#### Rudolph Weiss, Respondent, *v.*Bernath Weiss and Abraham Kelly, Appellants.

(Supreme Court, Appellate Term,

March, 1912.)

Partnership —- What constitutes — Actions — Between parties — Eight *1*to sue — Pleading.

One partner cannot sue another at law on a contract, unless there has been a settlement of the partnership accounts, a balance struck and a promise to pay.

Where one partner sells property in hostility to and in denial of the partnership he is liable in conversion to the other partner.

A complaint by one partner against his copartner and another, which alleges that the copartner wrongfully transferred the entire partnership property to the other defendant without the knowledge, consent or authority of plaintiff and that he was wholly deprived of such property and physically ejected from the firm’s place of business, states a cause of action in conversion of which the City Court of, the city of New York has jurisdiction.

Hotchkiss, J., dissents.

Appeal by the defendants from an order of the City Court of the city of ¡New York denying the motion of one of the defendants for judgment on the pleadings, .and sustaining plaintiff’s demurrers to the answers of the defendants.

William Halpert, for appellant Bernath Weiss.

Samuel Greenbaum, for appellant Abraham Kelly.

Respondent filing no brief.

Seabury, J.

Plaintiff sues for damages in conversion. The complaint alleges that plaintiff and defendant-appellant Weiss are copartners owning property as such, and that defendant-appellant Weiss has wrongfully transferred all the property of the- partnership, without the knowledge, consent or authority of the plaintiff, to the defendant-appellant Kelly and that the plaintiff'has been wholly deprived of such prop* *645erty. The complaint also alleges that on the day following the transfer the defendants physically ejected the plaintiff from the copartnership place of business and refused to permit him to enter the same.

The answers of the defendants-appellants pleaded that the cause of action alleged was equitable in its -nature and not within the jurisdiction of the City Court. Plaintiff demurred to this defense. The issues raised by the demurrers were brought on to be heard by motion and the court below sustained the demurrers to the defenses. The defendants appeal. If the cause of action is equitable it is clear that the City Court is without jurisdiction.

Before partnerships were known to the law of England the ancient action of account was in existence. Subsequently, by statute, this form of action was so extended as to apply to traders in a commercial adventure (2 Poll. & Mait. Hist, of Eng. Law, 221), but it is doubtful whether there is any reported case where one partner invoked this form of action against his copartner. 2 Lindley Part. (2d Am. ed.) 560, note K. The increased facilities for taking an account which came with the development of the jurisdiction of equity so far surpassed those afforded in the law courts that the common law action of account became obsolete. The rule has long been settled that one partner could not' sue another at law on contract, unless there had been a settlement of accounts, a balance struck and a promise to pay. Murray v. Bogert, 14 Johns. 318; Voegtlin v. Bowdoin, 54 Misc. Rep. 254. In regard to actions in tort, especially trover, the present rule is the, result of an interesting evolution. Littleton laid it down that if two possessed a chattel in common and “ if the one take the whole to himselfe out of the possession of the other, the other hath no other remedie but to take this from him who hath done to him the wrong * * * when he can see his time.” Coke approved this statement, but pointed out that if one co-owner *destroyed*the property an action would lie, saying: “If two tenants in common be of a parlce, and one destroyeth all the deere, an action of trespass lieth.” Co. Litt., § 323. Barnardstone v. Chapman (cited in Bull. H. P. 34, 35) held that trover *646would, not lie, unless the chattel.which was the subject of common ownership was *destroyed.*This continued to be the rule, except when the cotenant disposed of the chattel by-sale in market overt, until it was doubted in Barton v. Williams, 5 Barn. & Ald. 401, reported in 106 Eng. Rep. (Full Reprint) 1235; affd., Williams v. Bartos, 3 Bing. 138; 11 Eng. Com. Law, 76. In that case it was suggested by Abbott, Oh. J., that if one of the co-owners *sold*the chattel he would be liable to the other in conversion. The actual decision of this case did not turn upon this point, although it was discussed by the judges. Bayley, J., agreed with Abbott, Oh. J., although Holroyd, J., declared that he was “ not quite -satisfied upon that point,” and Best, J., expressed the opinion that the action would not li-e unless the sale was in market-overt, because such a sale would he binding from the policy of the law, and not by the authority of the seller.

