21 N.Y.S. 533 | N.Y. Sup. Ct. | 1892
I confess that' when this case was before us on the last appeal (6 N. Y. Supp. 451) I had grave doubts upon the facts, as they then appeared, with regard to the question of the statute of limitations, and I concurred in the affirmance of the judgment only because I felt bound by the opinion delivered,upon the first appeal, (41 Hun, 524.) It was therefore with but little surprise that I observed the reversal of the judgment in the court of appeals, (125 N. Y. 203, 26 N. E. Rep. 253;) and upon perusing the opinion of tliat court I noted that the reversal was upon the very point which had seemed to me to be the difficult one in the plaintiff’s case as it was then presented. I make these observations the more freely because, upon the record as it now comes up, my previous doubts are removed, and I feel satisfied that, upon the facts as found by the learned judge upon the trial now under review, his conclusion that the statute had not run against the plaintiff’s claim is entirely correct. The keynote of the case, as it was presented to us and to the court of appeals on the previous hearing, was that by the agreement of dissolution the plaintiff was made the liquidating partner; that by this agreement he became the authorized agent of the partnership; that, as such, it, was his duty to collect and realize its assets; that the claim against the defendant was an asset, and that consequently it became the plaintiff’s duty to the creditors as well as to himself to collect it. The cause of action to reduce this asset to possession was held to be independent of the right to an adjustment of partnership affairs as between the partners themselves, even though an accounting to ascertain the precise amount of the asset—namely, the specific sum due to the partnership—might well be involved in thé liquidator’s action. The cause of action for a judicial dissolution and adjustment of partnership affairs, as between the partners themselves, and for affinai accounting, with an
“Granting, ” said Finch, J., “that the defendant’s interest in profits could equitably reduce his overdraft, and that the amount of profits, and so his interest in them, would he affected by the total of debts and the soundness of assets, and yet his overdraft remained due instanter to the partnership, which he was liable at once to pay, which he ought at once to pay, which the liquidating partner, .as such, was entitled immediately to realize and receive. ”
The fundamental error upon the trial then under review was the finding of fact with respect to the agreement of dissolution, and the appointment thereby of plaintiff as sole liquidator. This error was the result of some loose and inaccurate expressions on the part of the plaintiff— when he was previously examined—to the effect that by agreement with his partner he was to liquidate the business of the firm. The finding which followed this testimony .was not inconsistent with the framework of the complaint, and it was therefore fatal to a recovery. It is also true that the present finding of fact—that there was no agreement with regard to liquidation—is entirely consistent, as we shall presently see, with both the letter and the scope of the complaint, and such finding is the truth of the case. This finding of fact—that there was no agreement by which either partner was to be sole liquidator to the- exclusion of the other—is amply supported by the testimony. Indeed, the evidence on the subject was all one way. The plaintiff on the present trial testified to facts,—that is, to what actually transpired,—and not, as upon the previous trial, to mistaken conclusions or impressions. He testified that there was no agreement by which he was to have exclusive liquidation of the business; none that he was to liquidate to the defendant’s exclusion; none that the defendant was to liquidate to his exclusion; and that, as matter of fact, they both went on, “each of them, liquidating the business.” And this was the literal truth, whatever the plaintiff may have inadvertently said upon any other occasion. It is borne out by the subsequent acts of the parties, and by facts as to which there could be no dispute. Even the defendant claimed nothing more than a “tacit understanding” that the plaintiff was to be the liquidator; an understanding, however, which was directly opposed to his own acts, for we find him, too, liquidating,—drawing money from the bank, paying debts therewith, signing checks “H. W. Gray & Co., in liquidation,” as late as September, 1874, authorizing a foreclosure suit in July, 1884, and making affidavits in support of a claim against the government in May, 1873, and July, 1875. The defendant testified that the assets “were liquidated to a certain extent” by him “in settlement of the affairs of H. W. Gray & Co.,” and on being asked how these assets were liqui
Let us analyze the complaint, and see precisely what it contemplates. In the first place, it contains no averment that the plaintiff was to be the. liquidator of the firm’s business. There is, in fact, no averment at all upon the subject of liquidation. Nor is there even a distinct averment of dissolution, although that may be implied from the language used. In the first paragraph the partnership is set forth, and its terms are specified. This is admitted in the answer. In the second paragraph it is averred that, prior to the commencement of the action, and on or about the 1st day of July, 1884, there remained outstanding and unadjusted certain copartnership transactions connected with the firm; that said transactions have never been settled or wound up, and could not be until on or about the date last mentioned; and that said transactions involve assets of the copartnership to the amount of $15,000, of which no account has been taken or had. Here, it will be observed, a distinct issue is tendered as to the possibility of settling or wdnding up the copartnership transactions prior to the 1st day of July, 1884. How is this issue met? We have searched the defendant’s answer in vain for a denial. He does not even deny the allegation that the co-partnership transactions were outstanding and unadjusted on the 1st day of July, 1884. The answer on this head reads as follows:
“(7) And, further answering, this defendant denies that any of the copartnership transactions which belong to the said copartnership of H. W. Gray'& Company were outstanding and unadjusted on or about the 1st day of July, 1884; but he says that if there were any such transactions outstanding and unadjusted they were and are the property of the plaintiff herein, and became his sole and separate-property on or about the 21st day of October, 1872, when the said partnership was dissolved. ”
This is really no denial at all. It is but a supplement to the allegation contained in the sixth paragraph of the answer:
“That upon the dissolution of the said firm, as aforesaid, in October, 1872, the whole of the assets thereof became and was the property of the said H. W. Gray, as representing the capital he had contributed to the partnership. ”
“And he says that there were no accounts and transactions of the said firm outstanding after the said date [October 31,1873] which would prevent such an accounting as the plaintiff demands in his complaint herein. ”
This is simply an averment of a conclusion of law It is not a denial, general or specific, of the averment of the complaint; nor is it a, statement of new matter constituting a defense. The effect of the pleading, therefore, is that it amounts to a. plea of the statute of limitations-as against the admitted averments of the complaint, namely, the averments that copartnership transactions of which no account had ever-been taken or had remained outstanding and unadjusted on the 1st day of July, 1884; and could not have been settled or wound up prior-to that date; in other words, that the statute ran against an accounting notwithstanding the impossibility of completing the liquidation prior-to the specified date. Thus the defendant meets the issue of fact tendered by the complaint in substance by the tender of an issue of law;, and that issue necessarily amounts to this: that the statute ran from the date of dissolution under any and all circumstances, and without regard to the special facts pleaded, admitted, proved, and found. This-, is an extreme view, to which no countenance is given by the "court of appeals, and it is in direct opposition to the great weight of authority. Gray v. Green, 125 N. Y. 205, 26 N. E. Rep. 253; opinion of Finch, J., (see paragraph quoted by the learned judge at special term;) Riddle v. Whitehill, 135 U. S. 637, 10 Sup. Ct. Rep. 924. And see, also, cases cited in 17 Amer. & Eng. Enc. Law, p. 1283, note 3; Wood, Lim. Act. p. 430, § 210; 2 Lindl. Partn. (Ewell’s Amer. Ed.) p. 964; and cases cited in the opinion delivered at special term.
We now come to the third averment of the complaint. Here the-plaintiff avers, -in substance, that the defendant has received more money from the partnership funds and assets than belonged to him; that is, more than his proper share of such partnership funds and assets. The -
The learned judge has also found certain facts which negative the idea of any disagreement between the parties at the time of the dissolution, Or any differences respecting their rights. The fifth finding is u,s follows:
“Fifth. Each of said parties in the settlement and adjustment of the affairs •of said copartnership has acted faithfully, and without unnecessary or inexcusable delay; and no complaint has at any time been made by either party of any want of diligence on the part-of the other in closing up said affairs, and neither has requested or notified the other to wind up or settle the affairs in any other ■manner, or in any shorter or other time, than was employed in winding up and settling the same; and the assets of said firm could not have been collected or realized sooner than they have been. ”
This indicates that the liquidation proceeded peaceably, and without question, and that there was a “tacit understanding” to postpone the final accounting, upon which the defendant’s liability should be ulti
It is suggested that an action for an accounting and settlement might have been brought upon the dissolution of the firm, and that a receiver might have wound up the business, and sold such claims as the defendant admits could not have been realized in due course until long after-wards, without considering the question discussed by the learned judge at special term, as to whether the claim against the United States was saleable under section 1910 of the Code of Civil Procedure, read in connection with section 3477 of the United States Statutes, we need only say that the parties were not bound to sacrifice these contingent and doubtful claims. It was, indeed, their duty to nurse them, and to realize all they could upon them for the benefit of their customers or of their creditors, and they also had a right to do as much for themselves when their customers were settled with. With what propriety, for instance, could either of these parties have rushed into a court of equity while they were carrying the securities already referred to after the dissolution,—that is, from that time down to August, 1873?' Would it have been a proper performance of duty to leave these securities to the tender care of á receiver, and to trust to his borrowing money, from time to time, under authority of the court, to save such securities from being sacrificed? And would it not, as against their customers, have been a downright breach of trust to permit a receiver to sell at auction so nebulous a claim, for instance, as that against the government? So, too, as to the claims against Dauchy and Neill.. Dauchy gave the.firm a mortgage upon land in Connecticut in which he had a vested remainder, subject to a life estate in his father; and the defendant actually authorized and requested a new York attorney to employ a Connecticut attorney to foreclose this mortgage as late as July, 1884. Neill had no immediate assets, but he had a contingent interest in