Stein v. Robertson

’WALKER, J. Tbe leading object of the bill in this case is, to establish for the infant complainant, Judah Touro Robertson, an equitable partnership interest with Albert Stein in the Mobile water-works ; and, if this object fail, to establish for the same complainant a resulting trust in certain funds invested by his father in those works. The following propositions are condensed from the bill: 1. There was a contract between ¥m. H. Robertson, the father of complainant, and Stein, that the former, for the benefit of his wife and children, should have an interest of one half in the water-works, and that that interest should be declared after the completion of the works. 2. That afterwards one Richards was admitted into the partnership, and thereupon the interest of Robertson’s wife and children was reduced to one third, being equal to the interest of Stein. 8. That upon a settlement between one Colwell, for himself and as the executor of Richards, and Stein, the former in his individual and’representative capacity was allowed an interest of 87J-100; and after that the -wife and children of Robertson were, in equity and good conscience, entitled to, and now claim, one half the remainder interest. 4. That all the money advanced by Robertson to the concern, amounting to about ten thousand dollars, was derived from the sale of the property of his children. The two aspects of the bill, — one looking to a recovery upon a contract for the benefit of Robertson’s wife and children, and the other to the enforcement of a trust implied from the advancement of money now belonging to the complainant, — are not repugnant; nor is there any inconsistency between the existence of the contract, and the fact that the money was paid as alleged in the bill. The bill is, therefore, not objectionable for repugnancy. The other objections made to the bill, apply also to the proof, and will be considered when we come to discuss the testimony. The first, and most important question in the case, is, — 292 — whether the averment in the bill as to a contract between Stein and Robertson, for the benefit of the wife and children, is proved. In determining that question, it is necessary to look at the answer of Stein. "We find a fiat denial that Robertson’s wife and children were understood by Stein to be entitled to any interest, or that they were even named by Robertson to him in connection with an interest in the water-works. But the answer says, “Robertson promised that he would, from the ample means that he had for that purpose, furnish the funds necessary to carry on the work to completion ; and the defendant, relying upon such assurances and promises of said Robertson, consented to make the proposed contract, and to associate Robertson with him in the enterprise, provided the said Robertson would furnish the means necessary to the accomplishment of the work as he had promised.” That Stein did not intend, in the above quotation from his answer, to assert that the furnishing of the means necessary to the accomplishment of the work was a condition precedent to his having a partnership interest, is clear from the fact, that from the very nature of the enterprise the supply of means must be distributed through the progress of the work; and from the other assertions of the answer, that Stein accepted from Robertson a sum which amounted to $8,000 on the 1st November, 1843, and that he regarded Robertson as entitled to take an interest proportionate to the sum thus received from him. It may, therefore, be taken in the further progress of this argument as a fixed fact, that there was a contract with Stein by Robertson for a partnership interest. This partnership, in the absence of any contrary stipulation, must be deemed one of equality. Such would undoubtedly be the effect of the contract. It may be conceded, that Robertson did not fully comply with the contract on his part, by furnishing as much money as he agreed to furnish; and yet it would not follow, that Stein had a right to repudiate him as a partner. lie has gone on, and, as he virtually admits, accepted money from Robertson, under the contract; and he freely availed himself, as the testimony shows, of the — 293 — influence, financial skill, and services of Bobertson, in the procurement of the funds required in the prosecution of the work. There are cases in which a partner may-dissolve the partnership; and there are cases in which he may sue upon the articles of copartnership, at law, for the recovery of damages; and there are, also, cases in which he may file a bill, to compel the performance of copart-nership articles, when the terms of the copartnership have been violated by the other partner; but it cannot be tolerated that one partner, after accepting the money and services of another, shall, when called upon to carry out the partnership, be heard to deny that any joint interest ever existed, because all the stipulations of the contract of partnership have not been complied with. — Fogg & Vanderslice v. Johnston, 27 Ala. 432. Having attained the conclusion that there was an agreement of copartnership, we must now inquire whether that agreement was made with Bobertson for the benefit of his wife and children. In conducting this inquiry, we exclude from our consideration the deposition of Bobertson, because we deem him incompetent from interest; and the deposition of Gerhard, because the objections to it raise several difficult questions, the decision of which would prolong and probably confuse this opinion, and its admission or rejection would not affect the conclusion which we attain. Bobertson is directly interested for the complainant. A decree in this ease, for the