Solomon v. Solomon

By the Court.

Warner J.

delivering die opinion.

The complainant in this case filed her hill against the plaintiff in error in die Court below, calling upon him to account for the proceeds of a lot of cotton purchased by the complainant’s intestate, James Solomon, in his lifetime, and the defendant as co-partners. From the record as transmitted to this Court, it appears that the defendant and his brother James, advanced about the sum of thirty-five hundred dollars each, to purchase cotton on speculation, to share equally of the profits and loss of the adventure. In pursuance of the agreement between them, about three hundred and fifty bales were purchased and forwarded to Wimberly & Jones, their factors in Savannah, which were by them shipped to Isaac, Low & Co. at Liverpool.

It also appears that Wimberly & Jones drew against the cotton so shipped by them to Liveipool, the sum of seven or eight thous- and dollars.

After the cotton had been shipped to Liverpool, Henry Solomon, the defendant, proposed to draw on Wimberly & Jones on account of the cotton, the sum of thirty-five hundred dollars, for his individual use; to which James Solomon assented, but declined drawing any money for himself, saying he had no use for the money, and wanted the benefit of the sterling exchange, &c. The cotton was sold in Liveipool, and the proceeds, over and above the sum drawn by Wimberly & Jones, was two thousand and thirty-six dollars, including the sterling exchange, which was equally divided between the partners.

It also appears fi'om the record, that suit was instituted by the partners against Wimberly & Jones, for the money drawn by them against the cotton remaining in their hands, and a judgment rendered therefor, for the sum of four thousand four hundred and seven dollars and nine cents, which has never been collected, Wimberly & Jones having become entirely insolvent. The complainant, as the adm’x of James Solomon, now claims the one half of tho thirty-five hundred dollars drawn by Henry Solomon against the cotton, in May 1840, for his individual benefit, and that he account with her for the proceeds of the sale of the cotton, &c. which has come into his hands as one of the partners in the joint adventure.

The defendant refuses to account with the complainant, on the ground that the drawing the thirty-five hundred dollars, in May 1840, from Wimberly & Jones, by the consent of his co-partner, was a dissolution of the co-partnership to that extent, and, therefore, he has a legal right to appropriate the amount so drawn to hia individual use, without accounting to his co-partner therefor. On the trial of the cause, the jury found a verdict for the complainant, for the one half of the thirty-five hundred dollars, with interest thereon from May, 1840. The case now comes before this Court on a writ of error and bill of exceptions to the charge of the Court below, to the jury.

[1.] The Court below charged the jury—“If the answer of the defendant and other evidence satisfies them, that Henry Solomon and James Solomon, purchased the cotton jointly, paid equal portions of the purchase money, were to pay equal portions of the expenses and transportation of the cotton, and were to share in the losses and profits, it is a co-partnership. There is no difference between a joint adventufe, when the joint adventurers purchase jointly, and are to participate in the losses and profits, and a co-partnership. Such an adventure is a co-partnership.”

“ The contract of co-partnership imports entire good faith between or among the partners. Partners are bound to use the partnership- property for the benefit of the partnership interest, therefore, if one partner draws upon the partnership funds and applies the proceeds to his own individual use, he is liable to account to his co-partner for a moiety, with interest from the time he received the fund so drawn. The interest each partner has in the partnership property, is his share in the surplus, after the partnership accounts are settled, and all just claims satisfied.”

“ The only ways a co-partnership for a single- adventure, enterprise, or business, can be dissolved are—first, by the extinction or destruction of the subject of co-partnership; or secondly, by a total separation or severance of it, before the completion of the business- or enterprise; or thirdly,by a completion or ending of the adventure, business or enterprise. The Court does not recognise any such thing in law, as a dissolution fro tanto of a co-partnership for single adventure, enterprise or business—there must be a total severance. If James Solomon, when he gave Henry Solomon leave to draw the thirty-five hundred dollars against the cotton, for his-(Henry Solomon’s) uso, agreed also, that ho would take the risk of the failure of tho Savannah factors and Liverpool consignees, and that the futuro loss should fall upon him, then the jury ought to-find for the defendant, otherwise for the complainant. With respect to verbal admissions, they ought to be received with great ■caution, and if made by a party when ignorant of his rights, are not-binding upon him; yet, when made deliberately, and precisely identified, are usually received as satisfactory.”

