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First DEPARTMENT, JULY TERM, 1903.
· No, it is not. He said, “I changed it back again the next day, go right on and draw me $500.' I went over and made out a check to the order of M. Donnelly, and signed it ‘M. Donnelly & Co.' and got $500 in cash, in bills, went over to McArdle at the Grand Central Depot * and gave it to him." The respondent says concerning this, "There was no such conversation at all.”
After this, and for about nine months, the respondent's son and the appellant both drew checks on the firm account and then the former returned to Albany and the appellant alone subseqnently drew the checks. The appellant continued to manage and conduct the business until the 18th day of March, 1891, when respondent took exclusive charge and excluded him therefrom, and on that day published a notice to the effect that the copartnership that had theretofore existed between him and the appellant was dissolved. The appellant testifies that the day before he was excluded from the business respondent was displeased with his refusal to purchase a quantity of steel, the purchase of which was strenuously advised by respondent, and charged him with having said that he was going to pay respondent off the first of the month, and that respondent thereupon at first insisted upon his paying him off then or next morning, but later, instead, took possession as stated. The respondent denies appellant's version of what took place at this time and testifies : “I recall what took place about the 17th of March when I terminated the relation that I had there with him. I told him I was sick of the business and I would wind it
at once. That was about the substance of it that I was sick of the business and I wanted to wind it up; I did not want to continue it any longer, as I was losing money right along and I could not afford it.”
It appears without controversy that from the time the bill of sale was executed down to the 18th day of March, 1891, respondent caused his Albany bookkeeper to forward accounts from time to time of the indebtedness of the firm of M. Donnelly & Co. to him, and the bookkeeper of the latter firm made monthly statements to respondent of his account with it. On the 20th day of June, 1890, respondent wrote a letter to one of his customers in which he referred to appellant's connection with the business as follows:
“In regard to Mr. Donnelly and the Steel Tires I will state to yon that since Mr. Donnelly started in business in New York I
App. Div.] FIRST DEPARTMENT, JULY TERM, 1903. have never sold a pound of stock for his account to anybody unless he was with me. Now I cannot sell you any stock that is in New York as I have never done a dollar's worth of business either buying or selling for Mr. Donnelly as he is a very peculiar man, and if I began to do business for the New York House he would think that all the authority was taken out of his hands and would feel very bad abont same. You know your brother M:. Perkins would do no business from your house except from your orders. Now you very well know any time that either Mr. Donnelly or myself have any stock that you want to buy we are only too willing to sell it to you."
On the ninth of July, the same year, respondent wrote the same firm a letter in which he said: “ Your kind letter of the 7th inst. is received and I will state to you that I am very much surprised at its contents. That is, in the first place you sold me these beams at $18.75 with the proviso that I was to give you a lot of stock from M. Donnelly's yard when you knew I could not do anything in regard to Mr. Donnelly's business."
On the 6th day of January, 1891, respondent wrote M. Donnelly & Co. as follows: “Your very kind letter of the 5th inst. is received, stating that I can draw on you at 30 days' time. I am sorry that you could not help me ont. If I* got into a tight hole you know I would help you out. What I expected to see this morning in the mail was a nice big check for about $5,000.00. I had to pay about $10,000.00 to one customer and I had to call on all my friends to help me.
I expected you to be the first to respond. However some of the others came to my rescue so it is all right. Hoping that this is satisfactory to you, I am,” etc.
On the 3d of March, 1891, he also wrote M. Donnelly & Co. as follows: “I am very much surprised at you Mr. Donnelly that you did not wire me as I requested as I sent you a despatch so that you would have no bother last night. You know the fix I have been
. and am in here for money as I explained it to you thoroughly yesterday and showed you how the Central was pushing me. Now kindly wire me on receipt of this letter if you have received any money. If you have I hope you have sent it to me by mail to-night. If you did it is all 0. K. and you need not wire me. Trusting that
FIRST DEPARTMENT, JULY TERM, 1903.
[Vol. 86. the above is satisfactory and that you will comply with my request, I am," etc.
The appellant also showed by the testimony of seven witnesses, all of whom appear to have been business men and appear to have been disinterested, with the possible exception of one who was related to him, that respondent at different times throughout the period between the execution of the bill of sale and the 18th day of March, 1891, stated to them that the appellant was his partner. These statements were made in many instances to customers and in all instances in connection with the firm business. This testimony is controverted by respondent, but it is overwhelming and fairly establishes the fact.
