27 W. Va. 483 | W. Va. | 1886
In August, 1872, J. A. Waddell, assignee in bankruptcy of the Mason City Coal and Salt Company, conveyed to JamesP. Kilbreth the coal and salt property lately owned by said company, consisting oí about 287 acres ot land with the improvements thereon, and certain privileges and franchises attached thereto, situate at Mason City, Mason county, in this State. By an arrangement between G. Y. Roots and said Kilbreth, they became the joint owners of said property, and from August, 1872, to December, 1875, they as partners under the firm name of Roots & Kilbreth, conducted the business of manufacturing and selling salt on said property. During the same time, Roots & Co., a partnership of which said G. Y. Roots was the owner of seven tenths, were engaged in the commission business in the city of Cincinnati in the State of Ohio, and the business of both of said firms was for the greater portion of said time under the immediate supervision and management of said Roots, and especially was such the fact in regard to the firm of Roots & Kilbreth.
In October, 1875, a corporation was created by the name of The Mason City Salt and Mining Company for the purpose of manufacturing salt, &c., at Mason City, with a paid up capital stock of $160,000.00, divided into shares of $50.00, each of which shares said Roots owned 1,592, said Kilbreth 1,592, A. E. Smith 4, James R. Murdock 4, and N. H. McLean 4; and by deed dated November 4,1875, Kilbreth conveyed the aforesaid property to said corporation. And on December 1, 1875, said company conveyed said property to said Kilbreth, as trustee, to secure the payment of 140 coupon bonds of $500.00 each, issued by the company.
In February, 1884, G. Y. Roots, A. E. Smith, H. P. Piefer, J. R. Murdock and C. M. Vancleaf brought this suit in the circuit court of Mason county against the said Mason City Salt and Mining Company, the two firms of Roots & Kil-breth and Roots & Co. and others; and the plaintiffs, after stating the foregoing facts, allege in their bill, among other matters, that the coupon bonds issued by said company and secured by said trust deed of December 1, 1875, are now held and owned as follows: G. Y. Roots $15,000.00, John W. and James P. Kilbreth $10,000.00, M. M. White $5,000.00, and
None of the defendants answered the bill except the said James P. Kilbreth, and he in his auswer denies that the said $40,000.00 of bonds are held by Roots & Co. as collateral security for said alleged indebtedness of $23,568.93, or that .said indebtedness in fact exists, and prays by way of affirmative relief for an account to be ordered by the court to ascertain the state of accounts between the firms of Roots & Kilbreth and Roots & Co., and that the latter be required to show in what said alleged indebtedness consists, t-he items of which it is composed and how' it was created. The defendant, Kil-breth, filed pleas of usury under the statutes of this State and of the State of Ohio, averring that said alleged indebtedness of Roots & Co. against Roots & Kilbreth is usurious, and he also filed a plea alleging that said indebtedness was barred by the statute of limitations.
The property of said company embraced in the trust deed to secure said coupon bonds was sold under a decree, and the sale confirmed without objection at the price of $12,500.00, which after deducting some charges left about $12,000.00 of which
By decree of September 12, 1884, the cause was referred to a commissioner to report who are the present holders of said coupon bonds, and “to settle the accounts existing between the firms of Roots & Kilbreth and Roots & Go. mentioned in the plaintiff’s bill, and report in whose favor the balance exists.”
The controverted matters litigated in the circuit court and the only questions presented by the record for the decision of this Court are those arising, nominally, between the firms of Roots & Co. and Roots & Kilbreth, though actually between the plaintiff, G. Y. Roots, and the defendant, James P. Kilbreth, in regard to the said claim of $28,568.93, and the application of the said $6,850.00 realized from the sale of the trust property for the payment of the $40,000.00 of bonds owned by Roots & Kilbreth, and which Roots & Go. assert are held by them as collateral security for the payment of said claim of $23,568.93. On these matters the commissioner took a great mass of depositions, and in his final report he finds and reports, “that Roots & Co. held the bonds amounting to $40,000.00 as collateral security for the payment of a note executed by Roots & Kilbreth, and payable to said Roots & Go. or order, for $23,568.93 dated March 1, 1884, payable six months after date with interest from date at seven per cent.and he also reports, that the amount of said note, with interest atvsevenper cent, added to May 4,1885, is $25,507.47. The defendant Kilbreth excepted this report and to each of these findings by the commissioner upon various grounds.
On May 20,1885, the court pronounced its final decree in the cause, and the said decree, so far as it regards the matter in controversy in this Court, is as follows: “And the court now proceeding'to make distribution of the proceeds of the said real and personal estate, is of opinion and doth decide that the aforesaid indebtedness of said Mason City Salt and Mining Company to Roots & Kilbreth is held by said firm of Roots & Co., as collateral to secui’e any indebtedness due from said firm of Roots & Kilbreth to said firm of Roots & Co., and the court, without adjudicating the-
A preliminary question is raised by the appellees, Roots & Co., which must be disposed of before we can consider the errors assigned by the appellant. The said appellees contend that the court properly declined to adjudicate the accounts and settle the indebtedness betwreen the firms of Roots & Kilbreth and Roots & Co., because there were no pleadings in the cause which could possibly justify the court in adjudicating said matters. Both of said firms being defendants, and said matter so foreign to and distinct from the whole object and purpose of the suit, there could, upon well-settled principles, be no decree between them as to said accounts and indebtedness. In support of this position they cite Vance v. Evans, 11 W. Va. 842; Ruffner v. Hewitt, 14 Id. 739; Worthington v. Staunton, 16 Id. 208, and 2 Barton’s Ch’y Pr. 805.