Defendant’s counsel asked the Court to charge that it was competent for James and Henry Solomon, during any period of the adventure, to have severed by agreement any part of their interest in the subject matter of the enterprise; therefore, if the jury ■should be of the opinion from the evidence, that James Solomon agreed that Henry Solomon should withdraw thirty-five hundred •dollars of his part of the proceeds of the cotton, and that James Solomon preferred to leave the whole of his share with the view to realize to himself the profit of the sterling exchange, they ought to find for the defendant, which the said Court refused to charge ; but charged the jury “ that it was competent for Henry and James Solomon at any time before the termination of the adventure, to agree to a total separation of their interests, or that Henry Solomon might draw for thirty-five hundred dollars and appropriate the same to his own use, and if James Solomon assented to it, and that James would run-the risk of future loss, then the jury would find for the defendant.”

Wb-havé carefully examined the instructions given to the jury by the Court in this case, in reference to the law of partnership, and give •our sanction to most of the principles advanced by the Court below, as applicable to the case then before it. If, however, the Court intended to be understood as saying, that co-partners, as between themselves, could not alter, modify, or dissolve a co-partnership for a single adventure, enterprise, or 'business, by contract or agreement, then we are of the opinion the Court below erred in its judgment as to the law. Partnerships for a single adventure, enterprise, or business, are formed by agreement between the partners, and where no certain limit is fixed for their duration, may be dissolved at the pleasure of either of die partners. Story on Part. 286, sec. 269; 3 Kent Comm. 53.

The co-partnership existing by the contract of the parties, [2.] may be modified, altered, or dissolved by contract, as between themselves, either in the whole, or in part, provided such contract does not violate any principle of law, or public policy. This portion of the charge of the Court below is assigned for error, and ■unexplained by the other portions of the charge, we should have felt bound to reverse the judgment below on that ground. But when we take the whole charge of the Court, and consider its practical application to the facts before it, we do not think'the jury were misled by the instructions of the Court. The question upon which the case mainly turned was, whether the drawing the $3,500 by Henry Solomon in May, 1840 for his own use, from Wimberly & Jones the factors of the co-partners, with the consent of James Solomon, was a dissolution of the co-partnership to that extent, so as to protect Henry Solomon from any loss occasioned by the failure of Wimberly & Jones, and throw the same entirely on James Solomon the other partner, who did not draw any money from the Savannah factors. The Court told the jury, “it did not recognise any such thing in law, as a dissolution pro tanto of a co-partnership for a single adventure, enterprise, or business; there must be a total severance. If James Solomon, when he gave Henry Solomon leave to draw the thirty-five hundred dollars against the cotton, for his (Henry Solomon’s) use, agreed also, that he would take the risk of the failure of the Savannah factors and Liverpool consignees, and that the future loss should fall upon him, then the jury ought to find for the defendant, otherwise for the complainant.” The original contract of co-partnership, the purchase of the cotton in pursuance of it, and the joint interest of the partners in it, is distinctly admitted. While the cotton was in the hands of the factors each partner was jointly interested in it, and had the right to control it, or the proceeds thereof. Henry Solomon, when he drew the thirty-five hundred dollars, had a perfect right to have drawn seven thousand dollars had he desired to have done so, and his receipt would have been good against both partners ; for one partner is considered in law, as the agent of the others with regard to the partnership property. In our judgment there is no foundation in law for the position assumed by the plaintiff in error, that the drawing the thirty-five hundred dollars by Henry Solomon of the joint funis for his own use, with the consent of James, his co-partner, worked a dissolution of the co-partnership; and thereby exonerated Henry Solomon from the responsibilities of the original co-partnership contract. To have exonerated him from liability to account with his co-partner for loss sustained by the failure of Wimberly & Jones, he should have established to the satisfaction of the jury, in the language of the Court below, that James Solomon “ agreed also, that he would take the risk of the Savannah factors and Liverpool consignees and that the future loss should fall upon 7dm.’’ This would have been such an alteration, or modification of the original contract of partnership for this single adventure, as would have excused him from accounting to his co-partner for such loss. The jury,however, by theirverdict, negative the idea thatany such agreement was proved, by finding for the complainant, and in our judgment their verdict is supported both by the law and the facts of the case, except as to the question of interest, which will now be considered. *

The Court below charged the jury that “the contract of [3.] co-partnership imports entire good faith between, or among the partners. Partners are bound to use the partnership property for the benefit of the partnership interest, therefore, if one partner draws upon the partnership funds, and applies the proceeds to his individual use, he is liable to account to his co-partner for a moiety, with interest, from the time he received the fund so drawn.” This proposition is undoubtedly true where the partnership funds have been abstracted by one of the partners from the legitimate business of the partnership, without the knowledge or consent of the other partners, as when there has been a fraudulent misapplication of the partnership funds by one of the partners, for his ownyn'Mie speculations, or he has employed the same in his own private trade; in all such misapplications of the partnership funds, the delinquent partner would be chargeable, with not only the interest on the funds so misapplied, but also with the profits he has made thereby. Sto. on Part. 342, sec. 233; Caldwell vs. Leiber, 7 Paige Ch. R. 483.

