Case Name: Pedro A. Merino, as Surviving Partner of Pedro N. Merino & Sons, Appellant, v. Leoǹtine C. Munoz, as Executrix of Jose M. Munoz, Deceased, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-05
Citations: 5 A.D. 71
Docket Number: 
Parties: Pedro A. Merino, as Surviving Partner of Pedro N. Merino & Sons, Appellant, v. Leoǹtine C. Munoz, as Executrix of Jose M. Munoz, Deceased, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 5
Pages: 71–77

Head Matter:
Pedro A. Merino, as Surviving Partner of Pedro N. Merino & Sons, Appellant, v. Leoǹtine C. Munoz, as Executrix of Jose M. Munoz, Deceased, Respondent.
Partners in a single joint adventure — facts constituting a fiducia/i'y relation — ten yeai's’ Statute of Limitations applicable — time runs from date when the person has actual knowledge of the facts — accounting — demand— Code of Civil Procedure, §§ 388, 410, subd. 1.
In an action brought by one Pedro A. Merino, as surviving partner of the firm of .Pedro N. Merino & Sons, to recover $250,000 upon a claim made against the estate of Jose M. Munoz and. referred under the statute, it appeared that Munoz had made a contract to purchase an interest in certain mining claims, and that in 1833 he proposed to the plaintiff and his co-partners that they should join in the speculation, by paying £15,000 and acquire a quarter interest in the property and be entitled to a quarter of the profits, Munoz alone to manage the joint adventure. The amount of the contribution of the plaintiff and his co-partners was measured by the amount which Munoz should be compelled to pay for the interest which he acquired. Subsequently, and at some time in 1883, the plaintiff and his co-partners made the payment of £15,000, relying upon Munoz’s statement that Munoz would have to pay $300,000 for his interest.
In a letter written by Munoz to the plaintiff March 23, 1888, Munoz stated that he paid only §200,000 for his share in the mining property, to which Munoz finally acquired title in 1885. On October 4, 1893, Munoz died and no claim was made against his estate until on January I, 1894.
The referee decided that the claim was barred by the six years’ Statute of Limitations.
Held, that this view was erroneous;
That the relation between the parties was one of partnership in a single adventure, and that Munoz stood to the plaintiff and his co-partners in the relation of a trustee;
That when Munoz acquired the property for $200,000, he held in his hands £5,000, which had been contributed by the plaintiff and his co-partners, "for which he could be compelled to account;
That no money demand arose, but that Munoz’s liability was dependent upon an accounting, and that such a cause of action would not be barred until ten years from the time when the right of action accrued;
That, assuming that the plaintiff and his co-partners could sue in 1885, subdivision 1 of section 410 of the Code of Civil Procedure, which enacts that where the right, to entitle a person to maintain an action, grows out of the receipt or detention of money or property by an agent, trustee, attorney, or other person acting in a fiduciary capacity, the time to commence the action must be computed from the time when the person, having the right to make the demand, had actual knowledge of the facts upon which that right depended, applied;
That as there was no agreement upon the part of Munoz that the money of the plaintiff and his co-partners should be returned, either an accounting was required or a demand therefor was necessary before an action could be maintained.
Appeal by the plaintiff, Pedro A. Merino, as surviving partner of Pedro N. Merino & Sons, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the cleric of the county of New York on the 19th day of April, 1895, upon the report of a referee appointed to hear and determine a disputed claim against the estate of Jose M. Munoz, deceased.
James L. Bishop and Emmet R. Olcott, for the appellant.
Henry Major, for the respondent.

