Cook v. Carpenter

Poland, Ch. J. The plaintiff, in this action of general assumpsit, claims to recover the amount he was compelled to pay upon the note given to the bank, signed by himself, and the other two defendants, upon the ground that the other defendants were the principals, and he their surety. The defendant Carpenter claims that the plaintiff and defendants were partners, and that this note was given to raise funds to carry on the partnership business; that the signers all stood as principals on the note, and that the matter can be adjusted properly, only by some proceeding proper to settle the whole partnership concern, and that this action is inadequate and inappropriate to that end The plaintiff insists that there was no partnership, that as there was a total misunderstanding between him and the defendant Carpenter, as to the basis or articles of the partnership, no partnership existed ; and many authorities are cited to show that to constitute a partnership there must be an agreement, a meeting of the minds of the parties, and that a man cannot be made a member of a partnership without his consent. The soundness of this principle cannot be doubted ; the difficulty is, it does not apply to the case. The plaintiff and the defendant Carpenter, did both agree to be partners, and both understood they were acting as [125] partners ; and actually proceeded to carry on the joint enterprise, with the understanding that they were to share in the profits or losses of the transaction ; hut, by the default of the defendant Cook, they did not understand the terms of the joint agreement alike. The plaintiff understood that the capital was to be raised wholly by the defendants, while the defendant Carpenter understood it was to be raised in the ordinary way, by all the members of the firm. It has never been held that when persons agree to become partners, and actually proceed to carry into execution the joint undertaking or business, that the relation of partners does not exist, because the conditions of the partnership are not understood alike by the partners. It is conceded that the note to the bank was given to raise the funds to carry on the joint business, but the same differing ideas of the partnership relation still existed, and while the plaintiff supposed that he was signing the note as a surety for the others, the defendaut Carpenter supposed all were equally bound as principals. From the facts reported by the referees, neither the plaintiff or Carpenter seemed to have been at all in fault in understanding the terms of their connection as they did ; the whole blame rested on the defendant Cook, who acted as the medium between them in making the arrangement. We see no ground on which the plaintiff can claim that the defendant Carpenter shall be bound by the contract as the plaintiff understood it, with any better reason, than Carpenter can claim that the plaintiff shall be bound by Carpenter’s understanding of it. In this dilemma, both parties being without fault, we think the matter must stand for settlement between them upon the general principles of partnership, that the gains or losses be shared by the respective partners. In this case it seems that, so far as the plaintiff and Carpenter are concerned, there has been a loss, and the referees have reported the amount of their respective losses. The plaintiff admits that his action is not the proper one in which to adjust the partnership dealings, but he claims that as the action was referred by agreement of parties, and they have reported m such a manner, that the court can render a judgment upon the basis of a partnership adjustment, the form of the action should be disregarded, and such a judgment be rendered, and if [126] is claimed that the decisions of this court in relation to the effect of referring cases to referees have gone to this extent. The cases on this subject are very numerous in our reports, and the language of the different judges not very uniform as to the precise rule on the subject. The general doctrine to be extracted from all the cases seems to be this : that where parties agree to an arbitration or reference oí a pending action, under a rule of court, so that the court are to render a judgment on the report or award, even where it is a part of the submission or rule of reference, that the arbitrator or referee is to be governed by the rules of law, it is the cause of action which forms the basis of the submission, and not the particular form of the declaration which the party has adopted, or any particular issue which may have been formed upon it, and that therefore the referee is not bound by the particular declaration and pleadings, but may award upon the subject matter of the suit without regard to them. An arbitration or reference under a rule of court stands upon the same general principle, as do all arbitrations, the mere agreement of the parties ; and the power of the arbitrator or referee extends to just what the parties have agreed to submit, and no more ; and if he undertakes to try and award of other matters not submitted, the award is invalid. It is conceded that the only matter for which the plaintiff brought his suit, was the money he paid on the note to the bank, and not to recover any general partnership balance that might be due to him, and his declaration could not have been amended so as to have enabled him to do so, for it would not only have required an entire change of the form of the action, but to introduce a new cause of adtion, which the court have no power to allow. The cause of action then, which formed the basis, and the extent of the submission, was the money paid on this note ; this was what the plaintiff claimed to recover before the referees, and what he claims now. Nor can it be claimed that the submission was extended by consent before the referees, for they state in their report, that neither party claimed to go into a settlement of the partnership matters before them, or assented to their doing so. [127] Their report then, so far as it furnishes a basis for a judgment for the partnership balance, was upon matters not embraced in the submission, and we cannot therefore properly render judgment upon it. As the note' was given for money that went into tbe partnership, and the plaintiff is not entitled to claim that he stood merely as a surety upon it for the defendants, we think it can be settled only in some proper action brought to close the whole partnership affair. We have sought earnestly to find some ground on which we could justify a judgment for what appears to be the partnership balance due to the plaintiff, as that appears to us to be wjiere the matter must at last stand between them, but we feel that it cannot be done without violating settled principles. The judgment is affirmed.