169 A. 379 | Pa. | 1933
Argued October 10, 1933. In this case we have been favored with elaborate briefs and an extensive printed record, but the controlling points are few and compel a reversal of the decree.
Charles Daub (the testator), August Daub and Jacob Daub were brothers and had been partners for some forty years. Their partnership articles provided: "It is hereby also agreed and understood between the parties hereto, that in order to avoid any and all controversies or disputes which might arise in caseof the death of one or more of the said partners, as to settlement of his or their share or shares and interests in the partnership, and in order to facilitate the ascertainment of the interest of each in the partnership assets, the parties hereto fix as the fair value of the entire partnership estate the sum of $420,000.00, and after carefully considering what would be a fair and proper division thereof as between the partners, taking into consideration the value of the services rendered and the moneys first invested in the *37 business, a perfectly fair division thereof is hereby mutually agreed upon to be as follows:
"Said Charles C. Daub is, and shall be entitled to one-half thereof, or the sum of $210,000.00;
"Said Jacob Daub is, and shall be entitled to one-fourth thereof, or the sum of $105,000.00;
"Said August Daub is, and shall be entitled to one-fourth thereof, or the sum of $105,000.00.
"This estimate and valuation of the partnership estate shall be accepted as the correct amount payable at the death ofeither of the partners to the estate of the one so dying,regardless of any appreciation or depreciation in the assets inthe future or of any or all losses, and is as follows: to-wit: To the estate of Charles C. Daub, $210,000; to the estate of Jacob Daub, $105,000, and to the estate of August Daub, $105,000."
Jacob died first and his estate received the $105,000 out of the partnership funds, and thereafter, subject to the provisions of the partnership agreement, if it continued to be applicable, Charles had a two-thirds, and August a one-third interest in the firm. Whether or not Jacob's death would have ended the partnership agreement, if its language alone were to be considered, is a disputed question we are not required to answer, though the above quoted extract would seem to imply that it did not. The business was, in fact, continued by Charles and August just as before, and Charles repeatedly said it was so carried on in accordance with the agreement, and, so far as appears, August assented to that conclusion. This constituted an interpretation of the ambiguous language of the agreement by the parties to it, and an interpretation thus reached in a controversy, as here, between the partners and those claiming under them, will always be enforced by the courts: Gillespie v. Iseman,
When Charles died, August and Jacob were named in his will as executors thereof, but, Jacob being dead, letters testamentary were granted to August only. When the question arose as to what sum Charles's estate was entitled to receive from the partnership, August, as executor, consulted the counsel who had drawn both the partnership agreement and Charles's will which referred to it, and who for many years had represented not only the firm, but also each of the partners individually. He was a lawyer of unquestioned integrity and ability. He advised that the partnership agreement was in force, and that Charles's estate was entitled to receive only the sum of $210,000. A two-thirds interest in the partnership assets was worth in excess of that sum; but this, as the partnership agreement showed, was (it being still in force) a matter of no moment. August told the distributees under Charles's will what the lawyer had advised and showed them the partnership agreement. When he filed his account he charged himself, quoad the partnership assets, with the sum of $210,000 only. At that time, as we pointed out in our former opinion herein (Daub's Est.,
So far as appears, none of the parties in interest made any objection to the decree of distribution or any of the proceedings, either then or subsequently, until after August Daub, the executor, died on September 4, 1926. On April 24, 1929, then for the first time complaining, they filed the petition which initiated the present proceedings, asking that the decree confirming the first and final account be opened, and that the executors of August be directed to file a supplementary account in the estate of Charles. A citation was issued as prayed for, the account was opened, and after a long and tedious proceeding the estate of August was surcharged, on the theory that the partnership agreement ceased to have any validity after Jacob died. As we have shown, this was an erroneous conclusion. August's surviving executor then took the present appeal.
The Fiduciaries Act of June 7, 1917, P. L. 447, which defines "fiduciary" in section 1 (page 457) to "include executors, administrators, guardians and trustees," provides in section 48 (page 514): "Within five years after the final decree confirming the original or supplementary account of any fiduciary, which has been or may be hereafter passed upon, a petition of review being presented by such fiduciary or his legal representatives, or by any person interested therein, alleging errors in such account, or in any adjudication of the orphans' court, or any report of an auditor of such account, which errors shall be specifically set forth in said petition of review, said petition and errors being verified by oath or affirmation, the orphans' court shall grant a rehearing of so much of said account, adjudication, or auditor's report *40
as is alleged to be error in said petition of review, and give such relief as equity and justice may require, by reference to auditors, or otherwise, with like right of appeal to the proper appellate court as in other cases." We decided in Stetson's Est.,
This extract from the opinion of the court below erroneously assumes that August had a duty to pay in excess of the $210,000, and that he concealed the facts as to the value of the partnership assets, yet neither assumption is true in fact. As we have already shown, Charles's estate was entitled to the $210,000, and that only. Upon payment of that sum, the distributees under his will had no interest in the partnership assets, and no right to know of what they consisted, certainly not unless they *41
asked to be advised on the subject, and this they never did. That being so, the fact that August did not volunteer information to those not asking for it, did not make him guilty of constructive or any other kind of fraud. When he was appointed executor he did what every other sensible man in such a position would have done. He laid the matter before the capable lawyer who had for years represented all the parties in interest in the firm, including Charles, as well as the firm itself, and then told appellees of the advice received and showed them the partnership agreement. True, he did not tell them what the assets of the partnership were, for, under that advice, as we have said, appellees had no interest therein, and were not entitled to know, certainly not unless they asked for the information, and apparently they were satisfied, since they asked no question. Under such circumstances constructive fraud cannot properly be charged. In the prior proceeding in this estate (
We reaffirm that conclusion, but it does not affect the present proceeding, since, as we have shown, the interest of testator's estate in the partnership assets was limited to the $210,000 which was paid and accounted for. In the prior proceeding, the widow was refused the right to set aside her election, and for a like reason she and her children must be refused the right to overturn the decree of confirmation of the account, to which she and they expressly agreed, especially as they did not proceed until after the death of the executor, who could best answer their complaints. We said in that case (
The decree of the court below is reversed, and its order opening the decree confirming the first and final account of the executor and all proceedings following that opening are vacated and set aside at the cost of appellees.