223 P. 431 | Cal. Ct. App. | 1923
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *67 By this action the plaintiff seeks an accounting and settlement of a copartnership between himself and defendants, alleged to have been entered into on or about January 1, 1907, and dissolved by mutual consent on or about the first day of June, 1910. The complaint in the action was filed in the superior court of Glenn County, California, on May 26, 1914. An amended answer to the complaint was filed on May 1, 1915. On May 19, 1915, the trial of the action began before the late Judge J. E. Prewett of Placer County, and on July 25, 1921, findings of fact and conclusions of law and judgment in favor of plaintiff and against defendants were filed in the superior court of Glenn County. An appeal from this judgment has been taken by defendants to the supreme court and the matter has been assigned for hearing to the appellate court of the third appellate district.
As alleged in the complaint, a finding was made by the court that a copartnership was entered into between these parties in Glenn County, California, on or about January 1, 1907, with the object and purpose of buying and selling *68 real estate in California, and particularly in the county of Glenn in said state, and the sale of lands and city lots on commission, and in general, engaging in the conducting of a real estate business therein; that all profits and properties of the copartnership should be acquired equally; that it was agreed by the parties that the partnership business should be conducted under the name of H. J. Barceloux Company; that in accordance with the agreement a real estate business was opened in the city of Willows, Glenn County, state of California, and business continued therein until on or about June 1, 1910, at which time the partners, by mutual consent, dissolved the copartnership; that no copartnership since said dissolution has existed between the parties, and that no accounting of the partnership business has ever been had between the copartners, save and except the accounting involved in this action.
The trial court found that during the existence of the copartnership its business affairs were conducted continuously by the defendants without consultation on their part with plaintiff; that after the dissolution of the partnership, defendants denied that the relation of partners had ever existed between them and plaintiff, and from the time of dissolution continuously denied such relationship, and retained in their possession all the property of the copartnership, claiming to own the same themselves and claiming plaintiff had no interest therein, and that he had never been a member of the copartnership; and that though requested so to do after the dissolution, appellants refused to recognize plaintiff as a partner, and refused to account to plaintiff for any of the business and transactions that had been had, and excluded plaintiff from any participation in the affairs and business, and any enjoyment of any of the profits and properties of the copartnership.
The trial court also found that plaintiff, after the dissolution, repeatedly demanded an account of the receipts and disbursements of the copartnership, and a one-third part therein which plaintiff claimed to be his, and that defendants at all times refused to in any manner account to plaintiff or to deliver any part of the properties of the copartnership to plaintiff.
By their amended answer defendants, after denying all the allegations of the complaint, set forth, as separate answers *69
and defenses, one, alleging that the cause of action set forth in the complaint, and the whole of the same, was barred by the provisions of subdivision 1 of section
The trial court found against defendants on each of the separate defenses interposed, as well as upon the main cause of action.
At every stage of the trial in the superior court the defendants vigorously resisted respondent's claim that a copartnership of any kind ever existed between the parties, as alleged in the complaint; but that such a copartnership existed, they now admit in the briefs, both opening and reply, which they have submitted on this appeal. In the opening brief (pp. 4 and 5) defendants say: "We do not propose to challenge the findings of the court as to the existence of the alleged partnership and will confine ourselves to the points hereinafter set forth"; and in the closing brief (p. 2): "We expressly stated in our opening brief that we did not intend to dispute such finding, although we disputed, and still dispute, that certain properties included in the accounting did not form a part of the partnership assets." This admission of the defendants simplifies, in great degree, the solution of the question presented by this appeal.
The trial of the cause was conducted by Judge Prewett on these lines: First, evidence showing the partnership relation, both oral and documentary was taken. At its close, an interlocutory decree directing an accounting before a referee was made. The referee was appointed and thereupon he heard evidence, oral and documentary, and said referee secured the services of an expert accountant to examine and submit a report on the business transactions from the beginning of the partnership to the time of accounting. The findings of the referee were then reported to the court, *70 after which the court heard evidence, and a number of objections interposed by defendants to the referee's findings and made and filed an order directing the findings and judgment in favor of the plaintiff involved herein. The interlocutory decree and opinion of the court before referred to will assist in an understanding of the matters and evidence involved in this action, they being as follows:
"Interlocutory Order.
". . .
"In this case it is ordered that the motion of defendants for a nonsuit (having been made after the submission of the case) be and the same is hereby dismissed.