In Farrar v. Beswick, 1 M. & W. 682, Baron Parke expressed his disapproval of the suggestion of Abbott, Oh. J., in Barton v. Williams, supra, and gave it as his opinion that the action would not lie for a *sale*merely, unless the sale was in market overt.

In Mayhew v. Herrick, 62 Eng. Com. Law, 229, the decision was based on other grtiunds, but the; judges discussed this question and Ooltman and Oresswell, JJ., were of the opinion that the action "would, not lie unless the sale was in market overt. Maulé and' Williams, JJ., however, expressed the view that trover would lie by one tenant in common against another when the common property was sold. For a lucid discussion of the English authorities, see Fraser v. Kershaw (69 Eng. Rep. Full Reprint, p. *18).*

In this State the development of the rule has been similar to that which it underwent in England, except that the effect of a sale in market overt has not been considered, as that custom has never been recognized in this State. Wheelwright v. Depeyster, 1 Johns. 471, 480, by Kent, C. J.

St. John v. Standring, 2 Johns. 468 (1807), declared broadly that tenants in common cannot maintain trover against each other.

*647Wilson & Gibbs v. Reed, 3 Johns. 174 (1808) ; Hyde v. Stone, 9 Cow. 230 (1828) ; Gilbert v. Dickerson, 7 Wend. 449 (1831) ; Mumford v. McKay, 8 Wend. 443 (1832) ; Farr v. Smith, 9 Wend. 338 (1832), all asserted that the action would lie for a *sale*of the common property, although this rule seems to have been declared with hesitation and some misgivings as to whether a destruction was not necessary in order to enable one tenant in common to sue the other. The case of White v. Osborn, 21 Wend. 72 (1839), settled the rule in this State. In that case it was held “ that a sale of the whole chattel by one tenant in common entitled his co-tenant to an action of trover.” Speaking of White v. Osborn, supra, Judge Finch, in Osborn v. Schenck, 83 N. Y. 201, 204, declared that “ That case has been steadily followed and the doctrine is now fully established,” and in support of this statement he cites Tyler v. Taylor, 8 Barb. 585 ; Van Doren v. Balty, 11 Hun, 239; Delaney v. Root, 99 Mass. 547; Wheeler v. Wheeler, 33 Maine, 348, and Dyckman v. Valiente, 42 N. Y. 560. In Dyckman v. Valiente, *supra,*the court, in considering whether the action should be in law or equity, said: "“If the exact interest of the plaintiff in the ship, and tho exact amount which he was entitled to recover of the defendants could he ascertained and determined, without an accounting, the appropriate remedy would be at law.”

In Osborn v. Schenck, supra, Judge Finch said: “The right of each to the use and possession of the property is précisely the same, and neither can have or exercise a superior authority over the other. It follows necessarily that the mere fact of such possession and use by one, even though it prevents the use and possession of the other, can furnish no ground of action, since it is rightful, and rests upon a lawful authority. But it also follows that if that possession develops into a destruction of the property or of the interest of the co-tenant, or into such a hostile appropriation of it as excludes .the possibility of beneficial enjoyment by him, or ends in a sale of the whole property which ignores and denies any other right, then a conversion is established and trover may he maintained against the wrong-doer.” •

*648So far as we know Osborn v. Schenck, *supra,*has never been questioned in this State. Thayer v. Gile, 42 Hun, 268; Lawatsch v. Cooney, 86 id. 546; Felts v. Collins, 46 App. Div. 332; 67 id. 430; Gates v. Bowers, 169 N. Y. 14.

All of .the cases cited above relate to tenants- in common except Mumford v. McKay, supra, where the parties were partners. In Wilson & Gibbs v. Reed, *supra,*and Hyde v. Stone, *supra,*the court indicates that a different rule would apply in actions between partners.

It has been supposed that some question might exist as'to •whether the rule applicable to tenants in common relates to partners in so far as it affects the right of one to maintain trover against the other. Pars. Part. § 226; 1 Oollyer Part. § 404. I cannot see any reason for applying a different rule to partners from that which is held applicable to tenants in common or joint tenants. There are, of course, important differences which exist between the rights and duties of such co-owners and partners (1 Lind. Part, [2d Am. ed.] 51, 52), but no distinction exists so far as .the right to maintain trover is -concerned., All co-owners are not necessarily partners, but-all partners are co-owners and one partner may sue his co-partner in -conversion where there is a sale in hostility to and in denial of the copartnership. 9 Ency. of the Laws of Eng. 475. I think that this necessarily follows from Judge Finch’s statement of the rule in Osborn v. Schenck, *supra.*

