Case Name: BURCHELL v. VOGHT et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1898-12-09
Citations: 55 N.Y.S. 80
Docket Number: 
Parties: BURCHELL v. VOGHT et al.
Judges: 
Reporter: West's New York Supplement
Volume: 55
Pages: 80–87

Head Matter:
(35 App. Div. 190.)
BURCHELL v. VOGHT et al.
(Supreme Court, Appellate Division, Fourth Department.
December 9, 1898.)
1. Firm Books—Constructive Knowledge oe Partners.
As to third persons, a member of a firm is conclusively presumed to know of entries in its books.
2. Same.
That a member of a firm was permitted to use its books for his individual business does not change the rule that a member is conclusively presumed, as to third parties, to know of entries in the firm books.
8. Same—Loans to Partner.
Where one member of a firm keeps the books and the bank account, and borrows money for the use of the firm, which was used by such firm, and the evidence of such borrowing and such use was entered on the books of the firm, the other members of the firm are bound by the transaction. Green, J., dissenting.
Appeal from judgment on report of referee.
Action by Susan Burchell against Henry H. Voght, impleaded with Joseph Bork. From a judgment for plaintiff, defendant Voght ap-
peals.
Affirmed.
This action was begun on the 1st day of June, 1896. It was brought to recover moneys alleged to have been loaned, and personal property alleged to have been sold, by John W. Leech to the defendants, as co-partners, and also for rents alleged to have been collected by the defendants, as such co-partners, for said Leech. The claims were assigned by John W. Leech to the plaintiff preceding the commencement of this action. Defendant Bork made default. Defendant Voght interposed an answer denying the allegations of the complaint, and alleging, that the transactions set forth in the complaint were had with Joseph Bork as an individual, and were not co-partnership transactions, and that he had no notice of the same, and was not liable therefor. The action was tried before a referee, who found as facts: That the defendants were co-partners doing business under the firm name of Bork & Voght from about May 1, 1886, to January 1, 1892, at Buffalo, and were actively engaged in carrying on “a general real-estate business (buying and selling), and insurance, money broking, buying and selling mortgages.”' That some time prior to December, 1890, John W. Leech became the assignee of George A. Merchant, for the benefit of his creditors, and as such assignee came into possession of moneys and personal property. That on or about December 15, 1890, Leech loaned to the defendants $2,000 of the moneys which he had received as such assignee, and on or about December 22, 1890, he loaned and advanced to said defendants of such moneys the sum of $750, and on or about March 9, 1891, he loaned and advanced to said defendants of said moneys the sum of $1,200, and on June 5, 1891, he loaned and advanced to the defendants of such moneys the further sum of $1,000, and on June 11, 1891, he loaned and advanced to the said defendants of said moneys the further sum of $400, which moneys were received and used in their said business. That on the day of the making of the loan of $2,000 the defendant Joseph Bork gave to said John W. Leech a check on the German-American Bank of Buffalo, signed “Joseph Bork,” bearing date December 17, 1890, and made payable to J. W. Leech, assignee, etc., or order, for $2,000, and on March 9, 1891, the said defendant Joseph Bork gave to the said John W. Leech two checks upon the German-American Bank of Buffalo, signed “Joseph Bork,” each bearing date March 9, 1891, payable to J. W. Leech, Esq., or order, one for $750, and the other for $1,200, being the amount of the loans made on December 22, 1890, and on March 9,1891, respectively, and, on June 5th, at the time of the making of the loan of $1,000, defendant Joseph Bork gave to the said John W. Leech a check on the German-American Bank of Buffalo, signed “Joseph Bork,” bearing date June 5, 1891, payable to J. W. Leech or order, for $1,000. That none of such checks has been paid, and they were produced upon the trial by the plaintiff, who tendered the same to the defendants. That on or about February 20, 1891, the said John W. Leech sold and delivered to the said defendant Joseph Bork one staked wagon, one pair bobsleighs, and one cutter, at the agreed price of $127. That he also in the month of June, 1891, sold and delivered to the said Joseph Bork a steam engine and boiler, at the agreed price of $350, and also on or about the month of August, 1891, he sold and delivered to the defendant. Joseph Bork one Howard hoist, at the agreed price and sum of $130, which sums said defendant agreed to pay for such articles. That the sum of $127, the purchase price of said staked wagon, and the sleighs and cutter, has been paid by Joseph Bork. That the sum of-$130, the price of the Howard hoist sold and delivered to the defendant Joseph Bork, has been paid by him. That the sum of $350, the price of the engine and boiler, has been paid by the said Joseph Bork. That during the time of the existence of such co-partnership the defendants kept a bank account in the German-American Bank of Buffalo in the name of the defendant Henry