Court Opinion

ID: 7894806
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:51:50.954634+00
Date Added: 2024-06-11T16:32:02.331367
License: Public Domain

Stewart, J.,
delivered the opinion of the Court.
The bill in this case was filed the 1st of February, 1856.
Amongst other things it avers a partnership had existed between the brothers H. C. & P. E. Scott, commencing in the year 1825, and was actively engaged in merchandising until the year 1842, and up to the death of P. E. Scott in 1855; that after the year 1842, there was no new business, and its partners were confined to the winding up of what had been antecedently thereto actively conducted.
It further charges, “that although upon a just settlement of the partnership, H. C. Scott is largely indebted to his co-partner, yet that he has exhibited and had passed by the Orphans’ Court a pretended claim against the estate of P. E. Scott, made up of alleged over-payments on the partnership accounts, embracing only the period of three or four years preceding the death of his co-partner, and omitting to include any account of the partnership anterior thereto.”
That he has also exhibited and had passed by the Orphans’ Court, a claim for $1000, against the estate of the said P. E. Scott, purporting to be founded on a note in favor of Thos. H. Osbourn, assigned to H. C. Scott, dated 28th October, 1852, with interest from January, 1850.
This claim the complainant charges is founded on, and is the joint and several bill of H. C. & P. E. Scott, given for a liability of H. C. Scott, with which P. E. Scott was in no way concerned; and that the same is unjust, and an improper charge, and ought not to be allowed against the separate estate of P. E. Scott.
*234These aré grave charges in truth, of fraud and perjury, requiring to be sustained on the part of the complainant, by clear and conclusive testimony, without which a Court of equity cannot sustain them by its decree, — and it may be remarked here, that we fail to discover in the proof any grounds for the charge.
The bill prays an account of the partnership between the brothers, showing its condition in 1842, when it ceased active business, and at the time of the death of P. E. Scott in 1855, when it was to all intents dissolved, and the relative indebtedness of the partners to the firm, at those periods, and to have the assets applied to the payment of its debts, and the residue distributed between the parties.
The bill was amended by consent on the 7th November, 1856, by making Mary C. Scott party complainant, by Charles Clagett her next friend, and on the same day, H. O. Scott filed his answer.
On the 12th November, 1856, a decree was passed for the parties to account, and the case was referred to the auditor to take proof. H. O. Scott the respondent, died in 1860, and his widow as his executrix, was made a party defendant.
After sundry interlocutory proceedings referred to hereafter, the final decree in the cause was passed on the 19th June, 1873, determining “that there is due by the representatives of H. C. Scott, to the representatives of P. E. Scott, growing out of the partnei’ship of H. C. & P. E. Scott, the sum of $1250.76, and directing Hall, administrator of H. C. Scott, to pay to C. C. Magruder, administrator of P. E. Scott, that amount, with interest from the 7th of May, 1855, and costs.
This was afterwards modified by requiring the payment to be made out of any assets in his hands.
This decree does not, in terms, provide for a distributive portion of the surplus, after payment of the debts of the firm, to be paid as prayed by the bill, to the complainant.
*235The debts of the partnership outstanding, it was irregular to undertake to distribute any assets thereof, amongst the partners, until they were paid. The right of any partner or his representative, could be only to his share of any surplus, and such was the prayer of the bill. Collyer on, Part., sec. 187; Story on Part., sec. 97.
Before this final decree the auditor having reported in pursuance of the decree to account, the matter was referred back on the 13th April, 1857, and a mass of testimony with voluminous and detailed accounts, were presented on the 16th September, 1861, requiring it seems an interval of four years to accomplish such result, but still leaving the subject-matter of controversy in doubt and utter uncertainty.
Exceptions were filed to these statement of the auditor, and elaborately argued by the respective counsel.
On the 8th of June, 1863, the opinion of the Court was pronounced, the result of which was, by its order of the 10th June, to again refer the case to the auditor, under special instructions, but requiring further proof to be taken.
The special auditor on the 23rd June, 1871, after what appeared to have been an arduous search through the immense mass of proof, during the intervening period of some eight years, filed accounts Nos. 19, 20 and 21.
These were not satisfactory, and exceptions were taken by the respective parties in April, 1872.
