Court Opinion

ID: 7198070
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:04:46.276698+00
Date Added: 2024-06-11T16:16:25.585338
License: Public Domain

Oh the Merits.
Miulek, J,
The plaintiff appeals from judgment on her demand for the liquidation of a commercial partnership, "and to recover the amounts she claims will be found due her on that liquidation by the defendants, one of whom is her co-partner, and the other the widow of the deceased partner and the tutrix of her minor children.
The partnership organized in December, 1893, composed of plaintiff, the defendant, Milton II. Bosley, and John.H. Scheen, plaintiff contributing as her share of the capital two thousand dollars, Scheen & Bosley agreeing to contribute one thousand dollars each, was dissolved by the death of Scheen in December, 1895. The plaintiff and Bosley contributed their portions of the capital, and it is claimed that the portion of John H. Scheen was represented by a note for one thousand dollars used by the firm, but it is shown that the note was the paraphernal property of the plaintiff, which she alleges was placed in the firm’s safe to be kept for her, and was appropriated wrongfully for the firm’s purposes and the amount of that note is part of her present demand. At the dissolution’ of the firm in December, 1895, there were book accounts, other assets due the firm and its stock of merchandise. The plaintiff contends the stock was worth three thousand five hundred and forty-seven dollars, and there is in the record an estimate’ placing the stock at that value, made by or under the direction of Bosley. He continued the business after Scheen’s death, and was appointed liquidator on the 11th of January, 1896. It is shown that Bosley, from Scheen’s death to the date of his appointment as liquidator, sold merchandise of the partnership to the amount of nine hundred and seventy-eight dollars, and on the 11th *69of February, 1896, sold the residue of the merchandise to L. E. Scheen, and it appears that Bosley was engaged with L. E. Scheen in his business. On this branch of the case the plaintiff claims Bosley should be charged with the sales from Scheeen’s death to the sale of the residue of the merchandise, to L. E. Scheen, nine hundred and seventy-eight 70-100 dollars, less a credit of one hundred and thirty-nine 22-100 dollars; that the liquidator .should be charged also with the value of the stock, three thousand five hundred and forty-seven dollars, less the amount of these sales, one hundred and thirty-nine 20-100 dollars, and less also fifteen hundred dollars, proceeds of sale of the residue to L. E. Scheen. On another branch of this case, it is shown that in December, 1895, there was remitted to Bosley by Hardie & Co. the sum of one thousand dollars, and plaintiff claims Bosley should be charged with these remittances.
A previous suit brought by plaintiff for the liquidation of the partnership, was dismissed on the exception of prematurity, i. e., that the Code allows one year to the liquidator to settle the partnership dissolved by death of his co-partner. This suit followed, and though the petition is broader in its allegations, the controversy placed before us relates to the asserted liability of Bosley for the note belonging to plaintiff of one thousand dollars, his liability for the stock of merchandise on the basis of three thousand five hundred and forty-seven dollars, and the amount of the remittances by Hardie & Co., and plaintiff’s demand is that he should be charged accordingly. The defendant excepted that the petition united distinct causes of action, directed, we presume, against the allegation of Bosley’s liability as liquidator and his personal liability for the note of one thousand dollars arising from his alleged participation in the asserted fraudulent use of the note by the partnership. Subject to the exception, the defendant pleaded the general issue, with the averments that the one thousand dollar note had been transferred to John H. Scheen, by him was furnished to the partnership as the capital he was to furnish; that the stock on hand on the 16th of February, 1896, was sold for fifteen hundred dollars, by means whereof the defendant, Bosley, was enabled to compromise the firm’s debts at 66 2-3 cents on the dollar; that the liquidator had paid out of his own funds one thousand three' hundred and twenty-eight dollars, for which he claims judgment, and that the accounts of the partners be liquidated. Subsequently, the liquidator filed his account, showing the assets of the *70firm, the debts paid by him, and the amount due him of one 'thousand three hundred and twenty-eight dollars. The petition of the plaintiff was ordered to stand as an opposition to the account, and 'the result of the litigation was a judgment directing that 'the liquidator be debited and credited with sundry amounts omitted in Ms 'account, rejecting the demand that he be charged with the estimated value of the stock: and rejecting also the demand that he be charged with the money remitted by ITardie & Co. The judgment maintains, as against the partnership, the plaintiff’s demand for.the amount of the note of one thousand dollars, but not as to the individual obligation of Bosley. He is ranked as a creditor for seven hundred and eighty-nine dollars tó be paid before any dividends are paid; the Succession of John IT. Scheen is decreed to be indebted to the partnership in the amount of nine hundred and seventy-one dollars; the account filed by the liquidator, thus amended, is. homologated, 'and, in other respects, the plaintiff’s opposition is dismissed. In this court, the defendant, answering the appeal, asks that the judgment be amended so as to decree that the seven hundred and eight-nine dollars, awarded him, be paid by preference, especially over the one thousand dollars awarded the plaintiff.
