Case Name: Halsted & Wiggins against Schmelzel
Court: New York Supreme Court of Judicature
Jurisdiction: New York
Decision Date: 1819-08
Citations: 17 Johns. 80
Docket Number: 
Parties: *Halsted & Wiggins against Schmelzel.
Judges: 
Reporter: Johnson's Reports
Volume: 17
Pages: 74–77

Head Matter:
*Halsted & Wiggins against Schmelzel.
H. ⅜ S. made a joint purchase of a quantity of goods, each paying the one half of the price. They soid to A. one package of the goods, on a credit of five months; and afterwards divided the remainder of the goods between them, and H. paid S. for one half of the price of the package soid. A., having become insolvent, H. brought an action of assump-sit against S. to recover the one half of the loss arising on the sale. It was held, that this was a co-partnership concern, and that an,- action at law could not, therefore, be maintained by the plaintiff, without proving an express promise to pay. *That even if an action could lie in such a case, yet, as II. had taken the note of A., and treated it as his own, extending the time of crecí-, it and changing, the security, without the consent of 8., and finally making a compromise of the claim, he had no right to call on £. to share in the
THIS was an action of assumpsit, tried the 8th of December, 1818, at the New-York Sittings, before the late chief justice.
In October, 1815, the plaintiffs and defendant made a joint purchase, from Caines & Crary, of a quantity of French goods, to the amount of 18,608 dollars 33 cents, and tire plaintiffs gave their notes for one half the amount, and the defendant gave his note for the other half. On the 15th of October, 1818, Seymour & St. John purchased from the plaintiffs and defendant, one case of goods, for 2,583 dollars and 84 cents, at a credit of five months; and, before the expiration of the time, the plaintiffs agreed to receive in payment the notes of St. John &f Warner, which they accordingly received, the firm of Seymour & St. John having become insolvent; and, on receiving these notes, the credit was extended to six months. When the notes became due, the plaintiffs took, in lieu of them, Smith &f Spicer’s notes, endorsed by Seymour & St. John, at six months, St. John & Warner having failed, at which last-mentioned transaction the defendant was not present. The witness stated that, although Seymour & St. John failed, and declared themselves insolvent, yet Seymour had been, and still was, able to pay all his debts.
On the 25th of November, 1815, the plaintiffs and defendant made a division of the goods purchased by them and remaining on hand, and for the part sold, the plaintiffs gave to the defendant their two several promissory notes, of 542 dollars and 44 cents each, for the one half, payable in March, 1816, and which were, afterwards, paid by the plaintiffs to the assignees of the defendant, who had become insolvent.
On the 31st of July, 1817, the plaintiffs addressed a letter to the defendant, as follows: “ Dear Sir—Seymour & St. John have made a proposition to settle our joint claim on them, of 2,583 dollars and 87 cents, (equal to about 8 Shillings in the pound,) for one case of French goods. We believe it to be an advantageous offer; and, unless you object to it this day, we shall accept it, and hold you accountable for half the loss.”
In the afternoon of the day on which the letter was dated, the plaintiffs compromised with Seymour & St. John, and Smith & Spicer, who paid about 1,100 dollars, on their notes ; (and, to recover the one half of the loss, this action was brought.) The witness stated, that he did not know that Smith was insolvent ; that he is now cashier of a bank at St. Louis, (Missouri,) and that Seymour had always been able to pay his debts. Another witness stated that Smith was, at the time of this compromise, notoriously insolvent, and that all the parties to the notes were then believed to be so, and that he advised the compromise, as advantageous to the plaintiffs.
The plaintiffs having rested their cause, the defendant’s counsel moved for a nonsuit, on the ground that this was a co-partnership transaction; and, therefore, no action at law could be maintained, without proof of an express promise by the defendant. The chief justice reserved the question.
A witness for the defendant testified, that, in a conversation with the plaintiffs, on the subject of this controversy, he asked them, whether the defendant, after the division of the goods, could have enforced payment from Seymour ⅜ St. John, or Smith &f Spicer, and the plaintiffs replied “ no; the defendant had nothing to do with it.”
The chief justice charged the jury, that it did not appear that the defendant had any agency in exchanging the security of Seymour &f St. John for that of St. John fy Warner, nor in extending the terms of credit when the notes of Smith ⅝* Spicer were taken, nor in the change of security at that time; that the notice of compromise to the defendant was very short, to say the least of it; that, as to the compromise itself, its prudence and necessity were doubtful; and he thought, upon the whole, that the evidence was not enough to charge the defendant ; but that these were questions of fact for the consideration of the jury. The jury *found a verdict for the plaintiffs, for 965 dollars and 76 cents.
A motion was made to set aside the verdict, and for a new trial, as well on the point reserved, as because the verdict was against law and evidence.
