Case Name: Julius P. Wahl, John Ansteth and John S. Snaith, Resp'ts, v. Stephen O. Barnum and Theodore D. Barnum, App'lts, Impleaded with Edward J. Chatfield, Resp't
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1889-10-08
Citations: 26 N.Y. St. Rep. 457
Docket Number: 
Parties: Julius P. Wahl, John Ansteth and John S. Snaith, Resp’ts, v. Stephen O. Barnum and Theodore D. Barnum, App’lts, Impleaded with Edward J. Chatfield, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 26
Pages: 457–466

Head Matter:
Julius P. Wahl, John Ansteth and John S. Snaith, Resp’ts, v. Stephen O. Barnum and Theodore D. Barnum, App’lts, Impleaded with Edward J. Chatfield, Resp’t.
(Court of Appeals, Second Division,
Filed October 8, 1889.)
1. Appeal — Lies to court of appeals fbom order denying new trial under Code, § 1001.
An order of general term, denying motion for a new trial, made on exceptions under Code, § 1001, is appealable to the court of appeals, but only the questions of law raised by the exceptions can be considered in that court.
2. Partnership — Agreement—Consideration.
In 1879 it was orally agreed by the parties hereto to form a partnership for three years, each to put in certain capital and have one-fifth of the profits, interest to be paid by each on his capital until paid in. The business continued until 1880 and large profits were made, but no written articles were signed. Appellants then denied that a partnership existed, but claimed that they owned the business. It was finally, agreed that respondents should be credited $3,000 each on their capital and the partnership commence as of that date. Held, that there was a valid consideration for such agreement.
3. Same — Statute of frauds.
A contract forming a par.nersliip to be continued beyond a year is within, the section of the statute of frauds which requires every agreement not by its terms to be performed within a year to be in writing, and a partnership, so formed is a partnership at will.
(Potter, J./dissents.)
Appeal (pursuant to § 190, subd. 2, Code C. P.) from an order' of the general term of the superior court of Buffalo, denying a. motion for a new trial made pursuant to § 1001, Code Civ. Pro. Bor many years prior to June, 1879, Stephen 0. Barnum and ‘Theodore D. Barnum were partners and merchants at Buffalo, M„. Y., under the firm name of S. 0. Barnum & Son. Stephen O.. Barnum owned a three-fourths, and Theodore D. Barnum a one-fourth interest in the firm. The respondents had for many years, been employed by the firm. June 4th, 1879, the firm’s place of business and a large part of its merchandise were destroyed by fire. In that month the parties to this action orally agreed that. S. O. Barnum &Son should discontinue business and be succeeded by S. O. Baruum’s Son & Co., which firm was to he composed of Theodore D. Barnum, Julius P. Wahl, John Ansteth, John S.' Snaith and Edward J. Ohatfield, and have a capital of $60,000, of ■which Theodore D. Barnum was to contribute the unburned merchandise of the old firm, valued at $40,000, and every one of the other partners $5,000 in cash, and that the firm should continue in business for three years from June 24th, 1879. The time when Wahl, Ansteth, Snaith and Ohatfield should pay in their shares of capital was not agreed upon, but it was agreed that every one of the partners shorrld pay the firm interest at the rate of seven per cent per annum on the amount due from him to the firm for capital, and should receive interest at the same rate on the-,capital furnished. It was also agreed that each partner should have one-fifth, of the profits and bear one-fifth of the losses, the five parties having equal interests. Barnum was to have the right to withdraw from the firm $2,800 in each year, and the other partners $1,200 each. It was agreed that the contract, should be reduced to writing, and afterwards Theodore D. Barnum presented a written contract for the signatures of the five parties-which the plaintiffs refused to execute on the ground that it did not express the oral contract agreed upon. Barnum turned over the unburned merchandise to the new firm, and it began business and continued until March 28, 1882, when it was dissolved by mutual consent. In January, 1880, Ansteth paid towards his. share of the capital $500; in April, 1880, $500. In April, 1880, Wahl paid towards his share of the capital $1,000, and about that time Snaith paid in $5,000, his share of the capital. Mo other sums were paid in as capital. In January, 1880, an inventory of the assets and business of the firm was taken, as of the tenth of that month, by which it appeared that the profits of the firm then exceeded $60,000. Shortly after the inventory was taken, the Barnums asserted that no articles of partnership having been signed, and the respondents not having paid in their share of capital, no partnership existed, and that they,. the Barnums, owned the business and its profits. After considerable negotiation, it was, about March 8, 1880, orally agreed between the parties to this action.that every one of the respondents ¡should be credited with $3,000 on the books of the firm, the Barnums should have the remainder of the assets, and that thereafter the business should be conducted by S. 0. Barnum’s Son & Co., •on the terms above stated. The business was continued from this 'date until the dissolution.
