Court Opinion

ID: 6239491
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:40:55.465414+00
Date Added: 2024-06-11T08:58:09.292258
License: Public Domain

c. w. ahl’s appeal.
Opinion,
Me. Justice Williams :
The objects of the bill in this case were discovery and an account. The facts on which the plaintiffs’ right to the relief sought rested, are shown by the report of the master to be as follows:
Daniel Y. Ahl, Peter A. Ahl, and Carey W. Ahl were brothers, residing in Cumberland county, and for many years actively engaged in business. Prior to 1887, D. V. Ahl was doing business as an individual. He was engaged in the manufacture of iron at the Carlisle Iron Works with his brother C. W. Ahl, and he was also transacting business in connection with Peter A. Ahl under the firm name of P. A. Ahl & Bro. He was at the same time president of the Harrisburg & Potomac Railroad Company, which was then constructing its line of road through Cumberland county. P. A. Ahl and P. A. Ahl & Bro. were contractors with the railroad company for the work of construction, and were to receive their pay almost entirely in the stock and bonds of the railroad company. In the effort to secure the completion of the road, D. V. Ahl, P. A. Ahl, and P. A. Ahl & Bro. had invested money and pledged their credit to an extent that brought serious financial embarrassment to them. In this juncture the advice of family friends and persons interested in the early completion of the road was sought, and after a conference it was decided that the interests of the parties and those of the railroad company required the speedy completion of the section of the road between Langsdorf and Jacksonville, which was then being built by P. A. Ahl & Bro., but that embarrassments of the contractors were so serious as to make it desirable that the work should be done in the name of some other party. A formal transfer was accordingly made by P. A. Ahl & Bro. to Q. P. & T. W. Ahl, who finished the section, which was accepted by the company, *40and the stock and bonds delivered in payment therefor. As part of the same general arrangement, it appears that C. W. Ahl was to undertake-the conversion of the property of D. V. Ahl and P. A. Ahl & Bro. into money, and the payment of the debts of D. V. Ahl as an individual, and those of the firm of P. A. Ahl & Bro., with the money so received. To this end the partnership between D. Y. Ahl and C. W. Ahl in the Carlisle Iron Works was dissolved. A new firm, composed of C. W. Ahl and T. W. Ahl, his son, was formed under the firm name of C. W. Ahl & Son. The new firm bought the interest of D. Y. Ahl in the stock of materials, pig-iron, blooms, tools, etc., on hand at the time of the dissolution, and agreed to pay royalties for the ore and wood used for charcoal and other purposes, taken from the lands owned in part by D. V. Ahl. C. W. Ahl & Son also bought some real estate from D. Y. Ahl. The money thus falling due from the firm of C. W. Ahl & Son for stock, materials, tools, etc., and for royalties and purchase money, was to be paid to C. W. Ahl, who was also to receive the stock and bonds due from the railroad company to P. A. Ahl & Bro., to P. A. Ahl and D. Y. Ahl, and who was to collect the rents due on several farms belonging to D. Y. Ahl, and then in the hands of tenants. With these moneys, and the share of the profits of the Carlisle Iron Works which he agreed to pay to D. Y. Ahl, he was to pay the debts of D. Y. Ahl and P. A. Ahl & Bro., as fast as was reasonably practicable. Several hundreds of thousands of dollars passed through the hands of C. W. Ahl under this arrangement, and the purpose of this bill was to secure a final account from him. The answer alleged the proper appropriation of all the money received, and the payment of a considerable sum in addition thereto, so that a balance of many thousand dollars was due from the plaintiffs to the defendant.
The statement of the account was referred to two masters, who heard the parties at great length, investigated the transactions involved, and stated air account between them, showing a balance due from the accountant. Their report was presented to the court, excepted to, recommitted for further hearing, modified by the masters on rehearing, and again laid before the court. It was again excepted to, the exceptions argued for several days before the court, and after further consider*41ation the court concurred in the findings of the masters, and made the decree recommended by them.