Opinion:
Ingraham, J.:
The appellant presented a claim against the estate of Jose M. Munoz, deceased, and that claim having been rejected, the parties agreed to refer the matters in controversy to a referee under section 2718 of the Code. There were no pleadings, and we have not a definite statement of the appellant's cause of action and the nature of the judgment that the appellant demanded. The amount of his claim he stated was $25,000. So far as appears there was no formal statement of the claim made, but the parties proceeded before the referee to take the testimony, and upon that testimony the referee has dismissed the claim upon the ground that it is barred by the Statute of Limitations. The material facts -appear in certain letters written by tlie respondent's testator. Erom such letters it appears that the respondent's testator, having made a contract to purchase an interest in certain mining claims, proposed to the firm of Pedro N. Merino & Sons (of which firm the appellant is the surviving partner) that they (the appellant and his co-partners) should join in the speculation, and that if the appellant and his co-partners would contribute £15,000 the respondent's testator would convey to them one-fourth of the interest which the respondent's testator should own in the property, and one-quarter of the profits to be realized therefrom. This proposition as contained in a letter of June 28, 1883, was as follows: " What I propose to you is that for £15,000 I will admit you as a participator with me to the extent of ^ of my interest in the property, as specified, that is, that you are to be my partners to that extent in my speculations with Webb, Anderson & Whiton, sharing in the same proportion the profits that may accrue to me if there are any. Of course, Webb, Anderson & Whiton don't know you at all in the transaction (of course I will tell them of it and explain the transaction). Your arrangement is with me and not with them, and if you do take part it must be well understood that I will have the management here of everything, and that, successful or disastrous, I am the only one' who will represent and manage here for both."
In a former letter Munoz had told the appellant that he had secured his interest in the mines by paying, or promising to pay, $100,000, or £80,000. In a subsequent letter of August 21, 1883, Munoz stated that it was understood that the plaintiff and his co-partners were to pay $75,000 for the one-quarter interest. This letter also contained the following statement: " In looking over my letters to you, I find that in that of May the 28th, in which I first broached the subject, I told you that I had agreed to pay $100,000 for the interest; this was an error; I should have said $300,000, which is what I meant to say, for this is the amount of my contract ; I gave you the J proportion light ($75,000) for the J of my interest. Why I said 100 thousand I can't imagine." This proposition was accepted by the plaintiff and his co-partners, and during the year 1883 the sum of $75,000 was paid by them to the respondent's testator.
The relation that thereupon existed between these parties seems to be quite clearly defined. The properties purchased by the respondent's testator were certain mining claims, or interests in mining property, in the State of Colorado. By the payment of this $75,000 the plaintiff and his co-partners acquired a one-quarter interest in such properties, and were to be entitled to one-quarter of the profits realized from the purchase of such interest by the respondent's testator, the respondent's testator to manage the joint adventure; and all profits to be realized therefrom were to be divided in the proportion' of one-quarter to the plaintiff and his' co-partners and three-quarters to the defendant's testator. And it was clear, also, that the contribution by the plaintiff and his co-part-r rs to this joint adventure was based upon the amount that the defendant's testator was to pay for the interest that he acquired, the plaintiff and his co-partners to pay one-quarter of such amount and to receive a one-quarter interest in the profits to be realized. It was upon the statement of the defendant's testator to the plaintiff and his co-partners that he was to pay $300,000 for the interest that was purchased that the contribution by the plaintiff's firm was made. It is clear that the parties did not contemplate an absolute purchase of one-quarter of the respondent's testator's interest as distinct from a joint speculation in the purchase by the respondent's testator of an interest in these mining claims, the intent evidently being that the respondent's testator was to acquire the interest specified, to hold and manage such interest until the same could be disposed of, and to divide the profits in the proportion named.
There is no evidence in the case, except a letter to be hereafter mentioned, as to the amount of money that the respondent's testator actually paid for the interest that he purchased in these mining claims. It seems that a copy of a contract was sent to the appellant and his co-partners, by which it appeared that the respondent's testator had an option to purchase these mining claims at the price of $300,000, to which was annexed a statement made by the respondent's testator that this option had been exercised and the property purchased. Not]ling was expressly stated therein as to the amount that was paid, except that the sum of $75,000 was stated to be one-quarter of the purchase money; but it appeared that subsequently, in the year 18S5, two deeds or conveyances were executed to the respondent's testator, conveying certain mining interests, the consideration in each of which was one dollar. It does not appear that the appellant and his co-partners recceived any further information as to the amount actually paid by the respondent's testator for the mining interest until March 23, 1888, when, by a letter to the appellant, it was stated that but $200,000 in money had been paid for the mining property, and subsequently respondent's testator caused two deeds or conveyances to be executed, each of which expressed a consideration of $37,500, by which one-half of his interest in this mining property was conveyed to the appellant and _ his. co-partners, and those deeds were duly recorded and sent to the appellant's firm. In answer to the letter inclosing those deeds,, the appellant says: "We take note that you have made our share in these properties one-half of your interest instead of one-quarter, for which we are much obliged, but we should like to have some explanation on the subject, as if you have done so as compensation in settlement of our claim for $25,000 against you in the matter of payment for the share we have bought in the property, we must say we cannot accept this arrangement." So far as appears, this is the first time that the appellant or his co-partners made any claim that they were entitled to receive back the proportion of the $75,000 contributed by them not used in the purchase by .the respondent's testator of the one-quarter interest that the appellant and his co-partners had acquired. Rut, from this letter, it clearly appears that at that date, namely, April 30, 1889, the appellant and his co-partners had notice of the fact that the amount invested was'not $300,000 but was $200,000, and that they looked to the respondent's testator for a repayment of that amount.
