Skidmore v. Collier

GILBERT, J. : There is really but one cause of action set forth in the complaint. The object of the suit is to obtain an accounting in respect to a partnership formerly existing between William D. and Henry Skidmore and one Bush, upon the allegation that after the death of William the partnership business was continued by Henry and Bush as surviving partners, for a short period, when Henry purchased the interest of Bush, and thereafter carried on the business as sole surviving partner until his death, and that after the death of Henry, his widow and administratrix, who has since married Mr. Collier, carried on the same business, with the partnership capital and effects, and that no accounting of the interest of William has ever been rendered to the plaintiff, who is his widow and adminis-tratrix. The first count is confined to the business done during the life of Henry, while the second includes that and also the business carried on after the death of Henry by his administratrix, Mrs. Collier. The other defendants are the children of said Henry, and his next of kin and heirs at law. They are made parties upon the allegation that their co-defendant has made a partial distribution of the assets of their father’s estate to them as his next of kin, and that in that [54] way they received moneys which belong to the plaintiff as adminis-tratrix of William D. Skidmore, and upon the further allegation that some of the real estate which descended to them as heirs of their father, was in fact purchased with the funds of the partnership aforesaid, and so constitutes a part of the effects thereof. We repeat,'these facts constitute only one cause of action, namely the right to an accounting concerning the affairs of the partnership mentioned. In such an action it is proper to make all persons parties who are interested in the subject-matter of the accounting. It matters not that the interests of the several defendants did not accrue in the same right. All persons should be joined whose interests are involved in the accounting sought, howsoever such interests may have arisen, as for instance heirs and personal representatives, residuary legatees and distributees, mortgagors and mortgagees and their assignees. (Story Eq. PL, § 319.) Such is the rule prescribed by the Code (§§ 118,119; Richtmyer v. Richtmyer, 50 Barb. 55; 1 Wait’s Pr. 137.) The facts stated in the complaint clearly make out a case within the equitable jurisdiction of the court. A surviving partner, though he has a legal right to the partnership effects, yet in equity is considered merely as the trustee to pay the partnership debts, a.nd to dispose of the effects of the concern for the benefit of himself and the estate of his deceased partner. It is the duty of the surviving partner to wind up the affairs of the partnership, and to account for, and pay over to the personal representative of the deceased partner his share of the partnership effects. If he has continued the partnership business with the partnership funds, he is, as a general rule, liable to account for all profits made thereby, and the losses, if any, must be borne by himself. The capital of the deceased partner will be treated as trust property, and when it has been employed in carrying on the business qf the concern, so much of the subsequent profits as can be attributed to the employment of the capital must be accounted for by those who have used it. (Lindley Part., 830, et seq.; Story Part., §§ 343, 346; Willard Eq. [Potter’s ed.] 708; Case v. Abeel, 1 Paige, 398.) This principle renders the defendant administratrix liable to account for the quasi breach of trust committed by the intestate, Henry Skidmore. That is sufficient to dispose of the first ground of demurrer. She is also charged with [55] a like liability as administratrix, arising out of her carrying on said business after tbe death of said intestate. That is not a distinct cause of action. She merely followed the course pursued by said intestate in continuing the business. He treated the partnership effects as if they belonged solely to himself, and she acted accordingly, in administering the personal estate left by him. Her acts were not done on her own account, but in her capacity of adminis-tratrix. Having as administratrix received the effects of the partnership, and the profits which accrued from the use thereof, and having acted in carrying on the business bona fide for the benefit of the estate which she represents, she is liable in her representative capacity and ought not to be liable personally. (Pugsley v. Aikin, 1 Ker., 497.) Nor is any distinct cause of action set forth against the heirs and next of kin of Henry Skidmore. They are liable only to refund such sums as may be necessary to make good the amount which shall be found to be due to the plaintiff upon the accounting, and to have the real estate which has descended to them applied to the same purpose. It is not the object of the action to enforce the liability imposed on them by statute in respect to creditors of their father. The order overruling the demurrer must be affirmed with costs, with leave to defendants to answer in twenty days on payment of costs. BakNAbd, P. J., concurred. DyKMAN, J., not sitting. Order overruling demurrer affirmed, with costs, with leave to defendant to answer in twenty days, on payment of costs.