97 Va. 234 | Va. | 1899
delivered the opinion of the court.
The ground of the d,emurrer is an alleged inconsistency between the original and amended bills, wherefore both, it is asserted, are demurrable and no relief can be given under either of them.
It is further asserted that the amended bill is a radical departure from the original bill and makes a new case; that this is not allowable under the rules and practice of equity pleading, and is a valid ground of demurrer to the amended bill.
The original bill sets forth the sale by the executrix of D. B. Tennant, deceased, to the appellee, David Dunlop, of the interest of her testator in the good-will and tobacco brands of the late firm of D. B. Tennant & Co., composed of the said Tennant and Dunlop, and of a private tobacco brand of D. B. Tennant, used by the firm, and charges that the sale was made at a grossly inadequate price, whereby the executrix committed a breach of duty; that the breach of duty resulted in a loss to the plaintiffs and in a corresponding gain to Dunlop; that the sale was induced by the undue influence, misconduct, and fraud of Dunlop; that he has reaped all the benefit resulting from the devastavit of the executrix, and should be made primarily liable therefor; and asks that he may be made to account for the actual value of the assets so improperly obtained, with a prayer for such other and further and general relief as the nature of the case may require, and to equity may seem meet. The bill conforms in its frame and structure to that exhibited in the case of Patterson v. Bondurant, 30 Gratt. 94, where it was held that one who received a benefit arising from a devastavit committed by an executrix, knowing the facts, was primarily liable.
The amended bill repeats all the averments of the original
The amended bill does not make a new case or depart in substance from the original bill. It does not differ materially from the original bill, except'in the prayer for relief. There is no inconsistency between their respective averments. They both charge the same misconduct and fraud. The amended bill merely accentuates it by the averment of additional facts discovered since the filing’ of the original bill and the taking of testimony in the cause, which averments are not inconsistent with those of the original bill, and do not make a new or different case of misconduct and fraud, but confirm, if true, that charged in the original bill. The additional allegations of the amended bill were germane to the subject matter of the original bill, and might with entire propriety have been incorporated in it. The gravamen of both bills is the misconduct and fraud of Dunlop in obtaining the interest of his deceased partner in the property in controversy, and virtually the same evidence would be required to sustain either bill, whether the relief sought was adequate compensation, as contemplated by the original bill, or a rescission of the contract of sale, as asked for in the amended bill. The averments of the amended bill were pertinent to the case charged in the original bill, and, as above stated, might have been incorporated therein; and the complainants, being uncer
As this variance in the special prayers for relief of the original and amended bills constitutes the only material difference between them, it does not render the latter demurrable. Under the liberal rules of chancery practice which prevail in this country, and particularly in this State, there is no1 valid objection to the amended bill, and the demurrer to it, and also to the' original bill, was properly overruled. Belton v. Apperson, 26 Graft. 207; Parrill v. McKinley, 9 Gratt. 1; Ferry v. Clarke, 77 Va. 397; Hanby v. Henritze, 85 Va. 177; Anthony v. Leftwich, 3 Band. 238; Hurt v. Jones & Wife, 75 Va. 341; Hardin v. Boyd, 113 U. S. 756; Graffam v. Burgess, 117 U. S. 180; and Richmond v. Irons, 121 U. S. 27.
In the year 1867 David B. Tennant, who had been engaged for many years in the manufacture, of tobacco, associated David Dunlop with himself in the conduct of the said business, under the firm name of D. B. Tennant & Co., which co-partnership continued from its formation until the death of Tennant, on October 6, 1885. The business during the existence of the partnership was eminently successful and profitable. Dunlop, after the death of Tennant, declined to continue the business in partnership with the widow of his deceased partner, and, having decided to continue it by himself, had frequent interviews with her as the executrix of the decedent, with the view of acquiring
The complainants, who are the children and residuary legatees of D. B. Tennant, charge in their bills that the sum of $1,500 for the interest of their father in the good-will and trademarks so acquired by Dunlop was grossly inadequate compensation therefor, and that the sale for such insufficient sum was a devastavit by the executrix, in which Dunlop fraudulently participated, and from which he has reaped immense benefits. Upon this charge the issue was made up. The inquiry, therefore, is: Shall the purchase as made by Dunlop stand, or shall relief be granted; and if the complainants be entitled to relief, what shall be the nature and extent thereof? These are the main questions in the case before us for decision.
