Case Name: MOYERS v. CUMMINGS
Court: Court of Appeals of the District of Columbia
Jurisdiction: District of Columbia
Decision Date: 1900-12-06
Citations: 17 D.C. App. 269
Docket Number: No. 1017
Parties: MOYERS v. CUMMINGS.
Judges: 
Reporter: Reports of Cases Adjudged in the Court of Appeals of the District of Columbia
Volume: 17
Pages: 269–282

Head Matter:
MOYERS v. CUMMINGS.
Partnership; Commingling oe Individual and Partnership Funds ; Receivers ; Presumptions ; Rule to Show Cause.
1. Whether a surviving partner is to he deemed a trustee of partnership assets or not, a court of equity has power to take from his possession all partnership property, including money, and deliver it to receivers.
2. A surviving partner who has collected money due the partnership, mingled it with his own and deposited the whole in bank in his own name, can not be heard to say that he has converted the fund by so doing and made himself a mere debtor to the partnership.
3. Where a surviving partner has deposited partnership money in bank to his individual account, in drawing thereon he will be presumed to have first drawn and used his own money, and so much of the fund remaining undrawn as may not be in excess of partnership collections, will be regarded in equity as partnership money, the identity of the fund not being lost by the act of commingling.
4. Phe presumption is that a surviving partner who is ordered to deliver to receivers partnership money collected by him, has not dissipated the money but has retained it subject to a settlement of partnership affairs, and if when so ordered he has not the money or any of it in his possession or under his control it is incumbent upon him to show clearly what disposition has been made of it.
5. If, in violation of his duty, a surviving partner has dissipated a fund belonging to the partnership before being ordered by the court to deliver it to receivers, he will be permitted so to show in answer to a rule entered upon his disobedience of the order, and upon his satisfying the court that he has not the money or any part of it in his possession or under his control, direct or indirect, such order (which is not final but may be amended or recalled at discretion) may be modified with a complete or partial discharge of the rule, but if he can not make such a satisfactory showing he should be held in contempt until he produces and surrenders the money.
6. An answer to a rule to show cause laid upon a surviving partner for hisfailure to obey an order directing him to deliver partnership money to receivers, is not conclusive, and the court may look beyond it if justice demands; following Tolman v. Reonard, 6 App. D. C. 224.
No. 1017.
Submitted November 7, 1900.
Decided December 6, 1900.
Hearing on an appeal by the defendant from an order of the Supreme Court of the District of Columbia appointing receivers pendente lite in a suit for a partnership accounting and directing the defendant to pay to the receivers partnership money collected by him.
Affirmed.
The Court in its opinion stated the case as follows:
This is an appeal in a suit depending in the Supreme Court of the District, from an interlocutory order requiring the appellant, Gilbert Moyers, as surviving partner, to pay over a sum of money to the receiver appointed in that suit to take charge of the assets of the partnership pending the proceedings for a final accounting and distribution.
The bill was filed, September 16, 1899, by Horace S. Cummings, as administrator of the estate of George B. Edmonds, the deceased partner, against Gilbert Moyers, the surviving member of the partnership.
The following agreement is set out in the bill as the foundation of the suit:
“Know all men by these presents, in duplicate, that the undersigned, attorneys of Washington, D. C., are special partners in the prosecution of the cases named in the schedule hereto attached now pending before the United States Court of Claims and the Congress of the United States, the fee agreed to be paid by the client in each case being the per centum of whatever may be recovered as is stated herein, and the agreement between the undersigned being that each shall have half of said fees and that each shall pay one-half of the expense incident to the prosecution of same, which expense is not to exceed two and one-half per cent, of the amount that may be allowed upon said claim.
“And it is hereby agreed and understood that the said Gilbert Moyers shall represent and be associated with me in the prosecution of said claims before the Court of Claims and the Congress of the United States as joint attorney of record.
“ It is hereby understood and agreed that the undersigned Gilbert Moyers is to advance the expenses incident to the prosecution of said claims.
“Witness our hands this 6th day of February, 1888.
(Signed) Gilbert Moyers.
(Signed)' Geo. B. Edmonds.”
