Case ID: ohio-st_25/html/0402-01.html
Source: Caselaw Access Project
Author: {"author": "McIlvaine, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William J. Bell v. George Crawford.
    The act of April 13, 1867 (S. &. S. 579), section 611 of the code as amended March 30, 1868, and title IX of the code, being in pari materia, must be construed together. As to their force and effect, • where the issues in an action, in which neither party is entitled to demand a trial by jury, have been referred to a master commissioner for trial, with instructions to reduce the testimony to writing and report it to the court, and the master reported his findings of the law and facts involved in the issues, together with the testimony, to which report exceptions being filed, the same were overruled by the court and judgments rendered — Held:
    1. On appeal to the District Court, the case stands upon the issues joined in the court below, and for the purpose of trying such issues, the parties are entitled to introduce any competent testimony without regard to the fact whether such testimony was or might have been offered on the hearing before the master.
    2. But where an order of reference in such action is made to the master for the purpose of stating an account, or ascertaining some other matter, ancillary to the determination of the cause by the court, the report is not vacated by an appeal, but is carried to the appellate court for confirmation, modification, or vacation, as the appellate court may determine from the testimony so reported, unless,, upon some equitable showing, the court permits additional testimony to be offered.
    Motion for leave to file a petition in error to the District -.Court of Scioto county.
    The original action in the Court of Common Pleas of ■Scioto county was brought by Crawford against Bell, to .foreclose a mortgage given to secure the payment of four promissory notes for the sum of $5,000 each. At the time suit was commenced, two of the notes had been paid. One was due and unpaid, and the fourth had not matured.
    The defendant in his answer admitted the cause of action as stated in the petition, and set up, by way of cross-petition, that for about three years before the mortgage was given, he and the plaintiff had been operating as partners the Clinton Eurnace, each owning one-half; that he was a nonresident of the state ; that plaintiff resided at the furnace, was the manager thereof, and knew all about its business ; that in April, 1869, the plaintiff had furnished him a statement showing a clear profit in the business, during the preceding year, of $12,000, and another statement in April of 1870, showing a clear profit, in the preceding year, of $11,000; that before the close of the third year he purchased the interest of the plaintiff in the real and personal property of the firm, and agreed to pay therefor as follows, to wit: Eor one-half the real estate, $15,000, and for the personal property one-half the amount, to be ascertained by an appraisement to be made at the close of the third year’s business; and knowing that the plaintiff’s interest in the personal property on hand at the close of the year would be at least $5,000, he executed to plaintiff his said four notes for $5,000 each, and the said mortgage to secure them. The cross-petition further alleges that at the time the defendant purchased Crawford’s interest, he believed and relied upon said statements, and had reason to believe that when the business and accounts of the partnership would be settled up, he would realize out of the profit enough to pay said indebtedness of $20,000.
    The defendant, in. his cross-petition, further states that the books of the firm, as kept by the plaintiff, show the total profits of the partnership to be $8,700.52, and no more, and avers that the books were improperly and incorrectly kept; that the plaintiff had credited himself with $5,425 for his personal services, whereas, by the terms of the partnership agreement, he was to receive no compensation for his services ; that he had also improperly credited himself by $1,410.29, for interest on advances, and that divers other sums have been improperly credited to the plaintiff on the books of the company; that $5,014.94 of the parthership funds are on deposit in bank, in the name of the firm, and that other sums are due the firm which have not been collected. It is further alleged, that when the partnership accounts are settled up, the balance due the defendant will be found ample to pay the balance due of said mortgage; and that it was understood that the said notes would be paid out of the money going to the defendant upon the settlement and adjustment of the partnership accounts.
    The prayer of the cross-petition was for a settlement of the partnership accounts, etc., and that the amount found due from the plaintiff to the defendant, might be applied in payment of the mortgage debt, etc.
    The plaintiff below, by reply to the answer and cross-petition of the defendant, claimed that by the terms of the partnership agreement, he was to receive $1,500 per annum for his services as manager, and also that each partner was to be credited with ten per cent, on all advances made on account of the capital to carry on said business, by way of distribution of profits.
    The reply also alleges that the interest account in the books objected to by the.defendant in his answer, was properly made under said agreement, not as interest, but as profits on capital advanced.
    All the allegations in the answer as to improper and incorrect entries in the books are also denied by the reply; and it is further denied that there was any agreement or understanding that the mortgage should be paid out of the money due the defendant on settlement of the partnership accounts.
    To the reply was attached a statement of the account of the partnership business, as the same purports and is alleged to be.
    Before the filing of the answer and cross-petition of the defendant, the following entry was made upon the record • p the Court of Common Pleas: “By consent of the ,'iannlift and defendant, leave is given to the defendant to ule his answer to the petition in this case in thirty days from the rising of this court, and by like consent it is ordered that this cause and the matters in dispute therein,’ to be set up in the answer of defendant, be referred to Henry E. Jones, as special master commissioner, to take and reduce to writing testimony upon the matters to be put in issue by the said answer and pleadings, and to report the same, together with his findings thereon, to this court at the next term thereof; and it is further ordered that said plaintiff and defendant deliver to the said master all books and papers pertaining to the business of the late firm of Crawford & Bell necessary to a full and complete investigation of the matters in controversy, and developed in the respective pleadings of plaintiff and defendant ; and this cause is continued,” etc.
    After the pleadings above named were filed, the special master, having taken and reduced to writing the testimony offered by the parties, reported the same to the court, together with his findings thereon. This report does not contain a statement of the partnership accounts, but purports to approve substantially the statement made by the plaintiff in his reply, with a finding that there is due from the plaintiff to defendant, upon settlement of said accounts, the sum of four hundred dollars.
    The master also specially finds that by agreement of the partners, the plaintiff was to receive as compensation for his services as manager of the firm business $1,500 per year, and he also specially finds, that by like agreement of the partners, “ either partner was to be allowed interest at the rate of ten per centum per annum upon any excess had by him in the business, in money or its equivalent.”
    To the report of the master, exceptions were filed by the defendant, and upon hearing thereof, the exceptions were overruled by the court, and the report approved and confirmed, and decree rendered in favor of the plaintiff for the amount claimed in the petition, less the amount found duo by the master, from the plaintiff to defendant.
    From this decree the defendant appealed to the District Court.
    On the trial in the District Court, the plaintiff below was permitted to read in evidence the testimony taken before the special master, although the witnesses whose testimony was thus read resided within the county, and whose personal attendance in court could have been procured. To which the defendant excepted.
    And thereupon the defendant, in order to maintain the issue on his part, offered to introduce himself and John Noble as witnesses, and to prove by them the facts stated in his crossrpetition and all the other facts put in issue between the parties by the pleadings, which testimony the court refused to hear, unless upon a proper showing that such testimony could not have been produced before said master, or by some accident or mistake, such testimony had been omitted on the hearing before the master. And it being made to appear that said witnesses offered had been examined by the master, the introduction of their oral testimony was not permitted. To which the defendant excepted.
    Thereupon the case was heard in the District Court, upon the exceptions to the master’s report taken in the Court of Common Pleas and upon the testimony reported by the master; the exceptions to the report were overruled, and a decree entered as in the Court of Common Pleas.
    This proceeding is prosecuted to obtain a reversal of the District Court on account of the matters excepted to as above stated.
    
