Link v. Haire

*413 MR. CHIEF JUSTICE CALLAWAY delivered the opinion of the court. This action was instituted by the plaintiff, a surviving partner, against the executrix of the will of Charles S. Haire, a deceased partner, for an accounting, predicated on a claim filed with and rejected by the executrix. After issue had been joined by defendant’s answer and plaintiff’s reply thereto, the cause was brought on for trial before the court without a jury. At the outset the defendant objected to the introduction of evidence on the' ground that the complaint fails to state facts sufficient to constitute a cause of action. The objection was sustained and thereupon judgment was entered in favor of the defendant, from which plaintiff has appealed. The sole question for decision is, did the court err in sustaining defendant’s objection and in entering judgment against the plaintiff? *414 It is alleged in the complaint, among other allegations, that in the year 1905 the plaintiff and the decedent, Charles S. Haire, who were architects, entered into a verbal agreement to practice their profession as partners commencing with January 1, 1906; that the shares of the partners were to be equal and there was no limit of time nor term fixed for the duration of the partnership; that pursuant to the agreement they carried on the business of architects as partners under the firm name of Link & Haire, until the death of Haire; that there never was any dissolution of the partnership except by the death of Haire and no interruption thereof from the time of its formation; that the plaintiff and the decedent as such partners maintained throughout the existence of the partnership offices in the cities of Billings and Helena, and at various times they also maintained offices in the cities of Butte, Miles City, Missoula and Lewistown, in addition to the Helena and Billings offices; that there never was any settlement of accounts between the partners, and that the accounts between them were unsettled at the time of the death of Haire; that Haire collected and received for the account of the partnership and for its use sums of money largely in excess of all sums collected by the plaintiff, and that of the moneys so received by Haire he still retained at the time of his death a large amount undivided and undistributed between the partners, of which one-half belonged to the plaintiff; that Haire died on or about the second day of February, 1925, and that at the time of his death he was a resident of the county of Lewis and Clark, and left estate therein; that he left a will of which defendant is the duly appointed, acting and qualified executrix; that two days before the expiration of ten months after the first publication of notice to the creditors of the deceased the plaintiff presented to the executrix a claim based upon the partnership relations which had existed between plaintiff and decedent. The claim, which is made part of the complaint itself, embraces the main facts which constitute the basis of the action, and sets *415 forth the partnership accounts in great detail. It is averred therein that the books in the Helena office were kept by the decedent or under his direction, and the bookkeeping for the Missoula, Butte, Lewistown and Miles City offices, and during part of the time for the Billings office, was done by the decedent. From these books the claimant caused a statement of the accounts of the partnership to be prepared by Hugh D. Galusha, a certified accountant, which statement was made a part of the claim. Claimant alleged that upon the account rendered there was due him from the estate a balance of $37,103.03. He averred, “claimant tenders this as his accounting for the affairs of said partnership with the representative of said decedent and also thereupon, as well as on said books, bases his claim in his favor for the amount above stated.” Claimant stated that he had in his possession no partnership assets except a certificate of stock for 300 shares in a mining company called the Marsh Mining Company; “that at the time of the death of said Charles S. Haire the said shares were, and ever since have been, without any value”; he acknowledged that one-half of this certificate belongs to the estate and averred his willingness to turn it over. He went on to say that there were drawings for buildings in his possession, and also in the Helena office. These drawings have no market or salable value, in so far as claimant knows. “He is willing and hereby offers to deliver copies of all such as he has in his possession, and he would desire copies of those in the possession of decedent at the time of his death, and which are now in the possession or under the control of the executrix.” The decedent, claimant averred, received in payment of work done by the firm shares of stock in certain companies, aggregating $13,000 at face value, which are now claimed by the executrix as the personal property of decedent. “Claimant is willing to allow the executrix to keep same provided claimant gets proper credit therefor. In the statement and claim herewith presented these stocks are charged to the decedent as if they were cash withdrawals *416 made by Mm; but if one-balf thereof, to wit, claimant’s share thereof, be delivered to him, he is willing to give credit on his claim for the