Berry v. Folkes

60 Miss. 576 | Miss. | 1882

Cooper, J.,

delivered the opinion of the court.

From the decree of the chancellor all the parties appeal.

The complainants in the court below assign for error, the action of the chancellor : —

1. In declaring the real estate to be partnership property.

2. In denying immediate partition to complainants.

3. In declaring the land subject to the debts of the partnership of Fizer & Folkes contracted after the death of Fizer and before the filing of the bill in this cause.

4. In fixing the beginning of the farming season of 1882, instead of the date of the' filing of the bill (December 13, 1881), as the date of the termination of the partnership.

5. In disallowing the application of the heirs of Fizer for an allowance for support during the litigation, and for attorney’s fees.

6. In modifying the injunction which had been issued, so as to permit Folkes to dispose of the crops of the year 1882, upon his entering into bond to have forthcoming the rents which might be assessed against him for that year.

7. In directing an account to be taken of the value of the improvements placed on the lands by Folkes after the filing of the bill.

8. In directing that Folkes should only be charged with interest at six per cent per annum instead of ten.

The appellant Folkes assigns for error the action of the court: — ■

1. In not enforcing the contract with Hilliard against the heirs of Fizer.

2. In not. allowing the business of the firm of Fizer & Folkes to be carried on until payment could be made of all the partnership debts.

3. In not allowing Folkes to continue the business under the will of Fizer, until the place shall be improved and put in successful cultivation;

4. In appointing a receiver.

5. In holding appellant Folkes as a tenant for the year-1882.

6. In not allowing Folkes compensation for his services in managing the business after the death of Fizer.

7. In directing interest to be charged against Folkes in the settlement of the partnership accounts.

8. In not sustaining Folkes’ plea of usury as to the Estes, Fizer & Co. account.

9. In construing the will of Fizer.

The appellant, Hilliard, by his first six assignments of error presents the same points raised by the first, second, third, fourth, fifth, sixth, seventh and eighth of Folkes. The seventh is upon the refusal of the chancellor to instruct the commissioner that Folkes, upon an accounting, should be credited with one-half the value of one-third of the plantation.

8. In not declaring that the lien of complainants for whatever might be due from the defendant Folkes in order to pay the partnership debts and to equalize the accounts between the partners, should be postponed to any decree that Hilliard might thereafter obtain against Folkes on the contract of January, 1877, in the event Hilliard should elect not to accept the moneyed compensation allowed.

9. In requiring Hilliard to elect whether he would accept a moneyed compensation before the amount thereof had been determined, and before declaring how his right to proceed against Folkes under said contract would be affected by the lien claimed for complainants.

■ 10. In not declaring that whatever rights Hilliard might have to enforce the contract of January, 1877, out of Folkes’ moiety of the land, should be subject to only the partnership débts, and the indebtedness of Folkes as partner to complainants, which were existing on the 241,h of January, 1877, and which had not been since paid, and that so much of this moiety, as might be afterwards decreed to Hilliard in any litigation with Folkes should not be liable to even such debts, until Folkes’ interest in all the other partnership property real and personal should first be exhausted.

It is unnecessary to consider seriatim the assignments of errors, as most of them are included in the examination of the general question which lies at the root of the controversy, which is, what was the character of the ownership which Fizer and Folkes had in the land?

As to the claim now propounded by the complainants, that the land shall be dealt with as property held under a tenancy in common, pure and simple, it would be sufficient to say that such was not the theory upon which their bill was exhibited.

But aside from this, an examination of the evidence showing the circumstances under which it was brought, the contract in reference to its improvement, the manner in which it was dealt with by the owners and the intimate connection it has with the partnership affairs, has led us to the conclusion that the land in no event could be considered as held by the owners as tenants in common, unaffected by the result of the partnership dealings conducted by them. On the other hand, the same considerations lead to the conclusion that the partners did not intend to reduce it to partnership property for all purposes, certainly not the extent of converting it into pei’-sonalty.

There was contemplated by the owners a tenancy in common, but it was to fully begin only when the partnership should by finally closed. There was also a partnership, but it was to end, not in the conversion of the land into personalty for the purposes of distribution, but in the partition of it between the members of the firm, or a continuation of the enjoyment of it as tenants in common.