"By this interlocutory order, it is further ordered and adjudged that the plaintiff is entitled to an accounting of the affairs of the partnership described in the complaint, and it is further ordered that such accounting be had.
"It is further ordered that such accounting be had before John Graves, hereby appointed as a referee for that purpose.
"It is further ordered that said referee take evidence and report a finding of facts as to the following properties:
"The Hastings Land, sec. 16; Deveney tract; Bailey tract; Dixon tract; Watt land; Barceloux 320 acres; Iglick land; Rice land; Reager or Rogers land and commissions thereon under contract with Armstrong, Quatman Co.; also other commissions due from said firm; Glenn County Irrigated Farms and commissions; Kelly lands; Willows Land and Improvement Company's lands, Selby lands; Cartenberg lands, as follows; to wit:
"(a) As to lands heretofore sold, the amount of proceeds arising from such sales;
"(b) As to commissions earned by H. J. Barceloux and Company or by any of the parties to this action, the amount thereof;
"(c) As to any of the above mentioned lands that yet remain unsold, the value thereof and the amounts contributed by each party to the purchase and handling thereof; the amount received by each party in the way of rents or other profits;
"(d) A division of the unsold lands in three parts of equal value and a memorandum of office fixtures and personalty. *71
"(e) Independently of the matters embraced in the subdivisions of this order marked or designated 'd' the amount due from the two remaining partners to the plaintiff, as may be shown by items 'a' and 'b.'
"It is ordered that the said reference be completed at the earliest practicable date, and duly reported to this Court.
"Done in open court this 22nd day of October, 1915.
"J. E. PREWETT, Judge.
"Filed October 25, 1915."
"Opinion and Order.
"The complaint avers the formation of a partnership between Frank Freeman, C. L. Donohoe and H. J. Barceloux, commencing about the beginning of the year 1908, and terminating about June 1st, 1910.
"The above parties from time to time in various real estate transactions — sometimes each singly, at other times two participating and at other times all three. Whether those transactions in which all three participated constituted partnership transactions or merely joint ventures constitute the principal question for the determination of the Court.
"The relations of the parties appear to be exceptionally strained and the case itself has developed much bitterness. The case is replete with charges of fraud, forgeries, mutilations, erasures, perjury, suppression of evidence, and destruction of books. This Court will make no attempt to determine those matters save as they may necessarily arise in the course of the decision of the case.
"In the year 1907 C. L. Donohoe, H. J. Barceloux and Mr. Gutman formed a co-partnership for the purpose of dealing in real estate. Each partner contributed a small sum for the purpose of starting the business. Near the close of the year Mr. Gutman retired from the business and turned his interests over to Frank Freeman, delivering to the latter his copy of the co-partnership agreement. Mr. Gutman inquired of the remaining co-partners whether or not it was satisfactory for Mr. Freeman to enter the partnership, and was informed by them that it was. Thereupon he informed Mr. Freeman of this fact, and Mr. Freeman claims that he thereupon and thereby entered the partnership. *72
"Mr. Donohoe and Barceloux insist that upon the retirement of Mr. Gutman the co-partnership was dissolved and was never re-organized. This contention, however, cannot be sustained. Whether or not Mr. Freeman became a member of the partnership, there seems to be no question whatever, and that the firm of H. J. Barceloux Co. continued to do business for a number of years. It kept a set of books, employed and paid a bookkeeper, rented and maintained an office, paid rent, displayed signs, used letter heads, and handled a vast volume of business. I take it that every resident of Willows during the years 1908 and 1909 would have stated without hesitation that there existed a well known firm transacting business under the firm name of H. J. Barceloux Co.
"That Mr. Freeman was a member of this firm is not quite so certain, yet the burden of proof very largely predominates in favor of that conclusion. If the evidence of the parties to this action be eliminated, there is scarcely a doubt of it. It seems that practically every fact in the case which does not in any way depend upon the oral testimony of the litigants, tends to show that he was such a partner.
"Exhibits two, three and four (copies) if genuine, establish the plaintiff's case. That they are genuine, must be held by the Court. It is true that they emanate from unfriendly sources, but the manner of their production and especially the testimony of Miss Pierce, tends to show that they are genuine. (Copies of Ex. 2 and 3 and 4 follow this opinion herein.)
"Exhibit one was written on the typewriter usually used by Mr. Donohoe. Examination of the characters '08,' 'a,' 'bar,' and especially the bottom of the letter 'x' show this. The fact that it was so written is not by any means conclusive, but it is a circumstance of much weight. Even if it was written at the instance of the plaintiff, it was written at a time when the parties were very warm friends, and when there existed no temptation to fabricate a case.
