Glass Co. v. Ludlum

The opinion of the court was delivered by

Kingman, C. J.:

l. Practice, escepUons. A question of practice is raised which must first be settled. A case made, or a bill of exceptions, should speak the truth as to the particular matter intended to be preserved thereby; and if there are any facts not presented by the party aggrieved, the adverse party has a right to insist that such facts shall be inserted in the case made, or bill of exceptions, before it is signed. In this case the de fend ants in error had a right to demand that their several exceptions made on the trial should be made a part of the “ case made,” and the court below correctly permitted such action. Such exceptions might be material, and of vital importance in this court. Gen. Stat., p. 740, § 559.

This was an action brought by the plaintiff to recover a sum of money due them from the partnership firm of Hays & Ludlum. It was brought against Samuel S. Ludlum, administrator of William H. Hays, and against William Dunlap and D. R. Anthony, his sureties in the administration bond, and against S. T. Oarr, Thomas R. Clark, and Lafayette Mills, his sureties on a bond for the faithful execution of the trust incurred by Ludlum by reason of his taking possession of the property of Hays & Ludlum, a firm composed of John B. Ludlum and the decedent Hays.

s Liability of sureties. The defendants Dunlap and Anthony interposed a demurrer, on the ground that the petition did not state facts sufficient to constitute a cause of action against them. The demurrer was sustained, and this ruling it is insisted is erroneous. But there can be little doubt that the decision of the court was correct. The petition, after stating the cause of action and the fact that Anthony and Dunlap had executed the bond as sureties of the administrator in his administration of Hays’ estate, and that Clark, Carr, and Mills were the sureties of the administrator for the faithful execution of the trust that had devolved upon him by reason of his having taken possession of the partnership property, has this averment:

“ Plaintiffs further allege that all of the property of which the said Wm. H. Hays died seized was the one undivided half of the goods and chattels and credits theretofore belonging to the firm of Hays & Ludlum, all of which said property and assets were situate within the said county of Leavenworth and state of Kansas aforesaid, and within the jurisdiction of said probate court in and for said county.”

The petition elsewhere states with great particularity that it was on giving the bond with Clark, Carr, and Mills, as his sureties, that he did forthwith take possession of the partnership assets. In another part of the petition it is alleged that the probate court apportioned the sum of money in the hands of the administrator among the creditors of the late firm of Hays & Ludlum. It is clear that if all the assets in the hands of the administrator were the partnership property, and required to pay the partnership debts, then the sureties in the administration bond were not primarily liable. By tbe common law tbe surviving partner would have been tbe one to whom tbe creditors of tbe firm of Hays .& Ludlum would have bad to look for their money, and against whom they would have had to bring suit, if such a proceeding was necessary. In the absence of statutory regulations, the law was, that on the death of one of the partners, as the surviving partner stood charged with the whole of the partnership debts, the interest of the partners in the property should be held so far a joint tenancy as to enable the surviving partners to take the property by survivorship for all purposes of holding and administering the estate, until the property is reduced to money, and the debts are paid; but when the debts are all paid, and the purposes of the partnership are all accomplished, the surviving partner is to account for and pay over to the representative of the deceased partner his just share of the partnership funds. We have stated the law as it existed before the statute of our state changed it, to show that in the absence of the statute Dunlap and Anthony would not be liable on the bond until the partnership debts were paid, and the remainder of the partnership assets had come into the hands of the administrator. But our statute has made a material change in the law. Before a surviving partner can proceed to close up the partnership affairs, he must give a bond: Comp. L., p. 519, § 47; (Gen. Stat., p. 437, § 33.) If he fails to give the bond, the estate, not only of the decedent, but of the surviving partner as far as the partnership is concerned, can be taken from his possession and given to the administrator upon his giving the requisite bond. Comp. L., p. 520, §§ 49,50. (Gen. Stat.j p. 437, §§ 35, 36.) This bond is to secure the execution of the trust; and that trust is that he takes not only the property of the decedent, but also that of the surviving partner, pay off the debts of the partnership with the proceeds thereof as far as the same will go, and pay over to the surviving partner his just proportion of -the funds, if any shall be found due after the payment of the debts. Now, by the averments of the petition, all the property that ever came into the hands of S. S. Ludlum came as the administrator of. this trust, for which alone the sureties oil the second bond were liable. And where a petition show's that a defendant is not hable, a demurrer is properly sustained; and such is this case. The plaintiff by his own showing had no cause of action against Dunlap and Anthony, and had no right to keep them in court any longer.

