Rockwell v. Wilder , 45 Mass. 556 ( 1842 )

Hubbard, J.

This is an action of assumpsit founded upon . promissory note made by the defendant on the 21st of June 841, and given to the plaintiff for $ 30,000, with the common counts, and on the writ in which case certain property of the Defendant was attached.

Messrs. Dykers & Allstein of New York, creditors of said Wilder, and subsequent attaching creditors of the same property, petitioned the court of common pleas to be allowed to dispute the validity and effect of the plaintiff’s attachment, by virtue of the provisions of the Rev. Sts. c. 90. This they were permitted to. do, and the court directed a trial by the jury on the question, whether the debt declared upon in this suit was justly due and payable when the action was commenced ; • and upon the hearing of their petition, it appeared that the note was given under the facts and circumstances set forth in the report of the case

Upon those facts, the petitioners contend that the plaintiff had no right of action upon said note, at the time of the service of his writ; but the presiding judge of the court of common pleas decided, upon the facts, as proved at the trial, that the same was a "good and valid note, and could not be avoided for want of con sideration.

The petitioners rely upon the position of law, that one partner cannot sue his copartner, except for the recovery of the balance of a final account settled between them ; and they contend that in this case no such account has been settled, and therefore that the present action cannot be sustained. But this rule of law, though generally recognized, both in England and in the different States of the Union, is not without its modifications ; and in this State, it has been decided, that though no final account has been settled, yet if there are no outstanding demands against the partnership, and no outstanding debts to be collected, or that can be collected, so that the judgment to be rendered will be a final settlement between the partners, then such action may be maintained. And in the case of Brinley v. Kupfer, 6 Pick. 179, the court have extended this right, and have decided, • that if there is in fact a balance due to the plaintiff, and there are outstanding debts due from the partnership, less in amount than the balance due from the defendant to the plaintiff, and the plaintiff is willing to assume such outstanding debts, and release to the defendant the amount of such debts, then the action can be maintained. And the court have strongly intimated, in the case of Williams v. Henshaw, 11 Pick. 79, that where there are outstanding debts due to the partnership, if the plaintiff, before commencing his action, assigns to the other, or tenders an assignment of the outstanding debts due to the partnership, he may maintain his action. So the court say in the same case, relying upon the authorities there cited, “ if one partner covenants or agrees to advance a certain portion of the capital, or to perform any other specific acts, an action will lie for the violation of these express contracts, even during the continuance of the part nership.” The court further say, in the same case, “if the plaintiffs had shown an agreement on the part of the defendants to advance one half of the money necessary to carry on their joint speculation, or a promise to repay the plaintiffs for their advances, they might well recover upon such undertaking, in the present action and this, notwithstanding the concerns of the partnership were not closed.

And we are of opinion, that where one partner has received more than his share of the partnership property, and the partners are closing their concerns, and it is ascertained that a balance will certainly be due to one of them on a final settlement, although the true balance cannot at the time be ascertained, then if such debtor partner gives his note to the creditor partner for a sum within the balance which it is acknowledged will be due to him on the final settlement, such note is given upon a good consideration, and is equivalent to an express promise to pay the given sum mentioned ; and the payment of such note may be enforced at law, though the balance is not struck between them.

In regard to the note itself, we are aware that it was given to the plaintiff in consequence of the failing circumstances of the defendant, and for the purpose of affording him an opportunity to secure a just demand by means of an attachment, and thus intending to give the plaintiff a preference as a favored creditor. But independently of the provisions of the insolvent and bankrupt acts, such preferences have long been allowed by our law, as the court have had frequent occasion to determine. Hatch v. Smith, 5 Mass. 49. Stevens v. Bell, 6 Mass. 343. Hastings v. Baldwin, 17 Mass. 556. Whitman v. Leonard, 3 Pick. 179. And again, in respect to the fact of making a note for a sum certain, in place of a sum uncertain, and giving a present demand in regard to debts due but not yet payable ; such notes have been distinctly held to be legal and valid, and attachments upon them have been sustained, as well for debts not yet due, as for liabilities merely. Cushing v. Gore, 15 Mass. 69. Little v. Little, 13 Pick. 426. Gardner v. Webber, 17 Pick. 407.

But we incline, in the present case, to think that the transactions of the parties were such that the accounts, resulting from the shipments to France, may be settled between them, independently of the shipments to England. This was a limited partnership, confined to the purchase of cotton for a single season, which cotton was paid for as soon as purchased and shipped ; so that no outstanding debts remained. On or after the shipment to France, Hottinguer & Co. were admitted as partners in that distinct portion of the business under the special management of the defendant, and which connexion was not dis-affirmed by the plaintiff. This part of the adventure was fully settled, the balance ascertained, the amount of profits due to Hottinguer & Co. retained by them, and the balance paid over or advanced to the defendant, for the account of himself and the-plaintiff; and this liquidation took place before the commencement of this suit. Upon this transaction, thus separated, a large amount was due to the plaintiff, and capable of being ascertained without difficulty ; on account of this balance the defendant made his note to the plaintiff, which constitutes, we think, a valid consideration, and an action upon it may be sustained.

In respect to the cotton shipped to Humphreys & Biddle, and which was subject to the control of the plaintiff, that property was also all sold, but whether under a del credere commission, or not, does not appear ; the account of sales rendered, resulting in a balance of £7166.00.11, and the whole of which was cash on the 31st of May, 1841 ; and the fact whether the payments were made at maturity, or not, might have been easily known at the time when the note in the present case was given ; and if collected, and the plaintiff was willing to assume that balance for his own account, no impediment would stand in the way of a final settlement of the accounts resulting from their limited partnership. The second agreement referred to in the facts stated was not embraced within the original contract.

We think, therefore, that a bill in equity might have beer, sustained by the plaintiff against the defendant, requiring ar account, and that such bill might have been inserted in a writ of attachment, by virtue of the provision of the Rev. Sts. c. 90, § 117, and the same attachment have been made and sustained as in the present suit, which would have resulted, substantially, in the same balance as that returned by the jury in this case ; a difference therefore merely in the form of action.

A question was started by the plaintiff, whether the petitioners had brought themselves within the provisions of the Rev. Sts. c. 90, §§ 83 — 85 ; but having come to the conclusion that the action can be maintained, for the reasons given, it is unnecessary to determine that question. The exceptions are therefore overruled, and the petition of the second attaching creditors must be dismissed with costs.