U.S. Supreme Court
Kelsey v. Hobby, 41 U.S. 16 Pet. 269 269 (1842)
Kelsey v. Hobby
41 U.S. (16 Pet.) 269
On the dissolution of a partnership in 1822, it was agreed with the out-going partners, H. and B., that the debts due to the partnership should be collected by the remaining partners, K. and McL., and the debts due by the partnership should be paid by them, and a fixed sum should be paid to H. and B., when a sufficient sum was collected for that purpose, beyond the amount of the debts due by the firm. In 1829, K. and McL. having gone on under this agreement to collect the debts due to, and pay the debts due by the partnership, H. and B. filed a bill in the Circuit Court of the South Carolina District against K. and McL., charging that there was a surplus of the partnership effects, after paying all the debts, sufficient to pay them the sum which, by the agreement made on the dissolution of the partnership was to be paid to them, and claiming certain bridge bills, which were to be delivered to them; and praying for an account. The circuit court, after proceeding in the case, the accounts having been frequently before a master, and after evidence had been taken, made a decree in favor of H. and B. for a certain sum of money &c., and the defendants appealed to the Supreme Court. It was contended by the appellants, that the circuit court, sitting in chancery had no jurisdiction beyond that of compelling a discovery of the amount which K. and McL. had received under the agreement; and that if anything was found due to H. and B., they were bound to resort to their action at law on the covenant entered into at the dissolution of the partnership, to recover it. By the court, this is a clear case for relief as well as for discovery in chancery. H. and B. were entitled to an account; and if, upon that account, anything was found to be due to them, they were, upon well settled chancery principles, entitled to relief also.
According to the ordinary proceedings of a court of chancery, the court should pass upon each item of an account reported by a master, when the amount actually received by a party is in controversy. This is necessary to enable the appellate court to pass its judgment on the items allowed or disallowed in the inferior court. But in a case where the remaining partners had received the sum claimed from them, beyond the debts they had agreed to pay, it mattered not how much more they had received, and such a case does not require a statement of the exact amount. The evidence and accounts and exceptions being all in the record brought into the appellate court, the court can determine whether the sum mentioned is proved to have been collected or not.
During the pendency of the suit in the chancery in the Circuit Court of South Carolina, one of the complainants, H., being in New York where he had gone on other matters than those connected with the suit, was arrested by the defendant, in a suit at common law, for a claim which was in controversy in the suit in chancery; and which could have been adjusted in the chancery suit, and was required to give special bail for his appearance to the suit before a court in New York. Much difficulty arose in procuring special bail, and having called at the counting house of K., one of the chanroblesvirtualawlibrary
plaintiffs in the suit, on the subject of the suit, he there executed a release of all claims in the chancery suit, and acknowledged accounts presented to him to be correct by which the claims in the chancery suit in South Carolina were admitted to be adjusted. The suit at common law was then discontinued. The defendants in the Circuit Court of South Carolina afterwards filed the release, and moved to dismiss the bill, which motion was opposed on the ground that the release was obtained by duress. The parties went on to take testimony as to the circumstances under which the release was given. Held that there could be no objection taken to the introduction of the release in this form, under the circumstances of the case. The release having been admitted without exception, no objection could afterwards be made to the manner in which it was introduced. It had the same effect that it would have had upon a cross-bill, or supplemental answer, and the complainant had the same opportunity of impeaching it.
There is no propriety in requiring technical and formal proceedings when they tend to embarrass and delay the administration of justice, unless they are required by some fixed principles of equity law or practice, which the court would not be at liberty to disregard.
If the accounts between the parties are impeached, and a release has been obtained, executed by one of the parties in a case depending before a court of chancery the release will not prevent the court from looking into the settlements, and the release in such a case is entitled to no greater force in a court of equity than the settlement of the account on which it was given.
If a release is executed, and a settlement is made of a particular item in an account for which suit has been brought, and in which the party has been arrested, the settlement having been confined to the claim for the damages for which the suit was brought, the mere circumstances of the defendant being detained by the process issued to recover the amount claimed would be no objection to the validity of the agreement and release. But if, while under detention for want of special bail, a release was obtained of other matters than those embraced in the suit, and much more important in amount, and which had been insisted on for years in the suit previously instituted, then in the course of proceeding; neither the circumstances under which the release was taken, and the account connected with it settled, nor the contents of the papers, entitle them to any consideration in a court of equity.