A list of cases which it was averred were contained in the schedule attached to the above agreement, was also made an exhibit to the bill. It contains a list of claimants, with the several amounts and dates of their judgments, the dates of payments and the fees due in each case. The aggregate of the judgments is $56,756, and the fees due thereon to the parties aforesaid amount to $26,380.25. The bill charges the collection by Moyers of the several sums above stated, and his failure and refusal to account to Edmonds for any part thereof. It is further alleged that it was the duty of Moyers to deposit said funds as collected to the credit of the partnership, but that in violation thereof he has deposited the same in bank in his own name and has commingled them with his own individual funds. It is further alleged that Moyers has no individual estate of value, that he is indebted, and that there is danger of the loss of the partnership fund unless a receiver be appointed and so forth. An additional averment sets out three other claims, amounting to $1,570, as collected or about to be collected, by Moyers and in which Edmonds had the same interest, although they are not recited in the said exhibit.
The complainant prayed as follows: (1) An order restraining the defendant from collecting any treasury warrants issued in payment of any of the claims in which the partnership was interested, .and from withdrawing, by check or otherwise, any money on deposit in defendant’s name in any bank and so forth; (2) That a receiver be appointed to collect all of the outstanding fees due the said partnership; (3) That defendant be ordered to deliver all of the -money, warrants, drafts, evidences of debt, etc., due to or on account of said partnership, into the possession of the receiver when appointed ; (4) That an account be taken of the partnership transactions, and a final settlement be had thereof, with decree against the defendant, for sums found to be due by him; and for general relief.
An order was made on the same day granting the restraining order as prayed, and directing the defendant to show' cause on or before September 20,1899, why an order should not be passed .appointing the receiver in accordance with the prayer of the bill.
Defendant answered on September 20. In his answer he admitted the execution of an agreement of the general character alleged in the bill, but could not say whether the one set out was a true copy or not. He denied that the cases named in the schedule attached to the said agreement were those named in complainant’s schedule exhibit, but added that to the best of his recollection and belief the only cases named in the exhibit that were among those recited in the schedule attached to said agreement, were those of J. C. Tappan and S. Fitzhugh, administrator, and in these alone, of those claimed in the exhibit, had the said Edmonds any interest. He also admitted the collection of the claims recited in said schedule exhibit, but denied that any portion of the $26,380.25, fees collected, was payable to said Edmonds. This denial of Edmonds’ right was based on the following claim:
“For that he says that in the year 1892 and prior thereto, after the making of said agreement, the said George B. Edmonds being in need from time to time of money, obtained from this defendant, on account of the prospective fees to be earned under said agreement, various considerable sums of money, amounting in all to the sum of about fifteen hundred dollars ($1,500.00), and that thereafter, to wit, in the said year 1892, this defendant paid to the said George B. Edmonds and the latter received the further sum of five hundred dollars ($500.00) in full settlement of all claims and demands which he had or might thereafter have under the said agreement of February, 1888, and the said George B. Edmonds then and there, at the time of the receiving of said money, agreed to return to this defendant the agreement of February, 1888, to his hands, indorsed in such manner as to show that full settlement had been made with him of all his claims thereunder, and this defendant further says that from this time forward until his death, which occurred, to wit, on the — day of-, —, the said George B. Edmonds never pretended or asserted, to the knowledge of this defendant, any claim whatever upon him for the right or interest in the said various cases embraced within the schedule attached to said agreement of February, 1888, and defendant further says that at the time of the payment of said sum of five hundred dollars ($500.00), in 1892, as aforesaid, it was well known to both the said George B. Edmonds and to this defendant that a long time must elapse before the said claims could be allowed and paid, and the value of said claims and the fees to arise therefrom was estimated by both of them to be much less than was afterwards realized.”
He also denied his insolvency and described several valuable tracts of land as owned by him in the District of Columbia and in Maryland, of the value of $68,000.
He further denied that said Edmonds had ever been interested in the additional claims set out in the bill as amounting to $1,570, and charged that the same had not been collected by defendant, because he had no interest therein. Several affidavits were attached to the answer tending to prove the alleged settlement with Edmonds. On the filing of this answer the court denied the injunction and prayer for the appointment of a receiver and dissolved the restraining order formerly granted. The parties then proceeded to take testimony.
After this was in, the defendant, upon an affidavit filed alleging mistake in his sworn answer, was permitted to amend the same in this respect: That he had erroneously admitted the interest of Edmonds in certain claims named in the exhibits, namely, those of Ubele, administrator; T. W. Russell, W. C. Baylor, J. L. Roberts and George Show and R. M. or R. W. Johnston, which had been prosecuted to judgment by other attorneys. (These amounted to the sum of $5,696 and the fees thereon as charged in the exhibit amount to $2,848.)
