Cleaveland v. Richardson
| Decision Date | 09 December 1889 |
| Citation | 132 U.S. 318,10 S.Ct. 100,33 L.Ed. 384 |
| Parties | CLEAVELAND et al. v. RICHARDSON et al |
| Court | U.S. Supreme Court |
This is an action of assumpsit, brought in the circuit court of the Uni ed States for the northern district of Illinois, in September, 1884, by George C. Richardson, Charles S. Smith, George K. Guild, Ralph L. Cutter, and Harrison Gardner, partners, composing the firm of George C. Richardson & Co., against James O. Cleaveland, Cornelius B. Cummings, Charles W. Woodruff, and Washington Libbey, partners, composing the firm of Cleaveland, Cummings & Woodruff. The declaration contains the money counts, and annexed to it is a copy of an account showing various items of merchandise sold by the plaintiffs to the defendants, in August, September, and October, 1883, amounting in debit items to $12,125.25, with a credit item of cash, December 31, 1883, amounting to $7,275.15; leaving a balance due to the plaintiffs on the last-named day of $4,850.10. The defendants were served with process, and put in various pleas, and there were replications and rejoinders, raising issues covered by the findings of the court on the trial. The defendant Woodruff having died, it was ordered that the suit proceed against the surviving defendants. A trial before a jury was commenced, but a juror was withdrawn, and the parties duly waived a trial by jury, and consented that the case be tried by the court. The court filed special findings, as follows:
'(1) James O. Cleaveland, Cornelius B. Cummings, and Washington Libbey, three of the defendants, with one William F. Shelley, on the 31st of December, 1881, formed a limited copartnership, under the statute of the state of Illinois in that behalf, under the name of 'Cleaveland, Cummings & Shelley,' to do a wholesale business in merchandise in Chicago, in which the said Washington Libbey was a limited partner, having put in $50,000 of capital.
'(2) About the 1st of May, 1883, the said Shelley went out of the firm, and Charles W. Woodruff, the other defendant in this cause, came into the firm, which assumed the name of 'Cleaveland, Cummings & Woodruff,' and continued to do business until as hereinafter stated.
'(3) Said firm of 'Cleaveland, Cummings & Woodruff' intended, as between themselves, to do business as a limited partnership; but they did not take the steps required by law to make said firm a limited partnership under the statute of Illinois in that behalf.
'(4) The plaintiffs sold to the firm of Cleaveland, Cummings & Woodruff, upon the 28th, 29th, and 30th of August, 1883, and upon the 14th and 15th of September, 1883, merchandise to the amount of $8,064.03, payable by the said firm in sixty days from September 15th; and on the 24th of October sold to Cleaveland, Cummings & Woodruff merchandise to the amount of $1,291.83, payable in sixty days from November 1st; and the plaintiffs were also the holders of two notes of said Cleaveland, Cummings & Woodruff, dated Chicago, September 15, 1883, due in four months from the date thereof, payable to the order of the defendants, and indorsed by them,—one for $1,347.99 and one for $1,421.40,—which two notes matured January 18, 1884; said several amounts aggregating $12,125.25.
'(5) On the 30th of October, 1883, Washington Libbey paid to James O. Cleaveland $1,000 for his interest in the firm of Cleaveland, Cummings & Woodruff, and said James O. Cleaveland, Cornelius B. Cummings, Charles W. Woodruff, and Washington Libbey signed and delivered to James O. Cleaveland an instrument in writing as follows, viz.:
'(6) It was contemplated, October 30, 1883, that a new firm would be formed, composed of Cornelius B. Cummings, Charles W. Woodruff, and Swan Brown, as general partners, and Washington Libbey, as special partner, but said firm was never formed; but the said Cleaveland supposed it was so formed when he sold out his interest to the said Libbey.
'(7) The firm of Cleaveland, Cummings & Woodruff stopped business on or before November 14, 1883. Said firm owed for borrowed money about $179,000, which was unsecured, and for merchandise about $461,000, and the assets of said firm were sufficient to pay the borrowed money in full, and not quite sixty per cent. on the dollar upon the mercantile debts. The said Washington Libbey was reputed to be a man of large wealth.
'(8) On the 14th of November, 1883, all the bills receivable, notes, and accounts of Cleaveland, Cummings & Woodruff were sold to Columbus R. Cummings for his two notes for $201,110.43, one for $110,000, which was delivered to the Union National Bank, in full payment of borrowed money due by said firm to said bank. The other, for $91,110.43, was delivered to a member of said firm of Cleaveland, Cummings & Woodruff. Columbus R. Cummings was a brother of Cornelius B. Cummings, and a director in the Union National Bank, to which he had introduced said firm, and felt in honor bound to see that the bank suffered no loss.
'(9) Immediately thereafter, Cleaveland, Cummings & Woodruff sent J. J. Knickerbocker, as their attorney, to New York, and proposed to the mercantile creditors of that firm to pay them sixty cents on the dollar of their respective claims. When application to the plaintiffs was made to accept sixty cents on the dollar of their claims, some had settled at that rate, and some had not. The attorney of Cleaveland, Cummings & Woodruff explained the situation of the assets of Cleaveland, Cummings & Woodruff, saying that the borrowed money was to be paid in full, which would not leave enough to pay quite sixty per cent. of the remaining indebtedness. Libbey's liability as a member of the firm was spoken of, when said attorney stated to the plaintiffs that he had not had opportunity to examine into the question, and was not in possession of information to know whether Libbey could make a successful defense or not, but that it was a question they could investigate for themselves. One of said plaintiffs said to said attorney they had sold no goods to the defendants on the strength that Libbey was more than a special partner; that no credit had been given to the firm on the faith that Libbey sustained any other relation to it; that Libbey had lost his special capital; and that they had no desire to make him pay more. It does not appear, however, from the evidence, that the defendants, or their attorney, communicated to the plaintiffs the fact that Libbey had signed the instrument in writing referred to in the fifth finding, or that he made any statement as to Libbey's financial ability to pay the debts of said firm. The plaintiffs at first refused, but about the 29th of December, 1883, upon the receipt of the sum of $7,275.15, WHICH WAS SIXTY PER CENT. OF their entire claim, they, by their agent, Walter M. Smith, executed and delivered to the said John J. Knickerbocker, the attorney for the defendants, at Chicago, an instrument in writing, as follows:
"For and in consideration of the sum of seven thousand two hundred and seventy-five and 15-100 ($7,275.15) dollars, to us in hand paid by John J. Knickerbocker, of Chicago, Ill., the receipt whereof is hereby acknowledged and confessed, we have sold, assigned, transferred, and delivered, and do hereby sell, assign, transfer, set over, and deliver, to said Knickerbocker, his heirs, executors, administrators, and assigns, the above and foregoing claim in our favor and against the late firm of Cleaveland, Cummings & Woodruff, and all other claims and demands which we now have, or might or could have, against the said Cleav land, Cummings & Woodruff, by reason of the happening of any matter or thing from the beginning of the world to the day of the date hereof, without recourse to us, and authorize and empower said Knickerbocker to sue for, collect, settle, compound, and give acquittance therefor as fully as we could do in person. In witness whereof, we have hereunto set our hand and seal this 29th day of December, 1883. GEORGE C. RICHARDSON & CO. [Seal.] Per WALTER M. SMITH. [Seal.]'
'Attached to said instrument are the following:
Oct. 24. " " Nov. 1 1,291 83
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$9,355 86
'And Charles W. Woodruff, one of the said defendants, at the same time, and as part of the same arrangement, delivered to the said agent of the plaintiffs an instrument in writing as follows, viz.:
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