"The loss by the defendants of their co-partnership books is an unfortunate circumstance and must be permitted to weigh to some extent against them. It seems quite certain that these books would throw much light upon the question now under review. *73
"The correspondence between the parties tends to show that the co-partnership existed. Out of the 30 or 40 exhibits, letters offered in evidence, almost all of them emanate from the plaintiff.
"The contention that a settlement was arrived at between the parties in June, 1910, is clearly a mistake. This conclusion seems to be almost mathematical in its certainty, since many of the items included in it did not transpire until long after that date. At most, the defendants are mistaken in their remembrance of the fact.
"Exhibit 15 was given by defendants to plaintiff as a memorandum showing the probable profits of their joint efforts. This exhibit is a very important document in this connection. Not only does it go far to establish the existence of a partnership, but it purports to contain arésumé of its transactions and properties. (A copy of Exhibit 15 follows this opinion.)
"Upon the whole, the conclusion seems to be fully established that the co-partnership set out in the complaint was formed at the time stated and that it handled the properties enumerated in Exhibit 15.
"The motion to strike out the answer must prevail for the reason that it was filed without leave of the Court. The evidence as to the stipulation is so conflicting that it must be held that the burden (which admittedly rests upon the defendants) has not been sufficiently overcome.
"Moreover courts are very loath to permit amendments whose purpose it is to plead the Statute of Limitations.
"Let an order be entered striking out the amended answer.
"The case is perhaps in condition for final judgment. Still, if either party wishes to offer any further evidence upon the point as to the properties and values, such party may so indicate within five days and the case will be set down for further hearing as to said point.
"If no such wish be indicated, then the plaintiff will prepare, serve and file proposed findings and decree.
"PREWETT, J."
Nothing appears in the record showing that either of the parties availed themselves of the opportunity to offer further *74 evidence after Judge Prewett made his order as to findings and judgment, as above set forth.
The judgment entered and from which this appeal is taken adjudges that plaintiff have and recover from defendants jointly and severally the sum of $31,504.85, in lawful money of the United States, with interest thereon from the date of the institution of the action, May 26, 1914, at the rate of seven per cent per annum, making a total of $47,260.31.
The judgment adjudges and decrees that plaintiff and defendants were copartners doing a general real estate business in Glenn County, state of California, during the times stated in the complaint and until the dissolution of the partnership on June 1, 1910; that a number of parcels of real properties, particularly described in paragraph 8 of the judgment, was and is the property of the copartnership and that plaintiff, when the action was instituted and when the judgment was rendered, was the owner of an undivided one-third of these real properties and that defendants were and are the owners of the remaining two-thirds thereof: that all of the debts and obligations of every kind of said copartnership from its organization to the time of the accounting and from that time to the giving of the judgment are fully paid, satisfied, and settled; that the partnership did not have when the action was commenced, nor has it had since, nor is it now, the owner of any other property, real, personal, or mixed, other than its profits in the lands above referred to, save and except certain interests in properties which are described in subdivision 6 of the judgment, to which properties described in said subdivision 6 of the judgment plaintiff filed a relinquishment of any right and interest which he might have, renouncing all claims of every kind and nature thereto and consenting that the same be awarded by the judgment to the defendants, and the same were so awarded.
The judgment further created a lien against the defendants in favor of plaintiff upon and against all the right, title, and interest of the defendants, and each of them, in and to the unsold real property, which was undisposed of and described in paragraph 8 of the judgment, to secure *75 the payment of the money judgment in favor of the plaintiff rendered in the action.
