88 Iowa 257 | Iowa | 1893
This case was once before in this court on appeal, and was reversed and remanded, because it had not received full consideration in the district court. The case was remanded with a suggestion that it demanded “the attention of a careful referee, who shall present fully the evidence, together with his findings of law and fact upon all questions arising
“findings of facts.
“First. That in the year 1869, D. B. Knight and Allan Smith entered into an oral agreement for acopartnership to erect "a steam mill and elevator, and to do the business of buying and grinding and" selling grain. Under the agreement they were to be equal partners, each furnishing an equal amount of capital, and sharing equally the profits and losses. No fixed amount of capital stock was agreed upon. They commenced the construction of a mill at Boone, Iowa, bathe fall of 1869, and completed it for operation about .May 1, 1870. The books of the firm were opened about the first day of May, 1870. Prior to this time each of the partners had kept an account of materials furnished and labor and material paid for by him in the construction of the mill, and for moneys paid out for merchandise on account of the firm. About the first day of May, 1870, each of the partners presented tb the bookkeeper of the firm a statement of the amounts thus paid by each for' account of the firm, and each partner was credited upon the books with the total amount of his payments thus made as of date May 1,1870; the balance to the credit of D. B. Knight being sixteen thousand, seven hundred and twenty-one dollars and fifty cents, to Allan Smith was ten thousand and fiftyjour dollars and thirty-eight cents.,, Thereafter each partner was credited in his individual account with merchandise and cash furnished or payments made on account of the firm, and debited with all merchandise and cash received. No regular monthly balances were kept of their accounts until after January 30, 1882. No settlement of the partnership accounts has ever been had.
*260 ''Second. D. B. Knight died on the twenty-fifth day of January, 1886. The balance to the credit of each partner, as shown by the books, on January 30, 1886, was as follows: D. B. Knight, eleven thousand, one hundred and sixty-six dollars and five cents; Allan Smith, eleven thousand, nine hundred arid fifty-seven dollars and sixty-seven cents.
“Third. On the eleventh day of June, 1884, D. B. Knight and Allan Smith entered into the following contract in writing, to wit:
“ 'Whereas, Dan B. Knight and Allan Smith have heretofore been engaged in business under the firm name of Knight & Smith, of Boone, Iowa; and whereas, said Knight and Smith engaged in business with the understanding that each should furnish equal amounts of money, and share equally the profits and losses of the business; and whereas, there has never been an inspection of the firm accounts, and it is probable that either Knight or Smith may at different times have had invested in their business an amount of money in excess of an equal one-half: Now it is hereby agreed by and between said Knight and Smith that as soon as possible after the date hereof the accounts and books of the said firm of Knight & Smith shall be inspected and corrected, and that the amount now justly due each partner, to wit, D. B. Knight and Allan Smith, shall* be credited to them individually on the books of said firm. That in calculating the amount now due said D. B. Knight and Allan Smith, interest shall be allowed on their just monthly balances from the time they first engaged in business up to this date, at the rate of interest said firm may have paid for money borrowed by said firm during the time above specified of the banks of Boone, Iowa. That interest from this date shall be allowed said D. B. Knight and said Allan Smith on their monthly balances at the rate of interest the said firm may hereafter pay for money borrowed by said*261 firm from the banks of Boone, Iowa. It is further agreed that neither partner shall be allowed interest hereafter on his. monthly balances, when the total amount to the credit of such partner be in excess of $15,000, unless such interest be agreed to in writing. It is further agreed that neither Knight nor Smith shall at any time reduce the amount of his credit on the books of said firm to a sum less than $10,000 without the written consent of both said Knight and said Smith. Neither said Knight nor said Smith shall at any time use the firm name in any private business or speculation whatever. Witness our hands this eleventh day of June, 1884.
“ ‘D. B. Knight,
“Allan Smith.’ ”
“This contract was drawn by one Arch C. Smith, in the office of Knight & Smith, and in the presence of both'the partners, and was there signed, and after its execution was placed in an envelope indorsed, ‘Firm agreement, Knight & Smith. Private,’ and deposited in the firm safe, in the office of the firm; and I find that at the time of the execution of this contract D. B. Knight had sufficient mental capacity to comprehend and transact any .ordinary business, and to make and enter into contracts, and that there was no fraud practiced by Smith in procuring the same. No settlement of the accounts of the partnership under this contract was ever made or entered upon.