face value of the shares that may be so delivered to him.” Bonds of the face value of $1,500 were received by the decedent on account of partnership business, which decedent sold; in the claim this sum was charged to the decedent. Other items need not be noted. It is reiterated in the complaint that the claim as presented is, and was intended to be, at one and the same time an accounting of the plaintiff to and with the defendant for the affairs of the partnership and a claim for the balance due plaintiff on account of the partnership business; that the plaintiff has always been ready and willing to account with the deceased for the affairs of the partnership, and ever since decedent’s death has always been ready and willing to account with the defendant for the affairs of the partnership and still is ready and willing to do so, and “hereby offers to do so”; that there was not at the time of the presentation of plaintiff’s claim, or thereafter, any contract or work to be performed on the part of the partnership; that the affairs of the partnership, at the time of the presentation of the claim, had been settled in so far as third parties are or were concerned, except as to the claims against third parties which are listed in the account; as to these, the plaintiff alleged that two, which he described, had been taken possession of by the defendant, inventoried as part of the assets of Haire’s estate and claimed as its exclusive property by the defendant; that plaintiff had diligently endeavored to collect the other claims mentioned in the account but had been unable to collect anything up to the filing of his claim against the estate or the institution of this action. He alleged “that the plaintiff will account to said defendant for anything collected thereon and will continue his endeavors to collect the same.” He explained why some were uncollectible. Respecting the shares of stock appropriated by the decedent and claimed as his personal property by the defendant, referred to in the claim, *417 plaintiff averred his willingness to take over the whole or any part thereof at face value and to give credit therefor to the defendant, or to allow the defendant to retain them if she prefer, and in such case charge the same against Charles S. Haire; plaintiff has been and still is willing that the same be sold and turned into cash and the cash taken into account. By amendment to the complaint it is averred that since the presentation of the claim and the account therein stated, plaintiff has discovered that a number of items of money received by plaintiff were omitted from the account presented by him; that they were so omitted through error and that neither plaintiff nor the accountant employed by him to prepare the statement of account had found the items, and that the plaintiff at the time of the preparation of the account and the making of his affidavit had no recollection thereof; that since the presentation of the claim he received fifty dollars; that the aggregate amount of the moneys received by plaintiff and not accounted for in the claim is $16,503.13; that some expenditures made by him were not taken into account in the claim, aggregating $3,179.89, leaving a net sum of $12,328.24, which belongs to the firm; that the items so received by plaintiff and the items of expenditures are set forth in a statement thereof attached to the amended complaint, marked Exhibit “A.” Plaintiff alleges on his information and belief that there was not at the time of the rendering of the account by plaintiff, or of the filing of the claim by him, and there is not now, any debt due from the firm, or any liability of it; that plaintiff in his claim, and particularly in the affidavit accompanying the claim, having waived any claim to expenses not included by him in the claim, “now offers to account for the sum so received by him, as in the next preceding paragraph stated, without any deduction for disbursements, and hereby offers to charge himself therewith, and give credit to the defendant for one-half thereof, and that hereby he does so, thereby reducing his claim to $29,348.96”; that decedent received to and for the use of the *418 partnership and retained and withdrew from the partnership sundry sums aggregating $180,781.68 over and above all the expenditures and disbursements made by him; that plaintiff has received to and for the use of the partnership and retained and withdrawn from the partnership the aggregate sum of $122,083.74 over and above all expenditures made by him exclusive of those not mentioned in his claim; that the difference between the net sum received, retained and withdrawn by decedent and that received, retained and withdrawn by plaintiff is $58,697.94, and that one-half thereof, to wit, the sum of $29,348.97 did and does belong to plaintiff, and that no part thereof or of the items or amounts making up the same was or has been paid to plaintiff by anyone or received by him and that the same is wholly unpaid; “that the plaintiff does not know of any items of receipts by him except those stated in the account and the others referred to in this complaint, but that he is willing and offers to make full discovery and accounting of all matters relating to said partnership and all his accounts therewith for any and all property of said