Smith v. Smith — 17 N.Y. St. Rep. 1006

Majority

p. 1006

Cassius M. Smith, Resp’t, v. Flora A. Smith, impleaded, etc., App’lt.

(Supreme Court, General Term,, Second Department,

Filed June 25, 1888.)

Headnote

1. Pabtnebship—Accounting—Evidence—Effect of.

In an action for partition of an estate it appeared that plaintiff and Edwin, another • heir, were partners in a skating rink, each having invested $3,500 therein, plaintiff paying $1,500 of Edwin’s share and taking a mortgage from Edwin on his interest in the estate. Afterward Edwin gave plaintiff a hill of sale of the rink in consideration of plaintiff’s paying the debts amounting to $552.34, the property having greatly depreciated in value. An oral contract was proved whereby Edwin agreed to “ sink $1,800” and let plaintiff take the rink: Held, that this did not limit Edwin’s loss to that amount, nor extinguish the mortgage given by Edwin to plaintiff.

2. Same—Application of payment.

Plaintiff held a mortgage on the interest of Edwin, his partner, he being a co-heir and a party defendant in an action for partition. The evidence showed that plaintiff and Edwin owned a skating rink as partners; that plaintiff paid the firm debts, amounting to much less than the value of the rink, and that Edwin gave plaintiff a bill of sale of the rink without further consideration, intending to defeat the claim of Plora, a co-defendant, against Edwin. Subsequently Flora reduced her claim to judgments and plaintiff subsequently sold the rink for its full value: Held, that after deducting from the proceeds the amount of debts paid by plaintiff, one-half of the remainder should be applied to plaintiff’s mortgage, thus reducing it in favor of Flora’s judgments as against Edwin’s interest in the estate.

Appeal from a judgment of the circuit court of Dutchess county.

Plaintiff brought the action for partition of an estate against defendant, impleaded with others. Edwin H.

p. 1007

Smith, one of the heirs and party defendant, was a partner with plaintiff in a skating rink, each having invested therein $3,500, plaintiff paying $1,500 of Edwin’s share, and to secure which Edwin gave plaintiff a mortgage on his interest in the estate. The defendant Flora, who was a divorced wife of Edwin, subsequently obtained judgments against him. On the trial at circuit tire court found the following facts, viz.: That the mortgage to plaintiff was given for a good consideration; that the rink property having greatly depreciated in value, Edwin sold his interest to his brother, the plaintiff; that the plaintiff agreed to pay the debts and did so, amounting to $552.34; that the sale was not based on any actual or equal consideration other than this, and that it was made with the intent to interpose a title between the property and claim of Flora, Edwin’s wife, which was not then reduced to judgment; that the rink was then worth $2,000 and no more, and that plaintiff subsequently sold it for that amount. The evidence on the part of plaintiff showed that at the time of the negotiations for the dissolution of the partnership with Edwin in the rink business plaintiff said to Edwin: “I will sink $1,800, and you take the rink and pay what it has run behind, * * * or I will take it and you sink $1,800;” that Edwin replied he had “no money to pay the deficiency, so he would have to give plaintiff a bill of sale.” The judgment of the circuit court was that after deducting the back debts on the rink, $552.34 paid by plaintiff, Edwin was entitled to one-half of the remainder of the proceeds, which should be credited on plaintiff’s mortgage; that plaintiff’s mortgage was a hen on Edwin’s interest in the estate only for the remainder after such credit, and that all over that sum realized on the sale of Edwin’s interest should go towards the payment of Flora’s judgments.

The appeal is by Flora, she contending that the transfer by Edwin of his interest to plaintiff extinguished the mortgage given to the latter.

Herrick & Lorey, for app’lt; William R. Woodin, for resp’t.

When this case was before us at a former general term, 12 ¡N". T. State Rep., 867, we granted a new trial because it seemed to us that Cassius had obtained Edwin’s interest in the rink property substantially without consideration, where it ought to have been subjected to the payment of Flora’s judgments. The court on the new trial has proceeded on this theory. It has found on sufficient evidence that the value of the entire rink property owned by the two was $2,000, and that they, as partners, owed $552,34, which Cassius agreed to pay, and has paid. That

p. 1008

left $1,447,66 as the net value of the rink property, which Cassius obtained under the bill of sale from Edwin, and that sale did Flora, as Edwin’s judgment-creditor, a wrong to the extent of his interest in this $1,447,66, which was one-half thereof, $723,63. The court has now credited this sum ($723,63), the mortgage held by Casssius against Edwin’s interest in the lands sought to be partitioned and reduced the lien thereof accordingly. This seems to us correct.

We do not apply the oral understanding to the facts of the case as Flora’s counsel contends. He urges that $1,800 was to be the extent of Edwin’s loss, according to the oral bargain between him and Cassius. But the facts were that the rink had cost $7,000, that is to say, $3,500 each. But Cassius had paid or become liable for $1,500 of the $3,500 which Edwin put in, hence, Edwin’s contribution to the rink was $2,000 over and above this $1,500. But the entire property had dwindled in value to about $2,000, besides which were these debts of $552,34. Hence, if Cassius took the property Edwin would sink the $2,000 which he put in. Just how they figured his loss at $1,800, is a matter which we do not clearly see; but it seems to us tolerably plain that it referred in some way to the loss which each was to suffer on their actual contributions, and was not the limit of Edwin’s loss if Cassius took the rink.

On the whole, we think that substantial justice has been done, and that quite independent of the reception of the testimony to which Flora excepted.

These views lead to an affirmance of the judgment.

The costs of this appeal are in the discretion of the court and the circumstances will doubtless justify us in charging Flora with them; but in view of the particular relations of the parties, we think that it will be fair to excuse her from those costs, if she shall consent to accept this decision, but if she refuses so to do she should be adjudged to pay them.

Dykman, J., concurs; Barnard, P. J., not sitting.