Case Name: Townes v. Birchett
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1841-04
Citations: 12 Leigh 173
Docket Number: 
Parties: *Townes v. Birchett.
Judges: (Absent Bbookb ana Stanabd, J.)
Reporter: Virginia Reports
Volume: 39
Pages: 850–860

Head Matter:
*Townes v. Birchett.
April, 1841,
Richmond.
(Absent Bbookb ana Stanabd, J.)
Stated Account — Retaining: Account Rendered without Objection. — The rule of courts of equity, that an account current rendered by one party to another, received and held without complaint or objection, shall be deemed a stated account, considered. >
Same — Same—Rule Not Confined to Herchants. — It seems the rule is not confined to accounts rendered by merchant to merchant, of mutual dealings between them as merchants, much less to accounts rendered by merchants abroad to merchants at home; that objections to such accounts rendered, which will prevent them from being deemed stated accounts, must be made within a reasonable time ; and that it lies upon the party contesting the accounts so rendered, to prove that he made objection within a reasonable time: the rule is founded on the acquiescence of the party. Dissentiente At/len, J.
Same — Same—Surcharge and Falsification — Onus Pro-bandi — Case at Bar. — B. whom the court regarded' as a merchant of P. employed T. & W. auctioneers and merchants of the same town, to sell goods at auction for him ; T. & W. five years after the sales made, render B. an account sales, and an account current wherein they charge him inter alia with commissions, with moneys paid to and for him, and with amount of debts lost by failure of buyers ; and B. holds these accounts for two years after he receives them, without objection proved to have been made by him : Hele, these shall be deemed stated accounts, which shall be taken as prima facie just; and tho’ B. may surcharge and falsify, the onus probandi of surcharge and falsification lies on him. Dissentiente Aizi/EN, J.
Equity Jurisdiction — Bill by Principal against Auctioneer. — Equity has jurisdiction of a bill by the principal against auctioneer for an account, if the account be yet open ; or to surcharge and falsify the account, if it has been stated.-
Same — Same—Rule Where Auctioneers Are Stake-Holders and Trustees of Proceeds of Sale. — And where auctioneers arc stake-holders and trustees of proceeds of sales by them made, bound to pay them to one or the other of two parties, upon conditions agreed upon, equity has jurisdiction to relieve, on a bill b3' one of the claimants against the auctioneers and the other claimant.
Auctioneer — Sale on Credit — WSaen Principal Must Bear Loss By Insolvency of Buyer. — Auctioneers employed to sell goods, with discretion to sell on credit, take notes from certain buyers to themselves. payable at a future day. and the makers of these notes fail before they come to maturity : Held, the principal, and not the auctioneers, shall bear the loss, unless it appear that the auctioneers appropriated the notes to their own purposes: andtho’ the auctioneers procure*such notes to be discounted for their accommodation. yet, if at the time they were in advance to their principal to an equal or greater amount, this will not be such an appropriation to their own use, as will make them liable to beat the loss.
Chancery Practice — Partnership -Death of One Partner Pending Suit. — Bill in equity against two persons, who have been auctioneers and partners ; one dies pending the suit; it is not necessary to revive the suit against the representative of the decedent: the plaintiff may proceed against the survivor alone.
Assignment for Benefit of Creditors — Money Assigned Decreed to Assignee.--One makes an assignment of a claim for money due him, among other property, to a trustee Cor benefit ot his creditors, and then flies a bill in equity, in his own name, to recover the money, ana by amended bill makes the trustees a party, and prays that the money due maybe decreed to the trustee : Heed, regular to decree the money to the trustee.
‘ On the 5th June 1821, Robert Birchett of Petersburg-, assigned, to Martin Thayer a bond of William Birchett for a large amount, and a deed of trust executed by the obligor mortgaging property to secure the debt. The assignment was made under a contract between the parties, which appeared by two instruments afterwards executed, one by Thayer, and the other by S. D. Townes and Charles Webb, auctioneers of Petersburg.
1. That of Thayer was in the following words: “Haying sold my stock of merchandise amounting to 12,885 dollars, to Robert Birchett, for the bond of William Birchett of Mecklenburg, dated May 1, 1818, for 14,416 dollars, with credits on the same for 2985 dollars, assigned to me on the 5th June 1821, in which bond is secured by a deed of trust on the land and slaves of the said W. B. in Mecklenburg, dated March 15, 1820, and recorded in the clerk’s office •of the said county; and the said R. B. having deposited the said stock of merchandise in the hands of Townes & Webb for sale; it is understood, that they are to hold the proceeds of sales of the same until the said R. B. shall furnish such further security upon the bond as shall be reasonable and satisfactory; and I bind myself not to take any steps against the said W. B. for the space of one year from the 11th May last” — “As the said stock of goods does *not amount to the principal and interest of the bond computed to the 11th May last, I bind myself to pay to R. B. any balance of said bond over and above the amount of the said stock of goods.” Dated June 16, 1821, and signed by Thayer.
