fore, were, at the time of ratification, subject to alienation and disposition by these two beneficiaries. We are, therefore, led to the conclusion that the adult beneficiaries, Hermann and Frank C. Pommer, have bargained away their right to now insist on a reinstatement of the lien of the mortgage so far as their interests are concerned, and that the plaintiffs, who represent their interests, can have no greater rights than they have. The judgment of the Appellate Division should be reversed, and the judgment of the trial court modified by directing that the $6,500 mortgage be re-established as a lien and foreclosed for only one-half of that amount, with interest, in favor of the two infant beneficiaries. As so modified, the judgment of the trial court is affirmed, and the record is remitted to the Special Term, with directions to render judgment in accordance with the views herein expressed, without costs of this appeal to either party as against the other.

ACCOUNTING

· DEBTS

ΤΟ

(Court of Appeals of New York. June 12, 1906.) 1. PARTNERSHIP FIRM-EVIDENCE. Testator and defendant, who was testator's brother, formed a stock brokerage partnership, testator furnishing all the capital. A stock exchange seat was purchased in defendant's name at a time when the rules of the stock exchange required that if a candidate for membership had borrowed money with which to purchase his seat he must, before being elected, file with the exchange a release of his claim for the benefit of other members of the exchange. Such a release was filed, signed by testator individually. Thereafter, however, defendant was debited in his own handwriting on the books of the firm with the price of the seat, and this item was carried on the firm books for many years, during which defendant was debited with interest on the same and credited with various payments on the account. At one time defendant wrote deceased acknowledging the existence of the debt. Held, that these facts sufficiently showed that the indebtedness of defendant was to the partnership, and not to his brother individually, so that on a settlement of the partnership affairs defendant was chargeable with the amount paid for the seat. 2. SAME-EFFECT OF RELEASE.

The evidence was also sufficient to show that the release was intended merely to satisfy the rule of the stock exchange, and did not extinguish the indebtedness of defendant to the firm for the money advanced to purchase the seat.

Cullen, C. J., and Haight and Gray, JJ., dissenting.

Appeal from Supreme Court, Appellate Division, First Department.

Action by John W. Sterling, as executor of Edwin S. Chapin, deceased, against Albert K. Chapin, individually, and as executor of

Edwin S. Chapin, deceased. From a judgment of the Appellate Division, 96 N. Y. Supp. 1147, affirming a judgment for defendant, plaintiff appeals. Reversed and remanded.

John A. Graver, for appellant. L. Laflin Kellogg, for respondent.

HISCOCK, J. This action was brought for a partnership accounting of the affairs of the stock brokerage firm of E. S. Chapin & Co., composed of Edwin S. Chapin, the plaintiff's testator, and his brother, the defendant. The Appellate Division by a divided vote has affirmed the action of the trial court in refusing to charge defendant with a balance of $37,078.80, shown by the partnership books to be due from him for the purchase price of a stock exchange seat, and the only questions involved upon this appeal arise with reference to such refusal to charge said defendant with this item. After entry of the interlocutory judgment finding the copartnership between the parties and directing an accounting, such accounting was first had with the result of charging defendant with the item in question, and the final judgment was entered in favor of the plaintiff for an amount including the same. The Appellate Division (92 N. Y. Supp. 904), however, reversed such judgment by a divided vote, and upon the second and present accounting the referee, and upon the entry of final judgment the trial court, were necessarily controlled by such decision of the Appellate Division and compelled to exclude said item.

It may be observed at the outset, as bearing upon the equities of this litigation, that the copartnership or the testator concededly advanced about $30,000, exclusive of interest, with which to purchase a seat upon the Stock Exchange for the defendant; that said defendant received and became the owner of said seat, and that there is not the slightest evidence or claim that he has ever actually repaid said advance. If the judgment appealed from is to be affirmed, it must be on account of a technical release for an expressed nominal consideration, and without any evidence of a meritorious consideration or discharge of the indebtedness. It does not seem to me that it should be so affirmed, and, of course, I do not lose sight of the rule that its reversal involves the demonstration that there are no findings of fact to sustain it, or else if there are such findings, that there is no evidence to sustain them. The following material facts appear without any dispute whatever: The partnership between testator and defendant was formed in 1886 and continued until May 1, 1896, when it was dissolved by mutual consent. The testator furnished the entire capital. January 20, 1887, the defendant, upon the books of the copartnership was charged with $30,110 cash for a stock exchange seat in an account which was headed "A. K. Chapin, New York Stock Exchange Seat." This account was entered up

