Wayt v. Peck

36 Va. 434 | Va. | 1838

Lead Opinion

Parker, J.

I am aware that Jacob Dull, the surviving partner of the intestate, had a right to the custody of the partnership effects, for the purpose of paying the debts and settling the concern ; and if he had exercised the right, and none of these effects had actually come to the hands of the administrator of the deceased partner, he could not have been charged, without gross negligence in having the partnership affairs adjusted, and the balance ascertained and paid over to him. But here, by an agreement with the surviving partner, he took possession of the partnership effects and sold them, and was to pay the partnership debts and divide the balance. This sale was made in September 1824, and the present suit was instituted in 1829, after he had had ample time allowed him to pay the debts, if any, and to administer the moiety coming to him, according to the tenor of his official bond. These effects were, in fact, legal assets in his hands, subject only to a charge which it was incumbent on him to establish. He was not merely Jacob Dull’s agent in this arrangement; for he was a tenant in common with him, having a community of interest, and, as such, entitled to hold the partnership effects, if he happened to be in possession of them, until required for payment of debts, or for distribution by a court of equity. They might have been taken under execution by a creditor of his intestate, and the court of law would not have taken notice of the equitable rights arising out of the partnership, but have left them to a court of equity. Ram on Assets 317. Law Library, vol. 8. p. 209. 210. 2 Wms. on Executors 1022. That is to say, Jacob Dull could only in equity have recovered a moiety after the partnership debts were paid; and in the mean time they would have been treated as legal assets. That this moiety should have been accounted for in 1835, when this suit was tried, appears to me to be reasonable, from other considerations. The administrator having undertaken to sell the partnership effects and pay the debts, it was his duty to use reasonable diligence in the execution of that trust. If they had remained in the hands of the surviving partner from 1824 to 1835, the administrator having unduly delayed to bring him to a settlement and to collect his intestate’s share, he would be liable to creditors for any amount they could establish by probable evidence. A fortiori he is liable, when he has the assets in his own possession, and has taken no steps to ascertain his intestate’s share. His conduct was a breach of his official bond, and the only question before the jury would be as to the amount of the damages. They had the materials before them for settling the account, furnished by the administrator himself, who by his own statement had paid but 200 dollars of partnership debts, whereas the sale amounted to 408 dollars 76 cents, which, after paying Jacob Dull one moiety, left more than enough to pay the debt for which suit was brought. After the lapse of 11 years, the jury had a right to presume there were no other partnership debts; and if the result of Jacob DulVs suit against the defendant, brought in 1831, seven years after the trust commenced, should shew the contrary, and charge him farther, it would be a loss brought about by his own gross negligence, which ought not to affect the creditors of his intestate. If, after eleven years laches, they are not entitled to have his account settled by a jury, and the balance considered as assets in his hands, how long must they wait ? Must it be until the suit is decided between him and the surviving partner, which may, for any thing that we know, be depending many years, and which we have a right to presume was rendered necessary by his own laches in not rendering an account to Jacob Dull from 1824 to 1831 ? I think not. I am therefore of opinion that the judgment of the circuit court should be reversed, and that of the county court affirmed. But I submit these impressions with much diffidence, since they differ from those of my brethren, who think the judgment of the circuit court ought to be affirmed.

Tucker, P.

The question in this case is, whether there was sufficient evidence of assets before the jury. The only assets pretended consisted of the interest in the social effects of a partnership concern between the decedent and his brother. Now, although it is true that upon the death of one partner, his administrator is tenant in common of the property in possession with the surviving partner (Gow on Partn. 376. Montague on Partn; 136. 2 Chitty’s Black. 399. in note. Co. Litt. 182a.) it is not less true that the social effects cannot be applied to the discharge of the individual debts, until all the social debts have been discharged. Montague 99. Gow 157. Id. 223-228. Ex parte Ruffer, 6. Yes. 126. Ex parte Williams, 11 Ves. 5. And though an execution against an individual partner may be levied on his interest in the tangible property of the firm, yet I have no doubt that Gow has truly stated the law to be, that an injunction would, on a proper case, be allowed in equity to stay proceedings under the execution, until the proper accounts are taken, and it is ascertained what interest the debtor has in the partnership stock; and if he has none, the injunction will be made perpetual. For, “ in case of dissolution,” says lord Eldon (in Crawshay v. Maule, 1 Swanst. 506.) “ nd person in possession of the property can make any use of it inconsistent with the purpose of winding up the affairs of the concern.”