2. The other instrument, executed by S. D. Townes and Charles Webb, after reciting the sale of his stock of goods by Thayer to Robert Birchett, and his assignment to Thayer of W. B.’s bond and deed of trust, proceeded in these words: “And the said Thayer not being satisfied, that the said bond is made secure beyond all reasonable doubt, and wishing to be further secured, provided upon enquiry he should not be satisfied with the present security; it has been agreed by the parties, that the aforesaid stock of groceries should be placed in our hands as auctioneers for sale, and has been accordingly received by us, in consideration of the above premises and in pursuance of the agreement of the parties aforesaid; and we, the undersigned, do bind ourselves, our heirs &c. to pay to the said Thayer the net amount produced by the sale of the stock of merchandise aforesaid, at the end of twelve months, provided the said Thayer shall not be able to obtain from the said Robert Birchett additional reasonable and satisfactory security for the payment of the aforesaid bond. It is understood, that the said R. B. shall not be allowed a longer time than twelve months to give the required security: he failing to do so, we agree forthwith to pay the said net proceeds to the said Thayer. Given under our hands and seals, this 16th June 1821.” Signed and sealed by S. D. Townes- and Charles Webb.
Townes & Webb, as agents of Robert Birchett, had negotiated the contract between him and Thayer. They took the inventory of the goods (chiefly groceries sold by Thayer to Birchett, and settled the prices; and they took charge of the goods, and proceeded to make sales thereof, from time to time, as they could effect sales. *They were auctioneers and partners, residing ' at Petersburg. Birchett also resided there, but whether he was a merchant or not, did not appear by any proof in the record.
On the 13th October 1827, Townes rendered Birchett an account of sales of the goods and the account current of Townes & Webb with him; the latter of which shewed a balance due Birchett, on the 1st June 1827, of 1758 dollars. On comparison of the account of sales with the account current, it appeared, that Townes & Webb’s debits against Birchett (including interest and commissions) amounted, in December 1821, to 5051 dollars; and the amount of proceeds of sales received before that time, was 3403 dollars.
In these accounts, Birchett was charged two and a half per cent, commission on the value per inventory of the goods sold by Thayer to Birchett, and two and a half per cent, commission on the proceeds of sales of the goods; he was charged with sundry sums paid to him, and other sums paid for him, among which latter were the sums of SIS dollars “paid to Durkin, Henderson & Co.” and of 728dollars “paid D. Foster’s draft assumed by Birchett;” with interest on the moneys advanced to or for him; and with three debts stated to be still uncollected, namely, 828 dollars due from Morton & Co. 538 dollars due from Arnold & Co. and 206 dollars due from one Flomerfelt, (amounting to 1S72 dollars,) on account of their purchases at the sales of the goods. And Birchett was credited with the sum of 11,178 dollars, for the proceeds of sales of the goods, which sum included the amount of uncollected debts above mentioned; and this credit was only given conditionally; for it was stated, that “it might be contested by Martin Thayer, and the amount was held accordingly.”
*Along with the account of sales and account current rendered, there was a letter from Townes to Birchett, also dated the 13th October 1827, in these words: “Dear sir, Enclosed please find sales of the groceries received from Martin Thayer for William Birchett’s bond, the account current of J. H. Brewer & Co. and your own ; balance due you 1758 dollars on the 1st June 1823, if I should not be held liable to Mr.„ Thayer, to whom the bond was assigned. I regret that about 1500 dollars of the sales proved to be bad, but it is impossible to provide against occurrences of this sort. Taking every thing into consideration (the rapid decline in the value of groceries after the negotiation of the bond) I think the result ought to be satisfactory. If it should be found, that I am not liable to Thayer, I shall desire to close the matter. And the better to explain the terms on which alone it can be effected, a disclosure of my unfortunate situation is necessary. I owe about 34,000 dollars, and my disposable effects, under the best management, will not produce more than 12,000 dollars, consequently, I can only pay 6-8ths. And at that rate, 25,000 dollars have been settled, payable in one and two 3Tears, with an understanding that I am to pay what further sum my situation may hereafter enable me, but that no suit is to be instituted against me. Such an arrangement is obviously advantageous to both parties; it places it in my power to make an effort; and there are none who do not believe that when I can pajr I will pay. These are, of course, the only terms I can offer; but if it should be possible, I will shorten the payments. When the weather is better I will have the pleasure of seeing you. (Signed) S. D. Townes.”
