Majority
p. 285Gribson and others vs. Stone and others.
Headnote
On the 29th of December, 1860, S. & Co., merchants at Manchester, wrote to G., H. & Co. of the same place, stating that they had instructed their New York house to hold the proceeds of the sales of certain goods for account of G., H. & Co., as security for the payment of their acceptances of B. & Co.’s two drafts for £5000 each, drawn as an advance against the above mentioned shipments. On the 11th of Januai'y, 1861, G., H. & Co. wrote to S. & Co. of New York, stating that they hand the latter the two acceptances for £5000 each, as advances on the goods, and which, according to an arrangement with the house of S. & Co. in Manchester, were to be held in trust for the payment of the said two acceptances. On the 29th of January, 1861, S. & Co. of New York wrote to G., H. & Co. acknowledging the receipt of their letter of the 11th which, they say, advises them of the acceptances, and indicates the goods to be held in trust for the payment of the acceptances; adding “ all of which is in order.”Sell, that these letters did not create any specific lien upon, or equitable assignment of, the goods mentioned therein, in favor of G., H. & Co., but amounted simply to a promise on the part of S. & Co. to hold the proceeds of the goods for their benefit.
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And that if S. & Co. instead of selling the goods for cash and remitting the proceeds to G., II. & Co. appropriated them to the payment of their own debts, the latter had no right to follow them into the possession of the creditors; it being merely a violation of a promise, for which S. & Co. were personally responsible.
B., L. & 1. by an instrument dated July 1,1860, reciting that they composed the firm of S. & Co., agreed that, as H. A. S. had loaned them $100,000, to be used as capital for the term of two years and subject to all the risks of their business, so far as the creditors of the firm were concerned, they would pay him interest at the rate of seven per cent, and that as a bonus for the good will of the business (in which he had formerly been a partner) they would allow him, half yearly, one per cent upon the gross sales of the firm, “he having no interest in the commission guarantee, or profit and loss, and in nowise a partner or to be allowed to have any part or control in the business of the house.” Held, that H. A. S. was not a partner with S. & Co., nor liable as such to creditors of the firm.
APPEAL by the plaintiffs from a judgment entered upon the report of a referee. The plaintiffs recovered judgment against the defendants Andrew S. Stone, Samuel Bates, Charles A. Lord and Edwin Lord, for the sum of $56,337.04, but failed to recover against the other defendants. The principal questions arising in this action are between the plaintiffs composing the firm of Gribson, Hankey & Co., and the defendants composing the firm of Stone &*Co. and their creditors. There was no dispute as to the facts. In December, 1860, the defendants Stone & Co. of Manchester were possessed of certain goods, of the value of £11,013 Is. 3d. sterling which they represented as having been consigned to them by the defendants James Black & Co., and they applied to the plaintiffs for a loan and advance thereon of £10,000 sterling, for the use of Black & Co., and the plaintiffs made the advances upon the goods particularly named, in consideration of, and upon the expressed condition, that the firm of Stone & Co., New York, should hold the same in trust for the payment of those advances. The advances were made by two drafts for £5000 each, drawn by James Black & Co. upon the plaintiffs, which they accepted and paid.
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In the course of the above mentioned negotiations, the following correspondence took place between the parties:
EIEST LETTEB.
“Manchester, Dee. 22th, 1860.
Messrs. Gibson, Hankev & Co., Manchester,
Dear Sirs: We have instructed our Hew York house to hold the proceeds of sales of goods as per memorandum at foot, ‘in trust/ for your account, as security for the payment of your two acceptances of Messrs. James Black & Co/s drafts for £5000 each, drawn as advance against the above mentioned shipments. Yours, very truly,
. Stone & Co.
The drafts mentioned above will be protected by remittances from Hew York.”
Annexed to this letter was a list of goods, with marks and numbers.
SECOND LETTEB.
“Manchester, January 11, 1861.
