Court Opinion

ID: 6603668
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:10:10.51388+00
Date Added: 2024-06-11T15:58:06.575373
License: Public Domain

Cole, C. J.
This action is brought by the plaintiffs, as executors, to obtain a construction of the codicil to the will of ÜST. ~W. Dean, who died February 28, 1880. The will was dated February 29, 1876, and makes a full disposition of the testator’s estate, both real and personal. After the payment of certain legacies named, the testator directed his executors to divide the rest and residue of his estate into six equal parts, which were to be paid to the persons named, in the proportions specified. The testator expressed the wish, in the last clause of the will, that his estate should be closed up as rapidly as the best interests of the estate would permit, and that all of the legacies (except one) should be paid as soon as funds could be realized for their payment. There is no controversy as to the proper construction of the will, and we need not further give its provisions. The codicil bears date February 23, 1880’. On *30May 1, 1871, the decedent and his brother Thaddeus Dean entered into partnership in the business of- dealing-in lumber' in the city of Chicago, which partnership was continued to the death of N. W. Deán. The will makes no express reference to this partnership business. But the codicil, after reciting that this partnership business had hitherto been profitable to the testator, which was largely due to'the business capacity and integrity of his brother Thaddeus, contains this language: “And being desirous of showing my appreciation thereof, and that the business so commenced should be maintained and carried on, I hereby direct my said executors to allow my present capital in said business to remain for the period of two yeai^ after my decease, collecting and receiving annually, from my said brother Thaddeus, the net profits arising from said business, under my agreement with him, belonging to me,.for the benefit of my estate. At the expiration of two years, it is my will and I direct that my said executors have a full settlement and accounting with my said brother Thaddeus in relation to said business, and that thereupon they collect and receive from him one-half of the net value of my interest therein, and, upon the payment by him of the one-half value so ascertained,' I instruct and direct my said executors to execute and deliver to him all proper and necessary assignments and conveyances so as to vest in him absolutely all my right, tide and interest in the business aforesaid; it being my intendon, in addition to the bequest heretofore made to him in my said will, to bequeath and devise to him one-lialf of my entire interest in said business, subject to the limitations and restrictions aforesaid.”
The articles of copartnership, to which reference is made in the codicil, are qdite full and specific. They provide, among other things, that each partner should contribute $15,000 to the capital of the firm, which was to be used in carrying-on the copartnership business; that Thaddeus Dean was to have the management of the business; and that he should been-*31titled to receive two-thirds of the profits, and JST. W. Dean one-third thereof. The losses were to be borne in the same proportion. • Boohs of account were to be kept, wherein all of the transactions of the firm should be entered, which books should be open to the inspection of each partner at all times. By the ninth clause it was provided that 1ST. ~W. Dean was to take out of the cash of the company’s funds $125 per month for his own use, and Thaddeus Dean $250 per month, providing these sums could be so drawn out by the respective parties without impairing the capital of the firm; but neither partner was to take a greater sum for his own use during any month without the written consent of the other. The tenth clause provided that Thaddeus Dean, at the end of each year, and oftener, if need were, on request, should make and render to R. W. Dean a just and true account of all the gains and profits, as well as losses, of the business, and of all things done on behalf of the partnership; and, this account being so made,, he was to pay ÍT. W. Dean his proportionate share of the profits, and take to himself his own share. In the eleventh clause it was provided' that during the continuance of the co-partnership none of the capital of the firm, nor any of the accrued but undivided gains and profits'thereof, should be used or employed by the parties thereto for anjr other purpose than carrying on said business;' in the .twelfth, that at the end of the copartnership a final accounting should be had, and all the debts of the firm should be first paid, and then each should draw out the amount of capital originally contributed by him, diminished by his proportionate share of losses, if any; the balance, if any, to bé divided as provided for dividing profits. These are the material provisions of the copartnership agreement.
•Erom three letters which were introduced on the hearing — one written by Thaddeus Dean, the other two b.y N. W. Dean— it appears that each party agreed, in July, 1872, to increase his capital to $20,000, and did so. And it further. appears, *32from the annual statement made of the partnership business, that at the end of each partnership year each partner was credited on the boohs of the concern with bis share of the profits, and was charged with the amount which he had drawn out during the year. The accumulated but undivided profits of the business consisted almost wholly of real estate, lumber, notes, book accounts, and other personal property belonging to the firm. The amount standing to the credit of N. W. Dean at the time of his death, including his capital of $20,000, was $43,478.16. Or, to speak more accurately, that sum embraced the profits standing to the credit of FT. W. Dean on the books of the firm at the time of his death, and also the unascertained profits which had accrued since the last annual statement of May 1, 1879, down to that time.
