Lefever v. Underwood ( 1862 )

The opinion of the court was delivered,

by Read, J.

A partnership was entered into in August 1856, between George W. Lefever, a drover, and Jeremiah Underwood, a farmer, of Chester county, in the buying and selling of cattle, which lasted betwe.en four and five months. Each contributed $4500, and each was to receive an equal share of the profits. By a statement entered in G. W. Lefever’s book, of an account with J. Underwood, it appears that their business closed with a profit. Half of the profits and the cash actually put in by Underwood, about which there was no dispute, with interest from 1st April 1857, formed the basis of the master’s report, and of the decree of the court below. Lefever had claimed to charge Underwood with certain losses occasioned by the failure of the Lancaster Bank, which was clearly negatived by the master, and is the ground of appeal to this court.

Mr. Lefever bought and sold the cattle, occasionally assisted in the selling by Underwood, but in every instance the purchases were consummated by Lefever. The payments for cattle sold were made both in money and promissory notes — the notes were made payable to Lefever, except once or twice to Underwood, but all were received by Lefever, and the payments for cattle were made by him. Eor a long time before, as -well as during his connection with Underwood, Lefever had a large deposit account in the Lancaster Bank, which was exclusively in his ovvn name, and he Avould never permit any one with whom he Avas connected in business to have control of his account or of his name in bank, nor would he have any partner in his bank account. The money and notes received by him from the sales of their cattle were deposited by him in the Lancaster Bank in his individual name, and mingled with his private funds and funds belonging to other business transactions. Until after the failure of the bank, Undenvood had no knoAvledge that the account Avas thus kept, and by reason of its being so kept, was in fact prevented on his application to the bank from ascertaining how it stood.

After the conclusion of the business connection with Lefever, Underwood demanded at the Lancaster Bank to see the account of G. W. Lefever & Co. On being informed that there was no such account, but that there was an account in the name of George W. Lefever, he asked for a copy of it, which being refused, because it was the individual account of Lefever, he asserted his right to it, because he and Lefever were doing business together, and he had an interest in it, and the master finds that Underwood knew nothing about it, but on the contrary supposed that the money was deposited to the credit of the firm, and it is equally clear that the bank and Lefever both regarded it simply as his individual account, and not the account of the firm at all. There was not only no account, but Lefever never intended there should be any to show Avhat was partnership and what were private or other funds, but that all should be regarded as his own exclusive property. All the notes were signed by Lefever alone given for cattle, and all the checks were drawn by him in his individual name. All the funds of the concern, from the time they passed into the hands of Lefever, were designedly kept within his exclusive control.

The Lancaster Bank finally closed its doors on the 17th November 1856; on the 24th November, Lefever drew out of the bank, in its notes, $13,500, upon his own check payable to self, leaving to his credit a balance of $200 or $300, Avhich was applied to the payment of a protested note at the bank with which Underwood had no connection. Part of the notes thus drawn out were afterwards redeemed in par funds, leaving in his hands $7905 of Lancaster Bank notes, which were registered by the bank for the purpose of drawing interest — endorsed by the cashier in three packages, and the packages appropriately endorsed. These packages, the master finds, “ are in the possession of Lefever, produced by him as part of his case, and have been under his exclusive control since they were delivered to him.” At the time' of the failure of the bank, the notes could have been sold at 80 per cent., and have gradually decreased in value till they are now scarcely of any value.

About the time that these things were thus going on, Lefever, individually, with his counsel, had several interviews with the directors of the bank, and made the arrangement with them by which part of the notes was redeemed. “Underwood,” as the finds master, “ had nothing to do with these arrangements, and was not called upon to take any part in them ; everything about them was conducted by Lefever alone, on his own responsibility, without consulting Underwood at all.”

Now this, the only loss made by Lefever, was $7905. If the notes had been sold at 80 per cent., the loss would only have been $1581, of which Underwood’s share could only have been $790.50; and if any part of the loss was to be paid by Underwood, was lie not entitled to be informed and consulted by his partner ?

Without entering into the elaborate reasoning of the master, it is clear that Lefever treated the account with the bank as his own individual account, and that it was so regarded by the bank ; that all his arrangements with it were in the same spirit, and that the most unwise and imprudent retention of the notes by him without even consulting or informing Underwood, was his own individual act; and that under the circumstances, having deprived the transaction of any partnership character, he must sustain the whole of this loss himself.

Decree affirmed at the costs of the appellant.