STREAT v. ROTHSCHILD

STREAT v. ROTHSCHILD. N. Y. Common Pleas; General Term, 1883. Action sob Partnership Accounting.—Reference. Where the plaintiff’s right to a copartnership account is in dispute by reason of the defendant’s pleading an account stated and settled, and also a release, the trial of the action can not be referred. It is not enough that the action is brought to obtain an accounting. The real issue in such an action is upon the efficacy of the release, and that is raised by the plaintiff, not by virtue of the complaint, but in rebuttal. While it may be necessary on the trial to give in evidence entries in the books of account, this is not the examination- of an account made requisite by the statute authorizing compulsory references. The case of Welsh v. Darragh, 52 N. 7. 590, distinguished. Appeal by defendant from an order of reference made at special term, on notice. George S treat sued his former partners Rothschild and one Dreyfus, for an accounting of the partnership affairs. The complaint alleged that there had been no final adjustment or settlement of the accounts. The defendant, Rothschild, pleaded an account stated and settled, and likewise a sealed release' executed and delivered to defendant bjr plaintiff. The defendant Dreyfus pleaded an account stated and settled. There was no reply required of plaintiff. After issue raised by the answers, the plaintiff moved for a reference- of the whole issue to a referee. The motion was heard on the pleadings, and on an affidavit of the plaintiff’s attorney, stating that it was the intention of plaintiff to show that the release set up by defendant Rothschild, had been obtained by fraud; and false representations as to the amount of profits. This affidavit, likewise, contained the statement, “ that; to prove these facts, it would be necessary to make the same examination of a long account,” as from such examination it is intended to establish the falsity of the representations above referred to. The defendants’ affidavits denied the fraud and falsity of the representations charged, and denied that it would be necessary to examine the accounts, in order to establish what representations were made. The court at special term granted the plaintiff’s motion for a reference, and the defendants appealed from the order of reference to the general term of the com-pleas. S. P. Nash (Moses B. Maclay, attorney), for defendants’ appellants. I. It is only where “ the trial of the issue of fact” requires the examination of a long account, that the issues can be referred without consent of the parties {(Jode Civ. ,Pro. % 1013). The issue here is not in respect to the account, but in respect to the right to an account. Where a partnership has existed and been terminated, an accounting follows of course, if the accounts are disputed ; but the action is an equitable action, and if an account stated, a settlement or a release is set up, such settlement or release must be first set aside, before the accounts can properly be taken. It would be an intolerable practice to take the account in the first instance, before a right to an account is established. II. The affidavit on plaintiff’s part is insufficient to take the case out of this well settled rule by stating that he intends to attack the settlement and make his proofs by the examination of the accounts. 1. The attorney could not know what took place on the settlement. 2. But, if true, this shows only an incidental and collateral need for looking into the accounts, which is not sufficient to justify a compulsory reference .(Kain v. Delano, 11 Abb. Pr. N. S. 29 ; Camp v. Ingersoll, 86 N. Y. 433). III. The motion appears to have been gran ted on the authority of Welsh v. Darragh, 52 N. Y. 590. This was a legal action, and plaintiff, to prove Ms case, had to prove an account. Here plaintiff has simply to prove the partnership agreement. Then the defendant takes up Ms defense. The evidence in reply is an attack on the release. Wm. King Hall, for the plaintiff, respondent. I. The action being referable the order of reference is not appealable (Gray n. Fox, 1 Code R. N. S. 334 ; Tallman v. Hinman, 10 How. Pr. 89 ; Ubsdell v. Root, 1 Hilt. 173 ; Hatch v. Wolf, 30 How. Pr. 65; Welsh v. Darragh, 52 N. Y. 590). II. Although the question as to the validity of a release should be first disposed of, yet where, as in this case, it is so connected with the accounts as to require the accounts to be fully examined on the trial, the case should be referred (Mills v. Thursby, 11 How. Pr. 113 ; Kennedy v. Shilton, 9 Abb. Pr. 157, note ; S. G., 1 Hilt. 546 ; Bachelor v. Albany City Ins. Co., 6 Abb. Pr. N. S. 240; Whitaker v. Des Fosse, 7 Bosw. 678). III. The action is for an accounting and is therefore referable. The defendants cannot make it non-referable by their answer (Welsh v. Darragh, 52 N. Y. 590; Williams v. Allen, 48 How. Pr. 357; Patterson v. Stettauer, 39 Super. Ct. [J. & S.] 413 ; Maryott v. Thayer, Id. 417; McKay v. Jarvis, 8 Weekly Dig. 155). See in this connection, Harrington v. Bruce, 84 N. Y. 103. And see note at the end of the case in our text. * The rule here laid down seems to mark a step in the assimilation of the former common law and equity practice, beyond what many of the profession have heretofore understood to be settled. The right of a party to resist the reference of the issues in a cause, frequently rests upon the constitutional provision securing the right of trial by jury. Article 1, § 2 (1 S. S. 7 ed. 82). But it does not follow that a party cannot object to reference and insist on trial by the court in some cases in which trial by jury is not secured by the constitution, for the statutes secure this mode of trial in some cases in which this provision of the constitution does not, and secure trial by the court in some cases in which trial by jury is not a matter of right. I. Actions friable by jury as matter of right.]