Opinion
December 16, 1921.
Clarence K. McGuire, for the appellant.
Timothy A. McCarthy, for the respondent.
The action is for the dissolution of a copartnership and for an accounting. The plaintiff alleges that the copartnership was originally between the parties hereto and one John L. Snowber who retired from the business on the 1st of July, 1914. The answer denied that the partnership between the three terminated at the time alleged in the complaint and alleges that it continued until February 29, 1920, and was then dissolved by mutual consent, and that the dissolution agreement has been fully performed, and that thereby the defendant succeeded to all the copartnership property. For a counterclaim defendant alleges that prior to the dissolution and while the copartnership was comprised of the members, the plaintiff, without the knowledge or consent of either of his copartners and in violation of the trust and confidence reposed in him by them and in fraud of their rights, acted as agent and broker on a sale of specified real property and received therefor a commission of about $1,200 which he appropriated to his own use; and the defendant demands judgment that the complaint be dismissed and that the plaintiff be required to account for the several sums misappropriated by him, and that his liability therefor to the firm be adjudged and decreed, and that judgment be awarded in favor of the defendant for his proportionate share of all sums misappropriated by plaintiff. The trial was before the justice who subsequently presided at Special Term and denied the motion. At the commencement of the trial the defendant moved for judgment on the counterclaim on the ground that no reply thereto had been interposed. The court thereupon ruled that the counterclaim stood admitted and that any recovery to which the plaintiff might otherwise be entitled would be diminished by the amount of the counterclaim. The trial then proceeded and the plaintiff in the course of his examination, was asked whether he had received a commission as set forth in the counterclaim. The defendant objected on the ground that the facts stood admitted and the court so ruled and excluded the evidence. At the close of the plaintiff's testimony his attorney asked permission to apply to the Special Term for leave to interpose a reply; and leave was granted on the payment of a term fee, and a formal order to that effect was entered by the plaintiff and served on the defendant. The plaintiff, instead of making the motion according to leave thus granted at his own request, moved to vacate the order on the ground that a reply was unnecessary because the counterclaim was improper and not authorized by law inasmuch as on a copartnership accounting all copartners are accountable for their acts as copartners. Undoubtedly the counterclaim was unnecessary and without it the defendant could have required the plaintiff to account for the moneys received by him if for services for which he was accountable to the copartnership. ( Cook v. Jenkins, 79 N.Y. 575; Reeves v. Bushby, 25 Misc. Rep. 226.) It does not follow, however, that the plaintiff who fails to demur or reply to facts pleaded as a counterclaim is at liberty to ignore the counterclaim and to controvert the facts therein alleged. Doubtless if plaintiff had demurred to the counterclaim, the demurrer would have been sustained on the ground that the counterclaim was not authorized in that the facts alleged therein did not constitute new matter (Code Civ. Proc. §§ 500, 501) but were embraced within the issues tendered by the complaint; but, nevertheless, the allegations of fact contained in the counterclaim if not put in issue by a reply stand admitted for the purposes of the trial. (Code Civ. Proc. §§ 495, 514, 522; Hudson River Water Power Co. v. Glens Falls Gas Co., 90 App. Div. 513.)
The theory upon which the plaintiff obtained the order was, therefore, right and after having thus obtained it he was not entitled to have it vacated. It follows that the order should be affirmed, with ten dollars costs and disbursements.
CLARKE, P.J., DOWLING, PAGE and MERRELL, JJ., concur.
Order affirmed, with ten dollars costs and disbursements.