Patterson v. Martin, 28 N.C. 111, 6 Ired. 111 (1845)

Dec. 1845 · Supreme Court of North Carolina

28 N.C. 111, 6 Ired. 111

SAMUEL F. PATTERSON vs. WILLIAM H. MARTIN & AL

One partner made an advance of $808 IS cents to the firm, an’d' took a memorandum therefor m the shape of a note signed by the other partner and payable to the first. Afterwards the firm was dissolved, and* no actual account of the partnership being taken, the partner, who bad made this advance, agreed to take a certain amouftt as his share, and the other partner was to take all the remainder of the effects of the firm, and also 44 to pay all the debts dlie from the firm.” Held, that by this settlement, the partner, who made the advance, was precluded from claiming the sum- advanced as one ** of the debts of the firm.”

Appeal from the Superior Court of Law of Wilkes County, at tbe Pall Term, 1845, bis Honor Judge Pearsox presiding.

The case was as follows: On the first of October, 1837, the plaintiff and the defendant, Martin, entered into partnership as Merchants in Wilkesborough, with a capital of $6000 ; whereof the plaintiff put in $4000, and Martin the residue. The business was to be continued five years, unless sooner dissolved' by consent. In October, 1839, the plaintiff advanced for the use of the firm the sum of $808 12, and Martin gave him a memorandum thereof in the form of a note of “ Patterson & Martin,” to the plaintiff for the money. On the 9th of January, 1840, the parties agreed by articles to dissolve the partnership upon the following terms : Patterson was to take certain merchandize (some of which had been shipwrecked and had not arrived) at certain rates on the cost, to the amount of $6000, and if, upon an inventory thereof, it should not amount to that sum, the deficiency was to be made up by any debts due to the firm, which he, Patterson, might select; and Martin was to have all the residue of the effects of the firm, of whatever kind, consisting of notes, accounts, judgments, county claims and property of every other description, amounting as per inventory, to the sum of $17,000, or thereabouts — he, Martin, further agreeing and obliging himself “ to pay all the “just debts and liabilities of whatever kind so ever, now “ due or owing by the firm of Patterson and Martin, within “ two years thereafter, and to indemnify and save harm- “ less the said Patterson, against loss or damage on ac- “ count'of the debts or liabilities of the said firm.”

On the same day, Martin and the other defendants, as his sureties, entered into a bond to Patterson, in the sum of $12,000, in which, after reciting the agreement for a dissolution, on the terms above mentioned, the condition was, that it should be void in case Martin should perform the agreement on his part, and pay all the debts and liabilities of the said firm within two years thereafter, and indemnify and save harmless, the said Patterson from the same, according to the tenor and effect of the said agreement on the part of Martin.

The plaintiff was compelled to pay several debts of the firm, which he demanded from Martin, and also the payment of the sum of $808 12, advanced by him in October, 1839, as before mentioned; and, Martin having failed to pay the same, the plaintiff brought this suit in July, 1844, on the bond, suggesting as breaches, the nonpayment of the said sum of f808 12, and also the other sums so paid to certain creditors of the firm. On the pleas, of conditions performed and no breach, the jury found for the plaintiff, and assessed his damages to the sum of $3782 18, subject to the opinion of the Court upon the point, reserved on the foregoing facts, whether the said sum of $808 12 constitutes a debt of the firm, within the meaning of the said bond: judgment to be entered for $3782 18, if the opinion of the Court was in the affirmative, and, if in the negative, the damages to be reduced to $2683 44.

The Court was of opinion with the' defendants on the point reserved, and gave judgment for $2683 44: and the plaintiff appealed.

Badger and Boyden, for the plaintiff.

Dodge, for the defendant. .

Ruffin, C. J.

The manner of closing this partnership was so loose, that it is probable one of the parties may have had this sum in his mind as still being due, and not the other, so that the former may, with a good conscience, demand payment, while the latter may, in equally good faith, refuse it. But, from the terms of the agreement of dissolution, and the circumstances of the case, the Court is of opinion, that the $808 12 is not legally to be considered as continuing to subsist as a debt of the firm. It constitutes a part of the plaintiff’s interest in the joint effects, and it paust, consequently, be supposed to have been included in the demands on those effects, for which the plaintiff took a part of them, to the value of $6000. On what account did the plaintiff get that sum ? In order to entitle him to that now in dispute, he must sayt that the $6000 was for his stock and profits exclusively. But how is that shewn ? If it had been declared so expressly in the articles, or if it could be seen, that a state of the firm had been made up, and that upon it there would be due to the plaintiff about that sum, for his part of the capital and the gains, then this sum might appear to be still due, as a debt for an extra advance of money.

Indeed, a state of the firm, if truly made, must have shewn this as an outstanding debt, with the others. But nothing of the kind was prepared. It appears, indeed, that an inventory of the debts to the firm and • of the other effects, (except the merchandize,) had just been taken ; but it is obvious, that was a mere list of debtors, and of the amount of the debts on their face, and it did not ascertain the good and bad debts, and compute the true value. It was not an estimate of the assets of the concern, or an account of the respective partners in company. This is put beyond doubt, by the fact stated in the articles, that the goods, in which the plaintiff was, as far as they would go, to be paid the $6000, had not been inventoried, nor their value determined. No list of the debts owing by the firm, appears to have been taken. The conclusion, then, seems certain, that this was a bargain for a dissolution without striking a balance, and at a venture on each side. The inference follows, that when the plaintiff took out of the common property $6000, for his share, it was for his whole share thereof, and not merely for his original stock and a conjectural profit. The memorandum given to the plaintiff by his partner, can make no difference in law. It is only one evidence of the advance, and is no better than an entry in the books to the plaintiff’s credit. We suppose that this sum of $808 12 was, of course, to the credit of his account; and the difficulty is to distinguish and say, that the $6000 did not extinguish that credit, as well as one for the plaintiff’s original share of the capital. In fine, when the plaintiff, one of the partners, took a large sum, exceeding all his advances of every sort, and took it without computing either profit or loss, and without saying on what accounts in particular he received it, the legal conclusion must be, that it was meant to cover his entire share, and extinguish every demand he had on the effects of the firm; for one item of his demand can he-no more said to survive than another. Therefore, although third persons might have debts against the firm,' the partner, thus provided for on a dissolution, could not be said to have them.

Per Curiam. . Judgment affirmed.