Court Opinion

ID: 6675486
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:15:27.610693+00
Date Added: 2024-06-11T16:00:41.683141
License: Public Domain

The opinion of the court was delivered by
Mr. Justice McIver.
On February 1st, 1873, John D. McLucas, S. A. Durham and William Evans entered into a written agreement for the dissolution of a mercantile copartnership under the name of S. A. Durham & Co., which had existed since September 1st, 1868, a copy of which is set out in the “ Case.” One of the terms of said agreement was expressed in the following words: “The said J. D. McLucas further assumes all the liabilities incurred by the said firm of S. A. Durham & Co. since September 1st, 1868, and hereby obligates himself to pay and discharge said debts and liabilities out of the proceeds of the choses in action of the said firm, hereinafter transferred to him, and to use all due and proper diligence to raise money by means of said choses in action, and to apply it promptly, when collected, to the payment of said debts of said firm herein assumed by said McLucas.”
One of the liabilities of the said firm, as it appeared on their books, was a balance due to A. L. Evans, amounting to $700, which arose in this way: the said A. L. Evans, at different times, deposited with the said firm of Durham & Co. considerable sums of money, which were credited to him individually on the books of said firm, and contracted large accounts upon the faith of such deposits; and the balance above mentioned was the difference between the amount of such deposits and the amount of the accounts due by him. There can be no doubt that when the agreement for dissolution was entered into, all the parties based their action upon the condition of the firm as shown by the books, and by a balance-sheet taken from the books and shown to William Evans, who does not seem to have been an active partner, and was not so familiar with the condition of the business of the firm, or with the books of the concern, as the other two partners, who had had the principal management of the business.
It turned out that the money deposited with the firm of Durham '& Co. by A. L. Evans was not his own money, but belonged to the estate of Gibson, of which he was the administrator, though the money was deposited to his individual credit and not in his representative character, and there was nothing whatever on the books of Durham & Co. to indicate that such money belonged to *309the Gibson estate, or that the firm was in any way indebted to said estate. Some time after the agreement for dissolution was entered into, A. L. Evans was required to turn over to the clerk of the court the certificates of deposit as part of the assets of the estate of Gibson, and an action was brought by him-against S. A. Durham & Co. to recover the amount of such deposits, in which they attempted, unsuccessfully, to set up as a discount the amount of their claims against A. L. Evans; and judgment was recovered against said Durham & Co. for the sum of $2,362.47, the amount of said certificates of deposit with interest. The object of this action is to require the defendants to contribute their ratable proportion to the payment of said judgment, upon the ground that the liability thus judicially ascertained against S. A. Durham & Co. was not one of the liabilities which the plaintiff had assumed to pay under the agreement of dissolution.
The Circuit judge found as matter of fact that the plaintiff, as well as the defendant Durham, did have notice of the trust character of the money deposited with the firm by A. L. Evans; that, though there was no distinct agreement between A. L. Evans and the firm that his accounts should be allowed as discounts against the said deposits, yet “ the plaintiff and the defendant S. A. Durham supposed and believed at the time of the dissolution that they would be so allowed as discounts, and the statement exhibited to William Evans was based upon that assumption, and he sold his interest upon that basis. They were all equally mistaken in this belief, and there were no circumstances of fraud, misrepresentation, concealment or deception upon either part.” And as matter of law he found that the plaintiff was not entitled to the relief demanded, and he therefore rendered judgment dismissing the complaint.
Accepting as correct the conclusions of fact reached by the Circuit judge, (inasmuch as there was a conflict of testimony, and it cannot be said that such conclusions are without any evidence to support them, or are manifestly against the weight of the testimony,) the only question remaining for us to decide is, whether, upon the facts so found, the plaintiff, as matter of law, is entitled to relief. It is clear, from the facts as found, that the parties never intended that the plaintiff should assume the payment of *310any debt to the estate of Gibson, for none of them knew of any such indebtedness at the time of the dissolution. It is equally clear that they all assumed that the amount of the indebtedness of the firm to A. L. Evans was only $700. The books showed no indebtedness whatever to the estate of Gibson, and only showed a balance of $700 due to A. L. Evans. It is manifest, therefore, that if the Circuit decree stands, the plaintiff will be required to pay some $1,600 more than he understood he was assuming to pay, and that much more than the other parties understood that he was assuming to pay. How, then, can it be said that the minds of the contracting parties ever meet upon such a result ? And this is an essential ingredient in every contract.
It is true that the terms of the written agreement, by which the plaintiff assumed the payment of the debts of S. A. Durham & Co., are very comprehensive. “All the liabilities incurred by the said firm of S. A. Durham $; Co. since September 1st, 1868.” And if it stood alone, might be sufficient to embrace any debt, whether known or unknown, of the said firm. But the testimony leaves no doubt of the fact that such agreement was based upon the condition of the firm as shown by the books, or by the balance-sheet taken from the books. The plaintiff, in his testimony, says: “ My assumption of the liabilities of the firm was based upon the statement [the balance-sheet] referred to above.” Durham says: “ Had a general idea of the books, my capital in the concern, and my liability to the firm ; upon this I based my offer to McLucas.” Certainly the balance-sheet was exhibited to William Evans before the agreement for dissolution was entered into, as he, not being an active partner, had no other means of ascertaining the condition of the concern; and such is the testimony. There is as little doubt that all parties understood, at the time the agreement was entered into, that the accounts of Evans were to be discounted against the amount of his deposits. This the Circuit judge has found as a fact; and that William Evans sold his interest with that understanding.
These facts being established “ by proofs entirely satisfactory;” equity will reform the written contract so as to make it conform to the precise intent of the parties. As is said in 1 Story Eq. Jwr., § 152, “ Sometimes, by mistake, the written agreement con*311tains less than the parties intended; sometimes it contains more; mid sometimes it simply varies from their intent by expressing •something different in substance from the truth of that intent. In all such cases, if the mistake is clearly made out by proofs ■entirely satisfactory, equity will reform the contract so as to make it conformable to the precise intent of the parties.” Applying this doctrine to the case in hand, the agreement for dissolution •should be regarded as binding the plaintiff to assume the payment of the debts of S. A. Durham & Co., as they appeared upon the books of that concern, or upon the balance-sheet taken from the books; and, inasmuch as no debt there appeared to be ■due the estate of Gibson, and only a balance of $700 due to A. L. Evans, the plaintiff cannot be held to have assumed any liability to the estate of Gibson, beyond the balance there appearing to be due to A. L. Evans, which, in reality, inures to the ■estate of Gibson.
The result, therefore, is that the judgment of the Circuit Court should be reversed, and that judgment should be rendered that the plaintiff pay the sum of $700 and interest on the judgment recovered by R. K. Clark as clerk of the Court of Common Pleas for the county of Marion against S. A. Durham, John G. Blue, as executor of the last will and testament of William Evans, deceased, and John D. McLucas, for the sum of $2,362.47, and that the plaintiff and the defendants herein are equally liable for the payment of the balance due on said judgment.
The judgment of this court is that the judgment of the Circuit Court be reversed, and that the case be remanded to that ■court with instructions to render judgment in accordance with the views herein announced.
Mr. Chief Justice Simpson, concurred.