When the supplemental answer was filed it contained a further distinct allegation to the effect that the cases referred to in the agreement were never scheduled or set out in any list; that it was intended, when the agreement was signed, that said Edmonds should prepare a list and attach a copy to each draft of the agreement that had been executed in duplicate, but that he failed to do so. This allegation was, by the court, ordered stricken from the pleading on June 5, 1900.
The complainant having renewed his application for a receiver, the case came on for hearing on June 13, 1900, on the pleadings, exhibits and testimony. The court passed a decree in substance as follows:
1. That a special partnership existed between the parties under the agreement for the prosecution of the claims recited in the schedule exhibit.
2. That no valid purchase was made of the interest of said Edmonds in said partnership business, as alleged by defendant.
3. That the complainant is entitled to an accounting with the defendant of all partnership dealings and transactions under said agreement.
4. That the matters be referred to the auditor to take the said account upon the testimony already taken and such other as might be introduced.
5. That the consideration of the application for a receiver be reserved for future adjudication upon motion to be made by the complainant with due Dotice to the defendant.
Additional affidavits were filed on the application for the receiver, relating to the property, indebtedness and so forth of the defendant, and the postponed hearing thereon was had on June 20. The result was the appointment of two receivers, representing the respective parties, to collect all of the assets of the said partnership. The decree contained a further special recital, on which alone the appeal has been taken, and error assigned, as follows:
“And it is by the court further ordered that the complainant and the defendant deliver to said receivers all of the books and papers and other effects of said partnership in their or either of their hands, and that the defendant deliver to said receivers from the moneys heretofore collected by him on account of the fees paid by the claimants in the partnership claims described in the bill of complaint in said cause the sum of nine thousand dollars, which said sum of money said receivers shall hold until further order of the court.”
Mr. Arthur A. Birney for the appellant:
1. The court had the right in its discretion to appoint receivers and direct them to take possession of partnership property, if any there was; but could not lawfully order the appellant to pay to receivers this large sum of money from his own funds. The learned judge by this order requiring Moyers to make this payment, abandoned wholly the principle which governs upon an application for receivers. 20 Ency. Am. & Eng. Law, 11 et seq., and cases cited; Blondheim v. Moore, 16 Md. 374; Haight v. Burr, 19 Md. 134. In no case may a receiver be authorized to do more than to take into his custody the property which is the subject of litigation, and the object to be attained is its preservation. Property not the subject of litigation can not be placed in the hands of receivers. High on Receivers, Sec. 378 ; Wormser v. Bank, 49 Ark. 117. The kind of property which may be put in possession of a receiver is that which might be taken in execution. Davis v. Gray, 16 Wall. 217. So, the property he is to take must be described with particularity, and unless this is done he can not hold it. High on Receivers, Sec. 87. The limit of the right of the court in this case was to appoint receivers to take possession of any chattels belonging to the partnership, of the files and papers in the unsettled cases prosecuted by the partnership, and to collect any fees or debts due the partnership. What the court found was that more than a year before the passing of the receivership order Moyers had collected moneys on firm account, that he should have paid part to the complainant, and that not having paid such part he probably was indebted to complainant in about $9,000, which he was commanded to pay to the receivers. This debt, if it exists, is not an asset of the partnership, or that kind of property which may be ordered into the possession of a receiver, and complainant’s remedy, if there be a debt due him, is by execution when that debt shall be ascertained and adjudged to him. Wallace v. Milligan, 110 Ind. 498. The practice should be to ascertain through the ordered reference and audit what is the true state of accounts, and after judgment award execution to the creditor partner for the debt due him. 17 Am. & Eng. Encyc. Law, 1289 et seq; Paine v. Paine, 15 Gray, 299. The liability of Moyers, if it exists, is not as trustee, but as a simple debtor. The jurisdiction to appoint receivers of partnership property is based on the legal principle that the partners are co-owners, equally entitled to possession. 3 Pomeroy, Eq. Juris., See. 1333; 5 Wait’s Act. and Def. 355.