Nothing was done, at the time, in conse■quence of this letter of Townes; nor did it appear in proof, that any ^communication between Birchett and him on the subject, took place till ■Januar3T 1831, when Townes wrote a letter to Birchett (in answer to one from Birchett to him, which was not produced) in the following words: “Dear sir, I have received your note of this morning. I have been for a long time extremely desirous to have our accounts settled; and so soon as. you find it convenient, I will do all that justice to the rest of my creditors and my own situation will authorize. I hope an early day may suit your convenience. (Signed) S. D. Townes.” The parties did not themselves effect a settlement, if indeed they attempted it, which did not appear.
In May 1832, Birchett exhibited a bill in chancery in the circuit superior court of Petersburg, against Townes & Webb and Tha3rer; wherein, after setting forth all the facts of the transaction, and exhibiting the documents, as above stated, he charged Townes & Webb with a fraudulent contrivance to get his funds into their hands, and to hold them for an indefinite period, namely, until Tha3'er should be satisfied with the security for the debt due on William Birchett’s bond; and- he alleged, that, in truth, W. B.’s deed of trust mortgaging property for the security of the debt, was an ample security; that Townes & Webb sold the goods they received from Thayer at their leisure, and never rendered any account till after they had failed; and that the account of these transactions remained yet to be settled, Townes & Webb having always refused to come to a fair settlement, which he had often asked them to do, under the fraudulent pretext that they were still liable to Thayer. And then, adverting to the account current rendered by Townes & Webb in October 1827, he alleged, as instances of injustice attempted by them, that they had charged him double commissions, namely, two and a half per cent, on the value of the goods (per inventory) received from Thayer, and two and a half per cent, on *the amount of proceeds of sales of the same goods; that they had debited him with the amount of the debts due from Morton & Co. Arnold & Co. and Flomerfelt, on the ground that those debtors had proved insolvent; and also with several debts paid by them to Durkin, Henderson & Co. and others, without authority and without propriety; that after having thus reduced the balance due to Birchett, to 1758 dollars, they claimed to hold even that sum, for an indefinite period', liable to the claims of Thayer; and Townes proposed to Birchett, that he should compound with him, and take only a part of the money acknowledged to be due him, or rather his very unsatisfactory assurance for the payment of it at a distant day. The bill, therefore, prayed, that Townes & Webb might be compelled to render an account of the whole transactions before a commissioner of the court, and a decree for whatever balance should be found justly due thereon ; and g-eneral relief.
The bill was regularly taken for confessed, for default of appearance, not only as to Thayer and Webb, who were- absent defendants, but as to Townes also, who was a resident of Petersburg; and the accounts had been ordered, taken and reported, and the cause stood ready for final hearing, when Townes obtained leave to put in his answer.
In this answer, Townes denied the fraudulent contrivance imputed by the bill to Townes & Webb; and alleged, that they had, at Birchett’s request, negotiated the contract with Thayer for him; that they had effected the sales of the goods received from Thayer for William Birchett’s bond, as speedily and upon the best terms they could; that the transactions took place during a period of great mercantile embarrassments, and when many failures were frequently occurring; that the sales of the goods were necessarily made on credit, and approved negotiable notes were taken from the purchasers; and that the purchasers, Morton & Co., Arnold *& Co. and Flomerfelt were merchants in good credit at the time the sales were made to them, but failed before their notes came to maturity, and therefore the moneys due from them were not and could not be collected. That the money paid by Townes & Webb to Durkin, Henderson & Co. for Bir-chett, was paid by his authority; and the drafts of Foster, charged to Birchett, had been assumed by him, Foster being Bir-chett’s son-in-law, and connected with him in business. That Thayer gave notice to Townes & Webb, that they should not pay over to Birchett the proceeds of sales of the goods put by him into their hands, alleging that the security for the debt due on William Birchett’s bond was inadequate; and Thayer required further security from Robert Birchett, which he failed to give; yet Townes & Webb, at their own risque, advanced to and paid for Birchett, about 5000 dollars. That the commissions charged, were charged in pursuance of an agreement between Townes & Webb and Bir-chett, and were moreover reasonable. And lastly, referring to the accounts rendered by Townes to Birchett on the 13th October 1827, he said, that Birchett made no manner of objection to the justice and fairness of those accounts, but was only solicitous that Townes should pay the balance thereby acknowledged to be due, which it was entirely out of his power to do; nor did he ever hear of any objection to those accounts so rendered till the commencement of this suit. And he objected, that the case was not properly relievable in equity.
In June 1833, Birchett filed an amended bill, stating, that on the 13th October 1827, he by deed of that date assigned all his effects then at his disposal, and among them his claim against Townes & Webb, the subject of this suit, to Richard Pegratn {since dead) and Robert Birchett the younger, in trust for the benefit of his creditors; and praying, that the surviving trustee, R. B. the younger, should be made party defendant, and that *tbe money due the plaintiff should be decreed to the trustee.
