Walden v. Sherburne , 15 Johns. 409 ( 1818 )

Spencer, J.,

delivered the opinion of the court. The verdict being taken by consent, subject to the opinion of the court, we must draw such conclusions from the evidence, as we think the jury ought to have drawn. The principal inquiry is, whether the defendants were general partners, in consequence of the agreement between them, of the 30th of September, 1806. Regarding the whole of that instrument, the circumstances of the times, and the conduct of the parties under it, I feel no hesitation in saying they were general partners. It appears, by the recital to the agreement, that the defendants had been partners in a commercial house at Nantz, in France, from May, 1804. That partnership they agreed to dissolve ; and for the purpose of promoting the general as well as individual interest of each party, they further agreed to establish a commercial house in New-York. It is to be observed, that both the defendants were American citizens, and the articles under consideration contemplate that Eakin was to reside at New-York, and Sherburne in France.

The first article of the agreement states, that the principal obj ect of their respective establishments was intended to procure consignments on commission from the United States, and they pledged their honour to use their best endeavours in the attainment of that object.

By the second article, Sherburne engages to ship, from time to time, such goods as may be deemed profitable for sale in the United States, directed to Eakin, for account of himself, for such American citizens as he may point out.

By the third article, Eakin engages to convert all such amounts, likewise any sum he may be able lo command, arising from association, loan, or credit, into reasonable advances on goods consigned for sale, to the house of Sherburne ; Eakin taking the precaution of insuring.

By the fourth article, all shipments of goods made by order of Eakin, shall be for his account and risk, but one third of the net profits arising from the sales of the goods, after deducting two and a half per cent, commissions, was to be carried to the business credit.

The fifth article, provides that all consignments of goods received from the United States, whether from shipments made directly from Eakin, or from his friends in consequence of his influence and exertions or orders,. Sherburne agrees to account with Eakin for one third of the net commissions arising from such consignments; and it is declared to be understood that this condition should be made reciprocal. The sixth article stipulates, that when a shipment of goods is deemed prudent to be made by Eakin, on his own account, consigned to Sherburne, a mutual exchange is to take place; and the article proceeds to arrange how the net profits and commissions are to be divided. Sherburne, in such case, is to receive one third of the net profits, and Eakin, one third of the net commissions. They also agree, that if losses should arise on such adventures, they are to be deducted from the amount of the profits made in the year; and they agree not to be answerable for the losses on shipments, beyond the profits made in the year. These are all the stipulations material to this inquiry.

It is very manifest, from the whole agreement, that the defendants meant to keep out of sight, the fact, that there was to be a commercial establishment in which both were interested, in France; that all goods going to and from France, were to appear to be owned by Eakin, who wai domiciled here, to avoid the risk of British captures; but in all the adventures, whether from America or France, boils of them were to have the stipulated profits and commissions, in a manner promoting the reciprocal interests of each. No principle is better established, than that every person is tobe deemed in partnership, if he is interested in the profits of a trade, and if the advantages which he derives from the trade, are casual and indefinite, depending on the accidents of trade. (2 Wm. Bl. Rep. 947. 998.) To constitute a partnership, a community of profits and loss is essential; the shares must be joint, though it is not necessary they should he equal. (1 H. Bl. 37.)

By the 3d article of the agreement, it was contemplated by both the defendants, that Eakin was to exert his credit in making advances on goods consigned to the house of Sherburne, for sale, and both of them were to participate in the profits and commissions. This puts it beyond all doubt, not only that the defendants were partners, but that Eakin had a right to borrow money, to advance ,the interests of the firm.

It has been contended, that the defendants were limited, not general partners ; and that, therefore, Sherburne was not bound for the advances made to Eakin, as it did not appear that they were made to promote the direct and specified objects of the partnership. All partnerships in one sense, are limited. They have particular branches of trade in view ; none embrace all the varieties of trade. All that is requisite to render a debt contracted by one of the partners binding and obligatory on the others, is that the debt relate to the partnership. The authority delegated by one partner to another, is to act in the course of their particular trade or line of business; and in such transactions, strangers have a right to act on the credit of the partnership fund. It is not necessary that the money lent, or credit given, should appear to have been actually used for the benefit of the partnership ; third persons have no concern with that. This principle is strongly exemplified in the case of Bond v. Gibson and Jephson; (1 Camp. N. P. Rep. 185.;) there one of the partners, with the intention of cheating the other, went to the plaintiff’s shop and purchased a great number of articles which might be used in the partnership business, and instantly converted them to his separate use. It was a fair sale in the ordinary course of business. Lord Ellenborough held, that unless the seller is guilty of collusion, a sale to one partner, with whatever view the goods may be bought, and to whatever purposes they may be applied, is a sale to the partnership.

