Attwater v. Fowler — 1 N.Y. Super. Ct. 180

Majority

p. 180

Russell Attwater versus Theodosius Fowler.

August Term, 1828.

Headnote

An action fbr money had and received, brought by a partner in a particular transaction against his co-partner, cannot be sustained, unless there has been a settlement of their joint affairs, and a balance struck, although there may have been a complete termination of the partnership.

Therefore, where A. Sr F. were jointly interested in a purchase of stock in the old bank of the United States, and upon a termination of their speculation, F. wrote to A., enclosed him a copy of his account, exhibiting a balance against A., and informed him that he (A.) would be entitled to receive thereafter “ whatever re“sidue there might be on twenty-nine shares of said bank stock;’’ but which “ residue,” consisting of dividends on the shares, was afterwards received by F. himself: It was held, that he was not liable to account to A. for such dividends, in an action for money had and received. The remedy in such cases, it seems, is to be sought in a court of equity.

This was an action of assumpsit for money had and received. The defendant pleaded the general issue, and gave notice of a set-off. The cause was tried before Mr. Justice Hoffman, on the 11th day of June, 1828.

At the trial the plaintiff gave in evidence the following agreement between the parties ; and the following letter from the defendant to the plaintiff, viz:

“ Memorandum of an agreement made this 28th March, 1812, “ between Theodosius Fowler, of Nexv-York, of the first part, and “ Russell Attwater, of St. Lawrence county, of the second part:— “ Whereas the party of the first part has lately purchased United States Bank stock, at a price less than par, and agrees to make “ such further purchases of the said stock of the late United States “ Bank, as shall be within his power, when offered to be had, at “ a price he shall think advantageous: And the said party of the ‘ second part, being entitled to subscribe for shares in the new “ stock of the Bank of America, about to be incorporated, “ which he engages he will do, to any number of shares he shall “ be able to obtain : It is now agreed and understood between “ the said parties, that the purchasers of said stock made by 11 the party of the first part, as well as the slock so subscribe

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“ ed for by the said party of the second part, shall be for the joint “ interest and benefit of both parties to this agreement, and they “ are to share equally in the profit or loss that may arise out of said u business ; each party to charge interest on all money advanced, “ but not for services done. In performance of this agreement ££ the parties bind themselves each to the other.

“ Russell Attwater,

“ Theod. Fowler.”

“ New-York, 26 June, 1812.

“ Dear Sir,

“ I have received your two letters, one dated at N. York, and the “ other on 20th inst. at Albany. Since you left this our govern- “ ment has declared war against Great-Britain, which has had “ a wonderful effect on all banking institutions; so much so, that “ all the banks of this city are at par, or thereabouts. The “ Union Bank of this city is 5 per cent, under par. In this situa- “ tion I have thought it most prudent for your and my interest, " not to subscribe to the 6 million S.; and it has been a fortunate “ thing, so far, that I did not purchase any more of the U. S. Bank <£ stock.

“ At foot you will see the statement of our accounts up to the 1st ££ inst., agreeable to your contract; the balance being $3,547,%%, ££ At the same time you are entitled to receive whatever the resi- “ due may be on twenty-nine shares of U. S. Bank stock.

“ The above balance of $3,547,%%, is due me from the 1st inst., and I will thank you to make provision for the payment “ as soon as possible. At all events, as times are, it is best for ££ both of us to have an immediate settlement.

(Signed) “ Theod. Fowler,”

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Russell Rttvjater,

To Theod. Fowler Dr.

1811.

27 Dec. 20 United States Bank shares, at 97J per cent. - - - - $7801 00

Interest 27th Dec. to 1st June, 5 months and 5 days, - - - 235 08

8 United States Bank shares, at 97í per cent. - - . - - 3104 00

Interest 27th Dec. to 1st June, 5 months and 5 days, - - - 93 54

1812.

29 Jan. 30 United States Bank Shares, at 98¡, ------ 11820 00

Interest to 1st June, 4 months and 3 days, ------- 282 69

23335 31

Deduct half for T. F., 11667 65|

Or. hy 70 per cent, rec’d on 29 shares, is 8120 00

Balance due 1st June, 1812, to T. Fowler from Russell

Attwater, - -- -- -- -- - - - - - 3547 65¡

Theod. Fowler.

The plaintiff then offered the depositions of Joseph Roberts, cashier for the trustees of- the late Bank of the United States, and of W. M. Walmsley, a broker residing in Philadelphia, for the purpose of proving, that certain dividends on the shares of the stock of said bank had been declared, and that the defendant received the amount paid on the 29 shares mentioned in said letter, over and above the 70 per cent, credited in the account.

These depositions were objected to by the counsel for the defendant as inadmissible: and if admissible, as insufficient to establish the facts, which the plaintiff sought to prove by them.