The unsold partnership real property is fully described and set forth in paragraph 8 of the judgment, and these properties are directed to be sold, either as a whole or in separate parcels, by the sheriff of the county of Glenn, who is appointed a commissioner and invested with the legal title to said real property and directed to sell the same as a whole, or in separate parcels as he might determine to be to the best interests of the parties at public sale, at a time to be fixed by the commissioner within ninety days from the entry of the judgment, upon notice of at least fifteen days, and that at the sale any of the parties to the action might become a purchaser of any part thereof, and directing the commissioner to acknowledge and deliver deeds by the commissioner, conveying to the purchasers of the properties all the right, title, and interest of the copartnership and of the plaintiff and defendants in and to said properties upon receipt of the purchase prices from the purchasers, and directing that the commissioner retain out of the proceeds received by him costs, charges, and expenses paid out and due him and the payment of the remainder of said proceeds to the clerk of the trial court, said clerk to pay to the plaintiff one-third of the net proceeds for and on account of his one-third interest in such properties and so much of the remaining two-thirds of these proceeds as may be necessary to the liquidation of any liens remaining unpaid at that time on the judgment; said clerk to thereupon enter in the judgment-book of the court in which the judgment is recorded a credit of the amount of money paid to plaintiff representing the two-thirds interest of the defendants and the clerk to pay to the defendants any proceeds remaining after the payment ordered made to the plaintiff. The judgment also adjudges and decrees that the plaintiff recover his costs, which were taxed at the sum of $731.85. The judgment is dated July 19, 1921, and signed by J. E. Prewett, as Judge, and indorsed as filed July 25, 1921, by W. H. Sale, county clerk.
Exhibit 15, referred to in the opinion and order of Judge Prewett, hereinbefore set forth, is as follows: *76
"Report on Barceloux Company business to date showing profits actually earned and values made in purchase of land, and commissions for sales, as follows:
Profit
Eibe land, 160 acres $60.00 per ................... $4000.00 Hastings land, Section 16 ......................... 6000.00 Deveny Tract ...................................... 5000.00 Bailey Tract ...................................... 9000.00 Dixon Land ........................................ 4800.00 Watt Land ......................................... 3000.00 Barceloux 320 acres ............................... 1600.00 Winkler land $150 an acre offer made .............. 6800.00 Iglick land ....................................... 1037.75 Rice land ......................................... 1272.00 Reager or Rogers land under contract with Rogers ........................................ 1333.33 Commissions in sale of Rogers tract under contract with Armstrong-Quatman Co. 5% ......... 5000.00 Commission from Armstrong-Quatman Co. on land already sold at Orland .................... 3360.00 Commissions G. C. Irrigated Farms ................. 1800.00 Commissions on options for Pittsburg Syndicate ...................................... 9000.00 Kelly Land ........................................ 800.00 Profit in Willows Land Improvement Co. at what it can be sold for today ............. 7500.00 ________ $71,303.08
In addition the members of Barceloux Co. have a united interest in the Irrigated Farms Company land of the value of ............ 7,500.00
Profit in Colby Land to Barceloux ................ 5700.00 To Donohoe and Freeman each ...................... 3900.00 In addition to the above the contracts now under contract with Armstrong-Quatman Co. for sale of land at Orland not yet sold, exclusive of Rogers tract will net Barceloux Co. when sold ........................ 10000.00 _________ 27,100.00 _________ $98,403.08 *77
"The above figures are made either on Sales actually consummated or values fixed on bona fide offers to buy, and the figures show a profit over and above all liabilities.
"Dated this 23rd day of November, 1909."
Exhibit "1," referred to in Judge Prewett's opinion and order for findings and judgment, hereinbefore set forth, is as follows: (Plaintiff's Exhibit One.)
"Know all men by these presents: That H. J. Barceloux, G. A. Gutman, and C. L. Donohoe, all of the County of Glenn, State of California, have this day associated themselves together as co-partners, and by these presents do agree to become co-partners in business together, under the firm name and style of H. J. Barceloux Co., in the business of buying and selling real estate and personal property in the State of California, and in doing a general insurance business in the County of Glenn, State of California. This partnership is to commence on the date hereof and to continue until hereafter dissolved by mutual consent, operation of law or judgment of a court, and it is agreed that at all times during their co-partnership that they shall and will bear, pay and discharge equally between them all rents and other expenses that may be required for the support and management of the said business; that all gains, profits and increase that shall come, grow, or arise from or by means of said business shall be divided between them share and share alike, and that all loss that shall happen to their joint business by bad debts or otherwise shall be borne and paid equally between them.
"In witness whereof, the parties have hereunto set their hands and seals this 2nd day of March, 1907.
"CHARLES L. DONOHOE.
"G. A. GUTMAN.
"H. J. BARCELOUX.
The statement of Judge Prewett, "in the year 1907 C. L. Donohoe, H. J. Barceloux and Mr. Gutman formed a copartnership for the purpose of dealing in real estate. Each partner contributed a small sum for the purpose of starting the business. Near the close of the year Mr. Gutman retired from the business and turned his interests over to Frank Freeman, delivering to the latter his copy of the copartnership agreement. Mr. Gutman inquired of the remaining copartners whether or not it was satisfactory *78 for Mr. Freeman to enter the partnership, and was informed by them that it was. Thereupon he informed Mr. Freeman of this fact, and Mr. Freeman claims that he thereupon and thereby entered the partnership," is a clear and concise statement, fully supported by the evidence as to the inception and creation of the formation of the copartnership involved herein.
