Opinion
01-14-1875
LINKE & KLEPPER v. FLEMING.
Scarburgh, Duffield & Sharp, for the appellants. Goodwin & Crocker, for the appellee.
I. In November 1865 L & K sold to F an interest in the sawmill business in which they were engaged, for which F was to pay them $3000, which they advanced to his credit; and they retained a lien on his portion of the profits and his interest in the mill itself as security for its payment. In August 1865, at the request of L & K, F withdrew from the concern, and relinquished all his interest in the partnership effects; and in consideration thereof L & K assumed all the debts of the concern, and released F from all liability to them, and all other persons, in all matters in any way connected with the partnership. And they further agreed, to pay F at the rate of $100 per month for his services during the 22 months he was with them, and $210 for his expenses in and about the business. F sued L & K for the compensation promised him, setting out the above facts in a special count, and adding the common counts; and there was a general verdict and a judgment for him. L & K then enjoined the judgment on the ground that F owed them the $3000, and was insolvent. F insisted the $3000 was discharged, and relied upon the record in his case as proof.--HELD:
1. QUAERE: If the insolvency of F gave the court of equity jurisdiction to enjoin the judgment.
2. The record is prima facie evidence of the facts stated in the special count of the declaration.
3. By the contract the debt of $3000 was released and discharged.
In October 1868 Linke & Klepper, partners, obtained from the judge of the Circuit court of the city of Portsmouth an injunction to restrain James Fleming from enforcing a judgment for $1,507.12, with interest from August 20th, 1867, which Fleming had recovered against them in the Hustings court of the said city. The grounds on which they asked for the injunction is, that Fleming was indebted to them by bond in the sum of $3,000, with interest from November 27th, 1865, on which bond they had instituted suit, which was then pending; and that Fleming was notoriously insolvent, had little property, and that was mortgaged for more than its value; and if their property was sold under Fleming's execution they would suffer irremediable injury.
Fleming in his answer denied that he owed the plaintiffs anything; insisted that the debt spoken of in the bill as due to them had been fully satisfied and discharged; and he set out the facts, and relied upon the record of the suit in which he had recovered his judgment against the plaintiffs as establishing said discharge.
In the suit referred to, which was an action of assumpsit, there were a special count, and the common counts. The special count stated that the plaintiff and defendants were equal partners in the manufacture of lumber, & c., and held property of great value as partners, and the defendants were desirous to purchase his interest in the property, and that he should withdraw from the partnership; and thereupon, on the 16th of August 1867, in consideration that the plaintiff would withdraw from the partnership and relinquish to the defendants all his right, title and interest in the partnership effects, they promised that they would assume all the debts of the partnership, and release him from all liability to them and all other persons in all matters in any way connected with the partnership; and further promised to pay to the plaintiff a sum equal to $100 per month, for twenty-two months of his connection with the defendants in said partnership business, viz: the sum of $2,200; and further, to pay him his expenses expended in and about said business, viz: $210.
The bill of particulars filed with the declaration stated items of account amounting to $2,590, and credited the defendants with $1,082.88, leaving a balance due the plaintiff of $1,507.12. The defendants pleaded non assumpsit; and on the trial of the cause the jury rendered a verdict in favor of the plaintiff for the said sum of $1,507.12, with interest from the 20th of August 1867; and there was a judgment in accordance with the verdict.
The debt claimed by Linke & Klepper as due to them from Fleming, was evidenced by a paper under his hand and seal bearing date the 27th of November 1865, in which he says: Linke & Klepper having this day advanced to my credit the sum of $3,000, it being the amount necessary to pay my portion of capital in joining them in the saw-mill business, I therefore agree that said Linke & Klepper shall retain in their hands my portion of the profits which may arise from the sale of lumber, & c., from said mill, until the debt and interest, at six per cent. per annum, is paid, and also that said Linke & Klepper shall hold claim on my portion of said mill until the debt, & c., is paid.
Although the defendant in his answer denied that he was insolvent, before the cause came on to be finally heard, he filed in the cause a paper in which he stated, that since filing his answer he had been compelled to make a sacrifice of his house and lot to meet some demands, which would have been easily avoided had he realized his judgment against Linke & Klepper. But not having been able to do this, he acknowledged that aside from what was due to him from them he had not property enough to pay all his debts.
The cause came on to be heard on the 23d of September 1871, when the court dissolved the injunction, and dismissed the bill, with costs. And thereupon Linke & Klepper applied to this court for an appeal; which was allowed.
Scarburgh, Duffield & Sharp, for the appellants.
Goodwin & Crocker, for the appellee.
OPINION
STAPLES, J.
