Morrison v. Van Benthuysen — 3 N.Y. St. Rep. 687

Majority

p. 687

Alexander C. Morrison, Resp’t, v. John Van Benthuysen et al., App’lts.

(Court of Appeals,

Filed November 23, 1886.)

Headnote

Practice—Compulsory reference—When not permitted.

Plaintiff’s assignor "bought upon an execution against G-. his individual interest in the firm property of T. & II., of which lirm G. was a member. Thereafter upon a sale upon executions, upon judgments against the lirm, the firm property was sold to W. for a sum less than sufficient to pay the firm debts. The complaint sought to set aside the sale as fraudulent and asked tliattlie vendee account for the use of the property and its value, and that his judgments he satisfied out of such assets, and that the balance bo paid to plain'.iff, who claim :d to be entitled thereto under an execution sale of one partner’s interest in the 1 rm; the complaint also asked that a receiver he appointed to sell the property and give the plaintiff two-thirds thereof, that being the proportion of the capital represented by the interest which the plaintiff had acquired ; a partnership accounting was not asked for, nor was the sole surviving partner made a party. Seld, that the only accounting requisite or sought was as to the value of the property fraudulently sold, the value of its use, and, possibly, the insurance received on part thereof which had been destroyed by firé, that these are purely items of damage and involve no long account, and that therefore the action did not permit of a compulsory reference.

N. Q. Moalc with Messrs. Doyle & Fitts, for app’lts; E. F. Bmxird, for resp’t.

This appeal involves a question of power to order a compulsory reference. The special term made such order, hut the general term reversed it, holding that no power existed to grant it. The action was an equitable one. The complaint, in substance, alleged that the assignor of the plaintiff became the owner through an execution sale of the interest of one Thompson in the partnership property of Thompson & Howocks, and so entitled to ascertain and recover that interest; that, upon judgments and executions against the partnership property, the whole of it was sold to George Warhurst at a price very far below its actual value; that the sacrifice was occasioned by the fraudulent conduct of Warhurst in preventing purchasers from bidding by a false representation of a chattel mortgage incumbrance, and a direct bargain with another judgment creditor not to bid; that Warhurst transferred the property purchased to the defendants, Jane Van Benthuysen and Annie Howocks, by a conveyance made without consideration, and with a fraudulent intent; that Warhurst is dead, and the defendant Nuttall is bis executor, and Thompson went into bankruptcy, and all his rights passed to the defendant Hicks, as assignee; that Howocks, by a compromise arrangement, had satisfied all the debts of the firm; and that Warhurst and his fraudulent vendees had used some of the property purchased, had sold some, and collected insurance money upon a portion destroyed

p. 688

by fire. The relief asked is that the sale to Warhurst be set aside; that bis estate and his fraudulent vendees account for the use of the property, and its value; that the Warhurst judgments be satisfied out of those assets, and the balance be paid to plaintiff and Thompson’s assignee; and that a receiver be appointed to sell the property, and give to the plaintiff two-tliirds of it, that having been Thompson’s proportion of the capital.

To this action Howocks, one member of the firm, and the sole surviving partner, is not a party. No accounting of the partnership .assets is asked for on either side, and none can be had in his absence. It is not for us to conjecture how the plaintiff’s action can be maintained without -making Howocks a party. ' If it can be, it will be because no partnership accounting is required. If it cannot be, the plaintiff may be obliged to amend his complaint, and bring in Howocks” as a party, and then, for the first time, such an accounting will become possible and necessary. But as the case stands, the only accounting requisite or sought is to ascertain the value of the property fraudulently sold, the value of the use, and, possibly, the amount of insurance realized. These are purely items of damage and involve no accounting. Camp v. Ingersoll, 86 N. Y., 433 .

The theory of the plaintiff is that he will be entitled to the whole or two-thirds of such aggregate values. He, perhaps, may seek to uphold that theory by the contention that the sale, though void as to plaintiff, is good as to Howocks, who does not repudiate it, and so has lost all interest in the question, or in the fruits of the litigation; or upon some other ground, as yet undisclosed. But, whatever else may be true about the case, it seems entirely certain that there can be no receivership of the partnership assets, and no administration and settlement of its affairs, in an action to which the sole surviving partner is not a party. It follows that no long account was involved in the action, and that the decision of the general term was correct.

The order appealed from should be affirmed, with costs.

All concur. _