Our first question is over the effect that should be given to this decree, and grows out of an expression made use of by the learned judge in his opinion. In that opinion, after a discussion of some of the legal questions involved, he says, speaking of the details of the account: “ To this report seventy-four excep.tions have been filed by the defendant, and eight-by the plaintiff. It is impossible, with the time that can be spared from other duties, to discuss these exceptions in detail.” In another part of the opinion he refers to the items of the account covered by the exceptions thus: “ An examination of these would require more time than is permitted to us; and, as it is extremely important that the rights of the parties should be finally adjusted at the earliest term of the Supreme Court, we are reluctantly compelled to close the case here by a pro forma decree overruling the defendant’s exceptions, and confirming the report of the masters.” The use of the phrase “pro forma decree ” is held by the plaintiff in error to justify the position that the questions were not considered by the learned judge, but turned over to this court for examination upon the report of the masters and the evidence. But we do not so understand the court below. It is reasonable to suppose that the word “examination,” in the second of these extracts, was used in the same sense by the learned judge as the word “ discussion,” in the first, and referred to the separate treatment in his opinion of each of the eighty-two exceptions on file. We do not understand him to say, nor does his opinion indicate, that he has not considered the questions which were raised and elaborately discussed before him, but we understand him to say that he has not the time to put his reasons on the record for his ruling on each exception. He cannot “ examine ” or “ discuss ” separately each separate question raised for want of time; and for that reason he makes his decree, giving only such reasons for it as he has time for. Such a decree is in no sense a pro forma decree, notwithstanding the use of the words by the learned judge who entered it. The opinion states the views entertained upon the important legal questions involved, and concurs in, without discussion, the conclusions of fact reached by the masters. Speaking of the work of the masters, the judge fur*42tber says in his opinion: “ The learned masters have devoted to them [the accounts] patient and painstaking industry. They are learned in the law and skilled accountants, and the result of their efforts is a monument to their ability.” Taking the opinion as a whole, it seems quite clear to us that the learned judge did not decide this case without examination, nor without reaching a conclusion upon the questions of fact, but that after examination and hearing he intended to concur with the masters. For this reason we feel justified in giving full effect to the decree. It disposes of the questions of fact, unless the appellant can overcome its prima -facies, and point out its errors clearly.
Our next legal question is, what was the relation existing between D. Y. and C. W. Alii, after the dissolution of the firm of O. W. Ahl & Bro., and the transfer of his property by the former to the latter for the payment of debts ? It was not that of vendor and vendee simply, although C. W. Ahl & Son were purchasers of large amounts of property, real and personal, from D. Y. AM, as part of the general arrangement. The purchase money was not to be paid to D. V. Ahl, but it was to remain in the hands of C. W. Ahl for the purpose of enabling him to pay the debts of his brothers. It was to be used in the same manner as the stock and bonds of the railroad company, and the rents and royalties derived from the real estate of D. Y. Ahl. The whole fund, from whatever source derived, was impressed with a trust created by the surrender of the property to C. W. Ahl for appropriation to a specific use, and by its acceptance by him for that purpose. By this arrangement C. W. Ahl was invested with the control of this property, he was entitled to the custody of the fund, and he was bound to apply it upon the debts of D. Y. Ahl and P. A. AM & Bro. He was not the legally appointed, but the voluntarily chosen, assignee of his brothers, and he held the assigned estate upon the trusts and for the uses contemplated by the arrangement. The masters were right, therefore, in holding him liable to account as a trustee for all the funds that came to his hands from the property of D. V. Ahl and P. A. Ahl & Bro., whether derived from real or personal estate.