A very interesting question has been raised and discussed by the learned counsel in this case. It is whether the insolvency of a judgment creditor is a sufficient ground for a court of equity to decree a set-off against him, upon which the debtor might have successfully relied by way of defense in the action at law; but which he failed to do without any circumstances of excuse for such failure. This question has never been decided by this court, nor can it be considered as settled by the decisions of foreign courts. We do not deem it necessary to express any opinion upon the point, as the case may be disposed of upon other grounds which do not admit of any very serious controversy. Conceding then that equity has jurisdiction to give relief in this class of cases, are the appellants entitled to such relief upon the merits.
The bond in controversy, executed by the appellee to the appellants on the 27th November 1865, establishes the fact that the appellants on that day sold to the appellee an interest in the " saw-mill business" in which they were engaged; that he agreed to pay them therefor the sum of three thousand dollars, which they advanced to his credit; and that they retained a lien on his portion of the profits and his interest in the mill itself, as surety for its payment. The appellant's claim is to recover this sum of three thousand dollars.
The appellee's defense is, that on the 16th August 1867, he, at the request of the appellants, withdrew from the partnership, and relinquished all his interest in the partnership effects; and, in consideration thereof, the appellants assumed all the debts of the concern, and released him from all liability to them and all other persons, in all matters in any way connected with the partnership; that they further agreed to pay him at the rate of $100 per month for his services during the twenty-two months of his connection with the concern, and the sum of two hundred and ten dollars for his expenses incurred in and about the business. And thus the debt of $3,000 was liquidated and discharged.
In support of this ground of defense the appellee relies upon the record of a suit in which he recovered against the appellants a verdict and judgment for the full amount of compensation and expenses as aforesaid. The only question to be determined is whether the record sustains this defense. The declaration contains three counts, one special and two common counts. The special count sets out in detail the facts already stated, upon which the appellee relies to establish the liquidation and settlement of the debt in controversy. The defendant pleaded non assumpsit, and there was a general verdict for the plaintiff. It is insisted by the counsel for the appellants, that as the verdict was rendered upon the entire declaration without reference to the special count, it cannot be relied upon to show that the averments made in that count are true.
The rule upon this subject, as settled by the courts, is that the verdict extends to every allegation which having been made on one side and denied on the other, was at issue and determined in the course of the proceedings. When the recovery is on a contract the verdict establishes not only that the plaintiff is entitled to the amount awarded by the jury as damages or compensation, but that he did every act and performed all the stipulations that were conditions precedent to the right to maintain the action. 2 Smith's Lead. Cases, 761-'2.
If it appear by the record or by extraneous evidence, that the matters at issue in the second suit were litigated and determined in the first, the verdict will operate as an estoppel and be regarded as conclusive. On the other hand, where the pleadings present several distinct matters, and the verdict may have been rendered upon one or the other of them, without precisely indicating which, it will be inconclusive, because the verdict wants the certainty necessary to an estoppel. In such case, however, as the jury may have decided on both matters, the verdict is prima facie evidence, though not conclusive, and may be rebutted by evidence aliunde. Henderson v. Kenner, 1 Rich. R. 474, 480, and authorities there cited. For example, a judgment and verdict for the plaintiff in a declaration containing the common counts and also a special count will be prima facie but not conclusive evidence of the existence and validity of the contract set forth in such count. It is not conclusive, because the verdict may have been based upon the common counts. Washington, Al. & Georgetown Steam P. Co. v. Sickles et al., 24 How. U. S. R., 333, 340.
According to these views, the record of the action at law is prima facie evidence of the matters relied upon by the appellee, and as the appellants have not undertaken to controvert them, they must be taken as true.
The learned counsel for the appellants conceding this, insist that as the agreement or arrangement was merely to relieve the appellee from liability in all matters in any way connected with the partnership, it does not affect the debt in controversy, because that debt is for money loaned, and is an independent transaction, having no connection with the partnership. It does not appear that there was any other debt but this due the appellants from the appellee. It is not pretended there was any other. It is difficult to understand to what liability the parties had reference unless to the one now in controversy. The debt may not have been due to the concern as partners, but it was certainly connected with the partnership. It was contracted in the purchase of an interest in the concern, and the appellee's portion of the partnership effects and profits pledged as security for its payment. The phrase is, that the appellants " are to release the appellee from all liability to them, and all other persons, in all matters in any way connected with said partnership." That this language is sufficiently comprehensive to embrace the claim of the appellants does not admit of a question. If it was not so intended, it is very remarkable that the appellants did not make some express reservation of a debt of so much magnitude.
It is still more remarkable, that the appellee should relinquish his entire interest in the partnership effects, and at the same time agree to continue liable for the three thousand dollars, the stipulated price for that interest. The facts disclosed by the record do not justify any such conclusion. The presumption is almost irresistible, that the real understanding of the parties was, that the appellee in severing his connection with the concern should be restored to his former position, and be compensated for his services and actual expenses during the period of his connection with the partnership. For these reasons we are of opinion that the appellants are not entitled to the set-off claimed by them, and that the decree of the Circuit court must be affirmed.
DECREE AFFIRMED.