Court Opinion

ID: 6675620
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:15:35.888603+00
Date Added: 2024-06-11T16:00:41.777056
License: Public Domain

The opinion of the Court was delivered by
Mr. Ohiee Justice Simpson.
A mercantile firm, consisting of the plaintiff, Albert Gr. Maybin, Reuben S. Chick, Pettus W. Chick, and R. Moorman, was formed in 1869, in Newberry county. The business was a general grocery, and continued until some time in 1873, when, Mr. Moorman having died, it was wound up. The two Chicks also died some time after Mr. Moor-man. The partnership proved insolvent, and the surviving partners, consisting at that time of Maybin and the two Chicks, had to contribute from their private estate to the payment of the outstanding debts against the firm. During the existence of the partnership, to wit, on June 29, 1871, Mr. Moorman, who was the active business manager of the concern, and especially of the financial department and bookkeeping, being a subscriber for ten *350. shares in the bank of Newberry, charged himself with $1,000, drawn from tl\e firm and used by him in paying for this stock, which stock has been since standing on the books of the bank as the individual property of Moormain, the dividends thereon having been received by him up to his death in 1873, and paid to his executor since up to 1878, the subsequent dividends still remaining in the bank.
Under this state of facts, the plaintiff, as survivor, instituted the action below in May, 1878, against the executor of R. Moorman, in which he prayed that the stock and • dividends accrued since July 1, 1878, be adjudged the property of the firm, and be turned over to the plaintiff as survivor thereof. In other words, the action, though presenting some of the features of an equity proceeding, is in substance an action for the recovery of personal property, and must therefore be governed by the law as applicable to such actions, and especially the right of action must stand or fall upon the question of title, legal or equitable, in the plaintiff. The defendant, appellant, in his answer, claims title, and further pleads the statute of limitations.
The case was referred to the master, who reported the above facts, and the additional facts that in October, 1873, after the death of Mr. Moorman, the private accounts of the partners stood as follows: Robert Moorman, $3,368.10, subject to a credit for services unpaid $3,600, leaving to his credit $231.90; Albert G. Maybin, $4,178.50, less credit for services $4,000, leaving him indebted $198.05; R. S. Chick’s account, $237.29, and Pettus Chick’s, $2,335.27. The $1,000 drawn out by Mr. Moorman was included in his account of indebtedness above. After the dissolution of the firm, and after applying all available assets to the debts, there was still a balance of indebtedness outstanding of $9,959.35, to which the surviving partners contributed out of their private estate as follows: A. G. Maybin, $4,490.15; P. W. Chick, $2,245.07, and R. S. Chick, $2,245.07, leaving still a balance of $979.36 unpaid. It further appeared in evidence that A. G. Maybin’s bank stock, and also that of P. W. Chick, each for $1,000, ivas paid out of the firm funds at the same time and in the same way as that of R. Moorman’s.
Upon these facts, the master held as matter of law, first, that *351the ten shares in the hank of Newberry having been purchased with partnership assets, and not having been, accounted for by the deceased partner; belonged to the partnership; and, second, that the statute did not begin to run until the death of Moor-man, October, 1873, and the plaintiff having commenced his action within six years thereafter, the action was not barred. Upon exceptions, the Circuit judge sustained the master as to both of these principles of law, and gave leave to the plaintiff to apply for such orders as might be necessary to obtain the stock, with costs to be paid out of the proceeds of said stock.
The main question involved in the appeal is as to the title to the stock. Has the plaintiff such title, either legal or equitable, as would authorize a recovery on his part ? This is a very different question, it will be observed, from the accountability of the estate of Moorman for the money which he drew out and used in purchase of the stock. That question might be raised in a different proceeding, but it is not involved here. Is the title of this stock in the plaintiff as survivor of the partnership ? It is conceded that the stock was taken by Mr. Moorman as an individual and in his own name. It was so entered when the subscription was made, and it has so continued ever since, the dividends being paid to him during his life, and to his executor since his death up +o 1878. It is clear, therefore, that as to the legal title the plaintiff has no standing. In fact the recovery is not urged upon that ground, but it is contended that, Mr. Moorman having used partnership funds in the purchase of this stock, the partnership has an equitable title which may be enforced by the proceeding below, and the effort is to bring the case under the operation of the principle which allows trust funds to be followed into the property in which it may be invested in violation of the trust.
This principle is a correct principle, and has been long established, but does it apply here? Was Mr. Moorman a trustee in the sense of this principle, and was it a violation of his duty as one of the partners to draw from the firm assets the sum which he did, and appropriate it to his own use in the purchase of this stock ? This is the turning point of the Case. There is no doubt that each partner can bind the firm within the scope of the *352partnership. By the partnership itself they hold'each other out to the world as worthy of confidence. This is necessary to the success of enterprises involving associated capital, and in the absence of fraud or conspiracy they can each draw from the common till for their own and individual purposes, charging themselves at the same time with the amount so drawn. They can pay their individual debts by giving credit to their creditor on a claim due by him to the concern when bona fide done. “One of several copartners can discharge his individual debts to a third person by releasing or giving a receipt to such person for a debt due by him to the firm.” Survivors of Halls, Kirkpatrick & Co. v. Coe, Green & Randolph, 4 McCord, *137.
There is no allegation or intimation, springing either from the testimony or presented in the argument, of fraud or conspiracy on the part of Mr. Moorman; on the contrary, this is especially disclaimed on all hands, and it is apparent that there was no concealment of the transaction by Mr. Moorman from his partners. He drew the money from the till and promptly charged himself with the amount. It is true he kept the books, but they were open to the inspection of the other members of the firm, and if they failed to become acquainted With this fact, this was due as much to their own negligence and inattention as to any default of duty on the part of Mr. Moorman.
In the absence of concealment of the transaction, and of all purpose secretly and improperly to appropriate a portion of partnership assets to his own use, and in the presence of the fact that he charged himself upon the books with the amount drawn out, we think, under the law applicable to partnerships and the facts of this case, he had the right to do so, and having done so, he became a debtor to the concern for said amount; that the stock purchased became his individual property, and is not subject to the equitable claim of the plaintiff. This would be the law independent of the fact that Mr. Moorman was a salaried employé of the concern, with his salary as salary unpaid at the time; but with this fact appearing, there is still greater reason why the transaction should be unimpeachable.
Under the view which we have taken of the case above, it is unnecessary to discuss the question of the statute of limitations *353raised in the appeal. We think the judgment of the Circuit Court, that the bank stock in question, with the unpaid dividends thereon, is the property of the late firm of R. Moorman & Co.,. was error, and therefore on that ground said judgment should he reversed. .
The judgment of this court is that the judgment of the Circuit. Court be reversed.