“Fourth. D. B. Knight left surviving his wife, the defendant Fanny A. Y. Knight, and two children, Harold Knight and Bertha Knight, as his heirs at law. In February, 1886, the said Fanny A. Y. Knight was appointed administratrix of his estate, and is now acting in that capacity.
“Fifth. All the assets of the firm of Knight & Smith, personal and real, upon the death of Mr. Knight, were taken possession of by Allan Smith, as the surviv*262 ing partner-of the firm, and ever since that time have been under his management and control. The amount received by him, and the disposition of the same, is hereafter shown in stating his account as surviving partner.
“Sixth. Allan Smith, surviving partner, and the administratrix of D. B. Knight’s estate, being unable to agree upon a settlement of the partnership accounts, the plaintiff on the-day of-, 1886, commenced this action to wind up the partnership, and in his petition claims that the following items, appearing on the books prior to June 11, 1884, are erroneous, to wit.”
The referee here specifies the items objected to, and makes specific findings as to each. Then follows:
“Twenty-third. "With the foregoing corrections, I find the monthly balances of the partners would be shown in the exhibit following, which is made a part of this finding.
“ Twenty-foiwth. Without any correction in the books, the monthly balances would be as shown in the following exhibit, which is made a part of this finding.”
Here follows, in parallel columns, a detailed statement of “monthly balances of D. B. Knight, as corrected, on the first of each month, and monthly balances of D. B. Knight, as on books, on the first of each month,” from May, 1870, to February, 1886. Then, in the same manner, and for the same time, the balances of the plaintiff are presented. The referee then proceeds:
“Twenty-fifth. I find that the firm of Knight & Smith paid interest for money borrowed at the banks of Boone, Iowa, at the following rates, to wit: From May 1, 1870, to January 1, 1880, at the rate of fifteen per cent, per annum; from January 1, 1880, to February 1, 1886, at the rate of 10 per cent, per annum.
*263 “ Ttventy-sixth. I find that, if interest be allowed on monthly balances, as provided by the contract set out in the third finding of facts, upon the accounts of the partners as corrected, the balance to the credit of Allan Smith on the first day of February, 1886, would be $14,733.20, and to D. B. Knight, $11,472.93; the credit allowed to Allan Smith upon the excess of his monthly balances on the foregoing basis being $3,102.43, and to D. B. Knight, $404.89. If interest be ¿llowed, as provided by said contract, from June 1, 1884, to February 1,‘1886, upon the excess of monthly balances, the balance to the credit of Allan Smith on February 1, 1886, would be $11,788.05, and to D. B. Knight, $11,068.04; the balances of Allan Smith being continuously from June 1, 1884, to February 1, 1886, in excess of those of D. B. Knight,- and the amount credited to him as interest upon such excess during said time being $157.28.
“Twenty-seventh. At the dissolution of the firm by the death of Mr. Knight, Allan Smith, the surviving partner, took possession of all the assets of the firm. 'On January 25, 1886, there was on hand the sum of $4,800.47 in cash and in bank. There was on hand a large quantity of grain, flour, feed, and mill stuff, of the value in the aggregate of $6,148.45. Allan Smith, against the objection of the administratrix, continued the business in the firm name of Knight & Smith, up to August 31, 1886, when the merchandise on hand was charged over to one Ool. William Smith, and the business carried on in his name for some time, when it was again transferred to the name of Allan Smith. No actual sale of the merchandise was made to William Smith at the time, mentioned, but the transfer was inifact for the benefit of Allan Smith, and made for the purpose of separating his own from the firm business, and of creating a rest in the partnership accounts. No inventory of the personal property,*264 merchandise, etc., on hand on January 25, 1886, was made by the surviving partner, Allan Smith, and the merchandise on hand was mingled with new purchases and new products in the operation of the mill by Mr. Smith. On April 30, 1886, Allan Smith made an inventory of the property then on hand, which he entered upon the daybook, with the value thereof. Subsequently he caused to be erased the value attached.”
