Kirkpatrick v. McElroy

41 N.J. Eq. 539 | N.J. | 1886

The opinion of the court was delivered by

Depue, J.

The decision in the former suit between McElroy and Ludlum, receiver, does not conclude the petitioner in this case. The controversy in that case related to the petitioner’s claim for a share of the profits of the firm business as compensation for his services. The court disallowed that claim on two grounds: first, that such a contract was not proved; and second, that if it had been it was invalid under the statute of frauds. McElroy v. Ludlum, 5 Stew. Eq. 828. This suit is brought upon a quantum meruit, to recover for such services, and is the remedy which the court, in denying relief in the former case, indicated as the proper remedy to be adopted by the petitioner.

The petitioner’s claim is for services rendered to the firm of James Horner & Co., which was dissolved June 9th, 1874, by the death of James Horner. Ludlum is the surviving member of the firm. The petitioner brought suit at law against Ludlum, as surviving partner, for these services, and recovered a judgment for $21,300 damages, and $61.84 costs. He collected out of Ludlum on account of this judgment the sum of $600; the balance is unpaid. The vice-chancellor, on the hearing, disregarded the judgment at law and retried the case upon the merits, and ascertained the value of the petitioner’s services to be $19,766.68, and deducting $15,000 received by him during the lifetime of Mr. Horner, and the $600 collected on the judgment, ascertained the balance remaining unpaid to be $4,760.80.

On the dissolution of a partnership by the death of one of its members, the surviving partner is alone suable at law for -partnership debts, and is entitled to the possession and control of the firm assets to enable him to discharge the debts and to settle the affairs of the partnership. 3 Kent 64; 2 Lindley on Part. 665; Murray v. Mumford, 6 Cow. 441; Case v. Abeel, 1 Paige 393. If there were no other peculiarities in this case than the fact that firm assets, out of which firm debts should be paid, were in the control of the court of chancery, the judgment at law recovered against the surviving partner would be conclusive. But the sit-nation of this case is materially altered by the proceedings which were taken in the court of chancery for the settlement of the partnership affairs before the suit at law was begun against the surviving partnei’.

Shortly after the death of Mr. Horner, Mrs. Buckingham, the executrix and residuary devisee under the will of James Horner,, filed a bill in chancery for the appointment of a receiver and the settlement of the partnership affairs. By a decree of the court, made November 17th, 1874, Ludlum, the surviving partner, was appointed receiver with power to collect and receive all moneys and property belonging to the firm, and out of the proceeds to pay the debts of the firm, and to take and retain possession of the firm property with a view to the ultimate settlement of the affairs and business of the firm under the direction of the court of chancery. On the 31st of July, 1879, Ludlum was removed from his receivership, and Andrew Kirkpatrick was appointed receiver in his place. The petitioner did not begin his suit against Ludlum as surviving partner until September 10th, 1880.

On the appointment of a receiver for the settlement of the partnership affairs, the surviving partner was superseded in the possession and control of the partnership effects, and in the authority to settle up the partnership affairs. The possession and control of the partnership effects and the authority to settle partnership affairs, were, by the appointment of a receiver, vested exclusively in that officer. He was a necessary party to any suit affecting the property of the partnership. Kirkpatrick v. Corning, 11 Stew. Eq. 234. The petitioner’s claim being against the partnership, for services rendered to the firm, he might have presented his claim to the receiver, and proceeded to collect it out of the partnership assets in the receiver’s hands, without first bringing his action at law against the surviving partner, and exhausting his bgal remedy against him. His judgment against the surviving partner, without the receiver being a party to the suit, was a nullity as against the receiver. No demand for an issue to which the receiver might be a party was made, and the vice-chancellor properly proceeded to try the case upon the merits.

The receiver has interposed the plea of the statute of limitations. The petitioner’s term of service began July 1st, 1869, and ended June 9th, 1874. The receiver was appointed November 17th, 1874. The bar of the statute had not attached when the receiver was appointed.

The suit being brought for the enforcement of a legal right, with respect to which the statute of limitations would be a bar in a court of law, the statute will be available in bar of relief in a court of equity (McClane v. Shepherd, 6 C. E. Gr. 76; Knox v. Gye, L. R. (5 H. of L.) 666, 674), unless the running of the statute was suspended by the proceeding in the court of chancery for the settlement of the partnership affairs. As a general rule, the mere- appointment of a receiver to take charge of property in dispute will not suspend the operation of the statute {Anon., 2 Atlc. 15), nor will it interrupt the possession of a stranger so as to prevent the statute conferring title on him, or suspend the running of the statute against a stranger. Harrisson v. Duignan, 2 Dru. & War. 295; Kerr on Receivers 172. But where the receiver is appointed to take charge of an estate for the purpose of administering it, as, for instance, the settlement of the affairs of a partnership and the payment of firm debts, the suit being substantially for the benefit of all the creditors, in analogy with an ordinary creditor’s bill, the appointment of a receiver with such powers will suspend the running of the statute (Sterndale v. Hankinson, 1 Sim. 393, 398; Wrixon v. Vize, 3 Dru. & War. 104); and the lapse of time before proceeding against'the receiver in the court by which he was appointed will be regarded only on the question whether the creditor has been guilty of laches in delaying the prosecution of his demand.

In 1877 the petitioner filed his petition in the former suit, and that litigation was not finally disposed of until July, 1880. After the petition in the former suit had been dismissed, the petitioner, under the impression that he must first bring suit and exhaust his remedy at law against the surviving partner, brought such suit on the 10th of September, 1880. That case was tried and proceeded to judgment, and the present petition was filed in the early part of June, 1881. The bar of the statute had not attached when the petition in the first suit was filed. The six years’ limitation expired while that suit was pending. The present petition is simply a continuation of the proceedings begun in 1877, and surely there has been no unreasonable suspension of efforts on the part of the petitioner for the collection of his claim.

The vice-chancellor decided that for the services the petitioner rendered to the firm he was entitled to $4,000 a year. I think that sum was a full, fair and reasonable allowance to the petitioner. The vice-chancellor credited the $15,000 the petitioner received before the dissolution of the partnership and the $600 collected on his judgment, and allowed interest on the balance. The decree is right in all respects, and should be affirmed.

Decree unanimously affirmed.