In this case, then, until it is shewn by a settlement of the partnership accounts, that there is a surplus after winding up the concern, and what that surplus is, it cannot appear that any part of the social effects is assets of the deceased partner’s estate. Now, if the surviving partner had taken possession of the effects, as he well' might, for the purpose of winding up the concern and paying the debts, it is palpable that until the accounts were settled, and he paid over the balance to the administrator, that balance, if any, would not have been assets. And even admitting that where an executor has grossly delayed the recovery of the decedent’s choses in action, he may be made responsible for them as if received, I do not think the mere lapse of time in this case would justify such a measure, when it appears that a suit is depending for the settlement of the partnership concerns, and there is no evidence that it has been unnecessarily delayed, but a presumption to the contrary, as the surviving partner, and not the administrator, is the complainant.

Nor do I think the fact of the winding up of the concern being intrusted to the administrator, makes a difference. He is bound, in faith of his agreement, as well as in law, not to misapply the funds, and to account fairly with the surviving partner. He alleges thal he has paid 200 dollars, and doubtless contends that there is 200 dollars surplus; and if so, the relator will at some future time get his money. But it would seem, the surviving partner is still asserting a claim against the administrator. If he should shew that besides the 200 dollars Peck has paid, he himself has paid other 200 dollars, then he is entitled to the whole amount in Peck’s hands. The jury ought not, in the dark, to have decided this matter, nor was it competent for them, or the court, to settle accounts between Peck and the surviving partner, in this suit between the justices and Peck, since their opinion of the matter would be no protection to him against paying the money over again ', . . to the surviving partner.

I am of opinion, therefore, that the judgment of the county court refusing a new trial was rightly reversed, and that the judgment of reversal must be affirmed.

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Concurrence Opinion

Cabell and Brockenbrough, J.

concurred in the opinion of the president.

After the delivery of the foregoing opinions, Baldwin requested to be heard, and was allowed to argue the case. Upon the argument (which was before a full court) the opinions were as follows—

Brockenbrough, J. It is a well established principle, that if a partnership be dissolved by the death of one of the partners, the executor or administrator of the deceased partner becomes tenant in common with the surviving partner, of the partnership effects in possession. Gow on Partn. 337. It is also a well established principle, that an individual creditor of a partner, having obtained a judgment separately against him for his own separate debt, may issue his fieri facias and cause it to be levied on the social effects, and the sheriff must seize the whole of them, though he may not sell the moiety, but an undivided moiety of the whole; and a vendee of the undivided moiety becomes tenant in common with the other partner. Gow 224. Shaver v. White & Dougherty, 6 Munf. 110. It would seem to follow, that if a judgment be rendered against the administrator of a deceased partner, for the said partner’s individual debt, a fieri facias against the goods of the intestate in the hands of the administrator may be levied on the tangible goods of the partnership, and an undivided moiety of the whole may be sold to pay the debt of the deceased; for the administrator is tenant in common with the surviving partner; and it might perhaps be contended that if Jacob Dull, the surviving partner in this case, had retained the possession of the partnership effects, a fieri facias against George Dull's administrator might yet be levied on those effects. But it is not necessary to maintain that position in this case. For here, Peck the administrator of George Dull was not only tenant in common with Jacob Dull the surviving partner, but, by agreement with the latter, he obtained actual possession of the social effects, and was bound both by agreement and by law to pay off first the partnership debts, and then to divide the surplus between himself and his cotenant in common. By thus obtaining possession of the partnership goods, he became chargeable, as administrator, with the undivided moiety of them, as legal assets in his hands. “ Whatever comes to the executors’ hands, or they are intrusted with as executors, shall be assets at law." 2 Fonbl. Eq. 401. 3d. am. edi. 622. See also 2 Williams on Executors 1022. Bac. Abr. Executors. H. 2.

