Summary
In Wells v. Mitchell, 23 N. C. 484, 35 Am. Dec. 757, the question was directly presented whether the defendant partner may maintain an action in his own name, and it was held that he could not. The court, in deciding the case, uses the following language, in which the distinction between tenant in common and partners is very clearly made: "If a tenant in common destroy the chattel, or, as some think, if he sell the whole, his fellow may have trover or trespass against him.
Summary of this case from Bertozzi v. Luigi CollasoOpinion
(June Term, 1841.)
One partner cannot maintain an action of any kind against a person who purchases from a copartner the partnership effects, though such sale was made by the copartner in fraud of the partnership rights and to satisfy his own individual debt.
(485) APPEAL from Pearson, J., at Spring Term, 1841, of GUILFORD.
The following is the case sent up to the Supreme Court:
This was an action of trespass vi et armis, for an injury to personal property. The plaintiff adduced evidence showing that he was in possession of a workshop containing sundry articles of property belonging to the coach-making business, which was his trade, and that he had secured possession by nailing a board across the door of the house, and that the defendant, in his presence and against his remonstrance, pulled off the board and sold the articles of property at public auction to sundry purchasers, who took them. And the defendants offered evidence showing that the plaintiff and one William P. Lindsay had carried on the coach-making business as partners in said shop, and that the articles aforesaid belonged to the firm, and that William P. Lindsay had absconded from the country, insolvent. They then produced a deed of trust from the said William P. Lindsay to the defendant Mitchell, conveying all the articles aforesaid, the shop and lot, as the individual property of Lindsay, to satisfy numerous debts due from him individually to the other defendant, and justified the taking under the authority of that deed. The partnership aforesaid as to the articles of personal property being admitted, his Honor intimated his opinion that the action could not be maintained. The counsel for the plaintiff then offered to show that there were partnership debts of said firm equal in amount to the value of all the said property; that some of these debts the plaintiff had paid before, and some after, the sale under the deed of trust as aforesaid; and that judgment had been obtained against him for others, which he had not been able to satisfy by reason of this loss of the partnership effects; but his Honor holding that these facts would not enable the plaintiff to maintain this action, in submission to this opinion he suffered a nonsuit and appealed.
No counsel for plaintiff.
(486) J. T. Morehead for defendant.
This Court concurs in opinion with his Honor, that this action will not lie. It may be admitted that the sale of the goods of a firm by one of the partners in payment of his own debt is prima facie an act of fraud and wrong towards the other partners. But the question is as to the remedy for that wrong. The case is different from that of an action brought against a partnership on a security given in the name of the firm by one of the partners for his own debt; in which case it is well settled that no action can be sustained. Weed v. Richardson, 19 N.C. 535. The defense, however, is not that of the defrauding, but of the defrauded, partner; the latter being allowed to show that he is not bound by the security. The consequence of that, in the English law, is that the plaintiff fails altogether, since by that law a joint action ex contractu must be sustained against all the defendants, or it cannot be against either. In this State it is different, and judgment may, by force of our statute, be entered against one or all the defendants in actions founded on contracts as in those for torts. Therefore, here there may be judgment against the partner who executed the instrument, while the other is discharged upon his defense, founded on the fraud. But although a fraud of this character constitutes a good defense in the case mentioned, there are insuperable difficulties in sustaining an action brought against the purchaser of goods of the firm from one of the partners. If the action be for the price of the goods, as upon (487) a sale, it must be in the names of all the partners, including him who made the fraudulent sale; and there is an inconsistency and absurdity in the idea of the perpetrator of a fraud recovering, as one of the plaintiffs, in an action against a person who cooperated in the fraud. In Richmond v. Heassy, 1 Stark., 202, Lord Ellenborough held that an action could not be maintained in the name of the three partners in a firm against the acceptor of bills drawn by the firm, when the defendant showed that one of the firm — though in fraud of his partners — had engaged to provide for the bills. This was held upon the principle that the partners were obliged to sue jointly, and that the release or other act of one, therefore, bound the rest as well as himself. If the action be for the property itself, instead of the price, or be trover or trespass for taking or converting the property, the result must be the same. It is not necessary to