3, Partnership it^oi^suStiesThe action was on a judgment of the probate court of Leavenworth county, in favor of the plaintiff, and against S. S. Eudlum, in his fiduciary character, and alleging as breach that the administrator refused to pay, and had converted the assets to his own use and benefit. Answers were filed by Oarr, Clark, and Mills, and a jury being waived, a trial was had before the court who found the facts and gave judgment for the defendants. It is important to bear in mind the object of the plaintiff’s petition, which is to enforce against the sureties on the bond a judgment of the probate court against their principal, and that the breach alleged is the conversion of the assets to his own use by the administrator, and his refusal to pay the judgment. This will broadly mark the distinction between this1 case and many of those cited in argument, where the breach was a neglect to account, or a willful concealment of assets in a settlement, or a want of due dilligence and fidelity in closing up the affairs of the partnership. The court below decided the case upon the ground that the- evidence when introduced did not sustain the breach as laid down by the plaintiff in his petition; or, in his own words: “The record does not show that the money in the hands of the administrator, and which he was ordered to pay to the creditors, was derived from the partnership estate.” And in this proposition we agree with the learned judge of the "district court, whose very able opinion is before us, and from which, as it fairly and plainly elucidates the point under discussion, we make this extract:

i Administraaná’ chara? Bepa°ateWs trusts. 5. Application “ If the record was susceptible of the construction claimed by the plaintiffs, I should be disposed to solve any mere doubts in their favor; but I have read it with great care two or three times, and each reading has strengthened my conviction that it will bear no such interpretation. The report, or account of the administrator is headed,‘ Samuel S. Ludlum, adm’r, &c. — Aee’t —Estate of "William H. Hays, dec’d;’ then follows a list of items debiting the administrator with money collected from time to time, sometimes merely stating the names of the persons from whom received, and at others that it was for merchandise sold or accounts collected. Following this is an itemized accormt of money paid out, giving the name of the person to whom paid, and indicating in very general terms for what purpose, such as wages, rent of store, printing, store fixtures, lights and fuel, etc., and concluding with a summary of the whole amount of money collected and paid out, with the amount of the claims of the fifth class, showing money sufficient to pay the above per cent, on all claims of that class. is an affidavit of Ludlum, swearing to the of the report, in which he styles himself, ‘ adaKnistrator 0f estate of William H. Hays, deceased.’ The form of the report, or account, is that usually followed by administrators of the individual or general estate of deceased persons. The record of the action of the court shows simply that the report of the administrator was approved, and he was ordered to pay eighty-six and two-fifths per cent, of the full amount of debts of the fifth class, together with three or four other claims specially described. But nowhere, either in the report, or the action of the court thereon, does it appear, or is it intimated, that it was a settlement of the administration of the property of the firm of Hays & Ludlum, or that the money in the hands of the administrator belonged to the partnership estate, or was derived therefrom. The administrator was required to keep his accounts separate, and make settlement of each estate by itself. He could not mingle them together in one common account. The estates were separate and distinct. The one was the sole estate of the deceased. The other was the joint estate of the decedent and surviving partner. The fund derived from one estate was primarily liable for the individual debts of the deceased; that derived from the other for the liabilities of the firm. Until the partnership estate was fully administered., and the respective interests of the deceased and surviving partner were ascertained, no creditor or legatee of the deceased could claim the fund arising from the partnership property. Then, if the settlement does, not show upon its face that both estates were included in the report, or account, there can be no presumption to that effect. The law would presume he was making settlement only upon one estate, the record showing for itself which one. The administrator could not make a settlement of his administration on the partnership estate, and then, when sued, claim it was a settlement of his administration on the individual estate of the decedent. He is bound by the settlement, as he makes it, as it appears by the record. The record is conclusive upon him, save only for fraud or mistake. It is equally conclusive on creditors of either estate.

“ I feel clear, therefore, that the construction claimed for the record of settlement by the counsel for the plaintiffs is not the proper and correct one. From what has been said it may be inferred, and probably necessarily so, that the record shows a settlement of the individual estate of the deceased; and unless they could show fraud or a mistake, the sureties to the first bond would be liable for the amount claimed in this suit.”

So far we entirely agree with the decision of the district court, and the decision of this point settles this case. The action is on a judgment of the probate court, a judgment which the petition alleges is against the administrator of Hays, acting as the administrator of the partnership estate of Hays & Ludlum; a judgment that is conclusive and binding on the sureties of the administrator of this partnership trust. And when examined, the record shows a judgment against thfe same party, but as the administrator of a different fund. Such a judgment most clearly does not fix any liability on Carr, Clark, and Mills. The judgment is not against Ludlum on any trust which these parties are surety for. There are no allegations in the petition of fraud or mistake in the settlement — no allegations that authorize the court to go behind the judgment rendered, even if the district court has that power. The petition merely seeks to make certain parties liable as sureties on a bond, because the plaintiff has a judgment against the principal that binds the sureties. When the judgment is presented it appears on its face to be one that does not affect any fund for which the sureties are bound. The judgment in such a case must speak for itself — must of necessity be its own interpreter. The court cannot go behind it, or look for evidence elsewhere to explain it. The settlement and order of payment in conformity thereto is the judgment of the probate court, and beyond this the district court decided rightfully it could not go in this case. The authorities in support of this proposition are numerous, and are to be found in the brief of the defendants in error.

Many other grave questions were discussed in the argument, but as their decision is not necessary in this case, an examination of them will not be attempted in this opinion, though they have received that attention that their importance demands. The judgment of the district court is affirmed.

Yaeentinb, J., concurring. Brewer, J., not sitting.

Case Details

Case Name: Glass Co. v. Ludlum

Court Name: Supreme Court of Kansas

Date Published: Jan 15, 1871

Citation: 8 Kan. 40

Court Abbreviation: Kan.