complainant, would be evidence for him, in a suit by the complainant to charge him with the money received by him as guardian. If it bo conceded that an infant cannot bind himself by an election, and that therefore he would not be precluded by taking in this case the benefit of the unauthorized investment of his money from proceeding against Ms guardian hereafter, — it will not follow, that Bobertson is a competent witness ; because, if to a suit by the infant, to charge Bobertson, the latter should plead the recovery in this case, the court would at least require him to do equity, by restoring the benefit of the investment established in his favor by the decree in this case, before it would give him any relief. — 294 — ¥e llave carefully examined tbe depositions of Wilson, Auze, Murrell, Gibbons, Colwell and Aymar; and we conclude that they establish tbe proposition, that the Robertson interest was, by the understanding and agreement of Stein, for the benefit of Robertson’s wife and children. We regard the answer as a virtual admission that the Robertson interest, to whomsoever it belonged, was equal with Stein’s. Some of the witnesses, speaking from settlements and declarations of Stein, made in the absence of any person representing or interested in the Robertson interest, seem to characterize that interest as proportionate in its amount to the sum advanced; but we think the distinct statement of other witnesses, to the effect that the interest was equal with Stein’s, fortified by what we deem the correct construction of the answer, ought to control our decision on that point. We admit that the testimony is not harmonious upon the point, whether the interest belonged to Mrs. Robertson, orto her and her children. Conversations that are evidence against Stein, are proved by the different witnesses, in some of which the interest was spoken of as belonging to Mrs. Robertson, in others as belonging to Robertson’s family, in others as belonging to Robertson’s wife and children, and in others as belonging to his children. We think that this testimony is reconciled, upon the hypothesis, that the interest belonged to the wife and children,' and was sometimes spoken of, in conversations where great precision was not sought, as the wife’s or children’s ; and in our judgment, the weight of evidence is in favor of the proposition, that the interest was for Mrs. Robertson and her children. It is said, that the money of the children of Robertson was derived from an unauthorized and therefore illegal sale of their property. If this be so, will it avail the defendant in this case ? It may show that the infant complainant would have a right to assert his title to the property sold; but that could not affect Stein. The purchaser could only go on Robertson for reimbursement. He could not go on Stein, one of the partners in the adventure into which the money was carried by Robertson. — 295 — So that, if the right of the infant complainant to avoid the sale by Robertson, notwithstanding the recovery in this case, be conceded, it cannot harm Stein; and therefore no argument available to Stein can be drawn from the existence of that right. But then it is objected by the defendant, that the money invested in the adventure did not really belong to the children of Robertson, as is proved by the fact that the investment was made before their money could have been received. It is also objected, that no money at all was invested which belonged to Mrs. Robertson; and this objection applies alike to the bill and the proof. It will not be denied, that it is permissible for a man to invest money of his own in a copartnership, for the benefit of his wife and children, by contract with the copartners; and the beneficial interest would be in the wife and children, as against all the world except existing creditors. — Collyer on Partnership, § 13; Story on Partnership, § 70. The contribution to the partnership by Robertson was not alone of money, but also of services which the proof shows were valuable. Then, if it were true that the entire contribution of Robertson to the partnership was of his own money and his personal services, that would be no reason why Stein should be permitted to repudiate the beneficial interest of Robertson’s wife and children, growing out of a partnership agreement with him. If the right of recovery here depended upon the establishment of a resulting trust, it would be indispensable to prove the ownership of the money invested to have been in the complainant, or in him and those from whom he might derive it; but the decree is, we think, maintainable upon the contract of Robertson with Stein. It can make no possible difference, that the funds invested by Robertson were his own, except so far as that fact, in connection with his bankruptcy, might conduce to show that the benefit provided for his wife and children in the contract with Stein was the result of an arrangement to defraud the creditors of Robertson. ¥e do not stop to inquire whether, in this case, the defendant could, under his answer, avail himself of the defense, — 296 — that the purpose of the contract was to defraud Robertson's creditors, or whether the defense is one that he could set up under an appropriate answer. See, however, Brantley v. West, 27 Ala. 542. The creditors of Robertson had no right to command an appropriation of his personal services; and his gratuitous bestowal of them for the advancement of the separate interest of his wife and children gives his creditors no claim on the interest thus promoted. — Hoot v. Sorrelle, 11 Ala. 386. The evidence in this case cannot establish that the trust provided for Mrs. Robertson and children was simply a scheme