Opinion
08-29-1893
BENEZET v. YOURISON.
William E. Potter, for complainant. Morgan Hand, for defendant.
Bill by John H. Benezet against Theodore H. Yourison for an accounting. Accounting ordered.
William E. Potter, for complainant.
Morgan Hand, for defendant.
PITNEY, V. C. This is a bill for an accounting, brought by principal against agent. It sets out that the complainant was the proprietor for many years of a country store located at Cape May Court House, Cape May county, which he himself, being engaged in business elsewhere, was not able to manage personally, and that the defendant was employed by him to manage the business, and keep proper books of account, and account to him for the proceeds. The bill further sets out that on the 2d of June, 1890, complainant made a settlement with the defendant, based upon the belief that he was indebted to the defendant, and that he gave to the defendant his five promissory notes of $100 each, payable at a future date, and took from the defendant a receipt in full of all wages and book account to date; that when he made such settlement he was not aware of the true state of the account between himself and the defendant, and subsequently, on a closer examination of the books, and an inquiry into the facts and circumstances, he became satisfied that he was not indebted to the defendant, but that the defendant was largely indebted to him. He charges the defendant with having defrauded him out of large sums of money, by failing to make proper entries in his books of account, and by actual embezzlement of moneys; and he asks that the settlement made on the 2d of June, 1890, may be declared not to be a bar to an accounting, and that he may have an accounting under the direction of the court, and offers if, upon an accounting, anything shall be found due from him to the defendant, to pay the same, and prays a decree against the defendant, if the balance shall be found the other way. The answer denies all fraud and embezzlement, and alleges that the complainant was indebted to him in a larger sum than the amount for which the notes were given, but Insists upon the settlement's being a fair one, and a bar to the action. The bill sets out many facts which are relied upon to show that the defendant had defrauded the complainant, and these facts are either denied or explained by the answer. At the hearing a large amount of evidence was adduced, on the one side and the other, in support and denial of the allegations of fraud and embezzlement. I do not find it necessary, at this time, to enter upon a consideration of these allegations, but shall contentmyself with a determination of the question whether or not the settlement made on the 2d of June, 1890, should, under the circumstances, be held to be binding upon the complainant, or whether he should be entitled to go behind that, and have an accounting against the defendant.
Such of the facts as are necessary to determine this question are as follows: The defendant went into the service of the complainant when about 21 years of age, as an apprentice in the tin, sheet-iron, and plumbing business, which complainant carried on at Cape May Court House. After serving an apprenticeship of some two or three years, he was employed as a journeyman for two or three years longer. Then the business gradually changed from that of a manufacturing business to a business consisting mainly of the sale of manufactured goods, stoves, sheet iron, tinware, house-furnishing goods, paints, and oils, and the defendant was given charge of the store, and kept the books of account. On the 28th of February, 1873, a settlement for the wages due defendant was had between him and the complainant, and the sum of $429.84 was found due from complainant to the defendant, for which the complainant gave him his duebill. Subsequently, about the 28th of September, 1878, another settlement was had, and, including the duebill, a balance of $1,246.83 was found due to the defendant, and that amount was placed to the credit of the defendant on the ledger of the complainant then kept by the defendant in the Cape May Court House store. The defendant swears that the account between them, up to that time, had been kept in a small ledger by itself, which is now lost, so that the mode in which that balance of $1,246.83 was arrived at cannot now be ascertained. As originally entered upon the ledger it was written simply thus: "1878, Sept 28. By balance due, $1,246.83." This is in the handwriting of the defendant. At some other time, and in a different ink, the defendant, in his own handwriting, added parenthetically, "(including duebill, $429.84,)" and it was an admitted fact that the balance of $1,246.83 did include the duebill of $429.84. From that time on, a regular account is kept in the ledger by defendant with himself, including debits and credits, down to the 2d of June, 1890. He credited himself each week with salary, eight dollars, up to the 25th of June, 1880, and charged himself with sundry items of cash and some few items of merchandise had by himself continuously up to about the 2d of June, 1890, but the weekly wages of eight dollars were not extended beyond June 25, 1880. In the mean time the defendant had, on two occasions after 1878, attempted to keep a cash book. The first attempt was from the 1st of January, 1884, to the 1st of July, 1884, and during that time all of the items of cash taken by himself, with which he was properly chargeable, were entered on this cash book, but were not posted to the ledger; and again, in 1889, on the 21st of January, he commenced keeping a cash book, and continued it up to the 2d of November, 1889, during which time numerous items of cash are entered in this cash book as paid to himself, and they, likewise, were not posted to the ledger. For all the remainder of the time from September, 1878, no such book was kept Again, in the course of the business, there were several instances in which the defendant became indebted to persons