Englis v. Furniss

By the Court.

In the view that I take of the right of the appellant to maintain this action, it is not necessary that I should consider the question whether the agreement between Brown and Furniss vested a present interest in Furniss, at the time of the execution and delivery thereof, so as to make him a joint owner of the steamboat “ Rhode Island,” at the time when the repairs in question were made.

In the first place, I deem it quite clear that the plaintiff, by virtue of the assignment to himself by his copartner, BroAvn, acquired no right which he and Brown jointly had not before the assignment was made. The claim to recover for the repairs, if any existed, against Brown and Furniss, was vested in BroAvn & Englis ; and whatever defences existed as against the latter firm, in favor of Furniss, could not be defeated by BroAvn’s assignment to his partner. The form of the action, in respect to parties, may be altered by such assignment, but in respect to the original title to recover from Furniss, he has a right to treat it as standing upon the footing of a copartnership claim.

In the next place, it may be observed that this is not an action by Englis, founded upon his right as a copartner, to compel Brown, or Brown and Furniss, to restore copartnership funds or property applied by him to the use of Brown and Furniss, and Avhich is necessary for the payment of the debts of the firm of Brown & Englis, or requisite to his indemnity against such debts, and to the payment to himself of all his share in the capital and profits of the last named firm. Conceding, as above suggested, that Brown and Furniss were joint owners of the steamboat, and, as such, liable to third persons, under the terms of their agreement as partners in the transactions relating to the steamboat “ Rhode Island,” and conceding that (notAvithstanding the agreement of Brown to make the repairs in question himself) the firm of BroAvn & Englis, by doing the work, became creditors of Brown and Furniss, in equity, in such a sense that Englis can not be prejudiced by any private arrangement between Brown and Furniss, respecting the manner in which or party by whom the repairs should be paid for, it is, no doubt, true that Englis may sustain an action against Brown, to which Furniss would be a proper defendant, in which an account should be taken; and if, upon such account, Brown were found indebted to Englis, after the payment of their partner

Be this as it may, this is not such an action, nor is it, in any respect, of that nature. It is nothing more nor less than an action to recover the value' of the work and materials, and the sums of money paid and applied, by Brown & Englis in the repairing of the steamboat of Brown and Furniss; and there is no averment in the complaint, or suggestion in the prayer thereof, which places the title to recover upon any other ground than simply that one firm (the defendants) are indebted to the other firm (the plaintiffs). And in respect to such indebtedness, the defendants are, under this complaint, in precisely the same position as if no assignment had been made to Englis.

It is true, that since this court is a court of equity as well as a court of law, the complaint may be said to be a complaint in equity; and in respect to parties to the action, the suit is free from objection in form, but it still remains an action by one copartnership against an alleged other copartnership, in "which one partner is common to both firms, to recover an alleged debt by the latter to .the former, upon the simple allegation that such a debt exists.

I do not think it necessary to consider whether the action can be at all sustained upon this mere allegation, without some averment that shows that the fund which the plaintiff avers to have come to the possession of Brown and Furniss, is necessary to the just settlement of the affairs of Brown & Englis, irrespective of the fact that Brown assigned his interest in the claim to him; or if he rested his claim upon that assignment, then that as between Brown and Furniss, it ought to be paid over by that firm to Brown. Whether these averments ought to be inserted in the complaint or might be dispensed with, it seems to me quite clear, that the claim of the plaintiff necessarily, and from its very nature, brings into view all the equities existing between the parties; and the moment it appears that, as between Brown and Furniss, it is inequitable that the fund should be taken from the latter firm, Eng

It is not denied that Brown undertook to make the repairs himself. It is found by the referee, and the evidence clearly warrants it, that upon a settlement between Brown and Furniss, the latter has advanced to Brown enough, and more than enough, to cover the whole amount.

At law there could be no recovery by Brown & Englis against Brown and Furniss, under these circumstances, because Brown cannot sue himself, and because at law Brown cannot become indebted to himself; and so at law (as insisted by the plaintiff’s counsel) there can be no set off of a debt due by the copartner against a copartnership claim, nor will the fraudulent application of the copartnership claims to the private debt of one partner, defeat the recovery by the firm. But when, by reason of the membership of the one partner in both firms, the alleged creditor firm comes into equity for relief, they come to do equity as well as to seek it. The complaining plaintiffs come also upon their own equities, which are alleged to be prejudiced. These equities cannot be ascertained, nor can it be discovered what is requisite to the doing of equity, without ascertaining what is equitable as between all the parties.

