Backus v. . Fobes

| NY | Sep 5, 1859

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] In the submission entered into between the partners Fobes and Seth A. Backus, it was provided that the arbitrators might determine which of them should pay the debt of the firm to the plaintiff, embracing the notes on which this suit was brought; and that the other partner should be discharged therefrom. The amount of the debt was also to be settled by the award. To this submission the plaintiff became a party, in respect to his demand, by entering at the same time into a separate stipulation at the foot of the paper, declaring his assent to the terms thereof. The plaintiff, therefore, in effect, agreed that on a determination being made by the arbitrators adjudging which of the partners should pay the debt, he would discharge the other. Such is the obvious construction of the two writings, which are to be read together. If therefore the agreement on the part of the plaintiff was founded on a sufficient consideration and was valid, its obvious effect was to exonerate the defendant Fobes, provided the award declaring that the defendant Seth A. Backus should pay this debt was properly made.

We think the agreement cannot be impeached for want of a consideration. The arbitrators not only had power to decide which of the partners should pay this and another considerable debt, but they were also to "divide and dispose of" the assets of the firm as they should think just and proper. It was therefore competent for them to award that one should pay these debts and should have the property of the concern. And this was the determination actually made. The partners were each bound by their submission to abide by such a disposition of their affairs, and that obligation alone was a sufficient consideration for the plaintiff's engagement to look for payment solely to the partner who, in the result of the arbitration, would receive the assets of the firm. It is quite true that the obligation of one of two joint debtors, substituted for that of both, affords no new security to the creditor. But if one of the debtors agree to surrender and does surrender to the other his interest in the property and funds which they own together, an agreement of the creditor to discharge him and look to the other is well founded on that consideration. This was essentially the principle on which the submission and the award proceeded.

On the part of the plaintiff it has been contended that the award was void because it did not, in accordance with the terms of the submission, "divide and dispose of all the assets connected with the business" of the firm at Turtle Point. Looking at the face of the award, this objection appears to be unfounded in fact. The arbitrators set forth in their determination a schedule of effects which they award to the partner Seth A. Backus; and in conclusion they say in substance that this schedule comprises the assets of the firm so far as the same came to their knowledge. Outside of the award, it appeared on the trial of this case that a few personal chattels of very insignificant value were not embraced in that disposition of the partnership property, and that it was proved before the arbitrators that the firm had these chattels. It appears that the final award was made some six months after the hearing was commenced. The arbitrators had power to dispose of these chattels or any other effects of the firm for the payment of debts; and in support of the award we are bound to intend, if necessary, that they were thus disposed of before the final decision. But I do not think that intendment necessary. If these goods remained on hand at the time of the award, the omission to divide or dispose of them does not vitiate the proceeding. The only effect of that omission was to leave them, as before, the joint property of the owners. It was not a fundamental condition of the submission that the joint ownership of each article in the inventory of assets must be terminated by the award. In the absence of such an express condition, there is no ground for questioning the validity of the award as to any or all of the subjects actually embraced within it.

It has also been claimed that the award was void on the ground that Seth A. Backus was adjudged to pay a debt due from the firm to John C. Backus, the amount of which was declared to be $1,932.63. This was among the matters distinctly embraced in the submission, and the proof in this cause shows that it was actually submitted to the arbitrators. The objection now is, that the debt in question existed wholly or partly against the partner Fobes alone. It appears that the creditor John C. Backus recovered a judgment against the firm for this debt, amounting to $985.65, in one of the courts of Pennsylvania; that Fobes alone appealed from that judgment and had a new trial; that on such new trial the recovery was for $1,880.03; and that, according to the law of Pennsylvania, Fobes, who had appealed, was solely liable for the excess over the first judgment. It was not, however, so far as appears, shown on the trial of the present case that the law of Pennsylvania giving that peculiar effect to the judgment rendered in that State was proved before the arbitrators. The whole demand of John C. Backus was submitted to them as one existing against both the partners; and their determination that such was its character, and that Seth A. Backus should pay it, cannot now be impeached by evidence showing that for a part of the debt the other partner was solely liable. By the very terms of the submission, the parties were to furnish proof of the debts of the firm remaining unpaid, and the arbitrators were to act upon that proof. Conceding even that they erred, it does not affect their decision. An award is not impeachable for error merely.

The submission set forth that the arbitrators should render a statement of the matters and accounts between the parties on the principle of partnership; and on the ground that this was not done, it is claimed that the award is void. This objection I think rests upon a misconstruction of the submission. That instrument, as I read it, did not require that a statement of the partnership affairs should be incorporated into and made a part of the award. The provision referred to, it seems to me, merely prescribed the principle on which the accounts and differences between the parties should be stated, and not what the award itself should contain. Proceeding on that principle, the arbitrators were to make their adjudication, declaring the results. It was not required even that the decision should be in writing. In arriving at their conclusions, it is to be presumed that the arbitrators proceeded in the manner and upon the principle which the submission pointed out.

On the whole, we are of opinion that the joint demand of the plaintiff against the two defendants was extinguished by the submission and award. The judgment should, therefore, be reversed, and a new trial granted.

GROVER, J., did not sit in the case, and SELDEN, J., was absent; all the other judges concurring,

Judgment reversed, and new trial ordered.