Isles v. Tucker — 12 N.Y. Super. Ct. 393

Majority

p. 393

Isles v. Tucker.

Headnote

In an action between partners, for an accounting, when the complaint alleges, and the partnership agreement states, that the plaintiff contributed $2,250 of capital, and the answer denies that the $2,250 was contributed as capital, and avers that it was to be paid by the plaintiff for an equal interest in the business, that the money was paid on that basis, and that both parties have acted upon the under standing that such was the meaning of the agreement, the allegations of the answer are sufficient to present the issue, whether the agreement was, by mistake, so drawn as not to express the actual agreement of the parties.

When the written agreement of parties is clear and unambiguous in its terms, clear proof of a mistake is required, to justify the court in holding, that it does not express the actual intent and contract of the parties to it.

Declarations of a defendant, not made to the plaintiff, are not evidence for the defendant, and declarations of the plaintiff’s agent, who negotiated the contract, made subsequent to the transactions to which they related, and not forming part of the res gesta, are not admissible against the plaintiff on the trial of such an issue.

(Before Oaklet, Ch. J., and Ddeb and Boswobih, J.J.)

February 23, 1856.

On the 27th day of April, 1850, the plaintiff and defendant entered into a copartnership, for the purpose of conducting a dining saloon, or refectory, at 145| and 147 Bowery, in this city, which had been previously conducted by defendant. The partnership was to continue until the first of May, 1853.

This action was commenced by plaintiff for the purpose of enforcing an accounting on the part of defendant. Five causes of action are set forth in the complaint: The second cause of action arises, as plaintiff claims, out of the fact that defendant converted to his own use the money which plaintiff put into the concern as capital. Defendant admits,'in his answer, the appropriation of this money, and justifies it on the idea that the money in question was paid to him for the purchase of a half interest, and was not put into the concern as capital.

The action was tried before Mr. Justice Duer, without a jury, on the 5th of November, 1854.

Without passing upon the other questions at issue, the court, at Special Term, decided that the defendant had a right to appro

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priate the $2,250 to his own use, and that this sum, paid by plaintiff, was not to be regarded as “ capital.” From this part of said decision plaintiff appealed. The court directed a reference as to the other causes of action.

The articles of copartnership were recited at length in the complaint. So much of them as is necessary to illustrate the point controverted at the trial reads thus, viz.:

This agreement, made on the 27th day of April, 1850, between Elihu L. Tucker, of the city of Hew York, the party of the first part, and Catharine Isles, of the said city, the party of the second part, witnesseth, that the parties hereto do hereby agree to form a copartnership for conducting the business, ordinarily conducted in a dining saloon or refectory, to be located at Hos. 145J and 147 Bowery, in said city, and known and designated as the Philadelphia House; that the said business shall be conducted under the firm of E. L. Tucker & Co., and that the said copartnership shall continue until the first day of May, 1853, unless ■ it should be sooner terminated by the mutual consent of the said parties.

The said party, of the first part, hereby agrees to put in as capital, into the concern, all the furniture and fixtures, which are now on the first and second floors, and in the basement of said buildings, an inventory of which is hereunto attached, and to which reference is made, at a valuation which shall be mutually agreed upon, by and between the parties hereto. And the said party, of the second part, hereby agrees to contribute as capital to the concern, the sum of twenty-two hundred and fifty dollars in cash.

And the said parties further agree, and in consideration of the covenant herein made, that the profits which may accrue during the existence of this copartnership, shall be equally divided by and between the parties hereto, after deducting all necessary expenses, required for the successful prosecution of the business aforesaid.

The complaint alleges, that the $2,250, agreed to be paid by the plaintiff, as her share of the capital, was paid as follows:—Fourteen hundred and eighty dollars on the execution and interchange of duplicates of the above agreement, twenty dollars shortly thereafter, and the balance was intended and supposed to be paid by her refraining to draw any share of the profits of the business

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until the defendant, Tucker, had first drawn out and applied to his own use the sum of fifteen hundred dollars, she being under the mistaken idea that that arrangement would settle the account equitably between herself and him.

The answer of the defendant, among other, contained these allegations, viz.: .

Secondly. That the plaintiff did not contribute, as capital, to the concern, the sum of twenty-two hundred and fifty dollars, in cash, or any other sum whatever.