Another question raised is whether the partial accounts that were attached to the answer as exhibits were proof, prima fa*43cie, of the items appearing on them, so as to shift the burden, and compel the plaintiff to show them to be incorrect, or be bound by them. They had been furnished to D. V. Ahl, and he had made no specific objection; and this, it was contended, was an admission of their correctness. The general rule that where a seller renders an account to the buyer of goods sold and delivered to him, and he does not object within a reasonable time to the correctness of the account, his conduct will be regarded as an admission of the items of which the account is made up, is familiar, and will not be controverted. The reason for the rule is that the transaction is fully within the knowledge of the buyer. He knows what goods he has purchased ; and if he receives the bill of the seller, and makes no objections after a reasonable time for examination, his conduct may fairly be regarded as an admission that the account rendered is correct, which may be given in evidence against him when he is called upon to pay for the goods, and will make a case against him prima facie. So, also, a principal, when notified of the acts of his agent, must disaffirm them within a reasonable time, or ratification may be presumed: Porter v. Patterson, 15 Pa. 229. But this rule is not applicable in the case of an accounting trustee, for the reason on which it rests is not present. The cestui que trust has not the means for verifying the account within his reach, except as to such items as may relate to himself personally; and his failure to object is fairly referable to his want of knowledge. The partial accounts under consideration afford an illustration. They were made up from the books of C. W. Ahl & Son, or those of C. W. Ahl. These books were not accessible to D. Y. Ahl, and he had no right to demand an inspection of them. He had no means of telling whether the abstracts furnished him were correctly taken from the books of the individual or firm to whose transactions they related, or whether they correctly represented such transactions. If C. W. Ahl had kept, as trustee, an account with the trust-estate, as it was his duty to do, and the statements furnished to D. Y. Ahl had been taken from the books so kept, a different question would be raised; but he kept no such accounts. His bank-accounts, if examined, would have afforded no help, for he mingled the moneys belonging to the trust, those belonging to himself, and those belonging to *44C. W. Ahl & Son together, and deposited them all to his individual credit. D. V. Ahl had therefore no means of verifying the statements furnished him, and he was in no position to admit or deny their correctness. His failure to object raises no presumption against him, and the burden of proof remains on the accountant.
The masters were right in requiring C. W. Ahl to account for all the moneys he received, and show to what uses it had been applied. But as the defendant had kept no account with the trushestate, and had no books to lay before the masters, how were they to proceed ? They had necessarily to set about gathering the materials from which to make up the trustee’s account. The profits realized from the Carlisle Iron Works, the rents, royalties, and purchase money due from C. W. Ahl & Son, could be collected from the books of C. W. Ahl and C. W. Ahl & Son. These books were under the control of the accountant, and he should have made haste to place them at the service of the masters, and to render them all the aid in his power in extracting from them whatever related to the trust. Instead of doing what was his plain duty in this respect, he produced such books as he was required by an order of court to produce, and not until their production was necessary to avoid a charge of disobedience. The masters complain in their report that, in their efforts to state an account, they met at the hands of the accountant, not co-operation and assistance, but evasion, delays, and a withholding of the means of information that were under his control. Having left them to grope after the facts as well as they could without his aid, it is with very poor grace that the accountant now comes to allege his ability to convict them of error by books that have been all this time in his possession or within his control. These books should have been laid before the masters. The accountant’s knowledge of what they contained should have been put at their service, and his aid rendered them in stating the account. His personal interest and considerations of duty both demanded this of him. This bill was filed soon after the manufacture of iron at the Carlisle Iron Works by C. W. Ahl & Son ceased. The circumstances were then fresh in memory. What books were kept at the furnace by his employees, and for what purposes, he must have known; and they were subject *45to ids order. His attention was drawn by the amended bill to the subject of profits in the manufacture of iron. No one could know what they were, or had the means for fixing the total amount of such profit, so well as he. But he stated no account, he did not produce the books of his firm, or help the masters to the items from which the account could be made up. After they had done the best they could without the help he was in duty bound to render, he proposes to show that they have made some mistakes, by means of the books heretofore withheld from them. This is not a position calculated to recommend the accountant to consideration at the hands of a chancellor. The same judge who heard the cause in the court below heard the motion to reopen and recommit the report for the second time to the masters, and, after a full and protracted hearing, refused it on the merits. It is enough to say, upon the subject of the profits of the Carlisle Iron Works, that the masters had before them competent evidence on which their statement of the account can fairly stand. If the account as they have stated it bears heavily on the defendant in any particular, he should charge it to himself, and to his conduct during the examination. His position was antagonistic to the masters from the outset, and he compelled them to go in search of facts which he should have furnished, and which it now seems he had the means for furnishing.'