The objections were overruled by the presiding judge, and the point reserved for the consideration of the whole court. But as the decision of the case did not turn upon these depositions, and as the court gave no opinion, either upon their sufficiency or admissibility, it has not been deemed necessary to notice them

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further. The plaintiff also called a witness to corroborate th e facts stated in the depositions, and the testimony offered by tended to prove that the defendant had received all the dividends declared on the 29 shares of stock mentioned in his letter.

The defendant then moved for a non-suit, upon two grounds: first, that this action could not be maintained by the plaintiff: secondly, that the proof offered was not sufficient to show thatmonsy had been received by the defendant. This motion was denied by the presiding judge, in order that the facts of the case being established, the questions of law might be reserved for the consideration of the whole court.

The counsel for the defendant then read,in evidence two letters from the plaintiff to the defendant, for the purpose of showing that the joint transactions between the parties, relative to the stocks mentioned in the foregoing agreement, had never been liquidated or closed. Those parts of the correspondence which bear upon this point, were as follows;

“ ffew-York, June 2d, 1825.

*•Theodacius Fowler, Esq.

“Dear Sir,”

“ By the conversation I had with you the other day, it ap- “ peared, that the business which was done by us, under the “ contract entered into on the 28th March, 18Í2, was not with- “ in your recollection, and as it may not be convenient to you to look up your papers referring to it, I have transcribed from “ those I have, such parti of them as will show you how the busi- “ ness is situated.

“Agreeable to the contract, I subscribed for two hundred “ shares in the bank of America, amounting to $20,000, which “ money I borrowed of Messrs. Prime, Ward & Sands, for one “ year; at the end of which time I borrowed the same sum of “ the bank of America, and gave them my bond, with a pledge of “ the stock, and paid Messrs. P., W. & S., with the interest, which “ was seven hundred dollars more than the dividend for that yean “ Since then, the bank kept the dividends on the stock, until Ju~ “ly, 1823, when they agreed to take the stock, give me up my

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“ bond, and discharge me.” “The above isa statement of my of the business, by which.I have paid out seven hundred “ dollars about eleven years ago, and you have received on my “ 29 shares, Sept. 12, 1812, eighteen per cent.: April 1st, 1813, “seven per cent. : April 1815, five percent.: in 1817, four per “ cent: 1820, one and three quarters per cent., and in 1823, two “ and one quarter per cent, which overpays you for the money “ advanced, namely, $3,547 66, and the interest. “ After having examined into this business, you will please to “ let me know how you are' disposed to settle it.

(Signed) Russel Attwater.

New-York, June 4. 1825.

Mr. Theod. Fmdler,

“ Sir” . -

“Yours of this day 1 have received. However absurd or “ laughable it may appear to you that I should request a settlement “ of a business commenced in 1812, and not finished even, at this “ time, is of no consequence to me. If I had not considered my “ claim legal as well as.equitable, I might not thought it worth “ my trouble to call upon you for a settlement; but as it possesses “ both, not only in my opinion, but of a gentleman well acquaint- “ ed with such transactions, (and the only one who has a know- “ ledge of it,) I might perhaps think of relinquishing it: as it is, “ you may be assured I shall not, but leave it for the public to “judge, whether it is most honourable for you to refuse a- settle- “ ment, or meto ask for one. I have good reason to believe that “ you knew that I subscribed for the bank stock ; and by our contract “ it was not contemplated that I should advance any money “ for the shares you purchased. ¥ou will understand by this, that “ I am not so modest a man as to desist from claiming my rights, “ and if you should not change your' mind, and let me hear again “ from you on this business, I'must' take some other course to . “ bring it to a close : but if you should be disposed to submit it •“ to any judicious and well-informed gentleman in businses, I “ should be pleased to abide by his opinion.

“ I shall leave town to-morrow morning for Connecticut, on business, and I expect to be absent four or five days. On my

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“ return I should be pleased to have it settled, if it is to be, amicably. That will depend on yourself.

I am yours, &c.

(Signed) <c Russell Atwater.5*1

Upon this evidence, a verdict was taken for the plaintiff for $877, subject to the opinion of the court, upon a case to be made, containing- the foregoing facts. If the court should be of opinion, that the action could not. he maintained, a judgment of non-suit was to be entered. If the action was adjudged maintainable,and the evidence sufficient, then the verdict was to stand. If the court were of opinion that the action could be maintained, ¿>ut that the evidence of the plaintiff was inadmissible, or insufficient, a new trial was to be granted.