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on the copartnership books by the defendant himself and there is no dispute that the charge in terms relates to the Stock Exchange seat in question. At this time it was a rule or custom of the Stock Exchange that before a person could be elected to membership he must show that there were no outstanding claims against him, and if he had borrowed the money with which to purchase his seat it was necessary to file with the exchange a release of this claim for the benefit of the other members of the exchange. It was the intention that a person should enter upon business as a member of the exchange without having any claim against him and that the person who had supplied money for the purchase of his seat could not make a claim against him to the exclusion of other creditors. January 6, 1887, the testator executed in form a general release whereby "for and in consideration of the sum of one dollar paid by Albert K. Chapin," he released said Chapin generally from all claims and demands which he had or might have for any cause, "and more particularly by reason of an advance of the sum of $29,000 made to the said Albert K. Chapin to enable him to purchase a membership in the New York Stock Exchange." This release appears to have been delivered to and filed with the Stock Exchange which produced it upon the trial of this action. There is not the slightest evidence that it was ever delivered to or ever seen or heard of by the defendant. The above-mentioned account, opened against defendant several days after the execution of the above purported release, as above stated, was carried upon the books of the copartnership to the time of its dissolution, and in that account the defendant each year, exclusive of the one ending when the copartnership was dissolved, was charged with interest upon the balance shown to be due from him, and was credited with various payments, the balance at the date of the dissolution due from him being $37,078.80. In addition to this, upon August 5, 1889, more than two years and a half after the execution of the purported release, the defendant wrote to his brother a letter, which reads as follows: "Dear Brother Ed: Understanding that you are thinking of appointing me one of the executors or trustees under your will upon your decease, and being now indebted to you on account of the purchase money of my seat in the New York Stock Exchange, I do most cheerfully hereby agree to act as such executor or trustee, or both, under your will, if so appointed thereby, without any commission or compensation other than a release by your will or otherwise from so much of my said indebtedness as would equal the commission or compensation to which I should otherwise be entitled. Yours affectionately, A. K. Chapin."

It is urged that the testator at some time made statements which indicated that he had forgiven or intended to forgive this indebted

ness, and that the defendant should not be held thereupon. The record, however, absolutely fails to disclose any such testimony outside of a certain letter or statement which was excluded from the evidence and is not before us for consideration. It seems to me that this evidence presents no question of fact, but fairly and reasonably leads to the conclusion as matter of law that the defendant became indebted to the copartnership composed of his brother and himself for moneys advanced for the purchase of this Stock Exchange seat, and that this indebtedness has never been discharged. Perhaps I can best state the reasons which lead me to this opinion by discussing the propositions upon which the respondent bases his claim to a contrary judgment.

In the first place it is contended that the advance or loan was a transaction between defendant and the testator as individuals, and that it was not a copartnership transaction, and this contention is supported by. a finding of the learned referee to the effect "that the sum of $30,078.80 appearing on the books as 'A. K. Chapin Stock Exchange seat' represented moneys advanced by the plaintiff's testator." This contention is based solely upon the form of the release above quoted, which is executed by the testator individually, and refers to an advance of money for the purchase of the seat. In view of the fact that the testator supplied the entire copartnership capital, out of which must have been advanced the money for this purchase if a copartnership transaction, it would not have been strange or conclusive against plaintiff's claim if in a release not having that point in mind he had definitely recited that the advance was made by himself. But this he did not do. The release was by him of any claims which he might have "by reason of an advance of the sum of $29,000 made to the said Albert K. Chapin to enable him to purchase a membership in the New York Stock Exchange." While it is very likely that a release by a copartnership would have been strictly more appropriate to cover a copartnership transaction, still there cannot be the slightest doubt that this instrument in the form adopted answered the requirements of The Stock Exchange and would have estopped and prevented the testator from ever urging against its members his rights either as an individual or as a partner on account of the advance. The recital is "of an advance" with no particulars added whether made by the individual or by the copartnership. It seems to me, therefore, that this piece of evidence standing by itself and without any other testimony explaining or elucidating it would be quite colorless and indecisive upon the question of the authorship of the loan. But when we consider the fact that subsequently to the execution of this instrument the parties, by an account with items extending over seven or eight

