Court Opinion

ID: 7946748
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:21:23.668136+00
Date Added: 2024-06-11T16:33:42.514628
License: Public Domain

Ostrander, J.
(after stating the facts). It is apparent that in the court below, and in this court, the real differences of the parties concern the actual and legal relation of Mr. Hannah and his executors to the property embarked in, and the product of the lumbering and manufacturing operations carried on by complainant and his partner, Payn, and afterwards by Mr. Hannah and his representatives. To understand this relation, some reference must be made to the testimony. That establishes, I think, the following facts: The debt evidenced by the note of complainant which is above set out was not, in its inception, the ordinary debt created by the lending of money. Complainant was a public officer, and Mr. Hannah was his surety, or was one of his sureties. A discrepancy, or shortage, in his accounts was made good by Mr. Hannah. The note represents the whole or a part of this sum, and the security given was, as we infer from the record, such as complainant could furnish. The Kalkaska *266lands were then being lumbered by complainant and one George Payn, who had made various contracts with various persons for the putting in of logs, the hauling of cord-wood, and the manufacture of the logs into lumber and shingles. The sale of the manufactured products had been arranged for, and credit had already been extended to Steward & Payn on account of the operations, and in turn they had advanced to contractors money so that some of them were indebted to the firm. Roads had been built from the land to the place where the logs were to be delivered for manufacture. Mr. Payn had an interest in the land (the title being held by complainant) and in the proceeds of the lumbering operations and had principal charge of the business of Steward & Payn, or Payn & Steward, so being carried on. Matters were in this condition when complainant proposed those lands and the personal property used thereon in conducting the logging operations, and the logs and lumber already cut, as security for his debt. Mr. Hannah consulted with Mr. Payn, and so did complainant. Payn agreed that he would consent to the proposal if he could continue in charge of the' work. I do not know just what Payn’s interest was; but it is clear that both complainant and Hannah considered that he had an interest, and that his consent should be secured.
That complainant understood that the lumbering and manufacturing were to be continued is, in my judgment, made clear, and that he participated therein, after turning the property over to Mr. Hannah, is equally clear. I find that the understanding was mutual. I do not perceive any legal objection to the arrangement; all parties in interest consenting thereto. It is true the property was turned out as security for a debt, and Mr. Hannah was empowered to sell it. But I do not understand how com-, plainant can now object to the legality of the further arrangement according to which the personal property, such as horses and equipage, was continued in the service in which it was already engaged, or by what right he may now complain that instead of selling the property, includ*267ing the land, thus interrupting all contracts which had been made by Steward & Payn, the timber was manufactured as he agreed it should be. The business was carried on, under the arrangement, from October until March. Of this fact there can be no doubt. It was thereafter continued, without any protest or demand on the part of complainant. Mr. Hannah had as much and the same authority to continue the business after March, 1905, as before that time. That complainant had little, if anything, to do with the business after March, 1905, is not a fact of any importance. That Mr. Hannah declined to proceed with the business if it was to be managed by complainant, or if he was to be employed at wages, is a fact easily accounted for. The understanding from the beginning was that Payn, and not complainant, should be manager, and to this complainant assented. The bill of complaint was filed long afterwards. It is framed according to the theory that complainant is entitled to an accounting and to have the fair and reasonable profits arising from the business applied in reduction of his debt. It is not intimated therein that authority to carry on the business had not been given. Complainant took the chances of a profit to he produced by Payn’s management, to which he expressly agreed, and Hannah’s capital, which he knew was being used. He never protested, never demanded, and never was refused, information. I am of opinion that in so far as the account is stated according to the theory that any of the defendants should be charged, on March 20, 1905, or on any other day, with appropriating any of the property, or with dealing with it without authority, it is wrongly stated.
It does not follow, however, that Mr. Hannah had the right to exercise no care, or indifferent care, with respect to the enterprise. The agreement that Payn should manage the business did not relieve Mr. Hannah from all responsibility. His advances of cash and of merchandise were items of the cost of running the business, to be repaid before a profit would be shown. He was under some *268obligation to see to it that disbursements were properly made; that accounts were properly kept. It appears that he gave the matter little or no attention, but advanced cash and merchandise, upon the demand of Payn, without supervision and with little inquiry. Probably no one may be truthfully charged with dishonesty. Yet it is clear that Payn permitted Harrington, who boarded some of his men, to be constantly and increasingly overpaid, when the exercise of ordinary business sense would have prevented such a result. Complainant should not be charged with such a loss. As to the amount of the indebtedness of certain contractors who were overpaid, the conclusion, upon this record, cannot be so certain. Their accounts were not closed when Hannah took over the property, and it seems that then they had been, to some extent, overpaid. But the testimony tends strongly to show that ordinary business prudence would have prevented further considerable overpayments. Taking over this business, as Mr. Hannah did, at the stage to which it had then been brought, continuing it after the manner in which it had theretofore been conducted, without changing or revoking contracts already made by complainant, Mr. Hannah did not insure the success of the business or agree that it should show a profit. In so far as losses can be traced to his failure, or to the failure of his representatives, to exercise ordinary care and prudence in conducting the business as it was conducted, they should be borne by defendants. It is impracticable for this court to state an account in accordance with the indicated rule.
The decree will be reversed, and the record remanded for that purpose. Neither party will recover costs of thi'a appeal as against the other, and, inasmuch as both claim to have appealed from the decree, the cost of preparing and printing the record, exclusive of counsel’s fees therefor, will be equally divided.
Moore, C. J., and Brooke, Stone, and Bird, JJ., concurred.