Mr. Chas. Cowles Tucker for the appellee:
1. The court had the right, under the circumstances of this case, in the absence of specific proof of the present existence of the specific partnership moneys collected, to assume that defendant had not committed the wrong of converting them to his own use, and to direct that he should deliver such collections, or a portion of them, to the receivers to hold during the pendency of the suit. High, on Pec., Secs. 478, 541; Shainwald v. Lewis, 6 Fed. Rep. 766 ; People v. Rogers, 2 Paige (N. Y.), 103; Beach on Pec. (2d Ed.), Sec. 586; Murphy v. DuBerg, 11 Abb. (N. C.), 586. Even in cases inter vivos, upon the appointment of a receiver, a partner does not stand in the position of a mere debtor to the partnership, but as a party to the action may be summarily compelled to transfer to the receiver any portion of the copartnership property he holds. But upon the death of one partner the surviving partner assumes a new relation — that of trustee. Nelson v. Hayner, 66 Ill. 490; Hoyt v. Sprague, 103 U. S. 613; Washburn v. Goodman, 17 Pick. 537; Case v. Abell, 1 Paige, 393. See as to the duty of a trustee with respect of trust funds, 27 Am. & Eng. Encyc. Law, 160 et seq.
2. The pleadings and testimony before the court when it passed the order complained of showed that defendant had collected $9,000 or more of partnership funds prior to the commencement of the suit and the appointment of receivers. If the court erred in directing him to turn over less than the amount received it was not error prejudical to him. Hartman v. Ruby, 16 App. D. C. 45.

Opinion:
Mr. Justice Shepard
delivered the opinion of the Court:
As has been stated, the appeal in this case is not founded on any objection taken to the decree in so far as it concerns the appointment of the receivers, and the direction to them to take possession of, or reduce to possession, the property and uncollected claims of the partnership.
Nor has it been denied on the argument that, upon plain proof of the actual possession by the defendant, at the time, of partnership property, or of money collected on the partnership account and belonging thereto, an order might properly have been passed directing him to deliver the same to the receivers.
Assuming that, as found by the court, the defendant had formerly collected large sums of money as fees due the partnership, it is claimed on his behalf that there is no proof showing the possession by him, at the time of the order, of the same or any part thereof.
Consequently, it is contended that the appellant is nothing more than a debtor of the partnership, the amount of whose debt must depend upon the result of the account ordered to be taken, and which upon ascertainment and decree for payment can only be collected by execution, in the ordinary way.
In other words, the contention is, that, under the facts shown in the record, the appellant is a debtor simply of the partnership in an uncertain sum yet to be ascertained and decreed, and which he can not be made to discharge by summary order, at any time, under penalty of attachment in case of disobedience.
In the view that we have taken of those facts, and of the necessary effect of the order requiring the appellant to deliver $9,000 to the receivers, we' do not find it necessary to follow the interesting argument of counsel in respect of the true relation of the appellant to that, fund, as an asset of the partnership, and determine whether he is to be regarded as a trustee thereof with all the duties and liabilities of an ordinary trustee. Whatever that relation, the court had the power to take from the possession of the surviving partner, and deliver into that of the receivers, all of the property shown to belong to the partnership, that was in existence at the time of the order, whatsoever its nature. The surviving partner, under the conditions making the appointment of receivers necessary, would have no more right to retain the money than he would the ordinary chattels or choses in action of the partnership.
If he in fact collected money due the partnership, mingled it with his own and deposited the whole in a bank in his own name, such of' it as he may have had at the time of the order would clearly be subject thereto. As to that, he can not be heard to say that he has converted the fund by so doing, and thereby made himself a mere debtor of the partnership and subject only to the ordinary incidents of that relation.
His relation was so far fiduciary, at least, that in mingling the fund with his own and drawing thereon on his individual account, he will be presumed to have first drawn and used his own money. Knatchbull v. Hallett, L. R. 13 Ch. Div. 693.
Consequently, so much of the fund remaining undrawn and unconverted in fact, as may not be in excess of the collection of partnership dues, will be regarded in equity as the property of the partnership. The identity of the fund is not lost by the act of commingling. Idem.
It remains now to ascertain from the record and to declare the facts established to our satisfaction by which the soundness of the decree and the contentions of the parties in respect thereof must be tested.
The original answer of the surviving partner contained a substantial confession of the main allegations of the bill, coupled with an avoidance of their effect through the completed purchase' alleged to have been made of Edmonds' interests in the partnership. This alleged purchase and settlement wholly failed on the proof, and the court expressly so declared.