During the year 1889 the firm's indebtedness to respondent was gradually decreased from $35,031.38, on the first of April, to $31,544.42 on the first of November, and on the date of the bill of sale the firm books showed it to be $28,862.14. After that it decreased to $25,175.18 on the 1st of January, 1891, but was increased to $54,754.41 on the 1st of February, 1891, and on March 1, 1891, to $62,737.68. The respondent claims that the firm sustained losses of from $16,000 to $20,000 during the year 1889, and that when he took the bill of sale he intended to close up the business as rapidly as possible, but that it was necessary to wait for a favorable opportunity to avoid selling at a sacrifice; that it was more convenient to continue the business in the old firm name, and at his request appellant consented to that course, but it is not pretended that any certificate was filed as required by the Copartnership Law (Laws of 1854, chap. 400, as amd. by Laws of 1888, chap. 142). It appears, however, that nothing was done towards closing out the business. Purchases were made and the stock was replenished froin time to time as usual, and as appears above respondent himself contributed largely to the stock after the execution of the bill of sale and allowed the firm's indebtedness to him to increase more than two-fold. During the period after the execution of the bill of sale appellant overdrew his weekly allowance and disbursements the sum of $5,736, and this was charged up to his account on the firm books.
The appellant claims that respondent frequently stated in substance that all he wanted out of the business was the amount owing
FIRST DEPARTMENT, JULY TERM, 1903.
to him and interest and that he would accept a check therefor at any time. Respondent admits that his object in forming the firm was to enable appellant to make money, and that he would have been satisfied at any time with the amount owing to him and interest, but denies having so stated.
Joseph F. Daly, for the appellant.
Pierre E. Du Bois, for the respondent.
The appellant contends that the findings of the learned trial court to the effect that the bill of sale was intended as an absolute transfer of the plaintiff's interest in the business, are against the weight of evidence, and that competent material evidence upon that issue was erroneously excluded. The substance of the testimony and evidence which we deem material is stated in the statement of facts. There is also evidence tending to impeach the credibility of the respective parties and of other witnesses, and there are many other items of evidence shedding more or less light on the litigated questions, which cannot be stated within the reasonable bounds of an opinion; but it has all been given due weight. The credibility of the appellant is so shaken by his own cross-examination that we would place but little reliance upon his testimony standing alone. The probabilities of the case, however, support the contention that this instrument was given to secure the firm's indebtedness to respondent, and that it was executed in the form of a bill of sale in order that he would have absolute control of conducting the business in case of the firm's financial embarrassment or of liquidating the business, unhampered by any interference on the part of appellant.
The appellant does not seek relief from the bill of sale on the ground of fraud or mistake. He merely claims the right to show, under a doctrine well established and looked upon with favor by the courts (Horn v. Keteltas, 46 N. Y. 605; Mooney v. Byrne, 163 id. 86; Barry v. Colville, 129 id. 302), that though absolute in form it was intended as security. No burden of showing fraud or mistake rested upon him. Of course, in so far as the instrument is in conflict with his present claim, he has the burden of adducing evi
FIRST DEPARTMENT, JULY TERM, 1903.
dence satisfactorily explaining how it came to be drawn as an absolute, instead of a conditional, transfer. Although appellant now claims not to have known at the time he signed the instrument that it was an absolute bill of sale, yet this is no bar to his obtaining relief, the same as if lie conceded that it was understood that he was to execute an absolute bill of sale, and that he so intended, but that the agreement was that it was to be held only as security. Surely, if he could obtain relief on this theory by admitting that he knew the bill of sale was absolute, his rights can be no less merely because he claims he never agreed to give an absolute bill of sale, but only to transfer his interest as security for respondent's claim against the firm. The absoluteness of the bill of sale and its recitals are not altogether irreconcilable with appellant's claim that it was intended as security. The recital that the firm was dissolved is the most difficult to harmonize with this theory.
The respondent claims that the appellant's interest was of no value, and that the bill of sale was executed upon that understanding. Appellant claims it was of great value; and if so, he being in charge of the business and thoroughly familiar with the assets and liabilities, he knew the fact and would not likely make a gift of the only property he had to liis brother-in-law, who was well to do financially. If the firm had been dissolved and there was to be an accounting, he suggests that there would be no necessity for a bill of sale as security. On the other hand, if appellant's interest was of no value and respondent intended, as he represented, to close out the business, there would be no necessity for his taking a bill of sale, and the only office it would serve would be to obviate an accounting or dissolution proceedings. This is scarcely an adequate explanation, when it is remembered that he intended to allow the business to be closed out by appellant, who fixed the selling prices, as it was doubtless contemplated that he should. The relations of the parties continued friendly, and it is not probable that in these circumstances there would have been any difficulty over an accounting. The respondent did not assume or agree to pay the debts of the firm. There were no negotiations for a purchase and sale. There was no inventory of stock, or examination of books, to ascertain the firm's financial condition. It is quite significant also that, according to the testimony of the respondent, there was no express