Court Opinion

ID: 6678631
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:18:33.438609+00
Date Added: 2024-06-11T16:00:46.366143
License: Public Domain

Mr. Justice Gary,
dissenting. ■ On the 16th day of July, 1883, Bevi Metz and C. J. Iredell entered into articles of partnership to do a banking business in Columbia, S. C., under the firm name of “The Commercial Bank,” to continue for five years from the 1st day of September, 1883. Metz was to put in $25,000, and Iredell guaranteed him from any loss in excess of this capital. Iredell was to devote his time to the business, and was to have the full management thereof. This partnership bank was opened for business on the 4th day of September, 1883. Previous to that time Metz had been a farmer and surveyor in Bexington County, S. C., and by his industry and thrift had accumulated a considerable fortune. Iredell for several years prior to said year had been, and at the time of the formation of the partnership was, the cashier of the Carolina National Bank of Columbia, S. C., and enjoyed the reputation of being a man of honesty, integrity, and business capacity. Metz was frequently in the bank, but left the entire business to Iredell, who managed it exclusively — signed the papers of the bank “C. J. Iredell, Manager.” The result of the first five years operation was complete insolvency, although Metz had every reason to believe, and did believe, that the business was pros*254perous. The partnership did a general banking business, loaned money, discounted notes, received deposits, sold exchange, and dealt in bonds and other securities. During said period the only knowledge Metz had of the conduct and management of said business was that furnished him by the monthly statements made out by said Iredell, commencing on the 4th day of May, 1884. Whenever the plaintiff made inquiry as to the condition of the partnership affairs, he was always assured by Iredell that the loans and discounts were well secured, and that the bank was in a prosperous condition. Dividends were declared at or near the end of the first and second years, and afterwards semiannually, beginning from the 1st of January, 1886, and were paid or credited to the partners. The total amount received by each up to the 1st day of September, 1888, was about $13,000. On the 1st day of September, 1885, the plaintiff deposited in said partnership bank $20,000, and received therefor a certificate bearing interest at the rate of ten per cent, per annum, which interest was paid up to the 1st September, 1888. At the end of five years the defendant, Iredell, upon request of the plaintiff, made a statement in writing of the profits of the whole period, from which it appears that they exceeded $26,000. Iredell well knew this statement to be false. Several bad loans had been made, which aided in causing utter r m condition of insolvency was m. community, and was only km ■ day of September, 1888, the . : ; was limited to terminate unci' a continuance of the partners! tiff was willing to continue the- 1 dell would contribute $12,500 stock. Iredell declined t<> ‘-, the money! The plaintifí ¡' partnership must be wound 1 , ■ Iredell went to work to ¡ he accomplished, and a clu-D •vency at that time. This spected by any one in the by Iredell. On the 1st on which said partnership id articles of partnership, as considered. The plainsiness, provided C. J. Irens one-half of the capital ecause he did not have >ld him the affairs of the peedilyas practicable, a chartered bank. This ■; obtained for “Comrner*255cial Bank of Columbia, S. C.” The chartered bank went into operation on or about the 9th day of March, 1889, and the books of the partnership bank were marked “closed” on that day. The only difference in the name of the old and new banks was, that the new bank omitted the word “The” before the “Commercial.” The new bank started its business with the same officers, same sign, place of business, pass book, checks, vault, and stationery as the old bank, and with its good will and customers. When the partnership bank closed, Iredell opened an account in the defendant bank under his name, as C. J. Iredell, manager. All money, assets and property of the partnership transferred to the new bank before the 12th day of February, 1891, were credited as cash on said account, subject to his check as manager, and were drawn out on the check of C. J. Iredell, manager. He deposited to the credit of said account all collections of notes, overdrafts, &c., of the partnership bank. Through the operations of this account, after the 8th day of March, 1889, up to the 12th of February, 1891, when he resigned, Iredell created large overdrafts in the defendant bank, which he closed up by notes nuder his name as C. J. Iredell, manager. All the claims of the defendant bank save two (those of Green and Ford, which were assigned to said bank,) against the partnership bank, grew out of the operations of said manager account, and were created by said Iredell after the 8th day of March, 1889. The new bank when it commenced business purchased sundry notes of the partnership, under the guarantee of said C. J. Iredell, manager, and purchased also the vault, furniture, books, &c., at an agreed price, also balances then due by other banks. For the aggregate of these rediscounts and purchases, Iredell took credit on the books of the defendant bank, of date 9th March, 1889, in the name of C. J. Iredell, manager, for $43,294.29, which in a few days thereafter was checked out and applied to the partnership indebtedness. On the 12th of February, 1891, the defendant, Iredell, conveyed and transferred to the new bank certain property which will be hereinafter more *256fully mentioned. The foregoing statement is intended merely as an outline of the facts connected with this very voluminous case, which contains 908 pages of printed matter, besides the elaborate and able arguments of the respective attorneys.