partnership.” The prayer is for judgment against the defendant for the sum of $29,348.96, or that the defendant be compelled to account to the plaintiff and ordered to pay over to him any balance found to be due on such an accounting. The main question presented is whether a surviving partner may in any case maintain an action for an accounting against the personal representative of the deceased partner. The plaintiff alleges, and in so far as his allegations are well pleaded, it is admitted, that the partnership does not owe any debts, nor is it in any way obligated to third persons. The surviving partner has no partnership property of any consequence in his hands. He drew from the partnership income less than his partner, the decedent, who collected over $58,000 more than did the survivor; the survivor is entitled to one-half of that; the personal representative of the deceased partner, the defendant executrix, has in her possession *419 partnership property which she claims as the property of the estate of the decedent. The surviving partner presented a claim, as he was obliged to do (sec. 10173, Rev. Codes 1921); Myers v. Sumer, 64 Mont. 342, 210 Pac. 76; Mares v. Mares, 60 Mont. 36, 199 Pac. 267), in which he set forth the facts in great detail, as upon an accounting, in which he affirmed that the claim presented was and was intended to be, at one and the same time, an accounting with the executrix for the affairs of the partnership, and a claim for the balance due him; he asserted his willingness to do equity in every respect. The executrix rejected the claim utterly. In legal effect she denied the surviving partner’s effort to account with her, and denied that he had any claim to property in her hands. The inquiry arises, if the course pursued by the surviving partner was not a proper one, what should, or could, he have done? There are -cases in which the surviving partner may sue the representative of the deceased partner at law, as where the surviving partner requires the property in order to apply it to the discharge of partnership obligations, and the representative withholds the property (First Nat. Bank of Butte v. Silver, 45 Mont. 231, 122 Pac. 584), or for a debt due from the deceased to the firm which does not form an item in the partnership account, or for a sum due from the estate of the deceased upon a final accounting, or for a definite sum by way of contribution. (30 Cyc. 648.) But this is not such a case. Here the surviving partner had done all the law required him to do; all that he could do; the partnership affairs were wound up save for the surviving partner’s accounting and settlement with the personal representative, there being no debts or obligations due third parties. Upon the facts disclosed it would seem that he could not maintain an action at law against the defendant executrix for the possession of partnership property in her hands (Silver v. Eakins, 55 Mont. 210, 175 Pac. 876); and he could recover any balance due in right of his partnership interest only on a settlement of the firm account. (Silver v. Eakins, supra; *420 Boehme v. Fitzgerald, 43 Mont. 226, 115 Pac. 413; Doll v. Hennessy Merc. Co., 33 Mont, 80, 81 Pac. 625.) Under the circumstances he was remediless unless equity could afford him relief. Here we are reminded that Aristotle defined the very nature of equity to be the “correction of the law, where by reason of its universality it is deficient.” The definition has been approved or adopted by Grotius, Puffendorf, Blackstone and Story. (10 R. C. L. 256.) The settlement of partnership accounts, and the division of the assets of the partnership among the partners, has always been one of the functions of a court of equity, because of the trust and confidence reposed by the partners in one another and the necessity of a discovery, and because a chancery court is able to investigate complicated accounts. Not only has equity jurisdiction in such cases, but frequently the only available remedy by which the affairs of a partnership can be settled by suit is by a bill in equity in proceedings in which the respective rights of the partners can be adjusted. (20 R. C. L. 1013.) In the very nature of things this function must occasionally be of vital importance to the just settlement of disputes between the surviving partner and the personal representative. Practically the unanimous weight of authority sustains the right of the surviving partner in a proper case to maintain a suit in equity for an accounting and a decree against the personal representative of the deceased partner, or for other relief not obtainable at common law. (30 Cyc. 649; 3 Pomeroy’s Eq. Jur., sec. 1154; Bates on Partnership, see. 755; 20 Gal. Jur. 829; Mentaberry v. Mentaberry, 47 Nev. 326, 220 Pac. 548.) It is urged that the rule is otherwise in this state in view of the construction placed upon section 10261, Rev. Codes 1921 (then sec. 7607, Rev. Codes 1907) in Mares v. Mares, supra. That section reads: “When a partnership exists between the decedent, at the time of his death, and any other person, the surviving partner has the right to continue in possession of the partnership, *421 and to settle its business, but the interest o£ the decedent in the partnership must be included in the inventory, and be appraised as other property. The surviving