Porter v. Lobach — 15 N.Y. Super. Ct. 188

Majority

p. 188

James L. Porter v. Wm. Lobach and John F. Schepeler.

Headnote

A firm is not liable for money, lent on the application of a person employed by them, without their knowledge or authority, and used by him for his own purposes, when there is no evidence that the loan was solicited in the firm’s name, or for its use, although at the time of the loan he was interested, in a particular department of their business, in the profits and losses of sales made to customers that he might procure and induce to purchase; especially when there is no evidence that he was held out as a partner, or was known, or supposed, to be interested as such in any of the business of such particular department.

And although the lenders, (having dealings with such firm,) render an account, say in January, 1851, to such firm, charging that firm with the money so lent, in this form: “ our loan to Mr. Tripler, $1136.40and although the account is retained some six months, yet if no act has been done directly or indirectly affirming its accuracy, but, on the contrary, its accuracy was disputed in the following March and August, and when last disputed, the firm was requested, by the lenders, to allow the account to stand as it was until the return of such borrower from Europe, such account cannot be treated as a stated and settled account which such firm is not at liberty to dispute.

A verdict should not be taken at the trial, for the plaintiff, subject to the opinion of the Court on the whole evidence, with a view to its decision of disputed questions of fact. But when that is done, and the Court at General Term, at the instance of counsel, hear the case on its merits, they will disregard the objection that a particular and material fact is unproved, when such objection was not taken at the trial, and some evidence in support of it was given, and the whole proceedings tend to show that it was understood at the trial that no such objection was relied on.

(Before Bosworth and Hoffman, J.J.)

Heard Nov. 13;

decided Nov. 28, 1857.

This action comes before the Court, on a verdict taken subject to its opinion at General Term, with power to the Court to render a judgment for such amount as it may deem the plaintiff entitled to, or to set aside the verdict, and order a dismissal of the complaint, or a judgment for the defendant. Either party to be at liberty to turn the case into a bill of exceptions. The verdict was taken, in form, in favor of the plaintiff, for $2000, being a larger amount than he claims to be entitled to recover.

The plaintiff sues as assignee of William Burger & Co., to re cover a balance alleged to be due from the defendants, as partners, to Wm. Burger & Co., which demand the plaintiff has purchased. The claim bought by, and assigned to, the plaintiff, as restricted

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by stipulations made at the trial, consists of two items of debit, made by Wm. Burger & Co., to the defendants, viz.:—

July 16, 1850, amount of draft on one Pablo Nigron, $338.16 31 Dec., 1850, proceeds of sale of goods, per “ Fredonia,” 1104.18

Total,'$1442.34

The defendants’ answer states, in substance, that, prior to the alleged sale and assignment to the plaintiff, (which was on the 30th of March, 1854,) the defendants had various mercantile transactions with Wm. Burger & Co., other than those referred to in the complaint, and that, as the result of the whole dealings, the latter firm, on the 1st of January, 1851, was a creditor of the defendants, to an amount not exceeding $300.20, to which sum, it is insisted, the recovery must be limited. It also alleges, that on or about the 1st of January, 1851, the defendants rendered an account current to Wm. Burger & Co., of all the said transactions between the two firms, showing the balance due from the defendants to Wm. Burger & Co. to be $3Q0.20. That this account was retained more than six months without any objection made thereto, whereby the said account became, and was “ admitted, settled, and allowed.’’

So much of the answer as set up a claim against Wm.° Burger & Co., to be credited with enough to reduce their account to $300.20, was put at issue by a reply.

The defendants having moved for a reference, the plaintiff, as a condition to the refusing of the motion, stipulated to admit the correctness of the account which had been rendered by the defendants, except two items on the debit side thereof, being—

“1850.—June 8. Our loan to Mr. Tripler, $1136.40

“ Sept. 16. One Spanish cloak, sold

by Mr. Lobach,..... 106.112—106.00.”

That stipulation, by its terms, declared, that it was not to prejudice the defendants’ right to insist that any of the credits in said account were properly credits against the two disputed items, if those two items should be disallowed to the defendants .on the trial. The objection to those two items was, that if they were

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ever had by any person, they were had by a Mr. Tripler, on his own account, and not on account of the firm of William Burger & Co., and that the said firm are in no way chargeable therefor.

The account, which is admitted to be accurate, (except as to the above two items,) commences under date of the 7th of February, 1850, and the last item of debit to Wm. Burger & Co., except interest, and some charges on the business transacted for them, is December 2, 1850. The last item of credit, except interest, is December 20, 1850. The account is dated the 31st of December, 1850, and credits to Wm. Burger & Co., in the aggregate, $7077.39 and debits them, in the aggregate, with...... 6777.19

showing a balance due Wm. Burger & Co., of . . . $300.20

It appeared on the trial that the book-keeper of Wm. Burger & Co. had three interviews with the defendants, in relation to this account, in which the two items now in dispute were objected to, and the subjects of conversation. The first was in March, and the last in August, 1851. At the last interview, the defendants gave such book-keeper a check for $600, on another account between the parties, and asked him to let the account in question “ stand over as it was, until they could see Mr. Tripler.”

