Court Opinion

ID: 3585307
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:35:28.582046+00
Date Added: 2024-06-11T07:41:46.286149
License: Public Domain

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The evidence is not in the record, and the only questions which can be considered arise upon exceptions to the conclusions of law of the referee, following his findings of fact. The plaintiffs on the one hand are not entitled to any presumption in support of the judgment, that facts were shown other than those stated in the referee's report, and on the other hand the defendant must accept any inference fairly deducible from the facts found which tend to support the conclusions of law, and cannot question such inferences although not indisputable, and although the facts found were capable of diverse interpretations. (RochesterLantern Co. v. Stiles  Parker Press Co., 135 N.Y. 209.) The principal question relates to the claim on the part of the defendant that in making up the account between himself and the firm of Corner Brothers  Co. (the plaintiffs), he was entitled to be credited with the amount of the interest on capital used in the business, erroneously charged in the accounts of the former firm *Page 581 
of Dowley, Corners  Co., to the extent that said charges diminished the profits to which he was entitled in the business of that firm. The referee found that the firm of Dowley, Corners Co. was dissolved in 1875. The plaintiffs organized the new firm of Corner Brothers  Co., three of the partners in the old firm retiring, and the three remaining partners uniting with two others of the plaintiffs, not members of the old firm, in organizing the new one. Unless the new firm, by an agreement between itself and the defendant upon sufficient consideration, assumed whatever liability the firm of Dowley, Corners  Co. might be under to the defendant at the date of its dissolution, it is plain that the new firm could not be compelled, in making up its accounts with the defendant in respect to the business of the new firm, to credit him, at most, anything more than $2,866.09, the sum appearing to his credit on the books of the former firm. The account between the plaintiffs and the defendant was adjusted by the referee on the theory that the defendant was entitled to a credit for that amount, and the plaintiffs are not in a position to question the correctness of the decision as to this item, even if a doubt might be raised in respect to it. After the organization of the new firm in 1875 the refinery business was continued, as the referee finds, by the new firm and the defendant and Muller, upon the same footing, though without any new definite arrangement, as theretofore between them and the old firm.
There were losses in place of profits in the business of the new firm, and, under the agreement of November, 1868, under which the parties acted, the defendant was bound to bear one-fifth of such losses. He now in effect seeks, by re-opening the accounts between himself and the old firm, to obtain credit on the account with the new firm for the errors and overcharges in the old account. He cannot be permitted to do this unless by force of some contract, or substitution, whereby the new firm obligated itself to the defendant to assume and pay whatever liability the old firm was under to him. No such obligation or substitution is shown by the facts found. *Page 582 
The accounts rendered by the old firm on the first day of January of each year up to January 1, 1875 (immediately preceding the dissolution), although retained without objection, could be impeached by him for fraud or mistake. (Lockwood v. Thorne,18 N.Y. 285.) When the new firm was organized he then had, and still has, unless he has released the old firm, or the statute has barred him, a right of action against the old firm for any profits not accounted for up to its dissolution. The new firm entered into no obligation to the defendant, express or implied, to assume such liability. It entered into no such obligation with the old firm. The finding is that the new firm succeeded to the "general assets, business and liabilities of Dowley, Corners 
Co.," and that the members of the old firm, who went out of the business, "were settled with on the footing of the books and accounts as they then existed." The fair inference from these findings is that the new firm assumed the liabilities of Dowley, Corners  Co., appearing on the books and accounts of that firm and settled with the retiring partners, on the basis that the liabilities were such as were shown thereby. Even if by the agreement with the old firm the new firm assumed its liabilities without limitation, the agreement would not inure to the benefit of the defendant, or give him a right of action thereon. (Wheat
v. Rice, 97 N.Y. 296; Serviss v. McDonnell, 107 id. 260.) As between the two firms it is plain that the old firm could not, under the arrangement with the new firm, have maintained an action against the latter to recover a sum which they might have been obliged to pay the defendant, or had paid him, on a correction of the accounts.
The principle of novation of debts has no application. The new firm had not taken upon itself the liability of the old firm to the defendant beyond, at most, the indebtedness entered on the books, nor had the defendant, upon the facts found, discharged the original debtor and accepted the new firm as his debtor for such excess. (Shaw v. McGregory, 105 Mass. 96; Caswell v.Fellows, 110 id. 52.) The conclusion of the General Term, that the account between the new firm and the *Page 583 
defendant did not draw into it any liability of the old firm to the defendant beyond the sum appearing on the final account rendered by that firm January 1, 1875, is supported by the facts found. We do not rest our affirmance on this point on the doctrine of equitable estoppel. We should have some difficulty in placing our affirmance on this ground. But on the ground that there was no contract liability, and that the finding that the new partners continued business on the same footing as the original partners to the contract, can only mean that the terms of the original contract were to govern the relations of the parties thereafter in conducting the new business, the decision should be upheld. We agree with the General Term in its disposition of the question of the charge to the business of the new firm of a sum equal to the interest on the mortgage of $20,000. The reasons are fully stated in the opinion of the General Term, and it is unnecessary to repeat them.
We think the judgment is right, and it should, therefore, be affirmed.
All concur.
Judgment affirmed.