Marr's v. Southwick, Cannon & Warren

By Mr. Justice Hitchcock :

In this case the bill was filed in the Circuit Court of Tuskaloosá county, by the defendants as complainants. ' The bill states that the complainants are mer■chants and partners, doing business in New-York. In 1824, one John Tarrant and one William M. .Marr, since deceased, purchased goods of complainants, and continued to do so until 1830, making occasional payments; that in . June, , 1830, a balance was struck, and the defendants were indebted to complainants for principal and interest, one thousand six • hundred and three dollars and eighty six cents: that a statement of the final account was made and forwarded to the defendants, which they neglected to •discharge: that a suit in assumpsit ivas instituted by complainants against defendants in the Circuit Court of Tuskaloosa county, on the thirty-first of January, .1831, returnable to the next March term. The writ was served on Marr only. At September term, 1831, the death of Marr was suggested, and the cause ordered to proceed against Tarrant, the surviving partner ; *363 that at the April term, 1832, a verdict and judgment were rendered against Tarrant, for one thousand eight hundred and one dollars and -eighty four cents, and one hundred and twenty one,‘dollars and ninety five cents costs: that execution'-* was issued on the judgment, and returned “ no property:” (the record of which suit is exhibited:) that Tarrant did and does reside beyond the limits of the State, and has no property here, nor had when judgment, was rendered, and was, and is reputed insolvent, and is insolvent : that Marr died in August, 1.831, and until his death defended the suit, and employed an attorney, who defended the same until judgment: that Marr left a large estate, and personal property, sufficiént to pay the judgment: that Marr made a will, nominating the defendant as his executrix, who .accepted the trust: that the will directs all Marr’s just debts to be paid, and contains an admission of Marr’s partnership with Tarrant: that the judgment against Tarrant is an equitable demand against the estate of Marr : that the defendant refuses to pay it, and pretends that Marr and Tarrant were never partners,- "and never purchased goods of the complainants — the contrary whereof is true; and that equity has jurisdiction of the case.

The bill prays, that the defendant, executrix, be made a party, and that she may answer: that the defendant, as executrix, be decreed to pay the full amount of the judgment, and costs of suit, and interest thereon ; and also prays for general relief.

The defendant, in her answer, 'states — that she knows nothing of complainants account, -except that she heard her deceased husband say it was unjust, and that he would not pay it. The'institution of the suit, and proceedings to judgment aré admitted.

*364 The defendant, insists, that the judgment cannot form a ground of recovery against her, being ex parte, and not obligatpry; and requires that her liability be established, by witnesses which she may cross-examine; and' adduce rebutting testimony : that the mode of calculating interest, as appears from the exhibits, renders, the judgment usurious and void; she claims advantage of this : that one thousand four hundred and seventy one dollars worth of goods were purchased by Tar-rant, individually, for which she is not liable that the credits on the account should be confined to a period subsequent to the first purchase by Tarrant: and that the judgment as against her,-for these reasons, is void.

The answer admits the will, and refers to it for alii defendant’s information respecting the co-partnership the defendant did not pay the judgment, because her husband said the claim was unjust: that the defendant is informed b.y Tarrant, that the firm of J. Tar-rant & Co. was composed of one James Pitcher, Samuel Pitcher, the said Tarrant and her husband that the articles of copartnership were made a consi-, derable time after the account, and were anti dated by James Pitcher, with a fraudulent intent to charge hen •husband with the purchase of goods, which was made by James, Pitcher: that the suit should have been commenced against Samuel Pitcher, who died since, her husband. The answer admits, that John Tar-, yant resides in New Orleans, and so resided before, the institution of the suit at law, within the knowledge of complainants, and states a belief of his sol-, vency; and that Tarrant says, he is able to pay all just demands. The answer also submits that Marr may have, defended the suit until his death, and his counsel continued in the defence until judgment, yet this, does not authorise a recovery on that judgment, as.it, *365 was ex parte : Üiat she does not, know when Samuel Pitcher died : that Majr had considerable property— enough to pay his just debts: that the estate is yet unsettled : that the defendant does not wish to incur individual responsibility : pleads the statute of limitations : (that 1826 is the last item in the account — - 1828 the last credit thoreon:) defendant is ignorant of partnership transactions, Tarrant being the acting partner. The defendant demurs to the bill, insists that judgment against one partner cannot be revived against the representatives of a deceased partner,, without proving the original consideration : that the-remedy is at law, and complainants entitled to none of the relief sought for.