In Bailey v. Bancker, 3 Hill, 190 , where one stockholder sued his associates (the statute having in principle established a relation like that of partners between themselves, and also as to third persons) for a contribution, Beoeson, J., in giving the opinion that the action could not be sustained, says, “ they may go into chancery for an account, and have the claims of all parties settled upon equitable principles.” So, where a necessity to go into chancery arises from the fact that two firms have one or more common members, the rule that whatever assets arose out of the business of the one firm,

The case of Jacand et al. v. French et al. 12 East, 317, goes to a great length in affecting a copartnership by means of what is done with another firm, having, with the former, a common member; and when such common member had agreed with the drawer of a bill that his last named firm should pay it, and, acting for such firm, had received securities out of which funds were realized for the purpose, it was held that his other firm, being holders of the bill, could not recover of the acceptor. As to him the bill was satisfied, and he could not, by unitingwith Ms partners in the last named firm, maintain the action, although not a dollar had come to their hands, and although the other partners were ignorant of the arrangement. In some respects that case resembles the present. The firm of Englis & Brown cannot divest themselves of the consequences of Brown’s knowledge that the repairs they were making were done for Ms benefit, and in performance of his express undertaking to do them himself, and, therefore, as before, when compelled to come into equity, the equities existing between Furniss and Brown can only be overcome by showing a higher equity in favor of Englis. So far as Ms claim rests upon Brown’s equity, he must fail. He cannot, therefore, in my judgment, maintain the action upon any ground, unless he shows that upon a settlement with Brown this money is necessary to the adjustment of their accounts.

I do not, in this view of the subject, mean to exclude the idea that where a partner in the one firm, by his dealings with another firm, in which he is also a member, has diverted partnership property in such wise as to amount not only to a withdrawal of capital, but to a contravention of the copartnership articles, the injured partner may not have a bill to compel its restoration for the purposes of the trade, or that a court of eqrnty will not in general treat the assets of a firm as a

Another view of the subject seems to me to present a like obstacle of the plaintiff’s recovery. Furniss, by force of the covenant of Brown to make the repairs himself, and in virtue of the advances made to Brown, which render it inequitable that he should be required to pay the money, has become entitled in equity to every defence which Brown himself could make to an action by Englis to recover for those repairs, and Brown, by uniting with Englis in the action, could not deprive him of this right; and what Brown could not do directly, he cannot accomplish indirectly by an assignment to Englis upon which he may sue alone. Suppose, then, Englis had filed this complaint against Brown and Furniss, without avowing any assignment by Brown to himself, it seems to me clear that Furniss, upon showing Brown’s agreement to make the repair's, and that he had paid or advanced to Brown moneys sufficient, and more than sufficient, upon a due accounting between them, to cover this claim, might successfully insist that until Englis established a right to compel Brown to restore the money for the protection of his equities as a copartner, he cannot recover. Furniss, under such circumstances, cannot in equity be compelled to pay this money to be enjoyed by Brown in common with Englis, and, as the case may be, to come into Brown’s pocket in the division of profits between them; and, as before suggested, Brown’s assignment to Englis does not drive Furniss from this position.

If it be suggested that Furniss has his remedy over against Brown, the answer is obvious ; a court of equity will not,

These views do not conflict with the rule that one partner may not pay his own debt with the property of his firm, or that he may not release a debt due to his firm in consideration of a benefit derived to himself alone, or that an individual debt of a partner cannot be set off against a copartnership claim; and there are other cases, no doubt, in which a firm, standing in a court of law upon their joint title, cannot be defeated by the transactions of one of the partners in his private dealings.

But when the firm are compelled to come into a court of equity to assert the copartnership title, that tribunal will take care that in recognizing the joint title of the firm, and enforcing it against the act of one of the members, no injustice is done; and where such member is insolvent, will not take money from a third person which such member ought to pay, unless protection of the rights of the other partners makes it necessary.

In the present case, stating it most strongly in the plain

Nothing in the case impeaches the good faith of Furniss in this matter. Brown was engaged in ship-building on his own account. In the department of repairing, Englis was his partner; and, doubtless, Englis was entitled to claim from Brown and Furniss that the bill for repairs be regarded as' copartnership assets. But the circumstance that the repairs were so done, does not warrant any imputation upon Furniss of collusion with Brown to appropriate the firm property to Brown’s private purposes. Even if he is to be deemed chargeable with notice of Brown’s partnership with Englis in the business of repairing, he has reason to believe that what was done was done under Brown’s covenant with him; and it is not bad faith on his part that he assumed that Brown caused these repairs to be made upon his own responsibility to Englis, and upon a full understanding with him on the subject.

Had Brown, when he agreed to make these repairs, had no interest in the ship, but having made a contract to repair the vessel upon terms agreed upon, had taken her into his own possession for that purpose, and the repairs had been made by himself and Englis, the right of Englis & Brown, as partners, to recover for such repairs, notwithstanding advances made by Furniss to Brown in good, faith, and in reliance upon such covenant, would not have been free from doubt. Audit appears, that although Furniss’ advances were not in terms applicable to this one vessel, they were made in reliance upon Brown’s two agreements—only one of which was in any sense performed—and Furniss is clearly, I think, entitled to the benefit of them as an advance upon that relating to the Rhode Island, for it was made in reliance on that agreement, though not solely on that agreement. But I do not pursue

. The precise grounds upon which the decision of the referee was based, do not appear by his report. His conclusion of law is given in sweeping terms, without informing us of the particular conclusions from which his result was derived. But, for the reasons above stated, I think his decision was correct, and should be sustained by an affirmance of the judgment.

Judgment affirmed.