Does the record, in this case, shew that there was any fraudu- [4.] lent misapplication of the thirty-five hundred dollars by Henry Solomon.in May, 1840, the time at which he drew that sum from Wimberly & Jones? We think not, but on the contrary, that amount was drawn by him with the express assent of James Solomon, his co-partner, and there was no dfault on the part of Henry Solomon with regard to that portion of the partnership funds so drawn by him with the consent of James, until a settlement was demanded and he refused to account for the same. Campbell vs. Mesier & Rustan, 6 John. Ch. R. 21. When he was required by his co-partner to account for that portion of the joint funds so drawn by him with his consent, on a final settlement of the co-partnership transactions, his refusal then so to account, was in our judgment, to use the mildest term, a misapplication of the partnership funds to his individual use, and, consequently, he ought to be charged with interest from the time of such demand and refusal, which in the absence of other evidence appearing on the' record, was, on the 12th day of August 1842, the time of the commencement of the suit by the complainant against him. We are also of opinion, that the Court below very properly refused the instruction asked by tho counsel for the defendant. The instruction prayed for, assumed the position, that if the jury should believe, from the evidence, that James Solomon agreed that Henry Solomon should withdraw thirty-five hundred dollar's of his part of the proceeds of the cotton, and that James Solomon preferred to leave the whole of his share with the view to realize to himself the profit of the sterling exchange, then the co-partnership was dissolved, and they ought to find for the defendant. From what has already been said, the consent of James that Henry should draw the thirty-five hundred dollars, and the refusal on his part to draw any thing for himself, did not, in our opinion, work a dissolution of the copartnership. The money drawn by Henry Solomon was the joint property of both partners, being a part of the proceeds of the cotton purchased with their joint funds. The money remaining in the hands of Wimberly & Jones, was the joint property of both partners subject to be drawn by either or both. If James Solomon preferred the money to remain in the hands of Wimberly & Jones for the purpose of realizing the sterling exchange, or for any other purpose, that did not affect the original contract of partnership. So long as the contract of partnership continued, each partner was bound by the acts of the other, in relation to the partnership property. The instructions given to the jury on that branch of the case, we think were proper and unexceptionable, and constitutes no ground of error.

[5.] With regard to verbal admissions, the Court charged the jury, “ they ought to be received with great caution, and if made by a party when ignorant of his rights, áre not binding upon him; yet, when made deliberately, and precisely identified, are usually received as satisfactory.” When we take into consideration that the admissions relied on were the verbal declarations of a deceased person deeply affecting his estate, the admonition of the presiding Judge to the jury, was not, in our judgment, improper.

The declarations of deceased persons are often-times easily proved, but extremely difficult to explain or contradict, for the reason, the voice of him who is alleged to have made them is hushed in the silence of the grave. Where one, through a mistake of the law, acknowledges himself under an obligation which the law will not impose upon him, he shall not be bound thereby; as, where the indorser of a bill of exchange or promissory note, who is discharged from payment thereof by want of notice under the law, yet, being ignorant of his legal rights, promises to pay it; he will not be bound by such promise. Warder et al. vs. Tucker, 7 Mass. R. 449; Garland vs. Salem Bank, 9 Mass. R. 389; Goodall and others vs. Dolley, 1 Term R. 712; Lawrence vs. Beaubien, 2 Baily R. 623.

The thirty-five hundred dollars having been drawn by the defendant with the exp-ess assent of his co-partner, we are of the opinion, that the Court below erred in its instructions to the jury that the complainant was entitled to interest from the time he drew die money in May, 1840; it being the opinion of this Court that he was not entitled to interest thereon until a demand made, and a refusal by defendant to account to his co-partner for the one-half of die money so drawn; and there must be a new trial on that ground ; unless the complainant shall, on or before the first day of the next succeeding term of the Court below, enter a remittitur on the record thereof for the interest found by the jury from May, 1840 up to the 12th day of August, 1842, the time the demand was made by the institution of the complainant’s suit. All the other assignments of error appearing on the record, are overruled.