The powers, rights and obligations of the owners cannot be determined wholly by the laws of partnership, nor of those of co-ownership, but are governed partly by those of each. 1 LindL.on Part. 63.

The contract of partnership was entered into solely for the purpose of purchasing, improving and equipping the place. The profits of the partnership business were to consist of lands and not of money; as rapidly as realized they were converted into realty by investing them in the payment for, improvement and equipment of, the place. The end and object of the partnership was the ownership of an improved and arable plantation. The partnership was the means by- which this end was to be attained.

The relations of the parties to each other and to the property are analogous to the cases of co-ownership of mines worked by the owners as partners. As to these Lindley, in his work on partnership, suggests the following, among other rules : upon a dissolution of the partnership, the mine itself not being partnership property, must be divided between its several owners and not bé sold.

As between the real and personal representatives of a deceased partner, his share in the mine will be real and not personal property.

With a view to a dissolution the court will, if necessary appoint a receiver to carry on the mine for the benefit of all parties interested.

The obligation of each co-owner to account to the others, is the same as that of one partner to account to his copartners, and much more extensive, therefore, than that which exists in a case of mere co-ownership. The lien which each partner has on the shares of his copartners, for what is due from them to the partnership, extends to this class of cases, as does also the obligation which one partner is under to account to his copartners for benefits he may have received in respect of the common property!

From the facts shown by the record we consider, that the lands were partnership property in so far as to be bound for the debts which are binding on the firm of Fizer & Folkes ; that the partners were capable of dealing with them as partnership property, by doing any acts within the scope of the partnership business ; that on a dissolution of the partnership they pass to the heirs and not to the personal representative ■of Fizer, and that neither partner has the right to insist upon their sale for distribution of their proceeds; but that the heirs •of Fizer are entitled to a partition in kind, if it can be made, which right is dependent upon a final settlement of the partnership accounts, until payment of which there can be no division of the lands, no withdrawal of them from the possession of the firm without the consent of all pai’ties in interest.

This disposes of the first, second, third and fifth assignments of error on the part of the complainants in the court below. The second assignment of error on the part of the appellant Folkes is, that the court erred in not permitting the business of the firm of Fizer & Folkes to be carried on until payment could be made of all the partnership debts, and the seventh is that it was error to direct interest to be charged against Folkes in favor of the heirs of Fizer in the statement ■of the partnership accounts. These two assignments are based upon the terms of the partnership contract and are therefore considered together. There were no articles of partnership, but the admissions or declarations of both partners as to the terms of the contract are proved by two witnesses, who were the friends of the partners and conversant with their general business affairs.

Mr. Burton, one of these witnesses, says “ it was understood and agreed, as explained to me by both of the parties, that Captain Folkes should take the management of the business in Tunica County, Mississippi, and attend to the raising of the crops, etc., and attend to all the other business transactions of the plantation ; that General Fizer was to advance the funds necessary to carry on the farm, and to pay the purchase-money, and that they should continue their farming operations until the profits were sufficient to pay off the indebtedness of the firm.” In answer to the next interrogatory, which was, “Were these moneys and means necessary to open and run and clear the place to be furnished by, Fizer individually, or by the house of Estes, Fizer & Co.,” he says, “ The money was furnished by Estes, Fizer &Coi ; it was charged upon the books of Estes, Fizer & Co., to Fizer & Folkes.”

Mr. Estes, the other witness, states : “ My understanding from both was that the partnership was to continue until the debt was worked out and the place opened up, and as long afterwards as was agreeable. The purchase-money was to be made upon the land, and paid back until it was cleared of debt entirely.”

On further examination Mr. Burton testified : “It was expected by both members of the firm, that the expense .of clearing and improving the land would exceed the revenue of the place for the first two years or for an indefinite period. It was agreed, however, that the place should be cleared and they would continue to improve it, and that this extra expense should be borne by General Fizer, and as soon as the place became profitable, the money advanced by him should be refunded, and after the indebtedness of the place should be paid off, then they could divide the land or continue, as they saw proper.”

