Gunnell v. Bird
77 U.S. 304 (1869)

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U.S. Supreme Court

Gunnell v. Bird, 77 U.S. 10 Wall. 304 304 (1869)

Gunnell v. Bird

77 U.S. (10 Wall.) 304

Syllabus

1. In stating partnership accounts, where one partner has had entire charge of the business, he is to be debited with the whole capital placed in his bands as well as with the proceeds of sales realized by him.

2. If part of the capital consisted of stock which has been used in the business or disposed of and the proceeds charged against him, he should be credited with such stock as a disbursement to the amount at which it was originally charged against him.

3. An allegation in an answer entirely impertinent to the bill cannot be used as evidence for the defendant, even though the plaintiff neglect to file a replication.

On the 1st of May, 1845, Gunnell on one side and Bird and Hepburn on the other entered into co-partnership in the lumber business as equal partners, entitled to an equal share of the profits. Gunnell was the active partner, and put in, as his part of the capital, a stock of lumber valued at $6,627.56, and Bird and Hepburn put in $7,775.65 in cash, making a joint capital of $14,403.21. The business was carried on for four years, during which period the gross amount of sales was $93,471.11, and the disbursements were, for lumber purchased of others, $55,146.55; for general expenses, $12,242.95; for lime, $732.18; and for rent, not contained in the other accounts, $111, making a total of $68,232.68. At the termination of the partnership, the stock on hand, books, and unsettled accounts were turned over by Gunnell to Bird and Hepburn, who collected $7,775.68 (including what they had previously received), and retained in hand bad and uncollected debts to the amount, in 1852, when, as hereafter mentioned, the case came before the auditor, of $5,461.56.

The parties were unable to agree upon a settlement of the partnership accounts, and Bird and Hepburn filed their bill in August, 1850, against Gunnell to obtain an adjustment. After answer, an auditor was appointed, who reported in

Page 77 U. S. 305

August, 1852, that Gunnell was indebted to Bird and Hepburn in the sum of $3,001.56, with interest from the 1st of May, 1849, the time of the dissolution of the partnership. The auditor stated the account thus:

The total sales during the partner-

ship made by the defendant. . . . $93,471.11

The total amount of lumber and

other articles purchased by the

defendant for carrying on the

business . . . . . . . . . . . . $55,146.55

And as increased by lime purchased,

not included in the above amount. 732.18

---------- $55,878.73

Amount of the expenses of conducting

the business . . . . . . . . . . . $12,242.95

And as increased by rent still

unpaid, and not included in the

above. . . . . . . . . . . . . . . 111.00

And by interest on the difference

of capital . . . . . . . . . . . . 183.52

---------- 12,537.47

Amount of bad and outstanding

debts, property &c. . . . . . . . 5,461.56

---------- 73,877.76

----------

$19,593.35

Gunnell's capital. . . . . . . . . . $ 6,627.56

Bird and Hepburn's . . . . . . . . . 7,775.65

---------- 14,403.21

----------

Net profit . . . . . . . . . . . . . $ 5,190.14

==========

Half to each . . . . . . . . . . . . $ 2,595.07

==========

Gunnell's capital. . . . . . . . . . $ 6,627.56

His share of the profits . . . . . . 2,595.07

---------- $ 9,222.63

Bird and Hepburn's capital . . . . . $ 7,775.65

Their share of the profits . . . . . 2,595.07

Interest on difference of capital. . 183.52

---------- 10,554.24

==========

Capital and profit and interest due Bird and Hepburn:

Bird and Hepburn . . . . . . . . . . . . . . . . . . . . . . $10,554.24

Collected by them since the dissolution, and amount of their

individual accounts on the books of the complainants, as

shown. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,552.68

----------

Balance of cash due to the complainants on the

defendant's hands . . . . . . . . . . . . . . . . . . $ 3,001.56

==========

Page 77 U. S. 306

Both the complainants having died, a bill of revivor was afterwards filed; a pure bill of revivor, stating only the facts necessary to have the cause revived, and the proceedings continued from the point reached when the complainants died, and concluding with the prayer for a writ to the defendant to show cause why the suit should not be revived.

Rule No. 56, regulating equity proceedings, provides in such case that if no cause to the contrary be shown by next rule day, "the suit shall stand revived as of course." The subpoena was served in June, 1859. No answer was made by the defendant until October following, and so the suit stood revived on the first Monday of August at latest.

Then the defendant, in October, filed an answer to the bill of revivor, admitting the facts stated in the bill but going on to state new matter as to the conduct of the complainants in regard to the books &c., and setting up that Bird and Hepburn should be charged with all the bad and uncollected debts, because by the use of due diligence they could have collected them, but had failed to do so.

To this answer no replication was put in. The matter being referred again to the auditor, he simply affirmed his old report.

Exceptions were taken to the report by both parties, but it was confirmed by the special term of the court, whose decision was affirmed by the general term. From that decision an appeal was taken to this Court, and the question now before this Court was whether the auditor's report was correct.

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