Middleton v. Twombly — 35 N.Y. St. Rep. 856

Majority

p. 856

John Middleton, App’lt, v. Horatio N. Twombly, Ex’r, et al., Resp’ts.^[1]

(Court of Appeals,

Filed February 24, 1891.)

Headnote

1. Money had and received—Limitation of action.

Between 1861 and 1865 plaintiff consigned goods to F., defendants’ testator, the latter to pay expenses and remit half the net proceeds. Previous, to 1865 F. sold the goods, etc., and remitted plaintiff his share of the proceeds, but subsequently F. received from insurance companies, in which the goods had been insured, dividends declared in favor of policyholders for business done with them, of which fact he did not inform plaintiff, and the latter became aware thereof only after F.’s death in 1887. Held, that the obligation and cause of action accrued against F. the moment the money was received; that he was under a legal obligation to remit; that no demand was necessary, and that the action was barred by the statute.

3. Same.

As to moneys received by F. for other goods sold on commission, and the proceeds remitted under a similar arrangement, he did not act as a "foreign factor,” and no demand was necessary to set the statute running ■ as to insurance moneys paid him in the same way.

Appeal from judgment of the New York superior court, general term, affirming an order setting aside a verdict in favor of plaintiff and directing a new trial.

Carlisle Norwood, Jr., for app’lt; Joseph W. Howe, for resp’ts.

The causes of action in this case arose at several periods between the dates of 1864 and February 8, 1867, upon the receipt by the defendants’ testator of the plaintiff’s moneys. • The action was commenced in January, 1889, and the sole defense is the statute of limitations. It follows, necessarily, that the causes of action were outlawed. It is conceded by the defendants that if their testator was under a legal obligation to remit the funds in his hands belonging to the plaintiff, the action is barred; but they contend that no such duty lay upon the testator until after instructions to remit, or a demand. The principal cause of action arose out of the following state of facts. The plaintiff was a • merchant, residing and doing business in China, and defendants’ testator resided in New York and did business there as a* commission merchant Between January 1, 1861, and January 1, 1865, the plaintiff bought goods in China and consigned them to the defendants’ testator in New York, under an agreement that the consignee should sell said goods and from the proceeds pay the cost of the goods with all expenses of freight, insurance and such others as might be incidental to the transaction of the business, and share equally the net profits and losses of the several adventures with the plaintiff. Previous to January 1, 1865, the consignee had sold all of the goods consigned to him, collected the proceeds, rendered statements of the sale of such goods, the amount of the expenses, and remitted to the plaintiff the share of the proceeds belonging to him. The insurance companies in which such goods had been insured by the defendants’ testator subsequently declared dividends in favor of their policy holders for business done with them during the years 1862, 1868, 1864 and 1865, and paid over the amount of such ■dividends to such testator. Such dividends were received by the ■consignee, but he never reported their receipt to the plaintiff or paid over to him any part thereof. The plaintiff was ignorant, not only of the fact that the partnership was entitled to such dividends, but also that they had been paid to one of its members, until the year 1888.

It cannot be questioned but that these dividends, were the legitimate proceeds of the goods consigned by the plaintiff to his partner, and assets of the firm distributable like all other assets to its respective members. Through inadvertence or mistake, the defendants’ testator, when rendering his final account of the transactions of the firm to the plaintiff, had omitted to mention these assets, but when they were paid to him the error or omission in the final account was demonstrated, and it became liable to be opened at the suit of the plaintiff and its mistakes and omissions corrected. The defendants’ testator had the right to retain one-half of these moneys, but the other half did not belong to him, -and he had reason to believe that the plaintiff did not know that they were due the firm or were in the defendants’ hands. It was the plain duty of the defendants to remit them to the plaintiff -Aside from these unexpected assets, the affairs of the concern had

p. 858

all been settled up and the relations of partnership existing between the consignor and consignee dissolved.

The ^ defendants’ testator had an undoubted right to receive these dividends as a member of the partnership firm, and, according to the usual course of business, it was his duty, from time to time, as he received' them to remit the share of such dividends belonging to the plaintiff to him under the partnership agreement. Mills y. Mills, 115 N. Y., 80 ; 23 N. Y. State Rep., 604. All liabilities of the firm had then been discharged, the assets of the firm had been collected, and consisted of moneys in the hands of the defendants’ testator, and there was nothing remaining to be done, as to partnership accounts, except the distribution "of this asset so unexpectedly recovered. It is a general rule that an action at law cannot be maintained by partners respecting partnership transactions; but this rule does not apply to actions brought upon express or implied promises in relation to special transactions, or where a balance has been declared or the action does not involve an accounting of the partnership transactions. Howard v. France, 43 N. Y., 593 ; Crater v. Bininger, 45 id., 545.

The right of the plaintiff to recover this asset is based upon the obligations of the partnership agreement and a promise to be implied from the circumstances of the case to pay it. The dissolution of the firm leaving this asset unaccounted for under the circumstances worked no bar to an action by the plaintiff to recover it It is entirely immaterial whether the action brought is for an accounting as to the particular asset or an action for money had and received or upon an implied trust; the rule of limitation applicable thereto in the absence of special circumstances not appearing in this case is that of six years. Roberts v. Ely, 113 N. Y., 128 ; 22 N. Y. State Rep., 185. Sections 74, 89 and 91 of the Code of Procedure contain the rule governing this case, as the Code of Civil Procedure was not enacted until long after the time for the commencement of an action to recover this demand had expired, and was expressly exempted from the operation of § 410 by § 414 of the Code of Civil Procedure. That rule requires that an action “ upon a contract obligation or liability, express or implied,” shall be commenced within six years after the cause of action accrues. § 91, Code of Pro.

The second cause of action stated in the complaint stands upon a slightly different footing, but we think that this also is barred by the statute of limitations. In the business out of which this cause of action arose the defendants’ testator • acted as a factor to sell and dispose of the plaintiff’s goods and remit the proceeds less a commission for his services and the expenses of the business. Insurances similar to those effected on other consignments were obtained by the consignee and dividends on such policies were declared by the insurance companies and paid to the consignee after he had disposed of the goods and remitted the proceeds, less his commission, insurance and other expenses to the plaintiff. The whole of these dividends, ex aequo el bono, belonged to the plaintiff and it was the factor’s plain duty to remit them to him when they were received.

p. 859

It is claimed, that the defendants’ testator received these dividends as a foreign factor, and could not be made liable for them until after demand. This is undoubtedly the general rule, but when from the usual course of business, or special contract and instructions, a different practice has been pursued, it is the duty of the consignee to remit without waiting for demand. Cooley v. Belts, 24 Wend., 203 ; Brink v. Dolsen, 8 Barb., 338 . In this case the consignee had remitted the proceeds of the several consignments previously received by him, and it was supposed by the plaintiff that the transaction was closed, but, by an unexpected chance, the consignee recovered back some of the expenses which he had been obliged to pay out for the plaintiff, and these sums having been allowed by him, it was the defendants’ testator’s manifest duty to rectify the mistake which then appeared to have been made in his account by remitting, as he had theretofore done, the sums thus received to the plaintiff. We do not think the circumstances of this case required a demand before suit brought, as the cause of action accrued upon the receipt of the money by the consignee and his failure to remit. Baker v. Exchange Bank, 100 N. Y., 31 .

The order of the general term should be affirmed, and judgment absolute ordered for the defendants on the stipulation, with costs.

All concur.