Pomeroy v. Benton

• Decision Date: 31 October 1882
• Citation: 77 Mo. 64
• Court: Missouri Supreme Court
• Parties: POMEROY, Appellant, v. BENTON.^a1

77 Mo. 64

POMEROY, Appellant,
v.
BENTON.^a1

Supreme Court of Missouri.

October Term, 1882.

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[COPYRIGHT MATERIAL OMITTED]

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Appeal from St. Louis Court of Appeals.

REVERSED.

January 13th, 1868, George Pomeroy filed his petition in the circuit court of St. Louis county stating that in 1858 he and the respondent Benton formed a partnership to conduct a wholesale dry goods business in the name of Pomeroy & Benton. They were to share equally the losses and profits. Neither was to engage in any other mercantile business, nor use the firm name otherwise than in its regular business, nor incur a personal liability for any other person without the written consent of the other partner. The partnership agreement was several times renewed. January 1st, 1862, it was extended for four years with an additional stipulation that ten per cent interest on the capital accounts could be withdrawn on the 1st days of July and January. The partnership business was continued until January 1st, 1865. During its continuance Pomeroy resided in New York and New Jersey. That Benton resided in St. Louis and had charge of the business of the house there, and full knowledge of all its details, and Pomeroy had only such information as he derived from Benton. In January, 1865, one year before the

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partnership was to expire by the contract, Benton went to New York and purchased all Pomeroy's interest in the house for $275,000, much less than its value. That before Benton went to New York he had forwarded to Pomeroy a false balance sheet of the house. That to induce Pomeroy to sell, he falsely represented that the balance sheet set forth the true condition of the partnership business. That Pomeroy relied on these representations and sold accordingly. That Benton knew the balance sheet was false at the time of his representations. That said balance sheet contained no account of certain dealings of Benton with the moneys of the firm in government vouchers, receipts and securities, and whisky; and that in these dealings which were concealed from Pomeroy, the firm had realized a profit of $200,000.

The defendant Benton denied all charges of fraud; averred that the balance sheet was made up by the clerks of the house, and by them forwarded to Pomeroy. That the books of the house were faithfully kept, and open to Pomeroy's examination; and he had opportunity to know everything, and did know everything about them. Benton denied dealing with firm moneys as charged in the petition; and denied that profits were realized as alleged.

The cause was heard and decided by the circuit court in 1873 in favor of Benton. On appeal to the Supreme Court the judgment was reversed in 1874; 57 Mo. p. 531; the Supreme Court holding that Benton's dealings in vouchers and whisky were fraudulent and he must account therefor as a fraudulent trustee. When the cause was remanded to the circuit court Benton amended his answer to the effect that after January 1st, 1862, it was agreed that John D. Egbert, as an employe, should have one-eighth of the profits. That each partner might draw out from the capital $100,000, also small amounts of unemployed capital. Pomeroy's reply denied the allegations of the answer. June 12th, 1875, the cause was referred to Hon. Edward A. Lewis, to hear all competent testimony offered by the

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parties and state the account between the parties in accordance with the opinion of the Supreme Court, and make report, etc.

September 15th, 1875, the hearing came on before the referee. The plaintiff's evidence, so far as material, was as follows:

(1) The articles of co-partnership.

(2) Andrew Johnson testified, that Benton told him he made a great deal of money in whisky and cotton. The profits were talked of as $100,000, and $75 000 in whisky. This was before the dissolution of the firm of Pomeroy & Benton, and in the presence of one Ramsey. Mr. Ramsey was called as a witness and contradicted the statement of Johnson.

(3) George H. Chase testified that just before the tax of $2 per gallon was imposed on whisky by congress, Benton told him he, Chase, had sold his high wines too soon. He did not say how many barrels of whisky he, Benton, had then; but he put some figures on a paper which amounted to 60 or 70,000. No dollars or barrels were written, but the result produced by multiplication was 100,000. Benton appeared to wish to tease, and was drinking. It was the same day congress laid on the $2 tax.

(4) Hecter McLean testified he had an operation in whisky with Benton, thirty to fifty barrels bought of Mauntel Bulte & Co. prior to the $2 tax. Benton told McLean he made a heap of money on whisky.

