Gilmore v. Patterson , 36 Me. 544 ( 1853 )

Rice, J. —

This case comes before us on report of the Judge, who heard the parties in Penobscot county. The gravamen in the plaintiff’s bill, is, that Martin Gilmore, who is one of the defendants, and a co-partner with the plaintiff, having possession of the notes against Pendleton, described in the bill, which notes were the property of the firm of M. & J. C. Gilmore, transferred and delivered them to Patterson, for thó purpose of deriving benefit therefrom, personally, and with the further purpose and design of defrauding the plaintiff and the creditors of the firm ; and that Patterson had knowledge of these facts, and of the fraudulent designs of Martin, before he obtained possession of the notes, and thereby became a participator in the alleged fraud.

The defendant Pendleton admits in his answer, that he gave the notes described in the bill, and affirms that he has at all times been, and now is ready and willing to pay the same according to their tenor, to any party entitled to receive payment therefor, and prays the direction of the Court. He is without fault.

Martin Gilmore has deceased, insolvent, since his answer was filed, and the plaintiff desires no further proceedings against him or his representatives.

Patterson and Martin Gilmore in their several answers, do not deny, but admit the existence of the co-partnership between plaintiff and Martin, as set forth in the bill; and Martin admits that the notes were the. property, of the firm, which fact is not contested by Patterson. But both these defendants expressly deny all fraud in the transfer of the notes, or that they were transferred or delivered to Patterson for the private benefit of Martin.

At the hearing, this plaintiff introduced much circumstantial evidence to show fraud on the part of Martin, and notice and cooperation on the part of Patterson. But the Judge did not find sufficient evidence of fraud and collusion on the part of Patterson to overcome his answer. This being a question of fact, the finding of the Judge is conclusive and the allegation of fraud therefore repelled.

From the answer of Patterson it satisfactorily appears, that from the time the notes came into his hands in the letter dated Oct. 15, 1849, until Nov. 5th, following, they were held as collateral security for the benefit of himself and certain other creditors of M. & J. C. Gilmore, though a literal construction of the language of the letter inclosing the notes would seem to restrict their application to indebtedness from Martin alone. This however is not material, because Patterson admits that that arrangement, whatever it may have been, was rescinded and a new arrangement made on the 5th of November, 1849. On that day Patterson states that he saw Martin Gilmore, who was then incarcerated in prison in Virginia, relative to his claim against the firm; that they computed the interest and found the whole amount of principal and interest then due him from the firm, to be $3900, and that by agreement he gave up to Martin all of said claims against the firm, and fully discharged the same. In consideration of which, Martin, in behalf of the firm, transferred and delivered to him said two notes, and as part of the same transaction agreed that he might, if he saw fit, get them cashed, and deduct from the proceeds said $3900, and a reasonable sum as compensation for his trouble and expenses, Patterson at the same time agreeing to pay over the surplus, if any, to the creditors of the firm, as Martin might direct. This contract was not in writing, but at that time Martin gave Patterson the memorandum in writing, recited in his answer.

It is now contended by the defendant Patterson, that his answer should be received as evidence, not only of the manner in which the notes came into his hands, but also as to the amount of the indebtedness of the firm to him.

So far as the defendant’s answer is responsive to the bill, or necessarily connected with, or explanatory of the responsive matter in the bill, it is evidence. But when a new and independent fact, not called for by the bill, is set up, such fact must be established by proof. The extent of the indebtedness of the firm to Patterson is of this character and must therefore be proved.

As evidence upon this point, Patterson offers the answer of his co-defendant Martin Gilmore. It is a general rule, that the answer of one defendant is not evidence for his co-defendant.

But it is also a general rule of evidence that the admissions of one co-partner, with reference to the legitimate business of the partnership, are deemed to be the admission of each and all its members. The existence of the co-partnership between Martin Gilmore and the plaintiff having been alleged in the bill, and admitted in the answers of the defendants, and the charge of fraud having been successfully repelled, the admissions of Martin, touching the indebtedness of the firm to Patterson, are admitted as evidence for Patterson, and may be used by him in establishing his claim against the firm, whether those admissions are found in the answer of Martin or in any other paper signed by him. They are admitted, however, as the admissions of a co-partner, not as the answer of a co-defendant, and as such must receive the consideration to which they are justly entitled under the circumstances under which they were made.

The rights of the parties stand thus ; — Patterson has an interest in the notes, or the proceeds thereof, to the extent of his just claims against the firm, which were surrendered by him to Martin, and also for such reasonable expenses as have been incurred under the agreement made with Martin at the time he surrendered his claims, and the surplus must be paid over to the plaintiff.

To determine the amount of Patterson’s interest in the notes or their proceeds, a master must be appointed, who is authorized to hear testimony and report the amount which is justly due to Patterson from the firm of M. & J. C. Gilmore, and for this purpose the master is also authorized to examine the parties upon oath.

The decree of the Court below, appointing a receiver, is affirmed, and said receiver is authorized to collect the notes and hold the proceeds to be disposed of. according to the principles above stated, under the order of Court, after the coming in of the master’s report.

The defendant Pendleton, not appearing to have resisted any of the just demands of the plaintiff, is entitled to his costs.

Shepley, C. J., and Tenney and Hathaway, J. J., concurred.