This is followed by an extended itemized accounting. The referee then says:
“I find that substantially all the accounts due the firm were collected, and all liabilities liquidated, by the surviving partner, within eight months after the dissolution of the firm by the death of D. B. Knight, except the liability upon the mortgage debt to Arch O. Smith, which was paid in March, 1888. That during the eight months following the death of Mr. Knight it was necessary and proper for the surviving partner to retain and pay, at the expense of the firm, a bookkeeper, which he did do. I find that he should be allowed the sum of eight hundred dollars on his account, and so credit him. I find that Allan Smith has occupied and used the mill and elevator continuously since January 25, 1886, and enjoyed the benefit thereof. That the fair rental value and the reasonable value of the use thereof during said period, exclusive of repairs, has been the sum of one hundred and twenty-rfive dollars per month, amounting in the aggregate, to April 15, 1890, to the sum of six thousand, four hundred and thirty-seven dollars and fifty cents.”
Following the findings of fact is a summarized “account of receipts and disbursements” by the plaintiff, with a debtor balance against him of ten thousand, forty-one dollars and sixty-seven cents. The referee then concludes with the following:
*265 “findings of law.
“First. That the contract between the partners, D. B. Knight and Allan Smith, made on the eleventh day of June, 1884, and set out in the third finding of facts herein, so far as "the same provides for the allowance of interest upon the excess of .monthly balances prior to its date, is without consideration, is inequitable, provides for usurious interest, and should not be enforced. That there should be allowed the plaintiff upon the excess of his monthly balances interest from the date of said contract, to wit, June 11, 1884, to January 25, 1886, at the rate of ten per cent,
“'Second. That the accounts of the partners should be corrected in accordance with the findings of facts herein set forth.
“Third. That Allan Smith, as surviving partner, should account for the value of the merchandise on hand at the dissolution of the firm by the death of D. B. Knight on January 25, 1886, and for all moneys received by him on account of the firm from all sources, as shown .by the finding of facts.
“Fourth. That he should be credited with all disbursements for account of the debts of the firm existing at the dissolution thereof, ,and for all taxes and insurance paid on the property, and all expenses on account of repairs, or incident to closing up the partnership business, as shown in the' finding of facts herein set forth.
‘ ‘Fifth. That he should account to the firm for the sum fixed in the finding of facts, as the reasonable rental value and value of the use of the firm property by iám since January 25,1886, and up to April 15,1890.
“Sixth. That defendant Fanny A. V. Knight, as administratrix of the estate of D. B. Knight, deceased, is entitled to judgment against the plaintiff for one-half the amount found due from him to the*266 firm upon the accounting herein, from which shall be deducted the excess of his account over that of D. B. Knight’s on January 30, 1886.
“Seventh. That said Allan Smith, as surviving partner, should account for one-half of all personal property now on hand, and of all notes and accounts still on hand and unpaid, as shown by the foregoing report, excepting the cattle notes, for which he shall account for the one-fourth.
“Eighth. That the defendants he required to convey by proper deed of conveyance the undivided one-half of lot eleven (11), in block sixty-seven (67), in Boone, Iowa, to the plaintiff, Allan Smith.
“Ninth. That Allan Smith is the owner of the undivided one-half of the real estate belonging to said firm, to wit, lots 12, 13 and 14, in block 67, and lots 6, 7 and 8, in block 54, in the city of Boone, Iowa; and the defendants, Fanny A. Y. Knight, Harold Knight and Bertha Knight, are the owners each of the undivided one-half of said real estate.
“I therefore recommend that judgment be entered in favor of the defendant Fanny A. Y. Knight, as administratrix of the estate of D. B. Knight, deceased, and against the plaintiff, Allan Smith, for the sum of four thousand, three hundred dollars and eighty cents, which shall be a lien upon the interest of said Allan Smith and the aforesaid real estate; that the said Allan Smith be required to account to the said administratrix for the one-half of all personal property and other assets of the late firm of Knight & Smith, now on hand; that judgment be rendered confirming the shares of plaintiff and defendants in the real estate as herein stated, and that partition thereof be made.
“Respectfully submitted,
“Ben. P. Bikdsall, Referee.”
