Armsby v. Farnam , 33 Mass. 318 ( 1835 )

Shaw Ch J.

delivered the opinion of the Court. The only question in this case is, whether the action was rightly commenced in the name of the two plaintiffs. It seems to us exceedingly clear, that the balance of the account due to Armsby alone, at the formation of the new firm in 1830, was well transferred to that new firm, by the mutual consent of the parties, and that that balance was absorbed and effectually paid by the subsequent proceedings. The presenting of the account by the new firm of Armsby & Withered, in which they debited the defendants with the balance due to Armsby, must be regarded as a proposal on their part, to transfer their mutual dealings to the new firm ; and the renewal and continuance of those dealings afterwards by the defendants with the new firm, was an acceptance of that proposition and a mutual consent of the parties to such transfer. The subsequent credit given by the new firm to the defendants for the proceeds of goods, previously consigned to Armsby alone, and the acceptance of such credits by the defendants without objection, is evidence of their assent to the like transfer of the consignment. of their goods to the new firm for sale, by the defendants. Even if the transaction could be deemed the assignment of a chose in action by Armsby to the new firm, we think the subsequent account being full notice of such assignment, the subsequent dealings must be deemed an assent to such assignment and must raise an implied promise to pay it, which would be sufficient to enable the plaintiffs to maintain an action for it. But we think it stands on still stronger ground, and that is, that the rendering accounts on one side, and the acceptance of them on the other, without objection, and new consignments made and advances taken, is evidence of the strongest character, of the mutual agreement of the parties thus to transfer the balance and open a new course of dealing; and to effect this result, it is wholly immaterial on which side the balance of such accounts appeared, as they purported to be accounts current, and to state debt and credit between the parties. Such being the case, the present right of action results from .the new balance struck upon an account directly between the parties, and the old balance must be deemed merged and paid.

But we are also satisfied with the more direct and simple view which was hypothetically taken of the matter at the trial, admitting the defendants’ claim. When the balance due from the defendants to Armsby was charged in the books of the firm of Armsby & Witherell, the presumption is violent, that the goods of the defendants were in the hands of Armsby for sale, under an actual or implied pledge for the payment of such balance ; in other words, that Armsby’s debt consisted of advances on the goods. These goods were transferred to the new firm at the same time as consignees, as is proved by the proceeds being credited to the defendants’ account, and the accounts in which such credits to them were contained, were received and accepted by them without objection. It seems therefore very clear, that if the defendants were right in their objection to the admission of this balance of debit from Armsby’s books, and that it ought to have been stricken out, it would follow, as a necessary consequence, that the proceeds of goods consigned to Armsby alone, which were more than sufficient to cover that balance, must have been stricken out too.

In regard to the other objection, that in consequence of the transfer of the balance to the still later firm of Armsby, Witherell & Co., Barlow ought to have been joined, if we understand the facts, there was no new dealing between the parties after Barlow became a member of the firm. A mere transfer of a balance on the books, is not alone sufficient to vest or change the right of action, but assent to it, and new dealings engrafted upon it, by which the old balance becomes effectually blended in and absorbed by the new account.

The real creditors, Armsby & Witherell, might be very willing to receive the balance due to them in the name, and through the agency of their new firm, but when it became necessary to sue, it was proper to conform these entries and their account to the real rights of the parties. Barker v. Blake, 11 Mass. R. 17. In that case it was held, that the transfer of an account due from two as partners, to the account of one, who had undertaken to pay the debts of the concern, but who had not in fact paid them, did not prevent the creditors from recharging the two, and recovering.

The Court are of opinion, that the two plaintiffs could well maintain the action, upon the facts stated, and that the default was properly entered.

Judgment on the default.