The Chancellor decreed the amount of'the judgment at law, ($1811 84,) interest thereon, ($284 98) and the balance of the costs of the judgment at law, ($56 55 1-2) to be paid by the defendant out of the estate of her testator.

A bill of exceptions, of the substance following, was taken to the opinion of the Chancellor.

1st. The defendant objected to the introduction of the judgment at law, stated in the bill, on the grounds, — that her testator was no party to that judgment; had no opportunity of making a defence against it; could not have the benefit of witnesses could not sue out a writ of error; could not appeal therefrom, though erroneous; could not challenge the .jury : if judgment had been different, could not have taken advantage of it in another suit, on the same-cause of action; and because the surviving partner, Tarrant, could not compromit the rights-of her deceased husband, by suffering judgment to be render-, ed against him. These objections were overruled,, *366 and the judgment received as evidence before the Chancellor.

2d. The defendant objected to admitting the evidence, as exhibited in the bill, on the ground, that it did not appear that the said evidence was taken regularly and before competent authority.

3d. The defendant objected to the introduction of the depositions in the suit at law, because it was not stated in the bill that they were read on the trial at law; because proper steps had not been .taken to make them evidence, the defendant never having been notified that they would be relied on or offered on the hearing — no previous order to admit them having been made, and no sufficient reason stated or proved why they could not be re-taken; and because the depositions contain answers, and state facts, not evidence in the present suit — because they were taken to establish a fact which the judgment at law could not- — the partnership,of Marr' and Tarrant. These objections were overruled, and the depositions received as evidence. The defendant also objected to a decree, because the fact, whether Marr was a partner of the firm of J. Tarrant & Co. was an issue, to be tried by a jury.

At the hearing of the cause below, before the Chancellor, the defendant applied for a continuance, to enable her to prove the solvency of Tarrant at the time of the filing of the bill; that he was then solvent ; and that he was, and is, engaged in New Orleans, in extensive merchandizing, and enjoying good' credit. Upon this, the complainants, for the purpose of obtaining a trial at that term, admitted the residence and solvency of Tarrant, as stated in the affidavit for continuance.'

The errors assigned, are,

*367 I. The Chancellor erred in not sustaining the plea of the statute of limitations, relied on in the answer.

II. There was error in not sustaining the demurrer to the bill. 1st. For want of proper parties defendants. 2d. The complainants’ remedy was at law. 3d. The complainants were not entitled to the relief sought for; nor the revival of the judgment at law against the estate of defendant’s testator.

III. There was error in admitting the judgment at law, referred to in the bill of complainants, &c. as evidence, and in not excluding the same on the ground, &c.' stated in bill of exceptions.

IV. The Chancellor erred in admitting the depositions of the witnesses as exhibited in the bill of complainants as evidence, on the hearing, for reasons stated in the bill of exceptions.

V. There was error in overruling the objections of the defendant below, to the introduction of the depositions of the witnesses taken in the suit at law, and in receiving the same on the hearing.

VI. There was error in overruling the objections of the defendant below to the rendering of a decree before the issue tendered in the answer was tried by a jury.

VII. There was error in rendering a decree against defendant.

VIII. The decree should not have revived the judgment at law, against the estate of defendant’s testator. 1st. The decree should have been rendered, if at all, on the original consideration of the judgment, proved by competent testimony. 2d. The costs of the suit at lav/, should not have been decreed against defendant below. 3d. Thé decree should not have been rendered against defendant below, because the proofs in the cause show, that Tarrant was sol *368 vent, and that fact, together with his place of residence, was known to the complainants below; the complainants also, not being citizens of the State of Alabama; and the subject matter of the bill, in its nature, not confined to the jurisdiction of the Courts of this State.

