114 Cal. 635 | Cal. | 1896
Lead Opinion
William J. Newman, Benjamin Newman, and the deceased, John Levinson, were partners in the merchandise business, and held interests therein in proportion to the amount of capital invested by each. The last articles of copartnership between these parties were entered into January 24, 1889, and, among other things, they provided in detail the manner in which an inventory and appraisement of the partnership business should be taken annually, which inventory and appraisement should form the basis in estimating the net profit going to each partner.
The articles further provided as follows:
“In the event of the death of one of the copartners, the inventory provided for herein shall be taken as expeditiously as possible, and without unnecessary delay; the surviving partners, if requested . so to do, shall admit to the place of business of the firm at least one person selected, designated, and empowered by the heirs or legal representatives of the deceased partner to represent the interest of his estate in the copartnership. Such person so representing the interests of the estate of the deceased partner shall have accorded to him access to all the books, papers, and accounts of the firm, and may at his election remain and continue at the place of business thereof until all matters relating to the interests of the deceased partner shall have been fairly and satisfactorily arranged and settled and adjusted, and the total amount due to the estate of the deceased partner shall have been ascertained and determined.
“ The total amount ascertained and determined to be due the estate of the deceased partner on account of his
Levinson died February 25, 1890, and forthwith the Newmans made an inventory and appraisement of the partnership business, as provided by the articles of partnership, by which inventory and appraisement it was determined that the net amount of Levinson’s interest in the assets of the firm was the sum of twenty thousand seven hundred and ninety dollars and eighty-eight cents. For this amount defendants prepared and procured to be properly indorsed their notes, twelve in number, for the sum of seventeen hundred and thirty-two dollars and fifty-seven and one-third cents, each bearing date February 26, 1890, payable at successive monthly intervals following that date, and within one month after Levinson’s death tendered them to Raveley, the executor of the will of said deceased, who had then received letters testamentary from the superior court. In July, 1890, the Newmans filed a petition in the court alleging that they were ready and willing to purchase the interest of the deceased in the
Levinson’s residuary legatees were his mother and two sisters, all of full age. They in writing notified the Newmans on March 5, 1890, that they did not desire to employ any person to assist in taking the inventory of the assets of the late firm, then in progress, and the estate of the deceased had no representative in that undertaking, though. the executor was often about the place of business, and both he and the legatees knew what was being done. No account of the goodwill of the firm was taken in the inventory made by the defendants, nor was it in the inventory and appraisement of the estate1 returned to the court by the executor. In the inventory and appraisement returned by the executor the value of the interest of Levinson in the partnership assets was stated at the same sum as that fixed by the appraisement of the defendants, to wit, twenty
Fraud is charged in the body of plaintiff’s bill, and upon that ground relief in a great measure is sought. But in the opinion of the trial judge, Hon. W. T. Wallace, which opinion is set forth in the record, it is stated that there is no evidence whatever to support such a charge. And, after a careful examination of the evidence, we find nothing therein even tending to show the practice of any fraud upon the heirs and legatees of the dead partner. It follows that all question of fraud is out of the case, and the only important question remaining is, Had the executor under the articles of co-partnership the right to consummate the transfer of the deceased partner’s interest in the business to the surviving partners for the consideration specified in said articles? Although this interrogatory presents a clear-cut proposition of law, still it is well to say that, if this transfer of the partnership interest should be set aside, as is here sought by appellant, and all parties be placed in statu quo, as of the day the transaction was had, no substantial results favorable to appellant’s interests would ensue. It would be a valueless victory, for, as said by the trial judge, upon an accounting the
