
    Francis R. Pemberton, Respondent, v. William G. McAdoo, Appellant.
    First Department,
    February 2, 1912.
    Practice — separate trial of issues — partnership — action to recover part of mutual debt paid by one party — defense of mutual accounting and settlement.
    It is correct practice in a proper case to order a separate trial of one issue prior to the trial of the other-issues.
    Where a complaint alleges that the parties were formerly partners in business; that upon a certain date they agreed upon a statement of their assets and accounts and agreed that a certain debt should be paid in part by notes; that thereafter the firm assets were divided, but the outstanding notes were overlooked and were subsequently paid by plaintiff, who seeks to recover one-half the amount thereof, and there is no allegation that there was ever any settled account made between the parties, but the complaint proceeds as if none had ever been made, and the answer as a separate defense sets up that after the mutual statement alleged in the complaint the parties continued in business for three years, at which time the assets were divided and the parties “mutually agreed and intended that said division should operate as a dissolution of said firm, and a final settlement of their respective interests in the said firm and its property and assets, and of all claims and other matters ” between the parties, the issue raised by said separate defense should be tried before the other issues.
    It is manifest that, if the decision on this issue should be in defendant’s favor, the litigation would be at an end, for, if the accounts had been finally settled by mutual consent it is too late for plaintiff to assert a claim against defendant arising out of the partnership affairs included in the settlement unless the settlement itself be first attacked and set aside.
    
      Appeal by the defendant, William Gr. McAdoo, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 13th day of November, 1911, denying the defendant’s motion for a separate trial of a single issue in advance of the trial of the other issues.
    
      Thomas D. Thacher, for the appellant.
    
      Louis S. Posner, for the respondent.
   Scott, J. :

This is an appeal from an order denying defendant’s motion for a separate trial of one of the issues prior to the trial of the other issues. Such an order in a proper case is distinctly provided for by section 973 of the Code of Civil Procedure, and the practice has been approved by this court and the Court of Appeals. (Smith v. Western Pacific R. Co., 144 App. Div. 180; affd., 203 N. Y. 499.)

In the present action the complaint alleges that plaintiff and defendant were copartners in business, and that in May, 1899, they agreed upon a statement of their partnership assets and accounts down to that date; that by this statement it was agreed that a certain debt owed by plaintiff to one Harrison should be paid out of the partnership assets as follows: $12,000 in cash and $15,000 in three notes of $5,000 each, payable September 1, 1901, September 1, 1902, and September 1, 1903; that the cash payment and the first note were paid out of the partnership assets; that thereafter the firm assets were divided, but such division was made in oversight by plaintiff that there were outstanding two notes which should have been paid out of the firm assets; that these notes were afterwards paid by plaintiff; that the firm assets so divided much exceeded the sum of $10,000 represented by said two notes. Upon this statement of facts plaintiff’s claim is that he should recover $5,000, with interest, being the amount which,. as it is claimed, defendant was overpaid.

It is to be observed that the complaint does not allege that the accounts between the partners were adjusted and settled when the firm assets were divided. The answer, by way of a separate defense, sets np that after the mutual statement of 1899, the parties continued in business as copartners until May, 1902, when the assets were divided, and that at the time of said division the plaintiff and defendant “mutually agreed and intended that said division should operate as a dissolution of said firm, and a final settlement of their respective interests in the said firm and its property and assets, and of all claims and other matters between the plaintiff and defendant relating to said partnership.”

It is the issue raised by this defense that defendant desires to try separately and before the trial of the other issues.

It is manifest that if such a trial should be had and should result favorably to defendant, this litigation would be at an end and there would be no occasion for going into the probably long and involved trial of the other issues.

If the accounts between the parties were finally settled by mutual consent in May, 1902, it is too late for one party to assert a claim against the other arising out of the partnership affairs included in the settlement, unless the settlement itself be first attacked and set aside. The complaint does not seek to set aside any settled account between the parties, nor does it contain the necessary allegations to avoid such a settlement if one was made. It ignores any such settlement, and proceeds as if none had been made. As the pleadings, now stand, if one was made as defendant avers, the complaint is answered. In support of its plea of a final settlement of the mutual accounts, defendant now exhibits and proposes to prove on the trial the record of a final judgment in an action between these same' parties wherein it was adjudged inter alia that at the time of the division of the firm assets the “ accounts between the plaintiff and defendant relating to the affairs of said firm were finally and completely settled,” and “ that there was no fraud or mistake in the division of said property and assets or the settlement of said accounts.”

This record defendant proposes to introduce as conclusive evidence in support of his plea that the accounts were finally settled and stated. So far as we can now see it would be such evidence, for plaintiff does not disclose, nor is he now called upon to do so, how he expects to meet the separate defense.

As the matter comes before us on this appeal this appears to be a peculiarly appropriate case for the application of section 973 of the Code of Civil Procedure. The order appealed from is, therefore, reversed, with ten dollars costs and disbursements, and the motion granted that the issues raised by the further defense ” contained in the answer, constituting paragraph 5 of said answer, be separately tried prior to any trial of the other issues in the case.

Ingraham, P. J., McLaughlin, Laughlin and Clarke, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted to extent stated in opinion.  