George W. Rogers et al., Administrators, etc., Appellants, v. Norman A. Smith, Respondent

George W. Rogers et al., Administrators, etc., Appellants, v. Norman A. Smith, Respondent. ¡Two cotemporaneous writings between the same parties, upon the same subject-matter, may be read and construed as one paper. If one of the writings is negotiable paper the same rule applies, in an action between the parties to it or their representatives. Defendant gave to R., plaintiffs’ intestate, his promissory note for $1,000, payable six months from date. By an agreement made at the same time, and delivered with the note, it appeared that R. advanced $2,000 to defendant to be invested as his share of the capital, in a firm of which defendant was a partner. R. was to receive and retain defendant’s share of the profits until the $2,000 was paid, and thereafter one-half of all proceeds from the business. The note was stated to have been given to secure R. against one-half the loss that said capital should sustain. Held, that no recovery could be had against defendant upon the note for more than one-half the loss shown to have been sustained in the enterprise. (Argued January 26, 1872; decided January 30, 1872.) Appeal from order of the General Term of the Supreme Court in the first judicial district, setting aside a verdict in favor of plaintiffs and directing a new trial. The action was brought upon a promissory note made by defendant, dated March 10, 1863, for $1,000, payable six months after date, with interest, given to Theodore Rogers, who has since deceased, and of whose estate plaintiffs are administrators. At the same time and in connection with the note defendant executed and delivered the following agreement: “ Whereas, Thomas F. Wells and R. A. Smith, both of the city and State of Rew York, at and before the signing and ensealing of these presents, did enter into a copartnership for the purpose of raising sunken vessels, making submarine explorations, gathering sponges, etc., to which business the said parties did contribute as follows, namely: The said Thomas F. Wells one hundred thousand dollars ($100,000) of the full paid capital stock of the Reptune Submarine Company, submarine armor apparatus, and other effects necessary to carry on said business; and the said R. A. Smith did contribute two thousand dollars ($2,000) to said business, which sum of two thousand dollars ($2,000) was advanced by Theodore Rogers to the said R. A. Smith, for the sole purpose of effecting his copartnership agreement with Thomas F. Wells. Row, therefore, know all men of these presents: That I, the said R. A. Smith, for the purpose of indemnifying said Theodore Rogers and securing to him the said sum of two thousand dollars ($2,000) advanced as aforesaid, do hereby agree at the ensealing and delivery of these presents, to give said Theodore Rogers my promissory note for one thousand dollars ($1,000) to secure said Theodore Rogers against one-half of the loss that the said capital of two thousand dollars ($2,000) put in by me in my said copartnership business with said Thomas F. Wells may sustain by the hazards of said business; and for a further security to said Theodore Rogers for the said sum of two thousand dollars ($2,000), I agree to assign and set over to said Theodore Rogers, for his sole benefit and behoof, at the execution and delivery of these presents, a bill of sale made and executed to me by said Thomas F. Wells, bearing date 11th day of March, 1863; the said Theodore Rogers to have and to hold said bill of sale until the said sum of two thousand dollars ($2,000) is paid to him; and if said sum of two thousand dollars ($2,000) is not paid to him within six months from the date hereof, then said Theodore Rogers shall become the sole and absolute owner of said bill, and the goods and chattels conveyed thereby; and as a further security to said Theodore Rogers for the consideration hereinbefore stated, I do agree that the said Theodore Rogers shall receive, take, and retain my share of any and all profits that may accrue for my benefit and behoof in said copartnership business with said Thomas F. Wells, until the said sum of two thousand dollars ($2,000) is paid to said Theodore Rogers; and that thereafter the said Theodore Rogers shall be entitled to, and shall receive one-half of any and all proceeds to which I may be entitled by reason of my copartnership business with said' Thomas F. Wells, until the expiration thereof; and as a further consideration for said advancement to me of said two thousand dollars ($2,000) by said Theodore Rogers, I hereby give, grant, convey, and set over unto said Theodore Rogers one-half of my interest in a certain • guano island, owned by myself and said Thomas F. Wells, and Captain Jordan, to hold unto the said Theodore Rogers absolutely and in fee-simple ; and I finally further agree for the consideration before mentioned, to give my ability, skill, and time to my copartnership business with said Thomas F. Wells, that the utmost success and profit may accrue therefrom to all concerned. In testimony whereof, I have hereunto set my hand and seal this 11th day of March, 1863. (Signed) y. A. SMITH, [us.]” Plaintiffs had received of the avails of the partnership $1,325. Defendant had sold out his interest, receiving $2,000 in notes, and paying $300 of his individual money. These notes were in litigation, and defendant had paid $100 attorney’s fees. The court directed the jury to find a verdict for plaintiff for $910.90, and ordered exceptions to be heard in the first instance at General Term. D. W. Gillett for appellants. The writing delivered with note did not make a partnership between the parties. (Conklin and, others v. Barton, 43 Barb., 435-438; Burckle v. Eckhart, 1st Den., 337-342; 3 Com., 132-138; Story on Part., 48, § 32 ; Merwin