—The cases in which trial by jury is made a matter of right by the present statutes are as follows: “ The trial by jury in all cases in which it has been heretofore used, shall remain inviolate forever; but a jury trial may be waived by the parties in all civil cases in the manner to be prescribed by law. ” Const. 1 B. 8. 7th ed. 83. The following provisions defining the actions triable by jury as a matter of right include, perhaps, some not included by the constitutional provision. Oode Gin. Pro. “ § 968. 1. An action in which the complaint demands judgment for a sum of money only. 3. An action of ejectment; for dower; for waste; for a nuisance; or to recover a chattel." “§ 969. An issue of law, in any action, and an issue of fact, in an action not specified in the last section, or wherein provision for a trial by a jury is not expressly made by law, must be tried by the court, unless a reference or a jury trial is directed.” “ § 970. Where a party is entitled, by the constitution, or by express provision of law, to a trial, by a jury, of one or more issues of fact, in an action not specified in section 968 of this act, he may apply, upon notice, to the court for an order, directing all the questions, arising upon those issues, to be distinctly and plainly stated for trial accordingly. Upon the hearing of the application, the court must cause the issues, to the trial of which, by a jury, the party is entitled, to be distinctly and plainly stated. The subsequent proceedings are the same, as where questions, arising upon the issues, are stated for trial by a jury, in a case where neither party can, as of-right, require such a trial; except that the finding of the jury, upon each question so stated, is conclusive in the action, unless the verdict is set aside or a new trial is granted.” “ § 971. In an action where a party is not entitled, as of right, to a trial by a jury, the court may in its discretion, upon the application of either party, or without application, direct that one or more questions of fact, arising upon the issues, be tried by a jury, and may cause those questions to be distinctly and plainly stated for trial accordingly.” (As to the trial of such issues, see p. 360 of this vol.) “ § 1544. An issue of fact joined in the action [of partition] is triable by a jury. Unless the court directs the issues to be stated, as prescribed in section 970 of this act, the issues may be tried upon the pleadings." “ § 1758. In an action brought as prescribed in this article, [Art. I. of c. XV. 1 Action to annul a void or voidable marriage ’] a final judgment, annulling the marriage, shall not be rendered by default, for want of an appearance or pleading, or upon the trial of an issue, without proof of the facts, upon which the allegation of nullity is founded. And the declaration or confession of either party to the marriage is not alone sufficient as proof; but other satisfactory evidence of the facts must be produced. In such an action, except where it is founded upon an allegation of the physical incapacity of one of the parties thereto, the court must, upon the application of either of the parties, make an order directing the trial, by a jury, of all the issues of fact; or it may, of its own motion, make an order directing the trial, by a jury, of one or more issues of fact; for which purpose, the questions to be tried, must be prepared and settled, as prescribed in section 970 of this act.” “ § 1757. .... If the answer [in an action for divorce for adultery] puts in issue the allegation of adultery, the court must, upon the application of either party, or it may, of its own motion, make an order directing the trial, by a jury, of that issue; for which purpose, the questions to be tried must ■ be .prepared and settled, as prescribed in section 970 of this act.”. . . . “ § 1800. An action brought as prescribed in this article, [Art. IV. of c. XV. ‘ Action by the p>eople to annul a corporation ’] is triable, of course and of right, by a jury, as if it was an action specified in section 968 of this act, and without procuring an order, as prescribed in section 970 of this act. ” “ § 1950. An action brought as prescribed in this article, [Art. I. of c. XVI. 1 Action against the usurper of an office or franchise ’] is triable, of course and of right, by a jury, in like manner as if it was an action specified in section 968 of this act, and without procuring an order, as prescribed in section 970 of this act.” “ §1958. An action, brought as prescribed in this article, [Art. II. of c. XVI. 1 Action to vacate letters patent ’] is triable, of course and of right, by a jury, as if it was an action specified in section 968 of this act, and without procuring an order, as prescribed in section 970 of this act.” It is the better opinion that a trial by a jury of feigned or special issues formed under Code Civ. Pro. § 970, satisfies the constitutional right. Ward v. Ward, 23 Bun., 431. Actions not triable by jury as matter of right; but not referable except by consent.]