In answer to cross interrogatory six which was : “ Do I understand you to say that General Fizer was to furnish all the money that was necessary?” He replied, “That was the original contract. Captain Folkes faut in some $3,000 cash, which he stated at the time, he had not expected to put in.”

It4s insisted by Folkes that by reason of the agreement of partnership thus proved, Fizer was unable to dissolve the partnership until the purpose for which the land had been purchased should have been accomplished, that it was a partnership for a definite and fixed end which both parties were bound by their agreement to carry into effect, and was indissoluble except by the consent of both.

In this view we can not concur. The law governing partnerships is that they may be dissolved at the will of either party unless there is a distinct covenant against the exercise of this right, or unless it is manifest that such was the clear understanding and agreement of the partners.

Declarations of Fizer and Folkes, testified to by the witnesses, seem to us rather the expression of their views as to the probable result of the scheme, and the manner it could be consummated, than of the terms of a contract deliberately entered into by which they were to be bound to each other for, an indefinite time in an uncertain adventure. The agreement, if such it be, lacks those elements of certainty and completeness which ought to be established to engraft upon a contract of. partnership so unusual a stipulation. Nor do we think the agreement on the part of Fizer to advance such sums of money, goods, etc., as should be necessary for the prosecution of the business, indicated an intention on his part not to charge interest for the use of the money or supplies so furnished. There is nothing in the evidence showing that he so understood it. As we have said in regard tothe contra ct to continue indefinitely the business of the partnership, we cannot consider such an agreement as sufficiently proved by evidence of indefinite statements of a partner made in a casual conversation, or in explaining to a friend the general plan contemplated for the prosecution of the scheme in which he was engaged. We think it more than probable that Fizer understood thé agreement to be that the common enterprise should not fail for lack of money, and that he was expected, as the moneyed man, to see to it that the necessary funds should be furnished by him or procured on his credit; but that the cost of such advances, whether made by him or by another at his procurement, should be borne only by him and not by the firm, we think was not contemplated by him, nor fairly inferable from the agreement as stated by him to the witnesses Estes and Burton. By his first assignment of error the appellant, Folkes, presents the question whether the heirs of Fizer are bound by the agreement entered into between himself and the appellant Hilliard.

The power to bind the interest of the heirs in the land by this contract is claimed by him to have .existed by reason of his power as a partner over the property of the firm.

The powers of the several partners over the property of the firm arise from contract between them, expressed or implied. In the prosecution of the common business it is usually necessary or expedient that, each member shall have authority to act for all, and because of this general necessity, the authority, even between the partners themselves, is implied from the mere contract of partnership. It need not be expressly provided for, but exists unless expressly provided against. Arising by implication, it is restricted by implication, and can only be exercised by the performance of such acts as are necessary or usual in the business in which the partnership is engaged. It is admitted that there was no express authority conferred by the partnership agreement to make such contract; if, therefore, it exists at all it must be implied from the nature of the business. Now, the object of the partnership wa.s the purchase, improvement and equipment of this land, not that it might be resold and a profit thus realized, but that it might be owned by the partners. If the power of alienation by each partner arose from the mere fact of partnership for one purpose, it arose for another': if there was authority to sell a part there must have been the same authority to sell the whole; if one partner could contract to convey a part to the manager employed in payment of his services, so also he might have contracted to convey another portion to the laborers who cultivated the fields or to the mechanic who built the houses upon the place. Such contracts could be made by neither partner alone, because they were not within the scope of the partnership business, and tended to destroy, not to advance the common scheme. But it is said that there was a necessity for the execution of the contact with Hilliard. The answer is, that the implied power of a partner does not arise from the necessity of a particular occasion, but from the contract of partnership. It is also said that a power exists in a member of a partnership to sell the real estate of the firm for the payment of the firm debts ; from which it is argued that a power also exists to contract a debt and at the same time to contract to pay it bjr a contract to convey the lands of the partnership in payment. The power to contract a debt implies the power to. pay it, the power to pay implies the power to convert the property of the firm into money for this purpose, and the power ter convert into money has been held to be substantially exercised by a conveyance of the property directly in payment of debts. In such cases the power of sale arises as an incident from the condition of the partnership affairs which has resulted from acts which the several partners had the power to perform. In this case the firm owed Hil-liard nothing ; there was no necessity for the sale of the lands of the firm ; there was no general power in either partner to sell them, and there were no special circumstances from which an exceptional power could be inferred. Whether property purchased and held as this was, could in any event be sold by a member of the firm for the payment of debts, or for any other purpose, we do not find it necessary to determine, as the contract with Hilliard was confessedly not made for the purpose of paying the debts of the firm.

