1. The court reverses a decree where the court below affirmed a
report of a master finding (on evidence not competent, and in the
face of answers by surviving partners responsive to a bill) that
the interest of a complainant's intestate in a partnership was
one-third, the answers averring that it was but one-eighth.
2. Where a person sues in chancery as administrator of a
deceased partner, to have an account of partnership concerns,
alleging in his bill that he is the sole heir of the deceased
partner, the fact that he is not so does not make the bill abate
for want of necessary parties, since a decree in his favor as
administrator would not interfere with the rights of others who
might claim a distribution after the complainant received the money
decreed to him.
3. Where a cross-bill and answers are filed in a case and the
decree undertakes to dispose of the whole case, it should dispose
of the issues raised in them.
4. It is not error in an appellate state court giving judgment
against an appellant to include in the judgment sureties in the
appeal and writ of error bond. By signing the bond, they become
voluntary parties to the bond and subject themselves to the
decree.
5. On a bill by the representatives of a deceased partner
against surviving partners for an account, these last should not be
charged with the sum which the partnership assets at the exact date
of the deceased partner's death were worth, but only with such sum
as by the use of reasonable
Page 84 U. S. 418
care and diligence they could get for them in closing the
partnership business.
6. Nor should they be charged with the value of real estate of
the partnership the title to which is left by the decree charging
them in the heirs of the deceased partner.
Mrs. Huntington, widow by a former marriage of Nathan Webb, and
administratrix of his estate, brought this, a suit in chancery,
against W. H. Moore and W. C. Mitchell, as surviving partners of a
firm of which her husband, whose sole heir by the laws of Texas she
alleged herself to be, was a member at the time of his death. The
object of the bill was to obtain a settlement of the partnership
transactions, and she alleged that a large sum was due her on such
settlement.
It admitted of no doubt that Moore and Mitchell, who had been
doing business at Fort Union, in New Mexico, as post suttlers and
general merchants, prior to 1859, in that year took into their
partnership the decedent, Webb, who had previously been one of
their clerks, and that in the year 1863, they started a business in
Southern New Mexico and El Paso, Texas, which was placed under the
especial charge of Webb.
It was also agreed that in regard to this latter business Moore,
Mitchell, and Webb were equal partners, the interest of Webb being
one-third.
In reference to the business at Fort Union the complainant
alleged in her bill that her husband, on joining the partnership,
put into its capital stock $16,000, and was taken in as an equal
partner, and that written articles of agreement to that effect were
signed by the parties. The defendants, Moore and Mitchell, who were
required to answer under oath, did so, and while admitting the
partnership, denied that Webb put in any capital, and averred that
he was taken in for his business qualities. They denied that any
articles of agreement were made or signed in writing, and they
denied that his interest was one-third, and alleged that it was to
be one-eighth.
Page 84 U. S. 419
As the transactions of the Fort Union branch of the concern were
much the largest, and as nearly all the profits claimed by the
complainant were made here, the difference was important.
The defendants denied also that the complainant was sole heir of
their late partner, and asserted, contrariwise, that he had left,
surviving him, his mother, who had an interest in his estate, and
was a proper and necessary party, without whom the cause could not
proceed.
The defendants filed a cross-bill against the complainant, which
she answered.
No written articles of partnership as to the Fort Union business
were produced or shown to have been made. One
Shoemaker,
father of the complainant, and "very intimate with Moore,"
testified in 1870 that in 1862 Moore had told him, "as near as the
witness could recollect," that
"all the partners were jointly interested in the business of the
firm. He never stated that the interests of the members were equal;
neither did he ever state that they were not equal until a year and
a half after Webb's death; and I never, until that time, heard
anything to raise a doubt of Webb's equal interest."
Houghton, a brother-in-law of Webb, stated that he
"had frequently heard Webb say, and at various times and places,
that he was a full and equal partner in both concerns, and in all
the various branches and ventures of the firm at Fort Union. On one
occasion, he referred to the equality of their interests in the
counting room of the suttlers' fort."
"To the best of my recollection," said the witness, "W. H. Moore
was in the room. He took no part in the conversation, and I am not
aware whether he heard what was said or not." For the rest, the
evidence as to the extent of Webb's interest in the firm at Fort
Union rested chiefly on the bill and answers.