The appellants call our attention to several cases which they assert are contrary to the rule stated above.- An examination of these authorities shows that they have no application to the question presented for decision. Cover v. Henneberger, 53 How. Pr. 1; Torrey v. Twombly, 57 id. 149; Buell v. Cole, 54 Barb. 353; Mitchell v. Tonkin, 109 App. Div. 165; Hollister v. Simonson, 36 id. 63; affd., 170 N. Y. 357, and Voegtlin v. Bowdoin, 54 Misc. Rep. 254, are all cases where the action was brought upon contract and not in tort. In Robinson v. Gilfillan, 15 Hun, 267, one of the partners retained possession of the chattel, and it 'was there held, consistently I think with Osborn v. Schenck, *supra,*that an action of conversion would not lie. In Belanger v. Dana, 52 Hun, 39, the partnership had been dissolved and *649one partner held the assets subject to the payment of the partnership debts, and the court held that the rule declared in Osborn v. Schenck, *supra,*did not apply. Smith v. Fitchett, 56 Hun, 473, was an action in equity for an accounting. Cary v. Williams, 8 N. Y. Super. Ct. 667, was an application at chambers by one partner for an order of arrest against his copartner. The facts of the case are not stated in the report. Douglass v. Winslow, 52 N. Y. Super. Ct. 439, held on- demurrer that the complaint was technically insufficient and did not state a cause of action for conversion. In Pattison v. Blanchard, 5 N. Y. 186, it was held that as between themselves the partners to the action were not partners. Thus it appears from a review of the authorities upon which the appellants rely that they lay down no-rule contrary to that referred to above.

As the rule declared in Osborn v. Schenck, *supra,*is applicable to partners, it only remains -to apply that rule to the facts of the present case in order to determine whether the demurrers of the plaintiff were properly sustained. It clearly appears from the complaint that the plaintiff charges the defendant-appellant Weiss with a wrongful sale of the entire partnership property which ignores and denies any right which the plaintiff has in it. Hpon such an allegation the plaintiff may sue at law and such an action is within the jurisdiction of the Oity Court.

It follows that the order of the court below was correct and it should be affirmed.

Order affirmed with ten dollars costs and disbursements, with leave to defendants to plead anew within six days upon payment of costs in this court and in the court below.

Geeaed, J., concurs.

Hotchkiss, J. (dissenting):

As a general rule a tenant in common may not sell the common property (per Savage, Ch. J., Blood v. Goodrich, 9 Wend. 68, 76; Tyler v. Taylor, 8 Barb. 585), whereas a partner may ordinarily dispose of the property and effects of the firm for any and all purposes of the partnership, and likewise may “ sell, mortgage, pledge. *650• aPPty or otherwise dispose of firm effects ” for partnership purposes. He may assign the firm assets as security for antecedent or subsequent debts, and may transfer or pledg’e all of the partnership property to a creditor as security for or in payment of a debt due from' the firm. Mabbett v. White, 12 N. Y. 442; Welles v. March, 30 id. 344, 350. I find nothing in the complaint negativing the hypothesis that the sale by defendant Weiss to Kelly was not under circumstances fully within the power of Weiss as a partner in the firm composed of himself and the plaintiff. True, the complaint alleges that the sale was in pursuance of a *“*fraudulent conspiracy ” between defendants Weiss and Kelly, and was “ without knowledge, consent or authority of plaintiff,” and that it was with “ intent to defraud ” plaintiff; There is no allegation that the sale was without consideration. The fact that it was without plaintiff’s knowledge or consent is immaterial. Mabbett v. White, supra, 454. In the absence of - facts characterizing the allegations of fraud, conspiracy and intent, the phrases are mere “ sound and fury,” signifying “ nothing.” Wood v. Amory, 105 N. Y. 278; Cohn v. Goldman, 76 id. 284; Knapp v. City of Brooklyn, 97 id. 520; Knowles v. City of New York, 176 id. 430.

Under these circumstances, assuming that the demurrers to the answers open the complaint to attack for insufficiency appearing on its face, I am of the opinion that the demurrers were improperly sustained. Peerrot v. Mount Morris Bank, 120 App. Div. 247. The order should be reversed.

Order affirmed.