Gaither v. Caldwell, 21 N.C. 504, 1 Dev. & Bat. Eq. 504 (1837)

June 1837 · Supreme Court of North Carolina

21 N.C. 504, 1 Dev. & Bat. Eq. 504

WILLIE GAITHER v. PINCKNEY C. CALDWELL.

June, 1837.

A partner who claims the benefit in equity, of a debt due the partnership as a set off or satisfaction of his individual note, must make his co-partner a party to his bill.

The plaintiff filed his bill in the Court of Equity for the County of Iredell, on the 29th Sept. 1827, against P. C. Caldwell, who alone was made defendant thereto; and therein charged that he had executed a bond to a certain John A. Chaffin, for the sum of six hundred dollars, due to the said John on the settlement of the accounts of a copartnership theretofore existing between them : that at the time of executing the bond, the plaintiff was in copart-nership with one Newton Crawford, trading under the firm of Crawford and Gaither: that shortly afterwards Chaffin commenced dealing with the firm, under an express agreement, that whatever debt he might contract therewith should be passed to the plaintiff’s credit on his bond: that by arrangements made between the plaintiff and his partner, Crawford, the plaintiff was authorized to apply the debt of Chaffin to the firm in this way: that after-wards in the month of May 1827, a settlement was made between the plaintiff and Chaffin, in relation to his dealings with the firm, whereby the balance due from Chaffin thereon, was ascertained to amount to one hundred and twenty-five dollars seventy and three-fourth cents; and Chaffin executed his bond for that sum, payable to the firm, and renewed his promise to credit the plaintiff’s bond to him for that amount: that about or before the time of this settlement, Chaffin assigned the said bond of the plaintiff to the defendant, with distinct notice, and an express agreement, that the same should be subject to a deduction of the amount due from Chaffin to Crawford and Gaither: that the defendant had induced the plaintiff, in May 1827, to accept service of a writ returnable to the next County Court of Iredell, upon an express promise that the cause “ should stand” until the November term following: that regardless of his promise, the defendant had caused a judgment to be taken by default for the whole amount of the bond, and was proceeding to collect the same by execution; and that Chaffin had become insolvent, and had left the state. The prayer of the bill was, that the defendant should be injoined as to the said sum of one hundred and twenty-five dollars seventy and three-fourth cents, and the interest thereon since the execution of Chaffin’s bond to Crawford and Gaither.

The defendant¡filed his answer to the bill, and therein set forth, that in the spring of 1825, he sold out to the plaintiff and the said John A. Chaffin, his stock of goods in trade, at an advance of twelve and a half per centum on the cost: that a computation was made by the plaintiff, whereby the price of the goods appeared to be, between twenty-one and tw.enty-two hundred dollars: that it was agreed if any errors appeared in this computation, these should be thereafter rectified: that in the winter of 1826-7, and in payment of the debt thus contracted, Chaffin delivered to the defendant his own note, with Abram Jones surety thereto, for the sum of fifteen hundred dollars, and transferred two bonds of the plaintiff, one for five hundred and fifty-three dollars, and the other for six hundred dollars: that the only agreement entered into between Chaffin and the defendant at,the timp of the transfer, was, that if upon a final settlement of the Valuation of the goods sold by the defendant, there should be found, anything due from the defendant, the same should be credited on the bonds of the plaintiff so transferred; and if on the other hand, a balance should be found due by the plaintiff, the same should be paid by the said Gaither: that an adjustment was afterwards made by certain persons, to whom the same was submitted, and thereupon a balance was found due to the defendant from the plaintiff greatly exceeding one hundred and fifty dollars, which the plaintiff admitted to be correct. The defendant denied the promise alleged to have been made to the plaintiff when the service of the defendant’s writ was acknowledged, but admitted that he promised not to force the collection of the money sooner than it could be compelled by the regular course of legal proceedings; and set forth that the Writ was returned to the May terna of Iredell County Court: that judgment at said term was rendered by default: that although execution was issued from said term, returnable to the August term following, and was levied on the plaintiff's property, the defendant forbore to enforce a sale thereon, and caused the execution to be returned; and that it was not until the execution issued from the August term, returnable to November, that the defendant endeavoured to press the collection of the judgment, when he would have been enabled to do so,had the defendant pleaded to the action. The defendant denied that he ever had any notice previous to the transfer of the plaintiff’s bonds of the alleged agreement between the plaintiff and the said John A. Chaffin, or of any other agreement whereby the bonds might be diminished, or made liable to credits, other than the agreement before stated in his answer, and insisted that the bond in question became due on the 4th May, 1827, and was assigned to him before the day of payment, for a valuable and bona fide consideration.

Upon the coming in of this answer, the injunction, which, was granted on the issuing of the bill, was dissolved with costs; and on motion of the plaintiff-, the bill was held over as an original bill. Replication was made to the answer, the parties proceeded to their proofs, and the cause being set down for final hearing, was, by consent of the parties,, transmitted to this Court to be heard.

