Frederick v. Cooper

3 Iowa 171 | Iowa | 1856

Woodward, J.

In April, 1846, the complainant, with' his father, Jacob Frederick, and his brother, John S., entered into a verbal agreement of partnership. On the 20th November, 1847, this agreement was reduced to writing and signed by them. Their business was the purchase of lands, and the carrying on of husbandry, in any and all of its departments, as they should see fit. The partnership was to continue five years, front the first of August, 1847. In order to arrive at the questions in the cause, and our views upon them, it is necessary to have a construction of the articles of partnership, so far at least as they bear upon the present cause. The partnership actually commenced, under a parol agreement, in April, 1846, which is recognized in the written articles of November 20th, 1847. The previous parol agreement is to be taken as the same in terms with the written. But the written one i& to be regarded as commencing again. Therefore the written articles must govern as to duration, and the interest of the parties, whilst, at the same time, whatever was invested in the partnership business prior to the writing, must be regarded as belonging to the firm, under the articles.

The father, Jacob, was to furnish two thousand dollars, to be invested in lands, stock and implements. The sons were to be charged five hundred dollars each, to be taken from their inheritance in the father’s estate. The father holds two shares in the concern, to one share each in the two sons. The sons are to give their time, labor, and attention. The father also is to give labor and attention to the common interest. If he does not render at least fifty dollars worth of labor each year, he is to pay that sum each year; and if he withdraws altogether from labor and attention to the common concerns, he is to pay one hundred dollars for each year. He is not to share this fifty or one hundred dollars per annum, because if he does not give this labor and attention, it is to be found elsewhere; and these sums are supposed to purchase, or to pay for them.

The five hundred dollars to be charged to each of the sons, is one hundred for each year of the duration of the firm. Therefore it is provided, that, if the firm ceases before the expiration of the five years, they shall be entitled to but one hundred each for each year, out of the capital stoclc. Then comes this question. If the firm continues the fiye years, and the capital stock, whether in lands, or otherwise, increases in value, in what proportions are the sons to take ? Are they to have their five hundred dollars only, or are they to have in the proportion which that sum bears to the investment? We say, in the latter proportion. This sum is charged to them, to be taken from their inheritance. It is an advancement by the father. It is an investment by them in the partnership, and in the increase of it, they are entitled to their respective shares. Their care, attention, and labor, has made the increase, so far as any such instrumentalities have done it. In effect, then, the father invests one thousand dollars, and each son five hundred. Beside this, all are to give care and labor, but the sons principally. If the father does not, he pays money. No other capital than this is required, and if any one puts in anything more, he is to have credit. Each may draw on the proceeds, or increase, for his subsistence. In a division, the father is to have two shares, and each son one share. Property which can be divided by number, is to be so divided. Other property, as land, for instance, is to be divided in manner following; each is to make his estimate; then the father’s is to be doubled; and then the sum of all these sums is to be divided by four, and the result taken for the value. And should more than one desire the same piece of property, he who will pay the most, shall have it. This is more especially applicable to the realty. Thus far, we suppose the firm to continue regularly the period of its limitation. We come now to the provisions relating to a premature dissolution.

If either, or both, of the sons, desires to withdraw before the expiration of the limitation, he or they may do so, on giving six months’ notice; and should the firm be closed before the time limited, the sons are entitled to but one hundred dollars each of the capital stock, for each year of the existence of .the Company. Thatis, and this means, one hundred dollars of the original investment, but this carrying with it, its due proportion of the profit or increase; for theirs was an investment as much as the father’s; and besides, if they are not allowed the increase, then in case of a premature dissolution, the father takes all the increase, and they the investment only. This might be; but there is nothing in this ease to lead to so harsh a conclusion. This construction is consistent with the thought before suggested, that the father makes an advancement of five hundred dollars in a partnership, which is to continue for five years; and now we see that if that partnership ceases before the five years, the sons are to have only at the rate of one hundred dollars for -each year.

