Coursen v. Hamlin — 9 N.Y. Super. Ct. 513

Majority

p. 513

William A. Coursen v. Frederick V. Hamlin and others.

(Before Oakley, Ch. J., Emmet and Hoffman, J.J.)

November 22;

December 10, 1853.

Headnote

An order for the payment of money under subdivision 8, § 244 of the Code, will not be made, unless the answer contains a plain, explicit, and full admission that a definite sum is due to the plaintiff. It will not be made when, in order to ascertain whether a specific sum is due, a critical examination of the pleadings, or of books and accounts, is necessary.

The provision in the Code is regarded by the court as a recognition and declaration of the rule which formerly prevailed in the Court of Chancery, and as going no further.

The rule in that court was settled, that an order for the payment of money into court, or to a party before a final decree, could not be made unless upon an explicit and full admission by the defendant in his answer, or upon his examination before a master, that a specific sum was due.

A counter claim cannot be set up in an answer, which cannot be decided without bringing other parties before the court, who have no interest in the determination of the causes of action set forth in the complaint.

A partner is not allowed to claim for his services in settling the affairs of the firm, unless a special agreement is averred and proved.

Order at special term, so far as it directed a payment to plaintiff, reversed; in all other respects affirmed.

TW complaint was filed by the plaintiff, as the special partner in a limited partnership, against the defendants as the general partners, who conducted the business of the firm under the name and style of Hamlin, Sloan & Squires, and the relief demanded was, that the defendants should be enjoined from

p. 514

interfering with or disposing of the goods, property, or credits, of the partnership; from collecting any moneys due thereto; that a receiver might be appointed to take charge of all the assets of the firm, and make distribution thereof; and that the defendants Hamlin and Sloan, under the direction of the court, should render a full account of the partnership, and of the goods, credits, and effects belonging thereto, and that in such accounting the plaintiff might be allowed interest on his share of the capital remaining unpaid from the time of its dissolution, and might be paid the amount due to him from the firm, with interest thereon, and might have such further or other relief as might be just.

The complaint charged that Hamlin and Sloan were each of them largely indebted to the firm for moneys drawn out by them beyond the shares to which they were respectively entitled, but admitted that nothing was due from Squires. Hamlin & Sloan answered together, Squires separately. Those parts of the pleadings upon which the questions decided arose, will be found fully stated m the opinion of the court.

The cause -was now heard upon the pleadings and upon, the following case and bill of exceptions.

The issues of fact joined in this action came on to be tried at a special term of this court, held by the Hon. "Win. W. Campbell, one of the justices thereof, without a jury, on the thirtieth day of June, in the year 1853.

The counsel for the plaintiff opened the cause upon the pleadings and claimed that there was an amount admitted by the answer of the defendants for distribution, and moved that the court order said amount to be paid by the defendants to the plaintiff, and a reference to take and state the accounts of each of the partners in the partnership mentioned in the complaint, and to ascertain, determine and settle their rights and interests respectively in the assets which remain uncollected and-belong to the said late partners.

The counsel for the defendants, Hamlin and Squires, thereupon objected to the granting of said motion, and insisted that this action was founded upon the agreement for a copartnership entered into between the parties and the relation which they had sustained towards each other under that agreement

p. 515

during the time specified in it, and that the claim of the plaintiff therein was entire to recover the "whole amount, which upon the taking of the accounts between the parties, should be found due to him from the defendants, or any or either of them, and that but one judgment could be given in the action for the payment of money by the defendants to the plaintiff. That it was not competent nor lawful for the court in this case, to render judgment for the plaintiff for the amount collected by the defendants and admitted in the answer (if any) and then to order a reference in the case to ascertain what other, or further sums might be due from the defendants to the plaintiff, and thereupon give a further judgment for the amount, (if any) which should be found to be due. That the whole cause should be tried by the court or referred.

His honor the judge overruled said several objections, and decided thereupon, that it was competent to the court to grant the motion for an order for the payment to the plaintiff, of the amount admitted by defendants’ answer, and for a reference to take and state the partnership accounts, to which decision of the said judge, the counsel for the defendants Hamlin and Squires, then and there excepted.

The court then looked into the complaint and answer of the said defendants, and thereupon decided that the sum of six thousand dollars was admitted by the defendants, upon said pleadings, to be in their hands ready for distribution, and which should be adjudged to be paid by the defendants to the plaintiff, and directed an order accordingly for its payment. To which decision the -counsel for the defendants, Hamlin and Squires, then and there excepted.