Robert Birchett, the younger, put in his answer; in which, acknowledging that he had taken upon him the trust, he asked that whatever should be found due from Townes & Webb to the plaintiff R. B. the elder, should be decreed to him for the purposes •of the trust.
In November 1833, the original defendants being then all in default, the bill was taken for confessed as to them, and the court made an order referring the account between the parties to a commissioner.
The commissioner made two special reports, stating, that Townes had been required to produce the original books and papers of Townes & Webb touching the transactions between them and Birchett, and that these documents were necessary to a fair adjustment of the account; upon which the court made a rule for an attachment against him for not producing them. He never produced them; and the commissioner, at length, proceeded without them, and in April 1837, returned a report of the account.
The report contained two statements of the account; one according to the claims of the plaintiff, and the other according to those of the defendant Townes.
In the latter, the account rendered by Townes & Webb in October 1827, was assumed to be just, and only some trial corrections were made in it.
The former was stated upon the supposition, that the burden of proof lay upon Townes & Webb to sustain all the contested items of debit against Birchett; and on this principle, the debit to Birchett of 728 dollars on account of “D. Foster’s draft assumed by him,” that of 1S72 dollars, the amount of the debts due from Morton & Co., Arnold & Co. and Flomerfelt, represented to be yet uncollected, and lost by reason of the insolvency of the debtors, and the charge of two and a half per cent, on the value of the goods (per inventory) sold by Thaj'er *to Birchett, as commission for negotiating the contract with Thayer, were (with some other items not necessary to be here stated) disallowed, on the ground that Townes & Webb adduced no proof to sustain them. And the commissioner reported, that this statement of the account insisted on by Birchett was, in his opinion, the just one, since no satisfactory proof of the disputed debits had been adduced. The account stated upon this principle, shewed a balance due Birchett of 5644 dollars, with interest on 5291 dollars from the 1st June 1823.
In support of the debit to Birchett of 728 dollars for D. “Foster’s draft assumed by him,” two drafts of Foster drawn upon New York in November 1820, in favour of Townes & Webb, with the protests thereof for nonpayment at maturity, were laid before the commissioner: the balance due upon which drafts, after crediting some payments, was 728 dollars. But there was no proof of Birchett’s assumption of this debt.
As to the uncollected debts: Townes laid before the commissioner, two notes of Morton & Co. payable to Townes & Webb, and negotiable at bank, one for 412 dollars due in March, the other for 416 dollars due in April, a like note of Flomerfelt for 206 dollars due in June, and a like note of Arnold & Co. for 538 dollars due in October, 1822. The commissioner stated, that the first note of Morton & Co. for 412 dollars had been endorsed by Townes & Webb, and discounted for their benefit; that the other note of Morion & Co. and the notes of Arnold & Co. and of Flomerfelt, had been endorsed by Townes & Webb to Townes individually, but they did not otherwise appear to have been applied to his own use; that the two notes of Morton & Co. had been deposited in bank and were noted for nonpayment at maturity; but the notes of Arnold & Co. and of Elomerfelt were never deposited-in bank for collection. And the depositions of five witnesses on behalf of the defendants, were taken before the commiss.ioner, and returned *with his report, to prove the fact of the failure and insolvency of Morton & Co., of Arnold & Co. and of Flomerfelt, and of their failure, respectively, before their notes came to maturity: but the commissioner reported, that the evidence was insufficient for the purpose, and it certainly seemed too vague to be relied on.
In respect to the commissions charged by Townes & Webb, objected to as being double commissions, there was the deposition of an auctioneer of Petersburg, taken before the commissioner, which proved, that the charges appeared reasonable; but there was no proof, that Birchett had agreed to allow such commissions.
Townes excepted to the report, for the disallowance of each and every of the charges of Townes & Webb, above specified.
There was no proof that Thayer had given notice to Townes & Webb, that they should not pay the proceeds of the sales of the goods to Birchett, but should retain the same in their hands, under their covenant of the 16th June 1821.
In November 1837, the death of Webb being suggested and proved, the fact was ■ stated on the record. And in December following, the court having (as before stated) allowed Townes to put in his answer to the bill, proceeded immediately to the hearing of the cause; and approving the commissioner’s’ first statement of the account, that, namely, which was made according to Bir-chett’s claims, (except the disallowance of the commission of two and a half per cent. on the value of the goods purchased of Thayer, as to which Townes’s exception was sustained,) the court decreed, that Townes, surviving partner of Townes & Webb, should pay the defendant Robert Birchett the younger, the trustee for the plaintiff Robert the elder and his creditors, the sum *of 5308 dollars, with interest on 4966 dollars, part thereof, from the 1st December 1823, and the costs.
