Dennis v. Ray

By the Court Warner, J. delivering the opinion. [1.] The first alleged ground of error which we shall notice, is the rejection of the Central Bank fi.fa. offered in evidence by the complainants. The allegation in the complainant’s bill is, that there was a debt due from thefirm of E. W.fy J. Dennis to the Central Bank, which had been paid off by Thomas Crutchfield, and Gregory J. Turner, as indorsers. The fi.fa. offered in evidence, was not against the firm of E. W. & J. Dennis, but issued on a judgment, as appears upon its face, against E. W. Dennis %.s principal, and John Dennis, Thos. Crutchfield and Gregory J. Turner, as indorsers. The complainants did not move to amend the bill, so as to make the allegation and the evidence correspond, and we think the evidence was.properly rejected by the Court, on the ground of misdescription of the fi.fa. [2.] The second ground of error taken is, the rejection of the sworn answer of E. W. Dennis to a bill in Equity, filed against the copartnership firm of James J. Ray & Co. of which E. W. Dennis was a member. This answer had not been filed in the cause as an answer, at the time it was offered, and the Court declined to stop the progress of the cause then before it, to take up another for the purpose of having the answer filed. As a matter of practice, we see no objection to the ruling of the Court on this point, and shall not undertake to control its discretion, in refusing to take up another cause for the purpose of permitting the answer to be filed, as E. W. Dennis had departed this life, and there were objections to the paper being filed as his answer. [3.] The third ground of error assigned is, the rejection by the Court, of the paper purporting to be the answer of E. W. Dennis, as one of the copartners of James J. Ray & Co. containing admissions in writing, against the interest of said company — first offering toprove the signature of Dennis thereto. This evidence,as-an admission in writing, made by one partner against the interest of the copartnership, which is admitted to have existed at — 454 — the time it was made, ought, in our judgment, to have been received. The admission was not offered to establish a copartnership, so far as James J. Ray & E. W. Dennis were concerned; that fact was not disputed; but was offered as an admission of one of the copartners, adverse to the interest of the copartnership, and favorable to the complainants, who are now seeking to collect their debts out of the assets, which they allege went into the hands of James J. Ray & Co. See 1 Greenleaf Ev. §177. [4.] The fourth ground of error is to the charge of the Court to the Jury, The Court charged the Jury: “ That the purchase of the goods in the name and on the credit of E. W. & J. Dennis, did not make them the property of E. W. & J. Dennis; that it was competent for James J. Ray & Co. to have agreed with the vendors of the goods, to sell them on the credit of E. W. & J. Dennis, and look to James J. Ray & Co. for payment, and in that event,, the goods were the property of James J. Ray & Co.” Solicitor for complainants then requested the Court to charge the Jury, that it was incumbent on the defendant, if such agreement existed, to prove it; which the Court refused to do. The object of the complainants is, to reach the proceeds of the goods which had been purchased by E. W. & J. Dennis, on their credit, prior to the formation of the partnership of James J. Ray & Co. in February, 1841. The complainants charge.; that the goods on the shelves of the storehouse, and in the boxes therein, purchased by E. W.' & J. Dennis, were turned over to the new firm of James J. Ray & Co. and that the latter firm paid nothing therefor, and that the defendant, as the receiver and assignee of James J. Ray & Co. has now in his hands the proceeds of the goods so purchased by E. W. & J. Dennis, and so turned over to the new firm of James J. Ray & Co. The question on the trial was, whether the goods on the shelves, and in the boxes in the storehouse, at the time of the formation of the new partnership, were the property of E. W. & J. Dennis, and turned over to the new firm of James J. Ray & Co. without any consideration having been paid therefor, by the latter firm ? If the — 455 — goods on the shelves, and in the boxes in the storehouse,, were the property ofE. W. & J. Dennis, purchased in their name,, and upon their credit, and were turned over to this new firm of Jas. J. Ray & Co., without the latter firm having bona fide purchased and paid a valuable consideration therefor, or without having paid any thing therefor, as is alleged, to the former firm of E. W. & J» Dennis, then, the goods, or the proceeds thereof, still remain the property of E. W. & J. Dennis, and may be followed and made-subject to the payment oftheir creditors’ debts. The goods were purchased in the name, and on the credit ofE. W. & J. Dennis,, and were in their possession in February, 1841, when ‘turned, over to the new firm of James J. Ray & Co. But the Court instructs the Jury: “ That it was competent for James J. Ray & Co. to have agreed with the vendors of the goods to sell them on the credit of E. W. & J. Dennis, and look to James J, Ray & Co. for payment, and in that event, the goods were the property of James J. Ray & Co.” Concede that it would have been competent to have made such an agreement, yet, we are entirely unable, after the most diligent search, to find tire least evidence of any such agreement in this record. It would have been very remarkable, had such an, agreement been proved in relation t©> the goods, now the subject matter of controversy; for it will be recollected, that the goods had been purchased by E. W. & J. Dennis, and were then in their possession in the storehouse, ore the