That the meaning of the partnership articles, in this respect, was, that this sum should be regarded as so much to be paid, by the plaintiff to the defendant, for an equal interest in his business, as then existing and established, and all matters and things appurtenant thereto, and that upon this understanding of the said articles the plaintiff and defendant both acted; that no money, paid in by the plaintiff, was paid in upon any other basis.

That, even though the covenant in the said articles, in this respect, might seem to imply differently, it was not executed or acted upon in that sense, by either the plaintiff or defendant.

That the plaintiff did pay one thousand four hundred and eighty dollars, in cash, on account of the purchase of an equal interest— with the defendant—in the said business, and that the balance of the said twenty-two hundred and fifty dollars—the sum agreed to be given therefor—was drawn out of her part or portion of the partnership profits, and that all the allegations of the complaint, to the contrary hereof, are untrue, as, or in manner and form as therein made.

Several witnesses were examined. The nature of the testimony given, by each of them, except that of Alexander W. Smith, is sufficiently stated in the opinion of the court; that of Smith is given, at length, and is as follows:

Alexander W. Smith, a witness called by the plaintiff, being sworn, proves the execution of paper produced. The paper was then read, and marked Exhibit No. 1, for plaintiff. This was the partnership agreement.

Being examined, by counsel for defendant, the witness then said: I was employed, by the parties, to draw up the partnership agreement between them; the original oral understanding was, that the sum of two thousand two hundred and fifty dollars should

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be considered as paid for the acquisition of a half interest in the furniture and fixtures of defendant’s establishment; that parties supposed súch was the provision in partnership articles, and that, under that impression, they carried out their oral understanding, instead of the original reading of the original article.

To all this the plaintiff’s counsel objected, but the court admitted the foregoing and succeeding evidence, subject to future objection, and the examination proceeded with that understanding. The witness continued: The agreement was executed in duplicate; it was executed at my place of business, 59 Rose street; I drew the papers, at the instance of both plaintiff and defendant; I am not a lawyer.

Here the counsel for defendant handed a mortgage to witness. The witness said: This mortgage appears to have been executed on the same day with the agreement; that mortgage was drawn by me, with the agreement, and executed on same day with copartnership articles; don’t recollect, if it was executed at same time; I am a subscribing witness. The mortgage was upon the plaintiff’s undivided half of the partnership property, and was given to secure the payment of $750, with interest, on the 1st of March, 1851, and was dated the 27th of April, 1850.

Here the mortgage was read, and marked Exhibit Ko. 2, for defendant.

Witness continued: I don’t recollect, if there was any other paper executed; I now think the mortgage was executed two or three days after the agreement; between $1,400 and $1,500, cash, was paid, in my presence, on account of agreement; I don’t know when the partnership terminated; the $750, in mortgage, was the residue of the purchase money; the mortgage for $750 was given to secure the balance of $2,250 capital; I don’t recollect, if any thing was said, as to the value of partnership property; I do not understand its value; don’t remember there was any agreement as to value; don’t recollect, if receipt passed, on payment of the $1,480; Alexander Isles, the brother of the plaintiff, represented her; I represented Tucker, and he was there himself; Miss Isles paid for the mortgage; the partnership articles Tucker agreed to pay for, but did not; I was employed by Tucker to procure him a partner, and was to receive $100 for it; I received $50; it was paid me for procuring Tucker a partner.

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Being examined by Mr. Clinton, in reply to the question, Were any instructions given by Mr. Tucker, before you drew the agreement ? the witness replied: There were; those instructions are embodied in that paper; I submitted them to Tucker, two or three days before it was executed; Tucker said he wanted to submit it to an attorney; I left it with him. The agreement, before referred to, marked Exhibit 1, for plaintiff, being here produced, the witness said: Both parties examined the paper, for an hour, before execution, on the morning it was executed; the copy given to Tucker was an exact copy of the agreement, except that the paper was originally drawn for one year, and extended to five; Tucker made no other objection, and I think Mr. Isles made that.,

Being again examined by counsel for the defendant, he said: My father, Silas C. Smith, Mr. Munson, and Alexander Isles, were present at the execution of the agreement; Munson read one copy, and I the other, aloud; I never saw Miss Isles before the execution of agreement; Mr. Isles negotiated with me for Miss Isles—acted as agent; saw Miss Isles before the execution of agreement; I saw her a month or two afterwards; Alexander Isles, her brother, negotiated with me, for her, and represented her; he brought her there, on the morning these papers were consummated; I was frequently in the establishment after the partnership commenced; never saw her in the business; Alexander Isles was there acting; he was behind .the bar receiving money.