express an opinion whether such a purchaser could maintain an action against the other partners, if they happened to get the goods into possession. Our inquiry is whether the partners or any of them can have an action against the purchaser; and in reason, an action sounding in tort stands, in such a case, on the same footing with one for the price. In Jones v. Yates, 9 Barn. and Cres., 532, where Sykes was a partner in two firms and took the money and bills belonging to one to pay his debt to the other, it was held that neither assumpsit for the money nor trover for the bills would lie in the names of the partners to whom the money and bills had belonged, nor, they having become bankrupt, in the names of their assignees. In delivering the opinion of the Court of King's Bench, Lord Tenterden said there was no instance in which a person had been allowed as plaintiff in a court of law to rescind his own act upon the ground that such an act was a fraud on some other person, whether the party sued in his own name only, or jointly with such other person. It may be supposed, as the present action is not brought in the name of the dishonest partner, but in that of the injured one alone, and the defendant has not pleaded in (488) abatement the nonjoinder of the other partner, that it ought to be sustained, and the plaintiff be allowed to recover his adequate part of the value of the goods. But the rule requiring a plea in abatement, when an action of tort is brought by one joint tenant or tenant in common, applies only to those cases in which a joint action by all the persons having an interest would lie. If in such a case the defendant does not plead in abatement to the action brought by one tenant in common, the plaintiff recovers in that action according to his share; and, when the other sues for his share, the plea of nonjoinder comes too late, since the action cannot then be sustained in another form; and unless it could be in that, the plaintiff might be entirely defeated, by collusion between his cotenant and the defendant. But partners do not, in this respect, resemble tenants in common or ordinary joint tenants. They cannot sever in an action; and one of them can, by a sale, pass the whole interest in a chattel belonging to the firm; whereas a sale by a tenant in common, or joint tenant, passes only his interest; and his former cotenant may still hold, or take possession, as part owner. In Jones v. Yates, Lord Tenterden said the property passed at law as against Sykes (the fraudulent seller), and there was no remedy at law for Bury (the other partner) to recover it back. He could not do so without making Sykes a party. He thus agrees with Lord Ellenborough, that partners must sue jointly. The difference between tenants in common and partners is exhibited more plainly, when it is considered what remedies persons standing in those relations respectively have against each other. If a tenant in common destroy the chattel, or, as some think, if he sell the whole, his fellow may have trover or trespass against him. But it is clear that between partners those actions do not lie; nor, indeed, any others at law. Everything rests in confidence between partners, and lies in account while the partnership continues; and if one of them sell or take, or destroy the joint effects, all that can be done is to charge to him the value in account. The interest of partners in particular chattels cannot be determined by the number of partners or their shares of the profits; nor can one of them claim a division of specific articles. An account must be taken of the whole partnership, so as to ascertain (489) the clear interest of each partner. Baird v. Baird, 21 N.C. 524. Until such account be taken, it cannot be told whether the partner who, for his own benefit, sold or consumed the partnership property was not justifiable, inasmuch as his interest in the joint stock may have exceeded the value of the property. If this action had, therefore, been brought against the fraudulent partner himself, it must have failed; and it might be, on the clearest ground of right and justice. So, for the same reason, it must against the vendee of that partner. As respects the right to the thing sold, the assignee stands in the shoes of his assignor. Besides, it is impossible to say what damages the plaintiff ought to recover. In an action by one tenant in common, he has only to show his interest, which is determinate, as a quarter or a half; and no plea in abatement being put in, the jury apportions the damages accordingly. But, as already mentioned, the interests of partners are complicated and depend upon the result of all the accounts of the partnership. To take the accounts a court of law is unfit, and, indeed, incompetent; and, therefore, the jury cannot apportion the damages which, as a partner, the plaintiff ought to recover. As a court of law thus finds itself incapable of ascertaining the rights of the parties and doing justice between them, it ought not to assume the jurisdiction for any purpose, but leave the whole subject to that tribunal which can administer exact justice in the premises.
PER CURIAM. Affirmed.
Cited: Blevins v. Baker, 33 N.C. 293; Vann v. Hussey, 46 N.C. 385; Flanner v. Moore, 47 N.C. 123; Ross v. Henderson, 77 N.C. 173; Sherrod v. Mayo, 156 N.C. 149.
(490)