The question arising upon the codicil, which the executors request the aid of the court in determining, is, what is the amount which they must leave in the partnership business for two years, and which, at the end of that period, they are directed to assign and convey to Thaddeus Dean upon his paying one-half of its ascertained net value; the annual profits having been collected by them in the mean time. On the part of the residuary legatee Thaddeus Dean, it is claimed, that it was the intention of the testator that his entire interest in the partnership business should remain in the business, including both his capital of $20,000 and all accumulated but undivided profits belonging to him under the partnership agreement; while, on the part of other residuary legatees, it is insisted that it was his capital only which was to be left in the business. Considerable proof was taken on the hearing relating to the acts of the parties and their course of dealing, for the purpose of aiding the court, in arriving at the intention of the testator in making the codicil. But, aside from the articles of copartnership, this evidence furnishes but little assistance', in construing the codicil. The intention of the testator must therefore be ascertained from the language of the codicil *33itself, read, of course, in the light of the written agreement to which it refers.
On looking at the language of the codicil itself, the first thing which will be noticed is, that the testator, in the intro-ductoiy part, speaks of his “interest ” in the business, which has been profitable to him. Being desirous that the business so commenced should be maintained and carried on, he directs his “executors to allow my present capital in said business to remain for the period of two years after my decease, collecting and receiving annually from my said brother, Thaddeus Dean, the net profits arising from said business, under my agreement with him, belonging to me, for the' benefit of my estate.” It will be seen that the mind of the testator was fixed at the outset upon his entire interest in that business as distinguishable from his capital therein. If he intended that his entire interest should remain, it is singular that he changed his language, using words which convey a different meaning. The terms “interest” and “ present capital ” are not equivalent expressions, and do not convey the same idea in the connection in which they are used. If the testator intended that his entire interest in the business should remain, it is remarkable that he changed his phraseology. But this is not all. The ■ executors are directed to collect annually from his brother-Thaddeus the net profits arising from the business under the partnership agreement, which belonged to him, for the benefit' of his estate. If the codicil is construed, as it must be, in connection with the partnership agreement, there is no difficulty in getting at the intention of the testator, for the agreement makes a plain and broad distinction between capital and profits. The former is devoted to the partnership business, but provision is made for withdrawing the latter from time to time. Therefore we think the word “ capital,” as used in the codicil, must be understood as meaning the same thing as when used in the agreement; it means the capital as opposed *34to profits, and the word “ profits means the gains upon the capital invested in the business.
The testator further directs that when a final settlement is made or accounting had, the executors shall convey to his brother, upon payment by him of one-half of its ascertained value, all his right, title and interest in the business, declaring that it is his “intention, in addition to the bequest heretofore made to him in my said will, to bequeath and devise to him one-half of my entire interest in said business, subject to the limitations and restrictions aforesaid.” If the qualifying words, “subject to the limitations and restrictions aforesaid,” were omitted, this clause of the codicil would tend strongly to warrant the inference that it was the intention of the testator that his entire interest in the business should remain for two years, and then be disposed of as directed. But, as the clause stands, in view of the previous language, where the words “•interest” and “capital” are used in a different sense, more especially in consideration of the fact that the whole codicil is to be construed in connection with the written agreement, no such inference or presumption can fairly be made; fo: the agreement, in its terms, so clearly and distinctly discriminates between capital and profits that it is impossible to hold that the testator, by the words “my'present capital,” intended to. designate not only the capital proper which he had contributed to the business, but also all the accumulated and undivided profits which had accrued from the use of that capital. If he had intended to direct that his whole interest in the business ■should remain two years, or if he regarded his entire assets therein as capital, his intention or understanding would have been made manifest by the use of language different from that employed.
But, as observed by counsel who argue in favor of the view we have taken of the meaning of the codicil, the testator, in the very sentence in which the words “ my present capital ” *35o'ccur, directs what shall be done with the “net profits” of the business, and pointedly makes a distinction between capital and profits, thus showing that the two things were separate in his mind. The intention of the testator must prevail, if i't is possible to gather it from the language of the entire codicil. That intention was to allow his capital, to remain in the business two years, but nothing more. This construction of; the codicil is vigorously combated by the learned counsel for Thaddeus Dean, because, as he says, if the accumulated profits of the parties were withdrawn it would so cripple the business that it could not be carried on with the success and profit which had theretofore attended it. But this argument, under the circumstances, is entitled to but little weight; for, if there had been no provision for continuing the business, it -would have had to be closed up on the death of 1ST. ~W. Dean. Its continuance, therefore, was a favor, and could not have been claimed as a right by the surviving partner.
