This statement, even if it had been competent evidence, did not obviate the objection. It did not purport to be a settled account to which the partners had assented, and it did not purport to bind any of the parties. It was merely a copy of the partnership books, showing how the actual balance was. This was no more than could always be proved in actions between partners; and if it was enough to authorize a. recovery at law, then the rule which requires such cases to be tried in chancery, instead of being one of jurisdiction, becomes one of practice merely. Partners, under that view of the question, may in all eases sue at law, and there compel the production of the partnership books, and'obtain judgment for the balance appearing by them. The general rule is, that partners must have their accounts settled in chancery. The exception is, that the creditor partner may sue at law, if a balance has been agreed to, upon a settlement of the accounts by the partners themselves. Such a case was not proved. The statement was offered and admitted as a copy, or substitute for the books of account, and to prove that, according to the books, one partner was a creditor of the others. There was no evidence that this was the result-of any settlement, or that it was assented to, or that it had been admitted to be correct by any member of the firm. If, therefore, the statement was properly admitted in evidence for any purpose, it was not alone enough to authorize a recovery, and on this ground the court should have allowed the motion for a new trial.
    But the plaintiffs in error will claim, that the statement itself was improperly admitted in evidence. The defendant in error introduced in evidence, the written memorandum of the agreement which gave rise to the account. This writing proves the transaction to have been one of partnership; and to do away the objection, that the remedy should be sought in chancery, the defendant undertook to prove that the partnership accounts had been settled, and a balance struck; and this he did by offering the statement of Peters, which is believed to have been objectionable for two reasons: first, such a paper is itself incompetent as a means.of proof; and second, if competent at all, it ranks as secondary evidence, and it was admitted without the preliminary proof, without which, secondary evidence is, under no circumstances, admissible.
    1. Peters was a clerk and book-keeper for the plaintiffs in error, and the question here made is, whether he had authority to make statements, written or verbal, which would be binding on his principals.
    If he had been living at the time of the trial, it is clear that no state of circumstances would have authorized the substitu-. tion of his declaration for his evidence under oath. They would have been res inter alios acta, and rejected; and the plaintiffs in error would have been considered entitled to avail themselves of the benefit of a cross-examination.
    