to defraud Robertson’s creditors, if the money invested by him belonged to his children. In determining whether it did or not, it must be observed, that Stein’s answer is not such as to impose upon the complainant the onus of making out Ms case in this particular by two witnesses, or one with corroborating circumstances. Wilson says in his deposition, that he learned from conversations with Robertson and Stein, that Robertson invested funds derived from Connecticut belonging to his children; that he, as the clerk of Robertson, furnished goods and money to Stein; that in ’40 and ’41 he was Robertson’s bookkeeper, and familiar with his affairs; and that he knows, of his own knowledge, that the advances made by him for the works were made from sources not his own, and with which his creditors had no concern; and that he looked to Mrs. Robertson’s interest for payment for the goods furnished to Stein. It is possible that this witness sioeaks with too much confidence of the extent of his personal knowledge, that the funds were derived from sources not Robertson’s own. But we know that one’s intimacy with the affairs of another may be such as to enable him to speak with some degree of assurance, as to whether certain money was derived from that other’s own sources; and then this witness is not contradicted, and his statement accords with the declarations of Stein which are proved. The testimony of this witness is corroborated by the deposition of Auze, who proves Stein’s declaration that he would not settle with Robertson, because the interest belonged to his children. It also seems from the — 297 — depositions of Aymar, and Gibbons, and Palmer, and Colvin, that the money advanced by Robertson was, in settlements and statements made by Stein himself, set down in the name of B. Aymar, who appears to have been chosen to be a trustee for Robertson’s wife and children. The fact that Stein himself, who had no interest in assisting to defraud Robertson’s creditors, denied the interest of Robertson, and asserted that of his children, and set down the interest in favor of one representing the wife and children, is persuasive to show that the funds advanced were not the private property of Robertson, and thus contributes to sustain the testimony of "Wilson. The fact relied upon for the defendant, that Robertson did not qualify as guardian, and consequently could not have received the money of his children, till after the advancement was made, is reconcilable upon the hypothesis, that the money was procured from others, or advanced by Robertson, in anticipation of that fund, and replaced by it when received. In our opinion, the proof against Stein is sufficient to negative the position that Robertson’s own funds were invested in the concern; and that therefore the proof does not show that the interest asserted by the complainant grew out of a fraudulent contract. The decree of the chancellor is erroneous, in allowing the complainant an interest of one-third. The interest to which the complainant is entitled, is 31J-100; and Stein is entitled to an interest for the same amount. We understand the chancellor’s decree to authorize the registrar, in taking- the account, to credit the complainant with sums of money advanced as a loan by other persons in their behalf, which have been repaid by Stein. This is also erroneous. The complainant is entitled to no other credit than for the amount actually advanced to the concern by his father, for Mrs. Robertson and her children, and his proportionate share of the profits. The chancellor’s decree must be here reversed, and a decree rendered, such as, in our opinion, ought to have been rendered in the court below; and this court doth therefore decree as follows: It is ordered, adjudged, and decreed, that the complainant, Judah Touro Robertson, — 298 — be, and lie is hereby, invested with an equal interest with Albert Stein in the Mobile water-works, the same being 31-1-100 of the whole; that it be, and is hereby, referred to the registrar of the chancery court held at Mobile, to take and state an account between said Judah Touro Robertson and said Stein, as equal partners, each having an interest of the amount above stated; that in taking said account, the registrar shall credit the complainant with the money advanced for his mother and her children by ¥m. Ii. Robertson, and his proportionate share of the profits, and shall credit the said Albert Stein with an annual salary of four thousand dollars, chargeable against all the interests in the concern, and with all other just credits to which he may be entitled, and shall allow the respective parties interest on sums advanced and paid out by them on account of the partnership ; that the said registrar shall ascertain the balance on the accounts between the said Stein and the said Judah Touro Robertson; and that upon the said reference, the registrar may examine the parties on oath, as to all items not exceeding twenty dollars in amount, may require the production of all books, papers, vouchers and documents in relation to the said account, and may examine witnesses viva voce, and by deposition, and use the testimony in this case, and the parties may examine each other upon interrogatories. It is further ordered, adjudged, and decreed, that if upon accounting there should be a balance in favor of the defendant, Stein, against the complainant, a lien is established in favor of the former, upon the share in the partnership and the future profits thereof of the complainant, for the payment of such balance. It is further ordered, adjudged, and decreed, that the appellant pay the costs of the court below, and the appellee must pay the costs of this court.