Clark v. Carr

Me. Justice Cartwright. Stephen A. Clark filed in the County Court of Jo Daviess County, a claim against the estate of Norman B. Richardson deceased, founded upon two promissory notes purporting to have been made by W. L. Gale and N. B. Richardson, and payable to Clark & Richardson. Hpon a hearing in the County Court the claim was disallowed, and judgment was rendered against the claimant for costs, and he appealed to the Circuit Court. A jury was impaneled in the Circuit Court for the trial of the issue, and the evidence in support of the claim was introduced. It consisted of the notes and an assignment, and the testimony of Charles E. Clark, bookkeeper for Clark & Richardson. One note was dated September 12, 1885, for $2,000, due ninety days after date, with interest at eight per cent from date, and indorsed with credits of $100, paid April 30, 1887, and of interest paid to October 26, 1887. The other note was dated November 14, 1885, for §2,000, due ninety days after date, with interest at eight per cent from date if not paid at maturity, and bore an indorsement of payment of interest to September 23,1887. The assignment was proven to have been executed by Norman B. Bichardson and Stephen A. Clark. It bore date December 31, 1888, and Norman B. Bichardson thereby assigned to Stephen A. Clark, in consideration of §18,000 paid by Clark to him, all interest in any and all assets of the firm of Clark & Bichardson, bankers, as shown by the general ledger -balance sheet of date December 28, 1888, copied into the assignment, in which was Included an item of “ bills receivable, $95,100.46,” and which statement or balance sheet and said assignment was declared to include, among other things, the bills and accounts receivable of said firm as well as all other items of said statement, and also any and all judgments, liens or old debts of said firm against any and all parties whomsoever. In the same instrument Clark assumed and agreed to pay all deposits and liabilities of the firm as shown by said statement, no other indebtedness being known to exist against the firm except the taxes of 1888, which were also to be paid by Clark. The testimony of Charles E. Clark was that the firm of Clark & Bichardson consisted of Stephen A. Clark and Norman B. Bichardson; that it ivas dissolved by this sale and assignment December 31, 1888; that the notes in question were assets of the firm, and among the items making up the $95,100.46 in the bill of sale or assignment marked bills receivable, as collateral security for a debt of W. L. Gale; that they were delivered with the other assets of the firm to Stephen A. Clark as his property, and that the consideration named in the bill of sale was fully paid by Clark. The defendant offered no evidence, but at the close of plaintiff’s evidence moved the court to direct the jury to find a verdict for the defendant. This motion was sustained by the court, and the jury were directed to return a verdict for defendant, which they accordingly did, and the court, after overruling a motion for a new trial, rendered judgment against the plaintiff for costs. It is contended on the part of appellant that the evidence introduced as above stated and before the jury, entitled him to a verdict and judgment for the amount due on the notes, and that the action of the court in directing a verdict for defendant, overruling the motion for a new trial and entering judgment on the verdict, was wrongful and without authority. On the other hand, such action is sought to be sustained on the following grounds: First. That the signature of FTorman B. Richardson to th e note had not been proven. Second. That the County Court, and the Circuit Court on appeal, had no jurisdiction and no power to act judicially on the claim. Third. That it was to be presumed that the indebtedness of Richardson to the firm was settled in the sale and transfer of his interest to Clark, and therefore the notes had been paid in that way. When the notes were offered in evidence they were objected to on the ground that they were not proven as required by law, but the objection was overruled and defendant excepted, and the notes were admitted and read in evidence. It is now urged that the court was wrong in admitting them, and that they were not evidence, because of a neglect to prove the signature of Rorman B. Richardson, in accordance with Rev. Stat., Chap. 3, Sec. 65, relating to administration of estates, requiring proof of handwriting, and therefore the court was right in directing a verdict for defendant. After the notes were admitted and read in evidence, there was no motion made to strike them out, nor were they stricken out or withdrawn from the jury. The motion to direct a verdict for defendant was general, and did not assign any reason or raise any question about the proof of the notes for the action of the court. It called upon the court to direct a "verdict for defendant, upon the testimony and evidence on the part of the plaintiff before the jury. The notes .were before the jury as evidence, and it was upon the evidence before them, which was equally before the court, in passing on the evidence, that a verdict for the defendant was ordered. If the court