Carter v. Holbrook

This was a bill in equity by one partner against his partners, setting forth the existence of a former partnership between the parties, under the firm of Holbrook. Bowman & company, and a dissolution of the same, and seeking of the defendants an account and settlement of the affairs of that partnership.

To this bill the defendant Holbrook pleaded an agreement, entered into simultaneously with the dissolution of the former partnership of Holbrook, Bowman & company, for the formation of a new partnership, of which the plaintiff and defendant, and several other persons became members, by the terms of which it was stipulated, that all the property and effects of the old firm should be paid and delivered over to the new firm, as and for shares of their capital stock ; that the effects in question, thus transferred with the plaintiff’s consent to the new firm, did become part of their capital, and that they did enter upon and prosecute the same business in which the old firm had been engaged ; and the plea further averred, that the concerns of the new firm remained unsettled. The question is upon the sufficiency of this plea as a defence to the bill.

It is objected, that this plea cannot avail, and that it does not cover the entire bill, because the plaintiff alleges, that he has demanded the books without success, and that the defendant has made an improper use of the partnership funds. The question, then, is, whether the plea does not meet all the material allegations of the bill, which are necessary to sustain the plaintiff’s case. The question is not, whether the facts pleaded are true, but whether, if proved, they would constitute a good bar to the plaintiff’s bill for an account.

If the agreement set forth substituted the agency and responsibility of the new firm for the liquidation, payment and satisfaction of the entire interest of Carter and the other members of the old firm, it would seem to follow, as a necessaty consequence, that this superseded their right to *335have a separate account from Holbrook as a liquidator of the old firm. The plea avers, that immediately after the dissolution of the firm of Holbrook, Bowman & company, the new partnership was entered into, of which the plaintiff and defendant both became members.

This agreement embraces two points, which are of importance to the present inquiry: —

1. The whole of the stock, property and effects of the old firm were to be transferred to and assumed by the new firm, subject of course to the payment of the outstanding debts. The new firm, therefore, must and did open an account with the old firm, charging them with all the debts paid, and crediting them with all the money, goods and property on hand, and with all debts as received. The balance, when ascertained, would show the amount due from the new firm to the old ; and the agreement would show the proportions to which Carter, Holbrook and the other members of the old firm would be entitled in such balance, and have credit for, as their respective shares, with the new firm.

2. It seems to us, that Carter, by agreeing with the other members to transfer and loan the whole of the capital of the old firm to the new, and to look to the latter for his share of the funds of the old firm, necessarily exonerated and discharged Holbrook from any other mode of either accounting for, or paying over, his share in those funds.

The effect of such agreement, on the part of the plaintiff, was, to make the new firm liquidators of the concerns of the old, and also to take them for his debtors. And this he may the more readily be presumed to be willing and to have intended to do, as he was himself one of those liquidators and debtors, with all the rights, powers and remedies subsisting between himself and the partners of the new firm, which had before subsisted between him and the members of the old firm.

We have examined the cases cited in support of the bill, and against this plea, and we think that no one of them is opposed to the views here taken.

It appears to us, that the plea meets all the material *336allegations of the bill. It shows that the complainant has agreed to another mode, both of pursuing his remedy, and of obtaining his satisfaction, from that which arose under the first relation of copartnership. It is in the nature of an accord and satisfaction, and a good bar to this suit.

Plea good.