      His statement was admitted on the ground of his agency, and as being that of his principals. But the rule which authorizes the reception of the declarations of agents, does not go so far; it is confined to admissions and statements which are parts of the res gestee. The agent is not considered as having any power to make admissions, and it is not on this ground that his admissions are evidence against his principals. He is empowered to perform an act, or make an agreement; and, then, what he does or says, whilst engaged in the performance of the act, or in making the agreement, is evidence to describe the act, or as part of the terms of the agreement. Kahl v. Jansen, 4 Taunt. 565; Langhorn v. Allnut, 4 Taunt. 511. In the first of these cases, the chief justice observed, “ When it is proved that A is the agent of B, whatever A does or says, or Writes, in the making of a contract, as agent of B, is admissible in evidence, because it is part of the contract which he makes for B, and which therefore binds him ; but it is not admissible, as the agent’s account of what passes.” “ In Masten v. Abraham, 1 Esp. c. 875, the question was, whether the defendant, the purchaser of the goods, had agreed to find bags for the carriage of them: the plaintiff offered in evidence the letter of the broker who sold the goods, (being the agent of both parties,) written to the plaintiff, saying that the bags would be ready by a certain day. The broker was then in the box, and Lord Kenyon said, that he would admit evidence of what he had done on account of the defendant; but that it should be learned from himself, and not from his letter.” And see Gow’s Nisi Prius cases, 45 ; Webb v. Alexander, 7 Wend. R. 281; Tallheimer v. Brinkerhoof, 4 Wend. R. 394; Sweeting v. Turner, 10 J. R. 225; Hurd v. West, 7 Cow. R. 752 ; Vinall v. Burnell, 16 Pick. 401; Hallowell Bank v. Hamlin, 14 Mass. R. 178 ; Garth v. Howard, 1 Eng. Com. Law. R. 431.
    The bill of exceptions shows that “ Peters, at the time of the date of the paper, was in the employ of the defendants, (the plaintiffs in error,) as their book-keeper and clerk; and this was the only fact in evidence to describe his agency. As to the nature of bis duties we are left to inference and construction ; and before it can be concluded that he was authorized to issue certificates from the books committed to his “ keeping,” it would seem that there should be some evidence that such an act was part of the business of a “ book-keeper and clerk.” As a matter of fact, it is well known that such is not the case. A man’s books of account are evidence against him, exactly as his own declarations are. The contents of his books may be proved by any witness who can describe them under oath, as his declarations may be proved by any witness who heard them. If his books may be proved by the admission of his clerk, to be consistent, it ought also to be held that his declaration may be proved by the same means; for they are both admitted as declarations, affording evidence as to disputed facts, and differing only in the circumstance that one is written and the other verbal. ' From what is known out of the record, it could be shown that the admissions of a “ book-keeper and clerk,” can never be evidence for any purpose, against his employer, unless specially authorized to be made. For they are not incident to the act which he is employed to perform, and do not accompany that act. But looking- to the record alone, it would seem clear that enough was not proved to admit the statement. It should have been shown that the making of such statements was part of the ordinary business of a “ bookkeeper and clerk,” or according to the course of business of the plaintiffs in error, or that it had been specially directed to be made. To infer such an authority, would be to-make a rule of evidence for this particular case.
    2. The statement was in the nature of secondary evidence. It was not evidence to prove the truth of the facts therein contained; — to prove that the defendants below were indebted to the plaintiff below, but to show the contents of the books of account. If Peters had made verbal declarations of the same facts contained in the written statement, it is manifest that those declarations would not have been viewed as admissions binding on the defendants below. It was not as an admission that the statement was made, but as a copy of the books; and then, when it was admitted in evidence, it proved, not that the defendants below were indebted to the plaintiff, but it proved the state of accounts as shown by the books. It was offered then as a copy and as a substitute for the original. The original, the books, would have been evidence — they were the best evidence, and they should have been called for; and then, if not produced, their contents might have been proven in the usual manner.
    
      Utica Ins. Co. v. Caldwell, 3 Wend. 296; Kennedy v. Jouke, 5 Har. & John. 63; Life and Fire Ins. Co. v. Mer. Fire Ins. Co. 7 Wend. 31; Halleck v. State, 11 O. R. 403; Taylor v. Colvin, Wright 499 ; Taylor v. Carpenter, 2 Woodbury & Minot 1.
    On all the grounds, it would seem there was an error in the proceedings of the court below, and the judgment of affirmance on the circuit must have been an act of inadvertence.
    
      Y. Worthington, for defendant.
    The case was submitted by the defendant without argument.
   Spalding, J.

It is claimed by the counsel for plaintiffs that the settlement or account in the handwriting of William D. Peters, dated October, 1839, was incompetent evidence, and improperly admitted on the trial. We think otherwise.

The plaintiff below first offered the agreement between the parties, of the date of February 27th, 1838, showing their special partnership in the transaction from which he claimed his profits had sprung.

This agreement showed the whole fund to be in the hands of J. & S. H. Goodin, who were to receive the avails of the in vestment, pay off the draft and other expenses, and then divide the net profits equally between the parties.

At the close of the business, Armstrong may be presumed to have called upon the Messrs. Goodin for a balance sheet showing the result of their adventure. In the usual and 'ordinary course of business, it is made out for him by the. principal book-keeper of the firm, and he is thereby apprised of a balance in his favor, of a given sum. He has a right to hold this balance sheet, thus signed by the “ book-keeper,” as prima facie evidence of the settlement of the partnership accounts and of the acknowledged balance in his favor. It will be presumed in favor of a paper thus made out and signed, that it had the sanction of the firm. Sound policy requires this presumption to be made, otherwise there can be but little safety in dealing with clerks behind a counter.

It was a paper emanating from a confidential agent, when acting in the line of his duty and within the scope of his agency, as we conceive, and should be entitled to as much weight in the law as an accountable receipt signed by the party or his agent, which is held good until explained and controverted by other evidence.

We are satisfied with the decision of the commercial court upon the whole case.

The judgment of the court on the circuit will be affirmed.