      Moore § Newman, for the motion:
    I. The code is silent on the question as to what is the effect of an appeal upon the report of a master commissioner, his findings, and the testimony taken before him. Sections 648 and 650 of the code relate to appeal. See also 10 Ohio St. 618. An appeal from a final decree opens up the whole merits of the case. Teaff v. Hewitt, 1 Ohio St, 511. The ease stands for hearing in the appellate court precisely as it did in the court below, and upon such testimony as might be introduced in that court, and entirely without reference to the evidence offered in the court below. Lawson v. Bissell, 7 Ohio St. 132.
    In such a case as the one at bar, even under the chancery practice, the case would not come into the appellate court for hearing merely upon the exceptions to the report of the master. "Where such would be the practice in chancery is only where the court has already determined the main issues, from which no appeal has been taken, and subsequently the case has been referred to a master to report as to some matters of account, and exceptions are filed to his report, judgment had upon the exceptions, and an appeal is taken from the judgment in respect to the exceptions. Broadwell v. Dudry & English, Western Law Monthly for 1860, p. 581. But whatever the practice in chancery was, the entire proceedings are now regulated by the code. S. & S. 573.
    II. The evidence taken before the master in the court below, can not be used in the appellate court if objection is made. Code, sec. 626.
    III. If we ■ are right in either or both of the preceding propositions, it was not only competent, but almost essential that oral testimony should be introduced on the trial in the appellate court. The very object of the appeal may have been to procure additional testimony.
    
