Court Opinion

ID: 3656987
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:09:50.701527+00
Date Added: 2024-06-11T12:27:50.968395
License: Public Domain

The action is assumpsit for the value of lumber sold and delivered to the defendant by the plaintiffs, as partners, to the amount of $385. The plaintiffs were both active partners, but the books were kept by Jackson, and were accessible to Carter. Each of the partners was in the habit of using debts to the firm in satisfaction of his private debts, and the books showed various entries by which the debtors were credited with the amounts thus settled, and the partner charged therewith in his account. The defendant made a settlement of the account against him with Jackson, in which he had credit for $72,00, for an account due to him from the firm, and a further credit for a debt which Jackson owed him, and entries thereof were duly made in the books by debiting Jackson to the defendant, and thereby closing the defendant's account. The defendant gave further evidence, that after that settlement, the firm became indebted to him, and that Carter paid the amount to him in money. This evidence was objected to on the part of the plaintiffs, but was received by the Court. The defendant also offered evidence, that during the *Page 45 
trial, the plaintiff, Jackson, said that Carter assented to the settlement which he made with the defendant, but did not say whether it was before the settlement. At the close of the business, the assets were not sufficient to discharge the debts of the firm: but at what time that was, does not appear; and Jackson was then a debtor to the firm upwards of $1000, and Carter a creditor for about $500, as shown by the books. The plaintiffs also offered evidence, that Jackson was insolvent at and after January, 1857, but the Court deemed it irrelevant, and refused to admit it. His Honor instructed the jury, that the transaction between Jackson and the defendant was not a bar to the plaintiffs' recovery of the residue of the account after deducing the $72, unless Carter assented thereto, but that if he had assented to the settlement, or subsequently agreed to it, and they were satisfied thereof from the evidence, it was a bar. The jury found for the defendant, who had judgment, and the plaintiffs appealed.
It was held in Cotton v. Evans, 1 Dev. and Bat. Eq. 284, the invalidity of the acts of one copartner in using the name or effects of the firm did not depend upon a want of power in him, but in the fraudulent abuse of his power in making use of them for his own separate benefit, and in the concurrence in that fraud by the party dealing with him in accepting them for that purpose. Of course, such fraud is repelled, when it appears that the other partner assented to the transaction, and hence also it was established, in that case, that it did not require evidence of express or previous assent to the particular transaction, but that it might be inferred from other facts, such as a course of dealing in that way, acquiesced in by all the partners, with knowledge of such dealing, or with full opportunities of knowledge from the entries in the books, which they had access to, and examined, or ought to have examined. Exparte Bonhomy, 8 Ves. 540; Exparte *Page 46 Peele, 6 Ves. 602. It imports such gross negligence, in a partner, of his own rights, and those of other persons, not to put a stop to such dealings, if he objects to them, and thereby prevent his copartner from deceiving those with whom he is having such transactions, as to amount to a fraud, on his part, and deprive him of the protection the law designs to give him.
The application of that doctrine to the present case, is demonstrative of its soundness. Jackson not only made frequent use of the joint effects for his own benefit, showing the openness and notoriety of those acts, but Carter also made the same uses of the effects, and proper entries were made of the whole of them in the accounts: so that one is obliged to understand that both parties allowed such dealings, or were wilfully blind. Besides, there is the further circumstance in relation to the transactions with the defendant, which strongly tends to the conclusion, that Carter approved of the settlement between Jackson and the defendant; which is that Carter himself, afterwards made a settlement with the defendant, for subsequent dealings with the firm, and paid the defendant a balance found due thereon, in cash, whence, it may be fairly inferred, that Carter approved of the manner in which the former account, against the defendant, had been closed. The Court is, therefore, of opinion that the case was properly put to the jury, upon relevant evidence, applicable to the principle of law. On the points of evidence, there is no doubt. Though, under the circumstances, the declarations of the alleged offending partner ought to weight but little, yet the admissions or declarations of a party, to the record, cannot be excluded. It was also immaterial to this enquiry, how the accounts in company stood between Jackson and Carter, since the world could know nothing of that.
PER CURIAM,                           Judgment affirmed. *Page 47