Townes, by petition to this court, prayed an appeal from the decree; which was allowed.
The cause was argued here, by May, Lyons and R. C. Stanard, for the appellant, and Macfarland and Rhodes, for the appellee.
I. The counsel for the appellant maintained, that the account current rendered by Townes & Webb on the 13th October 1827, accompanied with the account of sales of the goods, having been received by Birchett, and retained by him for above two years, without any complaint or objection proved to have been made by him to any item of the account, during all that time, must be deemed a stated account; and, therefore, the burden of proof lay now on Birchett to shew any errors, omissions or unjust charges in the account, not on Townes & Webb, to sustain their charges. Birchett could only surcharge and falsify; and had he framed his bill with that view, it would have lain on him to prove the injustice of which he complained. They cited Sherman v. Sherman, 2 Vern. 276; Willis v. Jernecan, 2 Atk. 249, 252; Chap-pedelaine v. Dechenaux, 4 Cranch 306; Freeland v. Heron, Lenox & Co., 7 Cranch 147, 151; 1 Sto. Eq. ch. 8, l 526-9. Now, the decree was founded on the contrary principle: namely, that the account was still to be considered as an open one, and that therefore the burden of proof lay upon Townes & Webb to prove every disputed item of their account; and, consequently, though Birchett adduced no proof to im-pea'ch any item of the account, yet as Townes & Webb produced none on their part to sustain the disputed charges, the court below disallowed all those charges.
*The counsel for the appellee entered into a critical examination of the authorities cited to shew that Townes & Webb’s account current, rendered to Bir-chett in October 1827, ought to have been deemed a stated account; and contended, that the rule of equity laid down by those authorities, was inapplicable to this case: that the rule was confined to accounts between merchant and merchant, having mutual dealings as merchants; nay even to accounts rendered b3r merchants abroad to merchants at home; and, certainly, to such accounts only as both parties intended and treated as stated accounts. Now, in the first place, though Townes & Webb were merchants, it nowise appeared by this record, that Birchett was also a merchant; and if it máy be supposed that he in fact was so, yet there were no mutual dealings between him as a merchant and Townes & Webb. He employed them as auctioneers to sell a parcel of goods for him, and (as they say) as agents to negotiate an exchange of a bond he held for the goods r the duty to be performed was all on their part, and that was, simply, to sell the goods, and pay the proceeds to him or his order. 2dly, Birchett and Townes & Webb resided in the same town. They said, it might be reasonable enough to take an account rendered by a merchant ‘ abroad to a merchant at home, and held without objection for two yeárs, as a stated account: because, in such case, neither party could be expected to seek a personal interview with the other, in order to have a formal settlement; the business must be conducted by correspondence. But, they submitted, there was no such reason for taking an account rendered by one party to another residing in the same town, as a stated account it was as much the duty of one party as of the other, to adjust and close their accounts: and either party might, at his pleasure, have a personal interview with the other for a settlement. But, 3dly, in this case, neither Townes & Webb intended that the account rendered should under *any circumstances be taken as a stated account, in other words, as a settlement, nor had Birchett the least reason to believe, that they expected it should be so taken and treated by him; for in Townes’s letter to Birchett of October 1827, which accompanied the account rendered, he told Birchett, that “if it should be found that he was not liable to Thayer, he should desire to close the matter;” that is, that the matter could not be closed, in other words he could make no settlement with Birchett, till it should be ascertained whether or no Townes & Webb were liable for the proceeds of the goods to Thayer; and even then, he was willing to close the matter only upon conditions that Birchett should agree to compound the debt, and take his assurance for the payment of 6-8ths at a future and distant day. If Thayer was entitled to the money, Birchett could not settle the account; and if he was to get nothing unless he agreed to the terms proposed for compounding the debt, and was not willing to accede to those terms, he had no motive for insisting on a regular and prompt settlement. The transaction was nothing more, in truth, than on the part of Townes & Webb, an exhibition of their claims, and a conditional invitation to Birchett to come to a settlement of the account, if he was willing to do so on the terms they proposed, and on Birchett’s part, the settlement on such terms declined. But, they insisted, Townes’s letter to Birchett of January 1831 was conclusive, that, in Townes’s own opinion, the account was then still open, either because he himself had never intended that the account rendered in October 1827 should be regarded as a stated account, and had never expected Birchett to state his objections to it, or because he was conscious that Birchett had timely stated his objections: for, in that letter, written in answer to a note from Birchett, which he has not produced, and which (as wras clearly inferrible from the answer) demanded and urged a settlement, he told Birchett, thaFx'“he had been for a long time extremely' desirous to have their accounts settled.” They cited Irvine v. Young, 1 Sim. & Stu. 333; 1 Cond. Eng. Ch. Rep. 170; Ld. Clancarty v. Latouche, 1 Ball & Beat. 428.
