Branger & Driard v. Chevalier

| Cal. | Jul 1, 1858

Burnett, J., delivered the opinion of the Court—Field, J., concurring.

In January, 1853, the parties entered into partnership, and on the thirty-first of August, 1854, a stated account, in triplicate, was signed by them, from which it appeared that plaintiffs were indebted to the defendant in the sum of $4,315—to secure the payment of which, the plaintiffs executed to defendant a mortgage, dated and delivered the fourteenth of October, 1854. The partnership continued until May, 1855, when it was dissolved. In August, 1855, plaintiffs filed their bill against defendant, alleging that they were induced to sign the stated account, by the fraud and false representations of defendant, and that the account was fraudulent and false. They then specify certain items in the account as being incorrect, and pray that the stated account may be decreed to be null and void, and that an account may be taken of all the partnership transactions, and for general relief. The defendant answered, denying all fraud on his part, and all error in the stated account, and conceded that the Court might grant any proper relief for settling up the partnership transactions occurring since the date of the mortgage. In the Court below, the plaintiffs had a decree, from which the defendant appealed.

The first error assigned by the defendant is, that the Court erred in refusing to give certain instructions, offered by the defendant.

There were certain special questions prepared under the direction of the Court, and with the consent of the parties, which were submitted to the jury. Conceding these points to have been correct, there was no error in refusing to give the second instruction asked for, as it had no relevancy to the question submitted to the jury. This instruction embraced a question which came properly before the Court, and not before the jury. The refusal to give the first instruction asked by defendant did not injure him, as the finding of the jury was in his favor upon the point embraced in it. Even conceding that the instructions had been proper, it is matter of doubt whether the refusal to give them, in a chancery case, could be assigned as error.

The next point made by the defendant, which it is material to notice, is, that the Court erred in the decretal order, so far as it annulled the stated accounts, and directed an account to be taken of all the partnership transactions de novo.

In answer to this objection, the learned counsel for the plaintiffs insists that this error, if any, was waived by the consent of the parties that the stated account might be set aside. If this consent had been given, it would seem to have amounted to a clear waiver of the objection. But upon an examination of the record, we can not find sufficient evidence to sustain the ground taken by the plaintiffs’ counsel. It is true, that in the order appearing on page twenty-three of the record, and purporting to have been made on the twenty-ninth of October, 1855, it is left doubtful whether the consent was given to the questions submitted to the jury, or to the setting aside the stated account. But this ambiguity is cleared up by the final decree, appearing on page fifty-four, wherein it is stated that “the following special issues having been prepared by the Court, with the consent and approval of the counsel of the respective parties,” setting out the issues and the answers of the jury; and then proceeding to recite, “ and in pursuance of said special verdict, the Court having by its interlocutory order, dated the twenty-seventh day of October, 1855, and by its further and amended interlocutory order, dated the sixth day of December, 1855, directed that the accounts stated between the said parties, dated the thirty-first day of August, 1854, should be opened and set aside.” The ambiguity is also removed by the interlocutory order signed by the Judge, and dated the twenty-seventh of October, 1855, appearing in the statement on page seventy-six of the record. The consent of the defendant, if it so appeared, to the appointment of a particular person as referee, could not be construed as consenting to the order setting aside the stated account.

There can be no question as to the fact that the account of August 31,1854, was a stated account, although the phrase “ errors excepted ” was added at the bottom. “An account in writing, examined and signed by the parties, will be deemed a stated account, notwithstanding it contains the ordinary preliminary clause that errors are excepted.” (Story’s E. J., § 526.)

In this case, though fraud was charged, the jury found only mistake, and this was the ground upon which the decretal order of the Court was made.

In the caso of Chambers v. Goldwin, (9 Ves. Jr., 264,) it was held by Lord Eldon that “ accounts settled shall not be set aside but for fraud, or surcharged and falsified but for error.” But in reference to accounts stated, the rule does not seem to be quite so strict. Accounts stated may be opened, and the whole account taken de novo, for gross mistake, in some cases. (Story’s E. J., §523.) But this can only be done when the gross error affects all the items of the transaction. In case the clear mistake only affects a portion of the items of the stated account, it will bo permitted to stand, except in so far as it can be impugned by the party alleging the error. And when the party who seeks to go behind the stated account, goes in to particulars, and specifies the items improperly charged or omitted, he is confined to those items, and the remainder of the account must stand. (Story’s E. J., § 523; Collyer on Part., §573, note 5: Adams E., 227 and note: 3 John. C. R, 587.)