Extended exceptions were filed to the report, upon the hearing of which certain additional items of credit
On the twelfth day of January, 1891, the plaintiff filed his supplemental bill for review and correction of former finding and judgment, and for general relief, and also a further report, as surviving partner, “touching said firm property, and receipts and disbursements and expenses in caring for said mill, elevators, and other property of said firm from the date of the report of the referee, Birdsall, to wit, April 15, 1890, up to the time the receiver took possession, October 7,1890;” and also a “statement of the matters which entered into and affected his personal accounts” for the same time. On the ninth day of February, 1891, the cause was finally submitted to the district court, and the following, on this appeal, is the essential part of its decree:
“After a due consideration of said report, and being fully advised in the.premises, the court finds that said report, showing a net amount in the receiver’s*268 hands of $8,129.87, should be confirmed and approved, and said report is accordingly and is hereby approved and confirmed. Now, on the same day the cause comes on for hearing and trial, and, the parties appearing as before, thereupon the court, after due consideration of the records and evidence introduced by the parties, the findings reported by the referee, Hon. B. P. Birdsall, as modified and approved by the court under date of October 1,'1890, which report, as modified and approved, with the order of approval as entered thereon, is embodied as a part of this decree, reference being thereunto made, the reports of plaintiff as surviving partner, the report of S. L. Moore, receiver, the waiver filed by the defendant as to claim for rent of the mill property subsequent to April 15, 1891, and all other matters, records, and other evidence before the court material and competent to be considered in said cause, after the argument of the counsel, and after being fully advised in the premises, finds and determines that the issues involved between the parties are found in favor of the defendants. And on final accounting the plaintiff, Allan Smith, is indebted to the defendant, P. A. V. Knight, administratrix, in the sum of four thousand, two hundred and nineteen dollars and thirty-six cents. That the plaintiff is entitled to one-half the money shown in the referee’s hands by his report, to wit, four thousand, sixty-four and ninety-three hundredths dollars ($4,064.93), and that the defendants, P. A. Y. Knight, Bertha Knight, and Harold Knight, are each entitled to and own one-sixth of the money now in the receiver, S. L. Moore’s, hands, to wit, to each the sum of one thous- and, three hundred and fifty-four dollars and seventy-eight cents.”
The foregoing presentation of the record brings us to the point where we may more intelligently consider the questions presented by counsel in argument.
The first proposition for us to consider is, was there a consideration to support the promise to pay interest on the credit balances prior to the date of the contract. An inspection of the contract indicates two purposes in its making: First, an adjustment of accounts because of past transactions; and, second, some additional provisions for the future conduct of the business. Nothing in the contract indicates the thought of a final adjustment or settlement. It is plain from the terms of the contract that the parties intended to ascertain the actual property rights of each in the firm to the date of the settlement or inspection, to be made as soon as possible, and receive credit therefor on the books, which would be an accounting
To our minds, a proper position from which to view or determine the -legal effect of the agreement to pay interest on the past balances would be to' assume the contemplated settlement as final, a closing up of the partnership affairs. One or two facts should be settled in this connection. There is a claim that at the commencement of the partnership there was a verbal agreement for the payment of this interest on monthly balances. One witness gives testimony to that effect, but it is of his recollection of a conversation between the partners nearly twenty years before his testimony was taken. This testimony is, to our minds, quite conclusively overcome by the other facts in the record. The contract of June 11, 1884, contains recitals of the terms of the contract as originally made, and makes particular mention of the portions of the capital to be furnished by each. There is nothing to show that at that time there was an expectation that the capital would be furnished, except in ’ equal amounts. To this may be added the fact that for fifteen years the business was carried on without a word
From this standpoint we may consider the question presented in argument as to the legal effect of the written agreement to pay interest on past monthly balances. Having held that other provisions of the contract furnished no consideration for the promise to pay interest on past balances, we are to inquire if there is anything in the record to overcome the presumption of the law that the contract, because in writing, is supported by a consideration. Every fact which could operate as a consideration seems to be disclosed by the record.-
It is urged that the agreement to pay this interest is mutual, being made without knowledge of who would be benefited by it, and that the promise of one is a consideration for the promise of another. We may be in better condition to consider the proposition by stating the rule as to what the obligations of the parties would have been in the absence of the written contract. Had they, under such circumstances, been settling the affairs of the partnership, it may be regarded as well settled, though perhaps not without