The complaint that the masters did not give sufficient weight to the mortgage for $75,000, given by D. V. Ahl to C. W. Ahl, as affording evidence of an indebtedness for that sum of money existing at the date of the mortgage, is equally unfounded. The answer of the defendants states that the mortgage was given to take the place of a judgment held by C. W. Ahl, which he was then about to release in order that a new mortgage might be made by D. V. Ahl for $40,000, which should be a first lien on the lands of D. V. Ahl bound by the judgment, and be negotiated to raise money for the purposes of the. trust. The mortgage thus substituted for the released judgment was made to take effect subject to the lien of the mortgage for $40,000, and was accompanied by an agreement in writing providing in explicit terms that the mortgage should stand for so much as might be found to be due to C. W. Ahl on settlement, and no more. The mortgage was given, there*46fore, according to defendant’s version of it in his answer, not because the precise sum named in it was due at its date, but as a device for continuing the lien previously furnished by the released judgment until the amount really due upon it could be ascertained.
The question over the competency of T. W. Ahl as a witness is clearly immaterial. The masters thought him incompetent, but they heard him under objection, and, upon consideration of his testimony, they find him to be unworthy of credit. It would be idle, therefore, if we thought the masters wrong on the question of competency, to send this case back to them for that reason, when we know that his testimony was rejected on the ground that he was not credible, if competent. Questions of credibility are for the courts that see and hear the witness, and their decision is not reviewable under any ordinary circumstances.
Another question which has been earnestly pressed by counsel, relates to the validity of the agreement of April 3, 1877, for the division of the profits arising from the manufacture of iron at the Carlisle Iron Works. It is urged that this agreement is not binding because of the want of a consideration to support it; but it recites the agreements of sale and lease made on the previous day by D. Y. Ahl, and purports to rest upon them. The consideration was the sale by D. Y. Ahl of his interest in the iron works to his brother C. W. Ahl, and the turning over to him of the entire.plant, upon the terms stated in the contract of April 2, 1877. This appears upon the face of the paper, and furnishes a sufficient consideration to support the agreement. There was nothing, therefore, on the face of the agreement, and there was nothing in the evidence, to justify the masters in holding it to be of no value.
The relation in which the parties stood to each other, the obligation to account, and the general lines of investigation being thus settled, what remains is a marshaling of the items of debt and credit. This was carefully done by the masters, and their work has been approved and concurred in by the court below. We have given time and labor to an examination of the account, and the alleged errors therein, and we do not feel constrained to disturb it. Upon some of the questions we might, if this was an original hearing on exceptions, reach *47a different conclusion from that which the masters have reached, but we are satisfied that there was evidence before them on which their findings may rest, and we cannot now disturb them. At this stage of the case, we are not to balance the testimony with a view-to settle the question of mere preponderance, for it is enough that there was competent evidence before the masters on which they might reasonably find as they did. If the defendant had been just to himself or his brother, whose confidence in him seems to have known no bounds, he would have kept the trust moneys separate from his own, and he would have kept full and accurate accounts with the trust-estate. Then, when called on to render an account of his important stewardship, he could have done so promptly and intelligently, and, if so required, submitted his account to the examination of a court of equity with confidence. Failing to do this, the least that he could do was to place the books on which he had made entries relating in any manner to the trust fund in the hands of the masters without delay, and to render them all the aid in his power in stating the account. He did none of the things that a court of equity had the right to expect of a trustee. His attitude was one of hostility, and obstruction. It resulted in delays and difficulty in the proceedings, and perhaps in uncertainty in results. If it also resulted in some mistakes, he cannot eonscionably complain of it at this stage of the ease.