The cause stands before us on demurrer, and we arrive now at the allegations of the bill. The partnership went on until April, 1849, when John S. sold all his right, title, and interest in the firm, to the father, withdrew from the concern, and went to California. He then has no further interest, and we set him out of view. But it appears that the partnership went on between the father, Jacob, and Benjamin P., the other son. Technically, the first partnership was dissolved. But it does not follow, as of course, that the whole affair must be, or was, wound up. The bill alleges that John sold all his interest to his father, and it is fairly inferable, though not alleged in express terms, that the father and Benjamin continued on together as before. Such being the case, they tacitly agree to continue the partnership, with themselves alone as partners. The first effect now is, that the father has an interest of three-fourths, and Benjamin his original one-fourth. The thought that the whole matter has stopped, and there is now no partnership at all, cannot be accepted. This would commit a fraud upon Benjamin. It must be understood that he and his father-went on together; and he alleges that he continued, after John’s withdrawal, till the 1st October, 1850, to work said land, and to give his sole attention to the best interest of said company. He then avers that at the date last mentioned, in pursuance of notice given by the said Jacob to him, and by mutual consent, the affairs of said company were closed ; that he and the said Jacob had a full settlement and division of all the personal property belonging to the said company, so far as petitioner’s share was concerned (except as afterwards mentioned), and that they settled their accounts of money, and property paid in and orrt by each. The exceptions referred to are, the claim of fifty dollars a year for labor, his share in the clip of wool for that year (1850), the one hundred dollars a year in the capital stock, and his share in a “claim” sold to C. D. Reinking for fifty dollars. All this shows (on demurrer), that the partnership went on between Benjamin and his father; and it shows further, that all claims as to the personalty were settled, except those specified, leaving open only those named as to personalty, and the broader claim on the land, on which they had not agreed when the death of the father occurred, on the 6th of May, 1852.

Let us examine these claims on the personalty. The provision of the original articles as to the fifty and the hundred dollars, is as follows r “ Said Jacob is to be charged with fifty dollars for each and every year, commencing the first of August, 1847, to be deducted out of his share of the dividend on the final settlement, unless he furnish labor to that amount at his own expense; and if from infirmity of old age, or if said Jacob should feel inclined to withdraw from attending to the affairs of the firm at the expiration of two years, one hundred dollars for each year shall be charged to him, and deducted out of his share as above stated.” Bad grammar does not make bad pleading. The meaning is evident, that the father is to pay fifty dollars each year, unless he furnish labor to that, amount, and that he may withdraw altogether after two years, paying one hundred dollars each year. These sums are to be deducted from his. share of the dividend. The question naturally arises, whether these sums or payments are of such a character that he may share in them as a partner. 'We think not. The partners in fact, contribute equally to the capital stock, and are to give their personal care and labor to the common concerns. This must be supplied by some one; and if the father does not supply his proportion of labor, it is provided that he shall pay a certain sum as an equivalent; and if after two years, he sees fit to withdraw his care and labor altogether, he is to pay a certain other sum as a commutation. These payments are instead of the labor and care which are due from him as a partner. They are to purchase, or to pay for, them, if he does not render them. They are capital, put in instead of labor. He shares in the increase or profit on the partnership property, created by this labor and care, but he cannot share in the first payment. He might as well charge for the labor, had he rendered it. If he did not actually pay these sums (such as might be payable), he is to be charged with them and interest, but not with the profit of them. Another item which complainant alleges he is entitled to, is his portion of the clip of wool for 1850, but he has waived this.

The only remaining item of personalty, is the one-fourth of the price received for a claim sold Reinking. This he is entitled to.

We are next brought to the question, whether this proceeding is legally correct. What is it ? The survivor of two partners brings his bill against the personal representatives and the heirs at law of the deceased partner, in relation to both personalty and realty; but both relate to and concern the partnership. The whole is partnership matter. It is a bill to settle the affairs of the firm. He sues the representatives in relation to the personalty; and he sues both them and the heirs, in relation to the realty, connected with the partnership. It is true that a surviving partner may take the affairs of the firm into his own hands, and settle them. But this supposes them in such a state that he can do so: or rather, it does not cover the case of a deceased partner, being indebted to the firm. It does not preclude the survivor from looking to the estate of the deceased debtor-partner. But he alleges that all matters relating to the personalty were settled, -except certain and specific ones, so -that there is, in truth, no general partnership settlement to be made or called for.

This preliminary -review of the contract of partnership, has been necessary to the clear understanding of the grounds of demurrer, and in order to save a great amount of repetition in considering those grounds severally. "We now take up the demurrer, and examine the causes briefly in their order!

