Peabody v. Bloomer , 3 Abb. Pr. 353 ( 1856 )

Hoffman, J. after stating the facts.

The case has been argued mainly upon this question;—Whether a defendant sued with others upon a joint responsibility can set up a demand against the plaintiffs arising out of their separate liability to him ? It is to be assumed that this liability arose upon a different transaction; but it may also be assumed that contract was its foundation. The agency and its acceptance made it ■such.

The engagement of partners was considered at law as a joint engagement, not a joint and several one, although otherwise in equity, at least after dissolution by death. (18 Johns., 459; 1 Wend., 524). If therefore it appeared on the face of the pleadings that there were several partners, judgment could not be taken against some, if it could not be against all.

Yet the principle of this rule was subject to many qualifications. Where the j oint liability did not appear on the declaration, a defendant co-partner was bound to plead in abatement. (Rice v. Shute, 5 Burr., 2611, approved in Robertson v. Smith, 18 Johns., 459). So in an action against the drawer of a bill of exchange, it appeared on the trial that the bill was drawn by the defendant and another, and it was held that the defendant should have plead in abatement. (Evans v. Sandford, cited 1 Saund 291, n. a.) And where a plea in abatement of a partnership was put in with the names in the usual manner, and on application to the attorney, the residences and additions of the others were refused unless the suit was discontinued, it was ordered that such particulars should be given, or that the plea, be set aside. (Taylor v. Harris, 4 Barn. & A., 93.)

. So it was admitted law, that when a defence was personal,, in favor of one of several defendants sued jointly on a joint demand, for example infancy, or a subsequent discharge under a bankrupt law, a nolle prosequi might be entered as to such, defendant, and judgment be had against the others. ■ But this-did not go to the original cause of action. It was consistent with the fact that such defendant was apparently as much liable as the others upon the original cause of action, and if' such personal exemption did not exist, then the liability of all must have been established, or none could be held responsible..

The Code has admittedly changed these rules to a very great, extent, and the following cases show to what a length the-change has been hitherto earned. In The Mayor of New New York v. Price, (4 Sandf. S. C. R., 616,) the action was on a bond described as a joint bond executed by three. On the trial it appeared it was joint and several. The court considered that by the former law, a several judgment could not have been taken, the plaintiff having elected to proceed jointly; (4 Hill, 35), but that under section 136 of the Code, such a judgment could be had against either; and hence that one was-admissible as a witness on behalf of another. This case was under subdivision 3 of the section which remains unchanged.

In Harrington v. Hingham, (15 Barb., 528, 853), the complaint was against three co-partners on an award alleging a. joint liability. It appeared that one had executed the submission in the name of the firm; another had assented to it, but without the knowledge or approval of the third. It was held that a recovery could be had against the two, and not. against the third.

The court decided that the submission and award were invalid as to the party assenting to it, and that under section 274 of the Code, the judgment against the two was proper; that the Code allowed a judgment against one or more of sev■eral defendants, whenever, on the facts of the case, a several judgment would be proper. This was allowable, irrrespective ■of the character of the complaint, whether it alleges a" joint or several liability. The true criterion is, whether a separate action could have been maintained. The action could have been maintained against the two; they could not have plead the non-joinder of their co-partner, because the suit was not against them as co-partners: judgment might have been rendered against them on their individual and separate liability.

In Brumshill v. James, (1 Kern., 294), the complaint was upon promissory notes made in a partnership name by two persons. It was proved that the note was made by one who was the husband of the other. Judgment was given against the husband. On appeal Mr. Justice Gardner adverts to the rule of law, that the recovery, where a joint contract is the ■subject of the suit, must be against all of the parties, or neither ; and says that this was the inconvenience which the provisions of the Code were designed to remedy.

In the Superior Court it has been held, that where two persons are charged in a complaint as jointly liable upon a contract, and the plaintiff only succeeds (under a general denial of the allegations in an answer) in proving a liability of one, he may have judgment against that one, and judgment will be .against him in favor of the other.

In The People v. Cram, (8 How. Pr. R., 151), the complaint was upon a joint and several bond, purporting to have been -executed by the defendants Cram and White to the plaintiffs. It was recited in the bond, that Cram had applied for a license to the commissioners of excise, &c. On the trial, it appeared that the bond was only executed by White. A judgment -against him was sustained by the general term. Justice Marvin, in delivering the opinion of the court holds, that while the court cannot award a separate judgment, where a joint liability is made out, yet it may make such a judgment wher■ever it appears that other defendants were not joint contractors or jointly liable. The plaintiff may have a judgment against those as to whom he establishes a cause of action.

From these cases it appears to result, that whatever may be ■the nature of the defence of one of several defendants sued jointly, upon establishing it, he shall have the action dismissed, and judgment may yet be had against his co-defendants,, provided that the case is such that a complaint would ■ be free-from a demurrer, if every fact proven at the trial exempting-the party, had been stated in the complaint; in other words that the exemption is one which does not discharge the liability of all.

Here the old distinction between a covenant not to sue, and-a technical release, may apply. By the former, one. of several joint debtors is not discharged. It may, under the Code, be-a question whether a release limited expressly to one, would' be a discharge of all. (Kirby v. Taylor, 6 John. Ch. B., 250 , Shed v. Pierce, 17 Mass., 623; Dean v. Newhall, 8 T. R. 108 ; Ex parte Giffard, 9 Ves., 807.)