In Reynolds v. Mardis, 17 Ala. 32, the syllabus indicates a different rule, and states it in these words: “When parties agree to invest equal amounts in their common business, and one advances a larger sum than the other, he is entitled upon settlement to an allowance of interest on the one-half of the excess so advanced by him from the date of the appropriation to the use of the firm.” The case of Clark v. Worden, supra, comments upon the holding of the Alabama case, and doubts, at least, under the facts, if it was a case of partnership, saying: “Although the court treats this as a case of partnership, it certainly was not such in a general sense, but was more in the nature of a joint
We are, then, to the point that, without the written contract, no interest on the balances could be claimed, and: from this situation we may consider the effect of the mutual promises. It is to be borne in mind that these promises or agreements were not dependent upon contingencies of the future, or the uncertainty of profits in contemplation, but an agreement based upon existing facts that were ascertainable and to be determined upon an inspection of the books. In the absence of the contract, the law fixed the rights of the parties upon the facts when' determined. The district court estimated that by the agreement, if enforceable,, the otherwise balance of eleven thousand dollars to the plaintiff’s credit would be increased to over fifty thousand dollars. Here is an advance of nearly forty thousand dollars, and what is it for? The appellant says, for his promise that, if the inspection of the books should show a balance in Knight’s favor, he should have the same advantage. Such a transaction does not invoke the rule of law that one promise is a cpnsideration for another promise. In such case the' transaction is an executory one, and the promises are such as, when performed, will come within the definition of a consideration as granting some right, interest, profit, or benefit to another, or assuming some obligation, responsibility, or loss. Neither party, in this case,
We have reserved for reference in this connection the case of Kemmerer v. Kemmerer, 85 Iowa, 193. The case was determined in this court in May, 1892. It supports the general rule we have announced, and has a direct bearing upon the particular point we are now considering. The issues involved a partnership accounting, and a question of interest upon past transactions of the firm. In the opinion it is said: “This interest the referee refused to allow, finding in effect that it was interest charged entirely upon past transactions, when there was no legal obligation to pay interest, and that the evidence as to the agreement between the defendants that said interest should be paid was conflicting. This finding was all right. There is nothing in the partnership contract providing for the payment' of interest, and the agreement to pay it, based upon transactions then past, would amount to nothing more than a gift by these partners to the firm.” The same is true in .this case. The agreement to pay interest, where, by the law, no interest could be charged, was but a gift by one partner to the other, and, not being performed, it is not enforcable.
We are not differing materially as to the real purpose or motive for this particular feature of the contract from the appellant’s view, for in argument it is said: “As has been seen, it was not an unlawful agreement to make, and each took his chances of what would be monthly fluctuating balances as the books then stood.
It is not important, in view of our holdings upon the other questions, that we should consider that of the contract being usurious.
The rental value of the mill, as found by the referee, has full support in the testimony, and we see :no reason why the conclusion should be disturbed.
Prior to the death of Knight. each partner drew from the firm one hundred dollars per month, and this fact is regarded by the appellant as implying an agreement for compensation. There being but two partners with equal interests, such a practice amounted simply do a division of profits to that extent. By what name it was called would make no difference. Nothing in the record shows that one partner, because of excessive service, was to receive more than the other, and the law, under the general rule, does not permit it. See Beatty v. Wray, 57 Am. Dec. 677. For such assistance as was necessary the plaintiff was entitled to an
But in this connection it is urged that this finding against the appellees can not be considered, because they have not appealed; the thought being that only matters of complaint by the appellant are involved in the trial on appeal. On the other hand, it is contended by the appellees that the whole ease is for trial anew, and that such a judgment should be entered as the law and the facts will warrant. Neither position, in our judgment, is correct. The appellees attach importance to the fact that in equity causes the trial is anew, and contend that it should be a trial of the whole case. On appeal in equity causes the trial is of the whole cause in so far as the appellate court is involved, but its province is not to reverse or modify judgments in favor of parties who are content with the judgment below, which fact is assumed in the absence of complaint by the party, and the legal mode of complaint is by appeal. Such a rule works no hardship, and we think it is a consistent rule of practice. Hintrager v. Hennessy, 46 Iowa, 600; Devoe v. Hall, 60 Iowa, 749; Frost v. Parker, 65 Iowa, 178, and Huff v. Olmstead, 67 Iowa, 598, are equity cases in which the rule has been announced, and the Reports contain other cases of both forms of action announcing the same rule. This appeal was taken in the light of these holdings, and they must be held as conclusive of the question.
As to the contention «of the appellant that we can not consider anew findings of fact' against the appellees by the court below, we must say that we are not aware that such a rule has ever been sustained or announced. In Frost v. Parker, supra, it was said that a party not appealing from a judgment “must be regarded as satisfied with it.” In that case this court refused to modify a decree in favor of the party not
These considerations lead us to a very satisfactory conclusion that the decree of the district court should be and is affirmed.