Appeal dismissed, at costs of appellant.
E. W. BIDDLE ET AL.’S APPEAL.
Opinion,
Mb. Justice Williams :
The principal reason for the appeal in this case is the allowance by the masters of $10,000 to C. W. Ahl as compensation ■for his services as trustee. This, it is contended, should not have been allowed, because the trustee did not keep the trust funds separate, but mingled them with his own, and those of C. W. Ahl & Son, in such manner as to make it difficult to trace them, and because he did not put his books and papers relating to the trust-estate in the hands of the masters, but assumed and maintained an attitude of antagonism to them throughout their investigations. These, it is urged, are sufficient reasons for denying compensation, and have been so *48recognized by tbe courts of this state in several cases which are cited.
But the masters ruled this question on what they considered the peculiar facts of this case. They admitted the existence of the general rule set up, but they declined to apply it in this case, because of reasons that were special to it. They found that valuable services had been rendered by the trustee ; that important responsibilities had been assumed and borne for many months by him, and that large sums, reaching an aggregate of nearly a half million of dollars, had been collected and disbursed among the creditors of D. V. Ahl and P. A. Ahl & Bro. Speaking upon this subject in their report, they say of the defendant: “ He was thus rendering them valuable services in their embarassed condition, and his purpose clearly was to relieve them from their pressing obligations, and, if possible, to extricate them from their financial difficulties, without giving much heed to the requirements of the law in keeping the trust funds intact, and the rendering of exact accounts of receipts and disbursements, with vouchers, as required of a trustee.” For the reason thus stated by themselves they allowed compensation, notwithstanding the failure of the trustee to keep the funds and the accounts of the trust estate separate from those that belonged to himself or to his firm. The services rendered were certainly of great value to D. Y. Ahl, to P. A. Ahl, and to their creditors. The account as stated by the masters charges the accountant with all he has received, so that no loss has been sustained by those entitled to the fund; and the masters report that notwithstanding his bad methods, and his apparent reluctance to give them the benefit of his books and his aid, he is entitled to an allowance for his services. Fortunately, there is no unbending rule which a court of equity is bound, under all circumstances, to apply in cases of this kind; but that may be done which in good conscience ought to be done in each particular case. As the masters and the court below concur in the opinion that compensation should be allowed, we are not inclined to disturb the decree upon this ground; but it must nevertheless be modified.
When the decree was made, there was pending in the court below a bill in favor of Q. P. Ahl, one of - the parties in whose names the section between Langsdorf and Jacksonville was *49completed, in winch he claimed that bonds to the value $87,600, which had been received by C. W. Ahl, the trustee, belonged to him, and should be accounted for to him. This bill has now been disposed of by a decree of this court adversely to the claims of Q. P. Ahl, and the bonds claimed by him found to belong to the trust estate, and to have come properly into the hands of C. W. Ahl. The value of these bonds was not included in the original, decree in this case because of the pendency of the bill of Q. P. Ahl; but they should now, since the dismissal of that bill, be accounted for by C. W. Ahl as part of the fund administered by him, and included in this decree. The decree as entered in the court below was for $10,363.40. To this should be added the value of the bonds involved in litigation when the decree was made, which was $36,700. A decree is therefore now entered for $47,963.40, with interest from the date of the decree in the court below. As the real contest on this appeal has been over the right to compensation, as to which the decision of the court below is sustained, no costs are awarded.
On January 6, 1890, the following was filed:
And now, January 6, 1890, the decree heretofore entered in this case is now amended so that it shall read as follows:
The decree of the court below is affirmed at the costs of the appellant.