The cause was argued by Mr, T. L. Ogden and D. B. Ogden, for the plaintiff, and by Mr. Tallcott and Mr. Jay for the defendant.

after stating the facts of the case, delivered the opinion of the court, as follows :

The objection taken by the defendant to a recovery in this cause, is, that the action is by one partner against another, in a partnership transaction, and therefore is not sustainable. The plaintiff insists that the letter of June 26th,1812, from the plaintiff to the defendant, and his acquiescence in its contents, were evidence of the mutual consent and agreement of the parties to terminate and close the joint concern, or if the contract was left open, and operations under it were merely suspended, the letter was conclusive evidence of the division by the defendant himself of the 58 shares of United States Bank stock, and a severance of the joint interest therein, and an allotment of the 29 shares to the plaintiff for his separate share, and that the plaintiff, by his silence, acquiesed in the arrangement and consented to the partition. It is also insisted, that the defendant by this operation became the trustee for the plaintiff of the 29 shares so allotted to him, but retained the same as security for the balance due from

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the plaintiff, and has received the dividends under them, insatis faction of that balance. In corroboration of this idea, it was spown Py extracts from the books of the trustees of the stockholders of the bank, that Fowler, the defendant, in May, 1812, had standing in his name 44 shares; and that on 28th September a separate power of attorney was given to receipt for twenty-nine of these shares; thus indicating, that a division had been made of the stock, and that from that time, those 29 shares were kept separate from the rest of the stock, and that it continued in his hands unsold, while the residue appears to have been u holly disposed of by him. These facts would seem to manifest an intention, on his part, to sever the common interest in the slock, and to vest in'the plaintiff exclusively "the 29 shares mentioned in the letter of June 26th, 1812, as being bis share of the stock and he entitled to receive the residue of the dividends thereon.

The" defendant denies that these acts amount to a severance of the joint interest, and insists upon the principle, that there must be a liquidated settlement of the co-partnership accounts, and a balance struck, or a balance agreed upon by the partners to entitle the one to sue the other at law; he insists, that no such liquidation and settlement appear in this case, and he puts in evidence two letters of the plaintiff, of as late a date as 1825, to show that he then claimed an account upon the principles of a continuance of the partnership. I do not attach much importance to these letters. , They admit, I think, of the explanation given of them by the plaintiff’s counsel, and at any rate, they speak after too long an interval of time to be heard with any effect; and though used against the writer, yet I think the claim they prefer, which by the last letter appears to have been repelled, was one which could not be sustained. I cannot consider those letters as any evidence of the continuance of the joint concern ; and the conduct of the parties shows that they considered it as terminating in 1812. The two hundred shares of stock in the bank of America, subscribed for by the plaintiff, were never considered or treated as joint stock. It was managed. by the plaintiff solely. It was nursed by his care ; and finally wound up, the stock sold out, "and the operation closed by his agency alone, and without any con

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sultation or advice of the defendant. The subscription was never made known to him, and he was an utter stranger to it, and to the disposition made of it, until 1825, two years after it was finally closed.

But the difficulty the plaintiff has, in my judgment to encounter is, that his own testimony fails to prove such separation of his joint interest with the defendant in the United States Bank shares, as to enable him to maintain an action at law against the defenddant for the avails of the 29 shares, as his exclusive property. If hie long silence and passive conduct are not evidence of an abandonment of the contract, his remedy in equity for an account is clear. But in an action of assumpsit at law, he must show more than a right to an account; he must show an actual account, or a division of the stock, or an adjustment and promise to pay. Does the testimony in this case establish either? The whole of the joint stock was purchased by the defendant, and the purchase money advanced by him. The times made it necessary, or highly expedient, in his judgment, to terminate the connection, or, at least; to suspend its operation. He knew of no purchases of stockin the Bank of America,and under these impressions and with these lights, the letter pf June 26th, was written. It transmitted an account of the defendant’s operation on joint account tip to the period of that statement, and the amount then due to the defendant for the plaintiff’s half of the defendant’s advances to effect the purchases, after crediting the 70 per cent, received in dividends. This sum, as no further purchases were intended to be made, the plaintiff was bound to pay for his share of the stock, and he would, of course, be entitled to the residue of the dividends on 29 shares, or one half of the stock, This may have been virtually a discontinuance or dissolution of the co-partnership, but it was not an adjustment of the partnership concerns.

In Casey and Lawrence v. Brush, [2 Caines’ R. 293.] the court held, that to entitle the plaintiff to recover in an action for the balance of an account growing out of a partnership dealing or transaction, there must be evidence of an express promise to pay the balance.

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The case of Wetmore v. Baker, [9 John. R. 307.] was decided on the ground that there was no such partnership between the parties as to obstruct the action.