On the 25th of April, 1873, C. C. Magruder, surviving administrator of P. E. Scott, by order of the Court was made a party defendant, and leave was granted complainant to file the amended and supplemental bill. The defendants filed answers thereto ; on the part of the appellant, it is claimed that the decree is erroneous as to the merits of the case ; and that the proceedings have been so irregular, as to demand its reversal on that account.
Amongst other objections to the form of the proceeding, it has been urged that the complainant had no right *236to have filed the original bill, and that the supplemental bill could not repair its infirmity — that the administrator of P. E. Scott should have been made a party in the first instance — that the pendency of the creditors’ bill for the sale of P. E. Scott’s real estate, and the interlocutory proceedings in that case on the part of the complainant, precluded the right to file this bill.
That the implication was not filed in time to make the issue, and therefore the respondent’s answer was competent evidence, according to our practice.
Erom the view we take, it is not deemed necessary to decide these several points of objection ; but it is proper that we should dispose of this last objection, as we discover no error in the ruling of the Circuit Court in the exclusion of the respondent’s answer, as testimony in the cause.
Not having been required by the bill to be made under oath, and not being read at the hearing by the complainant, the answer could not be made evidence against her. Act of 1852, oh. 133.
This Act.as construed by this Court in Warren vs. Twilley, 10 Md., 39, has no application to a case heard upon bill, answer and exhibits, because under the prior practice, where such case was set down for hearing by consent, the answer must be taken to be true, in all respects ; and the Legislature could not have intended to prevent a party from so consenting.
The answer in such case was treated as true, because no replication having been filed, no opportunity was offered the defendant to supply proof of his defence, and therefore, the truth of the answer must be conceded.
After the case is so set down, ivithout any proof being taken, the complainant has no right to put in a replication without the consent of the Court, or the defendant, because his rights are affected thereby ; but where proof has been taken, the case is different, the defendant has had the opportunity to support his answer by evidence.
*237The case is ordinarily at issue, only, when the replication has been put in, and the pleadings closed. Story’s Eq. Plea., sec. 886.
But the cause may be at issue by consent, express or implied, without replication ; as in this case, if no replication had in fact been filed, from the order of the proceedings; the'consent for the issuing of the commission to take testimony, of which each party availed itself, virtually imported that the parties were at issue without the formality of a replication. Md. & N. Y. C. and I. Co. vs. Wingert, 8 Gill, 178.
The replication was in fact filed before the case was submitted for final hearing, and the objection is not available in any aspect under the ruling in Warren vs. Twilley.
Questions of more gravity are involved in the disposal of the case upon its merits.
Whilst differing with the Circuit Court in some of its conclusions, it is but just to say, that we have been much aided in our examination of the vast volume of this case, by its patient and comprehensive review of the testimony and its copious reference to authorities, and its forcible reasoning thereon.
The two brothers, H. C. and P. E. Scott, were engaged as partners, in the mercantile business in the year 1826, under the name of H. C. Scott & Co., the profits and losses to be shared two-thirds to H. C. Scott, and one-third to P. E. Scott.
This partnership was dissolved by mutual consent, and another substituted in the year 1831, under the name of H. O. & P. E. Scott, in which they were to be equally interested.
It appears that much of the assets of the first, made up the second firm, the active business of which terminated about the year 1842, although it was not finally dissolved, until the death of P. E. Scott, who died intestate, in the year 1855, leaving his only child, his heir and distributee, the present complainant.
*238At the close of its active business in 1842, as we understand the testimony, the partnership had hut little assets, its stock of goods not exceeding one thousand dollars; but encumbered with a large mass of indebtedness to be settled up by the brothers.
The hooks and accounts were so loosely kept, that it seems to be a difficult, if not an impossible task, to learn from them the profits and losses of the firm.
No settlement appears ever to have taken place, nor any balance struck. Each party was individually engaged in planting and other pursuits, and a large portion of their crops was carried into the firm', and much of their individual indebtedness settled by it.
Their joint and individual concerns were indiscriminately blended ; and there is no statement from the books or other accounts, clearly and satisfactorily to distinguish the one from the other.
A mass of testimony has been taken, and considered by several intelligent auditors, experts at accounts. After laborious efforts to digest and simplify the same, their reports leave the matter in controversy involved in obscurity, and furnish no satisfactory solution of the same, sufficiently reliable to justify a decree in Chancery, especially adjudicating the questions involved.
