Case ID: ad_5/html/0115-01.html
Source: Caselaw Access Project
Author: {"author": "\n      O’Brien, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Augustus B. Coit, Respondent, v. Philip J. Goodhart and Others, Appellants.
    
      Compulsory reference — the examination of a long account must he the immediate object of the action — if issues of fraud are first to be determined the reference is improper — party.
    Where an accounting is asked for in an action, hut can take place, only after the trial and decision in the plaintiff’s favor of an issue as to whether the settlement of an account and a transfer of the plaintiff’s claim to a third person were induced by fraudulent representations, and in the event that such assignment is set aside, a motion by the plaintiff that the action be referred to a referee to hear and determine it on the ground that it involves the examination of a long account will not be granted for the reasons :
    
      First. That the account to be examined is not the immediate object of the action. Second,. That the party to the action to whom the assignment was made has no interest in the accounting.
    Appeal by the defendants, Philip J. Goodhart and others, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 19th day of March, 1896, granting the plaintiff’s motion to refer the issues in the action to a referee to hear and determine the same.
    
      Austen G. Fox, for the appellants.
    
      D. M. Porter, for the respondent
   O’Brien, J. :

This suit is brought to compel the defendants Goodhart to account to plaintiff for moneys not accounted for, the complaint alleging that incorrect accounts were delivered; that plaintiff received the same believing that they were correct, and that afterwards a discovery was made that $7,350 had not been paid, and that the accounts were incorrect to that extent; that, relying on the accounts and the statement of the amount of the deficiency, plaintiff received the $7,350 and transferred his claim to the other defendants, Lehman Brothers, and at the time of the transfer “it was concealed and deceitfully suppressed from the plaintiff that there was a much larger-sum due to the plaintiff” from Goodhart & Co. on a proper accounting.

To obtain relief it will be necessary to set aside the assignment made by plaintiff to Lehman Brothers, upon the grounds alleged, that it was obtained by fraudulent representations, and was the result of a mistake of fact. If successful in this attack upon the assignment, by showing that such representations were made and that they were false and fraudulent, then undoubtedly the further relief of an accounting would follow; and as this, in view of the numerous transactions between the parties, would necessarily involve the examination of a long account, the taking of this would properly be sent to a referee. So far as the defendants Lehman Brothers are concerned, the action can in no sense be regarded as referable, because, as between them and the plaintiff, the issue is whether the assignment to them was the result of fraud and mistake.

To justify a compulsory reference, it is not enough that the case may involve the examination of a long account, but sufficient should be shown to justify an inference that that would be the course of the trial, or, as said in Camp v. Ingersoll (86 N. Y. 133), “ The accounts to be examined must be the immediate object of the action or the ground of defense, and must be directly and not collaterally involved.”

If plaintiff is successful fin setting aside the assignment to Lehman Brothers, the latter have no interest whatever in the accounting or the extent of the liability of the defendants Goodhart, their sole interest being centered in an endeavor to uphold the assignment to them, which is assailed for fraud and mistake. And even as to the defendants Goodhart, the question which is first to be disposed of, and upon the establishing of which alone the plaintiff is entitled to re-open the accounts, is that of fraud. We do not think, therefore, that the court had power to order a compulsory reference of this issue. But even if it were a matter of discretion, it should not, upon the pleadings here, have exercised it in directing a reference.

The respondent calls our attention to the case of Nat. Shoe & Leather Bank v. Baker (148 N. Y. 581; S. C., 90 Hun, 277). The cases, however, are entirely dissimilar. There the action was brought under chapter 487 of the Laws of 1889 by creditors of a deceased insolvent debtor to disaffirm a transfer made in fraud of their rights as creditors. As correctly stated in the head note in 90 Hun, 277, “ The primary question in such case is whether an indebtedness to the creditor does exist upon the part of the estate of the deceased, and the whole proceedings depend upon the establishment of this issue in favor of the plaintiff.” This statement alone is sufficient to emphasize the distinction between that case and the one at bar.

The order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Van Brunt, P. J., Barrett, Rumsey and Ingraham, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.