In Murray v. Bogert & Kneeland, [14 John. R. 318.] the plaintiff, and defendants and others had been jointly concerned in shipments and adventures which had all terminated, and been closed. The supercargo of one of the vessels sued the píaintiff and three others, for advances made by him, and expenses incurred on their account, and recovered a judgment against them, which they were compelled to pay, arid the plaintiff then brought a suit against the defendants to recover the proportion due from them of what had been paid by the plaintiff. It was objected, that the demand grew out of a partnership transaction, and was not recoverable in an action at law; and the court held, that there was nothing in the case showing a settlement of the co-partnership accounts, and balance struck, and a promise by the defendants to pay, so as to enable the plaintiff to sustain the action.

In Halsted v. Wiggins, [ 17 John. Rep. 80 .] the court ruled the objection, that the demand arose out. of partnership concerns to be conclusive, unless there had been a liquidation of the demand. In this casé there has been no liquidation or settlement, nor any account stated between the parties; and unless the ground is tenable, that the joint interest in the stock was severed, and the share of each party allotted and assigned to him in severalty, the plaintiff must fail in his suit.

The features of the case which have the appearance of an actual division of the stock, are the advice to the plaintiff that he would be. entitled to receive the future dividends on 29 shares, and the fact of the separation of that number of shares from the whole quantity, and keeping them in a distinct parcel. Rut these were the acts of the defendant solely. He could not sever the joint interest in the 58 shares, so as to vest a separate property in himself in the shares taken by him. Suppose the portion of the stockreserved for himself had been sold by him, and the price of stock had afterwards fallen, would he not be accountable for the plaintiff’s share of what was sold 1 the apportionment could not bind

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the plaintiff, and the only purpose of the separation of the 29 shares from the residue, which could be useful, was the precaution of always keeping that quantity ready for the plaintiff, in case he should accede to the proposals of the letter of the 26th of June, 1812, and come to a settlement with the defendant, pay up the balance due from him, and take his part of the joint stock.

But it is said, that by his silence he acquiesced in these proposals, and must be considered as acceding to the severance of the stock, whereby the defendant became his trustee of the 29 shares set apart for him.

He received that letter, and did not answer it. But did he thereby agree to the defendant’s terms of settlement 1 Those terms were, that the plaintiff should forthwith pay the balance due from him, and make a final settlement of the joint concern.

The defendant presses him for payment, and invites him'to a settlement ; but there were acts yet to be done; neither of which was done, nor was any step taken by the plaintiff for the purpose of informing the defendant of his intention to accede to the arrangement, and perform his part of it. The allotment of the 29 shares to him, if such allotment can be considered as made, was provisional, and to take effect on his compliance with the terms of settlement, and finally winding up the concern. This he never did do. Could he then lie by, and by his silence accept or affirm the terms of the .'arrangements proposed by the defendant, which were favourable to him, and leave those unperformed which were inconvenient or unfavourable to him ? could he leave unpaid the balance he owed, and keep aloof from the final settlement to which he was pressed, and by which he would entitle himself to the shares, and yet insist on the severance of the shares as absolute, and charge the defendant against his will as trustee of those shares for him, and impose on that partner the duty of receiving the dividends, and attending to the concerns which the ownership of those shares imposed, without compensation 1 In my judgment he was bound to answer fully the terms of that letter, or he could claim no benefit from any part of it. But we may ascertain the effect of his letter by another test: Could the defendant have sued the plaintiff for the balance stated in that letter to be due to him from

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the plaintiff? By the contract the defendant had a right to charge interest upon his advances, but he could not call for payment of the principal, until the joint operation was wound up, and the profit and loss account was settled unless the joint interest was severed and the account settled and stated between them. Then, if he had sued for that balance, would not the answer have been, that he must first exhaust the joint funds, and could claim the deficiency and balance only of his advances and interest, which the avails of those funds failed to reimburse and satisfy ? Would it be any answer to this defence, that the defendant, had severed the joint interest by his own act and set apart the plaintiff’s portion of stock for him ? The plaintiff could not be concluded by that act, unless he affirmed it, and accepted the stock; his silence could not amount to an acceptance ; he was entitled to stand upon his rights ás they were; and leave the defendant to wind up the joint concern, which was under his charge for the joint benefit. In taking that stand, he secured himself from the call of the defendant for his proportion of the advances, and remained liable for the moiety of the final balance only, if there should be any. I interpret his silence to mean,that such was the course he determined to take, and the result was, what if well advised, he knew it must be. The defendant could not insist upon payment; the only obligation the defendant was under to him, resulted from the contract; and by that contract he was not bound to pay the advance.

The whole concern is now closed, and the joint operation has resulted in a gain. The moiety of this gain belongs to the plaintiff. But it is the fruit of a joint or co-partnership operation, and an action at law will not lie by the plaintiff against his former partner for it. There must, therefore, be a judgment of non-suit.

Judgment of non-suit.

[Ogden and Huggins, attys. for plff. P.