In appellant’s brief the law is conceded to be: Where the copartners in the partnership contract— articles of partnership—do actually contract that on the death of a partner the partnership property and business belongs to the survivor or survivors, fixing the price at which it is to be taken by the survivor or survivors, such contract is binding according to its terms.” Upon such concession we are brought face to face with the articles of copartnership for the purpose of weighing and testing them by the formula furnished by appellant; and at the threshold of the investigation we are met by the objection that, at the date when those articles were entered into, the deceased partner, Levinson, was incapable, by reason of mental incapacity, of entering into ■any contract whatever. The mental incapacity of Levinson at the time was not even suggested in plaintiff’s bill, and his mental status does not appear to be an element of the case that attracted serious attention at the trial. But some evidence came before the court upon the question without objection, which, even in the absence of direct issues raised by the pleadings, should be considered as bearing upon the question. (Crowley v. City R. R. Co., 60 Cal. 628.) There are various good reasons why this evidence should not be held sufficient to invalidate the articles of copartnership, and as an all-sufficient reason we suggest that the implied finding of the court was against any such contention. Appellant’s principal witness to the point testified that if Levinson had read the articles of copartnership he would have understood them, and there is no evidence in the record that he did not read them. As a salient circumstance bearing upon Levinson’s mental capacity at that particular time, it may be noticed that some few days thereafter he executed his last will and testament, the will under which this administrator is now acting in prosecuting this litigation. It further appears that»
We have quoted in detail that portion of the partnership contract which declares what shall be done with the business in case of the death of one of the partners. In this respect the provision of the contract is not well drawn. It is not clear, but, upon the contrary, somewhat vague and indefinite. At the same time, when carefully read and considered, but one conclusion can be arrived at; and that is that, upon the death of one of the partners, the surviving members of the firm had at least the privilege and option of buying the interest of the deceased partner in the business upon certain terms. It is claimed upon the part of the Newmans that under the contract they were bound to do so. But to support the validity of the contract in this regard they are not compelled to go to such length; for, if they had an option by the articles of copartnership to purchase upon stated terms, then they had the undoubted right to exercise that option and take the interest of the deceased partner, if they were so disposed. (Harbster’s Appeal, 125 Pa. St. 3.) In that case it is said: “It requires no argument to show that the interest of the deceased partner ended when the firm gave notice that they would take it in accordance with the terms of the agreement.” And in the ease at bar, if the Newmans simply held an option to purchase the interest, there can be no question but that they exercised that option in favor of purchasing. If it should be held that the copartnership articles did not giye the surviving partners a right to purchase, then the presence of all that portion of the contract providing for the mode and manner of payment by the Newmans for the deceased partner’s interest would be inexplicable. It is provided in great detail that they should give their equal monthly installment notes, ruñniúg over a period of twelve months, in pay
It is insisted that the language here used provides no fixed and definite amount of money to be paid by the surviving partner for the interest of the deceased partner, and it is claimed that for such reason there is no contract, at least no contract sufficiently clear and explicit, to be capable of enforcement. There is no case cited by appellant that goes to the lengths here insisted upon. But, upon the contrary, that is certain which may be made certain, .and many of the cases bearing upon this question rest upon this principle. Numberless cases might be cited where courts have recognized the right of the partners to stipulate in the copartnership articles that the purchase price for the interest of a -deceased partner shall be fixed by an inventory and appraisement to be taken after the death of such partner. In the very nature of things, a fair purchase price of an interest in the firm at an indefinite future time would be incapable of ascertainment. To fix the amount in advance would be simply a speculative gamble upon the ■ part of all parties concerned, and hardly justifiable either in morals or law.
It is further contended that there is no mode whatever provided in the articles by which to ascertain the value of the interest of the deceased partner; and it may well be conceded that the provisions of the contract in this regard are not what they should be. In this particular the instrument is unhappily drawn, and well serves the purpose of being an invitation for litigation. As we have already seen, the articles provide for an annual inventory and appraisement in order that the actual financial status of the concern may be determined. This inventory and appraisement was pro
Conceding that the inventory and appraisement mentioned in the articles of copartnership were intended by the partners to be used as the basis for fixing the value of a deceased partner’s interest, then appellant contends that the contract was void as placing it in the power of the surviving partners to fix their own purchase price. There is no force in this contention. The contract contemplates the presence of a representative of the deceased partner during all these times, and incidentally it may be suggested that the executor was present, during the time, more or less, and that both he and the legatees had full knowledge of what was being done, and ample opportunity to be present at all times and upon all occasions to assist, either personally or by agent.
