Brown v. Haynes, 59 N.C. 49, 6 Jones Eq. 49 (1860)

Dec. 1860 · Supreme Court of North Carolina

59 N.C. 49, 6 Jones Eq. 49

LETITIA BROWN, Adm’x of M. L. BROWN, dec’d against THOMAS W. HAYNES.

Where a partner, whose duty it is to keep the books, seeks to .make a charge in his own favor, which is. not supported by a proper entry in the books, he must account for that fact,, and can only support the charge by clear proof;, every presumption being, against him..

Where one entered into a copartnership with his son-in-law, and it was agreed that the father-in-law should furnish a house for a shop, tools, &o., and a house for the defendant to live in, and that he “should be at no expense,” it was held that these words must be intended to mean expense for things connected with the business, and not family expenses.

One partner cannot, without the express concurrence of his copartner, make a note of the firm payable to himselt and charge the firm therewith.

Where A, who was the active partner, and the book-keeper of a firm, sought to charge it with the value of a slave which it was alleged belonged to the firm, and had been appropriated by B, his copartner, to his individual use, it was held that in the absence of any charge upon the books of the firm, the mere allegation of it in his answer, supported by vague and improbable testimony that such slave belonged to the firm, was not sufficient.

Where A, who was the active partner ot a firm, and its book-keeper, set up a claim against the firm for money which the answer alleged was due the partners jointly, for services rendered independently of the copartnership, but which were appropriated by B to his own use exclusively, it was held that this could not be made a charge upon the firm in the absence of proof that the money had been appropriated to the purposes of the firm, there being no entry on tire books to show the fact.

The office of an exception is to call the attention of the court to some specific matter or item in an account in respect to which error is alledged, if it does not answer this purpose, the court will not notice it.

Cause removed from the Court of Equity of Rowan county, and brought up upon exceptions to the report of the master.

The bill is filed against the defendant as surviving partner of the firm of Brown & Haynes, and prays for an account and settlement of the firm business, and the plaintiff is the administratrix of M. L. Brown, the deceased partner.

About the year 1851, the defendant and plaintiff’s intestate entered into a copartnership for the purpose of carrying on, in the town of Salisbury, the business of tanning, shoe-making and harness-making. There were no written terms of copart-nership, but the defendant in his answer avers that by the terms of the parol agreement “ the capital was furnished by the plaintiff’s intestate without interest, and the tan-yard and a house for the defendant to live in, were to be furnished without rent, and also, the shoe-shop without rent; and his mules to grind the bark, and old Jesse, the tanner, without charge.” “ And in consideration of this capital, &c., the defendant was to give his personal attention to the business of the copartnership, and they were to share equally in the profits and losses of the said firm.” The partnership continued up to the year 1857, when Brown died.

In his answer, the defendant seeks to have an allowance for four notes; one for $960.79, dated Eeb. 15, 1855, which he avers “ was given on the settlement of the estates of Henry W. Brown and Michael Brown, one half of this sum belonged to this defendant, and the other half to plaintiff’s intestate ” another for $525, dated August the 8th, 1853; “ this was given for a negro boy, Burton, the property of the firm, taken by the intestate”; another for $600, dated Nov. 2d, 1854, “ for money of the firm received by plaintiff’s intestate”; and one other for $1152, dated May 6th, 1853, “given for money of the firm received by plaintiff’s intestate.”

These notes, amounting in the aggregate to the sum of $4344.46, were all in the hand-writing of the defendant, both the bodies and the signatures, the name of the firm having been signed to them by defendant, who, it is admitted, was the active partner; and kept the books, made the entries,hired the hands, and paid them; and, in fact, was the general manager of the business.