The case being referred to a master, he held that the interest
of Webb was one-third, and on this basis reported $97,596.19 due by
the defendants, charging the defendants in such a way that, as his
report seemed to indicate, they were charged as to come items twice
for the same thing,
Page 84 U. S. 420
charging them with property at the value
which it had at the
date of the decedent's death, and charging them with real
estate the title to which was still in the decedent.
Sixteen exceptions to this report were filed by the defendants.
Certain particulars of the report, and exceptions to them
respectively, which were taken, are stated further on, in the
opinion of this Court in passing on them. They are, therefore, not
more fully given here.
The Supreme Court of New Mexico, to which the case was taken on
appeal from the district court of the territory, where it
originated, reduced, "for errors apparent on the record" -- though
for what errors did not anywhere appear, nor on account of which of
the sixteen exceptions filed -- the sum found by the master to
$72,920.75, and "in all other respects" affirmed it, and for the
amount of $72,920.75; including in its affirmance, of course, the
fundamental part by which the master assumed that Webb's interest
in the Fort Union firm was one-third. In giving its decree of
affirmance, the supreme court adjudged that the complainant
(appellee in the case before it) should have judgment against the
securities in the bond for an appeal to that court, for the amount
of the judgment, interest, and costs.
* The
Page 84 U. S. 421
cross-bill was not in any manner referred to, and remained
undisposed of.
The defendants now appealed to this Court, assigning very
numerous errors, and among them:
A disregard of the proofs in the matter of Webb's interest in
the Fort Union firm; the fundamental matter of the suit.
A want of necessary parties, in the omission of the mother as
one.
Decreeing finally upon the complainant's bill and the
respondents' answers, without disposing at the same time of the
issues raised upon the cross-bill.
Making a decree against the sureties in the appeal bond.
Double charges in the master's report.
Charges on wrong principles, as
ex. gr. (a) of the
estate at its value at the date of the decedent's death; (b) of
real estate over whose title the surviving partners had no
control.
MR. JUSTICE MILLER delivered the opinion of the Court.
We are of opinion that the ruling which decided the interest of
Webb in the Fort Union branch of the concern to have been one-third
was erroneous. No witness ever saw any articles of agreement. It is
not contended now that any such were proved to have had an
existence. No witness was ever present at any conversation between
the partners on that subject. One witness, a brother-in-law of
Webb, states that he heard Webb say he was an equal partner in the
business, which statement was made while Moore was in the room
where it was said, but he cannot say that Moore heard it, or that
it was said in his immediate presence. Other declarations of the
decedent are proved to the same effect, but they are not competent
evidence. The statements of Moore and Mitchell are explicit
responses to allegations which they are called on to answer, and
they are unshaken by anything in the record. It must be held
that
Page 84 U. S. 422
the interest of Webb in the Fort Union branch of the business
was only one-eighth.
This necessarily reverses the decree, but other points demand
attention.
It is asserted that the suit cannot proceed because the mother
of decedent is not made a party, as she is one of his heirs-at-law.
But this is not a suit for distribution, and although the
complainant does assert herself to be sole heir, her suit may,
nevertheless, be sustained as administratrix, in which right she
also complains. A decree rendered in her favor in that capacity
would not interfere with the rights of others who might claim of
her a distribution after she received the money. That objection is
not, therefore, tenable.
A cross-bill was filed by defendants against complainants, which
was answered. No notice was taken of it in the final decree, which
should have been done, though the court undoubtedly supposed it was
disposing of the whole case. On the return of the case, this may be
corrected, and if on the next hearing the plaintiff in the
cross-bill are entitled to any relief, the pleadings are a
sufficient foundation for a decree in their favor.
The master presented two schedules or separate statements of the
two branches of the business. The Texan and Southern New Mexico
venture he styles the firm of N. Webb & Co., and the original
partnership W. H. Moore & Co. To this there seems to be no
objection. Numerous exceptions were taken to his report, which were
overruled, and a decree for $97,596.19 was rendered in favor of
complainant. This sum was reduced on appeal to the supreme court of
the territory by the sum of $24,675.44, and a final decree rendered
there for the remainder. But on what ground this deduction was
made, or to what exception it is referable, does not appear.
The decree was rendered in the supreme court jointly against the
defendants and their sureties in the appeal bond, and it is alleged
for error that no such judgment could be rendered against the
latter. But there is no error in this. It is a very common and
useful thing to provide by statute
Page 84 U. S. 423
that sureties in appeal and writ of error bonds shall be liable
to such judgment in the appellate court as may be rendered against
their principals. This is founded on the proposition that such
sureties, by the Act of signing the bond, become voluntary parties
to the suit and subject themselves thereby to the decree of the
court.