shelves, and in boxes, at the time the copartnership of James J. Ray & Co. was formed. Upon this- point, the answer of the defendant is quite significant and contradictory. “ This defendant further answering, says: That the firm of James J. Ray & Co. bought of the firm of E. W. & J. Dennis, the stock of goods on hand, and then on the shelves of the said E. W. & J. Dennis,, of the value of eleven hundred and twenty dollars, two- and a half cents, as estimated by the said E. W. & J. Dennis-, which the said firm of James J. Ray & Co. was to take, and sell at such-prices as could be obtained for them, and were to account to them,, the. said firm of E. W. &. J. Dennis, for the amount produced from said sales, which this defendant says has been done.” If the firm of James J. Ray & Co. bought the goods of E. W. & J. Dennis, — 456 — what price did they agree to pay for them ? E they bought the goods, how does it happen, that the new firm of James J. Ray & Co. was to take the goods and sell them “ at such prices as could be obtained for them, and account to E. W. 8f. J. Dennis, for the amount produced from such sales ? ” The idea of a purchase of the goods by James J. Ray & Co. and then to account for the sales thereof to E. W. & J. Dennis, is totally inconsistent with the ordinary transactions of mankind. Purchasers do not usually pay the purchase money for goods to the vendors, and then account to them for the proceeds of the sale of such goods. “This defendant says, that the stock of goods then in boxes and unopened, constitute that portion of the stock which the said Ephraim W. Dennis was to bring into the firm of James J. Ray & Co. and that the same had been purchased in the name of E. W. & J. Dennis, and that notes in the name of the said firm of E. W. & J. Dennis, had been given for the same.” The defendant also states in. his answer, that the said E. W. & J. Dennis agreed, for sufficient consideration, (to wit:) selling off the said above mentioned remnant of goods, and other services rendered by the said firm of ■James J. Ray & Co. to permit the said last mentioned firm, to use their name in the purchase of goods in New York and elsewhere, and to draw notes and make accounts in the name of said firm of E. W. & J. Dennis, for such purchases. The agreement here stated by defendant, must necessarily relate to such purchases of goods as were to be made subsequently to the formation of the partnership of James J. Ray & Co. and not to goods which had been purchased before that time, in the name of, and ■on the credit of E. W. & J. Dennis. The complainants are seeking to reach the proceeds of goods purchased by E. W. & J. Dennis, before the formation of the partnership of James J. Ray & Co. As to any goods which were purchased by E. W. &. J. Dennis before the formation of the partnership of James J. Ray & Co. there is no evidence in the record of any agreement whatever, between the latter firm and the vendors of such goods, to sell them on the credit of E. W. & J. Dennis, and to look to James J. Ray & Co. for payment; and indeed, there could not have been any such agreement, for the simple reason that the — 457 — copartnership of James J. Ray & Co. had no existence at the time the goods were purchased, which the complainants seek to subject to the payment of their debts. The complainants are seeking to subject the goods which were on the shelves and in the boxes, in the storehouse, which had been purchased in the name of, and on the credit of E. W. & J. Dennis, before the co-partnership of James J. Ray & Co. was formed, and which it is alleged,were turned over to the latter firm and been by them sold. Consequently, there is no evidence of any agreement, as to those goods, as stated by the Court in its charge to the Jury. In Paschal vs. Davis, (3 Kelly, 256,) we held, that it was error for the Court to charge the Jury, on an assumed state of facts, and this case is equally as strong as that. The request of the complainants solicitor, for the Court to charge the Jury, “ that it was incumbent on the defendant, if such an agreement existed, to prove it,” was both pertinent and proper, in our judgment, and ought not to have been refused. In view of the facts of this case, as made by the record, and the principles of law applicable thereto, we think the Court erred in that part of its charge to the Jury, in relation to all the assets of the firm of James J. Ray & Co. being sacred to the payment of the debt of Samuel J. Ray & Co. in preference to the demands of the complainants. We do not dispute the proposition assumed by the counsel for defendant in error, that the transfer of the partnership effects of E. W. & J. Dennis, to James J. Ray & Co. for value, and bona fide, would have been legal and valid, and that the creditors of the former firm could not follow them; but the very question here is, whether there was any bona fide transfer of the goods of the old firm to the new one; or whether the latter firm ever did pay any value whatever, to E. W. & J. Dennis for the goods which were on the shelves and in the boxes? Taking the evidence, as disclosed by this record, and we have no hesitation in saying, the firm of James J. Ray & Co. never have accounted to the firm of E. W. & J. Dennis for these goods. Where is the evidence of it ? The defendant in his answer admits, that the goods on the shelves went into the hands of James — 458 — J. Ray & Co. and also the goods in the boxes ; the' latter were putin, as E. W. Dennis’ share of the stock; but still the goods were the property of E. W. & J. Dennis, they having, as the defendant states, given their notes for them. When and how did the firm of James J. Ray & Co. pay E. W. & J. Dennis for these goods ? That is the question which it is incumbent on the defendant to answer, and one, which he has not answered. [5.] In relation to the goods on the shelves he says, the firm of James. J. Ray & Co. were to account to E. W. & J. Dennis for theproceeds of the sale- of them,.which he, “ this defendant, says he has done.” How accounted for them? To whom has he accounted for them ? In Moore vs. Ferrell, we held, that a defendant in his answer could not, both charge and discharge himself. 