Rowland v. Boozer

COLLIER, C. J. The declarations of the treasurer of the company, after the note was delivered by their order to the beneficial plaintiff in this action, were clearly inadmissible. It was not competent for him, by an act done, to prejudice the plaintiff’s right to recover — he was not.authorized to collect the debt, or to release it. Such a declaration was not referable to any res gesta, and we can conceive of no principle upon which its admission could be defended. [8 Ala. Rep. 650; Abney v. Kingsland & Co. at this term.] We [695] cannot very well conceive of any objection to the competency of the treasurer, as a witness for the defendant, unless ho was interested to defeat a recovery by the plaintiff, and upon this ground, perhaps, considering the circumstances under which his admissions were offered, the ruling of the circuit court might be supported. If upon a view of all the evidence, and such inferences therefrom as a jury could legitimately make in favor of the defendant, the plaintiff was entitled to recover, there was no objection to the court thus charging the jury. Let us then inquire whether, in this point of view, the defence was made out. We think it may be assumed from the evidence, that the creation of the orignal partnership, composed of nineteen persons, was shown to have been by writing, and if the defendant and beneficial plaintiff were not substituted in virtue of a written contract to the place of two of these partners, they were recognized by the firm as members, and each of them entitled to a share of the profits, “which they drew from the treasurer,” and “for which they gave receipts.” This recognition by the firm, and the authority to the treasurer to distribute the profits, must have been in writing j consequently, the partnership, and the interest of these parties was proved according to the requirements of the statute of frauds. The note in question is not a promise in favor of the partnership, but it is an undertaking to pay the nominal plaintiff, who it is not pretended was a member of the company. It is contended, that when the firm became the proprietor of the note, in consequence of the sale of land to the payee, the remedy thereon was suspended, and has not been revived. Conceding the general rule, that one partner cannot maintain an action at law against another, to recover money due by verbal contract on the partnership account; or even that the partnership cannot transfer the note of one of its members to another, which the firm became the owner of, through a third person, its payee, until the accounts of the concern are liquidated and a balance struck, and still the facts do not sustain the defence in the case at bar. Before the note in suit was handed to Barclay, the company had a meeting, and the assets in the treasurer’s hands [696] were charged to him as cash; and the lands having been all sold, it was ordered that the company should not meet again. Thereupon the treasurer was directed to pay over to each of its members the proportion ascertained to be due to them respectively, by a day designated, if a suit was not previously commenced against the purchasers from the company of the “ Augerhole reservation.” Such a suit was not brought by the day appointed for distribution, but has been since instituted, and is still pending. The note was delivered to Barclay, with the understanding that he should collect it, appropriate a sufficient amount of the proceeds to pay his interest in the concern, and the remainder hand over to the treasurer. Here then, was a settlement of the accounts of the partnership, as matters stood — the company had closed their operations, contemplated no further meeting, or joint action, and directed the custodian of their assets, to distribute to the members, in proportion to their shares, if a suit particularly referred to was not commenced by a certain day — this event not having occurred, we have seen the distribution was made. This, we think, authorized the treasurer to dispose of the note of the defendant, which we have seen was the property of the company; and the beneficial plaintiff having acquired it in virtue of an order by them, might well maintain an action thereon, in the name of the payee. The subsequent institution of the suit, can have no prejudicial effect upon the plaintiff, although the partners may be compelled to contribute to their’ vendees, and thus diminish their distributive shares, if the plaintiff in the suit for the “Augurhole reservation” should be successful. His success, it may be remarked, is contingent, and there is nothing in the record from which we can hazard a conjecture as to its probability. That suit does notyiroprio vigore, annul the settlement of the accounts of the company, though the result may subject the members to a liability for which no provision was made. In Clark v. Dibble, 16 Wend. Rep. 601, it was held, where there had been a settlement between the partners, and a proise by one to pay to the other the balance struck, an action at law may be maintained, although, by accident or otherwise, there may be some outstanding matters unadjusted. So it has been decided, that partners may separate any por [697] tion of their partnership affairs from the rest, and submit it to arbitrators for adjustment, and if a sum is found due from one to the other, a promise to pay that sum is binding, and an action may be sustained upon it, notwithstanding the other partnership concerns remain unsettled. [Gibson v. Moore, 6 N. Hamp. 547.] Is not the distribution of the assets of the company (of which the defendant was a member) by their own direction, in legal effect a promise in’ advance, to pay any note or other security in which the individual members may be indebted to the firm, to whoever it may be distributed ? See 2 Stew. & P. Rep. 259: 1 Wash. C. C. Rep. 435; 1 Stew. Rep. 510; 11 Pick. Rep. 79; 12 Id. 378 ; 3 Ala. R. 347, and cases there cited. We have seen that the circuit court laid down the law too favorably for the defendant, in stating, that if the beneficial plaintiff and the defendant were members of the company, then the plaintiff was not entitled to recover. However this might be, if there had been no dissolution of the partnership, and settlement of accounts, we have not thought proper to inquire, but choose rather to rest our opinion upon the conclusion that both of these facts were proved to exist. The right to sue upon the note is not at all affected by the undertaking of Barclay to pay to the former treasurer of the company all he may recover beyond a certain sum — in fact the defendant has not sought to avail himself of this as a defence. Upon the whole case, the plaintiff is entitled to recover, and the rulings of the court below present no available error. The judgment is consequently affirmed.