The counsel for the defendant, Frederick Y. Hamlin, then further objected to a reference, to take and state the accounts of the partnership referred to, and set up in the complaint, on the ground that the answer of said defendant Hamlin, sets up a set off or counter claim growing out of previous copartnerships. The counsel for the plaintiff insisted that said claims were not, nor was either of them, a subject of set off, under statute of set off, nor of an equitable set off, nor a counter claim, for which a separate judgment could be rendered for the defendant, Frederick Y. Hamlin, in this action, against the plaintiff, under the

p. 516

provisions of the code of procedure. His honor the judge sustained the objections, and directed an order of reference to take and state the partnership accounts, and to his decision thereon, the counsel for the defendant, Frederick Y. Hamlin, then and there excepted.

The counsel for the defendant, Frederick Y. Hamlin, then moved the court to make it a part of the order of reference directed in this action, that the referee to be appointed should take proof of said claims set up in defendants’ answer, which was objected to by the counsel for the plaintiff, and the objection was sustained by the judge, and to the decision thereupon, the counsel for the defendant, Frederick Y. Hamlin, then and there excepted.

And, in as much as the said several matters so occurring upon the trial of this action do not appear by the record thereof, the said judge, upon the prayer of the defendants, Hamlin and Squires, hath affixed his seal to this bill of exceptions, the thirtieth day of June, in the year 1853.

J. T. Brady, for the defendants,

insisted that the judgment at special term ought to be reversed, upon the following grounds.

I. The court erred in deciding that two separate judgments might be rendered in this action.

II. The court also erred, in ordering judgment for a certain sum, on the ground that it was admitted in the answer to be due. (a) Because no such imperfect or partial judgment could legally be rendered. (b) Because the admission was qualified and not absolute, and made in relation to certain counterclaims.

III. The court should have allowed the counter-claims to be considered in the reference, as this is a case in which a joint and not several judgments might, and, on the pleadings, must be rendered. The defendant, Sloan, is not liable for the so-called admitted balance.

IV. The court had no right to give judgment, founded exclusively on the supposed admissions in the answer. The whole answer must be taken together, and, if so taken, no judgment

p. 517

upon it against either of the defendants could properly be rendered.

I. Dayton, for plaintiff, contra.

I. The court had the power to make the order for the payment to the plaintiff of the amount admitted by the answer of the defendant to be due him (Code, § 244; Clarkson v. De Peyster, 1 Hop. Ch. R. 274; Roberts, administrator, v. Law, 4 Sandford’s Sup. Court Rep. 642; Tracy v. Humphrey, 3 Code Rep. 190 ).

H. Whether the sum of six thousand dollars is admitted by the answer of the defendants to be due the plaintiff, is not a question arising on these exceptions. Whether a certain amount is, or is not admitted by the pleadings to be due, is a question in respect to which, on objection, a judge cannot make a mistake. An objection was not made, nor does any appear on the exceptions, that the amount stated to be admitted is not admitted by the answer. The court will not look into the pleadings to examine the truth of matters taken for truth at special term (Munson v. Hegeman, 5 Howard’s Prac. Rep. 223; 10 Barber’s Sup. Ct. Rep. 112).

HI. In point of fact, if the court will go into the inquiry, the sum of six thousand dollars and upwards is admitted, by the answer of the defendants, to be in their hands, and due to the plaintiff.

IV. The claim set up in the answer of the defendants, by way of counter-claim on the part and behalf of the defendant Frederick V. Hamlin, was properly disallowed by the court below (Code, § 150, Statute of Set-offs, 2 R. S. 354, 4 ed. 604; Murray v. Toland, 3 John’s Ch. Rep. 573; Dale v. Cook, 4 John’s Ch. Rep. 11; Barber v. Spencer, 11 Paige, 517).

V. The judgment of the special term ought to be affirmed.

This was an appeal from an order made at the special term on the 30th of June, 1853, the case being heard on the pleadings alone.

The plaintiff sets forth that he was a special partner in the firm of Hamlin, Sloan & Squires, composed of the defendants

p. 518

and himself, under written articles of partnership, dated the 1st of January, 1849, and stated in the complaint. He sets out the grounds of his action in detail, and the relief sought is an injunction, receiver, an account of the partnership transactions, and payment of the amount which may be found due.

The averments in the answer need not be stated until the points raised in the cause are discussed.

The order at the special term was made upon the pleadings alone, and directed that the defendants pay and deliver to the plaintiff the sum of $6000 which appears by the pleadings to be a just claim on the part of the said plaintiff from the said defendants, and applicable to the payment of the plaintiff’s claim herein, and that the said sum be chai'ged against the plaintiff on a final settlement .of the accounts of the firm of Hamlin, Sloan & Squires. This is the first branch of the order which is appealed from, the other clause objected to will be afterwards noticed.

