Sons v. Batchelor

IN error from the district court of the United States for the District of Mississippi.

In the district court of Mississippi an action of debt was instituted on an obligation executed on the first day of January, 1824, by which John Richards & A. H. Buckholts promised, under their respective hands and seals, to pay to N. Rogers & Sons, on the first day of April, 1824, three thousand two hundred and eighty-eight dollars, with interest from the date.

The defendant, Abel H. Buckholts, pleaded payment, and there was a general replication. After a trial and verdict for the defendant, in 1833, and a new trial granted, the cause was again tried in February, 1836; the administrators of A. H. Buckholts having been brought in after his decease; and a verdict was again found for the defendant: the jury at the same time having certified, that the plaintiffs, N. Rogers & Sons, were indebted to the estate of A. H. Buckholts, the sum of one thousand eight hundred and twenty-six dollars.

A bill of exceptions was taken by the plaintiffs to the charge of the Court; and judgment having been rendered on the verdict for the defendants; the plaintiffs prosecuted this writ of error. The bill of exceptions stated, that on the trial of the cause the defendants set up offsets to the demand of the plaintiffs. They were contained in an account made up to April 1st, 1830; and show a balance due to John Richards & Co., which firm was composed of John Richards and Abel H. Buckholts. The balance due was one thousand five hundred and forty-one dollars. The accounts credit N. Rogers & Sons, the plaintiffs, with the amount of the note for which the suit was instituted, and with interest on it for six years, amounting to four thousand eight hundred and sixty-six dollars; and charges several items as payments to the plaintiffs, with interest on the same, showing the balance of one thousand five hundred and forty-one dollars.

Two items on the debit side of the account were made the subject of controversy, viz: a charge of one thousand four hundred and fifty dollars, received from Lambert & Brothers, on the 4th of September, 1825; and a charge of three thousand dollars, under date of January, 1827, for John Richards' acceptance of the draft of N. Rogers, &c.

Dr. N. Rogers & Sons, in account current (account to April 1st, 1830,) with John Richards & Co. Cr.

1825, Sept. 4. To cash from Lambert & Bro's, $1450.

Interest on the same,     530.

$1981.

Richards & Co., payable at 6 mo.

Interest,

$

1827. April 19. By amount of John Richards & A. H.

Interest on same, 6 years, 1541.06In support of this set-off, the defendants relied upon the testimony of one Rowan, who testified that some time in the year 1830, he was requested by Buckholts to be present at a conversation he expected to have at his office, with a Mr. Rogers, (a member of the firm of Rogers & Sons, as he understands,) relative to their accounts, and requested him to note down and recollect the conversation; that some time after Rogers came into the office, and a conversation ensued relative to their accounts; that the accounts before them were accounts made out by Rogers & Sons, between themselves and Richards & Buckholts, and John Richards & Co. and John Richards, and Lambert & Brothers, in account with John Richards & Co. Richards and Buckholts, and John Richards, and an account made out by Buckholts, between Richards & Buckholts, and Rogers & Sons: that in their conversation relative to those accounts, Buckholts asked Rogers if the several items charged in his account had not been received, and Rogers admitted they had been; that among other items so admitted, was the item charged in the account of offsets, filed under the plea of payment of one thousand four hundred and fifty dollars and forty-six cents, and the item of three thousand dollars.

The witness stated, that in their conversation about the one thousand four hundred and fifty dollars and forty-six cents item, Rogers admitted that sum had been received by Rogers & Sons, from Lambert & Brothers, in New York, and was part of the proceeds of seventy-four bales of cotton, shipped by Richards & Buckholts to Lambert & Brothers. That very little was said about the item of three thousand dollars; the witness recollected nothing more but an admission that it had been received. That something was said between Buckholts and Rogers about the right to apply moneys to the payment of John Richards' private debts; Buckholts contending Rogers had no right to do so, and Rogers that he had: but which particular item of payment witness did not understand. This was all the evidence introduced by defendants in support of the above two items of one thousand four hundred and fifty dollars and forty cents, and three thousand dollars. The said witness further testified, that he had understood the said John Richards had once failed, before he went into partnership with the said Buckholts. No other witness was introduced on the part of the defendants. The defendants admitted, that in the account made out by Buckholts between Richards & Buckholts, and Rogers & Sons, abovementioned, about which the said conversation between Buckholts and Rogers took place; that the item of three thousand dollars was charged by Buckholts, in his said account, as an item received upon a bill of exchange, drawn in 1825, by Rogers & Sons on John Richards alone.

The plaintiffs then introduced a letter from John Richards to them, dated Natchez, June 6th, 1825, of which the following are extracts:

'To-day we have amount of sales of all the cotton we own, (except half interest in seventy-eight bales gone to England, which was sold by Messrs. Lambert in New York, at twenty cents, subject to benefit of half profits, without being accountable for any loss;) which, although bought lately, nearly netted twenty per cent. Our profits on cotton will be from four to five thousand dollars; and our business is, I think, prospering. The following is about the payments we have left in the hands of Messrs. Lambert, Brothers & Co., to be divided between you and them:

Part sales of seventy-eight bales of cotton, about. $

--

On account of John Richards & Co.

The half profits of seventy-eight bales of cotton,

gone to England, which I hope may be. $

J.R. & Co.'s notes. due next winter, at New Orleans,.