Again, as to the store and office fixtures, the value is fixed at a certain and definite amount. As to the stock of merchandise on hand, it is to be appraised at its actual value, but not to exceed its original cost. All solvent debts are to be taken at their face value. We see nothing so indefinite in these facts as to nullify the contract. The actual value of a piece of merchandise can be determined; and likewise it can be determined what is and what is not a solvent account. They are matters capable of ascertainment, and every partnership in the country is constantly engaged in determining them. There is certainly nothing so indefinite and uncertain as to the valuation to be fixed upon these assets as to in any way render the contract nugatory. In Harbster’s Appeal, cited by appellant, the purchase price
In Dinham v. Bradford, L. R. 5 Ch. App. 519, it is held in effect that the articles of copartnership might provide that the purchase price of a deceased partner’s interest in the business should be fixed by three disinterested parties. In Quinlivan v. English, 44 Mo. 46, the value of the interest of a deceased partner was to be fixed by an appraisement made after his death, and, in case of a dispute as to the valuation of the stock, the matter was to be submitted to three arbitrators.. The court held such an agreement valid and binding. Indeed, it .may be suggested that the authorities are practically unanimous that any question of indefiniteness or uncertainty as to the amount of the purchase price, or the manner or mode in which such price is to be arrived at, in no way affects the right of the surviving partners under the partnership contract to buy. And it is held in many cases that such conditions only result in casting the burden upon the trial court to take an accounting and fix the price. We conclude that the contract is valid and binding in all respects; that the amount of the purchase price for the deceased partner’s interest in the business was fixed by the articles with such sufficient certainty as to deny the'court the right to hold a general accounting. And, in the absence of a showing of fraud, to some extent at least, in the making of the inventory and appraisement which formed the basic element in fixing the purchase price, the transaction should be upheld.
While this litigation, judging by the size of the transcript and briefs before us, has now assumed somewhat mammoth proportions, there was a time in its early history when but a single matter was involved. And that
The order appealed from is affirmed.
McFarland, J., and Van Fleet, J., concurred.
Concurrence Opinion
We concur in the judgment. We do not think we can say over the implied finding of the trial court that the execution of the partnership articles was procured by fraud, or by the use of undue influence. The question is argued on the assumption that the Newmans were contracting with the expectation that they would be the survivors. We do not think we can assume that. Such a consideration was proper to be urged upon the trial court under the charge of fraud, and evidence could have been addressed to that point. It does not appear that any such question was tried. It does appear that Levinson was then ill, but we do not find that the illness was deemed mortal. He lived more than one year thereafter, and during a portion of that time was able to attend to business.
