Court Opinion

ID: 6948919
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:28:55.517673+00
Date Added: 2024-06-11T16:08:00.937799
License: Public Domain

Scates, C. J. In the former case between these parties, 16 Ill. R. 471, et seq., we laid down the principles governing the relation in which these parties stood as partners, and property and effects like these about which they were contracting. We think, upon reconsideration, that the principles there laid down, and applied to the subject matter of this contract, under the surrounding circumstances, are correct, and are applicable to govern the property and relation here existing. The interpretation given the assignment of the interest of defendant, C. Coffing, in “ all property, debts, accounts, notes, boohs cmd papers belonging to the firm of Taylor & Coffing f is the legal and true intent and meaning of the parties, as expressed in the writing, and it must govern and control their rights, unless parol evidence is received to alter, change and vary that meaning. But that is inadmissible. Neither the capital put in by Coffing, nor the amount he had withdrawn, which was due from him, in taking the account between the partners, secured by the mortgage, was the property or effects of the farm of Taylor & Coffing. Neither of them passed to Taylor under the assignment of 27th of April, 1852. The money, which constituted the capital, became, in fact, as is contended, the property of the firm; and so did the goods purchased with it. The one or the other, remaining on hand, or their proceeds, unless withdrawn by a partner, was, in like manner, the property of the firm. But while this is true, the capital of the partners, for the purposes of the final partnership account, remains a distinct and separate thing from the money or property in which it was paid in. Although all the property of the firm may be destroyed, or may be exhausted in paying debts, yet this does not destroy the capital, or right to have an account taken between the partners for loss of capital, and that loss equalized, by refunding a portion of it, equal in amount to the agreed proposition in which the partners were to share the losses. An assignment, therefore, of all or a portion of the partnership property, assets and effects, by the firm to a stranger*, or by one partner to another, does not destroy the right to have a partnership account taken, to adjust the loss of capital, if the loss of capital is unequal, and the partners were to share equally. Had neither partner withdrawn anything from the firm, and owed nothing to be taken in account between themselves, the effect of this assignment from Coffing to Taylor would have been to settle, as between themselves, all the partnership affairs, except the loss of capital. Taylor, having agreed to share losses equally, would be liable to refund to Coffing $2500, one-half of the excess of his loss of capital above Taylor’s capital. We cannot sanction the idea that, however unequal the amounts advanced by the respective partners may be, that, in case of a loss of the capital, a clause to share the losses equally will not cover this, and apportion it accordingly. The contrary we deem to be the rule. The law does not deem that every partner shall lose the exact amount put in, in case of a loss of capital; hut, on the contrary, however unequal the amounts of capital advanced may be, its loss, or partial loss, is apportioned among the partners, in the degree or proportion in which they may have agreed to share the losses, if any is fixed; otherwise, equally. Here Coifing had withdrawn from the firm, and applied to his own use the sum of $18,340. On the 17th of May, 1857, he liquidated this account by executing to the firm a mortgage for the amount. After the execution of this mortgage, the firm continued to occupy a store room of mortgagor, worth $500 per annum, during 1851, and $600 per annum during 1852, until 27th of April, 1852, when C. Coifing assigned his interest in effects of firm to Taylor. During the same period, three other tenants of like premises, by direction of mortgagor, paid the rents to the firm. The amount due from firm, for use of store, 1st of April, 1851, to 1st of April, 1852, the end of first quarter, at $500 for former, and $600 for latter year, amounting to $525, together with the rents received from the other three tenants, amounting to $1,855.54, viz.: of Paul, $300; Coates, $800; and Harmon, $755.54, were all proper credits on the mortgage before the assignment of Oofhng’s interest in firm property. • These sums, amounting to $2,380.54, became the property of the firm before that day, and passed, by the assignment to Taylor. The interest accrued—$998.58—added to the mortgage debt amounted to $19,339.28. Deduct rents, and we have a balance due on the mortgage of $16,959.04. How, as between the partners, the assignment effected a final adjustment and settlement of all the partnership dealings, affairs, property and effects, except this item in account, of $16,959.04, due in settlement from C. Coifing, and the adjustment of the capital stock paid in. liad a settlement and division taken place on that day, Coifing might have refunded Taylor’s capital of $5000, as he did in effect, by transferring the plank road charter, banking house and bank to Taylor. Deducting his own