partner must give a bond, with sufficient sureties, in favor of the executor or administrator, in a sum at least equal to the value of the interest of the deceased partner in the property of the partnership. The amount of said bond must be fixed, and the bond approved by the court. In case he fails to give such bond, the court or judge may compel its execution by attachment or other proper order. The surviving partner must settle the affairs of the partnership without delay, and account with the executor or administrator, and pay over such balances as may from time to time be payable to him, in right of the decedent. Upon the application of the executor or administrator, the court or judge may, whenever it appears necessary, order the surviving partner to render an account, and in case of neglect or refusal may, after notice compel it by attachment; and the executor or administrator may maintain against him any action which the decedent could have maintained. The surviving partner is a trustee of the estate or interest of the deceased partner in the property of the partnership, for every purpose, and the court or judge may require the surviving partner to account at any time.” In the main, the statute is but an affirmance of common-law principles. The surviving partner has the right to continue in possession of the partnership, which includes all its assets, and to wind up its affairs. He must settle its affairs without delay, — he “must collect and adjust the debts due it, and pay its debts and discharge its liabilities.” (Story on Partnership, sec. 328; Krueger v. Speith, 8 Mont. 482, 3 L. R. A. 291, 20 Pac. 664.) He must account with the personal representative “and pay over such balances as may from time to time be payable to him, in right of the decedent.” Formerly if the surviving partner did not account in a reasonable time, a court of chancery would grant an injunction to restrain him from acting and would appoint a receiver and direct an ac *422 count to be taken. (3 Kent’s Com., p. 357; Story on Partnership, sec. 328; Krueger v. Speith, supra.) That necessity is obviated by the statutory provision that upon the application of the executor or administrator the court or judge may, whenever it appears necessary, order the surviving partner to render an account, and, in ease of neglect or refusal, may, after notice, compel it by attachment. And the statute recognizes the common-law right of the executor or administrator to maintain against the surviving partner any action which the decedent could have maintained. The reason for this latter provision is obvious. The statute in the main has reference to the powers and duties of the court sitting in probate. The law-making body, in giving jurisdiction to the probate court to act in matters which formerly were exclusively within the jurisdiction of chancery, did not leave in doubt the right of an executor or administrator to seek in courts of law or equity remedies of which the decedent might have availed himself. But the statute does not restrict the surviving partner’s lawful activities in any way. It does not, either in letter or spirit, deprive him of any authority he had at common law, nor of the right to maintain any action or proceeding which he might have maintained if the statute had not been enacted. The probate court has no authority whatsoever to interfere with the surviving partner’s management of the partnership estate, so long as he acts with expedition, makes the required accounts, and pays over to the estate of the decedent what it is entitled to upon the settlement of the partnership affairs. True, the probate court may compel the surviving partner to give a bond in accordance with the statute, but that goes only to the preservation of the rights of the estate. The construction of the statute contended for by the defendant amounts to saying, “the statute not only does not authorize the surviving partner to bring a suit in the probate court— that is, the district court sitting in the exercise of its probate jurisdiction — but it has abrogated his right to bring such a suit in any court.” The statute does not warrant that construction *423 either by expression or implication, and if it did, we would not hesitate to declare it unconstitutional. District courts have original jurisdiction in all cases in equity. (Const., Art. VIII, sec. 11.) By this provision Montana has adopted the entire system of equity jurisprudence. The legislative assembly has not the authority thus to restrict the great and beneficent powers of a court of equity. (Burns v. Smith, 21 Mont. 251, and see pages 264, 265, 266; 53 Pac. 742.) Again, McKay v. Joy, 70 Cal. 581, 11 Pac. 832, cited in Mares v. Mares, supra, comes into the discussion. The syllabus in that case reads: “A surviving partner cannot maintain an action against the personal representative of his deceased partner for an accounting* of the partnership affairs,” but the opinion does not bear out that statement. In proof whereof we here copy the opinion in full: “Bill filed by a surviving partner against the administrator of his deceased partner for a.n accounting. The complaint alleged that there never had been any settlement or accounting between the plaintiff and the deceased before the death nor since with the defendant. Section 1585 of Code of