The only evidence of any importance bearing upon the question, whether the $1136.40 was lent, and the cloak sold to Wm. Burger & Co., on the credit of that firm, or to Tripler alone, and on his credit, except such as is furnished by the account rendered, consists of the testimony of Tripler, who was examined on commission.

The evidence of Tripler tends to show, that, during the year 1850, the firm of William Burger & Co. consisted of said Burger, and Geo. R. Hendrickson, and John E. Hall. That,'in addition to other business, which may, or may not have been its principal business, the firm, so far as the evidence discloses, transacted a business spoken of as the wholesale drug and commission business, and which was designated among the members of the firm as the “ Spanish Business.” It was the particular duty and employment of Tripler to attend to that.

Tripler was to have twenty-five per cent, of the net profits of so much of that branch of the business as he might procure for the firm, and was to bear the like proportion of its losses.

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He was to be at liberty to draw at the rate of $1200 per annum, to cover his expenses, and the residue was to be retained by the firm, to meet his share of the losses, arising from the aforesaid part of the Spanish business.

He applied to the defendants on the 8th of June, 1850, for a loan of $1136.40, and received their check for that amount, and also delivered to them $600, in money, or a check for that amount.

The money borrowed he applied to his own use, and borrowed it without the knowledge of any member of the firm of William Burger & Co., and without any direct authority from them to do so.'

He did not state to the defendants for what purpose he required the money, nor did they ask him.

The Spanish cloak was ordered by him, and was designed for his personal use, and was so used. He gave no instructions to the defendants to whom they should charge it.

The check, which the defendants gave to Triplet for the $1136.40, was not produced on the trial.

John C. Dimmick, for plaintiff.

J. Larocque, for defendants.

This action should not have been concluded, at the trial, by taking a verdict on the whole evidence, for the plaintiff, subject to the opinion of the Court at General Term, unless there are no material portions of it which conflict with each other, and the whole leaves no doubt, as to the facts established by it.

But, having heard the cause argued at length, on the case made, we shall proceed to dispose of it, in accordance with our views of the effect of the evidence given at the trial:—

It is obvious that Tripler was not a member of the firm of William Burger & Co., either as between himself and the persons composing it, or as to third persons.

It is not pretended that he held the relations, or had the rights of a partner, except as to the department of that firms’ business, called the “ Spanish Business.”

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And his interest in that department was limited to such business as he “ might introduce and procure to the said firm."

There is no just ground for pretending, that he was held out to the world, as having, or was supposed by the defendants, to have any interest, in any part of the business of that department, or to be a partner in the firm of William Barger & Co.

It is clear, that the money borrowed was not applied to the use of the firm of William Burger & Co. There is no evidence that an application for the loan was made in the name of that firm, or that the defendants supposed, at the time, that it was solicited in behalf of that firm, or for its benefit.

The check lent was not produced at the trial, so as to show that it was not drawn to the order of Tripler. The charge, in the account rendered, is, in terms, “ our loan to Mr. Tripler."

The terms of this charge do not import a loan to the firm, or on its credit.

It is undoubtedly true, that if money is borrowed by one partner, in the name of the firm, in a manner and under circumstances justifying the lender in trusting to its credit, the firm will be liable, although the borrowing partner may apply it to his own use.

So when he borrows, without disclosing whether he borrows on his own account or that of the firm, and applies it to the use of the firm.

But when he borrows, without applying for the loan either in the name of the firm, or for its use, and applies the money to his individual purposes, and the loan is made by a check of the lender, and there is no proof that such check was not payable to the order of the borrowing partner, and there is no evidence that the loan was, at the time, charged to the firm, and the account, when rendered, describes that transaction as a loan to the person borrowing, the conclusion that the loan was solicited for the firm or made on its credit, is not warranted by such facts alone. (Jacques v. Marquand, 6 Cowen, 497; Church v. Sparrow & Good sell., 5 Wend. 223 ; Whitaker v. Brown, 16 Wend. 505 ; Miller, et al. v. Manice, 6 Hill, 114 , 119; Parsons on Mer. Law, 178 and 179, and note 7.)

If the question were to be submitted to a jury whether the money was borrowed in the name of the firm, or loaned by the

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defendants in an honest belief that it was desired for the firm’s use, it would be their duty, on the evidence before us, to find that it was not.