Smith was .subsequently further examined, but testified to no new fact.

The testimony having been concluded, the cause was summed up, by the respective counsel, and the court, on the 6th of January, 1855, made the following order:

“ This cause having been duly called on for trial before the Hon. John Duer, one of the Justices of this Court at Special Term, without a jury; and the court having elected to try only the issue raised by the pleadings on the question of capital, and intimated that all the other questions should be tried before a referee; to which course the counsel of the respective parties assented—"

After hearing the testimony of the witnesses of the respective ¡parties and their counsel, and mature deliberation having been had, it is adjudged that the sum of twenty-two hundred and fifty dollars was the consideration to be paid to the defendant for the

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one-half or equal interest with the defendant in his business as then existing and established, and not as an addition to the capital ; and that the defendant had a legal right to apply the whole sum of twenty-two hundred and fifty dollars to his personal use.

“ It is ordered, that all the questions of account, and such other questions as are put in issue by the pleadings, be referred to John L. Mason, Esq., to take proof thereof, and report the same, with his opinion thereon, to this court.

(A copy,)

“ Geo. H. E. Lynch, Clerk.”

Whereupon, the plaintiff appealed from so much of the above order as adjudges “ that the sum of $2,250 was the consideration to be paid to the defendant for the one-half or equal interest with the defendant in his business as then existing and established, and not as an addition to the capital; and that the defendant had a legal right to apply the whole sum of $2,250 to his personal use.”

H. L. Clinton, for plaintiff.

R. D. Holmes, for defendant.

The plaintiff seems to have tried this action on the theory, that the evidence given by the defendant was open to the objection, that its object was to contradict, by parol evidence, the clear terms of a written agreement.

The evidence, if admissible for any purpose, was admissible to establish the fact, that the executed contract was, by mistake, so drawn as not to express the contract as it had been actually agreed upon. Assuming that the pleadings were such as to authorize the reception of such evidence, there was none given except that of A. W. Smith.

He does not state what the parties said when he was instructed to draw the contract. He says the mortgage “ was given, to secure the balance of $2,250 capital.” He assumes' to state what “ the original real understanding was,” but on what facts or declarations of the parties that opinion is based, he does not state. That can not be said to be enough to justify the conclusion, that the written contract, which is clear and unambiguous in its terms, does not express the true meaning and intent of the parties.

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Whether the $2,250 was to be contributed as capital, or was to be paid for an undivided half of the stock, fixtures, and good-will, is a question to be ascertained. The contract says it was to be contributed as capital. That is higher and more satisfactory evidence than any thing contained in the evidence of Smith. The form and terms of the mortgage, with other evidence of what the parties to the contract said, at the time of concluding it, in connection with evidence of the practical construction given to it by their subsequent acts, might establish beyond doubt the fact of a mistake. No such declarations or subsequent acts are proved.

The testimony of Eagleson, much of that given by Hays, most of Johnson’s, and of Foster’s, and that of Hunter, was incompetent. It consisted either of declarations of the defendant, which could not be evidence in his own favor, or of declarations of the plaintiff’s agent, made subsequent to the transactions to which they related, and forming no part of the res gesta.

We think the allegations of the answer sufficient, to present the issue, whether the agreement was, by mistake, so drawn as not to express the actual agreement of the parties.

That it is advisable, that the order made should be set aside, and the whole action be referred to determine all the issues joined in it. If neither the $1,500 first paid or advanced by the plaintiff, nor the $1,500 of profits subsequently drawn out by the defendant, are charged to him on the books of the company, and if no credit to the plaintiff is found there, by reason of the $1,500 advanced, those facts, in connection with the mortgage and its terms, would be very strong evidence that the $2,250 was not to be advanced as capital, but was to be paid as the contract price for an undivided interest.

The order must be reversed, that, upon an application at Special Term, the whole issue may be referred.