Ball v. Farley

• Citation: 1 So. 253,81 Ala. 288
• Parties: BALL v. FARLEY and others.
• Decision Date: 25 January 1887
• Court: Supreme Court of Alabama

1 So. 253

81 Ala. 288

BALL v. FARLEY and others.

Supreme Court of Alabama

January 25, 1887

Appeal from circuit court, Montgomery county.

Action for money had and received. Defendants had judgment below. Plaintiff appealed.

W L. Bragg and Watts & Son, for appellants.

Sayre & Graves and Semple & Son, contra.

STONE C.J.

The copartnership between B. L. Wyman and Charles P. Ball was formed and took effect February 1, 1881. Before and up to that time Wyman was a merchant engaged in the hardware business. They entered into a written agreement of partnership, containing the following, among other provisions: "The said parties have agreed, and by these presents do agree, to associate themselves as partners for the purpose of carrying on a general hardware business in the aforesaid city and state, [Montgomery, Alabama,] upon the following terms and conditions: *** First. The said Charles P. Ball, of the second part, covenants and agrees to pay to said B. L. Wyman, of the first part, nine thousand dollars, the receipt of which is hereby acknowledged, before the sealing and delivery of these presents. In consideration of which payment, the said B. L. Wyman, of the first part sells and conveys to said Charles P. Ball, of the second part, one-half interest in all stock on hand, and to all notes and open accounts, horses and drays, office furniture and fixtures, and generally all and everything, in any manner pertaining to and used in conducting the aforesaid business prior to the date of this agreement. *** Eleventh. At the expiration of the aforesaid term, [five years,] or an earlier dissolution of the partnership, the stock and all other assets, or their proceeds, after paying the debts of the firm, shall be equally divided between the said B. L. Wyman and Charles P. Ball, parties to this agreement."

The other provisions of the agreement of partnership relate to details, and do not vary or affect the purpose or scope of the contract. Wyman's interest in the merchandise, effects, and business was valued at $18,000. Ball paid him $9,000 for a half interest, and thereby became partner and equal owner with him of all that pertained to the store.

Who became the owner of the $9,000 paid in by Ball? Evidently Wyman, for it was the agreed price and consideration for which half the business had changed ownership from him to Ball. It became Wyman's individual money, to deal with as he chose. Ball had no interest in it, and could not question its appropriation. To test this, let us suppose Wyman had previously had an equal partner, and Ball, instead of buying a half interest from Wyman, had bought out his partner, would any one contend the money paid by Ball in such purchase would become the property of the firm? Another view: The half interest purchased by Ball was valued and purchased at the agreed price of $9,000. All the witnesses who speak of it agree in this, and the agreement of copartnership proves it. If, when Ball paid the $9,000, that money became the property of the firm, then, being the owner of half the firm's effects, half the sum, $4,500, revested immediately in him, or, rather, never passed out of him. The result will be that, instead of paying $9,000 for the half interest, he will have paid only $4,500 for it. If it be claimed that the $9,000 paid in by Ball was his share of the capital stock contributed, and that it became part of the partnership effects, this necessarily leads to the conclusion that Ball's $9,000 was put in as the equivalent of Wyman's entire interest in the mercantile establishment, and consequently fixes the value of that interest at $9,000, the sum of Ball's payment. All the testimony, as we have shown, proves that Wyman's interest was valued, not at nine, but at eighteen, thousand dollars. Let us look at this question in another aspect. The agreement of partnership contains no express stipulation that the new firm should, with the assets, assume the liabilities resting on Wyman in his mercantile capacity. If no such liability was assumed, then it can make no manner of difference what amount of debts he may have owed. Such debts could neither increase nor diminish Bell's interest or liability. But suppose the partnership did, by the terms of its organization, assume the mercantile debts of B. L. Wyman, then it becomes necessary to inquire whether the debt to Farley, Spear & Co. was a personal, individual, outside debt of Wyman, or whether it was a debt resting on the mercantile establishment. If the former, then Wyman only paid his individual debt with his individual means, and it cannot possibly affect Ball's interest. If the claim of Farley, Spear & Co. was a debt of the mercantile establishment, and, as such, had become the debt of the new firm by virtue of the partnership, then Wyman, with his individual means, paid, $9,000 of the firm's liability, and thus, without any consideration, lifted a burden of $4,500 from Ball's shoulders.

We have indulged in the foregoing reflections for the purpose of showing that in no conceivable point of view could Ball have any interest in knowing what disposition Wyman intended to make, or did make, of the $9,000 Ball paid him. Hence, if the latter had no information of Wyman's debt to Farley, Spear & Co., no blame can attach to Farley for not giving him the information. He did know there was a debt; for Wyman informed him of it, and informed him further that, with the money he (Ball) was to pay the debt to Farley, Spear & Co. was to be paid. Pratt v. Philbrook, 33 Me. 17; Irvine v. Kirkpatrick, 3 Eng. Law & Eq. 17, 37; Vernol v. Vernol, 63 N.Y. 45. Ball inquired of neither of them how much the debt was.

It is claimed for appellant that Farley became his agent in negotiating the purchase from Wyman, and betrayed his trust in not informing him of the extent of Wyman's indebtedness to his bank. All of Farley's agency was rendered in obedience to requests from Ball, and consisted simply in bringing the parties together that they might negotiate. There is neither fact nor circumstance tending to show that Farley knew the value of the assets in the store, or that he knew the amount of Wyman's debts, save that he owed him,-$7,453,-at the time of the negotiation. He was neither consulted nor gave advice in regard to the making of the contract, nor its terms, and is not shown to have had anything to do in the matter save what is stated hereafter. There was no proof of Farley's agency for Ball in making the contract to authorize its submission to the jury.

In reply to an inquiry by Ball, Farley stated to him, according to Ball's testimony, that "Mr. Wyman is a man of honesty and integrity, and is doing a good business, and is a man of good business qualifications, with one exception; and that is, he needs a little more push in his business." Ball had previously expressed his belief in Wyman's integrity from long personal acquaintance. Farley's representation was made orally.

It is contended for appellant that Farley participated with Wyman in perpetrating a fraud on Ball, in inducing him to enter into the contract; and that the evidence offered tending to prove such fraudulent participation was enough to authorize the submission of its sufficiency to the jury. This is the pivotal point in this case. The testimony relied on to support this contention is- First, Farley's failure to inform Ball of the extent of Wyman's indebtedness to him when the negotiation for the purchase was pending; second, that Farley had a mortgage on the merchandise, and failed to inform Ball of it; third, the oral representations made by Farley set out above.

The first ground urged we have considered above, and need give it no further attention.

Second. At the time the trade was negotiated, January 1, 1881, Farley held a mortgage on Wyman's merchandise, which was never recorded. It is not pretended that Farley ever asserted any claim to the property under his mortgage, or that either Ball or Wyman was ever molested in consequence thereof. When the payment of $9,000 was made by Wyman to Farley, or before that time, the mortgage was surrendered by the latter to the former. It is thus shown that that mortgage never did injure Ball, and by no possibility could it have done so. Not being recorded, and Ball purchasing in ignorance of its existence, his title would prevail over Farley's in any controversy that might arise in regard to it. Even fraud, without injury, gives no right of action. Jordan v. Pickett, 78 Ala. 331; Kelly v. McGrath, ...