But the advantages of the agreement are not all on one side. In case of a dissolution by death it would have been the privilege of the surviving partners, in case
As to the construction and effect of the twelfth article of the partnership agreement between the defendants and their deceased partner, our views do not coincide with those expressed in the preceding opinion. The meaning of that article is, of course, the main question in the case, and for two years after the death of Levinson it was the only question—the attack upon the validity of the agreement based upon the alleged mental incapacity of Levinson and the charge of undue influence by his surviving partners, being an evident afterthought. So much stress, however, has been laid upon this matter in the argument, and it forms so large and so essential- a part of the charge of fraud, to the elaboration of which the voluminous brief of appellants is mainly devoted, that it cannot be ignored. The fact that the validity of the partnership agreement is affirmed by the implied finding of the superior court, and that there is substantial evidence to support such finding, is sufficient, as shown in the preceding opinion, to put an end to the question, so far as it is material to the decision of this appeal, but with respect to the matters so vehemently and intemperately argued upon the part of appellant, and especially with reference to the torrent of vituperation poured out upon Mr. Justice Harrison, it is important to note that never upon any occasion during the time that he was acting as attorney for executor Raveley was there the slightest hint or suggestion to the effect that the partnership articles were in any respect invalid, or that Levinson at the time he signed them was mentally incapacitated or subjected to the slightest degree of undue influence. On the contrary, the whole dispute from the beginning, and for two years after the death of Levinson, was as to the construction of the agreement, and, in particular, whether, according to its terms, the estate
Mr. Philbrook, however, seems to think that Jarboe and Harrison were guilty of a species of disloyalty tc> Ms clients, because, notwithstanding their opinion to the contrary, they did not sustain him in his position, and advise their client accordingly. But this contention i's utterly unreasonable. They were attorneys for the executor, who was trustee not only of the legatees, but also of the creditors of his testator, and it was their imperative duty to advise him to proceed according to the true construction of the agreement as they interpreted it, and especially to see that he wasted no portion of the estate in fruitless litigation. In view of the difference of opinion between them and the attorney for the legatees, it was natural that they should take time to consider before deciding a question so delicate and so important, and equally natural that they should wish to submit the decision of the matter to the probate court. But when that court, in the proceedings instituted by the Newmans to compel the executor to transfer to them the interest of the deceased partner, declined to give a construction to the agreement upon the ground that it had no jurisdiction to decide upon the matter, the responsibility was thrown upon the attorneys for the executor to decide whether he should accept or reject the tender which the Newmans had made of the appraised value of Levinson's interest. Being obliged to take the responsibility of deciding, they naturally decided according to their own construction of the contract, aifd not according to Mr. Philbrook’s. Differing,
By accepting the money and notes tendered by the Newmans in full payment for the interest of his testator in the firm, the executor placed himself in the position of unequivocally refusing to proceed against the surviving partners on account of the value of the goodwill, and thereby gave to the residuary legatees the right to ask, as they ultimately did, for his discharge, upon the ground that he was neglecting the duties of his trust. As to the executor, this was the sole effect of erroneous advice on this point. As to the Newmans, the effect of a settlement unauthorized by the probate court, and unwarranted by the terms of the partnership agreement, would simply be to expose them to an action for an accounting—this very action—in which the most rigorous and burdensome rules for computing the interest of Levinson in the assets of the firm and profits of the business would be enforceable against them at the option of the administrator with the will annexed. To suppose, as the argument does, that the attorneys for the executor were deliberately giving him advice which; they knew to be bad, in order to serve the interest of' the Newmans at the expense of the legatees, wTien the,
But it is not alone the acceptance of the tender made by the surviving partners, and the advice upon which the executor acted, that furnish grounds for Mr. Phil-brook’s suspicions. It is the secrecy of the transaction, and the fact that the receipts or acknowledgments given by the executor were in the handwriting of, and were witnessed by, a gentleman who at the date of the settlement had been nominated by a leading political party of the state for a seat on this bench, that excites his deepest indignation. He can see in these circumstances nothing but a deliberate attempt to defraud his clients and to corrupt this court.