IX. The decree should not have been, rendered for the amount of the judgment at law, because usurious sums of money are charged and allowed in the judgment for giving day of payment for advances made.

The several questions which arc presented by the assignments of error in this case, have been ably and •elaborately argued by the counsel on both sides, arid they will be examined in the order in which they have been presented, so far as they are deemed, material to the determination of the case.

I. The first enquiry presented is, as to the reliance on the statute of limitations.

By looking into the account, as exhibited in the depositions used, on the trial at law, between the present _ defendants and Tarrant, it appears that the account Commenced oil the 20th November, 1824, and is continued down by various charges, from time to time, till the first of May, 1826. The account purports to have been balanced on the llth September, 1826, by tho complainants, when there was two thousand three hundred and seventy eight dollars and forty-eight cents, due. On the credit side of the account, it appears that J. Tarrant & Co. are allowed for sundry payments, commencing on the 3d April, 1826, and terminating on the 19th September, 1827, when there was a payment of twelve- hundred and nine dollar's and sixty three cents, leaving a balance due the complainants on that day of one thousand two hundred *369 and forty one dollars and seventy seven cents. • This bill was filed on the twelfth February eighteen hundred and thirty-three, more than six years from the date of the last debit, but less than six years from the date of the last credit. This state of facts will render it entirely unnecessary to examine the various points which have been made upon the statute of limitations: for the law is well settled “ that if there be an item in the defendant’s account within six years, this wall take the account of ,the plaintiff out of the statute, though the plaintiff’s account contain no item within that period.” a Whether, therefore, this is to be taken as an account current, the last item of which is dated 7 19th September, 1827, or as an account stated and acknowledged, as is contended to have been proved by ■ the deposition of James Pitcher, and which would bring the account down to a still later period, upon Which we give no opinion, it is very clear that the statute does not, in this case, interpose a good de-fence.

The account is admitted to be between merchant and merchant, and therefore, we do not conceive that the statute which bars open accounts, at the expiration of three years, can, under any circumstances, apply. The reservation in the statute, excepting such accounts as concern the trade of merchandize between merchant and merchant, from its operation, relates exclusively to that, which fixes the limitation at the expiration of six years;

Plow far the questions, whether there is any bar to' accounts current between merchant and merchant, and if so, whether the death of Marr, and the delay which has necessarily intervened in prosecuting Tarrant to' ■judgment, would protect the complainants, we do nut *370 find it necessary to decide, in tire view wlriclr we take of the case.

• II. The second assignment raises a question of the sufficiency of the bill, on the demurrer. To sustain the demurrer, the plaintiff in error, contends—

1. That the bill is defective for want of parties— Tarrant not being made a co-defendant; and,

2. That the complainants have a complete remedy at law, under the act of our Legislature, which enacts, that whenever any cause of action may exist against two or more partners of any denomination whatever, it shall be lawful to prosecute an action against any one or more of them. a

1. That all persons in interest to a bill in Chancery should be made parties, is, as a general rule, undoubtedly correct. Exceptions are, however, allowed to this rule, when, from the nature of the case, it is not required; or, from the situation of the party, it is difficult or impossible to reach him, b and also, when the residence of the party in another State is stated as a proper ground of omission. The principle appears to be, that when the case can be completely decided between the litigant parties, the circumstance, that an -interest exists in another person, whom the process of the Court cannot reach, ought not to prevent a decree upon the merits.

In this case, the object of the bill is to obtain satisfaction of the entire demand of the complainants, out of the personal estate of the defendant's testator. The surviving partner, Tarrant, is alleged to be beyond the jurisdiction of the Court, and to be insolvent. Admitting this to be true, as the demurrer does, there is no absolute necessity for his being a party; and the bill ought not to be dismissed on that ground.

