Drew v. Beard

107 Mass. 64 | Mass. | 1871

Mobtost, J.

The bill in this case alleges, that the parties entered into copartnership by written articles of agreement; that under and by virtue of said articles business was commenced and carried on by the parties; that a large amount of profits was made and realized in said business, which was received and retained by the defendant; that the copartnership has been dissolved ; and that the defendant refuses to account with the plaintiff and to pay him the amount justly due and belonging to him.

Referring to the articles of agreement, we find that the partnership was established “ for the purpose of trade, especially for the sale of goods and merchandise from Boston and New York at Port Royal, S. C.,' Savannah, Ga., and Charleston, S. C.” They provide that goods and merchandise are to be bought and shipped from Boston and New York by the said Drew, and the business at that end to be managed mainly by him, and that the sale of the goods and the general management of the business at Port Royal, Savannah and Charleston is to be assumed by the said Beard. They contain no stipulation that each partner is to devote his whole time to the business of the firm, and no provision prohibiting either partner from entering into dealings or adventures on his own account.

It appeared, at the hearing before the master, that the parties, under their agreement, opened two stores in Savannah- for the sale of goods and merchandise, and carried on business there for about ten months, when the stores were closed, and that the said business resulted in a loss. It also appeared that, during that period, the defendant entered into certain speculations or adventures in cotton, lead and iron, the details of which are set out in the master’s report, from which he realized a large profit. The plaintiff claimed that the defendant should account to him for one half of the profits thus realized, and offered evidence in regard to said transactions in cotton, lead and iron, which the master, against the defendant’s objection, admitted. The question now presented to us is, whether, upon his bill, as it is framed, the plaintiff can maintain this claim; and we are of opinion that he cannot.

The contract between the defendant and the United States treasury agent was clearly not within the scope of the partnership business. It was not a purchase of cotton, but a personal contract to collect, rebale and forward to a shipping port, cotton in the interior of the state of Georgia, owned or claimed by the United States government, for doing which the defendant was to receive, as compensation, one quarter part of the cotton thus forwarded. The undertaking involved great personal and pecuniary risk. It is obvious that, if this adventure had resulted in a loss, the plaintiff would not have been liable to the United States government. Nor could the defendant charge him with one half of the loss, under and by virtue of the partnership articles. It was a separate and independent transaction, not within the scope of the business of the firm, and therefore one in which the plaintiff had no interest by virtue of the partnership articles. The same is true of the dealings of the defendant in lead and iron. They were not such dealings as he was authorized to engage in by the partnership articles, and were not within the scope of the business of the firm. Story on Part. § 193. Wheeler v. Sage, 1 Wallace, 518.

It follows, that, if the plaintiff is entitled to a share of the profits upon these transactions, it must be either upon the ground that they were undertaken by the defendant in fraud of the firm, or upon the ground that the parties made an agreement independent of the partnership articles, that they should be entered into and prosecuted upon joint account. And to entitle him to a decree upon either of these grounds it is necessary that the plaintiff should allege it in his bill. It is an elementary rule of equity pleading, that the bill must contain a clear and exact statement óf all the material facts upon which the plaintiff’s right to the relief sought depends, and that he can only introduce evidence of such facts as are thus stated. Story Eq. PL §§ 23, 251, 251 a. 1 Dan. Ch. Pract. (3d Am. ed.) 334, 364 and note. Wright v. Dame, 22 Pick. 55. The bill in this case only alleges that the partnership articles were executed, that business was conducted under and by virtue of them, and that a profit was realized from said business. It does not allege that there was an agreement that the cotton, lead and iron transactions were to be on joint account; nor that the defendant practised any fraud or misconduct which would make him liable to account for the profits of these transactions. Upon the bill as it stands, the defendant cannot be held liable upon transactions not within the scope of the business of the firm, or the contemplation of the articles of copartnership. To do so would be to permit the plaintiff to recover upon a case not stated in Ms bill, and of which the defendant was not informed by the pleadings so as to be prepared to meet it.

For these reasons, we are of opinion that the master erred in requiring the defendant to go into a hearing in regard to the cotton, lead and iron transactions, and that the defendant’s exceptions to his report must be sustained.

Exceptions sustained.