G. A. Gutman was examined as a witness at the trial of the action and his evidence shows that, prior to the transfer to Mr. Freeman of his interest, some business in the way of insurance and commissions had been transacted by himself and the defendants under the copartnership.
In their able and elaborate opening brief on this appeal, appellants urge the following grounds for reversal: 1. The plaintiff's right to an accounting was barred by the statute of limitations; 2. Even if the plaintiff's right to an accounting was not barred by the statute, the accounting could not extend backward for a period of more than two years prior to the commencement of the action; 3. The accounting improperly included therein transactions not the subject of accounting between the parties; 4. Evidence was improperly admitted to ascertain the figures upon which the accounting was made; 5. The referee and the expert accountant considered and passed upon matters not within the scope of their authority; 6. The court erred in not allowing defendants credits to which they were entitled; 7. The court failed to charge the plaintiff with moneys with which he was properly chargeable; 8. The valuation of certain properties disposed of after dissolution should have been made as of the time of the same being acquired or of dissolution and not as of disposition, and the values found by the referee were against the weight of the evidence; 9. The judgment is erroneous in that it is a joint judgment against both defendants based upon an accounting which fails to show that such defendants jointly received or were jointly responsible for the amount in respect of which the judgment was rendered; 10. The judgment is erroneous in that it is a joint judgment against both defendants, whereas the evidence shows that some of the moneys included in the judgment were received by one of the defendants alone; 11. The judgment is erroneous in that there is no finding that either defendant was a constructive trustee; 12. The *79 findings of the court and referee were erroneous and also fail to justify the judgment; 13. Plaintiff was guilty of laches.
Because of this being an action in equity and not one at law much of the argument of counsel for appellants and the authorities cited do not uphold the positions which they urge as reasons for the reversal of the judgment. A mistaken idea is often entertained and asserted that, under our system of code pleading, there is no longer a distinction between actions of a legal and those of an equitable character, such as formerly prevailed when separate courts of law and equity obtained. The provisions of section 4, article VI, of the constitution of the state providing that the supreme court should have appellate jurisdiction of appeals from the superior court in all cases in equity, except such as arise from justices' courts; that the district court of appeal "shall have appellate jurisdiction in all cases, matters and proceedings pending before the supreme court which shall be ordered transferred by the supreme court to the district courts of appeal for hearing and decision," and section 5 of article VI of the constitution providing that "the superior court shall have original jurisdiction in all cases in equity and in all cases at law which involve the title of real property, etc.," of themselves, show the recognition of a distinction in the legal and equitable proceedings in actions brought on for trial in the superior courts of the state.[1] There can be no question that an action for the settlement of a partnership and its affairs is an equitable action and to be considered as such in the courts of this state. In the case of Marston v. Kuhland,
"Where a fiduciary relation exists between parties, and the duty rests upon the defendant to render an account to the plaintiff, equity will entertain jurisdiction of a suit for an accounting, although the account is neither mutual nor complicated. The most common of such cases are those involving trustees, guardians, executors and administrators, partners, agents and cotenants. Although it is the trust relation involved in such cases which gives jurisdiction to a court of equity, the relation need not be the strictly technical relation of trustee and cestui que trust, a quasi relation being sufficient." (Pomeroy's Equity Jurisprudence, 2d ed., sec. 2358.) ". . . The equitable jurisdiction is also practically exclusive in proceedings for an account and settlement of partnership affairs, including suits for an accounting and settlement of the firm affairs between the copartners themselves; suits for a settlement of the firm affairs between the survivors and the executors or administrators of the deceased, when a partner has died; and suits to settle the affairs of an insolvent firm and to adjust the demands of the firm creditors and the creditors of the individual partners. The equitable jurisdiction over partnerships is a necessary outgrowth of the jurisdiction over accounting, and the remedies of dissolution, injunction, and receivership are incidents necessary to a final and complete relief." (Pomeroy's Equity Jurisprudence, 2d ed., sec. 2362.) Subdivision 1 of section