II. The appellant’s counsel contended, that taking the account rendered in October 1827 to be a stated account, the court of chancery had no jurisdiction to give the relief prayed in the bill. Birchett’s plain remedy was an action of assumpsit for the balance stated to be due. They cited King v. Rossett, 2 Young. & Jerv. 33.
The appellee’s counsel said, whether this was to be regarded as a stated account, or as an open account, the jurisdiction was clear: if the account was still open, Bir-chett had a right to call Townes & Webb to account in equity: if there was a stated account, he had a right to go into equity to surcharge and falsify it. Besides, Townes & Webb were, in truth, trustees of the fund; bound to account for and pay it to Birchett, if Thayer had no claim upon it; and bound to Thayer, if he had a claim, to pay’ him the whole, or such part as he should be entitled to; so that Birchett had no remedy but by bill in equity against Townes & Webb and Thayer.
III. The appellant’s counsel contended, that, in any view of the case, Townes & Webb were not accountable for the uncollected debts, lost (as, they said, was sufficiently proved) by the failure and insolvency of the debtors before their notes came to maturity, and not by any neglect or misconduct. Even as to the note of Morton & Co. which they had had discounted for their use, the case was distinguishable from that of Johnson & Duggers v. O’Hara, 5 Leigh 4S6. There, J. & D. had been employed by O’H. to sell his tobacco as commission merchants, and they not only took a note to themselves, for the proceeds of that tobacco and the proceeds of other tobaccos, mixed together, but (what was most material) without being in advance to O’H. their principal, they procured the note to be discounted for ‘*their accommodation ; and it was held, that they had, by thus dealing with the note, under such circumstances, made the note their own, and whether they collected the contents or not, were liable to O’H. for the proceeds of his tobacco included in the note which they had so appropriated. In the present case, the auctioneers were well warranted in taking the notes for the purchase money of the goods, to themselves: it was according to the known course of trade; and they had a special property in the goods and -in the proceeds of sales, and might have maintained an action against the vendee as for a debt due to themselves; Williams v. Millington, 1 H. Blacks. 81; Babington on Auctions, 91. Besides, it was not only their right, but their duty, to collect the proceeds of sales of the goods, and to hold them, under their covenant with Thayer of the 16th June 1821. They were also well warranted in procuring this note of Morton & Co. to be discounted for their own use, since at the time they had it discounted, it clearly appeared by their account, even as reported by the commissioner, they were in advance to Birchett to a larger amount, and surelj' had a right to reimburse themselves advances which they were under no obligation to make for him. Then, as to the other note of Morton 6 Co. and the notes of Arnold & Co. and Flomerfelt, there was no ground whatever for holding Townes & Webb bound to account for the contents of them. But, supposing they can be held liable for these uncollected debts, still they should not have been charged with interest on them; Rootes v. Stone, 2 Leigh 650.
The appellee’s counsel answered, that as the note of Morton & Co. which Townes & Webb got discounted for their own use, the case could not be distinguished from that of Johnson & Duggers v. O’Hara. The principle on which that adjudication was founded, was, that the commission merchants, in getting the note they had taken for the proceeds of sales of their principal’s tobacco ‘^discounted for their own accommodation, had exposed their principle to a twofold risque; the risque of the failure of the maker of the note, and the risque of their own fail ure. That case, therefore, in reason and in principle, was directly in point. They cited Wren v. Kirton, 11 Ves. 377. As to the other notes, they said it was fairly to be inferred that Townes & Webb had used these notes also for their own purposes; else, why had they endorsed them? As the notes were not put in bank for collection, they could only have endorsed them for the purpose of negotiating them. But there were two considerations, which they thought conclusive of Townes & Webb’s liability for the amount of these uncollected notes: 1. Townes said, in his answer, that Townes & Webb sold the goods and took approved negotiable notes from the purchasers; that Morton & Co., Arnold & Co. and Elomerfelt were in good credit at the time, and that the sales were made during a period of great mercantile embarrassment, when many failures were frequently occurring. Now, if the makers of these notes were in good credit at the time, they could easily have procured endorsers; and, in such times, the notes of the debtors alone, not secured by responsible endorsers, ought never to have been taken as approved negotiable notes: so that there was gross neglect in taking such notes at all. And 2. they held these notes in their hands (importing on the face of them to be their own property) from 1822 to 1827, about five years, without ever giving any intimation to Birchett of their existence; and this alone ought to make them liable to Birchett for the amount of them; Jackson v. Baker, 1 Wash. C. C. R. 394.