Defendant introduced in evidence the deposition of one W. H. Haynes, his father, who deposed, that in a conversation had with plaintiff’s intestate, a short time after the firm was organized, that intestate said to him that he “ was to furnish every thing,” and “ that T. W. Haynes was to be af no expense.” The witness, Haynes, further deposed that plaintiff’s intestate told him that he had administered on the estate of Henry Brown, and that T. W. Haynes had administered on the estate of Michael Brown; that Haynes was to attend to the business of both estates, and that the commissions were to be equally divided; that Brown afterwards told him that the estates were settled; that the commissions on both amounted to between $900 and $1000; that he had used the entire sum himself, but that he was responsible to T. W. Haynes for one half of it. lie further deposed that he sold a boj7, Burton, to the firm, and that he was paid for out of the firm funds; that plaintiff’s intestate afterwards took this boy to his plantation, and told him, witness, that he was to account for him to the firm; witness did not recollect how much he received for Burton ; that he sold the firm another boy at the same time, and thought he got between $700 and $800 for both.

The defendant, who was a son-in-law of plaintiff’s intestate, as was shown, was a man of slender means, and had been for several yearn previous to the organizing of the copartnership, engaged in clerking, and Michael Brown, his employer, deposed that when he left him, he was indebted to him, (Brown,) to the amount of $70, which was paid by his father, W. H. Haynes. The father of the defendant also stated upon his cross-examination, that during the continuance of the copartnership, he had let his son have money at different times; that the largest sum he recollected letting him have, was $400; and that of this money so supplied, $400 was borrowed by the firm to purchase hides with, half of which had been paid back by the firm, the rest was a gift to his son.

This witness lived, during the existence of the firm, in the county of Iredell, some twenty miles from Salisbury.

The answer also avers that there was a note on Moses Ry-mer and Frederic Mowery, payable to M. Brown for the sum of $600; that this note, though made payable to Brown, was the property of the firm, and was taken for firm debts, and the defendant seeks to have it accounted for as such in the settlement.

There was no further evidence of these various transactions, and no entries on the books of the firm in relation thereto, nor was any mention made therein of any such matters.

Upon the coming in of the master’s report, defendant filed the following exceptions:

1. Defendant excepts to the whole report, for the reason that the testimony does not sustain the report.

2. Defendant excepts to the report for the reason that the commissioner has charged for Jesse’s services at one hundred and fifty dollars per annum for five years, making $750, when the witness, W. EL Haynes, proved that there was to be no charge for Jesse.

3. Defendant excepts to the report for the reason that W. II. Haynes proved that T. W. Haynes was to be at no expense, but that the family expenses were to be borne by Brown, but that the master had allowed only the rent of the dwelling house and other buildings connected with the business, and for the services of two negro women, whereas he should have allowed for the whole expense of the family.

4. Defendant excepts to the report for the reason that the commissioner refused to allow as a charge against the firm in favor of defendant four notes amounting to the sum of $4.34-4.46.

5. Defendant excepts because commissioner refused to charge the plaintiff with the value of the negro boy, Burton.

6. Defendant further excepts because the commissioner failed to allow his one half of the commissions received upon the estates of Henry and Michael Brown.

7. Defendant excepts because the commissioner refused to allow for any money advanced to the firm, when he should have allowed at least, the sum of $500 ; that W. H. Haynes proved two hundred dollars advanced by him and applied in the purchase of hides.

8. Defendant excepts to the report of the commissioner for the reason that lie has not allowed the note of Rymer &Mow-ery, principals, and B. B. Roberts, S. R. Harrison and J. J. Summerell, sureties, for $600, with a credit of $75, which note, though payable to M. L. Brown, individually, was indirectly firm property, and placed by this defendant, as firm property, in the hands of L. Blaclcmer, and for which this defendant holds his receipt.

Upon the coming in of the report, and the filing of the exceptions, the cause was set down for argument, and transmitted by consent to this Court.

Fleming and James F. Kerr, for the plaintiff.

Boyden and B. R. Moore, for the defendant.

PearsoN, O. J.

Before entering upon the exceptions, two general remarks will serve to give “ color and complexion” to this whole case. “ Defendant admits that he was the active partner, kept the books, made all the entries, and received and disbursed the funds, hired hands and paid them, and did all the other business of the firm.”