As to the secrecy of the transaction, the simple truth is that Mr. Philbrook and his clients were not called in to witness the payment of the money or the delivery of the receipts, and there was no reason why they should be present. It was not necessary that they should be there to protest in order not to be bound by the settlement. Their rights were not being concluded, or in anywise prejudiced. The fact that the notes and money were in the hands of the executor was nothing to them. The time for presentation of claims of creditors had not elapsed, the time for filing a first annual account had not arrived. No part of the money in the hands of the executor could then or for months thereafter be applied in payment of claims or legacies; in short, neither the executor nor the Newmans could gain the slightest advantage, nor the legatees suffer the slightest loss, by concealment of the fact that the settlement had been made. And accordingly we find that upon the very first occasion calling for a disclosure of the fact and the terms of the settlement, such disclosure was fully and unreservedly made in the most direct and certain terms. The settlement was made in September, and in November following, in response to a
“And deny that said William J. Newman, or said Benjamin Newman, has not fully accounted to said executor of said estate for any and all moneys, interests, and claims due to said estate from said William J. Newman or said Benjamin Newman, or either of them, and, aver, on the contrary, that they have fully accounted for any and all claims, payments, and sums due said estate in the manner set forth in said memorandum in writing, and in this behalf said William J. Newman and said Benjamin Newman aver that after the appointment of said S. W. Raveley as the executor of the last will and testament of said John Levinson, deceased, said executor requested them— said William J. Newman and Benjamin Newman—-to account to him for the interest of said decedent in said co-partnership, and said William J. Newman and said Benjamin Newman did thereupon account to him and exhibit to him, said executor, all the books and assets of every kind belonging to said copartnership, and it appeared therefrom that the entire interest of said decedent in the assets of said copartnership amounted to. the sum of twenty thousand seven hundred and ninety dollars and eighty cents, and thereupon said William J. Newman and said Benjamin Newman elected and decided, under and in accordance with the provisions of said memorandum in writing, to purchase and pay for the interest of said decedent, in said copartnership, and thereupon executed to said S. W. Raveley, as executor aforesaid, twelve certain promissory notes, bearing date the twenty-sixth day of February, 1890, payable at monthly ■intervals thereafter, each for the sum of seventeen hundred and thirty-two dollars and fifty-seven and one-third cents {saidpromissory notes aggregating the sum of twenty thousand seven hundred and ninety dollars and eighty cents), in full payment and discharge of the interest of said decedent in said*657 copartnership business, as the same had been ascertained and determined by the inventory and appraisement thereof, made in accordance with the provisions of said memorandum in writing.”
Mr. Philbrook knows the meaning of a plain statement in plain English, and, therefore, it is not to be doubted that from and after the nineteenth day of November, 1890, he and his clients knew that executor Raveley had accepted from the surviving partners their notes for twenty thousand seven hundred and ninety dollars and eighty cents, in full payment for his testator’s interest in the copartnership. He knew then and ever afterward that Raveley, acting under the advice of his attorneys, would refuse to prosecute an action against the- Newmans for a further accounting, and that the legatees, if they desired to have such an action instituted, must procure the removal of the executor, and the appointment of an administrator with the will annexed who would be guided by his advice. This is the course which was taken just one year after Mr. Philbrook was advised of the settlement, and, since he allowed a whole year to elapse after receiving the information before taking the only action that the settlement called for, he can hardly complain that the fact was not disclosed two months sooner than it was. As to the fact that Mr. Harrison, after his nomination for justice of the supreme court, continued to advise executor Raveley in a matter in which he had been employed long, before his nomination, and the further fact that he drew up and witnessed the papers which passed upon the settlement, it seems scarcely credible that a normal mind could regard them as evidence of fraud, or as an attempt to corruptly influence the decision of this court. But it is out of these simple circumstances that Mr. Philbrook has constructed his elaborate theory of fraud and corruption.
The truth is there is not only no foundation for the argument upon this point, but the fact which it seeks to establish is totally irrelevant. The motives which
If these views are correct, and we have no doubt that they are, the whole question of fraud and corruption so gratuitously imported into the case may be dismissed from further consideration, and attention confined to the questions upon which the decision of the appeal -necessarily depends.
The agreement between the Newmans and Levinson, "which by the preceding opinion is held to be a contract ■of sale, properly bears the construction put upon it. It was within the terms of the agreement and the contemplation of the parties that in some way a purchase by "4he survivors should be made. If the contract were in 'other respects free from objection, the case would be the not unusual one where the partners provide for the purchase by the survivors of the interest of a deceased member of the firm. Upon the exercise by the survivors of their right the sale would be complete, and the surviving partners would become debtors to the estate of the deceased partner, with the duty of accounting with his representative for the value of the deceased partner’s interest.
