Court Opinion

ID: 6949740
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:30:01.438597+00
Date Added: 2024-06-11T16:08:02.352083
License: Public Domain

Catón, C. J. I adhere to the decree formerly entered by the unanimous opinion of the court. Separate Opinion by Walker, J. To determine correctly, the rights of the parties in this case, we must ascertain their intention, in executing the deed of sale by Coffing to Taylor, and the covenant from Taylor to him, of the same date. If this court gave them their true construction, when this case was considered on a former occasion, the conclusion then arrived at is undoubtedly correct. But if their intention was misapprehended, the account then stated between the parties was erroneous to a large amount. Coffing, by that deed, sold to Taylor his interest, as a partner in the firm, by this language: “ Has sold, transferred, assigned and set over, and by these presents does sell, transfer, assign and set over to the said E. D. Taylor, his heirs and assigns, all my right, title and interest in and to all property, debts, accounts, notes, books and papers belonging to the firm of Taylor and Coffing (except the indenture given by Coffing to Taylor and Coffing aforesaid, which is to stand and remain as it is, unaffected by this deed of sale,)” and Taylor, by his covenant of the same date, bound himself to pay all the debts owing by the firm, and also to credit the indenture given by Coffing, as referred to in his deed, by the sum of five thousand dollars, the amount allowed him by Taylor for his interest in the Illinois River Bank, and in the Salisbury Plank Road Company. It was held in 18 Ill. R. 422, in giving to Cofling’s deed a construction, that it neither passed to Taylor the capital advanced to the firm by Coffing, or his account with the firm. In that conclusion I am unable to concur. This deed, by the language employed, undoubtedly passed to Taylor all of his interest, of every description, in the firm, except in the instrument denominated an indenture, which was, on its face, an absolute conveyance of certain real estate, to defeat which, Coffing held a defeasance from Taylor, which rendered it in effect a mortgage. That was the only interest in the ■firm, whether consisting of property, debts, choses in action, claims or equities, whether between the firm and other parties, or between the members of the firm, in which Coffing had an interest which was reserved. And the very fact that it was reserved, by express language, renders it evident, to my mind, that no other right or interest was intended to be reserved. He transferred his interest in the books of the firm, and if kept in this instance, according to commercial usage, there was opened in them a stock account in the name of each member of the firm, in which he was credited by the capital stock advanced by him, and charged with any portion of it which he may have afterwards withdrawn. And as it was not shown in evidence that such accounts were not opened, the presumption may be indulged that they were opened in accordance with this general commercial usage. If such accounts were opened in these books, they were accounts that every accountant would say must be taken into consideration in making up a balance sheet, on a final settlement of the firm affairs, between the partners. And on such a settlement, Coffing would have had the right to receive the excess of his capital over Taylor’s, with interest upon one-half of that excess out of the firm effects, before Taylor received anything. Coffing would be a creditor of the firm, on a final settlement of its affairs by the partners, to that extent. He and Taylor, after he had received that amount, would be equal in capital, which would have to be paid out of the property and' effects of the firm, and then each would be entitled to one-half of the profits, if any were realized. They were each creditors of the firm, and had an interest in the firm property, debts, accounts, notes, books and papers, to that extent. And when Coffing granted all of his interest in these effects of the firm, I am at a loss to perceive how this interest did not also pass. The language employed is sufficiently comprehensive for the purpose, and the stock is not reserved by the deed. I am, therefore, of the opinion, that he by this deed transferred to Taylor, all right to receive from the firm, or from Taylor, any portion of the capital stock advanced by him. If it was not intended to pass, why was it not reserved in the deed, as was the mortgage ? This construction is fully sanctioned, I think, by commercial usage. It is believed the commercial world understands, that when a partner sells his interest in a copartnership without reservation, to a person not a member of the firm, that the capital advanced by him passes to the purchaser. If a bequest were made by a testator, of all his interest in a copartnership, of which he was a member, and the same language were employed, as is in the granting part of this deed, it is believed that no one would contend that the executor, as against the legatee, would have a right to withhold the capital stock advanced by the testator. Or, if the interest of a partner in a firm were sold on execution, or under a decree, that the purchaser would not, by his purchase, acquire a right to the capital stock advanced by the partner. Then, if such an interest does pass by a sale by a member of a firm, to a person not a partner in the firm, or by a bequest, or by a sale on execution or decree, no reason is perceived why the same rule should not apply on a sale by one partner in a firm to another. It must have been intended by the parties that everything pertaining to the firm and its affairs, as between themselves, should be settled, except this mortgage debt due from Ooffing to Taylor and Ooffing. Taking these instruments executed at the time, in connection with all the circumstances, and it seems to me that there must have then been a full, complete and final settlement of all the affairs of the firm, except this debt reserved from its operation. If this had not been their intention, why was not such unsettled portion reserved, as was the mortgage ? If the stock accounts were not settled, or did not pass by the sale, why was it that these accounts were not then adjusted, and the excess that would have been found to be in Coffing’s favor, not credited on the mortgage debt ? If all else was then settled but the stock accounts and this mortgage, there was not then enough remaining to refund the capital advanced by the partners. The mortgage debt was all the assets of the firm which then remained as joint property, and, after receiving the credit of five thousand dollars, it would have been inadequate to reimburse the capital of the partners. And it seems to me that they would then have settled these accounts, and after allowing Ooffing his excess of capital, with interest on one-half of that amount, to which he would have been first entitled as a credit on the mortgage, and whatever then remained, would have belonged to them equally. And Ooffing would then have received a further credit of one-half of that remainder, and the balance would have been due from Coffing to Taylor. Such an adjustment was so simple, that it would seem that business men would have certainly availed themselves of it, or have made some reservation of their stock in the sale, as they did in regard to the mortgage debt. The construction, it seems to me, is not warranted, that anything else remained unadjusted. When the mortgage debt was reserved, by express language, from the operation of the sale, that express reservation excluded all other things from its operation. All else was settled, or conveyed to Taylor, but the mortgage debt, which remained as it then was, unaffected by the sale. How was it then situated ? It was owing from Coffing to the firm, payable to the firm, and was the joint property of the firm. Everything besides being then settled and conveyed to Taylor, it remained unaffected by the sale, as it then was, a debt owing from Coffing to the firm, payable to the firm, and owned by them as firm property, just as it did before this transaction occurred. If it became the property of either party by that transaction, it did not remain unaffected by the sale, which the deed had expressly provided that it should. If it passed to Taylor by that sale, it thereby became individual, and not firm property, which would have certainly affected it. But, by this stipulation, it remained their joint property, precisely as if it had been a debt due from another person, and reserved by this sale, and all of the other affairs being settled, they held this debt in equal parts, and had it then been paid by Coffing, nothing would have remained but to divide the money equally between themselves, and close the entire concern. If this conclusion be correct, this debt belonged to the firm, subject to division between them. After deducting the credit of $5,000, there remained the sum of $13,341, one-half of which was $6,670, the amount each was entitled to receive on its division. Taylor afterwards received, of rents arising from the mortgaged property, $4,000, which, when deducted from his half, left still coming to him of the debt, $2,670. Add to this last sum, the interest which has accrued since it became due, .the sum of $906, and it will make the sum of $3,576, due from Coffing to Taylor on the 17th day of January, 1860, the date of stating this account, and for which last mentioned sum a decree will be rendered in Taylor’s favor, in conformity with this opinion, and the former decree rendered by this court in this case reversed, and that complainant, Taylor, recover his costs.