Auld v. Butcher

2 Kan. 135

Opinion

By the Court,

Cobb, C. J.

The plaintiffs commenced their action in the late Territorial Court of the first Judicial District, against the defendants on the 14th day of November, 1860, alleging in their petition that the plaintiffs and defendants in the month of March 1853, entered into partnership in the business of contractors and railroad builders in the State of Ohio, dh the terms that the plaintiffs should be jointly entitled to half the profits and bear half the losses of the business; and the defendants have the like interest therein. That the business of the firm continued until March 1856, when the firm was dissolved and “ the business thereof wound up and settled,” and an account stated between the parties.

That upon closing the business no assets of the firm remained. That plaintiffs had drawn from the firm $2,-378.69, and the defendants $7,244.90 and prayed judgment for $2,433.10. The defendants answered, first that the cause of action arose beyond the limits of the State of Kansas and in the State of Ohio, and did not accnie within two years before tbe commencement of the action. And as a sécond defence, they expressly admit the formation of the partnership and set out its terms and the proceedings of the parties under it, more fully than they áre stated in the petition ; allege that the partnership books .were kept by one of the plaintiffs, and state many important errors in them adverse to the defendants; and'that the plaintiffs had made úse of a large amount of property of the firm which they had never accounted for, and allege that on a fair adjustment of the partnership accounts there will be found due to the defendants the sum of $569.44, with interest at six per cent, since April 1st, 1856, and pray the taking of an account between the parties and for judgment against the plaintiffs for such sum as may be found due the defendants. The plaintiff demurred to the first cause of defence on the ground that it does not state facts sufficient to constitute a defence, and replied to the second by a general denial.

Upon these pleadings the Court with the consent of parties, made an order referring the cause to John M. Price, “ appointed a special master to take a mutual account of all dealings and transactions between plaintiffs and defendants referred to by the pleadings, and to report to the Court, &c.”

Said special master took such account, and at a subsequent term duly reported the same to the Court, showing a balance in favor of the plaintiffs.

Upon this report .the plaintiffs movéd for judgment in their favor, and the defendants moved the Court to arrest the judgment on the ground that the plaintiffs petition does not state facts sufficient to constitute a cause of action, for the reasons,

1st. That it appears from the petition that the action was not commenced within three years after the right óf action accrued, and

2d. That it appears that the cause of action accrued in Ohio, and the action was not commenced within two years after the canse of action accrued, and no reason for the delay is stated in the pleadings.

The Court arrested the judgment and gave judgment against the plaintiff for costs.

The plaintiff alléges as error,

1st. That the Court erred in sustaining .the motion in arrest of judgment, and granting an order therefor.

2d. That the said Court erred in not granting the motion for confirmation of said commissioner’s report, and in refusing to enter judgment thereon.

3d. The Court erred in refusing to consider the evidence returned and forming a part of report.

The counsel for defendants claim that the plaintiff’s action was barred by the statute approyed Eeb. 10,1859, and which by its terms went into effect on the same day, requiring actions upon contracts made beyond the limits of the Territory to be brought within two years after the cause of action accrued, and also by the limitation law included in the code requiring such action to be commenced within three years after such cause of action shall have accrued.

It appears by the petition that the right of action in this cause had accrued more than two years before the first mentioned law was passed, and if the defendant’s doctrine is correct, the time for commencing the action was not limited, but the cause of action instantly barred by that statute.

There is no language in that law indicating an intention to apply it to such cases, and it would he disrespectful to the Legislature who passed it-to presume that they intended so gross and manifest injustice to creditors.

But had such intention been expressed the statute as to such cases would be void. Section 10 of Article 1 of the Constitution of the United States, provides that no State shall pass any “ law impairing the obligation of contracts,” and it destroying all legal remedy upon a contract does not impair its obligation, it is difficult to conceive how it could be impaired. The legal obligation of a contract consists in the right of either party to have it enforced aga'mst the other or to Recover compensation for its breach by due process of law, and any argreement not carrying with it such right, is, in law, a perfect nullity. It is true that although the legal remedy upon a contract be destroyed the moral obligation will remain, and with or without constitutional restrictions, no human power could impair it. But the provision of the constitution referred to, was not intended by its framers to prohibit legislatures from impairing moral obligations, (a thing in its nature impossible,) but to prevent them from impairing legal rights vested under contracts, by impairing or destroying the legal power to enforce them. "We are not aware of any reported case upon this exact point, but respectable text writers and dicta of several eminent judges sustain the view here expressed. In Society &c. v. Wheeler, 2 Gall., 194, Justice Story, says: “ If the Legislature were to pass an act of limitation by which all actions upon past disseixens were to be barred without any allowance of time for the commencement thereof in future, it would be difficult to support its constitutionality, for it would be completely retrospective in its operation on vested rights,” and in Sturges v. Chowninsheild, 4 Wheat. R., 122, Chief Justice Marshall said: “ If in a State where six years may be pleaded in bar to an action of assumpsit, a law should be passed declaring that contracts already in existence not barred by the statute, should be construed to be within it, there could be little doubt of its unconstitutionality. See also Smith’s Commentaries on Constitutional and Statutory Law, page 401, and the following case's there cited.. Call v. Hagger, 8 Mass. R., 430; Proprietors of Kennebeck Purchase v. Laboul Greenleaf, 294, 3 Peters, 290 ; Blackfoot v. Pettier, 1 Blade, 36 ; Sedgioiclc on Btatutaryand Constitutional La/w, cmd oases there cited. There are numerous cases in which it has been held that the remedies of a party to enforce his judgment by execution against the person or property of the debtor, where there is no mortgage or other lien upon the debtors property, may be modified by a statute passed after the making of the contract upon which the judgmenf was recovered, but none we believe that all remedy upon such judgment may be swept away. That class of cases, however far they may go in allowing such modification, are not analagous to this, and we, know of no case or dictum sustaining the doctrine that a right of action already vested under a contract, may be divested by an act of the Legislature.

