Court Opinion

ID: 7291298
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:34:18.495078+00
Date Added: 2024-06-11T16:19:21.139693
License: Public Domain

Reed, V. C.
This bill, as it appears,' is filed by Mr. Schlicher against Mr. White and Mr. Vogel, his former partners, to compel an accounting. Mrs. White, the wife of one of the partners, is made a party to the suit. She is related to the firm transactions in this,, that she kept a boarding-house and bought meats and groceries from the firm. She did not pay for them,'but her husband gave her a credit for her debt, which amounted to $1,622.15, on the books of the firm, and then charged this sum to his own personal account with the firm. The bill attacks this transaction *354and asks that the charge against Mrs. White may be restored against her upon the books of the firm. She interposes a demurrer to the bill upon the ground that it is multifarious. The insistence of her counsel is that she has no interest in the accounting required of the members of the firm, and that therefore she should not be put to the trouble and expense of participating in that litigation.
The vice of multifariousness was elaborately considered by Lord Cottenham in the case of Campbell v. MacKay, 1 Myl. & C. 621, 622. Judge Story gives credit for the observations concerning this matter contained in his book on “Equity Pleadings” to the elaborate 'judgment of the chancellor in that case. As pointed out in that opinion, and in the text-books, multifariousness may consist of a joinder of claims of a different character in favor of the same plaintiff or plaintiffs against the same defendant or defendants. But what, says Judge Story, is more familiarly understood by multifariousness as applied to a bill is, where a party is brought in as a defendant upon a record, with a large portion of it,.and of the case made by which, he has no connection whatsoever. In such case he has a right to demur and to state the evil of those uniting distinct matters in one record to be (and so the old form of demurrer was) that it put the parties to great and useless expense.
As to what constitutes misjoinder or strict multifariousness is a matter not easily defined. Says Judge Story:
“ The conclusion to which a close survey of all the authorities would conduct us, seems to be that there is not any positive inflexible rule as to what, in a court of equity, constituted multifariousness which is fatal to the suit on demurrer. These courts have always exercised a sound descretion in determining whether the subject-matters of the suit are properly joined or not, and whether the parties, plaintiff and defendant, are also properly joined or not.” Story Eq. Pl. § 539.
Bolles v. Bolles, 17 Stew. Eq. 385. In respect to what matters, apart from the accounting itself, can be brought into a suit for an accounting, there is considerable contrariety of judicial opinion. The weight of authority as well as reason, seems to be, in respect to suits by and against partners, that whenever *355the right of a firm to reclaim property, which has been improperly or fraudulently transferred to a third party, has to be settled before an accounting can be completed, then such right can be tried in, and the third party be made a party to, the accounting suit.
In Penneman v. Jones, 58 N. H. 447, the bill alleged that the plaintiffs and all of the defendants, except one Stark, had been partners; that Jones, who was manager of the firm business, had combined with Stark in certain transactions to defraud the firm. The bill prayed that Stark be compelled to account. Stark moved to dismiss the bill as to himself. The court held that Stark was properly made a defendant, as Jones, with whom Stark'was jointly interested in the transaction, was a member of plaintiff’s firm, and could not be sued at law and be made plaintiff and defendant in the same suit.
In Wade v. Rusher, 4 Bosw. 537, a suit was brought by one' of two partners against the other to obtain an accounting, and to set aside a release given by plaintiff to defendant. A third person, who had fraudulently obtained from the defendant portions of the partnership property, was also made a party in order to subject the property so held by him to the payment of any balance due from the defendant. It was held that all persons who had come into possession of the property who were not purchasers for value, were proper parties to the suit.
The same doctrine was held in Webb v. Helion, 3 Rob. 625. In Palmer v. Tyler, 15 Minn. 106, the bill was by one against two other partners to compel an, accounting. Two persons, not partners, were made parties to the bill and charged with fraudulently abstracting, in collusion with one of the partners, from the mill of the firm, certain machinery. The court said : “A partner has a lien upon partnership assets, and if any portion of the property has, by the combined and ’collusive action of his copartner or other persons, been transferred to other persons through a sham sale for the purpose of putting the same out of his reach and in'fraud of the copartnership, he has the right to follow it and subject it to his lien and to the accomplishment of the purpose for which the lien exists. Why should not all this *356be embraced in one action? The object is single, viz., to bring about a complete and final settlement of the business of the co-partnership.”