Tripler’s answer to the 13th cross-interrogatory is not very full. He was asked, “ whether the said loan was not made by you, from the defendants, on your own account, and for your own individual use and purposes,” etc. He answers, “ I have already stated that the amount was received by me in the form of a check, and the same applied to my own use.”

To the fourth direct interrogatory, he says, “ I do not think there was any particular mention made on whose account the money was loaned,” and in answer to the 22d cross-interrogatory, he says, “ I never gave to Messrs. Lobach & Schepeler any instructions, nor did they ever ask me for any, as to whom the money received by me, at this time, was to be charged."

He says the Spanish cloak was ordered by him in the winter of 1849. It is charged in the account rendered, under the date of September, 16th, 1850.

No presumption can be indulged that a cloak, ordered by a person, who was only known to be employed by a firm, and not known to be interested as a partner in any of its business, and who, in fact, on the most unfavorable view for the plaintiffs, was interested as such in a part of it only, bought it for the firm, or that it was sold on its credit.

The fact, that the defendants had dealings with Tripler, which must be presumed, on the evidence before us, to have been understood to have been had with him, individually, and on his personal credit alone, does not add to the strength of the defendants’ claim, as presented by the other evidence, to have the lent money treated as a loan to the firm of Wm. Burger & Co.

We think the two disputed items of debit must be rejected; and as the $600, credited on the 8th of June, was a part of the transaction, out of which the loan arose, that it should be allowed as a credit against the loan.. The difference between that item of credit and the aggregate of the two disputed items, being $642.40 Should be added to the balance of the account, as rendered, ........ 300.20

$942.60

And the plaintiff should have judgment, for

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and interest, unless the account, as rendered, is to be deemed a stated account, so as to conclude the parties, from questioning its accuracy.

There is no pretence for saying, that Wm. Burger & Co. gave any actual assent to the correctness of the account rendered. It is sought to conclude them, and the plaintiff, as their assignee, by the account, as if it had been actually settled and agreed to, on the ground, that Wm. Burger & Co. kept it, during a reasonable time, to examine it and object to it, and suffered such reasonable time to elapse, without making any objection to its accuracy. In Lockwood v. Thorne, (1 Kern. 170,) the plaintiffs, after receiving from the defendants an account, showing a balance due to the former, immediately drew for the amount of such balance, which was paid. Ho objection was made to the correctness of the account, until that action was brought, a period of about nine months. In Toland v. Sprague, (12 Peters, 300-334,) the party to. whom the account was rendered, showing a balance in his favor, demanded such balance.

In the case before us, there was no act of Wm. Burger & Co., directly or indirectly, affirming the correctness of the account.

On the contrary, as early as in the following March, and subsequently, as late as in the subsequent August, they disputed the accuracy of the account. There can be no pretence, that Wm. Burger & Co. had either ordered, or enjoyed the benefit of, either of those items. And, as we view the evidence, the conclusion is inadmissible, that the defendants believed, at the time, that either of them was furnished to that firm, or that they parted with either of them on its credit. The defendants did not claim, when objection was made to the accuracy of the accounts, that it was too late to take that ground, or that the account was to be treated as a stated and settled account; but, on the contrary, requested that it might be allowed to stand as it was, until the return of Tripler from Europe.

Under such circumstances, we do not think that Wm. Burger & Co. can be held, to have acquiesced in the account, so as to be bound by it, as a stated and settled account.

A supplemental point was made, during the argument, that the action would not lie, because no demand of payment, prior to the commencement of the suit, was alleged or proved. The com

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plaint states that the defendants had received the moneys sought to be recovered, and that they were due and owing from the defendants, and that a payment of some moneys, on account, had been made, and claims the balance. Under the issues made, proof of such a demand, if deemed material, would have been admitted.'

The evidence of Russell, as to the interviews with the defendants, in respect to the account in question, and as to the payment, by the defendants, at the last interview, of the balance due to Burger & Co., on another account, and the defendants’ request that the account in question might “stand over as it was until they could see Mr. Triplet,” are sufficient evidence of a demand, when it is considered that the objection, that a demand of payment had not been made before suit brought, was not taken at the trial.

It is quite obvious, as we think, that the trial was conducted on the theory, that the only question was, whether the defendants should be allowed the two disputed items, as charges justly made against the firm of Wm. Burger & Co. And it is equally clear, that if the objection, now raised, had been started at the trial, Russell might have proved that he insisted the defendants should pay the balance which would be due, on striking out these items.

We think the plaintiff should have judgment on the verdict for $942.60, with interest from the 31st of March, 1851.

Judgment accordingly.

Cases cited

Church v. Sparrow 5 Wend. 223 N.Y. Sup. Ct. p. 192
Whitaker v. Brown 16 Wend. 505 N.Y. p. 192