Gilmore v. Ham

• Decision Date: 10 April 1894
• Citation: 142 N.Y. 1,36 N.E. 826
• Parties: GILMORE v. HAM.
• Court: New York Court of Appeals Court of Appeals

142 N.Y. 1

36 N.E. 826

GILMORE

v.HAM.

Court of Appeals of New York.

April 10, 1894.

Appeal from supreme court, general term, fourth department.

Action by William W. Gilmore against Edward E. Ham for an accounting as to partnership assets. From a judgment of the general term affirming a judgment for defendant, plaintiff appeals. Affirmed.

T. K. Fuller, for appellant.

Hunt & Everson, for respondent.

FINCH, J.

Under what circumstances, and from what date, the statute of limitations runs in favor of a liquidating partner as against the retiring partner suing for an accounting and payment of his share, is the question presented on this appeal. That it is a troublesome, and perhaps difficult, inquiry is obvious from the varying and shifting circumstances upon which it may arise, and still more from a study of the conflicting decisions which have striven by very different methods to reach a definite solution of the problem. That it has some degree of importance, and should be determined carefully, is apparent from the fact that it must necessarily settle when the cause of action for an accounting accrues and can be enforced, and so when the liquidating partner is in default. It is desirable to state first, as definitely as possible, the facts upon which the question arises. Ham and Gilmore became partners in the clothing business in March of 1864, and conducted the business until June, 1869, when Gilmore went away, and left the state. Ham says he ‘absconded,’ and claims that previous to his departure he had been secretly disposing of the partnership goods for his own benefit, and disappeared to avoid detection. Whether that be true or not, we must assume that Gilmore abandoned the partnership, and that his action amounted to a consent to its dissolution, and the appointment of Ham as the sole liquidating partner, authorized to settle the partnership affairs; for, shortly after Gilmore's departure, Ham published a notice of the dissolution of the firm, and that he would close its affairs, and Gilmore's assent is to be inferred, not only from his conduct at the time, but from his long silence, and from his adoption of Ham's action involved in the institution of the present suit. We are to treat the case, therefore, precisely as if there had been a dissolution by mutual consent, and Ham had been appointed the liquidating partner alone authorized to close up the business. He took that attitude, was allowed to take it, received and held all the assets, and assumed rightfully the duty of winding up the partnership affairs. What he did in that direction we know very imperfectly, because he chooses not to render an account. It appears, however, that in 1871 he sold out and received his pay for the whole stock of goods then in his possession, and which must have covered the entire assets of the dissolved firm, except, perhaps, its bills receivable. The latter, so far as collectible, ws may and should assume had been collected during the two years which had elapsed since the dissolution. As to the debts owing by the firm and payable out of its assets, we have only the statement of Ham that at the date of his sale of the stock of goods he had paid ‘a good many’ of the debts of the firm, but did not know whether he had paid them all. One, at least, he had not paid. That was a note given by Ham & Gilmore to the wife of the former, for $675, dated December 19, 1886, and payable one day after date. That note might have been, and should have been, paid in 1871, when the liquidating partner had turned all the assets into money, and, as the case shows, had ample means of the partnership in his possession adequate to that payment, and his omission to pay it was a clear violation of his duty. I am confident that at that date,-two years after the dissolution,-when all the assets had been turned into money, when most of the debts had been paid, and when all of them ought to have been paid, the retiring partner could have maintained an action against the liquidating partner for an accounting of the partnership affairs, and payment over of the share ascertained; and that it would not have been a defense to the suit that the retiring partner's cause of action had not accrued because one or more debts had been needlessly left unpaid. This conclusion, however, is adverse to some of the decisions, and will need consideration at a more convenient stage of the discussion. What further happened was this: The note held by Mrs. Ham was sued in 1886, about 20 years after its maturity. Service was made on Gilmore, who alone defended. The statute of limitations did not protect him because of his continued absence from the state. Judgment went against him, and he was compelled to pay the full amount of the note, with its accrued interest; and thereupon he commenced this action. It has two phases. The complaint, alleging the compulsory payment of the note, demands contribution from Ham of the one-half chargeable against him, and for that there has been a recovery. Whether, upon proper allegations, there might not have been a judgment for the whole amount paid, need not be considered, since no such claim was made, and no such relief was asked. The further cause of action pleaded was for an accounting of the partnership affairs, and payment of the share found due, and to that the defendant pleaded both the six-year and the ten-year limitation, and has succeeded. The plaintiff appeals, and insists that he is entitled to an accounting, notwithstanding the lapse of time, and mainly upon the ground that the statute did not begin to run until all the business of the partnership was settled up and ended, for which contention he furnishes more or less of authority.

Under the law of this state there is a fixed limitation for every cause of action, whether legal or equitable. After attaching suitable limitations to numerous classes of actions, the Code adds (section 388): ‘An action, the limitation of which is not specially prescribed in this or the last title, must be commenced within ten years after the cause of action accrues.’ This provision in the Code of 1848, and continued since, has done away with the old rules as to cases cognizable only in courts of equity, and subjected all alike to some statutory limitation. De Pierres v. Thorn, 4 Bosw. 288, 289; Loder v. Hatfield, 71 N. Y. 104. So far as I have examined the authorities in this state since the adoption of the Code, I have found no denial of the application of its provisions to any form of equitable action, unless cases of a continuing right, accruing newly every day, may be said to form an exception (Miner v. Beekman, 50 N. Y. 343;Schoener v. Lissauer, 107 N. Y. 177, 13 N. E. 741), although it is quite apparent that they are not inconsistent with the uniform and universal rule. They serve, not to break it, but to show how difficult it occasionally is to determine when the right to the equitable relief arises, and when the cause action so accrues as to set running the appropriate limitation. I shall assume, therefore, that either the six-year or the ten-year limitation applied to the plaintiff's cause of action, and need not, for present purposes, determine which.

When, then, did the plaintiff's cause of action accrue? for that is the date from which the limitation begins to run, and which we must fix in some...