1 Kelly,!. Here the-defendant admits the receipt of the goods by James J. Ray Co. o.r so-much as was on the shelves in the. storehouse, but says he has accounted for the same. To make this part of his answer available in his defence, it is indispensably necessary he should prove by competent evidence, how, and in what manner he has accounted, and to whom. But what has become of the- goods that were in the boxes, which had been purchased in the name of E. W. & J. Dennis, for which their notes, were given, and which went into the hands of James J. Ray & Co. as E. W. Dennis’ portion of the stock ? All the goods, both those on the shelves, and those in the boxes, were the property of E. W. & J. Dennis, in February, 1841, when this new copartnership was formed. What consideration have they ever received for them ? The defendant claims the funds in his hands for the payment of a debt contracted by James J. Ray & Co. with Samuel J. Ray & Co. If the defendant has in his hands as the receiver and assignee of James J. Ray & Co. the proceeds of the goods sold by them belonging to E. W. & J. Dennis, their creditors have an equitable right to have tire same applied to the satisfaction of their judgments, in preference to a creditor of James J. Ray & Co. The property of E. W. & J. Dennis cannot be appropriated to the payment of the debts of the creditors of James J. Ray & Co. Let James J. Ray & Co. pay their creditors with their — 459 — oion property; certainly the property of E. W. &J. Dennis is not sacred for the payment of the debt of Samuel J. Ray & Co. who are creditors of James J. Ray & Co. in preference to their own creditors, who most probably sold them the identical goods, the proceeds of which are now sought to be applied by the defendant, to the payment of debts contracted by James J. Ray & Co. The complainants’ debts -were contracted before the co-partnership of James J. Ray & Co. was formed, or are the renewal of debts contracted before that time. It is a mistake to suppose that the complainants seek to make the new firm of James J. Ray & Co. bound for the debts of the old firm of E. W. & J. Dennis. What the complainants seek is, to reach the goods of their debtors, or the proceeds thereof, which went into the hands of James J. Ray & Co. and to have the same applied in satisfaction of their judgments, on the principle, that the property of E. W. & J. Dennis, is subject to pay their debts, in whomsoever hands it maybe, and a Court of Equity will lend its aid to reach it, whenever the remedy at Law is inadequate. However, the jurisdiction of the Court was not questioned on the argument, and it is not necessary now to discuss it. Now, it may be true, that all the assets in the hands of the defendant, belonging to the firm of James J. Ray §• Co. may be sacred to the payment of the debt of Samuel J. Ray & Co. one of the creditors of that firm; but does it follow, that that portion of the assets in the hands of the defendant, as the assignee of James J. Ray & Co. arising from the sale of E. W. & J. Dennis’ property, is the property of James J. Ray & Co. and sacred to the payment of the debts of the latter firm ? The error of the Court consists, in not discriminating in its charge to the Jury, between the assets in the hands of the defendant, which were legitimately the property of James J. Ray & Co. and such as were the property of E. W. & J. Dennis. The Court should have instructed the Jury in relation to this branch of the case, that if the assets in the hands of the defendant were the proceeds of the sale of the goods which were turned over by E. W. & J. Dennis to James J. Ray & Co. for which the latter firm had not accounted, then, the complainants, as their judgment creditors, were entitled to have an ac — 460 — count thereof, and to have the same first applied to the payment of their demands, in preference to the creditors of James J. Ray & Co. .for the obvious reason, that the assets in the hands of the defendant, arising from the sale of E. W. & J. Dennis’ property, for which James J. Ray & Co. had never accounted, did not belong either, to James J. Ray & Co. nor to their creditors. The complainants do not seek to interfere with the assets which properly belong to James J. Ray fy Co. in the hands of the defendant. The complainants are seeking to reach the assets in tire hands of the defendant, which belong to E. TV. Sf J. Dennis. It is our judgment then, from a careful inspection of this voluminous record, that according to the pleadings and evidence, as conr tained therein, that so much of the goods as were purchased in the name of, and on the credit of E. W. & J. Dennis, prior to the formation of the partnership of James J. Ray & Co. and turned over to the latter company, including the goods which were on the shelves of the storehouse and in the boxes therein, are subject to the payment of the complainant’s demands, as well as the proceeds arising from the sale thereof; and that the complainants, as the judgment creditors of E. W. & J. Dennis, are equitably entitled to have an account of said goods, as well as the proceeds of the sale thereof, from the defendant, as the receiver and assignee of James J. Ray & Co. and to have the same first applied to the payment of their judgments, in preference to any debts contracted by James J. Ray & Co. Let the judgment of the Court below be reversed.