Thrall & Smith v. Seward

Peck, J. It is insisted on the part of the defence that the items in dispute, being items numbered from 1 to 18 inclusive, never accrued to Thrall & Smith, but to Thrall alone. The items accrued for services as attorneys in certain suits in the county court during the co-partnership of the plaintiffs, but did not come within the scope of co-partnership articles of the plaintiffs, as their co-partnership contract did not embrace the business pending at the formation [578] of the partnership. Thrall & Pond had previously been partners, and as such retained by the intestate in those suits. When Smith bought of Pond his interest in the -pending business of Thrall & Pond, he did not thereby acquire the right to be substituted for Pond as partner with Thrall in their subsequent services in those suits, without the consent of Thrall; but the services having been rendered by them jointly, Smith arguing the cases in court, the charges being made, as they accrued, to the intestate on the company books of the plaintiffs as other company business, with the knowledge of Thrall, and without objection on his part, he knowing at the same time that Smith had purchased Pond’s interest, the assent of Thrall to treat these services as partnership business sufficiently appears. After such election and acquiescence he cannot, as between him and Smith, object. The intestate having been informed of this arrangement, and making no objection, and allowing Smith to act on it, it is too late for his administrator to make the objection that the claim is not a joint claim of Thrall & Smith. The next question is whether these items have been paid or released in such manner as to bar a recovery for them. The payment to Thrall and release by Thrall must be regarded as a payment and release of these items in fact. The allowance in favor of Thrall by the commissioners was based on these items, and the payment was in fact a payment of these items. This also appears by reference to Thrall’s release to the defendant. But it is insisted by Smith on the part of the plaintiffs, that the payment to Thrall is a fraud on him and ought to be disregarded. If the facts show that the transaction was a collusion between the administrator and Thrall to defraud Smith, and that it will have that effect unless set aside, it must be held inoperative. We see no bad faith on the part of the administrator. When both Smith and Thrall claimed these items before the commissioners, Smith claiming them as a partnership demand, and Thrall as a several demand in his favor, the administrator had a right to make the arrangement he did with Thrall to shield the estate from the expense of litigating a question between Smith and Thrall in which neither he nor the estate he represented had any interest. There is nothing in the case showing that the payment to Thrall [579] will operate as a fraud on Smith. Generally, even after dissolution, either partner has a right to receive payment of partnership demands. What is stated by the auditor as to Thrall’s pecuniary circumstances is not sufficient to show that the payment was a fraud on Smith. It does not appear but that as between Thrall and Smith, Thrall has a right to retain the money paid ; for the auditor states that no evidence was introduced showing whether Thrall was indebted to Smith on account of the partnership or not. If we could assume that each was entitled to share in this entire demand in such proportion as he was to share in the partnership business, Thrall by this payment has not got his two-thirds of the entire demand. Even if the administrator was bound to pay to each his share, he was not bound to divide and apportion each payment. Suppose no payment had been made, and there should be a recovery in this suit to the full amount claimed, and the probate court should order the administrator to pay the debt; would not a payment of this debt to either partner be valid? But it is manifest that neither could object to a payment to the other until that other had received more than his share. The administrator has the same rights in relation to payments made pending the suit. The payment must be allowed in reduction of the plaintiffs’ claim. The defendant insists that the auditor erred in admitting Smith to testify on the part of the plaintiffs, relative to the contract or understanding between Smith and Thrall as bearing upon the question whether these items were a partnership claim. The statute provides that in all actions except actions of book account, when one of the original parties to the contract or cause of action in issue and on trial is dead or insane, the other party shall not be admitted to testify in his own favor ; and further provides, (subject to the same exception of actions of book account), that where an executor or administrator is a party, the other party shall not be admitted to testify in his own favor, unless the contract in issue was originally made with a person who is living and, competent to testify, except as to such acts and contracts as have been done or made since the probate of the will or the appointment of the administrator. The object of the proviso was to protect the estate of a deceased person from an apprehended danger of allowing the surviving party to an alleged contract [580] or transaction to testify, when the other party is no longer alive to meet, contradict or explain it. In this case the liability of the deceased was not in dispute. That liability was not to be increased or diminished by the determination of the question upon which Smith was allowed to testify. The contract to which he testified was not a contract to which the deceased was a party, nor one in which he was interested. Both parties to that contract were alive and competent to testify. The contract was collateral, but if it was “the contract in issue” within the meaning of the statute, Smith was a witness, as it “was originally made with a person living and competent to testify.” The case does not come within the mischief intended to be guarded against, and is not within the spirit and meaning of the prohibition already mentioned. Smith was competent to the extent he was allowed to testify, unless he is excluded by the last provision in that section, which is as follows: “Provided further, that in actions of book account, and where the matter at issue and on trial is proper matter of book account, the party living may be a witness in his own favor so far as to prove in whose hand writing his charges are, and when made, and no further.” The restrictive provision last above recited is the only one which in terms applies to actions of book account, and if construed literally, the party in this form of action can never testify where the other party is dead, except to the hand writing of his charges and when made, and is excluded from testifying to other matters in relation to which he is allowed to testify in other forms of action. Considering that parties nearly ever since the organization of the state have been allowed to testify in actions of book account without reference to the decease of the other party, it can hardly be supposed that the legislature by this recent statute extending the right to parties in other actions to testify, intended to restrict the right in actions of book account, to more narrow limits than in other actions. We think, taking the whole section together, the intention was to give a party the same right to testify in actions of book account, and where the matter at issue and on trial is proper matter of book account, as in other actions, and in addition, the right to testify to the hand writing of his charges and when made. This interpretation may seem like doing violence to [581] the language, but a different interpretation, in our judgment, would be contrary to the purpose and intent of the legislature. The special ■clause in reference to book actions was designed, as we think, to enlarge the right in this form of action in the particulars specified, rather than to restrict it to a more narrow limit than that assigned to other actions. Under this construction of the statute, Smith was a competent witness to the point to which he was called to testify. It was indifferent to the intestate whether his liability was to Thrall ,& Smith, or to Thrall alone. Judgment of the county court reversed, and judgment for the plaintiffs for the smaller sum found due by the auditor.