Berthold v. O'Hara

Citation25 S.W. 845,121 Mo. 88
PartiesBerthold et al. v. O'Hara, Appellant
Decision Date13 March 1894
CourtUnited States State Supreme Court of Missouri

Appeal from St. Louis City Circuit Court. -- Hon. Jacob Klein Judge.

Affirmed.

Campbell & Ryan for appellant.

(1) The court erred in sustaining the demurrer to defendant's answer. Plaintiff's causes of action being upon a contract under the second subdivision of section 2050 Revised Statutes, the causes of action pleaded by the defendant were proper counterclaims, and in view of the construction put upon section 2050 by this court, and upon similar sections in other states, the case of Leabo v Renshaw, 61 Mo. 292, and cases which it followed, were improperly decided, and should be overruled. The case of Jones v. Shaw, 67 Mo. 667, rests on that of Leabo v. Renshaw, 61 Mo. 292, and the latter was decided upon Ives v. Miller, 19 Barb. 196, which is in conflict with the earlier case of Gage v. Angel, 8 How. Prac. 835 approved in Wadell v. Darling, 51 N.Y. 327. "The statute allowing counter-claims was designed to prevent multiplicity of suits. It should be liberally construed, and the rules respecting its application are constantly broadening." Kamerick v. Castleman, 23 Mo.App. 481. To the same effect, that our counterclaim is very comprehensive, and is constantly receiving a broadening interpretation, and should be liberally construed to the end that controversies between the same parties can be adjusted in one proceeding, see Ritchie v. Hayward, 71 Mo. 560; McAdow v. Ross, 53 Mo. 199; Hay v. Short, 49 Mo. 139, 142; Garden v. Bruner, 49 Mo. 570; Waterman on Set-Offs, sec. 24, p. 25. (2) The court erred in overruling the fourth, fifth, sixth, tenth, eleventh, twelfth and fourteenth exceptions to the report of the referee. (3) The rule of law as to the proof to partnership inter sese is well established. Whether it is a partnership, is a question of intention upon the part of the alleged partners, and this intention must be shown by the evidence. Donnell v. Harshe, 67 Mo. 170; McDonald v. Matney, 82 Mo. 358-365; Schaefer v. Blair, 149 U.S. 248. Lindley on Partnership, page 10: "Persons can not be made to assume the relation of partners as between themselves, when their purpose is that no partnership shall exist." Company v. Drennon, 116 U.S. 461-472. (4) It is settled law, that if one partner wrongfully carries money belonging to the other to the joint account, an action at law lies for money it received. Smith v. Barrow, 2 T. R. 476; 2 Starkie's Evidence, 592; Collyer on Partnership [Perkins' Ed.], sec. 268; Parsons on Partnership [2 Ed.], sec. 274, page 286; Lindley on Partnership [Ed. 1888], 564.

Kehr & Titmann for respondents.

(1) An unsettled partnership account can not be pleaded as a counterclaim. Wright v. Jacobs, 61 Mo. 19; Leabo v. Renshaw, 61 Mo. 292; Jones v Shaw, 67 Mo. 667; Young v. Chew, 9 Mo.App. 389; State ex rel. v. Eldridge, 65 Mo. 584. One partner can not be said to be indebted to his copartner on partnership account until there has been a settlement of the copartnership affairs. Leabo v. Renshaw, 61 Mo. 292; Young v. Chew, 9 Mo.App. 389; Ross v. Carson, 32 Mo.App. 148. (2) The filing of the second and third amended answers waived the objection and exception to the action of the court in sustaining the demurrer to the counterclaim pleaded in the first amended answer. Ely v. Porter, 58 Mo. 158; Gale v. Foss, 47 Mo. 276; Fuggle v. Hobbs, 42 Mo. 537; Roberts v. Ins. Co., 26 Mo.App. 92; Scoville v. Glasner, 79 Mo. 449; Williams v. Railroad, 112 Mo. 463. (3) The report of the referee is equivalent to a special verdict, and if there is evidence tending to establish the facts as found, it will not be disturbed. Ferry Co. v. Railroad, 73 Mo. 389; Chew v. Ellingwood, 86 Mo. 260; Lingenfelder v. Co., 103 Mo. 578. (4) A partner is a trustee and the same rules and tests are to be applied in determing his liability to his copartner as are applied to other trustees. The mill rebuilt by appellant, behind the back of respondents, during the existence of the partnership and in the line of its business, and in part with partnership funds, is partnership property. Pomeroy v. Benton, 57 Mo. 531; Mitchell v. Reed, 61 N.Y. 123; Lindley on Part., chap. 2, book 3, p. 303. Parsons on Part. [4 Ed.], secs. 153, 158, and notes; Story on Part., secs. 174-178; Bates on Part., secs. 303, 304. (5) Objections to the admission or exclusion of evidence must be specifically stated. The grounds or reason for the objection must be stated. Railroad v. Moore, 37 Mo. 338; State v. West, 95 Mo. 140-149. The evidence was immaterial, and therefore properly excluded. R. S. 1889, sec. 2303; Gordon v. Eans, 97 Mo. 587-603; Seligman v. Rogers, 113 Mo. 642.