became satisfied that an erroneous ruling had been made in the admission of the notes, the only course open for the correction of the error was to strike out or withdraw the evidence. If that had been done, the objection was of a nature to be supplied by proof, and plaintiff might have chosen to supply the proof, and thereby obviate the objection, or he might have preserved his rights by an exception. The only ruling in the record concerning the notes, is the overruling of defendant’s objection, to which he excepted, and there is nothing in the record to indicate that the opinion of the court in that regard was subsequently changed. The evidence should not be left in the case and the jury be directed to render a verdict against it, nor should the court act upon a conclusion that a ruling was erroneous, without setting aside the ruling in some way, so as to give an opportunity to preserve rights. Fort Dearborn Lodge v. Klein, 115 Ill 177. The claim that the County Court had no jurisdiction of the subject-matter of the litigation is placed on the ground that the liability arose out of a partnership, and that the litigation involved an adjustment of account between partners. If this were true it would not justify the court in directing a verdict for the defendant and entering a judgment, but the proceeding should have been dismissed. To direct a verdict for defendant was not a disclaimer of jurisdiction, but an exercise of it. The question of jurisdiction of the court was not among the issues to be found by the jury under the direction of the court. The issues submitted to them were on the merits of the case, and a direction to find those issues for defendant was an exercise of jurisdiction over the subject-matter of the claim. But nothing had appeared to show that the court did not have jurisdiction. There had been no evidence of any unsettled partnership account to be adjusted between the former partners. The only matter calling for judicial action was the question of liability on this claim. All that was to be settled was whether the estate of Dormán B. Richardson was liable for the payment of the notes. Clark and Richardson had a right to agree upon the value of Richardson’s interest, and when they agreed and Clark bought and paid for that interest, an account between them as partners for the same purpose and to the same end as their agreement was rendered unnecessary. The sale and assignment by Richardson of all his interest in the firm to Clark, operated at once as a withdrawal by Richardson and a dissolution of the firm on December 31, 1888, and left no unadjusted account between the parties as partners, but their rights were afterward governed by the terms of their agreement, which adjusted their interest and left nothing concerning which the court was called upon to take an account. Edens v. Williams, 36 Ill. 252; McCall v. Moss, 112 Ill. 493; Parsons on Partnership, 400, 511. Mor was the County Court deprived of jurisdiction by the question whether the assignment by Richardson was sufficient in law or only in equity. By the assignment Clark became the beneficial owner of the assets of the firm, and if the notes were embraced within the terms of the assignment, he might present the claim and have it adjudicated in the County Court. In the allowance of claims against estates, the County Court exercises equitable jurisdiction, and is not limited to the technical legal rights of parties; it may disregard mere arbitrary forms of procedure and look to the substantial rights of the parties; Clark could proceed in the County Court in his own name. Dixon v. Buell, 21 Ill. 203; Hurd v. Slaten, 43 Ill. 348. It is next claimed that the direction of the court to find for the defendant was correct, because there was a presumption of law that the indebtedness of Richardson represented by these notes to the firm was taken into account in the sale to Clark as an item in Richardson’s account as a partner and charged to him and thereby paid. In other words, that the law presumed that the $18,000 paid to Richardson was the estimated value of his interest in the firm after deducting the amount of the notes as a charge against him in favor of the firm on the partnership account. Wherever a presumption of the nature stated arises, it relates to matters of account either debit or credit, and whether represented by instrument in writing or otherwise, which exist at the time of the sale between the partners and the firm in their relations as members of the firm. A debt due from Richardson alone to the firm would be regarded merely as an item in the account between the partners, because it would not be known until a settlement whether he would owe the firm anything or not. As to a debt which would be so regarded, a presumption might arise that, being merely an item in the partnership account, it was settled by a sale which settled such account; but even then the presumption would not be conclusive in its nature, and the parties might show that such was not the fact. In the cases on that subject, it is usually •stated that the presumption is that the account of the retiring partner was adjusted in ascertaining the value of his interest, in the absence of anything to