These authorities are all in harmony with the well established rule in equity practice, that a decree between co-defendants can be based only upon the pleadings and proofs ■between the plaintiffs qnd defendants; but where a case is
It seems to me, therefore, if this were strictly a controversy between co-defendants, the appellant would have been entitled to a settlement of the accounts and the ascertainment of the indebtedness, if any, by Roots & Kilbreth to Roots & Co. In fact, to the extent of $6,850.00 the court did ascertain said indebtedness to exist, but declined to do more. As I understand the decree, it finally settles, that said indebtedness to that extent does exist, and also finally determines that Roots & Co. shall be paid said sum as the proceeds of the sale applicable to the $40,000.00 of the coupon bonds of Roots & Kilbreth, and that the application and payment of this sum to Roots & Co., on their alleged debt, would be res judicata in any future suit'which might be brought under the reservation in said decree. It is plain that if it was neeessáry or even proper to that extent to decide the controversy between Roots & Co. and Roots & Kilbreth, which seems tobe conceded by the appellees, then it was equally necessary and properthat the whole controversy as to said indebtedness should have been decided.
But in my view of the pleadings in this cause-this is not a controversy between co-defendants. It is essentially a litigation between plaintiffs and one ot the defendants. The members of the firm of Roots & Co., as the bill shows, are G. Y. Roots, A. E. Smith and A. P. Piefer, and they are each and all plaintiffs in the bill, while the firm of Roots &
We come now to the errors assigned by the appellant, the first of which is, that the court erred in not finding that the claim of Roots & Co. against Roots & Kilbreth was barred by the statute of limitations as to the appellant. Our statute provides that, “an action by one partner against his co-partners, * * * or upon accounts concerning the trade of merchandise between merchant and merchant, their factor or servants, where the action of account would lie * * * may be brought until the expiration of five years from a cessation of the dealings in which they are interested together, but not after.” Sec. 6 ch. 104, Code.
The operation of this statute is the same in cases of partners and in cases of merchant and merchant, their factors or
The accounts between merchant and merchant, which are excepted from the statutory bar, must be a direct concern of trade. Liquidated demands or bills and notes, which are only traced up to the trade of merchandise, are too remote to come within the description, and they are not excepted from the bar. Ramchander v. Hammond, 2 Johns. 200; Webber v. Tivil, 2 Saund. 124; Barber v. Barber, 18 Ves. 286; Caster v. Murray, 5 Johns, ch. 522. If the items of the account are all on one side, the claim will not be within the reason or principle of the exception, which intended open, and current accounts, where there were mutual dealings and mutual credits or debits. Cotes v. Harris, Bull. N. P. 149; Murray v. Caster, 20 Johns. 583; Wortham v. Smith, 15 Gratt. 487, 494, and cases cited; Watson v. Lyle, 4 Leigh 236, 249.
The firm of Roots & Nilbreth was formed in 1872, for the purpose of manufacturing and selling salt, and quit business in December, 1875. During its existence the firm of Roots & Co. acted as its factors or agents for selling saltnmd purchasing supplies. While said firm was in business the firm of Roots & Go. rendered their accounts to it semi-annually, and they have since the dissolution of it rendered sundry accounts to the appellant, in all twenty-two in number. All of these were rendered as accounts stated, showing a specified sum upon each as the amount due from Roots & Kilbreth to Roots & Co. The accounts themselves show that no supplies were furnished to said firm by Roofs & Co. after it closed business in December, 1875, and the last credit
After this suit was instituted G. Y. Roots, without the knowledge or consent of Kilbreth, made a note to Roots & Co. for the alleged balance of said accounts, $23,568.93, dated March 1, 1884, to which he signed the name of the late finir of Roots & Kilbreth. This note, while it is binding upon Roots, would be ineffectual to bind Kilbreth, even if it did not appear that Roots was a seven tenths partner in interest of the firm to which he executed the note ; because after the dissolution of a partnership the .authority of one partner to bind the partnership, in reference to any new contract, is revoked. Even when the agreement between the partners is, that one of their number shall wind up the business, such agreement does not enlarge his powers so as to enable him to impose any new liability upon the firm or create a cause of action against the other partners. Conrad v. Buck, 21 W. Va. 396; 1 Collyer on Part. 174; 2 Matt. Dig. 414, note 17, and cases cited; sec. 9, ch. 104, Code p. 548.
