36 F.2d 309 | 9th Cir. | 1929
Lead Opinion
The appellant, acting as administrator de bonis non of the estate of W. W. Pendergraft, and also in his capacity as the administrator of the affairs of the partnership business carried on at Fairbanks, Alaska, by W. W. Pendergraft and John Aldridge, under the partnership name of Pendergraft & Aldridge, and also known as Imperial Cigar Store, brought action to cancel a mortgage given by W. W. Pendergraft, the surviving partner, on November 13, 1920, to the appellee George Hutchinson, as trustee, upon all the real and personal property of the copartnership to secure the-payment of $5,500, and for an accounting for all moneys paid on account of said mortgage.
The mortgage was given to secure indebtedness evidenced by the following promissory notes, to wit: A note of October 20, 1916, for $1,000, and interest, in favor of Julius Gius, executed by Pendergraft in his individual capacity; a note dated March 5, 1918, for $900, and interest, executed by the copartnership in favor of Henry Doring; another by the copartnership for $500, and interest, executed August 31, 1920, payable to the First National Bank of Fairbanks, Alaska; another note for $3,000, and interest, executed October 4, 1920, payable on demand to the First National Bank of Fairbanks, Alaska, by the co-partnership.
The complaint alleges the insolvency of the copartnership at the time of the execution of the mortgage and that the indebtedness secured by the mortgage was fictitious and fraudulent. These allegations are denied, and there is no finding on the issue of insolvency. By an interlocutory decree, the mortgage was canceled by default as to
In view of the fact that the interlocutory decree herein canceled the mortgage, the question as to whether or not the surviving partner had power to execute the mortgage becomes relatively unimportant upon the appeal. The indebtedness purporting to be secured thereby to the First National Bank has been fully paid by the surviving partner. If any wrong was committed in making this payment, it was committed by the surviving partner himself, and neither he nor the administrator of his estate could recover from the First National Bank at Fairbanks money paid to it by him on the indebtedness due the bank, in the absence of insolvency of the firm unknown to the surviving partner, or' fraud or mistake. 24 C.J. § 1258; Thorsen v. Hooper, 57 Or. 75, 109 P. 388. Nor do we see how the surviving partner, under the circumstances, as trustee for the copartnership, or the appellant as his successor as trustee, could compel the creditor to refund money due to it and paid by the surviving partner. If the partnership assets were incumbered by a valid mortgage, it is clear that such mortgage was entitled to priority of payment from the proceeds of the property so mortgaged. It is in this aspect of the case only that the validity of the mortgage is of any importance in this litigation. As the parties have directed their attention primarily to the question of the validity of this mortgage, we will now consider that question.
In support of the decree we must assume that the court found as a fact that the copartnership was not insolvent. There is no specification of error requiring or permitting ?- consideration by us of the evidence on that subject. There is evidence of a long-standing indebtedness to the National Grocery Company incurred between 1914 and 1918, and of a disastrous fire in 1919 causing a great loss to the co-partnership, but no proof in the record as to the financial standing of the deceased partner, Aldridge. The par
On October 24, 1920, and shortly after the execution of the last-mentioned note, John Aldridge, one of the co-partners, died.
The appellees claim, and the court found, that the mortgage was executed in pursuance of an oral agreement made on October 4, 1920, when Pendergraft secured the loan of .$3,000 at the First National Bank, evidenced by the note executed on that day. It appeared that the obligations evidenced by the promissory notes in question constitute all of the obligations of the partnership except an obligation for $19,000 due the National Grocery Company.
On November 15, 1920, Pendergraft fully paid the note of August 31, 1920, for $500,-to the First National Bank of Fairbanks. Later, before his appointment as administrator of the copartnership affairs, he had also paid $662.50 on the $3,000 note.
On February 1, 1921, Pendergraft applied for letters of administration of the partnership estate of Pendergraft & Aldridge. Letters were accordingly issued, and Pendergraft qualified as administrator, and after his appointment as ' administrator of the copartnership he paid the balance of the principal, $2,350, and $154 interest. These payments were all made_ from the proceeds of the copartnership business conducted by the surviving partner. The above-mentioned mortgage states that the largest part of the income of the parties from the conduct of the business consists in the sale of soft drinks, ice cream, candies, cigars, tobacco, and the use of pool tables. By the terms of the mortgage the surviving partner agreed to pay on the mortgage indebtedness at least 10 per cent, of his gross monthly sales. No payments were made on account of the personal note of Pendergraft in favor of Julius
On May 14, 1925, Brown was removed from the office of executor and administrator and appellant was appointed in his place and brought this action.
