81 Ky. 139 | Ky. Ct. App. | 1883
delivered the opinion of tiie court.
The principal cause of complaint in this case is, that the chancellor refused to permit the case to go to the commissioner for a settlement of the partnership accounts.
The appellant, Loesser, and the appellee, Loesser, were partners, engaged in buying and selling hides, wool, rags, jeans, and other merchandise, from February, 1875, until March, 1877. When the partnership was dissolved, the two partners had the partnership books before them, and made a settlement of their accounts as partners, showing a loss on the amount invested by the appellant of between one and two hundred dollars. The appellant, it seems, did the most of the buying, and the appellee the selling, the. latter controlling most of the money.
The partnership was dissolved by mutual consent, and' receipts were executed, evidencing the settlement between them. In the month of December, 1877, the appellant-filed this petition in equity against the appellee, in which
A long list of interrogatories is found annexed to the petition, to which special answers are called for.
If, when he reports, the sales correspond with the settlement made, the appellee has acted in good faith; if not, he has defrauded the appellant. The accounts between the parties were stated and settled, and when the partner complaining undertakes to surcharge the settlement, or to attack it for fraud or mistake, he must designate in what particular the fraud or mistake consists, and we have no doubt that the fraud might be of such a character as would authorize the chancellor to reopen the entire settlement.
If the appellee has made sales that he has improperly or falsely reported as to the amount, to whom were the sales
It may be well to advert to the general equity doctrine on this subject. Story says:
“Courts of equity will not open a settled account (when it has been signed or security taken at the foot of it), unless for fraud or for errors distinctly specified in the bill, and supported by evidence. The expression of errors excepted will not prevent its being a settled account, nor will the allegation of general errors be enough, for specific errors must be pointed out, or it Vill be final.” (Section 800. See Adams on Equity, page 452.)
Bigelow on Fraud says:
“If the account impeached be a settled account, the court requires the errors to be specified in the bill, and to be proved as specified; otherwise, it would be easy to overturn the fairest accounts if of a complicated nature.”
In the case of Lee’s adm’r v. Reed, &c., it was held “that slighter evidence may prevail against the conclusion resulting from the settlement when one of the parties has little or no knowledge of the transactions settled. But even then the settlement will be considered prima fade fair, and
In surcharging settlements with fiduciaries, where infants and those under disability are interested, the same character of pleading has always been required, and there is less necessity for such a rule in the latter class of cases than where parties are dealing at arm’s length, and in a condition to know their own interests.
In this case the appellant made nearly all the purchases. He knew what the goods cost, and must have had some idea of their marketable value. The books were open to him. He made the settlement with his eyes open, and is now in a court of chancery unable to designate ,any wrong practiced upon him, but asking the chancellor to reopen the settlement, with a view of ascertaining whether or not he has been defrauded.
It is impossible tq make an accurate settlement of these accounts. The account with Howe & Co. was created by the exchange of wool for jeans, and the latter article sold, and no doubt accounted for in the settlement. The appellee was also in a firm at Paducah engaged in the same business, and sold much of the goods from the Paducah house to the same parties, and it is impossible, or not practicable at least, for them to state what was purchased of the Owensboro house. Others were engaged in a like business, and say that they realized no profits; but whether so or not, on the appellant’s own showing, whether you take the allegations of his petition or his statements as a witness, he is
The principal question, as stated by counsel for appellant, is the practice in order to open a settlement of accounts between parties on the ground of fraud, and the substance of the charge in the petition is, that the entire settlement was obtained by the fraudulent representations of the appellee. Here is a stated account between partners, evidenced by the partnership books from which this settlement was made, to which both partners had access during the existence of the partnership, and in no single instance is it alleged, or attempted to be established, that the entries on these books, were fraudulent; but counsel, in his petition for a rehearing in this case, says: ‘ ‘ The complaint made in the petition is, ' that aside from, and independent of, the items passed upon and approved by the parties in this account, the appellee had received of the money of the firm many thousand dollars— $16,897 — the proceeds of the sale of their partnership property, the receipt of which he fraudulently concealed from appellant, ánd made no entries on the books of the firm, &c.’ ” Who he received this money from, to whom the goods were sold, or when the money was received, are facts not alleged or shown, and the chancellor is asked, through his commis
In every case where a partner has obtained a fraudulent advantage of his co-partner, equity will give him relief; but where thgre has been a settlement of their accounts, in order to attack that settlement for fraud or mistake, the specific acts of fraud must be alleged, or the manner in which the mistake occurred set forth. If the partner making the settlement and complaining has to rely on a general charge of fraud or mistake, it necessitates an investigation.by the chancellor of the entire pártnership accounts, to find out for the complaining partner whether or not he has suffered by the fraud or mistake of his co-partner in a settlement that both at the time regarded as final.
He has no right to require the chancellor to make a discovery of the fraud upon such a state of pleading, and the answer fails to cure the- defect, although, in response to interrogatories, the appellee discloses the nature of the partnership transactions and the manner in which he obtained the moneys; nor will the facts developed require the chancellor to begin his search, through a commissioner, for the discovery sought by the appellant.
Petition overruled.