Spear & Carlton v. Newell

| Vt. | Feb 15, 1841

The opinion of the court was delivered by

Collamer, J.

These parties were co-partners, the orators being jointly interested in one half of the partnership,- and the defendant in the other. The .orators were the active partners, the recipients of all the property and avails of the concern; but, it being an unprofitable and losing concern, there is a balance due the orators, from the defendant, and, to ascertain this balance, which has not been done, and to close the concern and recover the balance, this bill is filed.

The articles of co-partnership were not under seal, and, therefore, no action of covenant can be maintained. That an action of assumpsit cannot be maintained, at law, by one partner against another to recover an unliquidated and unsettled balance of a co-partnership business, has been too fully and frequently decided to be considered open to discussion. Gow on Partnership, 98. Collyer, 143, 144.

If, after a dissolution, a balance is struck and agreed upon by the parties, assumpsit may be maintained to recover it, on an implied promise to pay. 1 Holt’s R. 368. Different rules have been adopted in different states, whether there must be an express promise to pay the balance ; yet, all concur that it is only when the final balance has been adjusted that assumpsit can be maintained. Collyer, 153, note 45. To this rule, Massachusetts stands alone an exception. There, in the absence of a chancery jurisdiction, the court of law has gone farther than any other court of mere common law jurisdiction; probably influenced by the pressure of a necessity which does not here exist.

It has been fully settled, in an action of account, between these parties, that these orators, who were the active partners and received the whole property and avails of the copartnership, cannot maintain, at law, an action of account against the defendant to recover the balance of losses. It follows that the orators are without remedy at law, and are therefore, compelled to resort to chancery to adjust the balance of the conqern and to recover of the defendant his proportion of the loss, when so ascertained.

The mere statement of the case shows the necessity of the bill, and shows, too, that it is not a mere bill for an account, which could be sustained at law. It is true that, in matters of account, generally, chancery has concurrent jurisdiction with the courts of law ; and where the defendant is pursued, in chancery, for an account in any capacity in which he could be pursued at law, a bill will not be sustained where an action would not be. But, in this case, the bill is not addressed to the concurrent, but the peculiar and exclusive, jurisdiction of the court of chancery, in a case where the orators have a just claim, but are without a remedy at law. It is not a'bill calling on the defendant to account. He has received nothing and, of course, has no account to render. It isa bill to settle and adjust a mutual account, between the parties, of a co-partnership transaction, which the defendant will not settle and which the law cannot.

The defendant insists on the statute of limitations of the action of account. The statute, in terms, applies only to actions at law, naming them, and among others the action of account. But, as already shown, this is not a bill for the defendant to account; much less is it an action of account. But, a court of chancery will not enforce a stale claim. If it be a claim in which there are concurrent remedies, both at law and in chancery, and the statute of limitations has run at law, this would probably be a defence in chancery. If it is exclusively in chancery, the statute does not ever directly constitute a defence ; still, a court of chancery, to quiet a stale claim and discountenance laches in the claimant, will, from lapse of time, raise a presumption of adjustment .or payment, in analogy to the statute of limitations, provided the case furnishes no evidence to rebut the presumption and satisfactorily account for the delay. This doctrine is well stated by Phelps, Chancellor, in Wells et ux. v. Morse, 11 Vt. R. 9, where he says ethe remedy, being in chancery only, no statute of limitations is applicable to ’the case.’ ‘ If lapse of time is any bar, it must be in analogy merely to the statute, and, by force of a presumption and he adds, c no presumption can be made which is contradicted by the pleadings.’

This copartnership closed in 1829 ; but the orators were bound to sell the stock and collect the debts. When that was completed, so that a bill could have been filed, does not distinctly appear. But, in June, 1832, the action of account was commenced. Considering the business as all closed in 1832, the statute of limitations of the action of account would have expired in June, 1838, which was three or four months before this bill was filed. In this lapse of time, in analogy to the statute, the court of chancery would presume, if nothing appeared to rebut that presumption, that the parties had settled this co-partnership account, • and the defendant had paid any balance or loss, which had existed against him. Does any thing appear in the answer inconsistent with, and which therefore repels and prevents, this presumption. It appears that from 1832 to 1837 the orators were pursuing the defendant in an action of account to ascertain and recover this balance. The defendant, in his answer, insists, that during all that time he was resisting that action, not on the ground that he had ever settled, or that the concern had ever been settled, or that he had paid, but entirely on the ground that, as he had received nothing, no action of account should be sustained against him for contribution for loss. In the course of that action, the auditors found against him a balance of over two thousand dollars. That was rejected by the court, not because it was wrong or had been previously settled or paid, but, as the defendant says, because the action was not sustainable at law. Five years of the time insisted on to raise the presumpton of settlement is thus accounted for.

The statute of limitations will not run on a judgment while the debtor is in prison thereon, for his imprisonment repels any presumption of payment, while it continues. Ferris v. Barlow, 8 Vt. R. 90. Nor while a judgment remains apparently satisfied, for the same reason. Hall v. Hall, 8 Vt. R. 156. Baxter v. Tucker, 1 D. Chip. R. 355. It cannot be presumed that the defendant actually settled with the orators this account, and paid the balance, before the action at law, for if so, that would then have been his defence. Nor during the pendency of the action, as it was contested on entirely different grounds to its final determination. Deduct the five years thus accounted for, and it will leave no such period, before this bill was filed, as will create the required presumption. Nor can any inexcusable laches be imputed to the orators, who have so constantly, though unsuccessfully, pursued their claim.

In Wells & wife v. Morse, 11 Vt. R. 15, Phelps, Chancellor, says, "The doctrine of presumption, in chancery, is in strict analogy to the statute of limitations. That court, it is true, applies the presumption in cases not within the statute, but never to cases excepted by the statute.” In Phelps & Bell v. Wood, 9 Vt. R. 399, the court has given to the statute of limitations this construction; “ that, whenever an action was brought, and the merits failed to be tried, without fault of the plaintiff,” it is a case where another action may be commenced in a year thereafter, though, in the meantime the statute of limitations had run. That this is the fair interpretation of the statute, regardless of the particular manner in which the action terminated, even though it was by nonsuit, provided that nonsuit was not voluntary, but constrained by some decision of the court. The action, at law, between these parties, terminated in a nonsuit, constrained by a decision of the court that the claimants had mistaken their form of remedy; so, the merits failed to be tried, without fault of the plaintiffs. That action ended in October, 1837, and this bill was filed within one year thereafter. Something is said about that action having been continued one term after the court expressed its opinion. While that action was pending, it was a good excuse for not commencing this bill, and we cannot inquire why it was not terminated earlier. It is enough that the continuances were allowed by that court. If the orators commenced this proceeding within one year after the former action ceased to be pending, they are within the provisions of the statute.

Decree of the court of chancery reversed, plea disallowed, and the cause ordered to pass to the court of chancery to take an account, settle and adjust the same, and ascertain the balance, and decree the same to the party to whom it shall be found due.