It is contended on behalf of the defendant that the husband of plaintiff had agreed, or, at least, was expected to furnish on behalf of John Scheen, his portion of the capital of the partnership; or as we understand, that plaintiff’s husband being indebted to Scheen, transferred to him the note of one thousand dollars for the uses of the partnership, 'and that Scheen being credited with the amount of the note on the' capital account, the partnership stands before us as the holders for value of the note. It is distinctly testified the note, the property of plaintiff, was entrusted to Scheen for safe keeping, and we think the current of the whole testimony is that neither the husband and still less the wife ever transferred the note or consented to its use by the firm. Nor can we appreciate that because of the credit given Scheen on the books of the partnersMp, the partnership is to be deemed the holders of the note for value in any sense that defeats the right of the plaintiff. She was no party to that credit, nor was her husband even, if he could have thus disposed of his wife’s property. It is claimed that the use of the note by the firm was a fraud on the plaintiff, committed by Scheen and by Bosley, and in that view the plaintiff is entitled to judgment against Bosley indi*71vidually. The plaintiff is the sister of Scheen, and Bosley is her brother-in-law. It is argued that this relationship authorizes the conclusion that Bosley is to be charged with knowledge that the note was improperly used, and, hence, with participation in the alleged fraud. It is testified by him that he did not know the note belonged to plaintiff. There is in the record testimony of the communications by Scheen to Bosley, well calculated to leave on his mind the impression that plaintiff, the sister of Scheen, interested in his welfare, would not object to his temporary use of the note in promoting the business of the partnership. There is in the record a writing from Scheen to the effect the partnership should have no liability arising from his use of the note for its purposes. The note was about the amount Scheen was to furnish to the firm, and Scheen’s view seems to have been to use the note temporarily, as the substitute for the cash he was to furnish, It is in proof that Scheen pledged the note for the firm’s debt, we think with the expectation of being able to redeem it, but the expectation failed. In this condition the note was discounted by the maker, and with the funds thus obtained the note was relieved from pledge, the firm’s debt paid, the' note discharged and returned to the maker. ' Bosley conducted the negotiation resulting in the discount of the note, but the discount was the sequel of pledging the note which was the act of Scheen. ’We can not find the basis to charge Bosley with fraud and, on that basis, hold him liable, but as the note of plaintiff was used by the firm, there was'the firm’s obligation and the liability of each of the partners, incident to all commercial partners, and this was the view of the court, the judgment properly directing that the amount be paid before any distribution of dividends or payment to partners.
We think it is manifest from the record, then, the remittances of Hardee & Co. were not for any debt to the firm, but for the purchase of cotton. The remittances would haVe produced debts of the firm, but seem to .have been paid from the proceeds of the cotton. We find no basis to charge Bosley with these remittances.