When we come to a consideration of the exceptions, we will then refer more specifically to the facts of the case, that touch upon the questions raised by the exceptions. A reference to the decree of his Honor, Judge Aldrich, will show the different steps which have been taken during the progress of this case. The appellant’s exceptions are thirty in number, and very lengthy. We will not consider them seriatim, but will endeavor to state our views upon all questions properly arising under them. The first question raised by the exceptions which we will consider is: Was the partnership bank dissolved in March, 1889? The Circuit Judge and master both have found that the partnership was not dissolved at that time. In reaching the conclusion at which we have arrived, we are not to be understood as intending in an}' manner to contravene the well established rule of this Court, that findings of fact by the master, in which the Circuit Judge has concurred, will not be reversed unless they are not supported by any testimony or are against the manifest weight of the evidence. We feel less hesitation in concluding that this finding by the master, in which the Circuit Judge has concurred, should be reversed, because we have reached our conclusions by drawing, in our opinion, the reasonable and correct inference from those facts which in the main are not disputed: 1. After the 1st of September, 1888 (the time when the partnership was to be discontinued, as set forth in the articles of partnership), there was no agreement that the partnership should continue its banking operations for a definite period of time. 2. Metz was not willing to renew the partnership unless Iredell would contribute $12,500 as his one-half of the capital stock, which Iredell could not do for the lack of means. 3. Iredell knew that the affairs of the old bank would have to be settled up *257shortly after the time fixed for its limitation by the articles of partnership, and, therefore, set about getting a charter for a new bank. 4. The nature of the property sold to the new bank when it commenced business, to wit: vault, &c., was such that without it the old bank could not carry out the purposes of its organization. 5. Neither could the partnership bank accomplish the purposes for which it was organized, when the new bank assumed substantially the name of the old bank, started business with the same officers, same sign, same place of business, same furniture, &c., and with the good will and customers of the old bank. 6. Ire-dell made collections of the partnership assets through the new bank, and kept an account with the new bank touching the partnership affairs under the name of C. J. Iredell, manager; thus showing that the old bank was doing no active banking business whatever at that time. We are satisfied that the manifest weight of the testimony is against the finding of the master, concurred in by the Circuit Judge. The respondent, however, contends that a partnership formed for the purpose of dealing in money — as a banking partnership — the money so dealt in is not an incident to the business, but is the business itself. That notes given or debts due for bank furniture are incidental, deposits are the very business of the company; therefore, the partnership Was not dissolved until the deposits were paid, and- that for the purpose of paying off the deposits, Iredell had the right to act for the partnership as fully as when the partnership was in active business, under the articles of partnership. By reference to the articles of partnership it will be seen that it was organized “for the conduct of a general private banking business.” It loaned money, discounted notes, received deposits, sold exchange, and dealt in bonds and other securities. It was clearly the understanding of all parties concerned that the old bank was not to receive deposits after March, 1889. We can not accept the view of respondent’s attorneys, that deposits were the very business of the company. The receiving of deposits and making, payments *258thereof, was only an incident of the “general private banking business” for which the partnership was formed, but by no means the sole purpose of its organization. The amount due the depositor was on the same footing with any other .debt against the partnership. There was nothing in the fact that depositors had claims against the old bank, that would cause a continuation of its existence, in the face of such facts as otherwise would have worked a dissolution. The respondent contends that even if the Circuit Judge was wrong on the points so far discussed, still his decree must stand, unless he was also wrong in his finding of fact, that Metz authorized Iredell to borrow for the firm after March, 1889, and thereby made Metz liable for loans so made. It Is not contended that there was any direct authority for .such purpose; and, in our opinion, the manifest weight of the testimony is to the contrary. The circumstances show that Metz had no idea that the partnership was insolvent, and that there was a necessity to borrow money to wind up its affairs.
We will next consider the effect of the purchase by the defendant, in March, 1889, of the vault, furniture, sundry notes, &c., aggregating $43,294.29. It appears that this was a fair price for the property, and that every dollar of said amount was paid towards the extinguishment of the partnership indebtedness. Under these circumstances, even conceding that Iredell had no right to'sell such property, nevertheless the defendant bank became subrogated to the right of the partnership creditors, and have a right to set up this equity against the plaintiff’s claim. Bailey v. Bailey, 41 S. C., 337; Givins v. Carroll, 40 S. C., 413. The plaintiff’s demand growing out of the sale of said property cannot, therefore, be sustained.