In Hayes v. Heyer, 4 Sandf. Ch. 485, a bill was filed by one partner against another partner and an assignee, to whom the latter partner had privately assigned the effects of the firm. The bill asked that the assignment be set aside and that the firm be wound up and' an account taken. Vice-Chancellor Sandford said: “The bill shows an equal right in both persons to liquidate the affairs of the old partnership, which has been invaded by a collusive transfer of its effects by one partner to a creditor of the firm, and it claims to have the effects vested in a receiver and the account of the partners adjusted. It brings in Mr. Bement as one who has become mixed up with ■ a part of the general object of the suit, a part which is essential to obtaining its legitimate end.”
The case of Attorney-General v. Cradock, 3 Myl. & C. 85, was one for an accounting, not against partners, but against trustees of certain charities. With the defendants was united a person whom it was charged had, in concert with one of the trustees, fraudulently effected the exchange of a farm in .which he and the trustee were jointly interested for a portion of the charity lands. Lord Chancellor Cottenham, in respect to the objection that Cradock, who it was charged had colluded with the trustee, was an improper party, said : “The object of the rule against multifariousness is to protect a defendant against unnecessary expense. But it would be a great perversion of that rule if it were to'impose on the plaintiffs and all the other defendants the expense of two suits instead of one. The object of the suit is to establish that Cradock has, by means of the transaction stated in the information, become a trustee of part of the charity estate.” What the chancellor meant by his “ becoming a trustee,” was that he held by his collusive action a part of the property which belonged to the trust estate.
In Bolles v. Bolles, supra, a bill was filed to compel an executor to account, and also to set aside a deed made by him as executor to his daughter. The bill was held not to be multifarious. *357And, in addition to the ground that the grantee-in the deed was one of those interested in the accounting, it seems also to have been held that the litigation concerning the validity of the deed was essential to the completion of such account.
Now, in taking an account of the firm matters in the present case, the first question would be whether Mr. White is to be charged with the debt which was transferred to him from the firm books. If this debt was improperly charged off and has to be restored, then Mr. White’s liability will be so much the less. Therefore, no complete account can be stated until this question is settled. All the members of the firm are interested in the settlement of this question, for inasmuch as it is. charged in the bill that Mr. White is insolvent, and his wife is pecuniarily responsible, the point involves the query whether this credit is a valuable or worthless asset. The analogy between the posture of affairs of this case and in those cases already cited seems to me to consist in this, that the bill of $1,622.15 was an asset of the firm. If, owing by Mrs. White, it is a valuable asset. By the transference of the asset from a debt due by Mrs. White to a debt due by Mr. White, the firm lost the value of this asset. The transaction was equivalent to a gift of so much of the funds of the firm to Mrs. White. This gift is charged by the bill to have been an illegal transaction, and the bill seeks to set it aside and to hold the debt against the wife as a still subsisting portion of the firm’s assets. She stands, therefore, in the posture of one who has received illegally a portion of the firm’s property, upon which the partners and the creditors of the firm have a lien. She, therefore, does not stand in the attitude of an ordinary creditor, but in the position of one who has improperly received and still holds partnership assets.
Again, it is to be observed that the wife stands in a peculiar attitude; being the wife of one of the partners, the partnership cannot sue her on her contract at law. National Bank of Rahway v. Brewster, 20 Vr. 231.
As the question of her liability,-therefore, would have to be settled in a court of equity, I am of the opinion that it can be settled in this suit without imposing upon her any undue ex-*358pease or trouble. I do not perceive how there can be any increased cost of pleading, under our practice, imposed on her by the fact that she is joined in the accounting suit, and it was the imposition of this additional expense which was the main reason for declaring the joinder of the defendant obnoxious to the criticism of multifariousness.