[2] While this court is satisfied that the only statute of limitations that can be pleaded as a bar to an action seeking an accounting and settlement of a copartnership is the above section where an accounting and settlement is refused one of the partners; there is the further statute of limitations contained in section
The distinction between cases at law and those in equity has been drawn in a number of instances by the supreme court of this state from a very early period. In Barnstead v. EmpireMining Co.,
The issuance of the writ of supersedeas in the case at bar by the supreme court of California, reported in
While statutes of limitation must be heeded in actions in equity and the period of time therein specified within which actions may be brought regarded as in legal actions, they are not specially favored and esteemed, as are those great principles of equity which have developed through the centuries. *83
Statutes of limitation have well been denominated "statutes of repose." There are actions where it is salutary to invoke their aid. But, as said by the trial court in this case, in his order for findings and judgment, hereinbefore set forth, "moreover, courts are very loath to permit amendments whose purpose it is to plead the statute of limitation." That section
The case of Piller v. Southern Pac. Co.,
"While by our code all distinctions in pleading between suits at law and in equity are abolished, the different forms of declaration at the common law existed so long, and *84
became so ingrained in the legal habit of thought, that the very codifiers themselves have been contented to copy the provisions of the English statutes in respect to personal actions, sometimes substituting for the technical names employed in those statutes what was supposed to be their equivalent in ordinary English. Thus reading the statute, the four years' limitation of section
In Dorr v. Thornburg,
It is clear that plaintiff's right to an accounting in this case is not barred by any statute of limitation of the state of California.
[3] The contention that "even if the plaintiff's right to an accounting was not barred by the statute, the accounting could not extend backwards for a period of more than two years prior to the commencement of the action," cannot be sustained.
The doctrine in this regard is as given in the case ofHendry v. March,
Appellants' authorities which they cite do not support their claim that no items can be included in a partnership account which precedes the period prescribed by the statute for the recovery on ordinary accounts. Great reliance is placed by them on Flynn v. Seale,
The case of Carter v. Canty,
[4] The appellants' contention that "the accounting improperly included therein transactions not the subject of accounting between the parties" cannot be upheld under the evidence introduced before the referee and the court. The determination of the sufficiency of the same was a matter peculiarly within the province of the trial court. The evidence in regard to the ownership and disposition of what are described as "Willows Land and Improvement Company's Lands," the "Bailey" land, the "Rogers" land, and "Carttenberg" land, is conflicting, but there is evidence showing transactions in relation to these lands prior to the dissolution of the partnership and it has been determined by the trial court on the evidence introduced that they were properties of the partnership and subject to an accounting in this action. *87 [5] Appellants' contention that "evidence was improperly admitted to ascertain the figures upon which the account was made" cannot be sustained. The evidence shows that the preparation of the accounts was referred to an expert accountant and in the trial court objection was made to the admission of the account on the various grounds of irrelevancy, immateriality, and incompetency and these objections were heard and considered by the trial court and overruled and the report admitted and almost entirely adopted by the referee and the court. The records used by the expert from which he made his report were the books of Barceloux Company and those of the Armstrong-Quatman Company. The Armstrong-Quatman Company conducted the San Francisco end of the business, in which they were interested with the firm of H. J. Barceloux Company.
The books which the accountants examined were the books of the partnership during the time of its existence and after its dissolution up to the time of the accounting. Also the books of the Sacramento Valley Realty Company, which were controlled entirely by the defendants in this case from the time of its incorporation up to the time of the accounting, also books of the Armstrong-Quatman Company, in which were kept a good portion of the accounts as to land subdivisions involved in this action and commissions earned and which accounts were balanced and compared by Barceloux Company and relied upon by Barceloux in all such matters, Barceloux being the member of the firm in charge of the books of account of H. J. Barceloux Company. The books of the firm both before and after the dissolution of the partnership were kept entirely by the defendants, or under their supervision, the plaintiff had nothing to do with their keeping nor with the management of the properties, and all the properties, both real and personal, of the partnership were after the dissolution of the copartnership held in the possession and control of the defendants.