      W. A. Hutchins, contra:
    The appeal was from the confirmation of the master’s report, and the ease stood for hearing as it did in the court below, simply on the exceptions to the report. All not excepted to stood admitted. Broadwell v. Dudry & English, 2 Western Law Monthly, 581; Williams v. Stevens, 1 Cin. Sup. Ct. Rep. 176; 1 Ohio, 270; Adams Eq. 744; 3 Johns. 537.
    The power of the court to refer a ■ cause to a master, is given in section 611 of the code (S. & C. 1186), as amended March 30, 1868 (S. & S. 573). But independent of this act of 1868, the courts in equity cases, as a part of administrative law, had this power.
    All that was in issue in the court below was referred to the master. The equity of Crawford stood admitted. The matter simply asked to be done, and that was done, was to have the partnership account stated.
   McIlvaine, C. J.

In disposing of the questions before us, Crawford’s case, as made in his petition to foreclose the mortgage, may be dropped out of view, and the cross-petition of Bell, the mortgagor, regarded as an original petition to adjust and settle a partnership. Thus considered, we have a case where, after dissolution, one partner brought his action against his copartner to compel a settlement of the partnership accounts under the direction of a court of equity. A case in which it was admitted by the pleadings that an equal partnership had existed; that it was dissolved ; that all the partnership effects had been converted, and that no final settlement had been made of the partnership accounts; but in which issues of fact were joined between the parties as to the terms of the partnership agreement: 1. Whether the managing partner was or was not to be compensated for his services as manager. 2. Whether or not either partner was to be compensated for any excess of capital by him furnished at the rate of ten per centum per annum. The détermination of these two questions was necessary in order to fix the basis upon which the account between the parties should be stated; and, although many items in the partnership accounts as they appeared upon the books of the company were in dispute, as the pleadings show, there was no other issue made in the case, as we understand it, which involved a construction of the partnership articles, or was necessary to be raised by pleading.

The order of reference to the special master is somewhat vague, by reason, no doubt, that it was made before the issues were made up, but we have no doubt that the whole case was referred, as well the issues properly joined by the pleadings and fundamental to the statement of an account, as the statement of an account itself. It was upon this understanding of the order that the special master (as well as the parties before him) acted, and that he reported all the testimony and his findings upon the issues in relation to the terms of the partnership, and also the state of the account between the partners. To each of these findings the defendant below excepted, which exceptions the court overruled, and decreed against him. From that decree he appealed to the District Court.

Two important questions are thus brought before us. Upon what issues and upon what testimony should the cause have been heard and determined in the appellate court? These questions involve the construction of several provisions of our statutes in relation to practice in civil cases.

Under the code, the only triers of issues arising upon the pleadings in civil actions are designated in title IX. Issues of fact may, under certain conditions, be tried either by a court (judge), by a jury, or by referees. No provision was made in the code, at the time it was adopted, for the trial of issues of fact in any case by a master commissioner. If, under this title of the code, such issue were referred for trial to a person, although designated as a master commissioner, he must be regarded as a referee, whose report as to the law and the facts would stand as the decision of the court, and whose report of the facts alone would stand as a special verdict. Such report, if not set aside and a new trial granted, must be followed by the judgment of the court, in accordance with the findings of the referee; and in case of appeal from such judgment, not only the judgment, but the report also is vacated and entirely superseded, and the case stands in the appellate court as though no reference had been made. 7 Ohio St. 129. It will be observed, that there was no authority under this title to require the referee to reduce to writing and report the testimony to the court.

But, while an issue arising upon the pleadings could not, under this title, be referred to a master commissioner for trial, it was nevertheless true, that tbe code, section 611, as originally passed, provided for the appointment of such officers; and, although their powers and duties were not prescribed, there can be no doubt that the several courts of the state, in eases in which neither party was entitled to demand a trial by jury, might, in accordance with the usages of courts of equity, havp referred the case to a master for the purpose of stating an account, or ascertaining some other matter, ancillary to the determination of the cause by the court, with instructions to report the testimony, with his findings, to the court; and in such case an appeal from the judgment rendered on such report would not vacate the report, but would bring it up to the appellate court for confirmation, modification, or vacation, as it stood in the court below. 1 Ohio, 270. Such were the rules of practice under the code previous to the passage of the supplemental act of April 13, 1867. S. & S. 579.

