King v. Hamilton

Scates, J. This was a bill for an account, as originally framed, for an account as between partners; as amended, it embraces two items, claimed individually by plaintiff, but which were as strictly and technically a trust as the partnership affairs. I shall only notice the pleadings and evidence, as they present the questions argued before us. First, in relation to the statute of limitations to the two individual items of account. By the statute, “ replications shall be general, with the like advantages to all parties, as if special.” (Rev. Laws, 1845, p. 96, Sec. 81.) The proof has made it specific. The pleadings, proofs and exhibits show that plaintiff was a resident of England,' and remained beyond the limits of this State until 1849, when he returned to this State, and commenced this action January 31st, 1851. But the act of 1827, which contained an exception in favor of non-residents, was repealed in this particular act of 1837. (See acts 1837, p. 160, and Rev. Laws, 1833, p. 442, Sec. 7.) So the statute has run, and'the cause of action is barred as to any claim for wheat. In relation to the cattle, the proofs show that they were bought and left upon the farm by plaintiff, in 1831. His two brothers carried on the farming and improvements on the partnership account during 1831, 1832, and 1833. In the spring of 1831, part of the cattle were sold for $374, and in the spring of 1833, another part were sold for $512 ; and these sums were spent for current expenses and improvements on the farms, while managed by them. Afterwards, the remainder were sold to a lessee, and the amount included in a note for his other indebtedness to plaintiff, which was executed at the instance, and left in the care of William King, the acting manager thereafter ; which, since his death, has been found among his papers, and delivered to plaintiff. We are satisfied from the evidence that these cattle belonged to plaintiff, individually. But the only evidence upon which we can form an opinion as to the purposes, objects, and intention with which this property was left in care and management of William and Joseph, the two acting-partners, and its connection with the partnership enterprise, is the actual disposition made of it by them. From this, it would seem, that the partnership enterprise contemplated improving and tilling the lands, or some of them, which they actually did for three years after plaintiff left the country. In this view, we should treat the cattle as an advancement of private funds to be used for partnership purposes. When it was to be accounted for, whether before the general or special partnership accounts were taken, does not appear; consequently, it is not shown when the cause of action accrued. The cattle were as purely a trust, as the partnership property. It is true, an action at law might lie for the cattle, or the proceeds, as upon any other similiar bailment, when a right to the return of either accrued according to the terms of the contract. But when was that ? If the bailment was to continue during the partnership, as an advancement for partnership purposes, it would end, and an action accrue, upon a dissolution, or the taking of the partnership account. This is so intimately blended with the funds, the management and duration of the partnership, as part of the means of carrying it on, that we cannot by arguments, presumption or intendment, supply the deficiences in the evidence in not showing when plaintiff could have withdrawn it from partnership uses. Three hundred dollars were returned to plaintiff in the shape of the note referred to, and by the otner partners. But, in taking the account as between plaintiff and his brother and partner, William King, this sum with interest has been allowed the latter. This appears to us to be erroneous. The statute of limitations cannot be made to opertd^Saeestjgkoff, and under it, recover what has been paid. was done, under the view that the cattle wera partnership1}®!^ perty, and one was chargeable with what he JwQjtíKd. and tne . other entitled to credit for his payments. BltHSgftf-i view of the ownership, from the positive evili'eimeof a nephew; | who lived with the partners here, and knew the condition of the partnership property, its A^a^gernmWmfi^ condition, we do not feel at liberty to disregaro^g^sipmstive statements, upon doubtful presumptions which have no foundation to rest upon. We must therefore put the proceeds of the two sales of the cattle, as individual property, and from its intimate connection and use with the partnership enterprise, we must put it, in relation to the statute of limitations, upon the same footing as the partnership trusts themselves, and as a continuing trust. The statute of limitations will not bar these, as between trustee- and cestui que trust, (Angell on Limitations, 161, 2), whether it. be of personalty or realty. Ibid. 507. The distinction, as to its not belonging exclusively to a court. of equity, as in Lyon v. Marclay, 1 Watts, 275, or its staleness by great lapse of time, as in Piatt v. Vattier, 9 Pet. 416, and; McKnight v. Taylor, 1 How. U. S. R. 161, do not affect it, as before remarked, because it is so intimately blended with the partnership enterprise, as. a continuing equitable trust, that we are not shown when that partnership lost the right to its further use, and when the action accrued for a return of this sum. We