The suit was promptly instituted after the eldest child of the decedent attained his majority, and no question of laches arises as to the right to relief, if he and the other complainants be otherwise entitled to it.
It was insisted in their behalf that the purchase was made by Dunlop under circumstances that created an express trust between him as surviving partner and the executrix of the decedent, and constituted him both buyer and seller. The ground of this position is the claim that when he objected to her suggestion to have the good-will and trade-marks appraised, she proposed that he fix the price himself, and that she would accept what he fixed; that he acceded to her proposal, saying that it was well that she trusted it to him, as he would certainly do her justice; and that he afterwards made the offer of $1,500 and she accepted it.
It was next asserted that even if an express trust by creation of the parties did not exist at the time of the purchase, nevertheless, Dunlop, as surviving partner, stood under the law in a fiduciary relation to the executrix of the deceased partner, and upon him rested the burden of proving that she was fully informed as to her rights and interest in the good-will and trademarks, and of the facts necessary for the formation of an intelligent opinion as to their value, and that the compensation paid by him was adequate.
Upon the death of a member of a partnership, the entire legal title to all the partnership property passes to the surviving partner, and he becomes invested with the exclusive right to its possession, control, and disposition, but for certain purposes. TTia obligations with respect thereto are threefold: (1), To convert the same into money; (2), To pay the debts of.the partnership;
The position that the surviving partner is a trustee in the disposition of the partnership property, and stands in a fiduciary relation to the personal representative of .the deceased partner, was strenuously combatted by the able counsel of the appellee. 'To refute the position, the case of Knox v. Gye, House of Lords
Tbe language of Lord Westbury is, therefore, to be construed, we take it, witb reference to tbe particular question in bis mind for decision, whether a surviving partner, as respects tbe representative of a deceased partner, is a complete trustee, and liable to all tbe consequences resulting from tbat relation, or is only a quasi trustee. While declaring tbat be is not a trustee, either expressly or by implication, be nevertheless states tbat on the death of a partner tbe law confers on bis representative certain rights as against tbe surviving partner, and imposes upon tbe latter corresponding obligations, and then adds: “ Tbe surviving partner may be called, so far as these obligations extend, a trustee for tbe deceased partner; but when these obligations have been fulfilled, or are discharged, or terminate by law, the supposed trust is at an end.”
It is true that be also says tbat “ there is nothing fiduciary between the surviving partner and the dead partner's representative, except tbat they may respectively sue each other in equity,” but this position was vigorously controverted as “ novel ” by tbe Lord Chancellor, Lord Hatherly, a most able judge, as was also
Whether or not a surviving partner is inaccurately called a trustee does not matter. There is no magic in law in a name. It is not the name which determines his relation to the representative of the deceased partner, creates his duties, and measures his responsibility, but his dominion over the partnership property, and his obligations with respect to it. In him alone is vested the title and the right of possession, and to him alone belongs the power of its disposition, but subject to accountability for its proper disposition, to those interested. His obligations make it his duty, in the conversion of the property into money, to use “every reasonable effort to obtain its value, in order that the debts may be paid, and a just surplus for distribution be realized.' When seeking to purchase the interest of the deceased partner, instead of converting the assets into money and dividing the surplus, the relation that the surviving partner bears to the representative of the deceased partner is still in foi’ce, his obligations with respect to the assets still subsist, and they do not allow him to deal less frankly and justly. He cannot place the representative of the deceased partner at arm’s length, and seek to obtain a profitable bargain for himself. Having generally a superior knowledge of the assets and their value, it is his bounden duty, in purchasing the interest of the deceased partner, to acquaint his representative with full information as to the assets, and the facts from which their value may be estimated or inferred. It is not sufficient that he does not withhold or conceal such information, but it is incumbent on him to disclose voluntarily all within his possession or 'knowledge from which a sound judgment as to the value of the interest may be formed. He cannot remain passive, but must make a frank and honest disclosure.
