Riley v. Larocque

163 Misc. 423, 297 N.Y.S. 756, 1937 N.Y. Misc. LEXIS 1415
CourtNew York Supreme Court
DecidedApril 21, 1937
StatusPublished
Cited by16 cases

This text of 163 Misc. 423 (Riley v. Larocque) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Riley v. Larocque, 163 Misc. 423, 297 N.Y.S. 756, 1937 N.Y. Misc. LEXIS 1415 (N.Y. Super. Ct. 1937).

Opinion

Shientag, J.

A general partner in a firm of lawyers betrayed his trust. He purported to bind his firm in a series of transactions not within the scope of an ordinary law partnership. These transactions, involving substantial sums of money, were numerous and varied and extended over a period of several years. They were had with different individuals at different times and under different circumstances. Several suits have already resulted. Liability may well vary according to the facts involved in each particular transaction. It is essential, therefore, that the facts in the instant case be considered in detail.

A jury was waived before the conclusion of the trial and the customary stipulation made for the direction of a verdict.

The plaintiff, John C. Riley, seeks to recover the sum of $6,000 from Choate, Larocque & Mitchell, the defendant partnership, on two causes of action, the first on a demand note executed in the name of the partnership by one John W. Austin as a member of the firm, and the second for money due and owing in connection with the same transactions as are evidenced by the note.

Austin became associated with the defendant law firm in 1928. Up to February 1, 1932, he was employed on a salary basis, but after that date was admitted as a partner with a drawing account of $4,500 a year and a one-half interest in all fees he brought into the partnership. This arrangement continued until June 1, 1935, when he became entitled to a one-fourteenth interest in all fees earned by the firm after the deduction of expenses. As a general partner, Austin had his signature card on file with the Bank of Manhattan Company, where the general firm account was maintained, and with the New York Trust Company, which held the firm’s trust account, and he was authorized to draw and sign checks upon these accounts.

Riley, for about ten years before the first transaction involved in this litigation, had been friendly with Austin, but prior to November, 1933, had no contact with the defendant firm. At that time the plaintiff’s father died. Having known Austin, plaintiff went to see him in connection with his father’s estate and retained the defendant firm as attorneys. The legal work connected with the administration of the estate was handled first by Austin and then by a Mr. Crawford, an attorney in the employ of the firm. [427]*427In due time the affairs of the estate were wound up. Plaintiff went to the office of the defendant on August 21, 1934, and there saw Mr. Crawford. He received a bill in the sum of $323.95, representing the charges of the defendant firm for its services. This was paid by the plaintiff, and at the same time, as administrator, he drew a check to his own order in the sum of $1,972.45, representing his share of the estate. While these matters were being attended to, Austin came into Crawford’s room, invited the plaintiff into his own office, and then said, in substance: You're coming into this money from your father’s estate; and why don’t you leave it here in the firm? We have many ways of investing money and you will share in the profits on a percentage proportionate to your investment.” In response to this suggestion, plaintiff said he would give Austin a check in a few days. Nothing was said then, or subsequently, to indicate in any way the nature of the alleged investment or what the plaintiff’s proportionate share would be, nor did the plaintiff ever make any inquiry concerning this.

On August 30, 1934, there took place the first of the transactions which are the basis of this litigation. On that day plaintiff went to the Union Dime Savings Bank and withdrew the sum of $3,000, for which he received a check of the savings bank drawn on the Chase National Bank and payable to the order of John W. Austin. This check was delivered to Austin, who in turn gave plaintiff a non-interest-bearing note for $3,000, payable on demand, dated August 30, 1934, and signed “ Choate, Larocque & Mitchell, per John W. Austin, partner.”

Thereafter, not in the presence of plaintiff, Austin indorsed this check to the firm’s order and handed it to one Fitzpatrick, the firm’s cashier and bookkeeper, with instructions that it be deposited in the firm account to his, Austin’s, credit, and that a firm check to Austin’s order be drawn against it. Ihis was done and Austin then and there received and signed the firm check given in exchange, deposited it in his own personal bank account, and appropriated the proceeds to his own use. The following entry was made on the deposit side of defendants’ check book: “ August 30, J. W. Austin, Chase Bank — Ch. $3,000.” The amount is shown in the column entitled Clients ” as distinguished from the column entitled “ General.” The entries in the clients’ column covered payments made by clients pursuant to bills rendered, checks credited to particular clients’ accounts, and checks credited to the account of individual partners. The entries in the general column were items of income of a general firm nature. The check book also shows that $3,000 was withdrawn by check [428]*428to the order of John W. Austin on August 30, 1934, in exchange for the savings bank check for the same amount. From these original entries in the check book there were posted in the firm ledger in an account headed John W. Austin ” (1) a credit August 30, 1934, Chase Bank check, $3,000; (2) a debit August 30, 1934, check No. 18263, $3,000.

Thereafter and on or about November 14, 1934, plaintiff saw Austin again and the latter said to him that “ they ” (meaning the defendant firm) were going into another deal and if he had any extra money plaintiff should bring it in and let the firm invest it. On November 16, 1934, plaintiff gave Austin in cash an additional $2,000. This sum was never received by the firm, never was deposited in the firm account, and no entries thereof were made in the firm’s books. To make up this $2,000, plaintiff had procured a check from Hornblower & Weeks in the sum of $1,815.37, and on the same day withdrew from the Seamen’s Bank for Savings $184.63. The Hornblower & Weeks check was not indorsed to Austin or to the defendant firm, but was cashed by the plaintiff and the proceeds given to Austin. Plaintiff returned to Austin the $3,000 firm note, which was destroyed, and Austin wrote out and gave to plaintiff a new note for $5,000 in the same form and signed in the same manner as the first.

Subsequently, on September 3, 1935, plaintiff delivered another $1,000 to Austin — $148.65 in cash and the balance of $851.35 by check of Hornblower & Weeks to the order of the plaintiff, indorsed by him in blank and then indorsed by Austin and deposited in his own personal bank account. No entry was made of this $1,000 in the firm books, nor was it received by the firm. On this occasion the $5,000 note was surrendered and destroyed and Austin prepared and delivered to the plaintiff a new note for $6,000, payable on demand, signed by Choate, Larocque & Mitchell, per John W. Austin, partner. This note is the subject of the first cause of action.

During the period covered by the three transactions had by plaintiff with Austin, namely, between August, 1934, and September 3, 1935, and up to May 6, 1936, when his fraudulent conduct was discovered, Austin paid to Riley as alleged profits a total sum of approximately $1,700.

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Cite This Page — Counsel Stack

Bluebook (online)
163 Misc. 423, 297 N.Y.S. 756, 1937 N.Y. Misc. LEXIS 1415, Counsel Stack Legal Research, https://law.counselstack.com/opinion/riley-v-larocque-nysupct-1937.