Oases are not rare where contracts of this nature have been entered into and enforced, but, when upheld, it is because they are certain and specific in their terms, and unobjectionable upon any equitable consideration. The plan adopted by these partners for arriving at the value •of their annual profits by deducting from their assets the amount of their liabilities was feasible and satisfac
But, if we understand respondents, they do not contend, nor could they successfully, for the latter proposition, but they claim that by their agreement with the executor such value was legally ascertained, and herein it is claimed that the executor in effecting that settle
Had the executor that authority? Defendants claim it for him by virtue of his general powers, and independently of the articles. At the common law such power was unquestionably his, but at common law the executor or administrator held the title of the personal property of the decedent, while with us title to-personalty, as well as to realty, vests in the heirs, subject only to the right of the executor to take possession of it for specific purposes. At common law, then, the representative could sell personal property without restraint, so long as his acts were not fraudulent, but here-his power to sell is dependent upon the assent of the superior court. (Code Civ. Proc., secs. 1517, 1561; Wickersham v. Johnson, 104 Cal. 407; 43 Am. St. Rep. 118; 2 Wœrner's Law of Administration, sec. 331.)
The provisions of the articles for the transfer of Levinson’s interest were incomplete, in that no price was fixed, and that no disinterested person was named who should fix the price. The executor, by assenting to the valuation put by the Newmans on-the partnership interest, assumed to supply the omission of the contract, and to fix a sum at which they might take the interest.
Had the contract of partnership determined the price, or prescribed some legal mode of ascertaining the price, the cases cited in the preceding opinion would be directly in point. Then the executor would have needed only to abide by the terms of the contract. (Janin v. Browne, 59 Cal. 37.) The wisdom or policy of the contract would have been none of his concern. But, under the facts, the necessity for the supervisory power of the -court to order a sale, and for the caution of the statute that before confirming the sale of the partnership interest the court or judge must carefully inquire into the ■condition of the partnership affairs, and must examine the surviving partner (Code Civ. Proc., sec. 1524), was as manifest as if there had been no contract.
But it is further said that the inventory and appraise-' ment were made in the manner usual during Levinson’s life, and that this established a custom by which the articles are to be interpreted. But a customary mode of valuing assets, with a view of determining and withdrawing profits, is radically different from the requisites of a fair and reasonable estimate of all assets with a view to segregating the share of a deceased partner for purchase by the others.
We think the conclusion inevitable that the'executor exceeded his authority in the settlement with defendants; that he did not, as is admitted, follow the statutory mode in making the settlement, and that there was no power for him to do so under the articles.
Leaving aside for the moment the question whether or not the goodwill was included in the settlement, we think the evidence overwhelmingly establishes, as the
Having, under these circumstances, demanded and received the moneys so paid by the Newmans, the price having been fair and the transaction without fraud, we are of opinion that they are estopped from questioning the settlement while retaining the benefits of it, and from denying that there passed to the Newmans whatever would have passed under the terms of the contract had it been free from the defect above discussed.
What, then, would have passed, and what are appel
There thus comes under consideration the question which originally, and for a long time, was* the sole point of difference between the parties, the question of the disposition of the goodwill; for it appears that, while the heirs from a very early date insisted that the goodwill still remained a part of the property of the estate, and should be inventoried and appraised as such, they made no objection to the valuation put upon the deceased partner’s interest, nor to the sale of that interest, saving that therein the goodwill had not been valued. There was no concealment nor secrecy nor fraud in this. The heirs were informed that the goodwill was not included, the contention of the executor and of the Newmans under the advice of counsel being that the goodwill, under the circumstances, did not become a part of the assets of the estate, but vested in the surviving partners.
While some of the earlier cases lean to the doctrine that, upon the death of one partner, the goodwill goes
It is not necessary to enter upon a discussion of the character of this intangible property known as goodwill. The code solves many doubts by defining it to be the “expectation of continued public patronage.” (Civ. Code, sec. 992.)