The appeal is taken on behalf of the defendants, Hamlin and Squires. These defendants alone appeared by counsel on the hearing below. The order probably was meant to extend to them only.

As to the defendant S.quires, the complaint itself states that he had received only the share which he was entitled to under the articles of partnership, and that all the assets are in the hands of the defendant Hamlin. It is not perceived how the order can be sustained as against him.

But apart from this, and as to the defendant Hamlin, we consider the order to be incorrect. We regard the fifth subdivision of the 244th section of the Code which has been referred to, as recognising and declaring the rule which prevailed in the court of chancery, and as going no further. It was very clearly settled in that tribunal, that an application to pay money into court, or to a party before final decree, or, at least, before a report of a master, must be founded upon a full and explicit admission in the answer, or examination of the defendant, of a sum being due. The court will not examine the case to decide whether it is so. The order would not be granted if any examination of books „ or accounts was necessary to attain the result. It was refused in one case, though made upon the affidavit of an accountant

p. 519

that from, an examination of schedules and books of the defendant a certain sum was due. (Mills v. Hanson, 8 Vesey, 68; Roe v. Gudgeon, Cooper’s Cases 304. See also the important case of Gilbert v. Colt, before Chancellor Sandford, stated from MSS. 1st Hoffman’s Ch. Pr. 323 n.)

Is there any such plain admission in the answer of this sum of $6,000, being due by the defendants or either of them to the plaintiff 2

The plaintiff alleges “ that there is due to him on account of his share in the said partnership the sum of $14,600 as nearly as he can estimate the same. That he has endeavored to ascertain the partnership property in the hands of Hamlin. That permission to the book-keeper to make out the settlement has been refused. But that from such information as he is able to obtain,” he alleges “ that there is now in the hands of said Frederick Y. Hamlin, belonging to the said firm, subject to distribution and due to the said plaintiff in great part, the sum of $6,000, and that said Hamlin refuses to make distribution of the property of the partnership.”

In reply to this allegation the defendants referring to it explicitly aver, that “ the debts have been paid; that there are no liabilities of the firm ‘(with some specified exceptions); that the amount of the assets, exclusive of certain discounted notes, is about $33,500, and including such notes, about $40,000; and that the extent of the right or interest of the said Coursen therein is believed to be as hereinafter stated.”

They then proceed to set out various counter demands, which they insist should be allowed against the plaintiff’s share of these assets. There is clearly nothing like an admission of liability in a definite sum to be found here. The court must be compelled to ascertain by a minute examination of the case as presented, whether a sum may be considered as due. The authorities cited show that this duty is not imposed upon it.

But if it were imposed, the result in this case would not be certain; that is, it would not clearly appear that Hamlin owes the plaintiff on this account $6,000 or about that sum; or ever had on hand moneys from the assets to pay him.

From an examination of the statements in the pleadings the following are probably the results.

p. 520

That the debt to the plaintiff is about the sum claimed of $14,200. That the debt of the defendant Hamlin to the firm at the date of the answer was not over $1,600. That the outstanding assets were about $33,000. That these enter into the computation of profits, and of course make part of the debt due to plaintiff. It is on the assumption that the assets can be realized, that he becomes entitled to the debt which he claims. But upon clear principles in settling partnership accounts, the assets are first to be applied inpayment of demands of creditors or partners made quasi creditors, and the personal responsibility of each for his balance due is only to be ultimately resorted to.

There is nothing on these pleadings to show that Hamlin had, at the date of his answer, any amount in hand from this sum of $33,000.

It is by no means to be concluded that the statements thus made are accurate or approach to accuracy. It is only considered that these are the most probable results from the pleadings as they now stand.

The next objection of the defendant is, to that part of the order which directs that the alleged claims set up in the answer, by way of counter-claim on the part of the defendant Hamlin, be disallowed.

As to the counter-claim which is stated to have arisen by reason of a demand against the plaintiff, arising out of the concerns of the firm of "Fitch, Sloan & Hamlin, we are of opinion that the matter cannot be entered upon in this suit; that the members of that firm should be parties to any proceedings to adjust it.

The other alleged counter-claims are for a compensation for services rendered in settling the concerns of the firm of Fitch, Hamlin & Sloan, and Hamlin, Sloan & Teft. Besides other objections, it is sufficient to say that there is no statement of an express agreement to pay for such services; and that a partner cannot, without such agreement, be allowed a compensation.

The order is in these particulars correct. The order of the special term must be vacated as to the direction to pay over the $6,000, and be, in all other respects, affirmed.