The proofs on the part of the plaintiffs, consist of two. depositions. Abram R. Jones, the surety to the note of' fifteen hundred dollars, given by Chaffin to the defendant,, testifies, that he was present about the 1st February, 1827,. when this note was delivered to the defendant; and that at the same time, two notes of the plaintiff payable to Chaffin, and amounting to about the sum of eleven hundred* and fifty dollars, were also delivered to the defendant;, and that at the same time Chaffin stated that Crawford and Gaither, had an account against him which he supposed to be between fifty and a hundred dollars, and which was to be a credit on one of the notes. He further testifies, that Caldwell’s claim against Chaffin did not exceed twenty-three hundred dollars, and that his impression and understanding at the time, was, that the difference was to be credited on the note or notes Chaffin gave Caldwell, and that no credit because of that difference was ever given to the note whereon he was surety. Judge Pbakson testifies, that in May, 1827, when he was engaged in the practice of the law, he made a settlement at the request of the plaintiff and John A. Chaffin of their respective demands against each other: that the principal charge of the plaintiff was an account of Crawford and Gaither against Chaffin : that after allowing to Chaffin as set-offs against this; account, all his claims against Gaither individually, there yet remained a balance against Chaffin of one hundred and twenty-five dollars seventy and three-fourths cents: that Gaither said that Crawford- had transferred to him, his, Crawford’s interest in this account of the firm, but as he exhibited no evidence of the transfer, the deponent drew the note for this balance, payable to Crawford and Gaither, which note Chaffin executed in his presence. This note is appended to the deposition, and bears date 19th May, 1827. On the part of the defendant, the persons to whom, according to his answer, the computation made at the sale of the goods was referred for correction, have been examined. Their testimony has been taken so vaguely, that it is difficult to infer any thing from it with certainty, except an error of addition in the inventory of the goods sold by defendant to Chaffin and the plaintiff, to the injury of the defendant. They do not state whether Chaffin was before them,, nor the time at which they revised the computation. They refer to- their corrections made at the foot of the inventory, which was returned to-the defendant, and is not produced. John A. Chaffin has also been examined, and nothing is to be collected from, his testimony, but that a mistake against the defendant, was made in the inventory of the goods sold by the defendant to Chaffin and Gaither, which he thinks was discovered and rectified, at the time he transferred the notes of' of the plaintiff to the defendant; he is not examined by either party, touching the alleged agreement to credit these-notes, with the amount of his debt, to Crawford and Gaither; and in answer to a question from the defendant? whether he does not remember that the amount of all the the notes delivered to the defendant, fell short of the sur» truly due from Chaffin and Gaither, for the purchase of the goods; and whether he did not confess a judgment to the defendant, for the balance of about one hundred and ninety dollars, answers, that his recollection is too indistinct, to enable him to render a definite answer.

A decree cannot be had upon the testimony of one witness un-suported by circumstances against the plain and direct denial of the defendant in his anSwer, al-swear to his obtaining ay injunction.

No counsel appeared in this Court.

Gaston, Judge,

after stating the pleadings and proofs as above set forth, proceeded :—

The frame of the plaintiff’s bill is so defective, as not to warrant a decree in his favour, however clear his proofs might be. He claims to credit against the bond in the hands of the defendant, a debt due from Chaffin, not to himself, individually, but to himself and Crawford jointly, —and this because' of arrangements made with Crawford by which the plaintiff is individually to have the benefit of this copartnership demand, and because he is, therefore, in equity, the assignee thereof. Now, in all such cases the assignor must be a party, because his legal interest has not been transferred, and he would not otherwise be bound by the decree. It is not, of course, however, to dismiss a bill on account of a defect of parties discovered at the hearing, but rather to let the cause stand over with liberty for the plaintiff to amend, by adding parties. But we ought not to delay the cause for this purpose; because, upon the proofs, and independently of this objection, we cannot decree for the plaintiff.

The charge of notice to the defendant of an agreement between the plaintiff and Chaffin, that Chaffin’s debt to Crawford and Gaither should be applied as a payment on the bonds of the plaintiff assigned to the defendant, is most explicitly denied in the answer. The only proof to establish it, comes from one witness. We can find no corroborative circumstance attaching more credit to the evidence of the witness, and overbalancing the credit due to the defendant’s positive denial. It is possible, indeed, that the witness may have misunderstood the arrangement about which he has testified. It may have referred to a credit which might become due because of mistakes in the inventory and valuation of the goods sold, and not as he supposed, to a credit for Chaffin’s debt to Crawford and Gaither. But the defendant could not be mistaken. If his answer be untrue, it is wilfully untrue ; and we cannot declare it so upon the unsupported testimony of a single witness. The plaintiff, indeed, made affidavit to the truth of his bill, on his application for an injunction; but we are hearing the cause as though it had been instituted by original bill, and we are not now at liberty to consider that affidavit. If the agreement of Chaffin, and notice of it to the defendant, at the time of assignment, had been proved, there is no evidence against the defendant of the amount due from Chaffin to Crawford and Gaither. The settlement made between the plaintiff and Chaffin after the assignment of the bonds, is, as to him, res inter alios acta. It binds the parties, and those claiming under them subsequently, but it binds no others.

There is an entire defect of proof that the plaintiff is the sole equitable owner of the demand of Crawford and Gaither against Chaffin. The alleged fraud in getting a judgment at law by default, is denied; and there is no proof to sustain the charge. The Court, therefore, must declare, that the allegations in the plaintiff’s bill are not proved; and the same must' be dismissed with costs.

Pek CüRiam. Bill dismissed.