Taylor v. Thompson

• Decision Date: 06 October 1903
• Citation: 176 N.Y. 168,68 N.E. 240
• Parties: TAYLOR v. THOMPSON et al.
• Court: New York Court of Appeals Court of Appeals

176 N.Y. 168

68 N.E. 240

TAYLOR

v.THOMPSON et al.

Court of Appeals of New York.

Oct. 6, 1903.

Appeal from Supreme Court, Appellate Division, First Department.

Action by William A. Taylor against Robbert H. Thompson and others. From the judgment of the Appellate Division (77 N. Y. Supp. 438) affirming a judgment for defendants, plaintiff appeals. Affirmed.

Austen G. Fox and William D. Leonard, for appellant.

John J. Crawford, for respondents.

BARTLETT, J.

The plaintiff seeks to recover in this action damages by reason of alleged false representations made by the defendants upon the sale of a certain business which had been conducted by them under the firm name of Thompson, Culbert & Co. This sale took place in October, 1889, and, in order to deal with the questions of law presented, a history of the facts is essential. The defendants' firm of Thompson, Culbert & Co. were, in October, 1889, and for years prior thereto, importers of wines and liquors at 39 Broadway, in the city of New York. The defendants John and Robert Thompson were brothers. John Thompson was 70 years of age at the time of this transaction, and Robert was a very much younger man. Robert Thompson and the defendant Norris had practically nothing to do with this business except as contributors of capital, the management being left to John Thompson and the defendant Culbert. John Thompson contributed $13,000 as capital, and Robert Thompson and Norris contributed $6,500 each. Culbert, who was not financially responsible, furnished no capital, and received one-fifth of the profits for services rendered. The defendants Robert Thompson and Norris were at this time respectively president and vice president of a corporation known as the Thompson & Norris Company, manufacturers of corrugated paper for packing purposes, and had for many hears been doing business in the city of Brooklyn. In the month of August, 1889, the members of the firm of Thompson, Culbert & Co. became aware of the fact that, through the dishonesty of elerks, a defalcation had occurred amounting to $30,000, being somewhat in excess of the paid-up capital of the business. After considerable discussion, the Thompsons and Norris concluded that it would be better to wind up the business, as John Thompson was advanced in years, and greatly disturbed by the defalcation, and Robert Thompson and Norris had no disposition to carry on a business outside of their corporate interests, to which reference has already been made. When Culbert was advised of the disposition on the part of his partners to wind up the concern, he stated that he would like to retain the business. The result was that Culbert's partners stated to him, in substance, that, if he could raise the money so as to return to them their capital and relieve them from all obligations to the creditors of the firm, they would sell the business. Culbert thereupon had an interview with his friend, Robert E. Bonner, who introduced him to the plaintiff, Taylor. Bonner was a man of means, and agreed to advance to Taylor the necessary amount to purchase this business if Taylor was satisfied to enter into business relations with Culbert. After certain negotiations between Taylor and Culbert, a firm was formed under the style of Culbert & Taylor, having for its object the taking over of said business. The assets of the business were ultimately turned over to Culbert & Taylor, the defendants Thompson and Norris received their contributions of capital, and were released from their obligations to the creditors of the firm of Thompson, Culbert & Co. Taylor, in the following June, 1890, claims to have ascertained that Culbert made fraudulent representations as to the assets and liabilities of Thompson, Culbert & Co., but notwithstanding this fact continued in firm relations with him for two years thereafter. Taylor testified in this connection as follows: ‘When I discovered the evidence of this fraud on the 30th day of June, 1890, Mr. Culbert was my partner, and continued to be such for two years after that time. I called his attention to the fact that he had perpetrated a fraud upon me. I did that, I think, about September of that year, and continued in partnership with him after that for nearly two years. He was a full partner, and entitled to half interest. He did not draw out a full one-half. I permitted him to be there with certain rights. I had him pretty well covered. I am still carrying on the business. It has been a profitable business since I took possession of it. It was not at the time I took it.’ At the expiration of these two years Culbert is said to have assigned his interest in the firm to Taylor, and on the 16th day of January, 1893, this action was commenced by Taylor individually, naming as defendants the partners in the former firm of Thompson, Culbert & Co., including Culbert. The defendants John Thompson and Culbert were not served, and have not appeared. It is also to be observed that Culbert was not produced as a witness on the trial of this action.

This action has been twice tried. The plaintiff recovered a judgment on the first trial, which was reversed by reason of errors in the charge of the trial judge. It should also be observed that, notwithstanding the fact that Culbert is said to have assigned to Taylor his interest in the firm of Culbert & Taylor, that assignment was not offered in evidence on this second trial. The theory of the plaintiff's action apparently is that Culbert, as a member of the firm of Thompson, Culbert & Co. fully representing them in law as their agent, made certain false representations to him in negotiating the sale of this business as to the value of the assets and the amount of the liabilities, upon which he relied, to his damage of $33,000 and upwards. The main contention of the plaintiff and appellant is that he was entitled to go to the jury on the question of what relation existed between him and Culbert during these negotiations which resulted in the sale of the business. We are of the opinion that there are certain undisputed facts upon which the directed verdict can stand. It is true that when these parties met at the office of counsel to close matters there is a conflict of evidence as to what occurred. Robert Thompson and Norris testified that they told Taylor at that time, and in the presence of counsel, that they had nothing whatever to do with the management of this business, and that they did not know what the assets of the business consisted of. John Thompson testified on the first trial, and his testimony was read on the second trial, he having died in the interval, referring to his interview at office of counsel, as follows: ‘My brother got up and said: ‘Mr. Taylor, we know nothing about the assets, whether they were worth ten thousand dollars or one hundred thousand dollars. We sold out to Mr. Culbert on their appraisal, and we know nothing whatever about whether they are worth anything or a good deal.’' These statements were corroborated in the main by counsel. The plaintiff swore witnesses who denied that these statements were made. If the case rested on this portion of the evidence, it certainly should have been submitted to the jury. It, however, stands uncontradicted, as between Culbert and his partners, that he was to raise money and take over the business if he wished to continue it in connection with any third party. Culbert had been the partner of plaintiff for years, and a member of a firm formed for the purpose of taking over this business, concededly, and the fact that he was not sworn at the trial nor served in this action permits the presumption that he could not have aided the plaintiff's case if placed upon the witness stand. The defendants' theory of the action rests upon this uncontradicted...