Weston v. Watts — 29 N.Y. St. Rep. 289

Majority

p. 289

Walter Weston et al., Resp’ts, v. James R. Watts, App’lt.

(Supreme Court, General Term, First Department,

Filed January 24, 1890.)

Headnote

Partnership—When delivery of funds to liquidating partner will NOT BE ORDERED.

The plaintiffs and defendant were partners until December 31,1684. In October, 1885, plaintiffs sued defendant, who had been appointed to close up affairs, for an accounting. This action has not proceeded to judgment.

p. 290

It appeared, however, in that action that most of the firm debts were paid. But it was disputed as to whether plaintiffs were indebted to the firm or' not. They alleged that defendant was indebted to the firm; also, that he had failed to pay firm debts. One of the plaintiffs alleged that the firm was largely indebted to him, and this after all 1 rm debts had been paid or provided for. Held, that upon such a conflict of rights and of facts, the defendant, although the liquidating partner, was not entitled to an order directing the plaintiffs to pay over to him moneys of the firm in their hands, so that defendant, as alleged, might pay firm debts. Section 717, Code Civ. Pro., has no application to such a state of facts.

Appeal from an order made by Mr. Justice Barrett, denying defendant’s motion to require one of the plaintiffs, Walter Weston, to forthwith pay to the defendant, James R. Watts, the sum of $16,531.19.

The motion was denied on defendant’s papers, consisting of the pleadings in a suit against defendant for an accounting, the affidavit of the defendant that the action had been tried, and the affidavit of Peter J. Loughlin, the stenographer, at the trial, as to part of the testimony of the plaintiff, Walter Weston.

From these papers it appeared that plaintiffs and defendants formed a partnership January 1, 1884, which expired December 81, 1884, under the name of Weston Brothers & Watts.

That in October, 1885, plaintiffs sued defendant for an accounting as to the affairs of said copartnership. That the issue raised by the pleadings in said action involved the question as to whether defendant denied plaintiffs access to the partnership books and papers.

Defendant alleged, also, that he was to liquidate the firm debts, but these debts were nearly all paid except a contingent liability for rent, and the sum, if any, due by the firm to the plaintiffs. That plaintiffs also, had paid claims of creditors of the firm.

Defendant pleads also a separate defense to the effect that it was agreed between plaintiffs and defendants that defendant “ should not be called upon for an adjustment of the affairs of said firm ” until March, 1886. And that, for this reason, the accounting suit was premature.

It further appears that this accounting suit was brought to trial in July, 1887, and that on the trial the plaintiff, Walter Weston, testified that the firm money belonging to the firm of Weston Brothers & Watts was kept by defendant in a bank in Jersey City, in the firm name. And that plaintiff, one of the partners, drew out $25,000 belonging to the firm, and that defendant afterwards called on plaintiff to return $6,392.81 of that sum to pay debts of the firm. And that the debts to that amount plaintiff paid.

The pleadings show, also, that defendant had overdrawn his account, and was in debt to the firm.

Defendant then, on this motion, says of the $25,000 belonging to the firm and drawn out by plaintiff, no part has been paid to defendant, except $3,467.81, leaving in plaintiff’s hands a balance of $16,532.19.

That defendant asked the plaintiff, Walter Weston, to pay this money over to defendant, but plaintiff refused.

On this state of facts the defendant makes a motion asking

p. 291

the court to compel the plaintiff, one partner, to forthwith pay to defendant, another partner, §16,532.19, of firm assets. And this, notwithstanding the fact that the parties have never accounted; that the firm is indebted to the plaintiff, Walter Weston, and that defendant, James E. Watts, is indebted to the firm. The defendant makes his motion upon the assumption that he is entitled to the firm moneys as liquidating partner, and he wants the money to pay the firm debts. But the moving papers show that the firm debts have all but a small sum been paid, and that plaintiff paid them.

The moving papers do not show what judgment was rendered in said action, or whether said action was ever concluded, or what •other testimony was given in said action.

A. 0. Shenstone, for app’lt; M. J. Keogh, for resp’ts.

The statements of facts adopted as a correct exposition of the elements of the motion is a complete answer to the application to which it relates. The defendant, although designated to liquidate the affairs of the firm, does not appear to have done so, and was called upon to account in this action, and whether prematurely or not is of no consequence so far as the application for the $25,000, or the balance of it on hand, is •concerned.

This court has jurisdiction over the whole subject, and whether the respondent Weston was debtor to the firm or to firm creditors would necessarily appear by the judgment to be rendered herein. So far as the motion papers disclose anything upon that subject it is quite clear that the respondent is not a debtor to the firm, but a creditor, and that the appellant is debtor to the firm. The appellant supposes that having been selected to liquidate the affairs of the firm, he is entitled to the money received and deposited by him, whether the firm owes the amount of it or not, and whether the plaintiff Weston is entitled to it or not and whether he (the defendant) is a debtor to the firm or not. Section 717 of the Oode does not embrace or provide for an application such as made herein under the facts revealed, nor do any of the authorities referred to by the appellant

The moneys in dispute are those of the firm, not of the defendant, and assuming that the plaintiff Weston did not get them properly, strictly construing the agreement as to liquidation, nevertheless it might appear on the accounting absolutely as it does now, prima facie, that they did, in fact, belong to the plaintiffs. It should be said, further, that although the moneys were taken from the custody of the defendant, and for aught that appears by the consent of the pther partner, the respondent Weston seems to have paid, when called upon by the appellant, whatever sums were necessary to accomplish the liquidation. Indeed, the infirmity of the motion is so apparent that an apology would seem to be demanded for this elaboration of it.

Order appealed from affirmed, with ten dollars costs and disbursements of the appeal.

Van Brunt, P. J., and Daniels, J., concur.