In Sexton v. Sexton, 9 Gratt. 215, it was stated that the appellant, (one of the partners) in selling his interest to the other
In Heath v. Waters, 40 Mich. 465, in which, like the ease at bar, there was a controversy over the transfer by the representative of the deceased partner of certain assets of the firm to the surviving partner for inadequate compensation, the court said: “ As surviving partner he possessed exclusively the means of determining just what the assets consisted of. It was his duty, before making any bargain or other dealing with the representative of Elijah’s (the deceased partner) estate, to put her in as complete a condition of knowledge as himself. This would
It was insisted that even if Dunlop-, as surviving partner, occupied a fiduciary relation to the executrix of the deceased partner, he was released from the duty imposed by such relation as respects the matter in controversy by the intervention of competent and independent advice. There is no doubt that where a beneficiary in dealing with the trastee has sought and obtained independent advice from a person competent to advise as to the particular transaction, this fact will go far to give assurance of its fairness, and to induce a court of equity to uphold it. The foundation for the contention in this instance is the claim that the executrix had the advice of her brother-in-law, Mr. Baskerville, a man of affairs and large experience in business, and of her counsel, Mr. Mann. The evidence shows, however, that she never consulted either of them as to- the advisability of selling the interest of her testator in the 'good-will and trademarks at the price offered by Dunlop, and, moreover, that when she did consult Mr. Baskerville, he told her that he did not know enough about the value of brands and labels to advise her, but that he considered Dunlop-an honest man, and was sure that
Dunlop, having declined to continue the business in partnership with the executrix, wrote to her at Newport, R. I., on October 16, 1885, and offered to rent the factory from year to year, and to rent or buy her half of the fixtures at such price as competent persons might decide, the same having been given to her for life by the will of her husband. In this letter, he stated that he would buy the brands and good-will of the business at valuation. The executrix returned to her home in Petersburg, Va., on October 24, 1885. Between that date and November 10, 1885, they had several interviews in reference to the settlement of the business between them, and in all these interviews he assumed and claimed that the good-will and trade-marks survived to him as the surviving partner, but that he was willing, as a mere gratuity, to make her some compensation for them. On November 9, 1885, he submitted to her a proposition in writing for the purchase of the interest of the estate of D. B. Tennant in the fixtures, and for the rent of the factory and other property used in connection with the business, and offered to pay $1,000 for the good-will and trade-marks, but disclaimed any admission by such offer that they were not the property of himself, as surviving partner. He also offered verbally at the same time to pay $500 more for the “ Shellard brand. The executrix accepted his offer, and on the next day a formal contract of sale was drawn up, and the same executed by her.
As to his claim, as surviving partner, to the good-will and
He was not only mistaken as to his right thereto under the law, but the matter had been put beyond controversy by the articles of co-partnership. By them it was specifically provided • that any and all brands brought into the business by either partner should be his property at the expiration of the partnership, and all new brands established by the partnership should be considered, held, and treated as partnership property. At the time of the transfer of the.good-will and trade-marks to Dunlop by the executrix, the existence of the articles of co-partnership was unknown to her. She was not only unaware of them, but Dunlop had declared to her that he and her husband had not had any written contract of partnership after the first years, but merely a verbal contract from year to year. So that his position, as to his right to the good-will and trade-marks, was not only contrary to law, but contrary to the express provisions of the written agreement by which thg partnership was created. He stated to her incorrectly both the law and the facts.
