65 W. Va. 366 | W. Va. | 1909
W. C. Daniel brouglit this suit in the circuit court of McDowell county to set aside his purchase of his co-partner’s interest in a store, cancel his negotiable promissory notes given therefor, and settle and wind up the partnership business. The court, on final hearing, dismissed his bill and he has appealed.
Prior to January 1, 1904, he owned a retail store at North Fork in said county and, on that da3r, sold an interest in it to the defendant Grattan (Grat) Gillespie. He put in his merchandise at a valuation of $11,14&.95. Within á year thereafter he paid into the business, in some form, $3,836.01 additional and Gillespie $2,028.13. Neither was to have any salary and Daniel was to own three-fourths of the business and Gillespie the remaining fourth. The firm seems to have lost considerable money during the year* for, in the folio-wing February, the stock invoiced $8,163.16, there were accounts due the store, amounting to $1,444.76, and debts due from it, amounting to $10,513.60. On February 1, 1905, Daniel bought Gillespie’s interest for the sum of $2,185.00, executing his three negotiable promissory notes therefor. On April 27, 1905, he brought this suit for the purpose above stated. Iiis bill admits knowledge of firm losses at the time he bought and the clamor of creditors for payment of past due bills, and avers the purchase was made for the purpose of obtaining possession of the business, to the end that its exact condition might be ascertained and a settlement made without incurring the expense of a receivership. It says the plaintiff, on conferring with the defendant about the state of the business and attempting to purchase his interest, found the latter unwilling to agree to any equitable and just settlement. The latter threatened to bring a suit to dissolve the partnership and have a receiver appointed, and, rather
A cross-assignment of error, based on the overruling of the-demurrer to the bill, raises- the question of equity jurisdiction, adequacy of legal remedy by an action for damages being assigned as the reason for lack thereof. The authorities. invoke'd' for this proposition do not sustain it. In Childers v. Neeley, 47 W. Va. 70, the partnership had been dissolved and a settlement-made. The only matter alleged against the defendant was his-failure to execute a bond of indemnity to the plaintiff. It appearing to the court that the partnership business had beem
If the object of the suit were merely to prevent collection of the notes by establishing fraud in the procurement thereof or failure of consideration, in whole or in part, it seems clear that these matters of refenee might be set up in a court of law, and there might be no jurisdiction in equity; but the relief sought by the bill does not stop with this. It goes entirely beyond'the mere matter of defense and includes a settlement of the partner
We do not stop to discuss so plain a proposition as that the purchase or settlement, which ever it may be termed, may be set aside on allegation and proof of fraud on the part of the defendant; but a matter worthy of consideration is, whether the plaintiff, having obtained possession of the property by this purchase, and desiring to set aside the contract for fraud, must restore the property to the possession of the defendant, or admit him to joint possession and control thereof as a condition precedent to relief, and the authorities answer this proposition in the negative. Oliver v. Bouse, 125 Ga. 637; Wallace v. Sisson, 33 Pac. 496; Elfelt v. Hart, 1 Fed. Rep. 264; Abrahams v. Hunt, 26 Pa. St. 49. “A partner who has been defrauded into a private settlement may institute a suit for a judicial accounting, without rescinding the settlement and putting the defrauding partner in statu quo.” 30 Cyc. 713. The reason for differentiating such a case from one of rescission of a contract of purchase between strangers is apparent. Before the sale, each had right of possession and the possession of each was the possession of the other. By giving notice of election to rescind the purchaser virtually puts the seller in statu quo, except that he expects to' retain the assets at their real value, with assent of the other party, without relinquishing his right to a just and fair settlement of the accounts. Abrahams v. Hunt, cited, allows a partner to set aside a release extecuted to his co-partner, by showing that the latter coerced the execution' thereof by unjustly withholding the books and acting unfairly in other respects, and does not require him to restore what he obtained in the private settlement, as a condition precedent.
Enough has been stated to indicate that the vital questions in the case are, (1) whether the evidence adduced by the plaintiff, considered alone, sustains the allegations of the bill; and (2), if it does, whether the evidence adduced by’ the defendant is sufficient to -relieve him from the imputations of fraud thus cast upon him. Numerous witnesses testify to the reckless and dissolute conduct of the defendant. His habitual and persistent association with lewd women and reckless expenditures of money upon them and in other ways are abundantly shown. Many specific instances of misconduct are related, but the one most clearly indicating fraudulent intent, and, therefore, the gravest and most serious, as regards this case, is his conversion of money into a check in the name of a third party and causing the cheek to be assigned to him and then depositing it in his own name in a bank other than the one in which the firm money was kept. This is hardty reconcilable with any intent or purpose other than that of defrauding his partner. J. A. Jackson says Gillespie gave him fifty dollars and asked him to go up to Mr. Toney’s office and obtain the latter’s check for that amount in his own name and bring it back to him, which was done. Toney says Jackson brought him the money and he gave the check as requested which came back to him, bearing the endorsements of Jackson and Gillespie and showing it had passed
“The defendant denies that he had misappropriated any of the partnership funds, and in general terms says that none of the money deposited in the bank by him, as shown by the evidence of W. T. Gillespie, belonged to the partnership or to the plaintiff. He is asked by his counsel to explain the different items set out in the statement filed with Gillespie’s deposition as deposits made by him, and he explains and accounts for the various amounts deposited prior to the formation of the partnership, but he fails to explain a single item embraced within the partnership period.
“The commissioner in his former report charged the defendant with those deposits, only, which were made during the continuance of the partnership, and he was not charged with a single item deposited prior to that date. His failure to explain a single item and to account for a single deposit made during the continuance of the partnership, and with which he _was charged in the settlement adopted by the commissioner, in his former report, is, in the mind of your commissioner, significant
“Some evidence was given by the defendant tending to show that he had some income other than that from the partnership business, but in the opinion of your commissioner he fails to show that he actually had such income from Jnuary 1, 1904, to February 1, 1905,'the period of the partnership, but all the evidences of sales of cattle, farm products, etc., shows that these sales were made before or after this period. Your commissioner therefore finds that the evidence is insufficient to overcome the case heretofore made out, and upon which his former report was based.”
After a careful examination of the evidence in question, we fully concur in the commissioner’s estimate of it, from which it results that, in our opinion, the circuit court erred in sustaining the exceptions to his report.
We have examined the report of the commissioner and the appellee’s exceptions thereto, finding no errors therein to his prejudice. The account is not stated on correct principles, hut the result is to the prejudice of Daniel, who does not complain of the commissioner’s report, and asks a decree in conformity therewith. Therefore, the decree complained of will be reversed, and a decree will he entered here, ordering the surrender and cancellation of the notes mentioned and described in the hill and proceedings, confirming the commissioner’s report, and requiring the appellee, Gillespie, to pay to the appellant, Daniel, the sum of $561.84, with interest thereon from the 29th day of May, 1907, until paid, and costs in this Court and the court below.
Reversed.