—There are many cases in which a party has no right to trial by jury; but yet has a right to object to a reference, and insist on trial by the court. The power to refer the issues in an action compulsorily, is defined as follows by the Code of Civil Procedure: § 1013. The court may, of its own motion, or upon the application of either party, without the consent of the other, direct a trial of the issues of fact, by a referee, where the trial will require the examination of a long account, on either side, and will not require the decision of difficult questions of law. In an action, triable by the court, without a jury, a reference may be made, as prescribed in this section, to decide the whole issue, or any of the issues; or to report the referee’s finding, upon one 'or more specific questions of fact, involved in the issue.” It is farther provided by section 1015 as follows: “ The court may likewise, of its own motion, or upon- the application of either party, without the consent of the other, direct a reference to take an account, and report to the court thereon, either with or without the testimony, after interlocutory or final judgment, or where it is necessary to do so for the information of the court; and also to determine and report upon a question of fact, arising in any stage of the action, upon a motion, or otherwise,, except upon the pleadings.” The provision contained in section 827 should not be overlooked in-this connection, which is as follows: “ Where, according to the practice of the court of chancery, on the 31st day of December, 1846, a matter was referable to the clerk, or to a master in chancery, a court having authority to act thereupon, may direct a reference to one or more persons, designated in the order, with the powers which were possessed by the clerk, or the master in chancery, except where it is otherwise specially prescribed by law.” But it is to be observed that this last provision is contained in Chap. VIII. which relates to “ miscellaneous interlocutory proceedings, and regulations of practice,” and therefore, is not understood to apply to the trial of the issues in the action. [MAJORITY — Beach, J.] Beach, J. This is an action in equity for trial by the court without a jury. A compulsory reference, however, cannot be ordered, unless the examination of a long account on either side will be required, and the decision of difficult questions of law will not be called for (Code Civ. Pro. § 1013; Camp v. Ingersoll, 86 N. Y. 433). Although there may be some uncertainty in applying the numerous adjudications on this subject, I think a proper construction is adverse to the power of the court to direct a compulsory reference unless the trial of the issue will necessitate the examination of a long, account, (Kain v. Delano, 11 Abb. Pr. N. S. 29 ; Townsend v. Hendricks, 40 How. Pr. 143). It was held by this court, in Turner v. Taylor, 2 Daly, 278; that the account must be directly in issue, and not the subject of examination collaterally to establish some one of the issues in the action. The pleadings admit the partnership, and all required of the plaintiff is to give in evidence the agreement. The practice of the court in this class of actions, is to send the partnership accounts, to be stated by a referee, but this has been done by the court for economy of time, and not because either suitor had the legal right to require it. The issue here is upon the efficacy of the release, and that is raised by the plaintiff, not by virtue of his complaint, but in rebuttal. To prove this conten tion, entries in books of account may be given in evidence, but this is not the examination made requisite by the statute. The reference there is to an examination of items in issue between the parties, and affecting the judgment ei ther by their allowance or disallowance in whole or in part. In Welsh v. Darragh, 52 N. Y. 590, the action was at law for the price of goods sold and delivered, and it was held its character could not be changed by an answer alleging fraud in the transaction, with claim of damage by way of recoupment. Proof of plaintiff’s account was necessary, and the defense under less liberal rules of practice must have been the subject of an independent action. No such question is presented by this appeal, because the character of the action is in nowise affected by the answer, but it remains true, where an accounting may not be had, until the plaintiff succeeds upon an issue, the disposition whereof the defendant has the right to demand should be made by the court rather than by a referee (Wheeler v. Falconer, 7 Robt. 45). The order should be reversed, with $10 costs and disbursements. Daly, F. J., and Van Brunt, J., concurred.