Messrs. Stone & Go., Hew York,
Dear Sirs: We have the pleasure to hand you memo, of two acceptances for £5000 each, granted to Messrs. James Black & Co. for your account, as advances on the goods enumerated on the other side, which, according to an arrangement made with your house here, are to be held in trust for the payment of the said two acceptances.
We are, dear sirs, faithfully yours,
Gibson, Hankev & Go.” The goods were enumerated upon the back of the letter.
THIBD LETTEB.
“New York, Jan. 29, 1861. Messrs. Gibson, H^kev & Co., Manchester,
Dear Sirs: We have your esteemed favor of the 11th, advising us of your acceptance, for £10,000, of Messrs. James Black & Co/s drafts, and indicating the goods to be held in
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trust for the payment of said acceptances, all of which is in order.
Yours, very truly,
Stone & Go.”
Afterwards the firm of Stone &s Co., being indebted to sundry persons, hypothecated with the firm of Haggerty & Co. the goods in question, with other merchandise, upon which Haggerty & Co. made large advances; and there remains in the hands of Haggerty & Co., after paying their advances, so much of said trust goods and the proceeds thereof as amounted to $21,126.33. This sum the plaintiffs claim of the defendants Haggerty & Go. On the 24th of July, 1861, the firm of Stone & Co. executed an assignment to certain creditors, in which they assigned to them “the surplus of goods and securities'in the hands of Haggerty & Co.,” to be paid and distributed among said creditors ratably, among which is Henry A. Stone. The only consideration of this assignment was the indebtedness of Stone & Go. to those creditors. On the 16th of September, 1861, Stone & Go. executed another assignment to the defendants composing the firm of Babcock Bros, and the defendant Henry A. Stone, in and by which they transferred all the goods and merchandise deposited with Haggerty & Co. since July 24, 1861, subject however to the payment of the advances made by them, which those creditors were to hold as collateral security on account of the indebtedness of Stone & Co. to them. The creditors named in those assignments were made parties defendant in this action. This action was commenced on the 4th of October, 1861, and on the 22d of October following two judgments were recovered in the superior court against Stone & Co., in favor of Baring Bros, and Biolly Fils, upon which executions were issued. On the 22d of December, 1861, the sheriff of the city and county of Hew York, under the executions just mentioned and another, sold all the right, title and interest of the defendants Stone & Co. in the goods so hypothecated with the defendants Haggerty & Co.
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to the defendant Samuel Gr. Ward. The judgment recovered by the plaintiffs against the defendants Andrew S. Stone, Samuel Bates and Charles A. Lord," was for the advances made by the plaintiffs to Stone & Co. on the goods held in trust, and the plaintiff sought to include in that judgment the defendant Henry A. Stone as a partner of the firm of Stone & Co. The referee found that on the 1st of January, 1849, Henry A. Stone was a member of the.firm of Stone & Co. and continued to be such until the 1st of July, 1855, when a certain agreement was entered into between him and the firm of Stone & Co., which contained this clause: “We, Samuel Bates, Charles A. Lord and James M. Stone, composing the firm of Stone & Co., Hew York, agree with Henry A. Stone, that as he has loaned us one hundred thousand dollars to be used as capital for the term of four years, and subject to all the risks of our business as far as the creditors of our firm are concerned, we will pay him interest half yearly at the rate of 7 p. c. per an.; and as a bonus for the good will of the business we will credit him half yearly with 1 p. c. on the amount of the gross sales, he having no interest in the commission, guarantees or profit and loss, and in nowise a partner or to be allowed to have any part or control in the business of the house. We further agree that Henry A. Stone may cancel this agreement at any time after giving six months’ notice to us, and to the correspondents of the firm, and he shall be entitled to withdraw at same time in good bills receivable the amount standing to his credit, after reserving fully enough to pay all the creditors of the firm.” On the 1st of July, 1860, the defendant Henry A. Stone entered into a similar agreement with the defendants Samuel Bates, Charles A. Lord and Edwin Lord, composing the firm of Stone & Co., of añilar import to that of July, 1855. In this firm the defencmnt Andrew S. Stone had no interest in the profit and loss, and was paid $500 for the use of his name. In the agreement of July, 1855, Henry A. Stone sells the good will of the business -of the firm of Stone & Co.,
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and in the agreement of July 1, 1860, also professes to dispose of it. The $100,000 alleged to have been loaned to the firm of Stone & Co. by Henry A. Stone, in his agreement of July 1, 1860, Avas merely a continuation of what he loaned the firm of Stone & Co. in July, 1855, which was then composed of different members. The first agreement was made with Samuel Bates, James M. Stone and Charles A. Lord, and the latter with Samuel Bates, Charles A. Lord and JMwin Lord, and of which firm the defendant Andrew S. Stone was a member. The referee held that the letters between the parties were not a pledge nor a mortgage of said goods, nor did they constitute an equitable assignment thereof affecting the defendants. He also held that the defendant Henry A. Stone was not at any time a member of, nor a partner, nor liable as a partner, in the firm of “ Stone & Co.” mentioned in the complaint, and directed judgment that the attachment issued in this action be vacated and set aside as to him.