Again it is said that while the administrator and widow of Fizer did not actually sign the contract with Hilliard, they had notice of its existence and expressed no dissatisfaction with it; that they as the representatives of the estate of Fizer had the power to assent to the contract, and thus assenting to bind the heirs and estate of Fizer, and that their failure to object was equivalent to such assent. In our opinion, an execution of the contract by these parties would not in any degree have been binding upon the heirs or the estate of their testator. Whatever power they had must be deduced from the following clause in the will of Fizer: “ It is also my will and desire, that my partnership matters with W. C. Folkes in the plantation and store in Mississippi be continued until the plantation can be properly improved and put in successful ■operation, say for two years, and after that to go as the law directs.”

By this clause of- the will, authority was conferred to continue the old partnership in the same general manner and for the same purposes as contemplated in the inception of the •enterprise. Whatever was necessary to attain the desired end, whatever the individual members might have done before the death of Fizer without the knowledge or assent of the •other partner might have been done by Folkes, after the death -of Fizer, in prosecuting the partnership business under the will. But by the will no partnership was authorized to be ■carried on, other than the one existing at the death of Fizer. The executor or administrator could not enter into a new or •different one; they could not change the terms of the partnership contract, so that from it as changed, greater or different powers might be implied than could have been from the •original; they could not directly or indirectly, by consent, acquiescence or ratification give validity to any act for which authority did not exist by the terms of the contract as it •existed at the death of the testator.

It is finally said in support of this contract, that admitting its invalidity as against the heirs of Fizer, yet, as it was made in good faith by Folkes, at a time when there was no prospect •of relieving the firm from its embarrassed condition by other means, as it has been executed by Hilliard and resulted in benefit to the heirs, the court should now decree that it shall be executed by them. Waiving a consideration of the question whether, since the statutes of our State declare the contingencies under which the real estate of an infant may be converted into money, there remains any power in the court so to convert it, under other circumstances, we approve the action of the chancellor in declining to decree the execution of the contract under the facts of this case. Such contracts cannot be enforced, except where they are manifestly for the benefit of the infant. We are unable to say that it would in this case be to the advantage of the infant. Besides this, the status quo may be virtually restored by the allowance to Hillard of a sum of money, to be paid out of the partnership assets.

The proposition that, by the will of Fizer, Folkes was authorized to continue the partnership for an indefinite time, or, as stated by him, until the place shall be, in the words of the will, “ improved and put in successful cultivation,” cannot be supported. First, because we think that at least such progress has been made in that direction (of improving and bringing into successful cultivation) as was contemplated by Fizer in making the provision in his will in regard to it; and secondly, because the administrator is entitled to demand a dissolution of the partnership. He is the representative of the estate of the testator, and it would be a strong case,'indeed, in which the court would compel a continuation of a partnership in which the estate of a decedent was interested, against the wishes of its representative.

In view of the character of the partnership property and business, we approve the action of the court in appointing a receiver to take charge of and manage the affairs of the firm until the necessary accounting and settlement of the partnership can be made. There was no error in decreeing a dissolution of the firm, as of the beginning of the year 1882 and in charging Folkes as a tenant for that year. The complainants were entitled to a dissolution of the firm, and by resisting it Folkes could not continue the partnership against their consent. There is nothing in this that violates the rule which denies to a party having the election to take either the profits or the rents of property, the right of taking rents for a part and profits|for a part of the time. The complainants filed their bill, electing to take the profits of the partnership, and demandT ing that it should instantly be dissolved and its affairs placed in the hands of a receiver. The defendant admitted their right to a participation in the profits, but asserted on his part the right to continue the partnership operations. In this claim he has been unsuccessful, and the result must be that the complainants are entitled to stand upon the same ground they would have occupied if their lawful demand had been complied with. They cannot be compelled to take the profits of a partnership which they repudiate, and which was conducted without their consent and against their protest, because they elected to take, the profits of the partnership while conducted by their ■consent and approval.