The Circuit Court after elaborately examining the subject, gave its opinion and directions to the auditor, by special order No. 14, to charge the firm with the receipt of a large sum, on account of the ‘ ‘ Clagett purchase of the Osbourn real estate, sold by P. E. Scott, trustee.”
The auditor, was so well satisfied that this was an error to such extent — some $8000, that he very properly reported the matter back, for the reconsideration of the Court, which adopted the final conclusion, that order No. 14, ought to be corrected, and account 21, recognized, thus reducing the indebtedness to be decreed, to that extent.
*239This circumstance is referred to as showing that the most deliberate examination of the testimony, fails to reach a safe and satisfactory result.
The cessation of the active business of the firm, in the year 1842, marks an important period in its history, somewhat analogous, to a final dissolution.
The partners, in such case, had nothing to do with the business of tbe firm, but to settle it up, with all reasonable dispatch, by collection of the debts and payment of outstanding liabilities.
The special auditor reports as his conclusion from the testimony, .that the accounts on their books had been settled, long before the death of P. E. Scott, but no entry had been made thereof. That there are accounts on their books against persons of known ability to pay them. That there are numerous letters in their lettei-books, filed in the case, written to their commission merchants, to officers of the banks, and others, prior and subsequent to 1842, to the time of P. E. Scott’s death in 1855, showing they always wanted money, and that their business was conducted principally by means of discounts, that their crops, and not any assets of the partnership were relied on to pay these discounts ; that he is convinced from the details supplied from the various sources of evidence, that the firm was totally insolvent in 1842, and so continued to its dissolution in 1855, by the death of P. E. Scott. That they had made many bad debts, was admitted by P. E. Scott, and that they owed a great deal of money.
Notwithstanding this might have been the condition of their business, it was the duty of each partner to aid in its final settlement.
If the firm had been finally dissolved, this duty of the partners would still continue; it had to be finally wound up, their assets, if any, applied to the discharge of their liabilities — steps taken to recover any effects belonging to the partnership, receipts, acquittances, or discharges given, *240and a final ascertainment of the condition of the firm; such acts are requisite upon its dissolution, to meet the obligations due to others, and for the division of anjr surplus amongst the partners, after the debts and charges have been extinguished. Story on Part., secs. 325, 7, 8, 344, 346.
If this course had been pursued, and a settlement made by the partners, this long pending enquiry might have been avoided. But, notwithstanding the practical termination of the business of the firm in 1842, there is no evidence of any adjustment between the partners.
P. E. Scott, was either satisfied that he had received his share of the profits, if there were any; or he showed a willingness to relinquish the same, there being no evidence of his ever having set-up a claim to any, from that time on to his death in the year 1855, a period of some thirteen years. Such abandonment of any claim, or acquiescence, affords a reasonable presumption, that he held none. Adams’ Equity, 455.
The powers of the partners are co-ordinate, whether the partnership was in actual operation, or subsisted only for the purpose of winding up the affairs thereof, and it was the duty of each partner to beep precise accounts of all his own transactions for the firm, and to have them at all times ready for inspection and examination. Story on Part., sec. 180. If there has been a total failure to do so, it affords a good reason for a Court of equity to decline to supply them, without a sufficient reason or excuse for the omission. The authorities in regard to the effect of laches, are applicable to the claim now interposed, to any surplus of the profits of the partnership existing in 1842.
The bill prays for an account of the partnership between the brothers, from the remote period of 1825, and we discover no reason for discarding the accounts between them, as to the condition of the first firm, upon the ground of lapse of time, as held by the Circuit Court, if a complete *241settlement is to be made according to the prayer of the bill, the two firms are so intimately blended and connected, they cannot be fairly separated, and if tbe one is to be regarded as not obnoxious as a stale demand, the other is entitled to as much consideration.
If the claims of the respective partners in the first are to be treated as extinguished by lapse of time, because of the obscurity, and difficulty of making proper settlement, the partners in the second, so far as the ascertainment of any surplus of assets in the year 1842 is concerned, are in no better predicament, and there is no substantial reason for making the distinction, and in the exclusion of testimony, as to the condition of the first firm.
