Legal Opinion

Russell v. Herrick

Appellate Division of the Supreme Court of the State of New York

Decided July 8, 1908No. The sole, question presented by the appeal is whether Horton wa,s, in fact* a member of the partnership at; the time the notes were given, and its solution depends upon the construction of a written agreement which was entered into on the 31st of January, 1898, between Edmund R. Herrick and E. R. Herrick & Co., parties of the first part, and the appellant Horton, party of the second part. The agreement recites that the firm of E. R. Herrick & Co. had become indebted for loans and advances to various individuals in the aggregate sum of $19,986.82, which indebtedness had been acquired by the party of the second part, who, in consideration of provisions of the agreement for the payment of said sum, promised to loan the firm a further sum of $24,000, such loan, as well as the original indebtedness, to be evidenced by notes made by the firm, payable to him on demand, bearing interest at the rate of six per cent per annum, payable semi-annually on the thirty-first day of December and the thirtieth day of June in each and every year, and which notes were to be indorsed by Edmund R. Herrick; that Herrick should take charge of the business of the firm, devoting his entire time thereto; keep true books of account; promptly deposit all moneys received in- a bank named to the credit of the firm, and pay all its debts by checks drawn to the order of the creditors; not contract any obligations exceeding $500 without obtaining Horton’s consent; would not indorse any paper either in his name or in the name of the firm, or engage in any business similar to that conducted by the firm during the life of the agreement; that the books and records of the firm were at all times to be open for the inspection of Horton, who was to have a trial balance once every month, and .that the books were to be balanced and an account struck at least twice each year for the purpose of- ascertaining the profits or losses of the business during the preceding six months; that Herrick was to have a salary of $1,800 per year, and in addition thereto the right to draw a sum not exceeding $50 per month as against his share of the future profits of the firm, provided that the parties to the agreement agreed that the business warranted it; that at the end of each year an annual account should be taken of the receipts and disbursements of the firm for the preceding year, and if there were any surplus of receipts over- expenses, after paying the interest upon the notes held by Horton, then he was to receive a sum equal to one-half of such surplus, and after his notes had been paid, together with the interest thereon, he was to be paid only ten per cent of such surplus for a period of ten years, if he lived so long, and if not, until his death. The agreement further provided that Horton was not a partner, and that no representation should be made to that effect, and that his relation to the firm was solely that of a lender for use in its business; and that the profits which he was to receive were only for the purpose of compensating him, not by way of interest, but for his risk of lossPublished

Appeal by the defendant, Eliot Horton, from so much of a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Hew York on the 11th day of January, 1908, upon the verdict of a jury, as. amended by an order entered on the 15th day of January, 1908, as awards any recovery against him, and also from an order entered in said cleik’s office on the 8th day of January, 1908, denying the said defendant’s motion for a new trial…

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1Opinion of the Court

McLaughlin, J.:

This action was brought to recover upon five promissory notes made and delivered to the plaintiffs’ testator in the year 1899 by the firm of E. It. Herrick & Co. The complaint charged that at the time the notes were made the firm of E. R. Herrick & Co. was composed of the defendants Edmund R. Herrick, T. Edwin Ward and Eliot. Horton. Horton* in a separate answer, denied that he was a member of said firm, or that any copartnership relations existed between him and the other defendants at the time the notes in question were givén, and he also pleaded as an affirmative defense the…

2Cases cited6 opinions

Meehan v. ValentineSupreme Court of the United States · 1892
Beecher v. BushMichigan Supreme Court · 1881
Cassidy v. . HallNew York Court of Appeals · 1884
Smith v. KnightIllinois Supreme Court · 1873
Williams v. SoutterSupreme Court of Iowa · 1858

1 more not listed; retrieve them via the Exa API.

Court: Appellate Division of the Supreme Court of the State of New York
Decided: July 8, 1908
Docket: No. The sole, question presented by the appeal is whether Horton wa,s, in fact* a member of the partnership at; the time the notes were given, and its solution depends upon the construction of a written agreement which was entered into on the 31st of January, 1898, between Edmund R. Herrick and E. R. Herrick & Co., parties of the first part, and the appellant Horton, party of the second part. The agreement recites that the firm of E. R. Herrick & Co. had become indebted for loans and advances to various individuals in the aggregate sum of $19,986.82, which indebtedness had been acquired by the party of the second part, who, in consideration of provisions of the agreement for the payment of said sum, promised to loan the firm a further sum of $24,000, such loan, as well as the original indebtedness, to be evidenced by notes made by the firm, payable to him on demand, bearing interest at the rate of six per cent per annum, payable semi-annually on the thirty-first day of December and the thirtieth day of June in each and every year, and which notes were to be indorsed by Edmund R. Herrick; that Herrick should take charge of the business of the firm, devoting his entire time thereto; keep true books of account; promptly deposit all moneys received in- a bank named to the credit of the firm, and pay all its debts by checks drawn to the order of the creditors; not contract any obligations exceeding $500 without obtaining Horton’s consent; would not indorse any paper either in his name or in the name of the firm, or engage in any business similar to that conducted by the firm during the life of the agreement; that the books and records of the firm were at all times to be open for the inspection of Horton, who was to have a trial balance once every month, and .that the books were to be balanced and an account struck at least twice each year for the purpose of- ascertaining the profits or losses of the business during the preceding six months; that Herrick was to have a salary of $1,800 per year, and in addition thereto the right to draw a sum not exceeding $50 per month as against his share of the future profits of the firm, provided that the parties to the agreement agreed that the business warranted it; that at the end of each year an annual account should be taken of the receipts and disbursements of the firm for the preceding year, and if there were any surplus of receipts over- expenses, after paying the interest upon the notes held by Horton, then he was to receive a sum equal to one-half of such surplus, and after his notes had been paid, together with the interest thereon, he was to be paid only ten per cent of such surplus for a period of ten years, if he lived so long, and if not, until his death. The agreement further provided that Horton was not a partner, and that no representation should be made to that effect, and that his relation to the firm was solely that of a lender for use in its business; and that the profits which he was to receive were only for the purpose of compensating him, not by way of interest, but for his risk of loss
Parties: Russellv.Herrick
Author: McLaughlin
Panel: Houghton, McLaughlin
Status: Published
Cites: 6 opinions