Case ID: va_68/html/0679-01.html
Source: Caselaw Access Project
Author: {"author": "Moncure, P.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Newman v. Newman.
    September Term, 1876.
    Staunton.
    1. Joint Tenants — Share oi Profits. — B and 0 are .ioint tenants of a furnace, forge, and a large Quantity of land derived from their father, and B who had conducted the business for some years In the lifetime of his father, continues to carry it on with the assent of his sister G, without any contract with C. He must account to C for her share of the profits.
    2. Same — Same — Accounts.--Though there were efforts between B and G to agree upon a rent which should be paid by B to G for her half of the property, and B seems to have thought that his proposition was acquiesced in, and did not keep snch accounts as he should have kept to enable him to render the account of profits to her. yet C is entitled to have the account taken, and to have her share of the profits.
    3. Same — Same—Compensation.—B having been allowed all his expenses in carrying on the business, including $1,500 a year for his services, and interest on his capital employed in it until it became self-sustaining. and then being allowed by the decree three-fifths of the net profits, he at least cannot complain of the decree.
    Walter Newman, of Shenandoah county, died in November 1868. His will, which was made in June 1847, was admitted to probate in the county court of Shenandoah in March 1869, and his son, Benjamin P. Newman, qualified as his executor. By his will, after giving certain personal property and the income of one-third of his real estate to his wife for her life, he gave all the rest of his personal property, including all debts due to him, to his son Benjamin P. Newman, who was to pay his debts out of it, and he gave the thir4 of his real estate to his said son, subject to his wife’s interest for her life, and the other two-thirds to *his two daughters, Ann R. and Henrietta C. Newman; and he authorized his executor to sell all the real estate. At the time of his death his wife and his daughter Ann R. Newman were dead; so that his whole real estate became the property of his son Benjamin P. and his daughter Henrietta C. Newman.
    The real estate of Walter Newman at his death consisted of a large quantity of land, on which were a furnace — called Liberty furnace, a forge, dwelling house and other buildings. Tor years before his death, his son Benjamin P. Newman had carried on the business of manufacturing iron at the furnace and forge; he being allowed all the profits after supporting the family. On the death of Walter Newman, Benjamin P. and Henrietta C. Newman appear to have wished to sell the property; but in order to keep the same in repair, it was agreed that Benjamin P. should carry on the business of manufacturing iron until a sale should be made; and he continued to carry it on until this suit was brought, in December 1873, by Henrietta C. Newman, for a settlement of his account and for a sale of the property. The only disputed question of importance in the cause, is whether Benjamin P. Newman carried on the business under a contract, by which he was to pay to Henrietta C. a certain agreed sum for the rent of her interest, or whether he should account for profits. In the bill the plaintiff claimed that Benjamin P. Newman had carried on the business without any express agreement, for the joint benefit of himself and the plaintiff, whilst in his answer heavers that he had rented her interest at the price of $200 a month whilst the furnace was in blast, and $100 a year for the other real estate. It is certain that the business was carried on at first upon his capital alone, and that Henrietta C. Newman did *not furnish any means for carrying it on; and it seems that his payments to her during the continuance of the business were upon the basis of the agreement stated in his answer. But it also appears, that he reduced the terms of this agreement, as he claimed it to be, to writing, which he presented to her to execute, and that she declined to execute it. And upon the whole evidence in the cause, this court is of opinion that no contract was proved. Such, too, was the opinion of the circuit court; and when the cause came on to be heard in that court, in April 1874, the following decree was made:
    The court is of opinion that there was no contract of renting, express or implied by the complainant' to the defendant of her undivided share of the iron property held by them jointly; and that the defendant has occupied and been engaged upon said property in the manufacture of iron through a period of near six years to the exclusion of his co-tenant, and received the rents, issues and profits thereof, and that he is liable to the complainant for receiving more than came to his joint share or proportion of said rents, issues and profits of said property.
    And it appearing that whilst there was no contract of renting between these parties, there were negotiations between them with a view to such renting, which though not consummated, gave rise in the mind of the defendant, to the erroneous impression, that he was the tenant of his sister, the complainant, upon the terms stated by him in his answer and deposition, and that, in consequence of his misapprehension, the defendant kept no exact account of his receipts, disbursements or profits of said joint property, and that his failure to keep such accounts was in no sense willful; and it further *appearing that the complainant never offered or consented to become a partner in the manufacture of iron upon said property, the court is of opinion that a fair rent for said property is the best measure of the amount received by the defendant from said joint property over and above his just share thereof. It is therefore adjudged, ordered and decreed that this cause be referred to Phillip W. Magru-der, a master commissioner of this court, •who shall, after giving the parties to this suit ten days’ notice by a personal service thereof, proceed to ascertain a fair rent for said property during the exclusive occupancy thereof by the defendant. And in ascertaining said rent the master commissioner shall act in the light of any and all competent evidence that may be produced before him, showing the character of said joint property and of the business of the manufacture of iron thereon, as to the profits or losses thereof up to the institution of this suit; and to this end the defendant may be recalled and re-examined at his own instance, or upon the summons of the complainant.
    And inasmuch as the ore and wood taken from said property in the manufacture of iron are not of the annual products of said property, the master commissioner is directed to state an account of the quantities of wood and ore consumed during the occupancy of said property by the defendant, and the value thereof.