On May 21, 1870, after this decision, the plaintiff moved to amend Ms bill by adding allegations substantially as follows:

1. That, after the parties signed their written articles of partnership, they agreed to engage in procuring lead, iron, cotton and other products and articles, on joint account, by purchase or exchange of commodities, in the southern portion of the United States; that they procured such articles and products by use of their money, goods and credit, and of the time and services of the defendant and a large number of persons paid by Mm and the plaintiff jointly, and realized therefrom large profits; and that now the defendant falsely pretended that these transactions were his individual transactions, and that the plaintiff was not entitled to an account of or share in them, whereas the plaintiff was entitled to such an account and to an equal share with the defendant.

2. That, during the existence of their partnership under the written articles, the defendant, by representing to the plaintiff that iron, lead and cotton could be advantageously procured by using the money, goods and credit of the firm, and the time and labor of the defendant himself and of persons employed and paid by the firm, induced the plaintiff to tacitly consent to such a use of them, and the use was made, and large profits were thereby realized in the enterprises and ventures; but that, after the dissolution of the firm, and after these enterprises and ventures had resulted in profit, the defendant falsely pretended that he never understood or agreed that the plaintiff was to share therein; 'and ff in fact the defendant never did so understand or agree, and was not liable to account to and share with the plaintiff on that ground, then that the conduct of the defendant was intentionally fraudulent, in inducing the plaintiff to consent to such a use of money, goods and credit of the firm, and time and labor of the defendant and employees of the firm, and injured the business of the firm, and so the defendant was bound to account to and share with the plaintiff.

Romney Converse, for the plaintiff. Abbott Browne, for the defendant.

1. To grant the plaintiff’s motion will violate the reasonable rule not to allow an amendment the effect of which is “ to abandon the case originally made, and to make a new and distinct one.” Pratt v. Bacon, 10 Pick. 123, 128. See also Platt v. Squire, 5 Cush. 557; Sanborn v. Sanborn, 7 Gray, 142 ; Merchants' Bank v. Stevenson, 7 Allen, 489; 1 Dan. Ch. Pract. (3d Am. ed.) 410, note 1, and cases there cited. All the elements needful to a settlement of the suit on its present basis exist, in that portion of the master’s report to which no exceptions were taken. The determination therefrom of the balances due to the parties respectively from the business done under the articles of partnership is mere matter of arithmetical computation.

2. The plaintiff’s loches requires a denial of his motion; especially as to that portion of the amendment which alleges fraud. See Evans v. Bacon, 99 Mass. 213; and cases cited in 1 Dan. Ch. Pract. 402, note 1; 406, note 3. His omission to introduce his new allegations by a supplemental bill is conclusive that he seeks to allege nothing which arose after he began this suit on November 5, 1866. See 1 Dan. Ch. Pract. 407, note 3.

3. To grant the plaintiff’s motion will be inequitable, in enabling him to reap unjust advantages from a deliberately planned surprise, by which the defendant was forced to a sudden hearing :n issues which he had no opportunity to join .in framing by the pleadings, and for the trial of which at that time he was unprepared even with the vouchers of large expenses which the nature of his contract concerning the cotton is conclusive that he must have incurred at Thomasville, but which, in the absence of such , vouchers, were necessarily disallowed. The court has decided that to permit the plaintiff to recover upon the case as it stands “ would be to permit him to recover upon a case not stated in his bill, and of which the defendant was not informed by the pleadings so as to be prepared to meet it.”

The question “ whether this amendment can and ought to be allowed at this stage of the proceedings in the case, and upon what terms,” was reserved by Wells, J., for the determination of the full court, and argued in November 1870.

4. There are no terms, upon which this amendment can be alwed, which will be an equivalent to the defendant for its allownce; that is to say, which will put the parties into substantially the same relative position as if no error had occurred.

Morton, J.

The court has power to allow amendments, in any matter of form or substance,' which may enable the plaintiff to sustain the action for the cause for which it was intended to be brought. Gen. Sts. c. 129, § 41. Merchants’ Bank v. Stevenson, 7 Allen, 489. The granting or refusal of amendments is, however, within the discretion of the court. Payson v. Macomber, 3 Allen, 69. In the case at bar, it is unreasonable to doubt that the plaintiff, when he brought his action, intended to include in it the cause of action set forth in ¿he proposed amendment. It is a question therefore of discretion, whether, under the circumstances of this case, the amendment shall be allowed.