capital, $10,000, would have left $1,959.04 to divide as profits, onelialf of which, $979.52, would be due to Taylor. But this was not done, and the matter stood, to grow more complicated in its statement, and less beneficial to Coifing. His mortgage debt bore interest, while his capital remained unproductive, thus increasing constantly the amount of his liability on final settlement. But the interest bearing debt is subject to be diminished by the amount paid, on the day of assignment, to Taylor. For this is the legal effect of that transaction: Coifing paid $5000 on his debt in property, and received credit on his mortgage. The firm sold this same property, on the same day, to Taylor, at that sum. He should have been so charged for it on the firm books, as so much withdrawn. This is, we say, the legal effect of the transaction. Mor do we perceive how it operates to give Coifing credit three times, and charge Taylor as often, as contended by counsel. It is precisely the same thing as if Coifing had paid in $5000 in cash, and received credit on his mortgage, and then the firm had paid over to Taylor, and charged him in account with the same identical money. There is no other legal and fair way, that we can perceive, of passing credits and debits, on paying a debt from a partner to his firm, and then allowing another partner to withdraw it, and appropriate the same money or property to his individual use. This is the legal effect of this transaction, though not the form of it. The form of effecting it was a direct ‘transfer of the private property of Coifing to íaylor, in private ownership, with an agreement to credit the value on Coffing’s debt to the firm. To complete the legal effect, the law will charge Taylor for it, in account, in the partnership books. Coifing was entitled to credit for the full value on his account, as an individual partner, and, at the same time, became entitled to one-half of it, as a member of the firm. Taylor, as a member of the firm, owned the other half; and yet, when it is paid over to him, or withdrawn for his individual use, he should be charged in account, on the partnership books, with the full value. This is the only mode of keeping an account current of such transactions. To charge only one-half the value, on the idea that the other half is his, and he ought not to be charged with the half he owns, as is suggested as the only true and just rule, would be a falsification of the hooks. 'Hpon this mode the assets would be exhausted, and yet the books would only show a disposition of one-half of them. The idea confounds the distinction between the jvt'm and the individual members. We have said that the mortgage debt bore interest. We shall proceed, therefore, to state the account upon the mortgage, by adding the interest to it, from time to time, when rents were paid or became due from Taylor & Co., for occupation, and, after deducting such rent, then proceeding, as before, to the next payment. The balance due on the mortgage on 27th of April, 1852, after deducting the payment of $5000, was $11,959. 04. The rents received: and due for occupation, up to 20th of December, 1852, amount to $1,300. Deduct rents from debt, with interest, from time to time, of payments, and there is left $11,079.21. This process is continued in the same mode, making rests, at each period of payment, for addition of interest, when the payment will more than discharge the interest. We find the rents received and due for occupation, by Taylor & Co., after 20th of December, and up to May 1,1854, amount to the sum of $3,083.33, which leaves, of the mortgage debt due on that day, the sum of 8,931.73; and this sum, at interest to date of decree, 27th of February, 1857, makes aggregate of $10,444.15. That is the sum to be accounted for by C. Coifing in this decree. On the other hand, there appears to be in Taylor’s hands, received since 27th of April, 1852: The amount paid that day in bank and road charter, etc., $500; amount of rents received and occupation without interest, $4,383.33. Total, $9,383.33. We are of opinion that plaintiff is equitably chargeable with interest on the several sums received, and on the value of the banking house, charter, etc., from the respective times when received. The evidence shows that the property and moneys were applied to the individual use of plaintiff, and were kept in active use and employment for his advantage. Had the money lain dormant and unproductive in his hands, it would present a different aspect of the question. It was in his power, at any time, to have offered an adjustment of the partnership accounts, or to have filed a bill for that purpose. Under the circumstances of the case, it appears but just that he should pay interest. Under no mode of taking the accounts, are we able to arrive at the sum for which defendant obtained a decree. The true amount due on settlement is three thousand one hundred and seventy-nine dollars and eighty-five cents. The decree below will be reversed, and a decree will be entered here for that sum, together with the costs in the court below, in favor of John H. Coifing. Plaintiff in error will recover his costs, in this court, of defendants. The plaintiff in error will be directed to release record of the mortgage in the bill mentioned, according to the decree of the court below.