The argument on behalf of the plaintiff treats the defendant, Bosley, as an intermeddler with the property of the partnership, and urges that as such he should be held liable for its assets because, after Scheen’s death, in December, 1895, Bosley continued the bush ness, not having been, appointed liquidator until' February —, 1896. The surviving partner can not, in our view, be deeméd an intermed-*72cller with respect to the partnership property. It is his duty and his right, when the death of his co-partner occurs, to contribute his efforts to realize the assets of the firm, pay its debts, and do such other acts as are requisite to wind up the business of the firm. To that end the Code authorizes his appointment as liquidator, but, in our view, he is not to be held as an intermeddler merely because before that appointment he has collected assets and made payments of the debts of the firm. Story, on Partnership, Sec. 486, Civil Code Articles 1102, 1103, et seq. But it is equally clear the surviving partner is bound to faithfully account for all the property of the partnership when, at its dissolution, he takes charge of it, and it is no less his duty to keep and furnish when required proper accounts of his administration of the partnership. The account, such as it is, we find in the record is headed: “Bosley, liquidator, in account with Scheen & Bosley,” supplemented by the account of John T. liar die & Co. with that firm. The first named account begins 1st of January, 1896, and from an examination, we reach the conclusion that neither the amounts received by him from Scheen’s death to the 1st of January, 1896, nor the disposition made of such amounts finds any place on that account, beyond one of the debits “to balance $139.00,” which in Bosley’s testimony is stated to have remained on 1st of J anuary, 1896. It is true we find in his testimony that the amounts received by him prior to that date were applied in the business of the partnership; we have the reference to a diary and cash book, and to pages in the record, which furnish us no aid on this point. We find nothing in the record that conveys the explanation of the application of the amounts received prior to the 1st of J anuary. They should be debited to him in the account he should have filed, and was ordered to file; the items of his expenditure for the partnership, whether in payment of its debts, or for its other purposes, should have been stated on the credit side of his account and under the very explicit issues in the controversy, one specially directed to the amounts he received prior to the 1st of January, 1896, he should have supported these debits and credits by proof. We find no such accounting or proof. We have paused on this branch of the case, reluctant to charge the liquidator with the December sales in view of his general statement the amounts were applied for the partnership, not at all the equivalent of that account that should have been filed or proof of items that the law exacts. In our view, as the record is placed before us, *73the liquidator is to be charged with these sales claimed to s have amounted to nine hundred and eighty-seven dollars, and sustained in our view by the testimony, and the credit of one hundred and thirty-nine dollars deducted leaves eight hundred and forty-eight dollars for which he is chargeable. We find the stock of goods estimated a few days after the death of Scheen at three thousand five hundred and . forty-seven dollars. The estimate was made by the direction of the defendant, Bosley. It is offered to 'charge him with the amount it shows. If incorrect the burden was on him to show the real value of the stock, but without contrary proof we must take that estimate as our guide. Deducting nine hundred and eighty-seven dollars from three thousand five hundred and forty-seven dollars leaves the stock at two thousand five hundred and sixty dollars, and for this residue the' defendant proposes to charge himself with fifteen hundred dollars, the price derived by him from the sale in block to L. E. Scheen. It is claimed that the husband of the plaintiff desired to become the purchaser of the stock, was consulted with reference to the sale, and consented to it. His testimony is to the contrary, at least to the extent that he gave no consent. It is further claimed that the defendant, Bosley, negotiated a compromise with the firm’s creditors, thereby reducing the debts fully one-third, and the compromise depended on the quick realization of the cash requisite to be effected f only by the sale to t. E. Scheen. It is argued that if the goods sold for less than their value, the deficiency was fully compensated by the reduction of the firm’s debts, the result of the compromise. The sale of the stock of goods in the ordinary course of business is, at least,. the general rule for the liquidating partner. When he departs from that course and proposes to account for goods valued at twenty-five hundred dollars by two-fifths less, in our view, he can not escape liability by urging the sale in block for fifteen hundred dollars was to make a compromise" with the creditors.accomplishing a reduction of their debts. The proof shows the compromise was effected, and that the creditors insisted on its consummation within a final period of thirty days. But for all of that we can not hold that a liquidator, charged with accountability for property in his hands, can discharge himself from liability for disposing of the. property for less than its value by a compromise with a creditor effected with the cash he obtains, but what we must hold a sacrifice of the property. We are not prepared to establish that method as a guide for liquidators. In *74our view the liquidator is to be charged with twenty-five hundred and sixty dollars, the value of the stock disposed of for fifteen hundred dollars.
It is therefore ordered, adjudged and decreed that the Judgment of the lower court be amended so as to charge the liquidator with the amount of the sales prior to January 1st, 1896, eight hundred and forty-eight dollars ($848.00), with the stock at $2560, less $1500, andi that in other respects the judgment be affirmed with costs.