IV. The appellant’s counsel objected, that the representative of the deceased defendant Webb ought to have been brought before the court, before it proceeded to the final decree; for their covenant of -the 16th June 1821 made Townes & Webb responsible as joint covenantors, *not as partners. To this it was answered, that even as to Thayer, it was a partnership transaction, though both partners executed the covenant, which was proper as the instrument was a deed. But, supposing them individually liable to Thayer by force of their covenant, it was not .by that covenant that they were liable to Birchett: to him they were certainly liable as partners; and he was entitled to decree against the surviving partner for the whole amount due him.
V. There was another objection taken to the decree, namely, that this was not a proper case for a decree between co-defendants, and therefore it was erroneous to decree payment of the money to Robert Birchett the younger. The appellee’s counsel submitted, that, in this particular the decree was plainly right.
Stated Account — Retaining Account Rendered without Objection. — An account rendered by one party to another, received and held without objection beyond a reasonable time, becomes admitted as correct, and will be deemed a stated account. The principal case is cited, to support this proposition, in Radford v. Fowlkes, 85 Va. 853, 8 S. E. Rep. 817; Robertson v. Wright, 17 Gratt. 542 ; Tazewell v. Whittle, 13 Gratt. 349 ; Ruffner v. Hewett, 7 W. Va. 606 ; Shrewsbury v. Tufts, 41 W. Va. 225, 23 S. E. Rep. 697.
The reporter, on a careful examination of the record, found no such proof, and therefore stated that there was none. The president, however, in his opinion, regarded Birchett as a merchant.— Note in Original Edition.

Opinion:
TUCKER, P.
On the question of jurisdiction in this case, I have found no difficulty. Townes & Webb were the agents of Birchett, and in that character were peculiarly amesnable to equitable jurisdiction. Moreover, Birchett's claim being for the proceeds of sales of a parcel of goods, which were in the knowledge of the auctioneers exclusively, he had a right to call for an account of them, and he did call for an account accordingly. It is said, however, that the account had been already rendered. True: but there was no obligation on Bir-chett to sit down satisfied with that account not rendered on oath: he had a right to have it so verified by proceeding in equity. And though by retaining the account rendered he gave it the character of a stated account, it did not conclude him, for he still had a right to surcharge and falsify, and he had a right to a discovery from the defendants on oath to aid in sustaining his objections. It is said, indeed, that the bill does not surcharge or falsify. But that is a mistake. There are various items of both: the complaint of excessive charge for commissions, and of the payments made to Durkin, ^'Henderson & Co. and others, are instances of surcharge ; and the charge of 1572 dollars to him for bad debts, is also objected to, and properly forms an item of falsification. Now, the rule is that if one item of objection is sustained, the whole account is opened before the commissioner for surcharge and falsification. The first item is clearly sustained, though it is one of small importance; and whether the others can be, is a matter which ought to be the subject of further enquiry.. But what is conclusive as to the jurisdiction, is, that Birchett could not have sued at law. By the arrangement between the parties, Townes & Webb were not to pay the proceeds of sales of the goods to Bir-chett, until he should give Thayer additional security. This, Townes alleges, he never did. He could not, then, have recovered at law. Equity was the proper forum, where the stake-holders and both claimants could be convented. Neither claimant could compel payment at law; at least, he could not without the assent of the other. This assent was never given by Thayer, as Townes himself alleges; it was never given until since this suit was brought. On various grounds, therefore, I think the jurisdiction is beyond reasonable question.
