Case against Cushman, 3 Watts & Serg. 544

The opinion of the Court was delivered by Gibson, C. J. The circumstances connected with the turning point of the cause, are simple and few. When the defendant became the assignee of the liquidating partner, Yolz, he received from him the books and papers of the concern, which had previously been in the hands of counsel for collection. It was distinctly proved that the bill of goods which gives rise to the present contest, though furnished by the Messieurs Gascoigne to U.

Cushman & Co., in May 1830, had not been entered on the books of the latter when they dissolved their partnership in the October following; nor has it been entered since. It appears, too, that it was the business of the plaintiff to have entered it, and that the omission to do so, was his personal default.

The Judge charged with entire accuracy, so far as the direction went, that if the defendant was deceived by any false exhibit, or by the suppression of any fact which the plaintiff might have communicated, and which it was material for the defendant to know, there could be no recourse to him; and he was right, too, in supposing, that as the plaintiff’s omission to enter the bill was long before the terms of the agreement were negotiated, there was no room for a presumption that it was a preconceived measure to defraud.

But he inferred from this that there was nothing in the circumstance to restrain the generality of the covenant “ to indemnify, save, and keep harmless, the said Ugenior Cushman, from all claims and demands due or owing by the said U. Cushman & Co.” because the defendant had not taken the precaution to restrict his liability to debts per schedule, or to such as appeared on the face of the books. If, however, he was left in ignorance of any fact material to be known by him, which it was in the plaintiff’s power to communicate, the terms of the agreement must not be taken to extend to it.

It is one of Pothier’s rules of

interpretation, which have been deemed consonant to the rules of the common law, that “ however general the terms may be in which an agreement is conceived, it only comprehends those things in respect to which it appears that the contracting parties proposed to contract; and not others they never thought of.” Such are the words <?f Mr Evans, his translator, (Vol. I. p. 53), and their relevancy to the case in hand is perceivable at a glance.

The plaintiff knew that this bill had not been entered in the partnership books; and he ought to have known that, in ascertaining the partnership debts, the defendant would be guided by them. The books of a firm are the register of its transactions; and they are supposed to exhibit a complete statement of its business and liabilities, insomuch that a person who had resorted to them to discover the amount of its debts, would seek no further. In settling the terms of the agreement, then, what was the course of the plaintiff’s duty? Doubtless, to inform the defendant of this debt, as one he was expected to pay.

Omitting this, he took on himself the risk of being able to prove that the defendant was already apprised of its existence, in order to show that the disclosure was unnecessary. Sometimes ignorance or error has been a ground even to rescind an agreement entirely, by invalidating the assent of one of the parties to it, especially where there was a legal fraud in the suppression of a material circumstance. How was it here?

The books and papers, having successively passed through the hands of the liquidating partner and two gentlemen of the bar, may have all come safe to the hands of the defendant; but the only witness who testified in regard to the fact, did not undertake to say that this particular bill was among them. The probability is, that .in passing through so many hands, it was mislaid; at least it may have been so, which is enough for the argument.

Having failed to apprise the defendant of the very material fact that there was an unbooked debt outstanding, the plaintiff on whom the burthen of proof rests, was bound to show that the failure was not material, in the only way it could be shown, by specific proof that the existence of the debt had at that time come to the defendant’s knowledge. The omission, though not used in forming the subsequent arrangement with a design to deceive or mislead, would not be the less material; and in the misapprehension on that head, consists the error of the court below.

The plaintiff’s silence had an obvious tendency to produce misconception; and he whose act caused the. loss which was consequent on it, must bear it, though both parties were free from intentional-error. The other exception is not sustained. The construction put on the Statute of New York by the court below, seems to be the same that has been put on it by the courts of that State; by which it appears that it could furnish no defence to the action brought against the plaintiff, and that the defendant lost no advantage by not being warned to come in and defend against it.

It is true, that, for want of it, the defendant may insist in this court on any ground of defence that would have availed the plaintiff in the Supreme Court of New York, in which .the action was determined ; but as the

interpretation put by that court on the statutes of its own State, must be followed elsewhere, this ground of defence cannot serve here. Judgment reversed, and venire de novo awarded.