In this case certain errors were specified in the complaint, and the plaintiff should have been confined to the items mentioned. The order of reference cannot go beyond the pleadings of the parties; and then the mistake should be clear and material before the Court could allow the party even to surcharge and falsify. It- is a very dangerous practice to go behind stated accounts, especially as between partners, who alone understand their complicated affairs, and the mode in which their books are kept. If all partnership books were well and carefully kept, upon the same system, then the practice of opening up accounts would not be so doubtful. (4 Cranch, 308 ; 4 Paige, 495.)

The bill in the case of Consequa v. Fanning (3 John. C. R., 587) was very similar to the complaint in this; and it was there held that the inquiry could not extend beyond the items specified, although the bill prayed for a full account.

The counsel of defendant have specified certain alleged errors in the report of the referee. It appears that, after the settlement of the thirty-first August, 1854, one Chamon executed a mortgage to Chevalier, to secure the payment of $5,267 32, of which the referee states, in his report, (record, page 26,) that the sum of $1,538 43 belonged to the firm, while the statement, (record, page 308,) states that $3,728 87 of the sum of $5,267 32 belonged to the firm, and the remainder to Chevalier. By the terms of the mortgage, Chevalier was empowered to collect the rents of certain leased property belonging to Chamon, and to appropriate monthly $650 thereof, as follows : 1, interest to S. Moss; 2, the interest on the $5,267 32; 3, the accruing rents; 4, the taxes; and, 5, the surplus, if any, to the extinguishment of the mortgage. As the agent of Chamon, Chevalier had collected the gross sum of $2,315, from which should be deducted whatever sum Chevalier had paid out of it for Chamon to others, not including the firm; and then whatever net sum Chevalier received for the firm., should have been charged to him. To ascertain the sum collected and retained by Chevalier for the firm, the interest received on the $5,267 32 should have been apportioned between him and the firm, in proportion to the amount due to each. But, in the account of Driard and Branger with the firm, they are credited with several items, (on pages 205 and 207 of the record,) as having been received by Chevalier from Chamon, amounting in all to the sum of $2,561 48; and the same items are charged to Chevalier in his account with the firm, (record, pages 176 and 178.) From the account rendered by Chevalier as to the amounts collected by him of Chamon, there was only the sum of $1,244 remaining in his hands as the'property of the firm; the other portion of the $2,315 having been paid to others, according to the terms of the mortgage. This sum of $1,244 was subject to distribution among the partners. Instead of which Chevalier is charged with a larger sum than the whole gross amount received by him from Chamon, and is not allowed any credits for payments made to others for Chamon. This would seem to be error. There may be some entry in some other portion of the accounts correcting this mistake, but we have been unable to find it, if there be such; and it has not been pointed out by the counsel on either side.

It is insisted by the counsel for plaintiffs that if there be error in the report of the referee, the defendant has not taken the proper method of bringing it before the Court. The testimony is contained in the report of the referee, and properly certified by him. When the referee excludes proper testimony, or admits improper evidence, or does any other act materially affecting the rights of either party during the progress of the trial before him, then such party should except, and see that the exception is truly stated in the report. But when the alleged error consists in the final conclusions of law or fact drawn from the testimony, and the evidence is certified to the Court by the referee, the proper course is to move to set aside the report, and for a new trial. This was done in this case. It is true that the statement on the motion for a new trial was not settled by the Judge. The statement was made by the attorney for defendant, and proposed amendments filed by the attorney of plaintiffs;, and nothing further was done in reference to it, as appears from the record. In such a case the attorney of defendant must be held as consenting to the amendments, and both parties as agreeing to the statement as amended. It is also true that the affidavits used upon the hearing of the motion for a new trial are not get forth in the record. The only effect of this omission is to deprive the defendant of all ground of error based upon the affidavits; but the omission does not affect his right to raise the question as to errors apparent upon the face of the report itself.

There is nothing in the record to show what was the testimony before the jury; and we must j>resume that it was sufficient to warrant their conclusion that there was a mistake in the stated account of the thirty-first of August, 1854.

Our conclusion is, that the Court erred in setting aside the stated account aud directing an account to be taken de novo. "We also think that the report of the referee, in reference to transactions since the date of the mortgage, was erroneous in some particulars, and should have been set aside.

For these reasons the judgment is reversed, and the cause remanded for further proceedings.