Supreme Court of North CarolinaDec 1, 1860
59 N.C. 171 (N.C. 1860)

(December Term, 1860.)

1. Where one was a partner in a firm in 1855 and in 1857, but alleged that for 1856 he was not a partner, and that his withdrawal was evidenced by a deed which was lost, and it turned out that the deed had been destroyed by himself, and he answered delusively about it, and it appeared that he had acquiesced in certain acts of his partner, treating him as a partner, it was declared by the court that he was to be considered as a partner for the year 1856 also.

2. It was Held, by the court, that the destruction of the deed which it was admitted explained defendant's connection with the firm, and that, too, after he knew that it would be necessary to make such explanation, afforded a strong presumption that such deed committed him as a partner.

CAUSE removed from the Court of Equity of MARTIN.

In January, 1854, Joseph Waldo and L. L. Clements, the plaintiff, entered into a copartnership as merchants, in the town of Hamilton, under the name and style of "Waldo Clements," and did business during the years 1855, 1856, and until March, 1857, when the co-partnership was dissolved, and all the effects of the firm were transferred to the plaintiff, Clements, to collect and pay debts, and adjust the balance between them.

During the year 1855, the defendant Waldo was in co-partnership with the defendant Henry Mitchell, in running a steam sawmill, and in shipping and selling lumber. During this year, the latter firm had considerable dealings with the firm of Waldo Clements, and bought goods to a considerable amount, which was paid and settled. During 1856, the plaintiff alleges that the said firm of Waldo Mitchell dealt still more largely, to wit, to the amount of ______, and again in 1857. Waldo became insolvent, and in April, 1857, assigned, by deed, all his interest in the said mill, and all other partnership property, debts, etc., to the defendant Mitchell, to enable him to pay the debts of the concern. The plaintiff alleges that he has frequently called on the defendant Mitchell to pay to him the said debt due to the firm of Waldo Clements, which he has refused to do. The prayer of the bill is for an account and settlement of the balance between these two firms.

Mitchell, in his answer, says that in January, 1856, he rented his interest in the steam sawmill to one William Parr for one (172) year, with the knowledge and consent of Waldo; that a part of this arrangement was, that the lumber on hand should be sold to pay the former debts of the co-partnership of Waldo Mitchell, and that, therefore, for the year 1856 he was not a partner with Waldo, or any one else, in the said milling business; that this contract was expressed in writing, and deposited with one Daniels, who informed him that it is lost or destroyed.

Waldo, in his answer, says that it is true that Mitchell did agree in writing to let Parr take his place in the business of conducting the mill and lumber business, and whether the legal effect of the instrument was to release Mitchell from liability for the debts of the concern, he is not informed; but he says, "notwithstanding the said agreement, he was of opinion that the partnership of Waldo Mitchell existed during the year 1856; that he therefore continued to sign the name of the firm, and Parr gave orders on the firm of Waldo Clements in the name of Waldo Mitchell; that advances were made by Waldo Clements during that year on such orders and goods sold, which were charged to Waldo Mitchell; and that he, Waldo, as a partner of the firm, signed a stated account admitting a balance due as set forth in the plaintiff's bill.

It appears from the evidence filed that during 1856, Mitchell was aware of the manner in which the entries were made in the books of Waldo Clements, and though he objected to it, yet he afterwards acquiesced in it. It appears also in evidence that Mitchell himself, in 1857, destroyed the deed in question, and that he remarked to Parr when he did so, that it was of no further use and might as well be torn up. Also, that Mitchell was a man of financial means, and that Parr had been acting as engineer in the mill, and was without such means.

Reference was made to the Clerk and Master, who stated the account, charging Mitchell with the debts of the firm for 1856, to which (173) he excepted, and the cause was heard in this Court on that exception.

B. F. Moore and Donnell, for the plaintiff.

Winston, Jr., and Rodman, for the defendants.

The exception of the defendant Mitchell, now heard, is based upon the allegation that he was not a partner of Waldo during the year 1856. This allegation is not proved, and, consequently, the exception must be overruled.

Mitchell admits his co-partnership with Waldo in 1855, and also in 1857, but alleges there was a discontinuance of the co-partnership for the year 1856 by the substitution of Parr in his stead for that year, which he insists resulted by the force and effect of a certain instrument of writing or deed executed by Parr and himself, with the knowledge and concurrence of Waldo.

This deed was destroyed by Mitchell in 1857, and he remarked to Parr at the time "that it was of no further use, and might as well be torn up." No copy of it was preserved, and the testimony in respect to it is so conflicting and of such a character as to render it impossible for the Court to declare what were its contents. We are fully satisfied, however, of this fact, that although the nature of the deed may have been such as to have the legal effect to bring Parr in and make him liable, it did not have the effect to put Mitchell out of the firm, and relieve him from liability — the original purpose of the arrangement being to make Parr more stirring in his superintendence of the mills by having his wages depending, in part, on the profits.

Without entering into a particular examination of the evidence, one or two general remarks will be sufficient to show the correctness of this conclusion:

The want of fairness in the answer of Mitchell, by which he attempts to make the impression that the deed had been "lost or dedestroyed" [destroyed] without any agency on his part, when it is proved that he had, but a few months before, actually destroyed it (174) himself, raises a presumption against him, under which he must be content to labor. Waldo had failed at the time when Mitchell tore up the paper; so he must have been aware that it was very important for him to be able to relieve himself from liability as a member of the firm, and if the deed had been of the character which he now pretends it was, he would most assuredly have preserved it. The fact that he tore up the deed, saying "it was of no further use," is entitled to more weight than the recollection of a half a dozen witnesses as to the contents of a paper in which they had no particular interest, and which it is not alleged contained any direct words releasing Mitchell and substituting Parr as a member of the firm.

Parr was only a workman, and had no means; Mitchell was a man of substance. If the deed was of the character now imputed to it, can it be seriously insisted that Waldo would not have objected to the arrangement by which a solvent partner was to be withdrawn and a man of straw put in his place? Besides, the firm of Waldo Mitchell, in the year 1855, had been doing a very heavy business; would this alleged change have taken place by which the firm of "Waldo Mitchell" was dissolved without a settlement or some more definite provision for paying off the debts and dividing the profits than a mere understanding that the lumber on hand was to be applied to the discharge of debts due for the past year, unaccompanied by any statement of the amount of the debts, or the quantity of lumber?

Waldo, during 1856, made entries on the books of "Waldo Clements," charging large sums to "Waldo Mitchell," according to the course of dealing of 1855. These entries were seen by Mitchell from time to time, and although at first he made some objections, he finally acquiesced, and allowed the dealing and entries in the books of "Waldo Clements" to stand, and be continued to be made against "Waldo Mitchell," without the slightest notice taken of "poor Mr. Parr!" who is now, by dexterous shuffling, to be turned up as the partner of (175) Waldo, and Clements is to lose his money on the suggestion that the charges ought to have been entered against "Waldo Parr"!! a firm which never figured "in book or bill," and of which no man had ever heard until after the failure of Waldo, when Mitchell attempts to trump up Parr as the partner of Waldo, although prior to that event he had himself been content to hold the honor.

PER CURIAM. Exception overruled.

Cited: S. c., 62 N.C. 171-2.