dealing with the Cape May Court House store, and, in settling their bills due the complainant for merchandise sold out of the store, he credited them with the amount of their bills against him personally. This was done, apparently, by the consent of the complainant, but in several instances the defendant did not charge himself with the amount of the bills against him with which he had credited the debtors of the complainant, so that the account of the defendant on the ledger failed to charge him with large sums with which he was, by a proper adjustment of the books, liable to be charged. The complainant alleges and argues that the circumstances warrant the belief that the defendant took large sums of money directly out of the business, and appropriated them to his own use, of which no account whatever was made on the books, but upon that point I find it unnecessary to form any opinion. The ledger account of the defendant being in that condition, on the 2d of June, 1890, the complainant with his Cape May City store bookkeeper, Mr. Barnett, called on the defendant at the Court House store. He had become dissatisfied with the mode in which the defendant was conducting the business, and complained. Of the merits of this complaint also I find it unnecessary to form any opinion. The result of the interview was that the complainant discharged the defendant, and attempted to make, and did make, a settlement with him, the validity of which is now under consideration. Complainant and Barnett arrived at the store about 8 o'clock in the morning, and, after complainant had expressed dissatisfaction with defendant, some discussion took place, and a negotiation was entered into for the selling out by complainant to defendant of his business at the Court House. It progressed so far that there was some prospect of its being carried out, but finally, between 10 and 11 o'clock, complainant, desiring to return to Cape May City, directed Mr. Barnett to look over defendant's account while he was gone, and went to Cape May, leaving Barnett at the Court House, and returned again about 4 o'clock in the afternoon. In the mean time Barnett looked into the account of the defendant, continued the credits to him of his weekly salary, at the same rate, up to date, then footed the account, andfound a balance apparently due him of $3,829.97. He called the defendant's attention to the fact that an examination of the ledger showed that there were considerable periods of time during which he appeared not to have charged himself with any cash. This the defendant explained by saying that he had neglected to enter it, but stated that he had substantially paid himself his wages as he went along. When the complainant returned from Cape May City, about 4 o'clock, the result of the footings of the ledger were stated to him. He expressed great surprise, and told the defendant that he had understood that he had paid himself all his wages as he went along, which the defendant substantially admitted, and made no pretense that there was any such sum due him as the footings of the ledger seemed to show. The duebill was then spoken of, and complainant testified that the defendant had admitted to him that he had paid himself not only the balance due him for wages, but also the amount due on the duebill. This the defendant denied, but, as I interpret his evidence, admitted that he had paid himself all his wages over and above the duebill, or thereabouts. This duebill, although out-lawed, the complainant recognized and offered to pay, and thereupon gave his five notes of $100 each in settlement of it, and the receipt was signed. A subsequent examination of the books by Mr. Barnett disclosed the situation which I have previously stated, viz. that a large number of items which should have been carried to the ledger had not been carried there. It is quite clear that the settlement was understood by the complainant to be, and was confined to, a settlement of the wage account between him and the defendant, which, of course, included payments made directly on account of wages. Complainant had no idea at that time that the accounts were so complicated that, in order to get at a proper settlement with the defendant, an inquiry should be had as to the defendant's dealings with the creditors of the complainant's Court House store, nor was he aware that the $3,829.97 balance against him, as found by the footings of the ledger, included the duebill. He swears, and I believe him, that he supposed he owed the duebill over and above whatever was due to the defendant, if anything, upon the footing of the ledger, and was not aware that the duebill had been included in the original balance of $1,246.83. Nobody appears to have called his attention to that circumstance, nor does it appear to have been observed by Mr. Barnett. Mr. Barnett as I have stated, did not go into a general examination of the books, nor would he have had time to do so, on the occasion in question, if he had attempted it Under these circumstances I think the settlement should not be considered as binding upon the complainant, but that he should have an accounting, as prayed for by his bill. I am the more ready to come to this conclusion since nothing was parted with by the defendant to the complainant, and if, as defendant alleges, it shall turn out that upon an investigation complainant is indebted to him for a greater amount than the $500 represented by the five promissory notes, he will have the benefit of that, and be entitled to a decree against the complainant accordingly. I will therefore advise an order of reference to a master, to take and state an account of the dealings between the parties, commencing with the balance found to be due on the 28th of September, 1878, and the master may make use of all the testimony and exhibits already given and produced, and such further evidence as the parties shall choose to offer, each party to appear and submit to an exmination on the demand of the other.