All the authorities cited by the defendant as sustaining this doctrine to which we have access, are quite foreign to the point in controversy, and if any decisions of courts of sister States exist sustaining the defendant’s doctrine, they are too manifestly repugnant to the constitutional provision above cited, to be followed as precedents here. The cause of action stated in the petition was therefore not barred by the Limitation Law passed on the 10th of February 1859.

But it is claimed that the petition shows that the plaintiff ’s cause of action was barred by the limitation of three years provided for in the Code, and that judgment was properly arrested on that ground.

We will first enquire whether, assuming that the plaintiff’s action was so barred, the defendant was in condition to avail himself of that defence after the report of the referee ? The plaintiff’s petition was for a balance stated in his favor upon an account between the parties as partners. The answer admitted the partnership and its dissolution and a large partnership account between the parties, but denied the striking of any balance, claimed that on a fair accounting there would be found a balance in his favor, and pray, ed that a3 account be taken and judgment rendered for such balance, and the parties both assented in open court to the order which was made for the taking of the account before a referee.

By assenting to the taking of the account the plaintiff abandoned his claim to recover as upon an account stated, and by the assent of both parties appearing of record the action became in substance .an equitable action for a final accounting between former partners. If the accounts thus sought to be settled were barred by the statute of limtiation, the action for stating the account was barred as to both parties, and no accounting could ¡properly be had till that question was determined.

In chancery, the practice in such suits was, when the defendant set up by-plea, answer , or demurrer, any bar to the account to try the issue of law or fact -raised, and if .the account was found to be barred, dismiss -the.bill, but if the issues were-found for.the complainant, an interlocutory decree was made that an account should be taken,¡and a reference was then made to a master to take and -state the account, and upon the coming in and confirmation of his report, a final decree was made for the balance found due to either party.

If the defendant, as in this, case, requested or assented to the taking .of the account, the accounting was ordered of. course, and reference made accordingly. There is nothing in the Code changing substantially this remedy, and it is believed to be still the correct practice to dispose of all matters in bar of an accounting before the.account is stated, and that if a defendant chooses not to set up. such bar, but . to take his chances of getting a report in his favor, and prays that the account be taken, he ..waives the bar and should not be allowed to raise it afterwards.

It is argued by the defendant that by the provisions of Section 98 of the Code, he has not .waived the defence, because it appears upon the face of the petition, and the petition therefore does not state facts sufficient to constitute a cause of action.

.That section provides that “if no objection.be taken either by demurrer or answer, the defendant shall be deem ed to have waived the same, except only the objection to the jurisdiction of the Court, and that the petition does not state facts sufficient to constitute a cause of action.

That the lack of material facts in the petition to constitute a cause of action is not waived by failing to demur, for that cause or answer is fairly inferrible from the language of that section, but it furnishes no authority for holding that a defence appearing by the petition will not be waived by answer, and other proceedings of the defendant placed upon the record wholly inconsistent with such defence.

Suppose the defendant together with the answer filed by him had filed an additional answer setting up the three years’ limitation as a bar to the partnership account % The one would have been in irreconcilable antagonism with the other. By one answer he sets up a partnership account upon which he alleges there is a large balance due to him} and prays the Court to take an account of the partnership business and give him a judgment for the balance in his favor. By the other he declares in the same breath, that the whole partnership account is barred by the Statute of limitations, and no judgment can be rendered on it. In such case the Court, on motion, would compel the defendant to elect which answer he would stand upon, and strike the other from the record. Van Stantford' Ple., 2nd ed., 518-19, and cases there cited.

But surely the defence attempted in this case is not less inconsistent with the defendants answer than if it had been placed upon the record with it.

The judgment was arrested on the ground that the petition showed a defence to the action, but other portions of the record show that defence to be waived by the defendant, and what is tantamount to an agreement of record by both parties, to waive any such defence. On motion in arrest of judgment the whole record is before the Court, and if a defect of the petition is waived of record by the defendant, the judgment should not be arrested for such defect.

It is needless therefore, for us to discuss the grave question whether by the petition alone, the cause would appear to be barred by the statute.

The order arresting judgment and the judgment for costs in the District Court must be reversed and judgment for costs in this Court rendered against the defendants, and the cause be remitted with instructions to the Court below to render judgment upon the report of the referee' or special master, as upon a special verdict.

All the justices concurring.