181 Pa. 294 | Pa. | 1897
Opinion by
This is a bill for an account, an injunction and other relief by the appellant against its mortgagee and lessee, which was in possession under a lease reserving a rent of twenty per cent of the gross receipts of the road, to be applied, to the'paymenh of taxes, certain liens, and the debt of the lessor to the lessee. The duty to account is not denied but the defendant claims that it has from time to time during the running of the lease accounted fully. On this point the master found in favor of the appellant, and holding that there had not only been no such accounting as the law required, but also that the defendant had failed to keep such books as enabled it now to account fully, he reported that the defendant should be enjoined from proceeding on its mortgage. Recognizing however, that this was as he describes it himself, a “ radical position ” "which the court might not approve, the master presented also an “ alternative report” in which the evidence is gone over with great care and skill, and an account stated, in which the amount due from appellant to defendant is fixed at $11,217.34, a little more than one third of the sum claimed by the defendant.
The court below declined to approve the master’s first recommendation, and adopted the alternative report. This action is the most important error alleged by the appellant. The assignments on this point however cannot be sustained. A conclusive answer is given by the learned judge below in the suggestion that as there was in 1882 an admitted debt of appellant to defendant, of $19,336.78, the failure to state an account correctly cannot raise a conclusive presumption of payment. But the learned judge went farther. During the larger part of the period involved the defendant sublet the road, and the judge finds that although the defendant itself did not keep such
The learned judge then took up the alternative report and examined the account upon the evidence with great care, coming finally to a conclusion in substantial accord with the master. In so doing he laid down a rule at least sufficiently strict against the defendant. “ The standard of duty imposed on the defendant by the agreement of October, 1882, does not differ materially from that imposed on the usual mortgagee in possession. They are bound to account not only for what they actually received but also for what they should and could with reasonable care and attention have received. . . . While the agreement provides that the defendant might charge such rates as might be lawful and might seem best to it for its interests, the spirit of the agreement was that the road should be operated in the interest of both parties.” This rule the learned judge appears to have applied consistently throughout his examination of the account. The bone of contention, as he says, was the amount of the gross receipts, which was the agreed measure of the rent. As to amounts actually received there was no serious dispute, but it was claimed that defendant had failed to obtain earnings which it should have done, especially in the years 1885 to 1892. The railroad leased was a short road used principally for the development of lumber territory. In 1885 the sublessee, the
Where a business is conducted by one who is not the exclusive owner, but is accountable in part as a quasi trustee to another, the rule undoubtedly is, as held by the learned court below, that it must be conducted with fair regard to the interest of both parties, and equity will scrutinize closely where there is any reason to suspect fraud, or even any opportunity for unfair advantage. But where as in the present case the interests of both parties are the same, to get the largest rent possible for the property, there is a presumption that the best was done which the circumstances permitted. Rates and prices
Decree affirmed with costs.