real estate in this city, liable to be defeated by his death before his mother. These examples serve to suggest the reason for the rule stated by Finch, J., that the right to an accounting and settlement may accrue upon dissolution, and does accrue when “some material necessity exists” therefor, and no-other fact or circumstance bars or postpones the remedy; all of which is another and more illustrative way of expressing the general principle,, which runs through all the cases, that the statute does not necessarily run immediately upon dissolution, and that the question whether or not. it does run must be determined upon the peculiar facts of each case. It is also suggested that even in an action strictly betw'een partners the receiver need not sell contingent and doubtful claims, but that these claims could be reserved, and the rights of the parties adjusted, upon such a winding up as might be presently possible, making proper provision, how’ever, for the future division of what might ultimately be realized upon contingent or doubtful claims. This suggestion, however, is based upon the former- theory of the action. Of course, when it was .found as a fact that the plaintiff was suing as a firm liquidator, and that the defendant owed the firm a specified sum, a cause of action for that specific-sum, or for an accounting to ascertain such sum, was shown. The de
In addition to this finding, and in connection therewith, the learned judge has specifically found that (we quote the language) “the amount •of defendant’s indebtedness to the plaintiff depended upon the amount of his indebtedness to the firm, and could not be ascertained or estimated' until the assets of said firm were collected or realized, and defendant’s account with the firm had been adjusted; and defendant has ■claimed to be credited with his share of said assets when collected or realized.” This latter finding is excepted to, but the evidence in support of it is, as we have seen, overwhelming. The parties acted upon this view of the defendant’s rights; and their understanding, as it may be gathered from their acts and methods of liquidation, plainly was that neither party should be precipitate, and that the defendant should have the full benefit of all collections before any final accounting between the parties as partners should be required. The fact is that there was no difference or disagreement between the parties upon the dissolution. There was nothing to go into a court of equity about. There were then no charges or counter charges. They simply proceeded, each of them, with the liquidation, in the manner and upon the principles found by the learned judge at special term. The first nominal divergence occurred in 1880 and 1881, when the plaintiff demanded a settlement; but the real divergence occurred only when the liquidation was completed, and the hour for final adjustment, accounting, and money judgment thereupon, had arrived. It was then that the defendant put in his
The learned counsel for the appellant does not dispute that the liquidation was peaceable, nor does he .contend that there was any special cause for appealing to the courts, or, indeed, any cause whatever save the inherent right, which he insists always vests eo instanti upon dissolution. But he does contend that the precise action could have been brought by the plaintiff at once. It is really difficult to appreciate the force of this contention, and especially difficult to comprehend the meaning of the statement which follows, and upon which the contention is founded,—namely, that, if such an action as the present had been then-brought, the allegations of the complaint and the prayer for relief would have been identically the same as they are now. How could the plaintiff have alleged in October, 1872, that there remained outstanding and unadjusted copartnership transactions on the 1st day of July, 1884, and that these transactions had never been settled or wound up, and could not be until the date last mentioned ? And how could the plaintiff, in October, 1872, as a sequence to this last allegation, further allege that no-final adjustment of the business or accounting between the “parties as partners ” has been had? But, apart from this, the statute did not necessarily run even against such a cause of action as that set forth in this complaint,—omitting these impossible averments,—for clearly the parties could postpone the ordinary remedy for a reasonable time, or until such remedy—because of some new fact or future circumstance—became needful. Our conclusion is that, upon the pleadings, the proofs, and the findings, this case, in its true aspect, comes within the principle to which we have already adverted, and we think, therefore, that upon its own special facts, the statute of limitations did not run at the time of dissolution, which was the 21st day of October, 1872, nor certainly between that date and the 5th day of August, 1874, which latter date preceded the commencement of this action by 10 years. This conclusion is all-that is necessary to sustain this judgment, although we have no doubt, upon all the facts, that the running of the statute was deferred at least during the continuance of the partnership for partnership purposes. But, further than this, upon both principle and authority, the partners could postpone the right to an accounting as between themselves until the business had been peaceably liquidated, to the end that all payments and receipts might be embraced in such accounting, and it might thus be final. No reasons occur to us for doubting that partners may do this if they please, and that they have done so in a given case may be implied from their acts in proceeding severally with the liquidation without antagonism, (each, as here, giving the other assistance from time to time in effecting realizations,) and without cause for seeking judicial aid. We think, therefore, that the real cause of action stated in the complaint and found by the learned judge upon ample evidence was a cause of action for a final accounting, which had