Court Opinion

ID: 6830651
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:52:04.222563+00
Date Added: 2024-06-11T16:04:32.970096
License: Public Domain

HOUGH, Circuit Judge.
There are but two, questions of law raised by this appeal. Eirst, is the appellant entitled to any accounting? Second, from whom is he entitled to an account ?
It is asserted that the underlying reason for an accounting herein is that defendants, or such of them as were members of the committee, were joint adventurers or quasi partners in a commercial or at least money-earning enterprise. The relation of committee *374members to each other is said to be like that commented upon in such eases as Marston v. Gould, 69 N. Y. 220, and Joring v. Harriss (C. C. A.) 292 F. 974.
We are not concerned with such definition; it is enough for our purposes that an unincorporated, self-created, and self-perpetuating body of geptlemen became lawfully possessed of a large amount of property belonging to them jointly, against which there were unquestioned, but unliquidated or unfixed, claims for expenses and services, and concerning the distribution of which the rules, records, and history of the committee itself gave no binding instructions. It was impossible to say that any member of the committee had qua such member any legal right to any definite or positively measurable portion of their joint property, but he was, equitably entitled to some share in whatever might be left after the payment of expenses and charges jointly incurred, but not fixed in amount by any rule or agreement of the committee. Such a situation presented difficulties that nothing but the plastic remedies of equity or the healing power of universal consent could overcome or adjust. .
As above noted, we are satisfied that there was no universal consent, and the situation presented at the meeting of September, 1920, was not one that could be overcome by a majority vote. One of a number of joint owners can prevent, if he wishes, a departure from the general rule that equality is equity, and the ground for that prevention may be either an objection to the allowance of demands against the joint owners as a whole, or the assertion of an equity showing the objector entitled to either more or less than an equal share.
Equally is it clear to us that the persons from whom the plaintiff is entitled to an accounting do not include those members of the firm of Brown Bros, who were not also members of the committee. The partnership entity of Brown Bros, was never a member of the committee. It is doubtless true that some, if not most, of the results achieved by and for the committee resulted from work done by. members of Brown Bros, who did not belopg to the committee, who identified themselves with the committee’s projects because their firm reasonably expected to profit from the committee’s success. Yet, with all this admitted, it remains true that the firm was but a servant, however important, an agent, however trusted, and a depository, however indispensable. In all these capacities it was entitled to compensation for services and to repayment of proper advances. But such compensation had to come from the committee acting jointly, and each committee member acting severally was entitled individually to object to any item of charge or compensation. The committee’s rules or form of organization gave no special right to a majority.
We are therefore of opinion that complainant is entitled to have an account stated by or on behalf of the surviving members of the committee of 1920, in which account the demands of the firm of Brown Bros., for charges, or compensation for services, must be stated. But neither the plaintiff nor the other committee members are jointly interested with the firm of Brown Bros, in anything. That firm is doubtless a creditor, which does not require it to be joined as an accounting party.
The bill was dismissed below in part upon the ground that the committee, in making the distribution complained of, acted in good faith. We see no reason to doubt this finding, but deem it immaterial. The point is not whether they did what they thought was right, but whether they could impose their will upon a dissenting joint owner. They did not constitute a corporation, and their terms of association contained no arrangement whatever regarding the method of distributing the joint property at the end of their labors. It must be done equitably, and no machinery was provided for ascertaining what was equitable, except that furnished by the existence of courts of equity.
It is urged as a reason for an accounting that the charge account of Brown Bros, contains a method of computing interest which is substantially usurious. We express no opinion on that point. It is agreed that this banking firm has a just demand for charges and expenses, but that the propriety of items, or the statement of them, is a matter for investigation by a master. Neither do we express any opinion as to what is, when all the circumstances are shown, an equitable system of distribution. The nature of the committee organization was such that all that can be now said is that the results reached by the committee itself may meet the requirements of equity, but what we now hold is that the method of reaching those results is not in accordance with that law which equity follows.
It is ordered that the decree below be reversed, and that the defendants who were also members of the committee state an account before a master, to which account complainant may file exceptions. It is further ordered that appellant recover the costs of *375this appeal. The master to be appointed by the order on our mandate shall be Hon. Wallace Macfarlane.