(5) The plaintiff offered in evidence a deposition of Benton taken in the cause. Defendant Benton made two objections to reading this deposition. (1) It cannot be read as a deposition because defendant is present and ready to testify. (2) It cannot be read as an admission because it is a deposition. The referee sustained the objections. It was afterward admitted to impeach Benton as a witness for himself. In this deposition Benton testified he bought between 1,700 and 1,800 barrels of whisky, and no more; 1,000 barrels of it in Chicago, the rest in St. Louis. Could

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not remember the persons from whom he got it; that he got some of Mauntel Bulte & Co. and Von Phul. Bowen & Co. bought some for him, and Catherwood bought thirty-six barrels. The money used to purchase it was raised by discounts. He could not tell if he used the firm name on the paper or not. He must have had a memorandum of the paper used, and he thought the names of Chase Bros. and Hastings & Gordon were on the paper. Could not recollect the amounts. The whole amount of paper discounted to buy the whisky was $70,000 about. Part of the discounts were at the State Savings Association; could not remember if all was discounted there. He could not remember if the name of Pomeroy & Benton was on the whisky paper or not. He had money of his own. Could not tell how many barrels Bowen & Co. bought for him, but it was 500 to 600 barrels. They rendered him bills of purchase. Don't know where they are; don't know how the bills were rendered, whether in the name of Bowen & Co., or Pomeroy & Benton or William H. Benton. Cannot remember. They were intended to be in name of William H. Benton. Cannot remember how many lots Bowen & Co. bought. He was not here, but the house of Pomeroy & Benton paid for the whisky by its check when he was not here. It was between $47,000 and $48,000. The money was charged to him. The money was his own and had been credited to him on the books of Pomeroy & Benton.

The witness further testified that after he was sued by Pomeroy he sent for John H. Bowen and had an interview with him at his, Benton's, house in St. Louis. That he desired to see Bowen about the whisky, and to learn from Bowen why an account of 142 barrels was in the name of Pomeroy & Benton. He, Benton, then and there had all the accounts of sales of whisky made for him by Bowen & Co. The net profits received by him on whisky was less than $20,000. If he had said he had bought 5,000 barrels of whisky it was jocular; he is now stating the truth.

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Benton testified he did purchase government vouchers during said partnership, in 1864; could not remember the amount he paid for them by checks of Pomeroy & Benton. They were bought at a discount of from seven to eleven per cent; could not remember how soon he collected the vouchers from the government; the money used to buy the vouchers was charged to him; the check books of the house show the facts; and think he used $200,000 in the purchase of vouchers; cannot say that Pomeroy knew of his dealings in vouchers or whisky; believe he must have known it; he did not tell Pomeroy of it. He considered the risk his own, and paid the firm eight and a half per cent interest on the money used; cannot remember that Egbert was to have an interest in the whisky transaction. If he had it was only one-eighth of St. Louis whisky. Egbert's interest in Pomeroy & Benton was a contingent salary. Pomeroy had no interest in the whisky because he paid no attention to it.

On cross-examination Benton stated that from January 1st, 1864, to July 1st, 1864, each partner drew out of the firm $100,000 to use as he pleased; thinks he realized $26,000 to $27,000 net profit on vouchers; cannot remember exactly; there was a loss on the Bowen whisky about $150; that was 565 barrels, sold in July, 1864. Pomeroy had access to the books and is a competent bookkeeper. The bookkeeper sent the balance sheet to New York of his own motion. He, Benton, tried at first to sell to Pomeroy. He, Benton, made no representation about the balance sheet. He and Pomeroy both assumed it to be correct. Benton closed the purchase February 4th, 1865; to relate back to January 1st, 1865. Benton paid Pomeroy $151,000 and some hundred dollars in 5-20 United States bonds, and his notes for $62,500 payable in one and two years. He could not remember Pomeroy's ever speaking to him either about the whisky or voucher transactions. He could not say there is anything on the books to show Pomeroy he was charged interest on the money he used.

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The witness testified he saw the balance sheet in Pomeroy's hands prior to the sale to him.

(6) The plaintiff put in evidence another deposition of Benton given by him on his own application to vacate an order of court upon him to produce, for the use of plaintiff, the book in which he kept an account of said whisky transactions. Benton testified he had entered in a book kept by him in 1864 all the accounts of said whisky transactions; it was a private book. He destroyed it in July, 1865; burned it up, because he had no use for it; having transcribed from it all live accounts into another book. He did not destroy all the book, but tore out the leaves that had the accounts on them and destroyed them. He did not destroy the binding of the book...