The first question which presents itself is as to the authority of the surviving partner to execute the note and mortgage to the appellee and thus give priority to the claims thereby secured. The Legislature of Alaska in 1917 adopted the Uniform Partnership Law (Uniform Partnership Law of 1917, Laws of 1917, c. 69, p. 159), which provided, among other things, that upon the death of a partner the title to all the partnership property vested in the survivor who was authorized and directed to settle the partnership affairs. Prior to this legislation, the Code of Alaska, adopted in 1906, provided that the administrator of the estate of the deceased partner should inventory the entire ass.ets of the copartnership. Compiled Laws of Alaska 1913, § 1622. If the surviving partner desired to administer the affairs of the copartnership, he was required to file a petition to that effect within five days and execute a bond and qualify as such administrator (Compiled Laws of Alaska 1913, § 1623), whereupon the property was administered in the same manner as other probate estates (Compiled Laws of Alaska 1913, § 1624). See Compiled Laws of Alaska 1913, §§ 1622 to 1628. This system of administering the assets of the partnership in the event of the death of one of the partners followed the plan which was then in force in the states of Maine, New Mexico, Kansas, Missouri, Oregon, and Washington. Woerner American Law of Administration (3d Ed.) § 128, p. 443;
A decision of the United States Supreme Court (U. S. v. Wigger, 235 U.S. 276, 35 S.Ct. 42, 59 L.Ed. 226) is cited as authority upon the proposition that laws affecting the jurisdiction of the courts of Alaska come within the category of laws which can only be amended or repealed by Congress and not by the Legislature of Alaska. In this connection it should be stated that the Uniform Partnership Law of Alaska (section 37, c. 69, Session Laws of 1917) provide:
“Unless otherwise agreed the partners who have not wrongfully dissolved the partnership or the legal representative of the last surviving partner, not bankrupt, has the right to wind up the partnership affairs; provided, however, that any partner, his legal representative, or his assignee, upon cause shown, may obtain winding up by the court.”
Before entering upon a discussion of the questions thus presented, it should be observed that repeals by implication are not favored and only occur when there is a direct and unavoidable inconsistency between the old and the new legislation, and also that statutes are to be given a construction which renders them valid as against claims that the Legislature has exceeded its authority rather than one which would render them invalid, if such a con
Assuming that, if there were no legislation subsequent to the Compiled Laws of Alaska leading to a contrary inference, the surviving partner would have no authority to deal so with partnership assets in event of the dissolution of the partnership by the death of one of the partners, we have here, in the later Uniform Partnership Law adopted by the Legislature of Alaska, complete and full authority on the part of the administrator to exercise his discretion in the management and winding up the affairs of the partnership and in so doing to create a preference in the absence of court proceedings. See, as to preference under the common law, 47 C.J. § 616, pp. 1046, 1047. This express statutory authority is not necessarily qualified by the consideration that the surviving partner might be forced later to give a bond and execute an oath and to continue thereafter in the administration of the affairs of a- copartnership under the supervision of the probate court in the event that the administrator of the estate or the executor of the will of the deceased partner challenges his authority by filing an inventory of the partnership property. In the case at bár, the estate of the first deceased partner has never been administered in Alaska, and the authority of the survivor and of the executor of his will to administer the affairs of the partnership were not challenged in any way until the present action was brought by their successor. Under such circumstances it has been held in Missouri,
We have thus far dealt with inferences and incidental results flowing from certain statutory provisions. The statutory provisions themselves are not necessarily in conflict, although the conclusions and incidental results are in direct conflict. We are of opinion that whether or not, under the Compiled Laws of Alaska, the surviving partner was authorized to deal with partnership property before letters of administration were issued to him as such survivor, that under the Uniform Partnership Law of Alaska he is now so authorized, and the previous law is so far modified by this„subsequent enactment that the sur
The next question involved is as to whether the payments made by the surviving partner .after he had submitted himself to the jurisdiction of the court and qualified as administrator of partnership affairs were valid without an order of court. Inasmuch as the mortgage covered the entire partnership assets and the money used to pay the mortgagees was derived wholly from the sale of these assets, we do not see how any just complaint can be made of such payments by any creditor not so secured. The surviving partner continued the business, selling the goods of the partnership in the ordinary course of business and devoted the proceeds, so far as available, for the decrease of the mortgage indebtedness. We have not specifically dealt with the question as to whether or not the assets of partnership after the taking out of letters of
Decree affirmed.
Concurrence Opinion
(concurring in result).
I think that the Uniform Partnership Law irreconcilably conflicts with the Compiled Statutes of Alaska. Each is complete in itself, and exclusive respecting the management or administration of partnership property upon the death of one of the partners. If, therefore, the Uniform Partnership Act is valid, it necessarily operates to repeal the Compiled Statutes pro tanto. While, under principle of United States v. Wigger, 235 U.S. 276, 35 S.Ct. 43, 59 L.Ed. 226, the question is not free from doubt, I ac