--

$

'This day, sent to New Orleans six hundred and fifty-four dollars and fifty-five cents, to purchase exchange on New York, which will be forwarded as soon as received, to go to the payment of J. R. & Co.'s debt to you and Messrs. Lambert, Brothers & Co. With these payments I hope you will be satisfied until next winter. I have hopes of selling my private residence, at a sacrifice of two thousand five hundred dollars, which will be sent to you as soon as realized. I have a prospect of getting for it nine thousand dollars.'

The plaintiffs, by their attorney, requested the court to charge the jury: First, that the defendants are not entitled, upon the evidence before them, to the item of one thousand four hundred and fifty dollars and forty cents, as an offset to the plaintiff's claim. Second, that the defendants are not entitled, upon the evidence before the jury, to the item of three thousand dollars, as an offset. Which charge the court refused to give; and thereupon, the defendants requested the court to charge as follows: First, that if the jury believe the offset of one thousand four hundred and fifty dollars was the proceeds of cotton of Richards & Buckholts, or John Richards & Co., shipped on their joint accounts, then it is a legal offset to a joint debt; and cannot be applied to the individual debt of John Richards, without proof that Buckholts was himself consulted, and agreed to it. Second, that if the jury believed that the draft of three thousand dollars was paid by Richards & Buckholts, or John Richards & Co., or out of the effects of either of those firms, with the knowledge of Rogers & Sons, then, in law, it is a legal offset to the joint debt of said Richards & Buckholts, or John Richards & Co., and cannot be applied to the private debt of either partner, without the consent of the other partner. Third, that the letter of John Richards, read in this case, is not evidence against Buckholts; unless the jury believe that Buckholts knew of the letter, and sanctioned its contents; (which letter is the one beforementioned in this bill of exceptions.) Which charge the court gave as requested.

To which decision, in refusing to charge as requested by the plaintiffs, and in charging as requested by the defendants, the plaintiffs excepted. The defendants remitted five hundred and sixty dollars; part of the debt certified by the jury.

The case was argued by Mr. Butler, for the plaintiffs in error; and by Mr. Hoban and Mr. Key, for the defendants.

Mr. Butler, for the plaintiffs in error, stated that Mr. Richards before his partnership with Buckholts, became largely indebted to N. Rogers & Sons in the business of shipping cotton. Afterwards, in 1825, the firm of Richards & Co. shipped seventy-eight bales of cotton to Lambert & Brothers; and the proceeds of the shipments were, according to the directions of the shippers, paid over to the plaintiffs in error: and of this amount fourteen hundred dollars were, according to the directions of the letter from Richards, placed to the credit of Richards. The judge of the district court charged the jury, that unless Buckholts had been consulted about this application of the funds, and had assented to it, the appropriation could not be sustained. On whom does the burthen of proof lie, to show the other partner did not consent? It should fall upon the partner. After the property of a partnership is sold, one partner may take part of the proceeds of the sale to pay his debt; and the creditor to whom the payment is made may retain the money, if he does not know the partner had objected to the appropriation.

The instructions given by the judge to the jury, were therefore erroneous. Cited Harrison v. Sterry, 5 Cranch, 289; Winship v. Jones, 5 Peters, 529; 13 East, 175.

As to the item of three thousand dollars, Mr. Butler contended that this grew out of a draft drawn by the plaintiffs on John Richards alone. John Richards accepted the bill, and it was paid when at maturity. The account charges this as 'our acceptance;' but this was not the fact. The evidence shows that the bill was drawn on John Richards, and the drawers had no right to know it was paid out of the partnership funds. There is nothing to show they did know this. Cited 2 Starkie's Ev. 25-588, note; 9 John. Rep. 500; Walden v. Shelborne, 15 John. 409; 3 Pick. 5. The whole of the case depends on the good faith of the transaction. The judge did not leave the question of good faith to the jury; but laid down the proposition, that the fact of the partnership property having been taken to pay the acceptance, was sufficient to prevent the plaintiffs recovering.

The cases on which the counsel for the defendants rely are cases of guaranty.

There has been great neglect on the part of Mr. Buckholts in not having given notice that the acceptance of the draft on Richards was not to be charged to him. The transaction was in 1825; and there is no evidence that objection to the credit of the same to Richards alone, was made until long afterwards. All the cases which have been cited, are cases where objections were immediately made, and communicated.

In reference to the one thousand four hundred and fifty dollars, the credit must have been given in the books of the plaintiffs in error, in 1825; and no objection to this credit was made until 1830. Cited 7 Cranch, 147; 2 Barnwell & Alderson, 678.

Mr. Hoban and Mr. Key, for the defendant; said the question presented in this case is, whether one partner has a right to pay his separate debts out of the partnership effects. The letter from Richards shows that he was using the partnership property for that purpose.

The charge of the court is, that one partner cannot appropriate the property of the partnership for such a purpose, without the approbation of his partner. Such an appropriation is, per se, fraudulent. If it is known to be partnership property, by the private creditor, it is fraudulent in him to receive it. 1 East, 51; 7 Wendell, 328. All this was matter for the jury; and they have passed upon it on two trials, and always in favour of the defendants.

The burthen of proof is altogether on the party two receives partnership property, for his own benefit; in a transaction with one partner only. Cited Colyer on Partnership, 279; Dobb v. Halsey, 16 John. Rep. 34; 1 Wendell, 531. In England it never was contended that partnership property could be taken to pay a partnership debt, without the knowledge and consent of the other partner, expressly given or well known. 6 Wendell, 551; 19 John. 157; 5 Cowan, 489; 2 Caines' Rep. 246; 3 Wendell, 415.

Mr. Justice STORY delivered the opinion of the Court.