2. Neither does the Court think that the second ground is sufficient to sustain the demurrer.

*371 By the Common Law, the debts of partners are joint; and by the death of one they become extinguished' as to his testator or intestate, and can only-be revived in equity. : During the existence of the partnership, the partners must be sued'jointly, and we do not think that our statute, which authorises one or more to be sued separately, has subverted the whole doctrine of joint liability and survivorship, (which it must do, upon the principles'contended for by the defendant) and placed -partners and their executors and administrators upon • the footing of joint and several obligors or promissors. Tlie statute has not expressly declared it, and we are not prepared to do so by construction. This, the Legislature has done in the case of joint obligors, and has expressly authorised suits against any one of them, or his administrator or executor. But to give this statute that construction, would have the effect of subjecting the assets of deceased partners to the payment of the partnership debts, while the surviving partner would have the exclusive control of all the partnership funds, out of which the partnership debts ought, in justice to be paid. Where a suit has actually been commenced against a partner under the statute, and he dies pending the suit, it may be, that the suit could be revived and prosecuted- against his executor or administrator : the Court are inclined to that opinion. Having asserted his right under the statute, the creditor ought not to be deprived of his remedy under it by any act not within his control: farther than this a majority of the Court would not go, in the construction cf this statute; and they do not intend to commit themselves upon this point, as it is not now necessary 'to he decided.

*372 The III, IV, and V assignments, relating to the admissibility of the judgment, the testimony exhibited with the bill, and the depositions taken in the suit against Tarrant, will be examined together.

1. As to the judgment,

That a judgment of a Court of concurrent jurisdiction, directly upon the point in controversy between the same parties, as a plea in bar, and as evidence, upon the same matter directly in question in another Court, is good, is undoubtedly true; and that it is not evidence of any matter which comes collaterally in question, though within their jurisdiction, nor of any matter to be inferred by argument from the judgment, is equally true, a and no one can be bound by a verdict or judgment, unless he be a party or privy, or possess the power to make himself a party. For otherwise Ire has no power of cross-examining the witnesses, or of adducing evidence in furtherance of his rights': he can have no attaint, nor challenge the inquest, or appeal, or writ of error. In short, he is deprived of the means provided by law for ascertaining the truth, and consequently it would be repugnant to the first principles of justice that he should be bound by the result of an inquiry, to which he was altogether a stranger. b

In this case, the judgment was used and taken as the basis of the decree, and yet the defendant in this bill was neither a party or privy to the suit at law, and had no power to make herself a party.

2. And this rule is equally applicable to the exhibits and depositions. The party to be affected by them must hax e been legalfy called upon to cross-examine the witnesses, and have had the opportunity to do so, for otherwise the great and ordinary tests of truth are wanting, and this cannot be done unless ha *373 be a party; a and hence it is a rule, that when a judgment is not evidence against a party, the depositions taken in the case cannot be. b

But it is contended that as Marr was a defendant to the suit at law until his death, and had notice in his life-time of the time and place of taking the depositions, and did in one case actually file-cross interrog-atores, his representative ought to be bound by them, though he died before they were used, or the judgment obtained. By the death of Marr the whole proceedings were abated as to him; and so far as his representative is concerned, they are to be considered as never having had any existence. Had Marr lived and defended the suit, he might perhaps have defeated, those depositions in various ways. They might not have been properly taken, or properly opened, the witnesses might have been interested, or their testimony been irrelevant or contradicted, or they might never have been read. By his death he was deprived of all these defences, and his representative has not had any opportunity to subject them to any of these tests. It is therefore clear, in the opinion of the Court, that in this branch of the case, there is manifest error, The suit in Chancery to subject the assets of a deceased partner, is a new and distinct proceeding against a new party, and all the facts must be established by testimony in the ordinary manner.

