Tennant v. Guy — 19 N.Y. St. Rep. 667

Majority

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Albert C. Tennant, as Receiver, Resp’t. v. George E. Guy et al., App’lts.

(Supreme Court, General Term, Fourth Department,

Filed July, 1888)

Headnote

1. Evidence—Pleadings in other actions than one at trial competent SO EAR AS CONTAINING ADMISSIONS.

This action was brought for an accounting by the defendants with the plaintiff as a receiver of and successor to the right and interest of a member of a co-partnership. The co-partnership was composed of three partners, one of whom,to whom the plaintiff succeeds in interest, was to furnish the capital necessary for the business, the others to contribute their services and the use of the plant for the business. These latter were to receive a certain yearly compensation, after the reduction of which the remainder of the profits were to be equally divided, all losses to be borne equally. At the expiration of the co-partnership the use of the plant was to revert to the partners who had furnished it and the capital to be repaid to the party furnishing it. The partnership was subsequently dissolved by the insolvency and general assignment of one of the partners. On the trial a witness testified that the partner represented by the plaintiff furnished a certain capital for the business. The defendants then offered to prove by the witness that a certain portion of the capital was obtained upon a note made by the other partners at the request of the partner who furnished the capital, and upon his promise to pay the note when due or to repay the amount thereof. This evidence was objected to as incompetent and improper, also on the ground that the amount had been alleged by the defendant in another action, and that it was admitted by their pleadings in this action, and was excluded. Held, that the answer of these defendants in another case was proper in so far as it contained an admission on the part of the defendants, but was not conclusive

2. Pleadings—Allegations of—Omission to deny—"When not equivaLENT TO SPECIFIC ADMISSION.

The complaint alleged that the partner in question put into the business about a certain sum, and this allegation was not denied by the answer. Held, that the allegation was indefinite and that the omission to deny it was not an admission that the sum proven on the trial was put into the business.

S. Evidence—Materiality of.

Held, that the evidence was competent, that the burden was upon the plaintiff to establish the amount actually advanced and that the defendants were not concluded by proof given by the plaintiff.

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4. Accounting—Between nabtnebs—Impnopen change.

Held, that the plant was never the property of the Co-partnership, hut was by the terms of the agreement to revert to the defendants on the dissolution of the firm and that they could not be charged with the rent of it subsequent to the dissolution.

This is an appeal from a judgment against the appellants for $1,011.55, entered in Otsego county October 11, 1887, upon the report of a referee.

C. L. Barber, for app’lts; Brooks & Tucker, for resp’t.

This was an action for an accounting by the defendants with the plaintiff as a receiver of, and successor to, the rights and interest of Walter E. Mitchell, as a member of the firm of Guy, Eollett & Co. A co-partnership was formed December 5, 1882, between George E. Guy, Delos Follett and Walter E~ Mitchell, to carry on the business of milling and dealing in flour, feed and grain, under the firm name of Guy, Follett & Co. Mitchell was to furnish all the capital needed for the business, and Guy and Follett were to contribute their services and the use of a mill and fixtures. The mill was owned by Guy and one J. C. Follett, who was not a defendant in this action. Guy and Follett were each to receive $200 per year out of the profits, and the remainder of the profits were to be divided equally between the three. All losses were to be borne equally. At the expiration of the co-partnership the use of the mill and fixtures were to revert to Guy and Follett, and the capital furnished by Mitchell was to be repaid to him. The partnership continued until December 9, 1884, when it was dissolved by the insolvency and general assignment of Mitchell.

On the trial, Follett testified that Mitchell put into the business of the firm $7,478. The defendants then offered to prove by him that $2,000 of the sum so put in was obtained upon a note made by Guy and Follett at Mitchell’s request, and upon his promise to pay the note when due, or repay the amount to Guy and Follett. This evidence was objected to and excluded, to which ruling the defendants duly excepted. The offer was, in effect, to prove that Mitchell did not contribute to the capital of the firm $7,478, but only $5,478. This evidence was objected to on the grounds (1) that it was incompetent and improper; (2) that in another action the defendants had alleged that Mitchell had put in $7,478; (3) that it was admitted by the pleadings in this action that he had put in that sum. Surely the proof offered was competent and proper, if within the pleadings. While the answer in another case was perhaps proper evidence against the defendants as an admission, it was not conclusive, and the objection was not valid. The

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complaint in this action alleged that Mitchell put in about $8,000. This allegation was not denied. Hence, the question is whether the omission to deny this allegation was an admission that Mitchell put in $7,478. We think it was not; the allegation was too indefinite. The plaintiff would not have been entitled under the complaint to a finding that any particular sum was contributed by Mitchell, without proof of the amount. Thompson v. Lumley, 7 Daly, 74 .

Thus, the burden being upon the plaintiff to establish the amount advanced, the defendants were not concluded by the proof given by the plaintiff. They had .the right to show the true amount, as they had expressly denied the allegation in the complaint that there was due Mitchell several thousand dollars.

Moreover, the undisputed evidence was that the $2,000 note referred to was given for money that was used in the business of the firm, and also that it was given for the benefit of Mitchell. If for his benefit, presumably, it was a part of the $7,478 furnished by him, as the proof is that he furnished only that sum. This note was paid from the assets of the firm after Mitchell’s failure and the consequent dissolution of the co-partnership ; and hence, the actual capital furnished by Mitchell was only $5,478. The learned referee credited the plaintiff with $7,478 for capital furnished by Mitchell. In this, we think, he erred. While the evidence upon this question is not as full and satisfactory as might be desired, still the plaintiff cannot complain, as the proof which would have made it more clear, was rejected upon his objection. We, however, regard the evidence as sufficient to show that the capital furnished by 'Mitchell was $5,478, and not the amount allowed by the referee.

Nor do we understand upon what principle the referee could properly charge the defendants with the rent of the mill for more than two years and a half after Mitchéll became insolvent and the co-partnership had become dissolved. The mill was never the property of this firm. By the agreement it was to l’evert to Guy and Follett when the co-partnership was ended. The only property the firm had on hand at the time of its dissolution was stock of the value of twenty-two or twenty-three hundred dollars, and accounts and debts owing the firm to the amount of $6,591 to $6,691. A proper discharge of the defendants’ duties, as the remaining members of the dismembered firm, would' have been discharged by a fair disposal of the stock and property on hand, a faithful effort to collect the debts owing such firm, and- a proper disposition of the proceeds of such sales and collections. While it might have been proper to charge them with interest upon the value of the

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assets and property of the, firm which came into theiir hands, we can discover no principle upon which they can be charged with rent for the use of property which never belonged to the firm, especially as they ceased to occupy it within four months after Mitchell’s failure. We think the learned referee ei’red in allowing such rent.

For the errors pointed out, we think the judgment appealed from should be reversed. Judgment reversed on the exceptions, and a new trial granted, with costs to abide-the event, before another referee.

Hardin, P. J., and Follett, J., concur.