[6] The two defendants upon the dissolution of the copartnership became trustees for the plaintiff, and being trustees, were at all times during the existence of the partnership and after its dissolution bound to the plaintiff in the highest good faith. *88
The rule relative to the duties of trustees as to keeping proper books of account and the rendering of full accounts of their dealings with the trust funds is clearly announced in the case of Purdy v. Johnson,
[7] The contention of appellants that "the referee in the said accounting considered and passed upon matters not within the scope of his authority" cannot be sustained. They insist that under the interlocutory decree specifying the respective portions of land in respect to which the account was to be made limited the referee to the taking of evidence and reporting simply an account of the money proceeds from sales. The report of the referee shows that his valuations on some of the lands involved was based upon evidence taken before the referee showing what the value of the land was at the time of the making of the sales. The sales made by the defendants after the dissolution put it out of their power to deliver to the plaintiff on the settlement of the partnership affairs his share of the property sold, and it would appear that the only methods of determining *89 what was the interest of plaintiff in those properties, of which he was deprived through the sale, would be the value thereof at the time of the making of the sale. As to the evidence taken for the purposes of determining the value of these lands sold, the province of determining the valuations to be fixed was one within the jurisdiction of the trial court, it being based on conflicting evidence.
[8] Appellants urge that the court erred in not allowing defendants credits to which they were entitled. Had defendants, in response to plaintiff's complaint, appeared in the action and by their answers submitted a report and account of their dealings and transactions on account of the partnership affairs, as it was their duty to so do, they would then be in a position to complain of the action of the trial court. This they did not do, but, on the contrary, denied there were any partnership affairs to adjudicate.
In relation to the contention of defendants that the necessary expenses incurred by partners and trustees in relation to the management of property entrusted to their care, or over which they had control, are ordinarily allowed in proper cases, it may be said that this rule is applicable in cases of accountings made by honest and faithful members of a copartnership. These defendants absolutely denied under oath that there had ever been any partnership existing between them and the plaintiff and they maintained this position at all times during the trial of this case and until the filing of their brief in this court. From the time of the dissolution of the copartnership they denied that plaintiff had any interest whatever in any of the properties included in the accounting. The report of the expert set forth in the appendix to appellants' opening brief shows that no exceptions were taken to the expert's report on the Deveny tract, in which there were net profits of $4,750.34, of which plaintiff's share was $1,583.45, of the Dixon tract on the property of which there was due plaintiff $509.43, of the Watt tract, in which the plaintiff was entitled to profits of $1,177.54, of the Rice land in which plaintiff's share of profits was $424.00, of the Kelly land in which plaintiff's share of profits was $423.17, and the Selby lands in which plaintiff's share of profits was $1,238.89, and net commissions from various transactions, of which plaintiff's share of profits was $917.98. Their answer to plaintiff's *90 complaint denied the having of any moneys or properties of plaintiff in their hands.
Having failed to present anything in any way of an answer to plaintiff's complaint requiring an examination by the court into the transactions on behalf of the defendants with the partnership which would show the amount of moneys expended by them and with which they should be charged in the settlement of any account, they are not now in a position to claim error on behalf of the trial court in not allowing defendants credits to which they were entitled, if there are any to which they were entitled. They did not even avail themselves of the opportunity afforded to offer any evidence they desired to produce by virtue of the order allowing further time to submit further evidence, if they so desired, made by the trial judge when he directed findings and judgment in this case.
[9] There is no merit in the contention of appellants that the judgment is erroneous because it is a joint judgment against both defendants based upon an accounting which fails to show that such defendants jointly received or were jointly responsible for the amount in respect of which the judgment was rendered. The matter of showing how the moneys were received by defendants, and the amounts and disposition of the same, was peculiarly within the knowledge of the defendants. They handled the partnership properties and proceeds therefrom, had charge of the partnership accounts, and plaintiff had nothing to do with this function of the partnership business. If defendants desired in this action a settlement of its affairs between themselves they could have secured such adjudication through proper pleadings admitting the partnership relation and setting forth the transactions and asking the proper relief. The only relief they sought by their answer was, "that the prayer of plaintiff's complaint be denied in whole and that the defendants have judgment for their costs."
The case of Eisentraut v. Cornelius,
The contention that the trial court failed to charge plaintiff with moneys with which he was properly chargeable is not sustained by the evidence. Defendants claim that at the time of the dissolution of the partnership there was due from one C. M. Wooster $15,737.24 commissions earned by the partnership and that defendants sued to collect this sum, making plaintiff a party defendant because he would not join with them in the action. Plaintiff afterward, defendants claim, compromised the action and accepted $7,240.80 as a consideration of the compromise. Defendants dismissed the action, plaintiff paid part of the moneys received by him to the defendant Donohoe, and a settlement and adjudication as to these moneys is contained in finding No. XI of the trial court. As to whether the amount of these commissions was $15,737.24, as claimed by defendants or $7,240.80, the evidence was conflicting, and the statement (Exhibit 16) made by the defendant Donohoe to plaintiff makes as the estimate of profits in this matter $9,000 instead of $15,737.24. Under the rules applying to findings of trial courts on conflicting evidence, it cannot be said that the matter of the Wooster commissions was not properly settled by the trial court.