    And the court being further of opinion from the evidence, that in the estimation and desire of the parties to this suit, from the date of their joint ownership, a sale of the property was the object of paramount importance, and that a working of said property to its utmost capacity might, and probably would, have been seriously detrimental to the prospects of a sale, and that the course of the defendant, in not working said *property to its utmost extent, was judicious, directs that the commissioner shall limit any charge he may determine proper as rent to the time said furnace was actually in blast, and to such time as was necessary to prepare for said blast.
    And the said commissioner is ordered to make report of his proceedings herein to this court.
    And it appearing to the court that both parties desire a sale of the real estate in the bill mentioned, and partition of the oroceeds of sale between them, it is adjudged, ordered and decreed that Giles Cook, Mark Bird, Moses Walton, and H. C. Allen, who are hereby appointed special commissioners for that purpose, do make sale of said real estate upon the following terms: one-fourth of the purchase money to be paid at the time of the confirmation of the sale by the court, and the residue in three equal instalments, at one, two and three years respectively, from the date of the confirmation of sale, and bearing interest from that date, and to be secured by a deed of trust or other lien upon the property, and such other additional security as the said special commissioners may deem judicious and proper, subject to the approval of the court. The said sale to be made at public auction after reasonable advertisement of the time and place of sale, or the said special commissioners may make a private sale of the said property if in their judgment it wiJl be for the interest of both parties to do so; and they shall make report of their proceedings to the court. But before collecting the purchase money, or any part thereof, the said special commissioners, or such of them as shall collect the same, shall execute a bond, and file it in the papers of this suit, with good security, in a penalty of double the sum to be received, with condition according to law.
    *And it being alleged by the defendant, that since he and the plaintiff became the joint owners of the said real estate he has paid the taxes and made permanent improvements thereon at his own expense,'it is ordered and decreed that said commissioner in chancery of this court do take an account of the taxes so paid, and of any permanent improvements on the said real estate made by the defendant, showing the nature and description of the said improvements, and the costs of making the same, and make a report thereof to the court, stating such matters as he may deem pertinent, or which either party may require to be specially stated.
    The real estate was sold by the commissioners and purchased by Henrietta C. Newman, at the price of $64-,000. But no question is made in relation to the said sale, and it will not be further mentioned.
    The commissioner directed to take the accounts returned his report, in which he made various statements, — showing in No. 1, the number of blasts, the length of each blast, and the amount of metal made at Liberty furnace from September 1, 1868, to May 1874 — forty-four months, fifteen days, twenty-two hours, 4,162 tons of metal: No. 2, showing the number of tons of metal sold, and also the amount unaccounted for from September 1868 to May 1874 — whole amount made 4,162 tons, lost fifty-seven tons; No. 3, showing the amount received for metal sold between same dates — sales $209,002.40, at the average price of $52.58 per ton; No. 4, showing the number of cords of wood and tons of ore consumed from Liberty furnace lands in same time — of wood value $1,418.62¡1£, of ore value $6,243.00; No. 5, taxes paid by Benjamin P. Newman in same time, $1,013.87; No. 6, permanent improvements made by B. P. Newman, $7,006; *No. 7, showing expenses in running Liberty furnace, $179,579.78; No. 8, B. P. Newman in account with B. P. and H. C. Newman. This gives alternate statements: the first makes the half of the profits due H. C. Newman $33,722.44, and after deducting payments made to her of $8,506.49, and adding two years interest on balance, made the amount due to her $28,241.85. The second,, deducting payments and adding interest, as before, made due to her $21,549.68. There were other statements which it is not necessary to give. Both plaintiff and defendant excepted to the report; and the defendant excepted especially because the commissioner had not, as directed by the decree, ascertained a fair rent for the property.
    The cause came on to be heard on the 17th of December 1874, when the court made first a statement A of the metal sold, excluding so much as had been lost, fifty-six tons, and that still on hand four hundred and fifty-nine and a half tons, and charging B. P. Newman with the proceeds of three thousand six hundred and forty-six and a half tons, at $191,732.97, and crediting him with expenses, $145,451.66, and also bad debts, $3,230, made a balance to be divided between the two of $43,051.31. Of this sum H. C. Newman is allowed $17,220.45, or two-fifths thereof; and on this last sum is credited the amount of payments made by B. C. Newman to the plaintiff of $8,506.49, leaving due to her $8,714.03. By statement B, Benjamin P. Newman is charged with the three thousand six hundred and forty-six and a half tons of metal, at $4.73% rent per ton, and crediting him with the payments made to H. C. Newman at the end of each year, the balance due her is ascertained to be $8,714.03. And the court sustaining the exceptions to the report, so far as it was consistent with the decree and the said statements, *and sustaining it so far as it was consistent with the same, decreed that Henrietta C. Newman recover from the defendant, Benjamin P. Newman, the said sum of $8,714.03, with interest on the balances due at the end of each year from that date. And it appearing there was still on hand unsold of pig iron four hundred and forty-seven and a half tons, and four hundred and seventy pounds in the county of Shenandoah, and that twenty thousand pounds of blooms had been sent to a firm in Baltimore, for which there had been no return, it was decreed that the defendant render an account of the sales of said blooms when made; and the pig iron was directed to be divided on the basis of the decree, giving to the defendant three-fifths, and to the complainants two-fifths of the same. And the costs were to be paid equally by the parties. Prom this decree Benjamin P. Newman applied to a judge of this court for an appeal; which was allowed.
    Walton and Cook, for the appellant.
    H. C. Allen, for the appellee.
    
