King v. Davis

• Citation: 130 S.E. 707,190 N.C. 737
• Decision Date: 16 December 1925
• Docket Number: 287.
• Parties: KING v. DAVIS.
• Court: United States State Supreme Court of North Carolina

130 S.E. 707

190 N.C. 737

KING v. DAVIS.

No. 287.

Supreme Court of North Carolina

December 16, 1925

Appeal from Superior Court, New Hanover County; Dunn, Judge.

Action by James S. King against L. W. Davis. Judgment for defendant and plaintiff appeals. Affirmed.

"Set-off," allowed against former copartner's portion of partnership funds in insolvent bank, held not dividend or payment within dissolution agreement.

Material facts: The plaintiff and defendant were partners in the clothing and men's furnishing business, in Wilmington, N C., plaintiff being one-third and defendant two-thirds owner under the firm name of L. W. Davis & Co. On March 14, 1923 the partnership was dissolved. The agreement of dissolution was in writing; plaintiff selling out the tangible business to the defendant (except the accounts due by customers). Defendant was to pay all debts. The accounts were to be collected by either copartner and divided between plaintiff and defendant--one-third to plaintiff and two-thirds to defendant. The lease of the premises was assigned to defendant. The controversy arose over the following:

"It is understood and the above agreement and sale is made upon the further condition that the funds on deposit in the Commercial National Bank at the time the same closed is the joint property of L. W. Davis and James S. King, and that all dividends and payments on account of said deposit shall be divided, when received, in the proportion of one-third thereof to James S. King and two-thirds thereof to L. W. Davis."

The plaintiff alleges:

"During the continuance of said copartnership, and on December 30, 1922, said copartnership had on deposit with the Commercial National Bank of Wilmington, the sum of $6,306.90; on said December 30, 1922, said Commercial National Bank was closed by an order of the comptroller of the currency, and thereafter a receiver for said bank was appointed by said comptroller of the currency on or about February 1, 1923, since which time said receiver has been in charge of and administering the affairs of said bank. Under the terms of the agreement of dissolution hereinbefore mentioned, the aforesaid sum of $6,306.90 so on deposit with said bank was and continued to be the joint property of plaintiff and defendant in the proportion of one-third to plaintiff and two-thirds to defendant, and it was by said agreement provided that all dividends and payments on account of said deposit should be divided, when received, in the proportion of one-third thereof to plaintiff and two-thirds thereof to defendant. That at the time of the closing of the Commercial National Bank of Wilmington and the appointment of a receiver therefor, defendant was individually indebted to said bank by a certain note in the sum of $2,500. That on or about April 17, 1924, of which fact plaintiff was not at the time informed, defendant obtained, by way of offset against the deposit in said bank belonging to plaintiff and defendant, the amount of defendant's individual note for $2,500 to said bank, which said amount of $2,500 was thereupon charged against said deposit of $6,306.90, leaving a balance on deposit in said bank to the credit of said copartnership of $3,806.90. Thereafter, and on or about August 1, 1924, the receiver of said Commercial National Bank of Wilmington paid to its depositors a dividend of 10 per cent., and among others said receiver paid to defendant, as representing said copartnership, the sum of $380.69. Subsequent thereto, without informing plaintiff of the fact of the offset of defendant's individual note hereinbefore referred to, and leaving plaintiff to believe that a dividend of 10 per cent. upon the full and original deposit of $6,306.90 had been allowed and paid, defendant paid to plaintiff as his one-third part of a 10 per cent. dividend on said total deposit of $6,306.90 the sum of $210.23, and plaintiff accepted the same under the belief, induced as hereinbefore stated, that a dividend of 10 per cent. had been allowed and paid upon the full deposit, whereas in truth and fact, plaintiff is informed and believes and upon such information and belief alleges that the said receiver paid to defendant a dividend on said deposit less the amount of defendant's note offset as hereinbefore stated, to wit, a dividend on the sum of $3,806.90, and plaintiff's one-third part thereof being the sum of $126.89. Thereafter, and upon being informed of the facts as herein alleged, plaintiff demanded of defendant the payment of one-third part of the amount of $2,500 offset as hereinbefore alleged, and the payment of plaintiff's one-third part of the dividend paid upon the balance of said deposit after deducting said offset, less the amount of $210.23 paid to plaintiff by defendant as hereinbefore alleged, but defendant has failed and refused and continues to so fail and refuse to pay the amount demanded, or any other sum on account thereof. That by reason of the matters and things herein alleged defendant is indebted to plaintiff in the sum of $764.55, with interest on the sum of $749.99 from the 1st day of August, 1924, at the rate of 6 per cent. per annum. Wherefore plaintiff prays judgment against defendant for the sum of $764.55, with interest on the sum of $749.99 from August 1, 1924, until paid, and for costs and such other relief as plaintiff may be entitled."

Defendant first demurred to the complaint. The demurrer was overruled, and the defendant answered. The defendant admitted the material allegations of the complaint, and "he expressly refers to the agreement of dissolution therein referred to for its terms and effect."

Defendant alleges:

"That the sum of $210.23 was the full amount that the plaintiff was entitled to receive from the defendant, either under the terms of the dissolution agreement referred to, * * * or in law, or in equity; and the defendant alleges that is the only sum that he was due and owing the plaintiff on account of the said agreement or declaration of dividend, or otherwise, and that he does not owe the plaintiff any other amount by reason thereof, or for any other reason. The defendant denies the allegations that he owes plaintiff $764.55 with interest," etc.

The court below rendered the following judgment:

"This cause coming on to be heard before his honor, Albion Dunn, judge of the superior court, and the plaintiff moving for judgment on the complaint filed by him, and the answer filed by the defendant, and the defendant moving for judgment also on said pleadings, and the court, after hearing the arguments, being of the opinion that the plaintiff is not entitled to recover hereunder, hereby allows the motion of the defendant, and adjudges that this action be dismissed at the cost of the plaintiff. It is further ordered, adjudged, and decreed by the court, the defendant consenting thereto, that all dividends or payments to be made by the receiver of the Commercial National Bank shall be paid to the plaintiff in proportion of one-third of the original deposit in said bank at the date of its failure, without regard to the offset heretofore allowed to the defendant, and that the balance of said

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