42 Ky. 377 | Ky. Ct. App. | 1843
delivered the opinion of the Court
In November, 1834, George W. Jones, Thomas More-'head, and J. G. Foley, associated themselves by written articles of partnership, under the name of Thos. More-head & Co. for the purpose of carrying on the milling and ■distilling business at the Rock Spring Mills in Bracken County, under a lease for one year, with a privilege of purchase or renewal within a limited period, which Foley held in his own name, from William Metcalf. Expensive repairs having been made during the first season, the parties determined to purchase, and by agreement, the conveyance of about 400 acies of land was made to Jones and Morehead. During the years 1835 and 1836, large sums, advanced by Jones, were expended under the superintendence and chiefly according to the plans of More-head, in renewing and extending the buildings, apparatus, and fixtures, whereby, and at the cost of sixty or eighty thousand dollars, the establishment seems to have been made one of the most extensive and complete in the western country. In addition to these heavy expenditures large sums were requisite for furnishing the necessary
Before the summer of 1837, the difficulty of procuring the necessary funds having been severely felt and the prospect of profit, which bad induced such vast expenditures, having been greatly diminished or entirely dissipated, the business flagged, the supplies became deficient, the parties began to lose confidence in each other, and mutual crimination and re-crimination seems to have taken place of the cordial and energetic co-operation so essential to the advantageous management of such an establishment. At length, on the 19th of September, 1837, a dissolution of the partnership, which if not necessary seemed inevitable, but which ought to have been brought about either by amicable arrangement or by appeal to the Chancellor, was effected by the act of Jones and Foley alone, who, making the fact known to Morehead by.private notice, and to others by public adverlisemppt, took exclusive possession of the establishment, from which Morehead was kept out by force, and which was thenceforth carried on by Jones, and for his exclusive benefit. Morehead protested against these proceedings and set up his claim to remuneration . for capital and services, but seems not to have claimed to be any longer a partner. 'And two days after his forcible expulsion he conveyed his interest in the land and appurtenances, to Nathaniel Foster for the consideration expressed of four thousand dollars.
Before the dissolution the parties had, by written agreement, submitted the books and accounts of the late firm to John Keating, to ascertain the amount received and expended by each, and bound themselves to abide by his award. Keating, after a laborious examination, reported that Jones had, up to the 19th of September, 1837, advanced a sum exceeding $100,000, and had received of the proceeds of the establishment about $40,000, leaving him more than $70,000 in advance, and that Morehead, who had had the' principal superintendence of the repairs, buildings, expenditures, and supplies, had advanced, of his own
In this condition of things Jones, in 1838, filed his bill against Morehead, Foley, &c. alledging that by the articles of association, which ho charges to be in possession of Morehead, they, Morehead and Jones, were to advance the capital equally, and that after they were remunerated from the establishment Foley and themselves were to be equal partners, and stating the amount of his advances, he prays that an account be taken and that the premises should be sold for his remuneration; and charging that the conveyance to Foster was made to defraud him, he prays that it may be set aside. Morehead in answer, denies that the articles of partnership are in his possession or control, and charges that they were delivered to Jones for safe-keeping. He also denies that he was to advance any of the capital, and alledges that Jones was to advance the whole, and that he and Foley were to contribute their services alone; that Jones was to receive all the proceeds until remunerated, after which the three were to be equally interested, and that until that time he and Foley were to withdraw from the business nothing beyond their personal expenses. He denies fraud in the conveyance to Foster, and produces a re-conveyance. And setting up, byway of cross bill, the award of Keating, he insists upon his claim for the amount of his advances as therein stated, which he says is correct, and prays a decree for this sum, and also for damages for his expulsion from the firm, and for the loss of the advantages promised by the terms of association, and that the land and appurtenances might be sold, &c.
Jones, in answer, denies the allegation in regard to his possession of the articles of association, and also in regard to its terms; repeats the statements of his billon this subject, and goes into many details, as Morehead also had done, which it is unnecessary to repeat,
A commissioner was appointed to state the accounts, and his voluminous report, together with an immense mass of depositions containing much useless matter, has swelled the record to the unusual volume of about 800 pages. The report of the commissioner agrees very near
On the hearing the Court decreed that Jones should pay to Morehead the sum of $2,699 96, with interest from the date of Keating’s award, as the amount of his advances; that the partnership property should be sold and the proceeds appropriated, first to the payment of this sum, decreed to Morehead, and the residue to the remuneration of Jones, who was decreed to pay the entire costs of Morehead. And the case, as to the damages claimed by Morehead, having been reserved, Jones was afterwards decreed to pay him one thousand dollars on that account. From this last decree Jones appealed, and to the first he prosecutes a writ of error. And the land of the late firm having been sold under the first decree, he moved to quash the sale bond and the execution thereon, and prosecutes a writ of error to reverse the order overruling that motion. But as the sale took place before the decree under which it was made was suspended or superceded by appeal or writ of error, and no defect is shown either in the bond or the execution, the motion was properly overruled and the order and decree on that subject is affirmed, with the costs of that writ of error.