In November, 1882, this action was begun to set aside the oral •compromise of March 8, 1880, for the fraud and duress of the Barnums, and for the lack of consideration, and for an accounting ■of the affairs of the firm from June 24,1879, until March 23,1882, 'the date of dissolution. Upon the trial the court held that the oral compromise “ was without any good consideration and was ■null and void,” and that an accounting should be had before a referee of the business of the firm from June 24, 1879, to the date •of its dissolution. An interlocutory judgment was entered in accordance with the decision, which reserved the question of costs until the final judgment. After the entry of this judgment, and before the accounting therein ordered was begun, Stephen O. Barnum and Theodore D. Barnum moved, pursuant to § 1001, Code Uiv. Pro., at the general term, for a new trial on their exceptions, which was denied with costs, and thereupon they appealed from the order entered on the decision of their motion.
Adelbert Moot, for plt’ff’s, resp’ts; Spencer Clinton, for Edward J. Chatfield, resp’t; John G. Milburn, for def’t’s, app’lts.

Opinion:
Follett, Ch. J,
The order of the general term denying the motion for a new trial made under § 1001, Code Civ. Pro., is reviewable by this court. Walker v. Spencer, 86 N. Y., 162; Raynor v. Raynor, 94 id., 248. But the general term could not, on such a motion, review questions of fact, and only the questions of law presented by the exceptions can be considered in this court. Raynor v. Raynor, 94 N. Y., 248, 252.
In the absence of fraud or duress, a settlement of a disputed claim preferred in good faith by a promisee against a.promisor is a legal consideration for a promise; and the fact that the promisor had a legal defense to the claim settled is no defense to an action on the new promise. Russell v. Cook, 3 Hill., 504; Stewart v. Ahrenfeldt, 4 Denio., 189; Crans v. Hunter, 28 N. Y., 389; White v. Hoyt, 73 id., 505, 514, 515; Feeter v. Weber, 78 id., 334; Dunham v. Griswold, 100 id., 224; Callisher v. Bischoffsheim, L. R., 5 Q. B., 449; Ockford v. Barelli, 25 L. T., 504; 20 W. R., 116; Miles v. New Zealand, etc., Co., 32 Ch. Div., 266.
The cases of which Ryan v. Ward, 48 N. Y., 204, is a type, Folding that a payment by a debtor of a less sum than the amount which he admits to be justly due and owing by him does not extinguish the debt, though the creditor agrees to receive the less sum in satisfaction, are not in conflict with the rule above stated. There is a great difference between claims unliquidated and disputed, and those which are liquidated and undisputed. A compromise which is sufficient to bar an action on a claim within the first class often being quite insufficient to bar an action on a claim within the second class.
The law regards with favor and seeks to uphold settlements of pending or threatened litigations, but not with favor an attempt to-discharge an admitted debt by payment of a part of it. There is no doubt about the rule above stated being firmly established in the law of this state; but the important question is, whether the-settlement of March 8, 1880, is within the rule. The transaction was not an executed settlement of one or more disputed claims by which the claimant surrendered or released his demands in consideration of the payment of a sum agreed on, or upon the promise of future payment of the sum agreed on. In the absence of duress, fraud or mistake, an account stated by partners between themselves will not be opened and investigated in an action for an accounting. Story on Part,, § 206 ; Lind. on Part. (5th Eng. ed.), 512; Pilling v. Pilling, 8 DeG., J. & Sm., 162; Coventry v. Barclay, id., 320. But the controversy settled March 8,1880, did not relate to the accounts between all or any of the parties to this action, as. partners; the question debated and settled was, had Theodore D. Barnum and the respondents been partners since June 24, 1879, and each entitled to a fifth of the profits ? They finally agreed, in consideration of being credited with $3,000 each and of the future partnership, that no partnership had previously existed.