The exhibit schedule attached to the bill shows a sum total of $26,380.25 of fees due the partnership on account of the claims therein recited, and charged to have been collected and received by the appellant. One-half of this sum, less such necessary expenses as may have been incurred in the prosecution of the claims, belonged to Edmonds under the partnership agreement.
The court, however, did not direct the surrender by the appellant of this gross sum, or of even one-half thereof. There being some controversy in respect of several claims in the schedule, the order was limited to $9,000 of the fund.
Looking to the answer, it appears that while the appellant denied some items of the schedule exhibit account, he expressly admitted the collection of the two claims of Tappan, administrator, and Fitzhugh, administrator, respectively.
The judgments collected in these two cases amount to $22,100, and the fees retained therefrom are $9,042.50. This shows a slight excess over the amount ordered to be surrendered, without considering any expenses that might be a proper charge thereon. There was, however, no proof of any expenses connected with these transactions, and no claim of diminution or allowance on that account was set up in the answer. Here then was traced into the possession of the appellant, as partner, a fund slightly greater than that which he was ordered to surrender to the receivers for conservation and administration in obedience to the further orders of the court.
Now, as contended by the appellant, it is quite true that there was no direct proof showing that, at the date of the order, he had that sum in his actual possession, or under his control. On the other hand, it is equally true that there is neither allegation nor proof tending to show that he did not then have the money in his possession or under his control.
In the absence of all proof, the presumption ought to be that he had not dissipated the money in which his copartner and possible creditors of the partnership were interested, but had retained it subject to the settlement of the partnership affairs in accordance with his duty in the premises. If then he did not have the money or any of it in his possession or under his control, it was incumbent upon him to show clearly wha.t disposition had been made of it.
In passing the decree it might probably have been better to make its terms general, covering all funds of the partnership had and held by the appellant, rather than specific; but whether so or not is now immaterial in our view of its purpose and substantial .effect.
If, in truth, the appellant had, in violation of his duty, dissipated the fund before the attempt made to impound it, he would be permitted to show that fact in and under an answer to a rule entered upon his disobedience of the order. Upon satisfying the court that he did not have the money or any part of it, in his possession 'or under his control, direct or indirect, he could secure a modification of the order with a complete or partial discharge of the rule; for the decree is not a finality, but may be recalled or amended at discretion. If, on the other hand, he can not make this satisfactory showing he ought then to be held in contempt until he produces and surrenders the money.
As was said in an analogous case: "Where the object is to compel performance of a decree in aid of a private right, and the punishment of the offender may or may not be made incidental thereto, the answer is not conclusive and the court may look beyond it if justice demands [citing authorities]. If an answer should show clearly the inability of a party to comply with the order, and there is nothing to the contrary, he ought to be discharged." Tolman v. Leonard, 6 App. D. C. 224, 234.
The doctrine of that case, which arose under an attachment issued to compel obedience to an order for the payment of alimony, that it was not the collection of a debt by the summary process of attachment, but the enforcement of an order of delivery that was clearly within the jurisdiction of a court of equity, is directly applicable to the facts of the case at bar.
We have found no reported case in other courts in which the direct question,as here presented, has been determined; but there are many closely analogous, the doctrines of which are in accord with our conclusion, and to some of them we refer. Eikenberry v. Edwards, 67 Iowa, 619; State, ex rel., v. Burrows, 33 Kan. 10, 17; Kenesaw Mills Co. v. Walker, 19 S. C. 104, 112; In re Milburn, 59 Wis. 24; State v. Becht, 23 Minn. 411; Bond v. Bond, 69 N. C. 97; Ex parte Kellogg, 64 Cal. 343.
Those cases arose under statutes providing for proceedings after judgment looking to the examination of judgment debtors and the discovery of property in aid of execution. As the orders for the surrender of property and money in those cases issued to mere debtors to compel the satisfaction of judgments against them, otherwise uncollectible, they savor much- more of imprisonment for debt than does this case, for here the party ordered to surrender the money is not the unqualified owner of it. Whether indeed some of those cases did not go to an extreme under the particular facts upon which they turned is not now before us.
The order appealed from will be affirmed, with costs, and the cause will be remanded for further proceedings in due course. It is so ordered. Affirmed.