Brewer v. Norcross

| New York Court of Chancery | Feb 15, 1865

The Chancellor.

The bill is filed by one partner against his co-partner, for an account of the partnership transactions in the business of running stages and carrying the mail, under contracts with the government of the United States, from the first of July, 1852, to the 30th of June, 1856.

The defendant, by his answer, claims that there are monies due to him from the complainant on various accounts, of which he asks a settlement; and that the amounts found due may be allowed by way of set-off to the demand of the complainant, if anything shall be found due to him.

The complainant excepts to the answer. The exceptions relate to so much of the answer as asks to set off the amounts claimed to be due from the complainant to the defendant.

1. On account of a farm of which the complainant, the •defendant, and one George Brower were joint and equal owners, and which was occupied and managed by the complainant for the use and benefit of the joint owners.

2. For mules and harness belonging jointly to the parties, complainant and defendant, and the said George Brewer, which were sold, and the price therefor received by the complainant.

3. For an account of the defendant against the complainant in his individual capacity.

4. For an individual account of the defendant against George Brewer.

The several matters thus set up by way of defense, have no natural or necessary connection with the subject matter of the bill. They are in themselves entirely distinct and unconnected. If they were united in the same bill, it would constitute the vice of multifariousness. A claim against two or more defendants cannot be properly united in the same bill, with a separate claim against one only. Uor can distinct claims against two or more defendants, upon individual accounts, be thus joined. 1 Daniell’s Ch. Pr. 383; Story’s Eq. Pl., § 271.

The bill is filed for the sole purpose of effecting a settlement of the partnership accounts of the complainant and defendant in a specified business. The allegation that the parties were engaged in other transactions with third persons, or with each other, either as partners, or oil their individual accounts, is impertinent to the matter of the suit.

The general rule in equity, as well as at law, is, that joint and separate debts, or debts accruing in different rights, cannot be set off against each other. At law, under the statutes of set-off, the rule is inflexible; but in equity, special circumstances give rise to exceptions. Courts of equity exercise a jurisdiction in matters of set-off, independent of the statutes upon the subject. They look beyond the form of the contract, to its real character; and beyond the nominal parties, to the parties to be affected by the decree. Wherever it is necessary to effect a clear equity, or to prevent irremediable injustice, the set-off will be allowed, though the debts are not mutual. Vulliamy v. Noble, 3 Mer. 618 ; Dale v. Cooke, 4 Johns. Ch. R. 13; Blake v. Langdon, 19 Vt. 494; 2 Story’s Eq. Jur., § 1437; Receivers v. Paterson Gas light Co., 3 Zab. 283.

In cases of insolvency, or of joint credit given on account of individual indebtedness, or where the joint debt is a mere security for the separate debt of the principal, the equity is obvious, and the set-off will be allowed.

I do not perceive that any equitable ground for allowing the set-off is disclosed by the answer. Insolvency or danger of irremediable loss is not suggested.

One of the allegations of the answer is, that George Brewer was a joint partner with the complainant and the defendant in the staging business as well as in the farm, and that he is, therefore, a necessary party to the suit. It is clear, that at this stage of the cause, the court cannot act on the assumption that this allegation is true. If the fact should be established in evidence, the bill is clearly defective. If' the bill should be amended, the defendant will have a right to answer the amended bill, and to avail himself of any equitable defence to which such new state of facts may entitle him. A set-off of the individual account against George Brewer can have po possible foundation, if he be not a necessary party to the bill. Nor is there ground suggested for a set-off of the individual indebtedness of the complainant to the defendant.

The only plausible grounds stated in the itnsvyer, upon which the right of equitable set-off can be made to rest, are, that the same parties were interested as partners ip both partnerships, &pd that the defendant believes that the business of both firms was so connected and blended, that justice requires that the accounts of both partnerships should bo inquired into and settled at one and the same time. The only reason assigned for this belief of the defendant is his hearing and belief, that the products of the farm were taken for the use of the horses upon the stage route, and that manure from the stables of the stage company was used upon the farm. How the facts alleged create no necessity for the settlement of the accounts of both firms at the same time. Nor can the court act upon the general allegation on the part of the defendant, of his belief in the existence of such necessity. The facts upon which such allegation is founded, should be clearly and distinctly set forth.

Nor can the defendant have this relief by way of answer. It must be, if at all, by original bill. He is not asking, upon equitable grounds, the mere right of setting off one indebtedness against another. But, upon a bill filed to settle the accounts of one partnership, he asks that there should at the same time be a settlement of the account of another and different partnership. If the balance upon the settlement of the account, in respect to which the bill is filed, should prove to be in favor of the complainant, but upon the settlement of both accounts, the balance should bo in favor of the defendant, what remedy could he have, or what decree could be pronounced upon the pleadings as they stand? If, in this aspect of the case, the defendant has any equity, he can have relief only by way of cross-bill.

I think all the exceptions to the answer are well taken, and must be sustained.