Parsons v. Hughes

9 Paige Ch. 591 | New York Court of Chancery | 1842

The Chancellor.

If the allegations in this plea are true, they appear to be a full and perfect bar to all discovery and relief sought by the complainants in this suit. It is true that gross and enormous frauds are charged in the bill as having been committed by the agent, upon the decedent as one of the firm, with the consent and connivance of the copartner who has obtained this release. And the subsequent discovery of such frauds, if they were unknown to E. L. Parsons at the time of the dissolution and settlement, would unquestionably have authorized this court to set aside the settlement and release, and to compel a full account and adjustment of the copartnership accounts and transactions, so as to charge the fraudulent copartner with the loss occasioned thereby j and if he was irresponsible, to compel the fraudulent agent to indemnify the estate of the decedent for such loss. But where a party with full knowledge that he has been defrauded by another, thinks proper to settle the matter in relation to which the fraud has been committed, and to release the party who has defrauded him, he has no legal or equitable claim to relief against such voluntary act.

It is supposed by the counsel for the complainants, however, that the settlement with and release of the copartner of the complainant who was a party to the fraud cannot protect the other defendant. But the averment in the plea shows that the release and settlement were made and executed for the purpose of fully settling and compromising all the matters and frands referred to in the pleadings in this cause. And as the agreement in terms declares that it is intended to embrace the firm of Edward Hughes & Co. wTho had been employed as agents, both defendants may avail themselves thereof, although the consideration of the release proceeded from John Hughes only for the benefit of both. Independent of this special provision in the release, I am inclined to think that a release of the copartner by whose authority and consent the supposed false and fictitious invoices were made, and other frauds upon E. L. Parsons had been committed, necessarily deprived the defrauded copartner of the right to call either to account for such frauds, or to have the accounts opened which had been settled and adjusted between the agent and one of the members of the firm, previous to the dissolution of the firm and the settlement of all the partnership transactions.

The plea must therefore be allowed ; and the complainants’ bill must be dismissed with costs, unless they think proper to take issue upon the plea, as provided by the 47th rule of this court. But the dismissal of the bill must be without prejudice to the defence which the complainants may think proper to make to any suit brought or to be brought, by the defendant John Hughes, to open the settlement and adjustment of the copartnership concerns.