But the same counsel further insisted that the written, agreement had been essentially modified or changed in some of its provisions by the acts and course of dealing of the parties. He says the proof shows that the accrued but undivided profits which stood to the credit of the partners on the. books of the firm had been converted into capital, or had been treated as capital, so that they would be included in the phrase “ my present capital,” as used by the testator. We do not think this position is sustained by the proofs in the case. It was certainly competent for the parties to modify or entirely set aside the provisions of the written agreement. But what is the evidence that they did so? In respect to the amount which each partner contributed to the capital of the firm, there was undeniably a change. The provision for drawing out the profits monthly does not seem to have been acted on. at all. The same remark is true in respect to the tenth clause of the articles, which bound Thaddeus Dean, at the end' of each year, to pay H. "W. Dean his share of the profits, and take to *36himself his own share. But we fail to find any proof which warrants the assumption that the accrued but undivided profits were'converted into capital, whether by express agreement or by long acquiescence of the parties. On the contrary, we have no doubt of the right of the partners to withdraw these profits from the business whenever they chose to do so. The business was very profitable; these profits could be advantageously used in it; and the parties permitted them to be so used when not withdrawn. But the annual statements show that the testator, in the eight full years which the partnership continued, overdrew his profits in three of the years, the last time being the last full year. Also that Thaddeus Dean overdrew his profits in five out of the eight years, including the last year. In view of these well-established facts, what becomes of the contention of Thaddeus Dean? The burden obviously was upon him of showing, by clear and satisfactory evidence, that the partnership articles had been modified or laid aside; that the provision in regard to the amount contributed by each partner to the capital stock had been superseded; that undivided gains and profits had been transformed into capital; that all this was so well understood by the parties, that when the testator speaks of “my present capital ” we must presume he meant his entire interest, including both capital and profits; and that when he directs that the “net profits ” arising from the business should be annually collected from Thaddeus Dean, which belonged to him “ under my agreement with him,” he referred to some agreement other than the written one. For to this extent does the claim of Thaddeus Dean go; and it seems to us quite untenable. It is true, as we have remarked, that the profits not withdrawn by the partners were used in the business. But this was entirely consistent with the eleventh clause of the agreement, which contemplates such use. But that falls far short of proving that the profits were capitalized either by express agreement or by the silent acquiescence of the parties. We have examined all of the authorities relied on by the *37learned counsel in support of the position that profits declared and credited on the books of the firm to each partner may be so treated as to fall within the designation of capital; but they throw little light on the question before us. We do not deem it necessary or useful to specially notice these authorities, as the views which we have exjiressed as to the proper construction of the codicil do not conflict with any doctrine or principle laid down in them.
The only other matter we deem of sufficient importance to be noticed, is the question of costs. The circuit court adjudged that the costs of the plaintiffs and of the defendant Thaddeus Dean, and also the costs of the other defendants as between attorney and client, be paid out of the funds of the estate; the five last-named defendants to be allowed but one bill of costs. The counsel for the last-named defendants insists that this is inequitable; that the costs should be paid out of the assets of the estate in the partnership business. He says that it was only that fund which was in controversy, therefore it should bear the whole expense of the litigation. The cases of Att'y Gen. v. Lawes, 8 Hare, 32; Martineau v. Rogers, 8. DeG., M. & G., 328; Jenour v. Jenour, 10 Vesey, Jr., 562, are relied upon in support of this position. These cases do recognize and apply the rule that where the litigation relates to a legacy which has been severed from the bulk of the estate, that particular fund, and' not the general estate, is chargeable with the costs. But that rule cannot apply here, for reasons suggested by the opposing counsel. This is not a case where the legacy or matter in litigation lias been so severed from the general estate that the general estate is not affected by the suit. The residuary fund to be distributed is increased or diminished as one construction of the codicil or the other is adopted. Our construction makes that fund more than it would be under the decision of the circuit court. It seems to us there is no reason for departing from the rule laid down in Heiss v. Murphey, 43 Wis., 45; Will of Meurer, 44 *38Wis., 392; and Dodge v. Williams, 46 Wis., 72, where the costs were paid out of the estate.
It results, from the views expressed, that the judgment of the circuit court, placing a construction upon the codicil, and giving directions to the executors in regard to the proper execution of their trust, is erroneous. The judgment must therefore be reversed, and the cause remanded with directions to enter a judgment in accordance with this opinion.
By the Goxirt.— So ordered.1

 On the 5th of April, 1882, the following order was entered in the above cause, in this court:
“ Upon motion of the appellants by their attorneys: It is now here oidered and adjudged by this court that the costs to be awarded by the circuit court to be paid out of the assets of said estate to the several parties to this action who have appeared herein, be and are hereby restricted to taxable costs and disbursements, and but one bill oE costs and disbursements be allowed to the parties, Harriet II. Dean, Maria M. Dean, Irving W. Dean, and Adelaide Dean, who appeared by the same counsel; but this direction is not intended to embrace or control the matter of fees which said executors shall pay their counsel, etc. A copy of this order to be attached to the opinion and returned with the remittitur.”