Knapp v. Edwards

Lvorr, J. The finding of the referee that the defendant is indebted to the plaintiff, on account of their partnership business, in the sum of $1,087.52, and interest thereon from January 1, 1872, and the judgment entered in accordance therewith, can only be supported (if at all) by an application to the defendant of the maxim omnia praesvmuntur contra spoliatorem.. We think this is not a proper case for the application of so severe a rule. The rule in all its rigor is for wrongdoers— for those who have been guilty of fraud or wilful disregard of duty, rather than those who have failed in capacity to perform their undertakings. The defendant covenanted to keep proper accounts of the transactions of his firm, and failed to do so. But there is nothing in the evidence which can justly be taken as an impeachment of his integrity, or which raises a suspicion that he wilfully failed to keep proper accounts. Manifestly he did as well as he could, but was quite incompetent. These considerations distinguish this case from that of Dimond v. Henderson, 47 Wis., 172, in which the maxim was applied in all its rigor. But it was there applied against one who had appropriated the property of the firm of which he was a member to his own use, without charging himself therewith, thus manifesting a criminal intention to defraud his partners. Here we have no such case. Moreover, the plaintiff knew from the first year of the partnership that the defendant was incompetent to keep the books of the firm, and endeavored from time to time to *197 straighten the accounts. Rut he bore the defendant’s shortcomings in this respect with commendable good nature, until the business was terminated by the fire. This is a sort of condonation or waiver of the defendant’s want of capacity as a book-keeper, and furnishes an additional reason why the defendant should not be punished for his incompetency. Hence, we conclude the case must be determined by the rules of evidence applicable to ordinary cases of accounting between partners. The findings of the referee, which were confirmed by the court, are that the plaintiff invested in the business $6,046.25, and drew out before the fire $765.63, and after the fire $450, leaving his net investment $4,830.62; that the net investment of the defendant was $6,196.86; that the profits of the business did not exceed the salary to which the defendant was entitled • under the copartnership agreement; and that there were no losses except by the fire. The real estate of the firm remaining after the fire was donated to it. The same not having been paid for out of the capital paid in by the partners, its value does not enter into this accounting. That still remains the property of the firm. . These findings seem to be sustained by the proofs. It satisfactorily appears that all of the available assets of the firm remaining after the fire were required, and were appropriated by the defendant, to pay the debts of the firm, all of which have been paid. There having been neither profits made nor losses suffered, and the firm having no assets (except the donated real estate) and owing no debts, the amount invested in the business by plaintiff should be accounted for by the defendant, who had the management of the business. The only way in which he can account for it is to show that it was lost by the fire. To the proposition that it was so lost the evidence is mainly directed. The property destroyed by the fire consisted of a shop-building and engine-house, and of the machinery, tools, lumber, hardware, and ready-made stock therein. The referee and court *198 found that the entire loss of the firm by the fire was $1,461.20. One half of this sum — $3,-130.60 — deducted from $4,830.62 (the amount invested in the business by the the plaintiff), leaves a balance of $1,100.02 of plaintiff’s investment unaccounted for. If the amount of the loss is correctly stated, that balance is chargeable to the defendant. The balance is stated at $1,081.52, but the computation was made upon the erroneous basis that one half of the loss is $3,743.10, which is $12.50 more than it should be on the basis adopted. This accounts for the discrepancy. From what has already been said, it is obvious that the controlling question in the case is, Does the evidence support the finding that the loss by the fire was only $7,461.20? It is scarcely contested that the machinery and tools destroyed cost $5,820.15. The defendant so testified, giving an itemized statement of the articles and the cost thereof. The plaintiff estimated such loss in the aggregate as not exceeding $5,000, but did not itemize his estimate. Because he did not do so, and the defendant did, the testimony of the latter is most satisfactory. The cost of the building rests entirely in estimate. The opinion of the plaintiff is that it did not exceed $1,500, while the defendant thinks it was $3,000. The building was of wood, forty by sixty-four feet, with two stories and an attic. It had stone foundations, on one •side five feet high. The stone cost $8 a cord, exclusive of hauling. The whole shop was plastered, and the engine-room was double plastered. We think we shall not be far wrong if we estimate the cost of so considerable a building at the medium figure between the conflicting estimates, of $2,000. The proof is undisputed that at least $125 worth of lumber was consumed in the building Without recapitulating the evidence as to the loss of hard-ware and ready-made stock, it is sufficient to say that the testimony of the defendant and his son shows a loss of these to an amount considerably exceeding $2,000. Their testi- *199 raony is quite full and detailed, especially as to the ready-made stock, and in the main is unassailed except by very general estimates made upon imperfect and unsatisfactory data. Perhaps their estimates of quantities are too large in some cases; but their estimates of specific values or cost are scarcely questioned. On the rule of evidence above stated, which discards the idea of punishing the defendant for his incompetency as a book-keeper, we think the referee and court ought to have found, and would have found, that the value of the hardware and ready-made stock destroyed by the fire was at least §1,700. We are not overturning the findings of the referee because there is a mere preponderance of evidence against them. The court will not do this. We hold only that such findings are the result of the application of a rule of evidence which should not have been applied, and hence that they cannot be upheld. . And for the purpose of saving the expense and delay of another trial, we state the results which we think must necessarily follow an application of the true role of evidence. Stating the account of property' destroyed by the fire at the sums above mentioned, and the whole of the plaintiff’s investment is accounted for. No profits having been made in the business, he is not entitled to anything further. Neither is the defendant entitled -to be allowed any more than he has already received from the firm, although he invested in the business more money than did the plaintiff. This is so because the firm met with no losses other than by the fire, and hence it would be unjust to require the plaintiff, in addition to losing his whole investment, to pay several hundreds of dollars to his partner. It being settled that the firm made no profits and suffered no other loss, the plaintiff cannot be held chargeable for any sum beyond his - investment. Although there is nothing due from the defendant to the plaintiff on account of the partnership business, it does not follow that the complaint should be dismissed. It was the *200 plaintiff's right to have the accounts of the partnership rendered to him by his partner for adjustment, and the defendant unreasonably neglected to render the same after proper request. The plaintiff had no remedy but to bring an action for an accounting. The account should be stated as above indicated, and the judgment should be that neither partner is indebted to the other on account of their partnership transactions. The real estate of the firm, the legal title to which is in the defendant, should be adjudged to be owned and held by the parties in common; but there is no apparent necessity for a receiver. We think the circuit court will be justified in imposing the costs on the defendant, in its discretion, because his neglect made this action necessary to settle the account of the parties. By the Court.— Judgment reversed, and cause remanded for further proceedings in accordance with this opinion.