Bidwell v. Madison

Dy the Court — Berry, J. — It is not necessary to determine in this case what were the relations of the parties to this action to third persons, so that we are not embarrassed by any of the difficulties which might present themselves were we considering the ques [20] tion of partnership or no partnership in reference to outsiders. We have only to decide upon the mutual rights and liabilities of the parties to thi§ action as between themselves. The Defendants in error allege in their complaint that they were partners under the style of Bicfwell’s Exchange Bank. This allegation is denied by the answer. The Plaintiff in error contends that a material issue was therefore raised upon the question of ¡partnership between the Bidwells, and that the Referee has not found the existence of the partnership, and so the Defendants in error have failed to establish a material allegation in their case. The Referee finds that the Plaintiff and Defendants associated themselves in business under a written agreement, set out verbatim in the report, and entered into between Ira Bidwell, of the first part, and John R. Madison and Henry E. Bidwell, of the second part, by which the parties became partners for one year, profits and losses to bo equally divided. That they entered upon and carried on business under said agreement, and the renewal of it, for the space of two years, when Madison withdrew, and the business was continued by the Bidwells. There can he no doubt but this state of facts would constitute a partnership between the parties. But the partnership articles contained the following stipulation : “And it is further agreed between the said parties, that the said John R. Madison, one of the parties of the second part, may at the expiration of this agreement, viz., on the 16th day of April, 1857, elect to receive the sum of thirteen hundred dollars in cash as a salary, in lieu of one-third of the net proceeds of the said exchange and banking business,” &c. The Referee further finds that Madison elected to receive and did receive the sum of thirteen hundred dollars in pursuance of this stipulation at the expiration of the year, and also at the expiration of the second year. AI this stage of the case the quostion'to be considered is, what relation did the Bidwells sustain to each other upon the exercise by Madison of his right to receive a salary in lieu of one-third of the net proceeds of the business ? To be sure, the Referee finds that the losses exceeded the profits, but we do not perceive that that fact is important. We think the fair construction of this state of [21] facts is, that the Bidwells. and Madison associated themselves together as partners with a special stipulation that Madison might at his own option, at a specified time, elect to be a partner or a salaried employee, and that when Madison elected to be a salaried employee the partnership relation between the Bidwells was not disturbed. They were partners before the election, and that election, provided for as it was in the original partnership articles, left them still partners as it found them. This fact is sufficiently found by the Referee. (Cady vs. Allen, 18 N. Y., 573) The next inquiry would seem to be as to the relation between the Bid-wells and Madison, and of course their mutual rights and liabilities. On this head we have already somewhat anticipated. By the terms of the agreement it would appear that it rested with Madison himself to say whether he was a partner or an employee. He elected to be considered as the latter, and we see no reason why his election should not be decisive upon the question of his capacity and the nature and extent of his liabilitity. By this election he relieved himself from the duty of contributing to make up the losses of the partnership business, and it would be inequitable for him to shield himself from the liabilities which would attach to a capacity which he had assumed of his own voluntary choice. No doubt was expressed upon the argument as to the duty of Madison (who took charge of the note made by Dunwell) to have made a demand of payment upon Dunwell as early as the day of maturity, nor as to the fact that his neglect so to do discharged the endorser Brown, who was the only solvent and responsible party to the note. And we see no reason why Madison was not liable over to his employers, the Bidwells, for any damage arising from negligence of this character. As to the endorsement of $300 made upon the note by Fuller & Mendelson, the owners of the note, there would appear to be no basis for the presumption contended for by the Plaintiff in error, that that sum was paid by Brown, and the Referee finds that there is no evidence upon the subject. On the question of damages, we find nothing wrong in the amount awarded by the Referee. The firm styled Bidwell’s Exchange Bank was clearly liable to FuEer & Mendelson for the [22] neglect by which the D unwell note was lost, and Fuller & Mendelson had an undoubted right to exact the full amount due on the note as damages. Fuller & Mendelson were the owners of this claim for damages against the Bank, and the Bank held Fuller & Mendelson’s paper for a smaller amount. At the maturity of this paper, and at the time when the claim for damages accrued, and for two years afterwards, Fuller & Mendelson were solvent, but declined to pay the note which the Bank held against them on the ground ,iihjg.t they were entitled to the damages aforesaid. It does not appear that Fuller & Mendelson were insolvent at the time of the agreement of settlement between them and the Bank, and it is perhaps unimportant whether they were or not. The claim of Fuller & Mendelson against the Bank for damages, was a proper matter of set off against the note held by the Bank. It was a claim for damages arising from the non-fulfilment of a contract to make the demand and give the notice necessary to fix the liability of an endorser. An action of assumpsit might have been maintained at common law in sxrch case, for as Chitty says: “The breach of all simple contracts * * * for the performance of any act is remediable by action of assumpsit.” (1 Ch. Pl. 100.) “Assumpsit is the usual remedy for neglect or breach of duty against bailees.” (Ibid 134.) See also 6 Minn. 352. The Bank might well forbear to enforce collection of the note against Fuller- & Mendelson, so long as Fuller & Mendelson held a claim against the Bank sufficiently large to swallow its note up. We think the referee was right in awarding the amount of damages found in his report, being the amount paid by the Bank in settlement of Fuller & Mendelson’s claim, especially as this amount (according to our computation,) was less than the claim, and so an abatement had been secured in the advantage of Madison. We also think that under all the circumstances of the case, the referee was right in regarding the note against Fuller & Mendelson, which -was surrendered on the settlement as so much cash. The counsel for the plaintiff in error insists that inasmuch as Madison was allowed to receive his salary of $1300, after this act of negligence by which the Bank became liable, and without any claim being made upon [23] Mm on account of the. negligence, he had a right to take it for granted'thatthe Bidwells had assumed this liability to themselves, and that he was clear from it. If the defendants in error saw fit to pay Madison his salary and hold him for damages for his neglect, they had a right so to do, and the fact that nothing was said about the claim for negligence at the time when he received his salary, would only go to show that the matter was not then adjusted. The judgment below is affirmed.