      
      Joint Tenants — Share of Profits. — See, citing the principal case, Paxton v. Gamewell, 82 Va. 710, 1 S. E. Rep. 92; also, Graham v. Pierce, 19 Gratt. 28; Ruffners v. Lewis, 7 Leigh 720; Early v. Friend, 16 Gratt. 53; Va. Code, § 3294; 2 Min. Inst. 475, 476.
    
   Moncure, P.,

delivered the opinion of the court.

The court is of opinion that the contract alleged in the answer of the appellant, Benjamin P. Newman, to have been made between him and his sister, the appellee, Henrietta C. Newman, that the former should use and occupy certain real estate in the county of Shenandoah, owned by them as joint tenants, derived by them as such from their father, Walter Newman, under his will, on which estate are located a fur-mace, called “Liberty Furnace, ” a forge, dwelling house, and other buildings, in consideration of a certain rent to be paid to her for her undivided interest in the said estate and ^its appurtenances until the same should be sold (as was intended to be done by the parties), was never in fact made by the parties; but the said Benjamin P. Newman, who had used and occupied the said property before and until the time of his father’s death, under an arrangement with him, continued to use and occupy it after his death, with the knowledge and acquiescence of the said Henrietta C. Newman, and with an understanding between her and her brother, the said Benjamin P. Newman, that he would duly account to her for the use and occupation of her interest in the said property; and although it was expected and intended by them to agree together upon the terms of such accounting; and although efforts were used by and between them for that purpose, yet those efforts were wholly unsuccessful, and no such agreement ever was made.

