U.S. Supreme Court Withers v. Withers, 33 U.S. 8 Pet. 355 355 (1834)
Withers v. Withers
33 U.S. (8 Pet.) 355
APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES
FOR THE COUNTY OF ALEXANDRIA IN THE DISTRICT OF COLUMBIA
Partnership. Construction of articles of co-partnership as they related to the expenses of the co-partners.
The case as stated in the opinion of the Court was as follows:
The bill filed by the appellee in the court below alleges that on or about 7 March, 1815, the parties to this suit entered into co-partnership, as merchants in trade, in the Town of Alexandria under the firm and style of J. & R. Withers. That the complainant, John Withers, was to furnish to the firm fifteen thousand dollars, and to receive three-fourths of the profits of the business, and the defendant, Reuben Withers, was to furnish five thousand dollars, and receive one-fourth of the profits, and in case of loss, it was to be borne in the same proportion, and that each party was to pay his own individual expenses. That the business was continued upon the same terms and conditions in all respects (the name and style of the firm having been changed to that of John Withers & Co), until 13 December, 1819, when it was dissolved by mutual consent and upon certain terms which need not be here stated. The bill then alleges that the complainant, never having received a satisfactory account of the disbursements and transactions of the defendant whilst in New York as a member of the firm, they were excepted out of the settlement of the partnership concerns, and the defendant agreed to render a true, full, and just account of all his purchases and transactions in New York as a member of the said firm, and that he should be exclusively liable for all debts and engagements which he might have contracted or made in the name of said firm and for which they had not
received full benefit. And the bill charges that the defendant had failed and neglected to render such account, and prays that an account may be taken of such disbursements, dealings, and transactions, and that the defendant may be decreed to pay over to the complainant what, if anything, upon the taking of such account, may be found due to him.
The defendant in his answer admits the partnership was entered into upon the terms and conditions stated in the bill, and avers that he regularly transmitted to the house at Alexandria invoices of all goods purchased in New York, and that the same were entered on the books of the firm, which are in the possession or under the control of the complainant. The defendant admits that it was stipulated in the articles of co-partnership that each party was to pay his own individual expenses, which, as he alleges, was meant and intended to apply when the parties were at home, and not traveling on the business of the firm. And he expressly avers that all the funds put into his hands were well and faithfully applied to the objects for which they were remitted and received. The defendant also admits that upon the dissolution of the partnership, he did agree to render a full, true, and just account of all his purchases and transactions in New York as a member of and on account of said firm, and to be liable for all debts and engagements which he may have entered into (if any) on account of said firm and for which the said firm may not have received full benefit and advantage. And avers that he has fully complied with his engagement to render such account and submitted the same for examination, and that the account, when examined and corrected, was balanced, as he thinks, on the books of the company, which are in the possession or under the control of the complainant. And that there is no debt due in the City of New York or elsewhere from the said firm contracted by him, the defendant, but that every such debt, contract, or engagement, so far as he knows or believes, has been paid off, satisfied, and discharged.
The cause afterwards being set down for hearing, was, on motion of the complainant, referred to a commissioner to state and settle the partnership accounts between the parties.
Upon the coming in of the report of the commissioner, sundry exceptions were taken and argued by counsel, all of which
were overruled by the court except one, which related to the defendant's charge for his expenses in New York, amounting to $1,756. The exception to this charge was allowed, and the cause referred back to the commissioner with directions to allow the defendant his reasonable traveling expenses to and from New York and the necessary difference between the expense of living at New York and at Alexandria.
MR. JUSTICE THOMPSON delivered the opinion of the Court.
The question in relation to the expenses of the appellants in New York being the only one now in controversy between the parties, it is unnecessary to notice the proceedings in any other respect.