The conclusion thus announced, would dispose of this controversy but for the questions presented by the claim of Roots & Co., that the $40,000.00 of coupon bonds were deposited with them as collateral security for their alleged debt of $23,568.93. It is denied by the appellant that said bonds were ever with his consent pledged as such security. There can, I presume, be no question as to the law, that none of
But on the other hand, it is equally clear, that during the active existence of the partnership and before its dissolution, any member of the partnership is authorized to do any act affecting the business of the partnership or its property, which could be done by all the partners, because he is the legally authorized agent of the partnership for the conduct of its business. One partner, therefore, before the dissolution, could, I apprehend, legally pledge the securities of the partnership for the loan of money from a third person or for the security of a-debt due from it, to a third person. But I doubt whether a partner could, in any case, pledge the securities of one partnership, in which heis interested, to another partnership of which he is also a’ partner and in which he has a larger interest. Newcomb v. Brooks, 16 W. Va. 32; Reilly v. Oglebay, 25 Id. 36.
I have carefully examined the evidence on this question, which is somewhat contradictory, but from the whole testimony and the admitted facts and circumstances I am satisfied that said bonds were pledged by the firm of Boots & Kilbreth to the firm of Boots & Co. as collateral security for any sum or balance that might be due from the former to the latter. G. Y. Roots, one of the partners, testifies that to this positively; and while Kilbreth, the other partner, does not admit that such was the fact, but circumstantially and indirectly denies it, he testifies to facts which amply show, that if he did not expressly agree that these bonds should bo so held by Roots & Co., he knew Roots & Co. claimed to hold them as security for their debt, and that they-applied the interest collected upon them for a number of years, perhaps all the interest paid on them from time to time, to the payment of their debt. All this was done
The next question to be considered is, does the fact, that the debt of Roots & Co. is barred by the statute of limitations, release the bonds of Roots & Kilbreth deposited as security for said debt? Can Roots & Kilbreth withdraw said securities without the settlement and payment of any balance due on said debt ? I think not. The statute of limitations destroys and defeats simply the remdies for the recovery of the debt; it does not operate inlaw or in fact as a discharge of the debt. The debt remains and the legal remedies for its enforcement only are destroyed. The creditor can not resort to the courts for redress, but he is not required to give up any rights or securities which he may possess and which he may apply7 or hold for the satisfaction of his debt without resorting to the courts. The owner of the security is bound in conscience and honestly7 to abstain from withdrawing the pledge until he has satisfied the debt, and he can resort to the courts to reclaim his pledge with no more effect or propriety than can the creditor to enforce his barred debt. On this subject the law is settled that the pledgee is entitled to retain the pledge
It iollows trom what has preceded that the circuit court should have investigated the accounts aud transactions involved in this cause between Roots & Kilbreth and Roots & Co. and have determined whether there was any indebtedness by either of said firms to the other. This was necessary in order to ascertain the right of Roots & Co. to retain the proceeds applicable to the payment of the bonds held by them as security for their debt, if there is in tact any thing due them. If said debt shall equal or exceed said proceeds, then the whole thereof shall be decreed to Roots & Co. and it it is found to be less, then only so much as shall equal the debt so found due shall be paid to them and the residué shall be paid to Roots & Kilbreth. But in no event shall a personal decree for an.y sum on account of said debt be decreed against the appellant, James P. Kilbreth. For the failure of the circuit court to fully adjudicate and determine these matters, and because it failed to consider the defence of usury relied on by the defendant Kilbreth, which the commissioner reported would “materially alter the statement of accounts between these firms,” so much ot the decree of May 20,1885, as adjudges and decrees that Roots & Kilbreth are indebted to Roots & Co. in a sum equal to or greater than the proceeds of sale applicable to the payment ot collaterals held by Roots & Co. belonging to said firm of Roots & Kilbreth, and orders said sum to be paid to Roots & Co., is reversed and set aside.
What has been said disposes of all the questions passed upon in this cause by the circuit court, but inasmuch as the plea ot usury was filed in the said court and argued in this court, and also because the defence raised by said plea will be necessarily involved in the decision to be rendered by -the circuit court upon the remanding of the cause to that court, we are required by the laws of this State, to indicate the views of this Court on the law applicable to said defence.
It is contended by the appellees, Roots & Co., that from the facts appearing in the cause, tbe usury laws of the State
The said appellees also seek to avoid the defence of usury by denying that the apparent excess of interest, included in their account, is in fact usury, but that such excess was really for services rendered under a contract between the firms of Roots & Kilbreth and Roots & Co. As this position and the the question presented by it depend upon the facts proved, or which may hereafter be proved, I refrain from giving any opinion in regard thereto, but will simply state, that as a matter of law, it is well settled that one partner is not entitled to claim from the partnership compensation for his services in the business without a special contract for such compensation. Forrer v. Forrer, 29 Gratt. 134; 1 Pars. on Contr. 165; Story on Part. § 182.
Having disposed of all the questions fairly arising upon the record, and finding that there are errors in the decree of May 20, 1885, it is ordered that said decree to the extent and in the particulars hereinbefore specified, be and the saméis reversed, and in all other respects it is affirmed, and the cause is remanded to the circuit court for further proceedings there to be had in accordance with the principles announced in this opinion.
AFFIRMED IN PART. REVERSED IN PART. REMANDED.