The proof shows clearly enough that the accounts and books furnish no sufficient data as to the condition of the latter firm, and the fact must have been as reported by the auditor, that in the year 1842, it was insolvent, and that its liabilities largely exceeded its assets. It is not according to the usual course of such things, that a firm conducting its business as this did, could without extraordinary good luck transact a profitable business, and the mystery has its solution, in the fair inference that so far from being in a prosperous condition, it was heavily embarrassed by its mass of indebtedness.
There is no proof that it incurred any considerable liabilities afterwards.
It is probable that under this state of things, the partners ceased to continue the business, and P. E. Scott concluded to retire, surrendering the disagreeable task of winding up the partnership, and paying off the debts, to his brother, devoting himself to the preservation of his health, at that time said to have been precarious, and to his private pursuits, leaving the drudgery of clearing up the embarrassed affairs of the partnership to his brother, in whom there seemed to be no want of confidence on his part.
*242In the condition of the affairs of the firm, P. E. Scott had no right to throw the burden of winding up the concern exclusively upon his brother. It was his duty equally with his brother, to render active assistance in closing the partnership, on his own account if there were any surplus, and if not, to discharge the obligations due to the creditors.
Because of his declension and the more active agency and interest of his brother, it does not by any means follow that H. O. Scott should be made primarily to account for the assets of the firm, as directed by the special order of the Circuit Court, No. 16 — such a doctrine would offer a premium for delinquency, by making the partner who discharged his duty, more answerable than the 'one who failed to do so.
There is no proof other than that the brothers were always on the best of terms of kindness and mutual regard, and intended to transact an honest business with the world and between themselves; and such is the legal presumption, and we do not see that one is to be held more accountable than the other, for any losses arising from the mismanagement of the business.
They resulted probably from want of proper attention on the part of both.
Having found their partnership affairs in a disastrous condition, as early as 1842, and no step having been taken by P. E. Scott from that time until his death in 1855, to make any claim against his brother, if any existed, and the books and accounts showing none, it may be reasonably concluded that'he had none.
If there were in fact any, it was a clear case of laches on his part, not to have asserted it or left some evidence of its existence.
His representatives stand in no better condition in charging in the bill the existence of indebtedness on the part of H. O. Scott, and claiming a decree therefor; the complainant has the onus of making good such allegation; *243and in the absence of clear proof thereof, has no right to expect a Court of equity to establish and decree the same.
Such a Court will not grope its way in utter darkness, and undertake to create and establish a claim upon mere contingencies or the preponderance of mere possibilities or probabilities. There is no duty devolving upon it to assume the impracticable task of adjusting the relative rights of these partners, where the proof is utterly deficient and inconclusive.
There is furnished by the testimony in this cause, no reliable basis upon which to rest the ascertainment of the sum decreed to be paid by the Circuit Court, according to our estimate of its force and effect.
From the view we take of the scope of the testimony, and the conclusion deducible therefrom, it is unnecessary to decide specifically the most of the interesting questions, discussed at the bar. Every case where laches exists, must depend upon its own facts and circumstances.
In matters of account, more especially, Courts of equity refuse to interfere after a considerable lapse of time, from considerations of public policy; from the difficulty of doing entire justice between the parties, (which as a Court of conscience it is bound to do,) where the transactions have become obscure by time, and the evidence may be lost.
The repose of titles, and the security of property are mainly promoted by a full enforcement of the maxim, “ Vigilantibus et non dormientibus jura subveniunt.” Story’s Eq. Jur., sec. 529; Angell on Lim., sec. 171.
Lapse of time may operate as a bar to a decree to account. In equity, laches and neglect are discountenanced. Stale demands without any effort to enforce them, cannot meet the aid of a tribunal which only lends its power to reasonable diligence. Steiger’s Adm’r vs. Hillen, 5 G. & J., 132.
*244(Decided 8th March, 1878.)
The spirit of the maxim, “Interest reipublicce ut sit finis litium,” may he traced to a more remote period than the Christian era.
The language of the civilians, and of the commentators upon the common law, has heen that the dominion of things must not for a long time remain uncertain, so as to disturb the peace of society, by giving rise to innumerable and perpetual litigations.
To prevent such evil the indolence of those who are dilatory in recovering their property, and claiming what is due them, should he punished, and they should impute to themselves the punishment. Angelí on Lim., sec. 9.

Decree reversed, and bill dismissed.