Civil Procedure gives to the surviving partner ample power to take possession of the property of the partnership and wind up its affairs. It necessarily follows that he does not need the interposition of a court of equity to aid him in doing that which he has ample authority to do himself. ’ ’ This is a familiar rule; why should the public agency be called upon to do that for a man which he can do for himself? It is said in Cal. Jur., Volume 20, page 829: “Though the contrary has been held,” citing McKay v. Joy, supra, “there would seem to be little doubt but that suit may be maintained by the surviving partner against the decedent’s representatives, both for an accounting and to recover firm assets,” citing Raisch v. Warren, 18 Cal. App. 655, 124 Pac. 95. So far as we have been able to learn, McKay v. Joy, supra, has not been followed, nor even cited, by the supreme court of California or the district court of appeals. We have ex *424 amined Fong Sing v. O’Dell, 50 Cal. App. 55, 194 Pac. 745, relied upon by defendant, but it does not support McKay v. Joy nor militate against Raisch v. Warren in any way. The case of Pritchard v. Mercantile Trust Co., 65 Cal. App. 327, 224 Pac. 103, is called to our attention. In that case the facts were materially different from those in the case at bar. Whatever may be said of some of the language of the opinion we think it does not deny the rule stated in Raisch v. Warren and the conclusion of California Jurisprudence, supra. In the Mares Case this court held that the surviving partner had not made an accounting, which it was his duty to do, and he had not exhausted the remedies which the law gives to a surviving partner; nor had he presented a claim to the executrix for allowance. Upon the conditions presented to the court in that case the result reached was correct; but in so far as anything said in the opinion may be construed to announce that not under any circumstances may a surviving partner sue the personal representative of the estate of his deceased partner for an accounting the opinion must be modified, for that is not the law. The situation presented in the case at bar differs from that presented in that case. Here the surviving partner actually accounted to the executrix, and filed an appropriate claim. As noted above, nothing remained to be done except to adjust the account in accordance with equity between the surviving partner and the executrix. The executrix was in possession of all the partnership property of any consequence, claiming it as the property of the estate. She rejected the claim, denied the account rendered, refused to recognize the action of the surviving partner as an accounting, and herself refused to account. If it be admitted that, the facts considered, the plaintiff could have maintained an action for the possession of the partnership property, what then would have followed? He would immediately have been under the obligation to return to the executrix one-half of that which he had presently re *425 covered. No such idle ceremony, as this court remarked in Silver v. Eakins, supra, is required. (And see Kutz v. Dreibelbis, 126 Pa. 335, 17 Atl. 609.) If this plaintiff is not entitled to recover upon proof of ‘ the allegations of his complaint it readily will be seen that a situation might arise in which a surviving partner would be remediless. Suppose there are no partnership debts to be paid nor obligations to be discharged, and nothing remains but a settlement between the surviving partner who has accounted so far as he is able, but the personal representative refuses to join in any settlement or accounting, meanwhile retaining money and personal property of the partnership and even asserting that the surviving partner is indebted to the decedent; is there any adequate remedy except a suit in equity wherein a full and fair disclosure upon both sides may be compelled ? If, after rendering his account and filing his claim the surviving partner has any right it must follow that he may maintain an action of some kind to enforce his right. For every wrong there is a remedy. (Sec. 8752, Rev. Codes 1921.) Must he bring two actions, and if so, of what kind? He cannot bring an action at law in the first place, no balance being struck between himself and the estate. Must he bring an action in equity and after the court has made a decree of accounting, then bring an action at law, when the whole matter might be adjusted in an action in equity? The law neither does nor requires idle acts. (Sec. 8761, Rev. Codes 1921.) No authority has been cited, and we think none can be found, to the effect that the surviving partner cannot enforce a settlement or have his rights adjudicated although he had himself accounted to the representative and filed the requisite claim. The plaintiff upon the allegations of his complaint has done both, is entitled to an accounting, and thereupon to a decree settling the rights between himself and his deceased partner. *426 • We think it proper to say that in view of the broad language employed in the Mares Case the learned district judge is not to be criticised for the ruling which resulted in the "judgment. But as the ruling is contrary to the law, the judgment must be reversed, and it is so ordered. Reversed. Associate Justices Myers, Stark and Matthews concur.