Oliver v. Forrester

Mr. Justice Walker delivered the opinion of the Court: When Byerson died, both firms Avere dissolved. It terminated the firm of Byerson & Johnson, as lumber dealers, and the partnership of Byerson, Johnson and Tarrant, doing business under the name of Tarrant & Co., as manufacturers of lumber. Under the well settled rules of law, when these partnerships were terminated, the surviving partners of neither firm had power to continue the business of the firms, but were then required to wind up and close the business, and after paying the firm debts, to distribute the proceeds of the assets amongst the surviving partners arid the representatives of the deceased partner. After Byerson’s death, Johnson had no legal authority to purchase lumber and continue the business, so as to bind Byerson’s representatives, or his estate. It was his duty to sell the property, collect the debts due the firm, within a reasonable time, and account with Byerson’s. executrix for all sums she was entitled to receive, after paying the debts OAving by the firm. Nor did Tarrant and Johnson, as remaining partners of the firm of Tarrant & Co., have the right to purchase logs, manufacture lumber, and ship it to Chicago for sale, so as to bind the estate of Ryerson. There was no such authority conferred by the articles of co-partnership, and it was forbidden by law. Hence, they could not continue the business so as to bind Ryersou’s estate for any loss thereby occasioned. It only remained for them to wind up the business of the co-partnership, and account for and distribute the surplus amongst themselves and the executrix. But it is urged that there was an agreement entered into by Ryerson, Johnson and Tarrant, after the co-partnership of Tarrant & Co. was formed to buy logs and manufacture lumber in Michigan; that when it should be sawed, it should be shipped to the lumber yard of Ryerson & Johnson, in Chicago, to be sold. And that Ryerson & Johnson agreed to guarantee to Tarrant the cargo price of such lumber, and, if profits were realized, they were to be divided between the partners; and that when Ryerson died, Tarrant, under that agreement, shipped lumber to Johnson, and he received and held it on the same terms and under the agreement, and it was burned, and that Ryerson’s estate should bear half of the loss. On Ryerson’s death all knew that it ended the partnership as to all unexecuted portions of the partnership agreement. Being terminated, the survivors had no authority to proceed to carry out the agreement and execute its provisions. And if such unexecuted provisions of the articles of co-partnership can not be carried out by the survivors, by what rule can this verbal agreement between themselves alone, relating entirely to the partnership business, and which agreement was entirely dependent, at least on the continuance of the firm of Tarrant & Co. for its performance, be carried on till it was performed, notwithstanding the dissolution of both firms? When they terminated, this verbal agreement being wholly dependent for its performance on the continuance of the firms and their business, it was also terminated at the same time and by the same event. If it be claimed that the surviving partners were bound to execute contracts entered into by the firm, it may be answered that if the proposition is true, it is so only as to contracts entered into with persons not members of the firm, and not to contracts made between the several members of the firm as to the mode of conducting the business of the firm. We know of no rule that requires the surviving partners to continue the business of the firm so as to execute and carry into effect agreements as to the mode of carrying on the business. Suppose it had been agreed between the partners of the firm of Tarrant & Co. that on a future specified date the firm would purchase laud, erect large and expensive mills, and purchase logs, manufacture lumber and sell it on the market, in commotion with their other partnership business, and Ryerson had died before the time arrived, would any one contend that the surviving partners could go on and carry out the agreement, using the funds of the partnerships for the purpose, and thus bind Everson’s estate? We apprehend not. And although the case supposed may be extreme, it is apprehended both depend on precisely the same principle, and that no well founded distinction can be made. This unexecuted agreement, as to the mode of transacting the firm business, therefore fell with the termination of the firms themselves. As it was dependent on the continuance of the business of the firms, the power to perform its unexecuted portions fell with the ending of the firms themselves. And Tarrant had no legal right to continue to ship, or Johnson to receive, lumber under the agreement. All that was shipped subsequent to Ryerson’s death was therefore not under the agreement, and Ryerson’s estate is liable for no portion of its loss, and the decree of the circuit court was wrong in allowing Johnson to retain the money of the firm of Ryerson & Johnson to pay for its loss. Again, Johnson