We will now consider the effect of the assignment by Iredell of the property mentioned in “A,” on the 12th day of February, 1891, to wit: “Assets of partnership bank traced to defendant bank, held by bank as collateral. 1. Notes, as per Martin list, $7,603.62. 2. Gibson bond and mortgage *259$5,000. 3. "Twelve notes and liens to Gibson. 4. $10,000 of stock of the Columbia Oil and Fertilizer Co. 5. $900 stock of the Ninety-Six Oil Mill Co. 6. Package of forty-nine notes. 7. Lot of jewelry. 8. $5,000 stock in Congaree Construction Co. 9. Stock in the Piedmont L- I. & I. Co. 10. Real estate: Epstin farm,-Smith house, Peavy place, Harmon land, O’Hanlan. tract. (This excludes- the assets of the old bank transferred to the new bank 9th March, 1889).” The property aforesaid was conveyed and transferred to the defendant bank by Iredell to secure the payment of new obligations entered into by Iredell after the dissolution of the partnership, except the Green and Ford certificates which had been assigned to the defendant bank, and upon which-the Circuit Judge found there was due on the 1st of September, 1894, the respective sums of $1,350 and $124.50.- Iredell had no right to contract new obligations after the dissolution of the partnership, and the transfer, -therefore, of property belonging to the partnership, to secure payment of obligations for which the partnership was not liable, was null and void. The defendant bank, however, is not accountable for said property or its value in case it has been disposed of, for the following reasons: When the defendant bank made the loans to Iredell it supposed, and there were good grounds for it to suppose, that the assets of the partnership were pledged to secure the payment of said loans; the evidence shows that said loans were used by Iredell in satisfying the partnership indebtedness to a greater amount than the value of the property transferred as aforesaid. It would, therefore, be inequitable, under the circumstances, to require the defendant bank to account either for the property or its value, except as hereinafter mentioned as to the Green and Ford certificates.
We will next consider so much of the decree as renders judgment against Metz and Iredell, as partners, in favor of the new bank. The- Circuit Judge finds that Levi Metz and C. J. Iredell, as partners, are indebted to the bank in the sum of $54,920.64, as per statement set out in his decree. *260All the items therein set forth, except the Green and Ford certificates, are new obligations of Iredell, entered into after the dissolution of the old bank. The old bank is not liable for any of said items, except the Green and Ford certificates, and his finding should be modified so as to include only these two demands, which should be paid out of the property-assigned by Iredell for the purpose of paying them.
The appellant contends that it was error on the part of his Honor, the presiding Judge, to allow the claim of A. C. Alexander. The master, in his report, says: “The facts as to this claim are substantially these: A. C. Alexander had deposited with the defendant, Iredell, and obtained certificates of deposit two or three times in 1887 and 1888; these were subsequently paid. Afterwards, on the 17th of May, 1889, he went again and handed to the defendant, Iredell, a check for $500 and $150 in cash, and received from him a certificate, No. 118, in the usual form, signed ‘C. J. Iredell, manager of the Commercial Bank of Columbia.’ Subsequently on the 22d of July, 1890, he went back-, and to the face of the certificate and interest to that date he added $61.65 in money, and obtained the certificate No. 180 for $750,'■jin evidence as ‘G.’ * * * He did not recollect when the new bank began operation, and supposed that the old bank was in operation on the 17th»of May, 1889, and that he was dealing with it as before. When he obtained the last certificate he asked no questions, and seems to have had no definite idea as to what bank he was dealing with,” &c. The evidence shows that the transaction took place with the president of the new bank after the dissolution of the old bank. Under these circumstances, the defendant bank is liable to Alexander. If for any reason Alexander should not be able to collect his demand from the new bank, then the partnership bank would be compelled to make payment to him, as he did not have notice of the dissolution, although he had been a customer of the old bank.
The appellant complains of error on the part of the Circuit Judge in not holding that the corporators of the bank *261bad falsely certified to the Secretary of State, in March, 1889, that twenty per cent, of the capital stock had been paid in. While we might decline to consider the exception raising the question, on the ground that it only raised an abstract question, we may say that we agree with the Circuit Judge in the view which he has expressed in his decree.
The Circuit Judge has found that C. J. Iredell is indebted to Levi Metz in the sum of $48,112.75; the views herein-before expressed necessitate a restatement of the account between said partners.
There were two causes of action heard together by the master and Circuit Judge, and we will proceed to a consideration of the question raised by the exceptions under the second cause of action, being that of the Commercial Bank of Columbia, S. C., against Levi Metz. The facts are. as follows: In January, 1891, Metz, having no deposit in the defendant bank, drew three checks on this bank aggregating $5,700, which were paid and charged to him, creating an overdraft of $5,700. The overdraft was wiped out on the books of the bank by Iredell’s check for $2,600, on his overdrawn account, and by a deposit slip for $2,500, plus $600,. making $3,100, which Iredell made out in Metz’s name and put to Metz’s credit, and carried by the teller as “cash in hand,” until the 24th of January, when the whole $5,700— that is, the check of Iredell for $2,600 and the deposit slip for $3,100 — were changed back to Metz, who knew nothing of the credits on his account. Neither the check of Iredell nor the deposit slip ever yielded a cent to the bank. As the check was drawn on the new bank, and Metz received the money, or got the benefit thereof, we are satisfied, in view of all the facts and circumstances in the case, that the Circuit Judge was correct in rendering judgment against Metz for the amount stated in his decree.
For the foregoing reasons, we dissent from the judgment of the majority of the Court..