There is no room for mistake or doubt as to his position, when obtaining from the executrix a transfer of the interest of her
He not only claimed that the good-will and brands belonged to him, as surviving partner, but stated to the executrix that the brands were not so valuable as they had been, because customers, when sending orders for tobacco, sent with their orders, more than formerly, brands or labels of their own to be put on the tobacco. This was deposed to by the executrix, and admitted by Dunlop. The evidence shows that in making this statement he was again mistaken, and that the fact was just the other way. From a paper filed by him in answer to a question as to the number of brands used" by the firm of D. B. Tennant & Co., at or about the time of its dissolution, and which shows a list of the brands of the firm and also of brands used by the firm in manufacturing tobacco for persons by whom they were owned, which last-named brands are called “ proprietary brands,” it appears that twenty-nine of these proprietary brands were used by the' firm in 1883, twenty-four in 1884, and nineteen in 1885, the year that Tennant died. The number of pounds of tobacco manufactured under them in 1883 was 284,379; in 1884, 178,583; and in 1885, 178,102. It thus appears that there was a steady decrease both in the number of proprietary brands used, and in the amount of tobacco manufactured under them. But this is not all. It shows also a remarkable increase in the quantity of tobacco manufactured under the firm brands during these same years. Thus, there was manufactured
As heretofore stated, the law required him, in purchasing the good-will and trade-marks, to put the executrix in as complete a condition of knowledge as himself. It was his duty to impart to her all information possessed or known to- him as to their value. So far from performing this duty, he omitted to-do so; and not only omitted to do so, but persistently asserted that the good-will and trade-marks belonged to him as surviving partner, and that the estate of the deceased partner had no interest in them.
In negotiating with her for the purchase, he took the erroneous position that, being surviving- partner, they were already by reason thereof his property, and that he was simply making a gratuitous allowance for any right supposed ‘by her- to belong to the estate of her testator. It is not natural, nor consonant with reason, that a sum of money given under these circumstances would even approximate their value. One does not give value for property as a gratuity.
Hor was he less mistaken in imparting to- her information as to the value of the brands and labels. They were not becoming less but more valuable. He was still less likely to offer a fair price for them under the statement, which was contrary to the fact, that they were diminishing in value.
The presumption is, therefore, strong that the price paid was much below their real value. Hot only is this the presumption under the circumstances, but the evidence is abundant that the price paid was inadequate.
It was argued in behalf of Dunlop, that the law did not au
That the good-will of a business and trade-marks, of the character under consideration, which are incidents of the business and not of the place of business or plant, with the right to use the latter in the manufacture or sale, as the case may be, of the merchandise to which they have been attached, may be sold separately from the plant or property, and also from the book debts, is, we think, not only sustained by the authorities, but is in accord with the tendency of the law, which is yet in a state of evolution, upon the subject of trade-marks, and their growing importance and increasing value in the commercial world.
In Browne on Trade-Marks, section 362, the law is thus stated: “A property in a trade-mark may be obtained by transfer from him who has made the primary acquisition, though it is essential
In Julian v. The Hoosier Drill Co., 78 Ind. 408, which was a suit by the assignee of a trade-mark to recover damages for an infringement thereof, one of the defences relied on was that there was no valid assignment of the trade-mark. The assignor had devised and adopted the word “ Hoosier ” as a trade-mark on certain grain drills manufactured and patented by him, and subsequently transferred and assigned to the complainant the letters-patent, and also the right to and property in said trademark.
“ The assignment and transfer,” said the court, “ carried with it to the assignee the exclusive right to manufacture apd sell the grain drill specified in the letters-patent, and to carry on the business of making and selling the same. It was a transfer to appellant of the right to carry on the business in which Joseph Ingles had been engaged, and in connection with which he had used said trade-mark. * * * * The assignment, and the right to make it, did not, in any way, depend upon the time at which the appellant might engage in business. Uor was it necessary to the validity of the transfer of the trade-mark that the place of business or drills actually manufactured should be transferred. It was enough, if the right to engage in the business was assigned. As incident to the assignment of this right, it was quite competent to assign the right to the trade-mark.”