The first and second causes, belonging together, are, that the petition shows an unsettled partnership account, but does.not-show the amount of capital stock furnished by each partner; nor the amount which each expended in carrying on the partnership; nor that which each received therefrom ; nor the interest of the several partners; nor the manner of conducting the business; and so gives no basis upon which the court can decree an account and settlement of the partnership business. The petition does show the original amount of capital stock furnished by each, and so far as that affects it, their respective interests also. Ifieither added more afterwards, he should make it appear. ' If the complainant claims no more, he gets no more. If the deceased partner furnished more, his representatives are to show it. It is not to be assumed that he did, and the bill is not defective for not stating that he did. To hold it so, would be assuming this, without either averment or proof; and the same reasoning precisely, applies to the matter of the amount expended by -each in the affairs of the firm. As to the amount received by each from the firm, it is not a necessary inference that either one took anything out. But further, this point is covered by the fact, that the bill explicitly alleges that the two partners, Jacob and Benjamin, had a full settlement and division of all the personal property of the partnership, which, from the tenor and allegations-of the bill, must be understood to include all the claims to personalty, except certain specific ones. It is not perceived what statement of the mode and manner of conducting 'the concerns, farther than is made, would he of any importance. The interest of the parties is given definitely, and there is a sufficient basis upon which to proceed. The third cause, being general, will be noticed hereafter.

Fourth: That the verbal contract in relation to the partition of the lands, or the setting off to plaintiff the certain lands which he claims, not having been executed before the death of the said Jacob, those lands, at his death, became part of the assets of his estate, in • like manner with any others owned by him at his decease. That the lands were purchased in the name of the father, we are not disposed to-regard as a bar to the complainant’s claim. It was provided that if the partnership ceased before • the expiration of its term, the sons were to receive of this capital stock only pro rata; and therefore, to control this, it was requisite that the title should be held by him who furnished It in the first instance, until subsequent events should show how much, or what proportion, the sons were to receive. Thus, if they had continued together the five years, they would have received their full proportion of-one-fourth each. But before that time, John has sold his interest and left; -Benjamin continues longer, and until the father terminates the relation. It is not till this event, that Benjamin can tell what he is entitled to. This would seem to afford adequate reason for the title remaining in the father, but it does not present any substantial obstacle to the son’s obtaining his -share. There is a written contract, signed by the parties, containing all the essential matters which could, in the nature of the case, be then specified. What items of property should come into the firm, was in the future. What tracts of land would be bought and used by, or appropriated to, the partnership, was to be determined by their future action. These must be ascertained by the evidence. There -is in this, ‘no-violation of the rules of law in relation to written instruments, or to contracts concerning land. The contract is complete, and in writing, but the objects to which it applies are to be pointed out. At least, we are disposed to so regard the question, at present, on this demurrer, and leave it to be brought up again, in a more direct form, and on fuller discussion, if the parties see cause.’ This applies to the claim as a partner, to a share in the land; but it may be that it does not apply, in full force, to the claim to the certain parcel or parcels. But should the complainant sustain his allegations in respect to these, equity would dictate that these should enter into his portion, if a division were decreed.

The fifth cause is covered by the preceding remarks. The sixth cause is, that if petitioner has any just claim, it is one which can be prosecuted in the county court (as a court of probate) only. Sections 1362 and 1363 of the Code, present no objection to this suit. The 'cause all taken together, could not be conducted in the county court, and it is very doubtful whether any part of it, taken separately, could be.

The seventh and eighth causes, with the sixth, go to a misjoinder of parties, and subject matter. All this is answered by the consideration .that this is a bill in equity to settle an unsettled portion of the affairs of a partnership, relating to both personalty and realty, in which.both the personal representatives and the heirs at law of the deceased member, are concerned, and which cannot well be separated, -or which it is not necessary, at least, to disjoin. And as to the probate court, again, that has no authority in a bill’for a specific performance; neither has it in a bill in equity, to settle the affairs of a partnership.

The ninth eause of demurrer alleges that the parties have agreed upon the tribunal or forum by which their business was to be settled, and that the petition gives no reason for applying to this court, and invoking its aid, in settling the partnership. This seems to be completely answered by an averment of the bill, that the complainant has frequently endeavored to have the executors and heirs settle the said claims, and has applied to them to have the said one-fourth portion of petitioner set off to him, under and by virtue of said agreement, and that they have hitherto failed, neglected, and refused so to do. The agreement provides that, “should any of the company die, his surviving friends, or a justice of the peace, shall appoint one or more judicious disinterested person or persons, to act in his stead in making the •distribution of property, in conformity with the terms before stated.” The third cause, that the petition discloses no mat'ter upon which the court can act, or over which it has original jurisdiction, is involved in the fifth, sixth, seventh, and eighth causes, and is answered by the remarks made upon those. The case being looked at closely, and the cause of action being analyzed, the apparent grounds of demurrer disappear.

The demurrer should have been overruled, and the cause is remanded for the respondents to answer.