Seeing then no substantial objection to the jurisdiction, and not deeming it necessary to go more at large into that point, I proceed to the merits. And here the first question is as to the weight to be attributed to the evidence of the account rendered in October 1827. The transactions in question took place in the town of Peters-burg, where both the parties resided. They stood in the relation to each other, of a vendor of goods at auction, and the auctioneers. The goods were sold as early as the year 1821; and the appellee being in embarrassed circumstances, had every motive to demand an account of sales, and th.e payment of the proceeds. It is alleged, that the parties were on friendly terms, and that .the accounts were at all times open to inspection, and were in *fact examined by the appellee: and though there is no direct evidence of this fact, the circumstantial evidence is irresistible. It is inconceivable, that Bir-chett, after selling a bond for goods, that he might raise money by the sale of them, should have remained inert from 1821 to 1827, without critical scrutiny into the account of sales and disbursements, when the amount which had been made available to him had fallen short more than one third of the estimated probable proceeds of sales. My own mind is, therefore, satisfied that Birchett knew all about the matter before he received the account in October 1827. Then, at least, he was fully informed ; and it is observable, that except the claims for commissions and interest, there is only a single item excepted to on the debit side of the account. On the other side a short credit of 1572 dollars for the lost debts is complained of. This account was retained by Birchett from October 1827 till the year 1831, without objection or complaint. Can it be believed, that it never was examined by him, or that being examined he never would have pointed out the objectionable items, and insisted on their expunction? He is charged, for instance, with Foster's draft: if improperly so charged, would he have acquiesced for four years? I think not; and if there were no rule upon the subject, I should take that acquiescence as sufficient evidence that Townes, the agent of Birchett, who was collecting his funds and applying them, obviously with his assent and by his direction, to the discharge of his responsibilities, had justly charged him with Foster's draft. But there is a rule upon the subject, and particularly applicable to merchants. "Where one merchant sends his account current to another, though residing in a different country, and he keeps it two 3rears without making any objections, it shall be deemed a stated account, and his silence and acquiescence shall bind him at least so far as to cast the onus probandi on him." Such are the terms in which the rule is laid *down in Freeland v. Heron, Lenox & Co. and Willis v. Jernecan, cited at the bar. Doubtless, it applies with more force between merchants in the same country, and yet more between merchants residing in the same town, and in the daily habit of intercommunication. Between such, a shorter period would give rise to the presumption. For the principle of the rule is that the retention of the account for an unreasonable time without objection, is evidence of acquiescence in its justice, and throws the burden of proof upon the party so acquiescing: and so it is laid down by Judge Story, in his treatise on Equity, vol. 1, ch. 8, § 526-9. The rule is founded in good sense and justice. If a party does not deny what his adversary states in his presence and hearing, we infer the truth of the statement from his silence and apparent acquiescence. How much stronger is the case of the silence of a regular merchant for two years after he has received the account of his correspondent, which can be looked upon in no other light than as an assertion o£ a claim, which, if not admitted, should, in good faith as well as in prudence, be promptly repelled. I say in good faith, because its requisitions demand, that the earliest information shall be given to the claimant to enable him to assert his claim and preserve his evidence. If I do not intend to allow a demand, it is not fair dealing in me to delay payment, and by my conduct put off the commencement of a suit for yrears, and then take the chances of success from the loss of mjr adversary's testimony.
The present is a strong case for the application of the rule. There is every reason to presume an early acquaintance with the accounts, and the account rendered was moreover about two years in Birchett's hands without objection. It must then be taken as -true unless disproved.
Now' as to Foster's draft there is no evidence, so that that item ought to have been allowed. Next, as to the *lost debts. These are distinctly set forth in the account, and the principle just adverted to, applies to them. They should not be charged to Townes, unless there is proof either of culpable negligence or misappropriation. The latter ground has been most earnestly urged, and the cases of Johnson & Duggers v. O'Hara and Wren v. Kirton, are relied on to sustain it. I willingly defer to tne principle of those cases; but I do not think they have any application to this peculiar case. To bring them to bear upon it, it must be shewn, that the notes in question have been diverted from their legitimate objects and applied to the purposes and accommodation of the defendants. To establish this, it has been said, that the auctioneers took the notes in their own names, and discounted them for their own purposes. As to the notes being taken to themselves, it is, I think, the common course of business with auctioneers. As bailees to sell, they are bailees to receive payment; and hence they confessedly have a right of action in their own names against the purchasers. If so, it is not perceived that there is any thing improper in the ordinary custom of taking notes to'themselves for the proceeds of sale. But if this be true, in an3' case, it was particularly true in this, where the auctioneers were stakeholders; where they were required to sell, but until the expiration of twelve months, it could not be determined -whether the proceeds of sale were to go to Birchett or to Thayer. The notes then were property taken in the>r own names. Have they been properly dealt with? It is said, they were improperly discounted before maturity for the defendants' use. That one was discounted seems probable: there is no such probability as to the others. Then, as to that one: was it discounted for the defendants' use or for the legitimate purpose of discharging Birchett's responsibilities, or reimbursing their advances for him? The facts, I think, prove the latter. As early as December 1821, their just debits against him, including *their commissions and interest, to which no objection had ever been made, were more than 5000 dollars. The proceeds of sales for money were only 3400 dollars, and there is no evidence that any other of the various notes, all of which were due at distant days, were discounted before maturity. The defendants had a right to discount some of them to reimburse themselves. They exercised this right by discounting one note of Morton & Co. and in doing so, are liable to no imputation of unfairness. I am, therefore, of opinion that there is nothing in the record which can justify throwing the loss of these notes upon the defendants. Yet, in reversing the decree, and sending the cause back for further proceedings, I think the questions as to Foster's draft and the bad debts should be considered open before the commissioner to any further evidence of either party.
I see no just objection to the decree for being in favour of Robert Birchett the younger, or for the omission to revive the suit against the representative of Webb.
CABELL, L, concurred.