Rush v. Thompson

• Decision Date: 20 October 1887
• Citation: 13 N.E. 665,112 Ind. 158
• Parties: Rush and others v. Thompson and others.
• Court: Indiana Supreme Court

112 Ind. 158

13 N.E. 665

Rush and others

v.Thompson and others.

Supreme Court of Indiana.

October 20, 1887.

Appeal from superior court, Marion county; Napoleon B. Taylor, Judge.Claypool & Ketcham, for appellants. Duncan, Smith & Wilson, for appellees.

Zollars, C. J.

James W. Thompson, Sr., John W. French, and James W. Thompson, Jr., appellee here, brought this action against Frederick P. Rush, George E. Townley, and Edward F. Gall, the appellants. Appellees alleged in their complaint that they were partners, doing business under the firm name of J. W. Thompson & Co.; and that appellants, a firm doing business under the name of Fred P. Rush & Co., were indebted to them in the sum of $10,552, for wheat sold and delivered. Appellants filed what purports to be an answer, in four paragraphs: First, a general denial; second, payment. In a third paragraph, as therein stated by way of answer, and by way of set-off and counter-claim, appellants denied that they were, or at any time had been, indebted to the plaintiffs, or ever had any business transaction with them as such firm, composed of the three members named. It was further averred that they had sold wheat for James W. Thompson, Sr., and John W. French, partners, doing business under the firm name of J. W. Thompson & Co., and received the money for the same; and that, prior and subsequent to such sale, said James W. Thompson, Sr., and John W. French, under such firm name, became indebted to them, the defendants, in the sum of $552.92, for services rendered to said firm at their request, for money laid out and expended for them at their request, and for money had and received by them from the defendants. The plea closed with an offer to set off, as against any amount that might be found due to said James W. Thompson, Sr., and John W. French, and equal amount due from them to the defendants, and with a prayer for judgment against said plaintiffs for the balance due the defendants. It is assigned as error here that the court below erred in sustaining a demurrer to the foregoing plea. That assignment must be sustained. The plea is clearly good.

As a rule of pleading it is settled in this state that a complaint by several persons must state a cause of action in favor of all of them, in order to be good as against a demurrer for want of facts. Berkshire v. Shultz, 25 Ind. 523;Holzman v. Hibben, 100 Ind. 338. On the other hand it is provided by statute that, upon the trial of a cause, judgment may be given for or against one or more of several plaintiffs, and for or against one or more of several defendants. Rev. St. 1881, §§ 568, 569. If, upon the trial, the evidence had shown that appellants were indebted to Thompson, Sr., and French, as the only members of the firm of J. W. Thompson & Co., the court would have had the right under the above statute, and it would have been its duty, in the absence of countervailing evidence, to have rendered judgment against the defendants in favor of those plaintiffs; and, because of that right and duty on the part of the trial court, it must follow that appellants, as defendants below, had the right to plead that Thompson, Sr., and French were the only members of the firm of J. W. Thompson & Co., and the only persons who had any interest in the cause of action set up in the complaint,or to whom they were in any way indebted; and also to set up as against those plaintiffs whatever defense they had, or whatever claim they had, in the way of set-off or counter-claim. Berkshire v. Shultz, supra; Hamilton v. Browning, 94 Ind. 242;Moyer v. Brand, 102 Ind. 301;Terwilliger v. Murphy, 104 Ind. 32, 3 N. E. Rep. 404.

The fourth paragraph of plea by appellants, defendants below, like the third, purported to be by way of answer, and by way of set-off and counterclaim. The facts set up in the two paragraphs were substantially the same, with this difference: In the third it was alleged as a fact that the firm of J. W. Thompson & Co. was composed of Thompson, Sr., and French only. In the fourth it was alleged that, during the transactions between the parties, James W. Thompson, Sr., and John W. French claimed that they alone composed the firm of J. W. Thompson & Co. There were these averments: “And defendants say that they were never informed, nor had they notice, that the plaintiff, James W. Thompson, Jr., was a member of, or had any interest in, or connection with, said firm. And in all their transactions with said plaintiffs, Thompson, Sr., and French, said plaintiffs represented that said firm was composed of the said plaintiffs, Thompson, Sr., and French, and that no other person whatever had any interest in said firm.” It was further averred that, relying upon said representations, and believing them to be true, appellants rendered the services and advanced the money, etc., to said Thompson, Sr., and French. The paragraph closed with a prayer that, as against any amount that might be found due to Thompson, Sr., and French, an equal amount due from them to appellants might be set off, and that appellants might have judgment against said plaintiffs for the balance due from them. That plea we think was not good. That the then plaintiffs, appellees, composed the firm of J. W. Thompson & Co., is not disputed in the plea. Nor is there any charge of bad faith on the part of Thompson, Jr., either in the way of representations, in the way of keeping silent when he ought to have spoken, or in any other manner. Nor is it charged, or in any way shown, that he was a dormant partner. The only construction that can be put upon the plea is that Thompson, Sr., and French represented to appellants that they alone composed the firm of J. W. Thompson & Co. There is no averment that Thompson, Jr., either authorized or had any knowledge at all of such representations by his partners. Thompson, Jr., although he did not personally participate in the transactions between appellants and the firm of J. W. Thompson & Co., being a partner in that firm, had an interest in all of the firm assets, including, of course, the wheat sold to appellants, or sold by them for the firm, and hence had an interest in the claim against appellants for the value of the wheat, or the amount received by them for it. He could not be deprived of that interest by the statements of his partners, without his knowledge or consent, that he was not a member of the firm. Each partner in a firm is, in a sense, the agent of his copartners, and may bind them by his acts, contracts, and statements, as to all matters fairly within the scope of the partnership business; but, dealing in the name of the firm, one partner cannot deprive another member of the firm of his interest in the firm assets, by representations to others with whom he deals that such partner is not a member of the firm, where such partner neither authorizes nor knows of such statements. Gordon v. Ellis, 52 E. C. L. 820; 2 Lindl. Partn. 508, 509; Ramazotti v. Bowring, 7 C. B. (N. S.) 851.

Mutuality is essential to the validity of a set-off. Griffin v. Cox, 30 Ind. 242;Booe v. Watson, 13 Ind. 387;Blankenship v. Rogers, 10 Ind. 333;Proctor v. Cole, 104 Ind. 373, 379, 3 N. E. Rep. 106, and 4 N. E. Rep. 303. No mutuality is shown here. The debt due from appellants was and is due to the firm of J. W. Thompson & Co., composed of James W. Thompson, Sr., John W. French, and James W. Thompson, Jr. The debt due to appellants is due from Thompson, Sr., and French alone. It therefore cannot be set off against the debt due to the plaintiffs (appellees) from appellants. The prayer, however, is to be allowed to set off so much of the debt due from appellants as shall equal the amount that shall be found due to Thompson, Sr., and French. That cannot be done. Thompson, Jr., cannot be compelled to submit that he shall personally, or that his firm shall, be subjected to the delay and expense incident to a trial of the claims existing between two of his partners and appellants. And besides the debt due from appellants is a partnership asset, and Thompson, Jr., has a right to insist that it shall be...