C. Bainbridge Smith, for the appellants.
Aug. F. Smith, for the respondents.
By the Court,
I concur with the referee in the' opinion that the three letters, of December 29, 1860, January 11, and January 29, 1861, did not create any specific lien upon the goods mentioned in these letters. The first letter states that the Hew York house should hold the proceeds of the sales of certain goods for the plaintiffs’ account, as security for the payment of their acceptances of Messrs. J ames Black & Co.’s two drafts for £5000 each, drawn as an advance against the above mentioned shipment^ The second letter of January 11, 1861, written by the plaintiffs to Messrs. Stone & Co. of Hew York, stating that they hand the latter the two acceptances for £5000 each, as advances on the goods,, and which, according to an arrangement with the house of
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Stone & Co. in Manchester, were to be held in trust for the payment of the said two acceptances. The third letter, dated 29th January, 1861, written by Stone & Co. of New York to the plaintiffs, acknowledges the receipt of the letter of the 11th, which they say advises them of the acceptances, and indicates the goods to be held in trust for the payment of the acceptances.
Taking these letters together, they simply amount to a promise on the part of Stone & Co. to hold the proceeds of the goods for the benefit of the plaintiffs. It gives them no specific lien on the goods themselves; and if Stone & Co., instead of selling the goods for cash, and remitting the proceeds to the plaintiffs, appropriated them to the payment of their debts, the plaintiffs have no more right to follow them into the possession of the creditors than they would have to follow the proceeds, in case Stone & Co. sold the goods for cash, and appropriated the money to the payment of the same debts. In either case it is alike merely a violation of a promise, for which they are personally responsible to the plaintiffs.
No intent is shown on the part of Stone & Co. to surrender all control over the goods; and this, according to all the authorities, is necessary, in order to constitute an equitable assignment. All that Stone & Co. have said in the letters of 29th December, 18.60, and of 29th January, 1861, amounts, I repeat, only to a promise to hold the goods in trust for the benefit of the plaintiffs, and to pay the proceeds to them, giving to the plaintiff's no equitable assignment, and still more clearly, no pledge or mortgage. Stone & Co. retained, throughout, complete control over the goods.
I also am decidedly of opinion that the referee correctly found that Henry A. Stone was not a partner with Stone & Co. As a creditor, for the loan of $100,000, he received 7 .per cent; as a previous member of the firm, having disposed of his share of the good will of the establishment, the new ¡firm agreed to allow him, half yearly, one per cent upon the
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gross sales of the firm, precisely as they might have allowed any agent for procuring customers a similar per centage. In this agreement, they expressly declare that Henry A. Stone has no interest in the commission guaranties, or profit and loss, and that he is in nowise a partner, or to be allowed to have any part or control in the business of the house.
[New York General, Term,
Febuary 6, 1865.
The judgment should be affirmed, with costs.
Ingraham, Clerke and Sutherland, Justices.]