show the contrary, or that such will be the presumption until the contrary appears. In Norman v. Huddleston, 64 Ill. 11, the court, being unable to reach any conclusion as to the merits, expressed the opinion that in such case resort might be had to the inferences drawn from the sale. The inference to be drawn was there stated to be that all former accounts were to be considered as settled, or at least as merged in the new bargain. In Jones v. Bliss, 45 Ill. 143, there had been an assignment by one partner to the other of all the assets of the firm, among which book accounts and dioses in action were especially enumerated, and the court held that a book account against the retiring partner was not to be excepted by implication from the language of the assignment by which in terms it was covered. In that case the presumption was considered to be overcome by the language used in the assignment. In this case the assignment conveyed to Clark all the interest of Richardson in the assets of the firm, as shown by the general ledger balance sheet, especially enumerating bills receivable amounting to §95,100.46, and again expressly including the bills and accounts receivable of the firm as well as all other items of the statement. The evidence was that these notes were assets of the firm within the terms of the assignment; that they were collateral security for notes of W. L. Gale of like amount embraced in the list of bills receivable which went to make up the amount of assets of that kind especially enumerated in the assignment, and that they were turned over with the other assets to Clark. There ivas nothing in the evidence to exempt the notes from the operation of the assignment, and in view of the evidence the court would not be justified in directing a verdict for defendant on the strength of any legal presumption. But we think that there is no presumption of law that the liability of Richardson on these notes was extinguished by his sale to Clark. It is not upon any theory of release of liability of a retiring- partner or release of right of action against him, that debts due from him to the firm may be presumed to be settled, and it is not so claimed. ISTo presumption of that kind could arise from the mere fact of a sale, but the presumption that arises in the absence of anything to show the contrary, is that in the valuation upon which the sale is based the debt - of the selling partner is taken into account and charged to him, and the value of his interest is thereby reduced to that extent, so that the debt is actually paid in that way. Being merely an item in the account which he may or may not owe, depending upon the state of the ivhole account, there is a presumption when there is a settlement, that the debt was charged to the debtor partner as an item in the accounting. In this case the estimate made and agreed upon by the partners of the value of Richardson’s interest, merely obviated the taking of an account, and if the liability of Richardson was extinguished it was because of a presumption that the notes were actually paid to the firm in the manner indicated. These notes were the notes of both Gale and Richardson, and they were collateral to individual notes of Gale and not mere items in Richardson’s account as a partner. The liability of Gale was not dependent in any degree upon a settlement of partnership accounts. Gale was the principal debtor and his liability was absolute. It was definitely known just how much he owed the firm before any account should be taken, and it is clear, we think, that his debt was not paid, and that it was not so understood or intended. It seems to be admitted that the individual notes of Gale to which these notes are collateral, belong to Clark, and that these notes also belong to him so far as Gale’s liability is concerned, and that if Gale should pay the amount of the debt Clark would be entitled to the money, or that he might collect it from Gale if he could; and this is doubtless all true, for it is plainly shown that the debt to the firm was transferred to Clark; but if the presumption insisted upon should prevail, Richardson would be entitled to the money if paid or collected, because he had settled the debt. If the debt was settled by Richardson, he would have been entitled to receive these notes, and the notes of Gale to which they were collateral, and they should have been delivered to him instead of -being turned over by him to Clark. If the presumption would hold, and Gale should be sued by Clark, he could successfully plead that the debt had been paid by Richardson -by being included as an item in his account and charged to him. This would be to override by means of a presumption the agreement of the parties, in Avhich Gale’s notes Avere enumerated among the bills receivable, and under Avhich they and the collateral notes Avere turned over to Clark. We think that there Avas no presumption arising from the fact of the sale that Richardson settled and paid the debt Avhich the notes AATere given to secure. Rone of the reasons suggested Avould, in our judgment, authorize us to approve the direction to find for the defendant. The judgment will be reATersed and the cause remanded. Reversed (md remcmded.