The letters from Sherburne to Eakin by no means tend to disprove the fact of the existence of a partnership. Considering the necessity for caution, lest their correspondence might be intercepted, the letters are not incompatible with a partnership. Indeed, they seem to me to take an interest in the business which Eakin was doing, indicative of a concern in it>; and Eakin's letters convey the same idea; although I do not consider these letters of any material importance, for, in my judgment, the plaintiffs’ case does not require them.

With regard to the stipulation in the articles of agreement, that the losses on shipments should be deducted from the profits of the year, and that the partner not making the shipment, should be no further answerable ; this was a valid agreement as between the partners, but cannot affect any person dealing with the partnership. If the transaction was in the ordinary course °of business, and attached on the partners, they are answerable to the whole extent of their fortunes.

It has been objected, that moneys lent to pay the custom-house bonds, are not chargeable upon the partnership, inasmuch as one of the plaintiffs was a surety in those bonds, for Eakin only. The case of Tom v. Goodrich and others, (2 Johns. Rep. 213.) has been cited and relied on, in support of this objection. That case would have applied with decisive effect, had the custom house bonds been paid by the plaintiffs; but they do not make the bonds the ground of their demands. They were paid by Eakin, with money lent and advanced by the plaintiffs. This money was applied by Eakin, one of the partners, to pay a partnership charge. Had the money been advanced for the same purpose, by any other person, no doubt could have existed, as to the liability of the defendants ; and the plaintiffs did not advance the money to relieve themselves from the bonds, or because they had become chargeable, but it was money }en£ jn the course 0f business. The objection is untenable.

It has been strongly insisted, that the plaintiffs did not Pr0^uce sufficient evidence to prove the items of their account. On the 15th of September, 1808, Eakin, by his certificate, endorsed on an account current,i, made out by the plaintiffs, and charged against him aloné, admitted a balance to be due the. plaintiffs, for 5,802 dollars, 54 cents ; which he further certifies to have been contracted since his connection with Sherburne. This balance was admitted, after the dissolution of the partnership, which took place on the 18 th of August, 1808; for, on that day, Eakin received Sherburne’s letter dissolving the connection. According to the decision of this court, in Hackley v. Patrick and another, (3 Johns. Rep. 536.) one partner cannot, after a dissolution, bind his copartner by acknowledging an account, any more than he can give a promissory note to bind him. It seems that the court of Common Pleas, in England, have held otherwise; (1 Taunt. 104.) but I believe there is more safety in the rule of this Court, than in a contrary one.

It appears to me, that the proof of the account is fully made out. The waste book, in the hand writing of Eakin, was proved, and given in evidence. This I take to be an original book of entries made at the time the transactions took place; and this book contained credits for all the plaintiff’s accounts. The existence of the partnership being established, it follows, that an admission of the account, by one of the partners, during the continuance of the partnership, is competent proof. Besides, the case states, that the plaintiff’s account against Eakin was proved, and read in evidence. Now this account is precisely the account against both defendants, and if proved, the proof avails against both.

Again; the defendant, Sherburne, to gain a deduction from the plaintiff’s account, produced the account himself, and by doing so, he made it evidence. He might, indeed, contradict, or disprove it, but not doing so, it was evidence in the cause, to the jury. (5 Taunt. 245.)

The only remaining question is as to the interest. We have uniformly decided, that after an account has been liquidated, it carries interest; and that an account is to be considered liquidated after it has been rendered, if objectians are not made to it. In the present case the account was rendered to one of the defendants on the 15th of September, 1808, and not objected to; indeed, it was admitted. From that period the plaintiffs are entitled to interest.

Judgment for the plaintiffs accordingly.