The court is further of opinion that no such agreement having ever been made, the said Benjamin P. Newman was bound to account with his sister, the said Henrietta C. Newman, for her interest in the said property, while he occupied the same, after their father’s death, on such terms as may be prescribed by law in the case of the absence of such an agreement. And the court is of opinion that the principle which applies to this case is that of the case of Graham &c. v. Pierce, 19 Gratt. 28, and not that of the case of Early & wife v. Friend &c., 16 Gratt. 21. In the latter case, it was held to be a general rule, that where a tenant in common uses the common property to the exclusion of his co-tenants, or occupies and uses more than his just share and proportion, the best measure of his accountability to his co-tenants is their shares of a fair rent of the property so occupied and used by him. And although it was said in that case “that there may be peculiar *circumstances in a case making it proper to resort to an account of issues, profits, &c., as a mode of adjustment between the tenants in common,” yet it was further said that such case would be an exception to the general rule; and it was held that Early & wife v. Friend &c., came within the general rule, and not within the exception. On the other hand, it was held in Graham &c. v. Pierce, supra, that that case came within the exception and not the general rule. “Under the circumstances of this case,” said the court, “it was proper to resort to an account of issues, profits, &c., as a mode of adjustment between the tenants in common. It is not a case of land used for agricultural purposes only, in which there is no difficulty in ascertaining a fair rent for use and occupation; nor is it such a case as that of Early & wife v. Friend &c., where the property consisted of salt works, the yearly value of which might be ascertained with reasonable certainty, and where a money rent had been contracted for, and paid to some of the tenants in common, which furnished a standard for ascertaining the amount due to others; but it is the case of a lead mine, the yearly value of which, and more especially of an Undivided and uncertain portion of which is incapable of ascertainment. ’ ’ ‘The best mode of settling such an account, and one which is perfectly just, supposing the tenant to have been capable and faithful, is to charge him with all his receipts, and credit him with all his expenses on account of the operation of the mine.” Id., 19 Gratt. 28, 39. That was the case of a lead mine, while this is the case of an iron mine; and there seems to be no difference in principle between them on the subject we are now considering. A tenant of such property necessarily uses a part of the subject itself, and may by such uses render the residue of the subject *of little or no value. It may be discovered by explorations and operations that the property is of great value, or the contrary. To rent it for a certain sum, is to make a bargain of speculation and hazard, which is always objectionable in such cases, as it is almost sure to operate unequally on the parties. Whereas to carry on operations upon it for the joint and equal benefit of all the owners in proportion to their respective interests in the subject, and by the agency of persons -(whether they have an interest therein or not) who may be amply compensated for their trouble, complete justice will be done to all parties concerned. It may be said that to carry on the business required a capital, which one of the parties did not have. But that matter may be adjusted by allowing interest to the party who advances the capital. In this case the property was of known and established value, and there would probably have been no difficulty in. finding a suitable agent and borrowing the necessary capital to carry on the operations, even if both had not been readily furnished by one of the parties. But that party had •long and successfully conducted the business, and had become joint and equal owner of the property with the other party. It 'was his manifest interest to continue to use and occupy it, and carry on the business until a sale of the property could be effected to advantage, which was desired by both parties, he being of course entitled to ample compensation for his services as superintendent, and for the use of his capital employed in the business. Accordingly he did so continue, without having made any contract with his co-tenant as to the terms of such use and occupation. Those terms are therefore prescribed by law, and by the principle of the case of Graham &c. v. Pierce, before cited.

The court is further of opinion that the said Benjamin *P. Newman being bound to account to the said Henrietta C. Newman for her share of the issues and profits of the said property while the same remained in his possession as joint tenant as aforesaid, and knowing that he would or might be so accountable, as he had made no contract with her for settling on any other terms, it was his duty to keep proper accounts, and .to be at all times ready to make such a settlement ; and whatever difficulty may have occurred in making such a settlement, has arisen from his neglect of his said duty to keep proper accounts as aforesaid.

The court is further of opinion that the appellee was entitled to have the said account of issues and profits settled as correctly as it might be under the circumstances of the case, and that such a settlement has been made accordingly by the decree of the court below; that in said settlement, every credit which seems to be .just has been allowed'to him, including-an -allowance of fifteen hundred dollars per annum for his services as superintendent of the said property during a period of six years and four and a half months, while the blasts in the furnace on the said property, while under the charge of said superintendent, were in operation during periods amounting in all to only about forty-four months and a half; and including also an allowance for the use of his capital for two years, and until it appears that the business had become self-sustaining; and that if he is really entitled to any more credits than have been allowed him, they are more than covered by the deduction of one-fifth of a moiety of the said issues and profits which was made from the same before a decree was rendered in her favor for the balance of said moiety by the court below.

The court is therefore of opinion that there is no error in the decree of the court below, at least to the *prejudice of the appellant, and that the said decree ought to be affirmed.

In concluding our opinion in this controversy between a brother and sister, we deem it an act of justice to both parties to say — which we do with a great deal of pleasure — that after a full consideration of the long record in the case, we are satisfied that they have been perfectly conscientious in their dealings with and claims against each other, and desired to have and receive nothing inore than they considered themselves to be justly entitled to. Whatever errors there may have been on either side have been errors of judgment and not of the heart.

Decree affirmed.