The chancellor rightly refused to decree the dissolution as of the date of the filing of complainant’s bill. The business conducted by the firm was of an annual character, and for this reason the end of one and commencement of another farming year was a proper period to establish as that at which the •dissolution should be made.

The injunction against the disposal of the crop of 1883 by Folkes was properly modified. Folkes being charged with rent and hire for the partnership property for that year, the crop became his individual property. Not belonging to the firm, the complainants have no lien on it for the payment of any amount which may be found due from Folkes to them on the settlement of the partnership accounts. Folkes’ plea of usury should have been partly disallowed and partly sustained. As the estate of Fizer paid the debt as contracted by him, and •since he gave no warning to its representative that he would object to the interest charged and paid, we think he ought not now to be permitted to cast the burden wholh7 upon the estate •of Fizer. But the evidence discloses the fact that apart (probably one-third) of the usury was really received by the estate of Fizer, by reason of his interest in the firm of Estes, Fizer & Co. No injury can be done the estate by disallowing the ■usury to the extent that it was benefited by its collection. Directions to this effect should have been given by the court to the commissioner.

In view of the fact that Folkes’ good faith, in his management of the partnership affairs, is fully shown by the' evidence, we have hesitated in determining to deny him the right to receive compensation for services rendered by him subsequent to the death of Fizer ; but in view of the facts that under the original agreement no charge could have been made for services rendered in tbe life time of Fizer, that Folkes was the attorney who prepared the will of Fizer by which compensation was provided for Mr. Estes, the surviving member of the firm of Estes, Fizer & Co., for services to be rendered by him after the death of Fizer, and that the will, while referring to the continuation of the business of Folkes & Fizer, is-silent as to compensation for services to be rendered by Folkes,. and because also we have thought Hillard (who seems to have-been the real manager of the planting interests of the firm) to-be entitled to compensation on the basis hereinafter shown, wo have not felt justified in decreeing compensation to Folkes.

The ninth assignment of error by the appellant Hilliard is-well taken.

He should not have been compelled to elect between the reception of a compensation in money and the right to pursue Folkes on his contract until the account shall be taken, and the chancellor shall have declared what that amount will be. The account must of necessity be taken in any event, as the amount properly payable to Hilliard will be a charge on the partnership property in any event, in his favor if he shall elect-to receive - it, and in favor of Folkes, if Hilliard shall elect to proceed against him on the contract.

The eighth and tenth assignments of error by Hilliard are-untenable. If he shall elect to receive compensation in money he will stand as a creditor of the firm, and his debt will be paid pari passu with those of the other creditors. But if he shall decline to receive such compensation, and shall elect to proceed against Folkes individually, he will be postponed as against the partnership property to all the creditors of the firm. At best, under such circumstances, he could occupy only the position of a purchaser of a part of Folkes interest in the partnership property, and what that interest will be cannot be determined until a settlement of all the-partnership debts.

In taking an account of the amount which should be allowed the appellant Hilliard for services rendered to the firm, regard should be had to the terms upon which he contracted to perform them ; that is,-that he was to receive only $500 per annum in cash, the balance being payable only at the end of the six years from the date of the contract, and the contingency that such balance would not be paid at all, except in the event the partnership should be successfully prosecuted. He should be allowed a sum equal to that for which a man, capable of performing the services performed by himself, could have been employed by the firm of Fizer & Folkes to perform such services, at the time the contract was made, in the locality of the lands, receiving in cash annually the sum of $500, the balance of his compensation being payable at the expiration of the term of six years, and such payment of such balance being conditional upon the ability of the firm under his management of the property to pay off the debt secured by mortgage on the lands.

The matters involved in the seventh assignment of error by the complainants have not been finally passed upon by the chancellor. It was not error to refuse to charge Folkes with interest at ten cent per annum.

The decree is reversed in so far as affected by the errors herein indicated ; as to all other matters it is affirmed. The cause will be remanded to the court below for further proceedings, the costs of this court to be equally divided between the parties, and those of the court below to abide the result of the final decree.