purchased a cargo of lumber after Ryerson’s death, placed it in the yard where it was burnt, and he claims that Ryerson’s estate should bear one-half of that loss. Whilst it is conceded that a surviving partner in mercantile business may make small purchases of some articles of the stock to render it more saleable, and to enable him to close it out, he has no power to make large purchases intended to continue the business. We perceive no necessity of purchasing a cargo of lumber consisting, perhaps, of lumber of the usual varieties and grades, amounting no doubt to a considerable sum. If this be true, then Ryerson’s estate should not be held liable for any portion of the loss by its destruction. Johnson, however, had the right to delay a reasonable time in making sales of the lumber on hand. He was not bound to force it on the market when there was but little demand, and thus sacrifice the property. If the season was dull when Ryerson died, and from the course of trade there was reason to believe that in a few months the demand would revive, Johnson had the right to wait a reasonable time, for the purpose of procuring better prices, and avoiding loss. The evidence shows that Ryerson died in one of the dullest seasons of the year, and that past experience tended to establish the fact that prices would be better in the following autumn, and mere delay, under the circumstances, seems not to have been unreasonable. Johnson should, therefore, not be charged on that account with the entire loss of the lumber on hand at the termination of the partnership. The estate of Ryerson should bear its proportion of that loss. But Johnson should bear the loss of the lumber received by him after Ryerson’s death. According to the views here expressed, the Appellate Court erred in holding that Johnson’s estate should account for half of the lumber held by the firm at the time of Ryerson’s death, and which was destroyed by fire. If Johnson paid Tarrant with funds of the firm of Ryerson & Johnson, for the lumber shipped to Johnson after Eyerson’s death, and it was burnt, his estate has no right to retain the portion of the money thus paid to which Byerson’s estate would be entitled had such lumber not been shipped and burnt. And Johnson’s estate should account as though such shipment had never been made or loss sustained. . Nor is Eyerson’s estate chargeable with any portion of the loss of the cargo purchased after the partnership was terminated, and the executrix, on stating the account, should not be charged with any portion of that loss. The record does not show whether after the death of Byerson the business was so managed by Johnson that his transactions in the lumber received by him from these Michigan mills, and in the cargo of lumber bought in the market, were conducted in such manner that they can be distinguished from his transactions in the lumber and other property of Byerson & Johnson on hand at the time of Byerson’s death. If the business was so transacted, and any part of the lumber (on hand at the death of Byerson) was destroyed by fire in October, 1871, in such case Byerson’s estate should bear one-half of that loss, but should not be charged with any part of the loss of .lumber received after his death, from the Michigan mills, or with any part of the loss, if any, of the cargo of lumber bought in the market by Johnson. We think, from an examination of the facts, so far as shown in this record, that Johnson did not intend to continue the business of the firm of Byerson & Johnson, in the sense condemned by the law, but that he acted on the mistaken idea that he was bound, as surviving partner of Byerson, to complete and perform the agreement made by them with Tarrant, to continue to receive, take and dispose of, and account for, the lumber from the Michigan mills. We are not, therefore, prepared, on the evidence in this record, to require him to be charged as with a conversion of the whole of the partnership property; nor, should he be so charged unless it appeared the business was in fact so transacted by him as to inseparably commingle the property proper of the late firm of Ryerson & Johnson with that which was put in the yard after Ryerson’s death, so that the amount thereof can not be distinguished from the cargo bought in the market and from the Michigan mills. Of course, if the lumber was so commingled, and the books so kept, that the one can not be distinguished from the other, in that case Johnson was liable to be treated as having converted the assets of the late firm to his own use, and should be held to account for the value of Ryerson’s net interest in those assets at the time of his death, and interest thereon. The Appellate Court, in reversing the decree of the circuit court, did right; but that court erred in rendering a final decree upon this record for a specific amount. The decree of the Appellate Court is reversed, and the cause remanded to that court, with directions to remand the cause to the circuit court, that an account may be taken, in some appropriate mode, in accord with the views herein expressed. Deoree reversed.