The respondent's testator died October 4, 1893, and it appeared that on January 7,1894, a specific claim ivas made against his estate for this sum of $25,000. The referee appears to have held that, in 1885, when these mining claims were conveyed to the respondent's testator, the appellant and his co-partners were then entitled to commence an action against him for the $25,000; that the Statute of Limitations commenced to run against such claim at that time; that the six years' statute applied, and that the claim was barred, no action having been commenced within six years. In this, we think, the referee clearly erred.
The appellant and his co-partners had transmitted to the respondent's testator $75,000 to be invested by the respondent's testator in this joint adventure, in which the appellant and his co-partners were to pay one-quarter of the purchase price of certain mining claims and were to have a one-quarter interest therein and to be entitled to one-quarter of all profits realized; and such remittance was based upon the statement by the respondent's testator that the total amount that they were to invest was to be $300.000.
We think this relation was one of partnership in one particular adventure, and that the respondent's testator as to the receipt of this money was a trustee for the appellant and his co-partners. The relation was, in its nature, a trust relation and one which would entitle the appellant and his co-partners to require the respondent's testator to account to them for the $75,000 that they had given to him to invest. There was no contract, express or implied, to return to the appellant and his co-partners any particular sum of money, and when the respondent's testator acquired the property for the sum of $200,000, ho held in his hands the sum of $25,000 contributed by the appellant and his co-partners to be applied on this joint adventure, for which he could have been compelled to account. No money demand on contract, however, arose in favor of the appellant and his co-partners, but the liability, if any, depended upon an accounting between the parties as to the investment of this sum of $75,000, and that cause of action would not be barred by the statute until ten years from the time the right of action accrued. (See § 388 of the Code.) If, however, it should be held that a right of action did exist against the respondent's testator to recover this $25,000 at the time that ho finally-acquired title to the property, namely, in 1885, we think, then, that subdivision 1 of section 410 of the Code applies. It is there provided that where the right to entitle a person to maintain an action grows out of the receipt or detention of money or property by an agent, trustee, attorney Or other person acting in a fiduciary capacity, the time must be computed from the time when the person having the right to make the demand has actual knowledge of the facts upon which that right depends. This demand came within this provision. The sum of money was deposited with this respondent's testator to be invested in the purchase of property. There was no agreement that it was to be returned to the plaintiff and his co-partners until the transaction was fully closed and the profits ascertained, and i-t is clear that before the appellant and his co-partners would be entitled to maintain an action to recover it back, either an accounting or a demand made for its return would he necessary.
The cases cited by the respondent and relied on by the referee do not apply. In all of these cases the obligation to pay to the plaintiff existed upon the receipt- of the moneys by the defendants; no demand was necessary. Here no such obligation existed until it should be determined what amount was required for the investment. The relation that existed between the parties was that of partners in a joint adventure, and the respondent's testator received the money in a fiduciary capacity to be invested for the appellant and his co-partners, upon a statement that the amount to be invested would be $75,000. The investment amounted to but $50,000, but the right to make the demand depended upon the existence of the fact that one-quarter of the property cost but $50,000, and the time must be computed from the time when the plaintiff and his co-partners had actual knowledge of that fact upon which the right to make the demand depended.
We think, therefore, that the referee erred in holding that the claim was barred by the Statute of Limitations, and that the judgment should be reversed and a new trial ordered before another referee to be appointed by this court, with costs to the appellant to abide the event.
Van Brunt, P. J., Rumsey, Williams and O'Brien, JJ., concurred.
Judgment reversed and new trial ordered before another referee to be appointed by this court, with costs to appellant to abide event.