It is suggested that these entries might relate to and evidence an individual transaction between the brothers, an individual loan by one to the other, but of course this is at variance with the fundamental principles of bookkeeping. The books of a copartnership represent the copartnership and every transaction properly entered thereon must be one to which the copartnership is a party. When the defendant was charged upon the books of this copartnership with the cash advanced for his seat, it necessarily meant that the copartnership was the other party to the transaction and was entitled to credit for the advance thus made. It is also urged that the release in question discharged any indebtedness and

that the account referred to evidenced a merely moral and not a legal obligation. The latter suggestion is so utterly untenable as to require little discussion. Merely moral obligations have no place upon the business books of a copartnership. Such books contain a statement of the legal assets and liabilities of the firm, and when men enter upon their books a debit or a credit balance of many thousands of dollars they are presumed to be dealing with claims which are legally enforceable and which do not rest upon mere option or morality. I, therefore, pass to the claim that the indebtedness was discharged.

At the outset I am at much loss to find any evidence that the release can, if it was so intended, properly affect or discharge the copartnership claim against defendant. It did not purport to discharge any claims which might accrue in the future to the testator, much less to the firm. Many days after it was executed the defendant charged himself upon the copartnership books with cash advanced for his seat. Those entries mean that on that day the firm advanced the money and first became his creditor upon the transaction in question. Presumptively, and in the absence of evidence showing the contrary, the money was advanced upon the date when it was charged upon the books, and this claim now before us did not exist when the release was executed and could not have been dis

able in this view, for the copartnership might very well at this later date come into the transaction and advance the money and take up an indebtedness which had theretofore been carried elsewhere. What I emphasize is, that we have here the uncontradicted and unexplained admission of the defendant by entries which are binding upon him that at a certain date the copartnership advanced money to or for him, and that this copartnership indebtedness was not affected by a prior individual release of one copartner. However, passing by this and assuming upon some vague and undefined theory, rather than in accordance with any proof that the release might relate to the same transaction evidenced by the entries, and might possibly, therefore, affect the indebtedness proved thereby, I still do not think such result was, in fact, either intended or accomplished. I have already referred to the rule of the Stock Exchange, which required an assurance that a proposed member was free from indebtedness as a protection to the members against any claim which any person might have for moneys advanced for the purchase of his seat. The defendant was about to become such member. The testator, whether he did it as an individual or by means of his copartnership capital which he had solely furnished, advanced the money for the purchase of the seat. He executed the instrument in question which, as between him and the Stock Exchange, would have operated to prevent any claim for this advance in whichever form made. It was delivered to, retained by, and upon the hearing produced by, the Stock Exchange. So far as appears, the defendant never saw or heard of it, and it seems to me that upon this evidence alone the fair presumption would be that the testator executed the instrument simply for the limited purpose of complying with the rules of the Stock Exchange, and that otherwise said release was not intended to cancel any indebtedness. And upon this point the finding of the learned referee seems not only not to oppose, but expressly to sustain the theory which I am urging. He finds "that thereafter and on the 6th day of January, 1887, said release was delivered to the New York Stock Exchange for the purpose of enabling the defendant to obtain membership in said exchange and so to be in a position to make use of his seat therein."

But again we are not left to evidence which standing by itself might be indecisive. the natural order of things the release to the Stock Exchange would first be executed to enable a person to become a member, and then some time thereafter the seat and membership would be granted, and so not unnaturally we find a few days after the date of the release these entries made upon the copartnership books which were binding upon the defendant not only because he was a member of the partnership, but because they