In The Dixon Crucible Co. v. Guggenheim, 3 Am. L. T. R. 288; s. c. 2 Brewster, 321, Judge Paxson, after citing the authorities and stating that property in trade-marks may be obtained from him who has made the primary acquisition, said: “The true rule to be dedu'ced from these cases would appear to be this: That the property or right to the trade-mark may pass by an assignment or by operation of law to any one who takes at the same time the right to manufacture or sell the particular mer
But it was further contended that, conceding that the good-will and trade-marks may be sold' separately from the property of the business and the book debts, yet the surviving partner, having the right to carry on a similar business in competition with the purchaser, though not in the old name, nor as the successor of the old firm, no one would buy the good-will and trade-marks under these circumstances, and that consequently they had no value beyond what the executrix of the deceased partner could induce the survivor to pay for them. We would be loth to hold that the measure of accountability was wholly arbitrary, and rvas only what the surviving partner might choose to give, although the value was really much greater. But, aside from this, whether any one would have given more or not than Dunlop paid is merely conjectural. It is not capable of proof or demonstration. There was no trial to ascertain this. The good-will and brands were not offered for sale to the public. Ho one but Dunlop' was given an opportunity to buy. There was no competition, and no valuation. The contention that no one would have bid at all under the circumstances, or given more than Dunlop, rests wholly within the domain of opinion. It has no other or more substantial foundation. Dunlop acquired from the executrix of the deceased partner the interest of his estate in the good-will and brands at apparently a greatly inadequate sum, when he should have paid the fair value thereof, and the complainants are now entitled to recover for the devastavit.
Under the circumstances shown, and in view of the relation that a surviving partner bears to the representative of a deceased partner, the mistaken claim of right by Dunlop to the said assets,
It is next to be considered what is the proper relief to be given. Shall the transfer of the good-will and brands and labels stand, and Dunlop be required to pay adequate compensation, or must the sale be rescinded, the property sold at public auction, and the proceeds divided between him and the estate of Tennant, and the profits which have been realized from the use of the brands since the purchase be ascertained, and likewise distributed?
The court is of opinion that, under the circumstances of the case, the proper relief to be given is adequate compensation according to the value of the good-will and trade-marks at the dissolution of the firm. Where a surviving partner is not the representative, nor one of the representatives, of the deceased partner, he is not interdicted from contracting with such representative; and if by agreement with such representative he has acquired the interest of the deceased partner for an inadequate consideration, through some mistake of fact, or obtained the transfer of some asset of the firm under a mistaken claim of right, wherefore right and justice call for redress, the proper relief, in the absence of all fraud, is the real value of the interest or asset. This measure of relief satisfies the legal right of the estate of the deceased partner. It restores to it all that it was originally entitled to, repairs fully the injury, and leaves no just ground of complaint.
The nature and extent of the relief granted, where the purchase was made or the transfer obtained without fraud, should not be such as to deter a surviving partner from purchasing the interest of a deceased partner in the property of the partner
In a case where the survivor has continued the business and used the assets of the firm, and it is plainly just that he should be made to account for profits—so many elements, labor, skill, foresight, and other personal qualities, and fortunate business connections, as well as capital, combine to create profits—that it is often most difficult to estimate with any degree of accuracy the proportion of profits to be attributed to capital and what to other elements; and any estimate is at best conjectural, and liable to do injustice.
Therefore, our conclusion is, upon a careful consideration of the whole case, to reverse the decree of the Circuit Court, and remand the cause, with directions to the court to ascertain the value of the interest of the deceased partner at the dissolution of the firm in the good-will, brands, and labels purchased from his executrix by the surviving partner, and to decree that the appellee, Dunlop, pay the same to the complainants, subject to a credit for the amount paid to the" executrix by him for the said property, with interest on the balance from January 1, 1886, to which period the partnership was extended by agreement between him and the executrix to enable him the better to wind up the business without loss.
Reversed.