VI. The sixth assignment, that the Chancellor should have directed an issue to try the fact of Marr’s being a partner, is not supported by authority. A Chancellor may, in his discretion direct an issue, but he is not bound to do so, except in some cases required by statute, or in a few specified cases, of which this is notone. c

VII — VIII. The 3d specification of the 7th and *374 8th assignments, presents a question of more difficulty than any one disclosed in the record, and one upon which the Court has been less aided by authority, The admission by Iho complainants, that Tarrant was at the time of the filing of the bill, and at tho time of the trial residing in the city of New Orleans, and that he was and still is solvent, and in good credit, places the case upon an entirely different footing from that set out in the bill.

That the complainants have obtained a judgment against him in conformity with the laws of this state; that the execution has been returned nulla bona ; that it is admitted there are no effects of the firm within this State, upon which the judgment can be levied; and that the surviving partner has removed himself and his effects beyond the jurisdiction of our Courts,' presents a strong case for the assertion of the complainants’ claim against the assets of the deceased a partner, which are admitted to be sufficient to pay this and all his other debts, cannot be denied. Yet there is no principle which appears to be better established, than that in order to maintain the jurisdiction of a Court of Equity, there should be an absolute discharge or insolvency of the surviving partner. “ If he is liable at law and is able to pay, the' bill cannot be sustained.”

It is asserted, by Mr. Justice Story, a that “it is perfectly well settled that equity will not lend its aid to reach assets in the hands of executors, when a com-píete, adequate and effectual remedy at law exists against the surviving partner.” Such also is the authority of Chancellor Kent, b after a minute examination of all the English authorities upon the subject.

At law the debt is extinguished as to the deceased partner, and the .creditor is not bound to use any dill- *375 gence (such as would be required in case of an endorsed note.) He may deal with the survivor for a time, and let the debt of the firm remain unpaid, and yet in case of subsequent insolvency may resort to the deceased partner’s estate.

That great inconvenience may often arise by the removal of surviving partners, is no doubt true; but still the rule must not be impugned, to remedy the inconvenience. In this case, the removal of Tarrant may create delay ; but still it cannot be said the complainants are without a complete, adequate, and effectual remedy, at law.

The city of New Orleans is a prominent city of this Union: her commercial intercourse with New York, where the compl’ts reside, is as great and intimate, as with us. The Courts of Louisiana,- and that of the United States, in that State, are open to the compl’ts, and in point of fact, they might as well have gone there, in the first instance, as to have come here; and they can go there now. There is nothing local in the contract. Tarrant has not obtained a legal discharge from the debt, and he is solvent, by the admission of the complainants. Equity says, they must therefore pursue the remedy there; yet, they may ultimately resort to the estate of Marry and recover, the debt here.

A case might be imagined, in which the absence of a surviving partner, though no legal discharge or insolvency was proved, would present a case for relief in equity : but as the case now stands, the Court are constrained to decide, that the admission of the solvency of Tarrant, is fatal to the bill.

IX. There is also error in the mode of computing interest, as set forth in the 9th assignment. The law does not allow rests, or the computation of inter *376 est upon interest, re-stating the account every six or twelve months, and adding interest to the princi'pal sum : and no custom or agreement to that effect, can alter the law. Interest may be charged on an open account, when by the. terms of the sale, the contract stipulates for a certain period of credit: but the mode of computation is to charge interest on the debt up to the date of the payment, and deduct the payment from the whole debt; and so,, as often as payments are, made. This is the rule in Chancery in New Yorkf where this contract was made, and where it was to be executed. a

• From this view of the case, it follows, that the decree of the Chancellor below must be reversed, and the bill dismissed. • ' • Angel on Lim 193, and theauthorities cn ted.

Aik. Dig.268 12 Wheat.197 10 ib. 167 1 Starkie,217.

1 Starkie,217.

1 Starkie,264.

1 Starkie,267 2 Mad.474.

1 Gallison 385 2 Johns. Ch. R. 508.

1 Johns. Ch. R. 13.

. Mer R.547