The claim that the judgment is erroneous because of being a joint judgment against both the defendants and that the evidence shows that some of the moneys included in the judgment were received by one of the defendants alone cannot be upheld. Defendants, had they admitted the partnership in this action and alleged by appropriate allegations in separate answers, if there was a dispute between them, or in a joint answer if they were agreed upon the balances as to moneys and properties of the partnership in their hands, might have obtained a decree settling all the affairs of the partnership between the individual partners. By their answer denying a partnership they precluded the determining of the liabilities of defendants Donohoe and Barceloux each to the other. What is adjudged by the decree to belong to plaintiff is his share of the properties of the partnership, determined to be in the custody and control of both defendants; they did not at the trial of the action by any pleading ask that the court determine the condition of the partnership moneys and properties as between the defendants Donohoe and Barceloux; and if there exist any differences in *92 these regards those are matters for settlement either in proceedings after the partnership properties are sold in this action regarding any proceeds, if any there be, after settling the plaintiff's judgment or by any such action as may be proper between the defendants Donohoe and Barceloux relating to the properties and moneys in their hands.
The rule as to when it is proper for the rendering of a joint judgment against partners in suits for accounting is clearly stated in Bloomfield v. Buchanan,
In this state partners are trustees for each other within the meaning of chapter 1 of the title on Trusts contained in the Civil Code, and their obligations as such trustees are defined by that chapter.
"A trustee is responsible for the wrongful acts of a cotrustee to which he consented, or which by his negligence, he enabled the latter to commit, but for no others." (Civ. Code, sec. 2239; Perry on Trusts, sec. 848; Birmingham v. Wilcox,
"The rule is firmly settled that where a breach of trust has affected two or more or all of cotrustees with a common liability, they are liable jointly and severally; each is liable for the whole loss sustained or the whole amount due, and a decree obtained against them jointly may be enforced against any one of them." (Pomeroy's Equity Jurisprudence, 4th ed., sec. 1081; In re Thompson,
As a trust relation between the parties was created by the provisions of the Civil Code hereinbefore set forth, the *93 argument of the appellants that the court should have made a finding that the defendants were constructive trustees is without merit in view of the facts shown by the evidence in this case.
[10] The contention of appellants that plaintiff was guilty of such laches as should defeat his action cannot be sustained. The evidence discloses attempts on the part of plaintiff for over a year after the dissolution to bring about an amicable settlement of the partnership affairs and division of its properties; of a written request for a report of the partnership affairs; of the writing soon thereafter by the defendant Donohoe to one W. S. Armstrong, who was in charge of the Armstrong-Quatman Company, in San Francisco, a letter as follows:
"Henry and myself are having some difficulty in affecting an adjustment of our affairs with Freeman, and I wish you would refrain from giving Freeman or anyone else any information concerning our past transactions should they apply to you in the way of oral statements, written statements or copies of papers or inspection of papers which you may have"; and the absence of the reasons generally for which the refusal of relief because of laches is sometimes given in equity. Delay in bringing the action is the main reason urged by defendants for applying the doctrine of laches.
"There is no artificial or hard-and-fast rule either as to the lapse of time or the circumstances which will justify the application of the doctrine of laches. The question must be determined by a consideration of all the facts and circumstances of the particular case. Laches is a question of fact, on the evidence, and each case becomes largely a law unto itself. In other words, the matter is one which reposes in the sound discretion of the chancellor." (10 Cal. Jur., sec. 64.)
Speaking of this rule and its application, it is said inPratt v. Pratt,
No sufficient reason has been presented by appellants for a reversal of the judgment appealed from in this action, and said judgment is, therefore, affirmed.
Hart, J., and Plummer, J., concurred.
A petition by appellants to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on February 21, 1924, and the following opinion then rendered thereon:
Addendum
We do not approve that portion of the opinion of the district court of appeal herein which seems to hold that this action may be regarded as upon a contract, obligation, or liability founded upon an instrument in writing. We are satisfied with the conclusion of the district court of appeal to the effect that the statute of limitations applicable to the case at bar is the one prescribed in section
The petition for transfer to and hearing by this court is denied.