Other exceptions to the report of the master, of considerable
value in amounts, seem to us to be well taken.
1. In the schedule which refers to the business of N. Webb &
Co., the assets are charged to defendants at $78,879.16 for goods,
wares, and merchandise and $76,103.03 for debts due and owing to
the firm.
Immediately after this, the defendants are charged in items Nos.
3, 4, and 5 with cash received by W. H. Moore of $10,258.75,
$8,166.70, and $2,000.
It seems to us that these items are for money received on
account of assets already charged or for debts collected already
charged, and are therefore twice charged against defendants.
2. So in the schedule of W. H. Moore & Co., the goods on
hand at Fort Union July 2, 1866, are charged to defendants at
$182,656.71 and debts due the firm at $322,958.77.
Looking to the exhibit in the answer of Moore, on which this
estimate is based, it is quite clear that in this latter sum, the
item of $101,330.95, due by Moore, Adams & Co., is for all or a
part of the goods charged in the first item of $182,000, purchased
at the time that inventory was taken, and counted afterwards as
part of the assets of the old firm. It is thus charged twice
against defendants.
3. The defendants are credited in the schedule of N. Webb &
Co. with fifty percent of the debts due the firm after deducting
what Webb and his wife owed that firm, and in the other schedule
they are credited with $100,000, both for bad debts. This may or
may not do justice, and it may possibly be the only approximate
mode of doing it. But it goes upon the ground of charging the
defendants with everything at the date of the decedent's death at
its value at that time. Such is not the true rule. It was a legal
right
Page 84 U. S. 424
of the defendants, as surviving partners, to close out the
concern, collect and dispose of its choses in action and its
property, pay what it owed, and then pay over to the plaintiff her
just share of what was left. They were not bound to become
purchasers of the decedent's interest at a valuation. But they were
bound to use reasonable diligence and care in closing out the
business and in taking care of the decedent's interest. If they
used such care and diligence, they are only liable for what was
realized in their hands when it was done. If they did not, they are
liable for what might have been realized by the use of such care
and diligence. In this latter view, it is not now possible to say
with accuracy what the state of the account should be, and it is
the duty of the master to ascertain this and make proper report on
this point as well as others.
4. Again, while the defendants are charged with the value of
certain real estate of the partnership, the title of it, which is
in the plaintiff, is left there by the decree.
In short, the basis of the account being entirely erroneous in
assuming the interest of Webb at one-third instead of one-eighth in
the partnership of W. H. Moore & Co., and considering the loose
and unsatisfactory character of the whole report, among which are
doubtless other errors than those above mentioned, it is utterly
insufficient as a foundation for any decree. Nor can we here
undertake, with no other report, to render one with which we would
be satisfied.
It is therefore ordered and decreed that the decree of the
supreme and district courts be reversed, that the case be remanded
with directions to set aside the entire report of the master; that
a new master be appointed, with directions to adjust the accounts
on the basis of an interest of one-eighth in Webb in the Fort Union
branch of the business and one-third in the other, and that such
adjustment be made in conformity with this opinion so far as it can
serve for a guide, and that the final decree to be rendered in the
case shall be a full settlement of all the matters litigated in the
bill, cross-bill, and answers.
* The compiled laws of New Mexico (page 290, ยง 5) enact
that:
"In case of appeal in civil suits, if the judgment of the
appellate court be against the appellant, it shall be rendered
against him and his securities on the appeal bond."
This section of the Act of the Territory of New Mexico was
founded, according to the allegation of the appellant's counsel, on
what is known as the Kearney Code, an enactment made by General
Kearney, September 22, 1846, four years prior to the organization
of the Territory of New Mexico, under the Act of Congress of 9th
September, 1850, 9 Stat. at Large 446. And when the act was passed,
it was applicable, as the said counsel conceived, only to the
courts of justices of the peace and probate courts existing and
doing business at the time as courts. They conceded, however, that
in "
The Beal Case," then just decided by the Supreme Court
of New Mexico, it was held that:
"A statute authorizing judgment against the securities on appeal
bond, as well as against the appellants in case of affirmance, is
not unconstitutional."
"The correctness of this ruling,' they added, 'where
a
statute is in existence so providing, it is not worth while to
discuss as a general proposition."
The Reporter did not understand whether the Supreme Court of New
Mexico regarded that the statute was in existence or not.