It follows that if the proper entries arc not made, so as to show, on the books, the condition of the business, it was the fault of the defendant, and he will not be allowed to take advantage of his own wrong. The defendant makes a charge against the firm, amounting to more than four thousand dollars j it is not supported by any entry on the books, and instead thereof, the defendant relies “on four notes” purporting to have been executed by the firm to himself, with different dates, and for the several sums, amounting in all, to the sum total claimed, and professes in his answer to give the transactions constituting the consideration. These notes are in his hand-writing, and the name of the firm signed by him. There is no proof that they were ever exhibited to the deceased partner, or were ever seen by any one in his life-time. — ■ These circumstances detract much from the credit which might, otherwise, be due to the answer, and reflect unfavorably upon the testimony of the defendant’s father, which is relied on in support of several of his charges.

1. The first exception is overruled because of its generality. The objeet of an exception is to call the attention of the court to some specific matter or item in the account, in respect to which error is alledged. If an exception does not answer this purpose, the court will not notice it.

2. The second exception is overruled. Neither IV. H. Haynes, nor any other witness, proves that ho charge was to bo made for the hire of Jess, and the allegation of the answer is not only unsupported, but is opposed by the weight of the evidence. The tan-yard tools and fixtures, shoe-shop, house and lot, which it is admitted the partner, Brown, was to furnish free of rent, in compensation for the services of the defendant, was worth an annual rent of some five hundred dollars. Two hundred and fifty dollars was a fair allowance for the services of the defendant, who was a young man, and had no experience in the business, and was to be also allowed one half the profits.

3. The third exception is overruled. The witness, W. EL Iiaynes, who is the father of the defendant, deposes that Brown, whose daughter his son had recently married, told him that he was to furnish every thing, and that the defendant was to attend to the business, and “ was to be at no expense.” The proper construction of this is, that Brown was to furnish the tan-yard, shoe-shop, houses, tools and stock on hand, that is, every thing connected with the business. It would be a strained construction to make the words include provisions for the use of the defendant and his family, and also their clothes and furniture, and other necessaries for housekeeping !! Had this been the understanding, the books would have contained many entries in respect to such articles, whereas, there is no entry of the kind, and the defendant does not, in his answer, alledge that the “ victuals and clothes” of himself and wife, were to be furnished by Brown. He says that Brown was to furnish, without charge, the tan-yard, tools, &c., his mules to grind the bark, and old Jesse, the tanner, and the shoe-shop, dwelling house and lots, “ these were all to be furnished without charge.” So, the probata, (construed as contended for,) goes beyond the allegata !

4. The fourth exception is overruled. This applies to the four noles, amounting to $4344.46, which are referred to above. The idea that a partner, without the express concurrence of his copartner, can make a note of the firm payable to himself, and charge the firm with it, is too monstrous to be entertained for a moment! The only motive that can prompt one to manufacture secret evidence of this kind, must be that he prefers to keep the evidence in his pocket, rather than put it on the books, where it would be subject to the inspection of his copartner. In our case, the proof is, that the defendant did not have the means to enable him to advance such large sums for the use of the firm ; indeed, it would seem that he was barely able to support himself and his wife.

5. The fifth exception is overruled. The answer seeks to «charge the firm with a note for $525, dated August the 8th, 1858, and sets forth “ this note was given for a negro boy, Burton, the property of the firm, taken by the intestate.”— This is one of the four notes embraced in the fourth exception, and the defendant failing in his attempt to have the note allowed, seeks to set up a charge against the firm for the value of the slave,, on the ground, that the slave was purchased and paid for by' the firm, and afterwards appropriated by the intestate to his individual use. If such was the case, the intestate ought to have been required, when he took the slave, to give his note to the firm, or been charged with the amount on the books, and it was’a strange notion, on the part of the defendant, that he could make it the foundation of a note by the firm to himself for the váílue of the slave. This circumstance, together with the absence of any entry on the books, in respect to it, puts suspicion on the transaction. It is proved that the slave went into the possession of Brown, and was claimed by him as his individual property. For the purpose of showing that he was bought and paid for by the firm, the defendant relies on the testimony of his father, who says “ I sold the firm a boy, Burton ; he was paid for out of the firm funds; afterwards, Mr. Brown took the boy to his plantation, and told me he was to account for him to the firm. I don’t recollect what I got for Burton, I sold them another negro at the same time; I think it was between $700 and $800 that I got for both boys.” No explanation is given how this witness happened to know the fact, that the price of this boy was “paid for out of the firm funds.” Witness says, “I don’t recollect when I sold him, nor do I recollect where Thos. Haynes lived at the time.” It may be his son told him so ; it was in character with the fact that he should, thereupon, make a note payable to himself, for the full value of the boy, •and put the name of the firm to it. But, however this may be, as it was the business of the defendant to keep the books, and to have charged Brown with the value of the boy, if, in truth, he had been the property of the firm; in the absence of any entry on the books, we cannot, upon loose testimony, like this, declare that the defendant has supported the charge; and strongly incline to the opinion, that, as it was not a part of the business of the firm to trade in negroes, as no bill of sale is produced by the defendant, who ought to have taken one, and no entry was made on the books in respect to it, connected with the fact that the defendant manufactured the note above referred to, that the defendant bought the boy as the agent of Brown, and not as a member of the firm¡ at all events, there is no sufficient proof that the slave was paid for out of the funds of the firm.