We think that the loches of the plaintiff in not properly framing his bill, or in not moving for an amendment at an earlier . stage of the case, is not so great that it ought to deprive him of the privilege of amending, upon such terms as shall protect the defendant from injury. The question, whether the transactions of the defendant in cotton, iron and lead were within the scope of the partnership articles, and whether the plaintiff’s claim to a share of the profits realized therefrom could be tried under the allegations of the original bill, was one upon which counsel might Honestly differ. The plaintiff’s counsel might have doubted, until '■he decision of the court, whether an amendment was necessary.

But the defendant ought not to be prejudiced by the error of the plaintiff. As he alleges that he was taken by surprise at the Hearing before the master, and compelled, without due prepara' fcion, to meet this question of his transactions in cotton, iron and lead, of which he was not notified by the pleadings, it is clear that he ought not to be bound by the findings of the master upon this issue. The case therefore must be reopened, if the defendant so elects, for a new hearing so far as this issue is concerned.

We think also, that, as upon the bill as originally framed the defendant has prevailed, and the amendment introduces a substantially new cause of action, the plaintiff should pay the defendant’s costs, and take no costs, if he prevails, up to this time. Upon these terms, the amendment may be allowed. The case is to stand for hearing before a single justice, who, upon proper application, after the. answer to the amended bill is filed, will make the necessary disposition thereof.

Amendment allowed.

To the amended bill the defendant answered, denying each and every allegation imputing an agreement between himself and the plaintiff for a joint interest in any business, not transacted under their written articles of partnership, in or in relation to lead, iron or cotton; denying that he ever procured any cotton by purchase or exchange of commodities; admitting his purchase of lead and iron, but alleging that it was on his sole and separate account; admitting that under a contract with the treasury department of the United States he collected, rebaled and transported the cotton, as a personal office of a public nature; denying any fraudulent use of money or credit of the firm, or time or services of its employees, and any fraudulent representations or fraud of any kind; denying any use of the credit of the firm in his private enterprises, and any injury of the business of the firm by said enterprises; denying any neglect of the business of the firm on his part; and finally, denying that it was in the power of either partner to license by his consent, or prohibit by refusal of his consent, any private enterprises of the other. The defendant also elected not to reopen the case for another hearing before the master upon the new issues ; and it was again reserved, by Colt, J„, as follows: “ The amendment of the plaintiff’s bill being allowed, and the defendant having elected to offer no more evidence and not to have the case recommitted to the master, but to take the report of the master the same and with the same effect as if the bill was drawn originally as now amended, or the amendment had been allowed and filed before hearing before him, the case is reserved for the whole court upon the report and exceptions of the defendant thereto, as they now stand of record.” Upon this reservation the case was argued in March 1872.

Ahlott cf Browne, (.Parmenter with them,) for the defendant. Banney, for the plaintiff. Ames, J.

We have already decided, at an earlier stage of this case, that the controverted transactions in cotton, iron and lead were not within the scope of the written articles of association, and that, if the plaintiff is entitled to a share of the profits upon those transactions, it must be either upon the ground that they were undertaken or prosecuted by the defendant in violation of good faith towards his partner, or upon the ground that the parties made an agreement, independent of the written articles, that they should be matters of the joint account. The plaintiff has accordingly amended his bill in order to present his case in both these aspects. [Here followed, in the opinion, a discussion of the master’s report and the evidence, which is omitted as relating solely to questions of fact; and the opinion concluded as follows:] It is true that every reasonable presumption is to be taken in favor of a master’s report, upon questions of fact referred to him depending upon conflicting evidence. The report in this case was made before the amendment of the bill, and when the matter of investigation was presented not precisely in its present aspect. But if the report is to be interpreted as a finding by the master that the partnership between these parties was by mutual agreement extended so as to include the controverted transactions in lead, iron and cotton, or that it was a fraud upon the plaintiff’s rights for the defendant to engage in them, we find such clear proof of mistake on the master’s part as to require us to set aside his conclusion.

Exceptions sustained.

A final decree was rendered in favor of the defendant, for the sum found due to him by the master upon a settlement of the business exclusive of the transactions in lead, iron and cotton.