D. 13. Ogden, for the plaintiffs.
This action is for the half of a loss, in the nature of a liquidated balance; the joint concern in which the particular purchase of goods was made, and to which the partnership was restricted, having spent itself before the loss occurred. The adjustment, made by the parties was a final settlement of the co-partnership. It is true, that the courts, in England and here, have said, that an action at law cannot be maintained by one partner against another, unless there has been a settlement of accounts, and an express promise by one partner to pay the balance. (Murray v. Bogert, 14 Johns. Rep. 318.) But in Rack straw v. Imber, Gibbs, Ch. I., (I Holds N. P. Rep. 368.) held, that an express promise was not necessary; that the “dissolution of the pre-existing co-partnership, and the mutual settlement of an account, are a sufficient consideration in law for an implied promise to pay a balance on the side of the partner from whom such balance is due.” And this court, in Wetmore v. Barker, (9 Johns. Rep. 307.) went on the ground, that the law would raise an implied promise to pay the balance found due on the settlement of accounts between partners. The error into which the English courts and this court seem to have fallen, in supposing that an express promise was necessary, originated in the case of Foster v. Allanson, (2 Term Rep. 479. and see Moravia v. Levy, n. 483.) in which there were articles of co-partnership, for seven years, and a covenant to settle accounts annually. Here the joint or partnership concern, between the plain tills and defendant, was finally and for ever closed. In Bond v. Hays, (12 Mass. Hep. 34.) the Supreme Court oí Massachusetts held, that assumpsit would lie by one partner against his co-partner, for money paid by him, on a dissolution and adjustment of the concern, more than was actually due. Now, have not the plaintiffs paid to the defendant more than he was entitled to? The plaintiff's gave their notes to *thc defendant, for the one half of the amount of the goods sold Sí. John & Warren, the consideration for which was, that the note of St. John & War-■ten, taken on the sale to them, would be paid; and that consideration having failed, the plaintiffs are entitled to recover back the money they have paid in this action.
' Suppose the plaintiffs had received the whole money, at the time, from St. John &f Warren, could not the defendant have maintained an action of assumpsit, to recover of the plaintiffs the one half, as so much received to his use ?
There are no partnership accounts in this case to be adjusted ; there is nothing which can deprive this court of its jurisdiction, or which renders it proper, or necessary, to send the plaintiffs to a court of chancery.
There can be no pretence, that the plaintiffs have made the debt their own, by changing the notes. They acted in good faith, and gave notice to the defendant before they took any step.
Anthon, contra.
The question is not, whether there was a partnership between these parties, but whether one can maintain an action against the other, for a share of a loss sustained on a joint sale, without an express promise to pay. Whatever fluctuation there might have been in the English courts, as to this question, this court have uniformly decided, that an action cannot be maintained by one partner against another, on a settlement of accounts, unless there has been an express promise to pay the balance. (Casey v. Brush, 2 Caines''s Rep. 294. Nevin v. Spickernan, 12 Johns. Rep. 401. Murray v. Bogeri, ,14 Johns. Rep. 321. 1 Binney’s Rep. 192. S. P. 2 Term Rep. 483. n. Watson on Partnership, 396. 2d ed.) The application of this rule to a general partnership cannot be doubted ; and the reason of the rule applies equally to a special partnership, as in this case.
Again ; the plaintiffs took the whole debt of St. John ⅝- Warren to themselves. They treated it as their own. They changed the security, and made a compromise; and though the defendant had notice of the proposed compromise, yet ⅝ was short, unreasonable, and insufficient. He never assented to any acts of the plaintiffs. One of the debtors, Seymour, was proved to be perfectly solvent. The compromise was, therefore, un necessary and imprudent, and discovered a great want of care and attention, on the part of the plaintiffs.

Opinion:
Per Curiam.
The objection that this demand arises out of a partnership concern is conclusive. There has not been a liquidation of the demand, and, certainly, nothing like an express promise to pay it. The merits, also, of this case, are with the defendant. The compromise made by the plaintiff's was unjustifiable. The weight of evidence is clear, that Seymour was always able to pay the debt. The plaintiffs received the debt as their own, and have treated it as such, and have acted in such a manner as to take away all right to throw any part of the loss on the defendant. There must be a new trial, with costs to abide the event.
New trial granted.
Vide Robson v. Curtis, (1 Starkies N. P. Rep. 78.) A. received a bill of exchange in payment for cattle, jointly purchased by himself and B.. and sold to C.f which he endorsed to B., and being; dishonored, B. promised A. that, if he would take up the bill, he, B., would pay A. half the amount. In an action of assumpsit, brought by A. on this promise, Lord ElUmhorongh said, that if there had been partnership dealings, and only one item remained unadjusted, the difficulty as to partnership would disappear; hut that not being the case, as some of the cattle remained unsold, after the sale to C., and it did not appear that the account had been settled, he nonsuited the plaintiff. In Venning v. Leekic, (13 East, 7.) where the plaintiff and defendant agreed to he jointly concerned in the purchase of a quantity of flax, and to share in the profit and loss, and the defendant promised to furnish one half the amount, in time, for the payment; it was held, that assumpsit would lie against the defendant for his share of the purchase money.
See Musier v. Trumpbour, 5 Wendell's Rep. 274. The rule that an action of assumpsit will not lie by one partner against another for moneys paid in the partnership concern, is as applicable to a law partnership of practising attorneys as to other partnerships. Westerlo v. Evertson, 1 Wendell's Rep. 532. Smith v. Allen. 18 Johns. Rep. 245. It seems by the case last cited, that, after a trial decided for the plaintiff, it is too late for the defendant to object, that the subject matter of the suit was a copartnership contract between him and the plaintiff. The objection ought to be made at the trial.