6. The sixtli exception is overruled. The answer seeks to charge the firm with a note of $960.79, dated the 15th of February, 1855, and sets forth, “ This was given on the settlement of Henry "W. Brown and Michael S. Brown’s estates, one half of this sum belonged to this defendant, and the other half to M. L. Brown.” This is also one of the four notes embraced in the fourth exception, and the defendant failing in his attempt to have the note allowed, seeks to set up a charge against the firm, for the amount, on the ground that the firm had received the commissions due on settlement of the estates of Henry and Michael Brown. If such was the fact, the books of the firm ought to show it, but there is no entry on the books, and no proof of the allegation, and the firm does not seem to have been in any way connected with these two estates, except by the strange notion of the defendant that he could make it the foundation of a note by the firm to himself, as he did in respect to the slave, Burton.

7. The seventh exception is overruled. It appears by the proofs that the defendant had been acting as a clerk in a store for a year or two before he married, and entered into business with his father-in-law; he had no funds when he left the store, and was actually in debt to his employer some seventy dollars. So, he was not able to make advances for the firm, and does not alledge, in his answer, that he did so. The evidence of his father, on which this exception is based, is another instance where the probata readies beyond the allegata. W. IT. Haynes deposes, “ I let him, (my son,) have money at different times; the largest amount I recollect of letting him have at any one time, was-$400.” In answer to a question, on cross-examination, “Did you make a gift of the money to your son which yon say you let him have, if not, did yon lend it to your son or to the firm, and was it ever paid back to you ”? The witness says, “Not the whole of it; $400 was borrowed by the firm to purchase hides with, and one half of it has been paid back by the firm, the balance of the money was a gift.” This ■witness lived some twenty miles distant, in another county, and had no opportunity of knowing the business of the firm, except what -was communicated to him by his son. So, the most charitable construction of his testimony is, that his son told him that the money was borrowed by the firm. The, books furnish no evidence of the fact that this $400 went to the use of the firm, and, in the absence of that proof, this evidence is not sufficient to support the charge against the firm.

8. The eighth exception is overruled. This is another item embraced by one of those “four unfortunate notes.” It is enough to say that the note of Rymer and others, for $600, is on its face, payable to M. L. Brown, individually, and there is no evidence that it ever did become the property of the firm.

In passing on all of the exceptions, we have been governed by a well established rule in the law applicable to copartners, i. e. where a partner, whose duty it is to keep the books, seeks to make a charge in his own favor, which is not supported by a proper entry on the books, he must account for that fact, and can only support the charge by clear proof; for every presumption is made against him, inasmuch as between partners, their books have the verity of a record. If the defendant, by the application of this rule, has lost any one claim, which is a just one, it is his misfortune, and the result of his own neglect in not making the proper entry. The matter was not helped by his attempt to manufacture evidence in order to supply the omission, and he was certainly ill advised in urging charges upon insufficient proof.

There will be a reference, in order to show the balance after bringing into the account the sum of $2021.49, which was omitted, and the report will be in all things confirmed.

Pee CueiaM, Decree accordingly.