Now the Newmans had purchased the interest of the ^estate in the assets as shown by the inventory, and had ■likewise acquired, as has been discussed, the right to • continue the business under the firm name. We are unable to perceive any difference between the acquirement of a right to conduct this business under a firm •name, and the acquirement of the goodwill of the business. In other words, every possible “expectation of -continued public patronage” to the business was gone when the right to conduct it under the firm name was parted with. If there were left anything of value, however shadowy and unreal, it might be ground for saying that the goodwill yet remained to the estate, but the interest in the assets, together with the interest in the right to conduct the business under the firm name,
But there is another and equally convincing view which may be taken of these matters. Counsel have cited some cases in which it is said that it is the duty of the survivors to sell the property, and the business, as a going business, and also to continue the business until this can be done. It may be that when a firm name is not composed of the name of the partners, but is a trade name only, different equities may arise, but we are sure in this case the Newmans could not have been required, in the interest of Levinson’s estate, to sell the right to continue the business in the firm name nor to sell the goodwill. There is not only the goodwill which belongs to the firm, but in a successful business each partner may have gained a business standing and a reputation which is of value to him. One who sells the goodwill of a business warrants by that very act that he will not endeavor to draw off any of the customers. (Civ. Code, sec. 1776.) If the surviving partners can be required to do this they are practically prohibited from pursuing the same business at that place, and that may be their only means of gaining a livelihood. When a partnership is dissolved by death, the survivors are absolved from all obligations, except to close out the partnership affair's and to account to the estate. They do not owe a duty to the estate of the deceased to abstain from business even in the same line as that in which the partnership was engaged.
We are forced to believe in this case that the articles of copartnership failed to provide, effectively, for a transfer of the interest of Levinson’s estate in the co-partnership to the surviving partners. The executor and his counsel were of the opinion that it did so provide, and acted accordingly. Though we are convinced that they were mistaken, we do not doubt that the estate of Levinson realized much more from the property than would have been possible if the firm had gone into liquidation, as they must have done in the absence
For the lack of such method, however, the, transfer to the Newmans was unauthorized and void. The legatees, however, of Levinson’s estate were all of age, and the estate was solvent.
Knowing all of the essential facts, they demanded and received the proceeds of the sale over the protests of the executor and of the Newmans. These protests amounted to the claim that, unless the transfer to the Newmans was valid, the money should be returned to them. If the transfer was regarded as invalid, plainly that should have been done. The court could not distribute the money except upon the theory that it properly belonged to the estate. The Levinsons solicited and obtained such an adjudication, and they received the money so distributed.
No rights were or could have been reserved by the protest, styled a stipulation, which was filed by the Levinsons. The money was not voluntarily paid after the protest was made, but the payment was forced by the legatees. The protest does show, however, that the legatees knew, or at least suspected, that the executor and the surviving partners claimed that, the money in the hands of the executor was all that was coming to the estate from the partnership. It is stated, after admitting that the money was received by the executor “on account of the interest of said estate in the partnership assets,” as follows: “But it is not admitted by said petitioners, or any of them, that no further sum remains due, or is to become due, from said surviving partners, or either of them, or assigns, to said estate, or to said petitioners, or any of them.” There would have been no purpose in guarding against the implication if it had not been believed that the claim was that this was
This was a ratification of the sale on the part of the legatees which can be avoided only for fraud discovered afterward, and then only upon a rescission and a restoration of all that they have received, or a showing of some excuse for not doing so.
The action is to compel the surviving partners to account for the interest of Levinson in the copartnership. But the moneys which were distributed upon the application of the legatees were paid for the entire interest of Levinson in the copartnership. To compel an accounting is to set aside or ignore that transaction. The money was not paid on account, and the legatees must have known that no such sum was due from the surviving partners to the estate, except upon the theory that they had purchased the interest of Levinson. The acceptance of the sum by the executor materially affected the condition of the surviving partners. But for that the concern would most likely have gone into-liquidation, and large liabilities for goods would not have been incurred. They did not understand that they were assuming these liabilities and the risks of trade for the benefit of the estate of Levinson, but for themselves.
Rehearing denied.