W. Voght, called the “German-American Account No. 1,” and also an account in said bank in the name of Joseph Bork, called the “German-American Account No. 2,” and also in other banks in said city bank accounts were kept in the name of Bork & Voght. That during such co-partnership the said Joseph Bork carried on an individual business in real estate amounting to many thousands of dollars, in which business Voght had no interest. That the bank account No. 2, in the name of Joseph Bork, was the active account of the fii'm during its existence, and through this account was the larger proportion of the business of said firm transacted during such times, and that the amounts of money received as aforesaid upon the checks given to said Joseph Bork by said John W. Leech as assignee, etc., were deposited in the said German-American Bank to the credit of account No. 2. That at the time of the making and delivery of the checks by Joseph Bork to said John W. Leech the said Bork requested the said Leech not to present the same for payment, to which request the said Leech consented, and in fact never presented the same for payment. That the said defendant Voght did not during the existence of such co-partnership have any actual knowledge of the execution and delivery of the said checks by his co-partner to the said John W. Leech. That on the books of said firm, however, there was entered a memorandum of the loan of $750 by said John W. Leech, and as to the item of $2,000 aforesaid is the entry of the date December 15, 1890: “Cash as charged, $2,000; exchanged checks with John W. Leech, assignee”; and as to the item of $1,200 the following entry was made of the date of March 9, 1891: “$1,200, exchanged checks with Leech, debit to cash;” and as to the item of $1,000, as of the date of June 5, 1891, is the entry: “To cash. Exchanged checks with J. W. Leech, $1,000.” That the individual business as well as the co-partnership business of said Joseph Bork went onto the books of said firm. That during all the times aforesaid there was never any balance struck between the co-partners, and no accounting has ever been had by them. That all the transactions aforesaid relating to the giving and exchanging of checks were had by and between the said John W. Leech and Joseph Bork, and that no representations were made by said Joseph Bork to said Leech that said loans were made for or required by said firm, but that said J. W. Leech at all of said times knew of the existence of said firm of Bork & Yoght, and that such firm was doing a large business and using large sums of money. The referee further found that previous to the commencement of this action John W. Leech assigned to this plaintiff all the claims and demands set forth in the complaint. The referee further found that there was a balance due from the defendants for rents collected on the Merchant houses the sum of $106.95, and that the amount of the loans was the sum of $6,869.85. He further found, 'as conclusions of law, that the plaintiff was entitled to judgment for the amount of such loans and the balance of such rents, and ordered judgment accordingly.
Argued before HARDIN, P. J., and FOLLETT, ADAMS, GREEN, and WARD, JJ.
Moses Shire, for appellant.
George W. Cothran, for respondent.

Opinion:
FOLLETT, J.
As between Henry H. Yoght and the assignor of the plaintiff, Yoght is conclusively presumed to have knowledge of the entries in the books of the firm of Bork & Voght. Bank v. Widener, 24 App. Div. 330, 48 N. Y. Supp. 492, and cases cited. The fact that Bork was permitted to use the books of the firm for his individual business does not change the rule, as between the firm, or the members thereof, and third persons. The moneys advanced by the plaintiff's assignor were loaned by means of checks, entries in respect to which were made in the books of the firm, and they also entered into the bank account of the firm, and the items appeared in the pass books of the firm with the bank, which brings the case within the rule and within the facts of the authority cited. The fact that Bork gave the checks on the German-American Bank, signed by him individually, is of no moment, for the reason that Yoght and all the witnesses agree that a firm account with that bank was kept in the name of Joseph Bork, and the checks drawn on that account had to be signed by him. E the firm chose to keep its account in that way, it is as effectually bound by the checks as it would have been in case the checks had been drawn in the name of Bork & Yoght on a bank account kept in the name of Bork & Yoght. Yoght, having permitted the business of the firm to be transacted in that way, cannot now be heard to say that the checks are not binding on, or evidence against, him, because signed by Joseph Bork. This money having been borrowed by one of the partners for the use of the firm, and having been used by the firm, and the evidence of such borrowing and of such use having been entered on the books of the firm, and acquiesced in by Henry H. Yoght, he is bound by the transactions. Bank v. Butler (Sup.) 14 N. Y. Supp. 831; Same v. Morris (Sup.) 17 N. Y. Supp. 286, affirmed 144 N. Y. 637, 39 N. E. 493.
The judgment should be affirmed, with costs. All concur, except GREEN, J., dissenting.