With regard to the- principal decree, there being no doubt that the sum decreed was advanced by Morehead out of his own resources, the only question is, whether he is entitled to stand as a creditor of the firm or of Jones, and to be paid his whole demand before Jones receives any part of his capital, or whether the sum advanced by him is to be considered as so much capital for the re-payment of which he has no prior claim.
These questions would best be answered by the articles of partnership. And in the absence of that instru
The oath of each party, to the effect that the written agreement is not in his possession or control, and has not been destroyed or secreted by him, but is or ought to be in possession of the other party, who is called on to produce it, must, in the absence of any testimony sufficient to fix the fraudulent suppression on either, be held sufficient to authorize the admission of parol evidence of the contents of the instrument, which indeed does not seem to have been objected to. This evidence consists of the detail, by numerous witnesses, of the statements of each of the parties, and especially of Jones, that the terms of the partnership were, with regard to the advance of capital, substantially as alledged by Morehead in his
Without attempting further to explain or reconcile the apparently discrepant circumstances in the case, we are of opinion, upon consideration of all the evidence and. all the circumstances, including those relating to the custody of the article of association, that the preponderance is in favor of the conclusion, that Jones was to furnish all the capita], and consequently, that Morehead is not only not bound to contribute to make up the excess of •his advances, but that he is entitled to priority over Jones, in obtaining from the property of the firm, a reimbursement of his own advances. And although this conclusion, as to the facts, is doubtful, and even if it were more doubtful than it is, still as the partnership was dissolved without the concurrence of Morehead, and against his will at the time, and he was expelled from the partnership property of which Jones, for his own exclusive benefit, took and held possession without even causing an inventory or estimate of value to be made at the time, and as the property thus appropriated, appears by subsequent estimates, to have been in value not far below the advances both of Jones and Morehead, we should hesitate to reverse a decree which, under such circumstances, has given the priority to Morehead, and to make him bear the loss which may have affected the value of the property, from deterioration, or waste, or depreciation of value, or a change of times, since the dissolution.
• The'decree therefore, so far as it ascertains the amount ■of the advances made by Morehead, and gives him a preference over .Jones in the reimbursement thereof, out of the partnership property, is deemed correct; And although, if the decree for a sale of the land had been brought up, or superceded before the sale, it might have been reversed, because Charles S. Clarkson was not made a party, the land having been mortgaged to indemnify him against loss by his indorsements on various notes
With regard to the decree for one thousand dollars, to be paid by Jones to Morehead, and from which Jones appealed, we are of opinion, that it was erroneous, because, conceding by the articles of agreement, as stated by Morehead, he had the contingent right of participating equally with Jones and Foley in the profits of the establishment, after the capital expended should be reimbursed, and that a deprivation of that right by the act of Jones, or of Jones and Foley, would entitle him to damages fora breach of the agreement, such damages should only be equivalent to the value of the right itself, and we are of opinion, that upon the evidence in the record, there is neither proof nor prospective probability that the capital expended will ever be reimbursed by the profits, or that it would have been if the firm had not been dissolved. And under these circumstances, Morehead cannot be regarded as having lost any thing, either on the ground of being cut off from this contingent advantage, or by the loss of the implied right of eating and sleeping at the expense of the establishment, so long as it should be carried on, in consideration of his whole time and exertions being devoted to it. Besides, a dissolution, as already intimated, was inevitable if not necessary. It
With respect to the allowance to the commissioner, it appears that before the cause was finally disposed of between the parties, an order was made, allowing the commissioner $600 for his services, and decreeing that Jones should pay the same to him. And upon its after-
But we are of opinion, that the Court erred in decreeing that Jones sould pay the entire amount. He was properly decreed to pay $400, allowed for making up the accounts previous to the dissolution, as to which More-head relied upon the award of Keating as conclusive, and opposed the reference to the commissioner, which was made on the motion and for the satisfaction of Jones, who as he failed in exposing any material error in the award, should bear the expense of his unsuccessful attempt.
It further appears, that an execution having issued in favor of Payne, the commissioner, and against Jones, in conformity with the order just noticed, and a sale having been made under it, a motion was made by Jones to set aside the order for an execution, and also to quash the execution and the sale bond, and this motion having been overruled, a writ of error is prosecuted by Jones against Payne for the reversal of this decision. But the only objection urged, being founded on the alledged impropriety of proceeding by execution instead of attachment, which has already been disposed of, the order overruling said motion is affirmed, w'ith costs.