Gordon v. Titus , 66 Barb. 275 ( 1873 )

Ingraham, P. J.

John Gordon & Son, Hartshorne & Brand, and one McKendrick, entered together' into a contract for the purchase of malt, for $13,371.68. Me-Kendrick paid his one-third. Neither Gordon & Son nor the defendants Hartshorne & Brand could pay for their shares, and Gordon proposed to use the note of Hartshorne & Brand to raise the money for that purpose. They accordingly gave their note to Gordon for $8,864, and he had the same discounted, and with the proceeds paid for the malt. The note being used for the joint benefit of both, it became a liability to be borne jointly by them, in equal proportions. As this was not a matter relating to the affairs of the whole partnership, but simply to transactions between two of the partners, the rule that prevents one partner from suing another for matters connected with the firm would not apply.

When the note for $8,864 was nearly due Hartshorne & Brand told the plaintiff they could not pay the note, and wanted assistance, and thereupon Gordon agreed to advance them money on notes they were to furnish. Accordingly, on receiving from them $8,000, in four notes, he advanced them $6,000, and they took up their first note when it came due. The effect of that arrangement was to terminate the transaction as to the first note which was advanced by them for the purpose of raising money, as they paid it from moneys raised upon the four notes subsequently provided.

What, then, was that transaction? Hartshorne & Brand, being in want of money to pay $4,457.06 which they owed for malt, and Gordon & Son being in the same condition, Hartshorne & Brand made four notes which they placed with Gordon, who advanced $6,000 thereon. This money, with $2,864 of their own funds, they used to pay the first note.. By this arrangement they paid their own portion of what was due for malt from them, and also what was due from Gordon on the first note, for his share, and became indebted to the holders of the notes if they were discounted; but as the plaintiff took them up when they became due, they were valid securities in the hands of Gordon for only the amount he had advanced thereon, viz., $4,457.06, leaving the sum of $1,593.06, as the only amount of consideration which Gordon in reality had paid on the notes. The balance was for his benefit—part to pay his own indebtedness and the balance of the notes used by him, as he said, to keep up deposits in the bank, so as to obtain discounts.

It is apparent, from this statement, that on a settlement of the accounts between the parties $1,593.06 is the only sum due the plaintiff from the defendants; and that he has no further claim beyond that sum and interest, on a settlement of their mutual clairgs, on the malt purchase. This balance is the difference between what the defendants paid on account of the first note, out of their own funds, and the amount they should have paid originally, for their third of the malt.

I see no difficulty in the way of settling the accounts between the parties, in this action, unless such difficulty arises out of the pleadings. The plaintiff suggests that the value of the malt subsequently delivered should have been the subject of a counter claim. This is not so. It always belonged to the plaintiff, and • was held by the defendants on storage. There was nothing to counter claim. The delivery of it to the plaintiff dispelled any presumption that the notes were an advance on that property. The balance above stated, with interest on the same from the day of payment for the malt by Gordon, is all the consideration for which the plaintiff could claim to hold the four notes of which this note in suit was one.

It would seem to be an idle proceeding to allow the plaintiff to recover more than was due him on the account between the parties, and put the defendants to another action to recover back the amount which they would have overpaid. The whole matter can be adjusted in this action.

The judgment should be reversed, and a new trial ordered, costs to abide the event; unites the plaintiff consents to reduce the judgment to $1,593.06 and interest from 17th September, 1870; in which case the judgment is affirmed for that sum, without costs of appeal!