are, therefore, of opinion that in taking the account, plaintiff should have been allowed this sum against the partnership, and not William King, with interest. Neither should he be charged, nor William King credited, with the $300, the balance of the proceeds of the cattle, paid over in the note on his nephew, John King. There was an allowance to William King, the acting partner, for services, for about twelve years, at $11.25 per annum, with interest. The law will allow the expenses and charges of trustees and partners. But if no provision is made for compensation, by deed of trust, or articles or terms of the partnership, they are not -entitled to it for services; all the partners are bound to render their service and skill, unless exempted by agreement. If exempted, and service is rendered, it may demand pay. 1 Johns. Chan. 510, 535, 623,629,431; 1 Monr. 151; 11 Ill. 397, 398. Story on Part., Sec. 182. And upon these principles, the item of $150 to D. A. Smith, is a proper expense. The allowance of interest, we think, was proper, upon the items of mutual account; not on account of long delays, but because the whole enterprise contemplated an active use of capital, with the object -of its increase, whether in land or money. The most important question presented is for the ascertainment of the right to about 1400 acres of land in Clayton county, Iowa, purchased by William King, in his own name, just before his death, in 1846. We believe the evidence satisfactorily shows that these lands were purchased with the partnership moneys, and that there is, ■therefore, a resulting trust to plaintiff, and the heirs of Joseph King, in the proportion of three-fifths to the former, and one-fifth to the latter, which is very clearly proven to be their proportionate interests in the partnership property. The court should, therefore, have made its decree accordingly. This principle was laid down in Coates v. Woodworth, 13 Ill. 654, and Williams v. Brown et al., 14 Ill. 203. 2 Story Eq. Juris., Secs. 1207,1210,1211. The reasons which have brought us to this conclusion upon the evidence, we can briefly state. It is clearly proved, and admitted on both sides, that plaintiff owned three-fifths, William one-fifth, and Joseph one-fifth of the lands in Illinois. Part of these lands were sold to Strawn, and part to Richardson. John King testifies that the money which was taken to Iowa and laid out in lands there, was obtained of Strawn and Richardson. Mrs. William King corroborates him as to the money from Richardson. We can entertain no doubt upon this proof of the ownership of the • money. But it is further corroborated by William King himself, in his letter to plaintiff. Speaking of the sales, value, etc., of the Illinois lands, he declared his purpose to go beyond the Mississippi, into the country west, to look at it, with a view to investment. It is sought to rebut this resulting trust, by showing that William bought the greater part of these lands for a homestead, and the remainder for John King, and his step-daughter ; and that he intended removing to and making them his homestead in a short time. This may be sufficient to show an intention to appropriate, and an appropriation of this portion of the funds to his own private use; and which, with the consent of the other partners, he might have done. But the right of the other partners, or of the cestui que trust, in his election, to follow and claim specifically the thing in which his money is invested, is paramount to the trustee, agent, or partner’s right to appropriate and convert. He may not alone make such a division and settlement as will control the party in interest. Such seems to be the character of this controversy on this point. There is proof enough to satisfy us that he intended these purchases for himself and others. But plaintiff elects to pursue his capital into this investment, and reclaim it specifically. To deny or control his right, even by the clearest possible intention of the trustee or agent to the contrary, is to overturn the whole doctrine of resulting trusts, and allow and sanction a breach of trust, as the ground of title. That the trustee has himself innocently, and without fraudulent intent, appropriated the trust fund, can make no difference. The right to follow and reclaim the thing must remain in the cestui que trust, as between himself and the trustee, and as to others who purchase, with notice of the trust. Fonbl. Eq., Book 2, Mar. p. 119, top, 395, note. Phillips et al. v. Crammond, 2 Wash. C. C. R. 442 ; Wallace et al. v. Duffield and wife, 2 Serg. and Raw. 529; Dey v. Dey, 2 P. Wms. 414; Lane et al. v. Bighton et al., Ambl. 413 ; cites also Ryal v. Ryal, and Balgney v. Hamilton. I presume at this day no court would feel at liberty to follow Kirk v. Webb, Pres, in Chan., and Halcott v. Maskant, ibid. 168, in holding that money could not be followed because it had no ear marks, if it were clearly shown that it had been laid out for a particular piece of property. It is, therefore, quite immaterial that William King intended these lands for himself; having paid for them with the partnership moneys, the other partners have a right to an interest with him, in the proportions of their interests in the moneys paid for them. Such should have been the decree. Decree reversed and cause remanded to take the account in accordance with this opinion. Becree reversed.