These assets were not less legal, because there was a lien on them to pay the partnership debts. Vincent v. Sharp, 2 Starkie’s Cas. 507. 3 Eng. Com. Law Rep. 451.

In cases of this sort, as the social effects are first liable to pay the social debts (according to the maxim, qui sentit commodum, sentire debet et onus) the separate creditor has no right to more of the partnership property than the separate interest of that partner, which is, in fact, a moiety of the surplus after paying the partnership debts. If, then, the fieri facias be issued against the partnership effects, a bill in equity may be filed by the solvent or surviving partner, to take an account of what is due to such partner, and for an injunction in the mean time. Gow 227. 1 Madd. Ch. 136. And I presume, that on the case being brought into equity, that court will distribute the surplus funds between the solvent or surviving partner, and the creditor of the insolvent or deceased partner, according to their several rJghts. Although the surviving partner may go into equity, yet why should it be required, in this case, that the creditor-of the deceased partner should become plaintiff in equity P Jacob Dull had surrendered the possession to Peck, who agreed to sell the goods, pay off the partnership debts, and divide the surplus. Peck, therefore, had the game in his own hands. He did sell the goods. It was just as easy for him to prove at law, as in equity, how much of the proceeds he had paid towards the partnership debts, and of course how much surplus remained in his hands.

When Peck was sued as administrator in the first instance by Hall, he might, on the plea of fully administered, have given in evidence to the jury the payment of partnership debts to the full extent of the social effects in his hands, and if he had done so, his plea would have been supported : or if he had proved debts paid to a smaller extent, the jury might have ascertained the surplus in his hands, and found against him the moiety of that surplus. To that extent, he would have been found guilty of a misapplication of his intestate’s funds. It would seem, however, that in the first action Peck made no such defence; but still it was competent for him and his sureties to make the same defence in the present action on the administration bond, and the jury did in fact make the enquiry, and found a surplus of assets more than sufficient to pay the debt. In this I see no error, and no prejudice to the rights of the deceased partner.

I am therefore for reversing the judgment of the circuit court, and affirming that of the county court.

Brooke, Cabell and Parker, J. concurred in opinion to reverse the judgment of the circuit court, and affirm that of the county court.

Tucker, P. adhering to his opinion already delivered in the cause, made the following additional remarks:

The action in this case being for a devastavit, it was incumbent on the plaintiff to prove that the assets in question actually came to the administrator’s hands, or have been lost by his negligence, or that, from the delay to reduce them into possession, he ought to be charged with them as if collected.

As to the first—They were not in his hands as administrator. They were placed there upon the faith of their being first applied to the payment of partnership debts. They were moreover in his hands liable to those debts in the first instance, since “ no person in possession of partnership funds can make any use of them inconsistent with the social purposes.” They were thus impounded in his hands. They were there in double trust, bound both by contract and by equity.

As to the second—It is not pretended that the assets have been lost.

As to the third—Though I am not aware that there is any case at law, impugning the general principle that choses in action are never assets until reduced into possession, (Bac. Abr. Executors. H. 2. 1 Salk. 207. 314. Shep. Touch. 497. Wentworth’s Office of Executor, ch. 6. p. 65.) or deciding that an executor shall be charged with a debt by unreasonable delay in collecting it, yet as equity will so charge him (2 Bro. C. C. 156. 1 Madd. Ch. Cas. 162.) I will concede, for the sake of the argument, that such would be the case in a court of law. But then the unreasonable delay must be proved. Now, although a long time has elapsed, yet the record of the suit between the administrator and the surviving partner not being before us, it is impossible to say that the delay has proceeded from the fault of the administrator. Every presumption is against it, as the surviving partner, and not the administrator, is plaintiff. It would therefore be grossly unreasonable to compel him to pay away to the relator, funds which are this moment demanded by another. The true controversy, in fact, is between the creditor and the surviving partner: the administrator is but a stakeholder. To make the stakeholder pay while the court of equity is proceeding against him, would be unjust and unprecedented. If the creditor desires to hasten the proceedings, and contest the surviving partner’s claim, he may introvene. If he does not, he should await the result.

I remain of opinion to affirm the judgment.

Judgment of circuit court reversed, and. that of county court affirmed.-