p. 384Appeal by defendant from an order of reference made at special term, on notice.
George S treat sued his former partners Rothschild and one Dreyfus, for an accounting of the partnership affairs. The complaint alleged that there had been no final adjustment or settlement of the accounts.
The defendant, Rothschild, pleaded an account stated and settled, and likewise a sealed release' executed and delivered to defendant bjr plaintiff. The defendant Dreyfus pleaded an account stated and settled.
There was no reply required of plaintiff.
After issue raised by the answers, the plaintiff moved for a reference- of the whole issue to a referee. The motion was heard on the pleadings, and on an affidavit of the plaintiff’s attorney, stating that it was the intention of plaintiff to show that the release set up by defendant Rothschild, had been obtained by fraud; and false representations as to the amount of profits. This affidavit, likewise, contained the statement, “ that; to prove these facts, it would be necessary to make the same examination of a long account,” as from such examination it is intended to establish the falsity of the representations above referred to.
The defendants’ affidavits denied the fraud and falsity of the representations charged, and denied that it would be necessary to examine the accounts, in order to establish what representations were made.
The court at special term granted the plaintiff’s motion for a reference, and the defendants appealed from the order of reference to the general term of the com-pleas.
S. P. Nash (Moses B. Maclay, attorney), for defendants’ appellants.
I. It is only where “ the trial of the issue of fact” requires the examination of a long account, that the issues can be referred without consent of the parties {(Jode Civ. ,Pro. % 1013). The issue
p. 385here is not in respect to the account, but in respect to the right to an account. Where a partnership has existed and been terminated, an accounting follows of course, if the accounts are disputed ; but the action is an equitable action, and if an account stated, a settlement or a release is set up, such settlement or release must be first set aside, before the accounts can properly be taken. It would be an intolerable practice to take the account in the first instance, before a right to an account is established.
II. The affidavit on plaintiff’s part is insufficient to take the case out of this well settled rule by stating that he intends to attack the settlement and make his proofs by the examination of the accounts. 1. The attorney could not know what took place on the settlement.
2. But, if true, this shows only an incidental and collateral need for looking into the accounts, which is not sufficient to justify a compulsory reference .(Kain
v. Delano, 11
Abb. Pr. N. S. 29 ;
Camp v. Ingersoll, 86 N. Y. 433 ).
III. The motion appears to have been gran ted on the authority of Welsh
v. Darragh,
52 N. Y. 590 . This was a legal action, and plaintiff, to prove Ms case, had to prove an account. Here plaintiff has simply to prove the partnership agreement. Then the defendant takes up Ms defense. The evidence in reply is an attack on the release.
Wm. King Hall, for the plaintiff, respondent.
II. Although the question as to the validity of a release should be first disposed of, yet where, as in this case, it is so connected with the accounts as to
p. 386require the accounts to be fully examined on the trial, the case should be referred (
Mills v. Thursby, 11 How. Pr. 113 ; Kennedy
v. Shilton, 9 Abb.
Pr. 157 , note ; S. G.,
1 Hilt. 546 ; Bachelor
v. Albany City Ins. Co., 6 Abb.
Pr. N. S. 240; Whitaker
v. Des Fosse,
7 Bosw. 678 ).III. The action is for an accounting and is therefore referable. The defendants cannot make it non-referable by their answer (Welsh
v. Darragh, 52
N. Y. 590 ;
Williams v. Allen, 48 How. Pr. 357 ; Patterson
v. Stettauer, 39
Super. Ct. [J. & S.] 413 ; Maryott
v. Thayer,
Id. 417 ; McKay
v. Jarvis, 8
Weekly Dig. 155).
This is an action in equity for trial by the court without a jury. A compulsory reference, however, cannot be ordered, unless the examination of a long account on either side will be required, and the decision of difficult questions of law will not be called for (Code Civ. Pro. § 1013; Camp v. Ingersoll, 86 N. Y. 433 ).
Although there may be some uncertainty in applying the numerous adjudications on this subject, I think a proper construction is adverse to the power of the court to direct a compulsory reference unless the trial of the issue will necessitate the examination of a long, account, (Kain v. Delano, 11 Abb. Pr. N. S. 29 ; Townsend v. Hendricks, 40 How. Pr. 143 ). It was held by this court, in Turner v. Taylor, 2 Daly, 278 ; that the account must be directly in issue, and not the subject of examination collaterally to establish some one of the issues in the action. The pleadings admit the partnership, and all required of the plaintiff is to give in evidence the agreement. The practice of the court in this class of actions, is to send the partnership accounts, to be stated by a referee, but this has been done by the court for economy of time, and not because either suitor had the legal right to require it.
The issue here is upon the efficacy of the release,
p. 387and that is raised by the plaintiff, not by virtue of his complaint, but in rebuttal. To prove this conten tion, entries in books of account may be given in evidence, but this is not the examination made requisite by the statute. The reference there is to an examination of items in issue between the parties, and affecting the judgment ei ther by their allowance or disallowance in whole or in part.
In Welsh v. Darragh, 52 N. Y. 590 , the action was at law for the price of goods sold and delivered, and it was held its character could not be changed by an answer alleging fraud in the transaction, with claim of damage by way of recoupment. Proof of plaintiff’s account was necessary, and the defense under less liberal rules of practice must have been the subject of an independent action. No such question is presented by this appeal, because the character of the action is in nowise affected by the answer, but it remains true, where an accounting may not be had, until the plaintiff succeeds upon an issue, the disposition whereof the defendant has the right to demand should be made by the court rather than by a referee (Wheeler v. Falconer, 7 Robt. 45).
The order should be reversed, with $10 costs and disbursements.
Daly, F. J., and Van Brunt, J., concurred.