This contract is supported by a valid consideration. The partnership which the court found then existed, and which, by agreement, was to continue for more than a year, rested only on an oral contract, and either partner had a right to determine it at will.
A contract forming a partnership to be continued beyond one year is within the section of the statute of frauds which provides, that every agreement which, by its terms is not to be performed in one year from the making thereof is void unless it is in writing, and a partnership so formed is a partnership at will. Morris v. Peckham, 51 Conn., 128; Williams v. Jones, 5 B. & C., 108 Jones v. McMichael, 12 Rich. (Law), 176; Essex v. Essex, 20 Beav., 442; Burdon v. Barkus, 3 Giff., 412, aff'd 4 DeG., F. & J., 42, 47 and 50; Reed's Stat. Fr., § 191.
We have not been referred to any case in this state wherein this proposition has arisen and has been decided. In Smith v. Tarlton, 2 Barb. Ch., 336, the parties, by an oral contract, entered into and agreed to continue in partnership for three years. Before the expiration of the time limited, two of the partners filed a bill against the third partner, alleging that the partnership property had been sold and the partnership dissolved by mutual consent, and that the defendant had misapplied the funds of the firm. An accounting and an injunction pendente lite was prayed for. An injunction was granted on the bill, which the defendant moved, on the bill, to vacate, but the motion was denied, the chancellor saying:
" This was not, as the counsel supposes, an agreement which was not to be performed within one year; so as to require it to be in writing, under the statute of frauds. But it was the formation of an immediate partnership between the parties, which partnership was to continue three years unless sooner dissolved by the consent of such parties. In this state no written articles are necessary to' constitute a copartnership which is to take effect immediately; although a written agreement might be necessary to bind the parties to enter into a future copartnership to commence after the-expiration of a year."
In National Bank v. Van Derwerker, 74 N. Y., 234, 239, it was said: " But as to partnerships, although to endure for a longer period than a year, it has been held that they are not within the statute of frauds. Smith v. Tarlton, 2 Barb. Ch., 236."
In the first case the complainants alleged that the partnership property had been sold and the firm dissolved by mutual consent, which was not denied The question whether a partnership to continue more than one year, formed by an oral contract, was determinable by the will of either party, was not in the case. The second case did not arise between partners, but was an action brought against the shareholders in a joint stock association, which existed under an oral contract, to recover the amount due upon executions against the association, which had been returned unsatisfied. It was held that the fact that the association existed under an oral contract was not a defense in favor of the shareholders and against a, creditor of the association. The remark quoted was made while discussing the liability of the shareholders, and cannot be regarded as a determination of the question.
An oral contract, invalid by the statute of frauds, because by its terms it is not to be performed within one year from the making thereof, is not validated by part performance. Billington v. Cahill, 51 Hun, 132; 20 N. Y. State Rep., 615. To hold that part performance is performance would be a nullification of the statute.
The agreement of March 8, 1880, cannot, under the facts found,, by avoided for fraud or duress. It is not found that the position of Stephen O. and Theodore D. Barnum, that no legal partnership existed, was taken in bad faith. There is no finding-that the Barnums made false representations or concealed any facts; on the other hand, it appears that all of the facts now known were then known to the respondents. Duress per minas might be implied from the seventeenth and eighteenth findings of fact contained in the decision signed, but for the finding, made on the request of the appellants, "that the plaintiffs consulted counsel in the matter (the settlement of March 8, 1880), and were not ignorant of their rights, if any, nor under duress." When findings of fact are so inconsistent that they cannot be reconciled, those which are the most favorable to the appellant are controlling on the appellate courts. Redfield v. Redfield, 110 N. Y., 671; 18 N. Y. State Rep., 560; Bennett v. Bates, 94 N.Y., 354; Bonnell v. Griswold, 89 id., 122; Schwinger v. Raymond, 83 id.. 192.
The facts found by the trial court are insufficient to support its decision that the oral compromise of March 8, 1880, " was without any good consideration and was null and void."
The orcler and judgment should be reversed and a new trial granted, with costs to abide the event.