v. Playford, 3 Robertson, 702, and cases cited; Strong v. Place, 4 Robertson, 385 ; Pattison v. Blanchard, 5 N. Y., 187; Bailey v. Clark, 6 Pick., 372; Salter v. Ham, 31 N. Y., 327.) W. W. Niles for respondent. [MAJORITY — Folger, J.] Folger, J. The note sued upon, and the agreement given in evidence by the defendant, are cotemporaneous writings between the same parties upon the same subject-matter, and the action being between the same parties or representatives, they may be read and construed as one paper. (Hunt v. Livermore, 5 Pick., 395; Draper v. Snow, 20 N. Y., 331.) So doing, it appears that the plaintiffs’ intestate advanced to the defendant $2,000. It is to be inferred from the papers, and is fully shown from the testimony, that Wells and the defendant were about to commence, or had then lately commenced an adventure, which though promising to them a profitable result, was contingent and uncertain in that respect. It strikes us on reading the agreement, that it is not expressed in terms that the defendant will repay the advance. He makes no explicit promise thereto. Nor is there any provision that the interest on the whole sum. is to be paid. The plaintiff’s intestate did not look to the legal interest for his recompense for his advance. But on the contrary, it appears, that there was other consideration therefor. One was the transfer by the defendant of his interest in a guano island. Another was that when the $2,000 should have been repaid to the plaintiffs’ intestate, he was still to receive one-half of all proceeds to which the defendant would be entitled by reason of his copartnership with Wells. A transfer is also to be made of the bill of sale from Wells to the defendant, to be held in the first instance as a collateral security; but to become absolute at the end of six months, at which time substantially the note would likewise become due if the $2,000 was not by that time repaid. The plaintiffs’ intestate is also empowered to receive all the defendant’s share of the profits, which might accrue from his business with Wells, until payment of the $2,000. Rroin all of these provisions it is evident that the advance. of money to the defendant was not, nor was any part of it, an ordinary loan to him in the usual course of business to be repaid at a fixed time with interest. The plaintiffs’ intestate stipulated for an advantage which might be greater than the repayment of the money advanced with interest at the rate allowed by law. He also took the risk that he might fail in this his expectation. He might receive again the whole money advanced and a remunerative profit upon its use, but he might not. It was dependent upon the success of the adventure. If it was successful he would be repaid the whole amount and a profit greater than the interest. If it was unsuccessful and the property put in his hands as collateral security did not avail enough, he must sustain the loss save so far as this note would protect him therefrom. It seems then, that the plaintiffs’ intestate took some stake in the hazard of the enterprise; and we are prepared apart from any language to that effect in the agreement, for the claim of the defendant that the intestate was to incur the risk of the loss of one-half of the advance, and that the note though absolute in form, was really given to secure against the loss of the other half and the interest thereon, and for this only. Such indeed seems the plain language of the agreement: <£ To give said Theodore Rogers my promissory note, for one thousand dollars, to secure said Theodore Rogers against one-half of the loss that the said capital of two thousand dollars * * * may sustain by the hazards of said business.” As the whole loss which Rogers could sustain would be in legal contemplation, but the amount advanced and the legal interest thereon, the half of such loss could be but $1,000 and the legal interest thereon. For the contingency of the loss of this, the note was to provide, and did provide, and for naught else. But before an action can be maintained against the defendant upon the contract shown by these two writings, there must be a loss sustained by Rogers or his representatives, and such loss must be shown. Ho recovery can be had against the defendant to an amount greater than one-half of that loss, and, be the loss what it may, greater than $1,000 and interest. When we turn to the testimony in the case, it appears that Rogers received at least $1,325 from the avails of the property sold by the defendant. Without making an exact calculation of interest, for which the data are not given in the case, it would seem that after applying this, Rogers could not lose more than $700. And this would be the result, without considering whether he or his representatives were not first bound to convert, or to seek to convert into money, the other pro perty received by the defendant from the effects of the enter prise. Leaving this question aside, the loss would not exceed the amount named. One-half of this and no more, could be recovered of the defendant. But the court directed a verdict for a sum of $675 and the interest thereon. Manifestly this was an erroneous disposition of the case, and the General Term was correct in setting aside the verdict and ordering a new trial. The proper and discreet course for the plaintiffs would have been to have gone down to the circuit again, and have secured a verdict for as much as they could have proven their loss to have been. But they have preferred the hazardous course of an appeal to this court, with a stipulation for a judgment absolute against them if the appeal is not successful; and such must be the result. The judgment of the General Term must be affirmed, and judgment absolute ordered for the defendant against the plaintiffs, with costs. All concur. Judgment accordingly.