The rule laid down by the court in its direction to the commissioner we think was entirely correct. The articles of co-partnership are not in the record. But the allegation in the bill and the admission in the answer touching the agreement between the parties in relation to their expenses do not materially differ. The bill alleges that each party was to pay his own individual expenses. The answer to this allegation is that although it was stipulated in the articles of co-partnership that each party was to pay his own individual expenses, yet the same was meant and intended to apply when the parties were at home, and not traveling on the business of the concern. This was substantially the construction adopted by the court below, and which we think is the fair and reasonable interpretation of the argument, even standing alone upon the complainant's own statement. It was manifestly intended to apply to private or family expenses not connected with the business of the partnership. But it would be an unjust and forced construction of the stipulation to extend it to extra expenses incurred when abroad on the business of the partnership. The stipulation in the memorandum of 13 December, 1819, upon the dissolution of the partnership, does not embrace this item of expenses. The defendant, Reuben Withers, covenants to render a full, true, and just account to the firm of all his purchases and transactions in New York, as a member of or for and on account of the said firm, and to be liable for all debts or engagements which he may have entered into (if any) on account of said house and for which the said firm may not have received full benefit and advantage. The disbursements of the defendant for his personal expenses cannot with any propriety be considered a debt or engagement within the meaning of this stipulation. It was obviously intended to protect the complainant from all liability for any outstanding claims for goods purchased in New York and for which the firm had not received the full benefit and advantage.
The cause was afterwards referred back to the commissioner to reform his report touching these expenses according to the rule laid down by the court, viz., to allow the defendant his reasonable traveling expenses to and from New York and the necessary difference between the expense of living at New York and at Alexandria. Upon the coming in of the commissioner's
report, an exception was filed, but overruled by the court, and a final decree entered against the defendant.
The exception taken to the report was in these words:
"The defendant excepts to this report because it is contrary to evidence, and for other reasons to be stated more particularly at the hearing."
The record only states generally that the exception was overruled. This does not warrant the conclusion that it was overruled for defect or insufficiency in point of form. For if this had been the ground of objection, it might have been and doubtless would have been amended. The latter branch of the exception may be objectionable. But the exception that the report was contrary to evidence is good in point of form, and we must presume that the court overruled it upon the merits, or in other words decided that the report was not contrary to the evidence, and in this we think the court erred.
The commissioner, in his first report, had allowed the defendant, for his expenses in New York, $1,756, because the charges were entered in the books of the company, of which entries all the parties were considered by him as having full knowledge. This undoubtedly is the prima facie presumption, and if the complainant knew of the entries and made no objection, his assent to their allowance would fairly be presumed. But the evidence in the cause is sufficient to rebut this presumption. John Washington, who was a clerk employed by the firm, swears that he was intimately acquainted with the concerns of the co-partnership and with their mode of transacting business. That John Withers attended mostly to what is called the outdoor business, and did not attend to the books of the firm. That he has good reason to believe, and does verily believe, that he was entirely ignorant of the state of the books between himself and co-partner. That he never attended to or examined the books. That on his showing him an entry of $900 on account of those expenses, he said they were incorrect and contrary to their agreement, and before the dissolution of the partnership he objected to all the defendant's charges for expenses. This, as far as negative evidence can go, shows that the complainant was ignorant of the entries in the books and ought not to be concluded by them.
The commissioner, in his last report, has estimated the defendant's expenses in New York at one dollar per day, whereas the positive proof, by the testimony of Gordon Miller, is not only that the customary charge for board at the house where the defendant boarded was $10.87, but that the defendant actually paid that sum, exclusive of extra fire at fifty cents per day. But there is no evidence showing the time he had an extra fire or what he paid therefor. The report therefore cannot be said to be against evidence as to this item. But with respect to the allowance for board the report is clearly against the evidence.
The decree of the court below must accordingly be
Reversed and the cause sent back with directions to reform the report of the commissioner so as to allow the defendant at the rate of $10.87 a week for his expenses in New York, instead of $1 per day.
This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the District of Columbia holden in and for the County of Alexandria and was argued by counsel, on consideration whereof it is considered, ordered, and decreed by this Court that the decree of the said circuit court in this cause be and the same is hereby reversed and that this cause be and the same is hereby remanded to the said circuit court with directions to the said court to reform the report of the commissioner so as to allow the defendant at the rate of $10.87 per week for his expenses in New York, instead of $1 per day.