But the question upon a counter-claim has not been examined and settled. I have found indeed but one case in which the point has arisen between plaintiffs and one of several' defendants. That is the case of Parsons v. Hash, (8 How. Pr. R., 454,) and is by no means decisive. Three defendants-were sued upon, a joint and several promissory note.' Hinkle was the principal, and the others sureties. A set-off or counterclaim was set up, of a judgment obtained by Hinkle, for an amount equal or greater than that of the note. A verdict was found for the defendants, and a new trial refused. Justice Marvin adverts' to the point, that probably the set-off’ would have been allowed in equity, and available to all.. This seems to be admitted in the case of Gentry v. Jones, (6' J. J. Marshall, 153.) The judge observes, that under section 150, as it now is, the counter-claim is to be a claim existing-in favor of a defendant, and- against a plaintiff, in favor of' whom a several judgment might be had in the action. “ This-clearly indicates that there may be cases where the set-off or counter-claim may not be due to, or in favor of all the defendants. In my opinion in an action proper for a set-pff or-counter-claim against several defendants, severally liable, or-jointly and severally liable, any one of them may avail himself of his set-off.”

But it is perhaps to be inferred that the learned judge would not have considered that when the demand in the complaint: was simply a joint demand, one -of the parties jointly liable could be entitled to set up a counter-claim belonging only to himself against his liability, at any rate it cannot be inferred that he would have considered this admissible.

Even in a Court of Chancery before the Code, it would not have been permitted. The general rule there was the same as at law. The debt must be mutual. A joint demand could not be set off against a separate claim, nor a separate demand against a joint one. (Murray v. Poland, 3 John. Ch. R., 574 ; Dale v. Cook, 4 Johns. Ch., 14; Howe v. Shephard, 2 Sumner, 409; Bunting v. Swehs, 2 Dev. dk Batt, 130.) There were exceptions to and qualifications of this rule. They arose upon bankruptcy in the English court. (See Babington on Set-off, 166, 6 Law Library, and Addis v. Knight, 2 Merivale, 121.) The Master of the Bolls and Chancellor Kent (4 John. Ch, 15,) throw doubt even upon these exceptions. (See further the cases cited in Lindsay v. Jackson, 2 Paige, 582.)

It may be admitted that the counter-claim of the Code is more comprehensive than the statutory set-off, and will include several other cases. The subject is fully investigated in the case of Gleason v. Moen, (2 Duer, 642). But it would, I apprehend, be difficult to sho\v that it will include defences which would not have been available as a set-off, either legal or equitable; or of a cross-action, when the suit was in a Court of Chancery, and of an equitable nature.

I am of opinion that the defence set up by the defendant Bloomer is not available in this action, and the demurrer to this part of the answer must be allowed with costs. As it is incapable of amendment, the allowance of the demurrer will be in effect to strike it out from the pleading, and to prevent evidence being given under it.

Judgment having been entered upon the order allowing the demurrer, the defendant Bloomer appealed to the general term. ■

Mr. Moody; for appellant.

Henry G. De Forest, for respondents.

By the Court, Woodruff, J.

This action is brought to recover moneys alleged to be due to the plaintiffs, in their own right, and as assignees of their co-partner Flint, from the •defendants, as joint debtors, for money lent and advanced to the defendants, and paid, laid out, and expended for their use, ■as co-partners.

The defendant Bloomer answering separately, among other •defences sets up a set-off or counter-claim in his own favor, individually, for damages sustained by himself by reason of "the plaintiffs’ and the said Flint’s fraud and negligence, in this, that he appointed the plaintiffs and the said Flint his agents, under a power of attorney, to manage and attend to his interests in California; which power of attorney he avers the plaintiffs and the said Flint received, and undertook to perform, keep and execute! the trusts, duties and obligations thereby given, conferred and imposed. By the fraudulent violation of their duty in this respect, the defendant avers that he has sustained damages, which he insists upon as a set-off or counter-claim in this action.

We fully agree with the conclusion at which Mr. Justice Hoffman arrived, in the examination of the demurrer to this •defence, at the special term, that, to an action against several joint debtors for a debt due by them as co-partners, one of them cannot avail himself, either by way of set-off or counter-claim, of such a defence. If the defence have any foundation, as very imperfectly (we think) exhibited in the answer, it belongs to Bloomer alone. If it can be regarded under the averments in the answer, as arising upon contract, then if is a fatal defect that there is no mutuality between the two claims which are exhibited. If it be deemed a tort set up in the answer, then it is not so connected with the subject of the action that it constitutes any ground of recoupment. And in no respect is the defence such that in this action there can be a separate judgment against the defendants, who are jointly liable, and who do not and could not set up the defence upon which the defendant Bloomer relies. The case of Parsons v. Nash, (8 How. Pr. R., 454), instead of sustaining such a counter-claim, appears to tend to the contrary.

Where one of several joint debtors pays the debt, that is payment for all, and any or all of them may set up the payment in bar. Here these is no pretence that either of the other defendants could have done so.

But without pursuing the subject, it must suffice to say, that the elaborate opinion pronounced at special term by Hr. Justice Hoffman, appears to us to be entirely sound in its conclusion, and it is unnecessary to enlarge upon the subject here. The judgment appealed from must be affirmed with costs.