By this act it was provided, “ That in all cases where a cause pending in any of the courts of this state shall have been, or may hereafter be, referred by the court in which said cause may be pending, to a referee, master commissioner, or special master commissioner for trial, with instructions to take testimony and report the same, together with his findings, to the court making the reference, the testimony so taken and reduced to writing by the referee, master commissioner, or special master commissioner, signed by the witnesses giving the same, and reported to the court, shall have all the force and effect of depositions regularly taken in the cause, and may be used as such at any subsequent stage of the cause, either upon a new trial, second trial, or appeal, subject to the restrictions of section 838 of an act entitled an act to establish a code of civil procedure; ’ but nothing in this act shall be so construed as to prohibit any party from recalling any witness who may have testified, or from taking additional testimony.”

This act, by necessary implication, confers upon courts the power to refer issues arising upon the pleadings to a master commissioner or special master commissioner for trial, such as before could be referred only to referees; and also the power to require, in all such cases of reference, that the testimony be reduced to writing and reported to the court; and by its plain terms, the testimony so reported, when signed by the witnesses giving it, has the force and effect of depositions, to be used on any subsequent trial of the case as other depositions. But this statute in nowise affects the practice in other cases, or in the same cases, where orders of reference are made to masters under the usage of equity courts, for mere ancillary or auxiliary reports.

On the 80th of March, 1868, section 611 of the code was amended so as to read as follows: “ The Court of Common Pleas may appoint, in each county, such number of persons as shall be necessary, to be master commissioners, who shall hold their office for the term of three years, unless removed by the court for good cause. The master commissioners so appointed shall have power to administer all oaths required in the discharge of their official duties, or authorized to be administered by the laws of this state. The court may, upon motion of either of .the parties, refer any action in which the parties are not entitled to demand a trial by jury, to a regular or special master commissioner to take the testimony in writing and report the same to the court, with his conclusions, on the law and facts involved in the issues, which report may be excepted to by the parties, and confirmed, modified, ,or set aside by the court,” etc.

The act of 1867 was not expressly repealed or modified by this'amendment, and is therefore in full force, except in so far as both statutes can not operate. To that extent, and only that, the former must give way to the latter.

Under each act, on the motion of either party, any action in which neither party is entitled to demand a trial by jury, may be referred to a regular or special master commissioner for the trial of the issues arising upon the pleadings. If the reference were made under the former, the report, as under title.IX. of the code, must stand as the decision of the court, and, unless set aside, must be followed by judgment according to its findings. But if made under the 611th section as amended, then the repoi’t may be confirmed, modified, or set aside. In this respect the two acts can not stand together, and the older must give way.

By both statutes the court may require testimony taken upon the reference to be reduced to writing and reported to the court. By the act of 1867, the force and effect of such testimony upon a subsequent trial, whether a new trial, a second trial, or on appeal, are prescribed, while there is no provision on that subject in the amended 611th section of the code. In this respect there is no conflict between the acts, and therefore the rule of the former statute must govern the practice.

It must also be observed that this amended section only applies to cases where the master finds “ the law and the facts involved in the issues,” and, like the act of 1867, does not profess to regulate the practice where the chancellor calls upon a master to state an account, or determine some other fact auxiliary to the final determination of the cause by the court.

How, then, stood this case in the■ appellate court? By the appeal, the finding and judgment of the court below, upon the main issues in the ease, were vacated, and the cause stood in the appellate court for trial upon the same issues. By the main issues we mean those controverted questions, by the determination of which the basis for accounting was established, to the exclusion of those disputed items in the transactions of the company, which would have arisen in the taking of the account, if they had not been mentioned at all in the pleadings. Upon these main issues — to wit, the terms and conditions of the partnership agreenlent — the parties were entitled to introduce any compe'ent testimony without regard to the question whether it was, or might have been, introduced before the master. Therefore we think the court below erred in refusing to hear the witnesses offered by the defendant below.'

In regard to those findings in the master’s report which related to the state of the account between the parties, but were not involved in the main issues, as above stated, we think the case stood, in the District Court, upon the master’s report, the exceptions thereto, and the testimony as reported by him. The report upon such ancillary matters should have been confirmed, modified, or set aside upon a review of the testimony reported by the master, unless, upon some equitable showing, the parties ought to have been permitted to introduce additional testimony.

Motion granted and judgment reversed and cause remanded.

Welch, White, Rex, and Gilmore, JJ., concurred.