Case Name: Francis J. Kennett, Respondent, v. George B. Hopkins and Harry L. Terry, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1899-05
Citations: 40 A.D. 367
Docket Number: 
Parties: Francis J. Kennett, Respondent, v. George B. Hopkins and Harry L. Terry, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 40
Pages: 367–371

Head Matter:
Francis J. Kennett, Respondent, v. George B. Hopkins and Harry L. Terry, Appellants.
Accounting between partners — when a New York court will not restrain the sale of the assets, of an Illinois firm.
In an action brought for ah accounting between the members of a firm of brokers dealing in stocks and grain in the city of New York, which, the complaint alleged held stocks and securities which had been purchased for, and fully paid for by, a Chicago firm carrying on a similar, business under the same firm name, of which firm the plaintiff and one of the defendants and certain third persons were members, a receiver was appointed of the property of the New York firm, to whom the defendant partner refused to deliver the stocks on the ground that he had a lien thereon for money advanced by him •— the report of a referee that he had an equitable lien to the amount of §235,756.84, having been confirmed by the court.
Upon the trial of the action at Special Term a referee was appointed to take and state the accounts of the Mew York firm, and also to take the accounts of the plaintiff and the defendant partner in the Chicago business and the assets, so .that such amounts might be considered and applied in reaching the ultimate amount which the plaintiff and defendant partner should receive from either, or from the assets of the Mew York business. Before the final submission of the case to the referee, the defendant partner, being notified by the plaintiff that the latter intended to sell certain of the accounts and assets of the ‘Chicago firm-at public auction in that city, made a' motion for an injunction restraining such sale, and for an order directing the plaintiff to transfer to the receiver in the action the assets of the Chicago firm, and permitting the defendant partner to sell under the receiver’s'direction the assets of the Mew York firm upon which he had a lien.
Held, that the motion was properly denied;
That while an accounting as to the liabilities of the parties in relation to the Chicago firm was necessary to the proper liquidation of the accounts of the Mew York firm, such an accounting was evidently simply an incident to the complete settlernent of the accounts of the Mew York firm; and that if any judicial action were necessary to the liquidation of the Chicago business, application should be made to the courts of Illinois;
That it wás proper for the court to postpone the sale of the securities held by the defendant partner until his right to hold them as security for the money advanced to the Chicago and Mew York firms should be determined by the referee.
Appeal by the defendants, George B. Hopkins and another, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 29th day of March, .1899, denying their motion for an injunction restraining the plaintiff from disposing of the assets and property of the firm of Kennett, Hopkins & Co.
S. Sidney Smith, for the appellants.
Thorndike Saunders, for the respondent.

Opinion:
Ingraham, J.:
The pleadings are not before the court on this appeal; but from the statements contained in the moving affidavits it would appear that the action was brought for an accounting between the partners of a copartnership engaged in the business of brokers in stock and grain in the city of Hew. York; and that the complaint alleged that •another firm, composed of the plaintiff, the defendant Hopkins and certain other persons, was carrying on a similar business in Chicago, under the same firm name. The Hew York house held stocks and •other securities of the estimated value of $120,000, which had been purchased for the Chicago firm and which the plaintiff alleged had '•been fully paid for by, and were the property of, the Chicago firm. 'The defendant alleged that there was but one firm doing business in •cities of Hew York and Chicago; that the plaintiff and defendant the Avere the only persons interested in the assets of such firm, and that the other persons described as partners were simply profit sharers :and not partners. An injunction was granted in this action restraining the defendant from disposing of the property of the said firm; and subsequently an order was entered appointing a receiver of the •copartnership assets, accounts and other property of the late copartnership mentioned in the pleading. The receiver demanded from the defendant George B. Hopkins the securities purchased by order of the Chicago firm, as being the property of that firm, but he refused to deliver them to the. receiver, claiming that he had a lien upon such securities for money advanced by him. Hpon application to the court, an order was made whereby a reference was ordered to determine ivhether the defendant had any lien or claim upon such securities, The referee reported that the defendant Hopkins had made- advances on account of the said firm of Kennett, Hopkins & Co. to the amount of $235,756.84, and that the defendant has an •equitable lien on all of the assets of the firm of Kennett, Hopkins •& Co. to secure that amount; and that report was confirmed by the •court. The case then came on for trial at Special Term, and an interlocutory judgment was entered referring the action to a referee to take and state the accounts of the firm of Kennett, Hopkins & •Co. in the city of Hew York. The referee was also empoAveredto take and state and adjust the accounts of Kennett and Hopldns in "the Chicago business and the assets, so that such amounts may be properly considered and applied in reaching the ultimate amount which Kennett or Hopkins should receive from either or from the .assets of the Hew York business, reserving the question of injunction and costs to the final judgment.
This accounting proceeded before the referee, and the case -when this motion was made was ready for final submission to him. In the meantime the plaintiff had sent notice to the defendant that he proposed to sell at public auction, in the city of Chicago, certain open accounts and assets of the Chicago. firm, whereupon the-defendant made this motion to enjoin the plaintiff from selling such assets and for an order directing the plaintiff to transfer to the-receiver appointed in this action all assets of the Chicago firm, and also that the defendant should have leave to sell, under the direction of the receiver, the assets of the New York firm upon which he had a lien. The Special Term denied this motion, and from this, order the defendant appeals. ,
We think this motion was properly denied. It is quite evident, from the order appointing the receiver that he was appointed receiver of the New York assets only. No attempt to administer the assets of the Chicago firm was made by the receiver, arid it does-not seem to have been claimed that he was properly entitled to-administer them. The accounts of these two firms have been kept separate; their-business .was entirely separate, and it would appear-that the plaintiff had substantially finished the liquidation of the Chicago firm. The interlocutory judgment did not attempt toad-minister the assets, of the Chicago firm, and it would seem to be impracticable for the courts of this State to properly superintend the liquidation of a firm whose assets are in Chicago, whose business is-there, and whose principal firm assets appear to be accounts against people doing business in Chicago. While an accounting as to the' liabilities of the parties as to each other in relation- to the Chicago firm is necessary to the proper liquidation of the accounts of the-New York firm, such an accounting was evidently directed as-merely incidental to the complete settlement of the accounts-between the parties as members of the New York firm. It is a little difficult to see how such an accounting could be had unless some disposition is made of these open accounts, which it is alleged are uncollectible, and the sale of the other assets of that firm. .But. -certainly the court here is not in a position to pass intelligently upon-the liquidation of the Chicago business, and if judicial action is necessary application should be made to the courts of Illinois.
As to the sale of the securities held by the defendant we agree with the court below, that as the case has been substantially tried it was proper for the court to postpone that sale until the determination by the referee under the interlocutory judgment of the question as to the right of the defendant to hold these securities as security for the moneys he had advanced to the Chicago and Hew York firms. It is not made to appear that it is necessary that these securities should be sold at once; and the settlement of the accounts between the parties will determine the right of defendant to have these securities, and just what amount, if any, is due to him for which he is entitled to hold them.
The order appealed from should, therefore, be affirmed, with ten dollars costs and disbursements, with leave to the defendant to renew his motion for the sale of the securities in his possession upon the coming in and confirmation of the referee's report upon the accounting.
Van Brunt, P. J., Barrett, Rumsey and McLaughlin, JJ., concurred.
Order affirmed, with ten dollars costs and disbursements, with leave to defendant to renew his motion upon the coming in and confirmation of referee's report.