OPINION

Gantt, P. J.

In September, 1888, the respondents, Berthold and Jennings, brought suit against the appellant, Henry O'Hara, in the circuit court, city of St. Louis, upon a petition containing two counts. The first count is for lumber sold and delivered by plaintiffs to defendant at his special instance and request, between the twenty-sixth day of August, 1887, and the sixteenth day of February, 1888, amounting to $ 3,647.76. The second count is for a draft or bill of exchange for $ 2,500, accepted by plaintiffs at the request and for the accommodation of defendant, and discounted by him for his benefit, and paid by plaintiffs on the eighteenth day of August, 1888.

Defendant, on the fifteenth day of January, 1889, filed an amended answer setting up, by way of counterclaim, the unsettled account of certain partnership transactions between himself and plaintiffs, and praying an accounting. Plaintiffs demurred to the counterclaim so pleaded, for the reason, among others, that the facts averred did not constitute a counterclaim, and the court sustained the demurrer. On March 14, 1889, defendant filed his second, and on February 12, 1891, his third, amended answer. The issues in the case were made and tried upon the petition and the third amended answer, which is identical with the second amended answer, except in the last paragraph.

The court below having held upon the demurrer to the counterclaim, that the unsettled partnership account could not be pleaded as a counterclaim in this cause, O'Hara, on March 13, 1889, brought suit against Berthold and Jennings in the circuit court, city of St. Louis, for an accounting in respect to the matters pleaded as a counterclaim in the said amended answer, and having done so, he filed, on the following day, in the cause at bar, his second amended answer. He pleaded four counterclaims, consisting ostensibly of individual transactions between himself and respondents, but made up, in point of fact, as the evidence subsequently showed and the referee found, of matters constituting part of the partnership account.

The cause was referred to Rudolph Schulenburg, Esq., who heard the evidence and filed his report on the seventeenth day of June, 1891. He found for the plaintiffs on each of the two counts of the petition, and found against the defendant and for the plaintiffs on each of the answers. The report is found in the record. There was evidence tending to support each finding of facts by the referee. His findings of facts and conclusions of law were reviewed by the circuit court upon defendant's exceptions to his report and were sustained throughout.

The referee found specifically that the subject-matter of the two counts of the petition did not arise out of, and did not in anywise appertain to, the partnership transactions between the appellant and respondents, but were separate and distinct transactions in nowise connected with the joint account. The correctness of the referee's finding on the two counts of the petition is not questioned here, no point being made thereon either in the brief or argument of appellant.

Appellant's first and second counterclaims arise out of the same matter, i. e., the rebuilding of the last "East Union Mill" and the shipment of lumber from the same between the date of its completion and the date of its sale in 1886.

The partnership of respondents and the appellant in the handling of long leaf pine began in November, 1879, and ended, so far as new transactions are concerned, with the sale of the above mill on July 15, 1886. Among the partnership property owned and operated by them was the saw mill now known as the "East Union Mill," which burned down several times, the last time in December, 1885. It was rebuilt in the spring of 1886 and the price realized by its sale on July 15, 1886, is the subject of appellant's second counterclaim, and the lumber shipped from it between May 1 and July 15, 1886, is the subject of appellant's first counterclaim.

The facts in regard to those two counterclaims are specifically found by the referee and are set out, with his conclusions thereon. It is conceded that the mill which burned down in December, 1885, as well as its predecessor, was partnership property, operated on partnership account. Appellant was anxious to rebuild it, respondents were not. The schemes suggested as conditions upon which respondents would consent to rebuild fell through; whereupon, in March, 1886, and during the existence of the partnership, appellant, with the knowledge of respondents, began to rebuild the mill on a site, the title to which, by virtue of a timber right, was the respondents' for the joint account. The counterclaim admits that appellant used in the construction of the mill an engine and boiler valued at $ 1,500 and belonging to joint account; and the evidence shows that he drew on respondents for the cost of repairing certain machinery that went into the mill; that respondents paid the draft and charged it to joint account; that the mill retained the name "East Union...

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