Rawlings v. Fish

Opinion of the Court by William Rogers Clay, Commissioner Affirming. This appeal involves the settlement of a partnership between appellant, C. M. Rawlings, and appellee, E. T. Pish. The action was brought by Pish, and Rawlings, set up certain claims to the proceeds of the partnership property by answer and cross petition. On final hearing, the chancellor gave judgment in favor of Rawlings for, the sum of $500, with six per cent, interest from April 30, 1906, until paid. The judgment recited that the two shares of stock owned by Rawlings in the Richmond, Kingston and Berea Telephone Company were included in the judgment, and that they were to be surrendered at the time the judgment was paid. If surrendred, Pish was to be credited with $50 upon the judgment in lieu thereof. The judgment further provided that each party was to pay his own costs. Prom the judgment thus en-. tered, Rawlings appeals, and Pish prosecutes a cross appeal. It appears that in 1896 or 1897 Rawlings and Pish began the construction of a telephone line between Berea and Lancaster, known as the Berea Paint Lick and Lancaster Telephone Line. They secured contributions from various parties, and also did certain work in- connection with the construction of the line. They put into this line practically the same amount of work and money, and afterwards drew up a written contract providing that they were to be equal partners. The contract provided that each partner had contributed $500 as the [765] capital stock of said company. Under the contract, books of account were to be kept, on which should be entered all money received or paid. No money or other property was to be drawn by either party from the partnership for his own use, except by the written consent of the other partner. Neither partner had any power to create any debt against the firm or to make any contract to bind the firm as surety without the written consent of the •other party. The contract covered any additional lines that the company might erect or acquire. About the time, and perhaps prior to the time, of the construction of the Berea, Paint Lick and Lancaster line, Bawlings and Fish also constructed the Berea, Kingston and Bichmond Telephone Company, a corporation. Of the stock of this company Bawlings owned two shares, while Fish owned a larger number, and subsequently acquired practically all the stock. The stock consisted of 40 shares of $25 each. In addition to the f oregoing lines, there was in Berea what is known as the Berea Exchange, consisting of all the telephone lines, connections, etc., in Berea, together with a line from Berea to White Station and another line from Berea to Big Hill. For several years Bawlings lived in Berea and book an active interest in the telephone lines. For a while in 1900 and 1901, he and his wife operated the exchange. Bawlings says that during this time the earnings of the line exceeded the cost of operation by at least $200. On the other hand Fish claims that included in these receipts are several items which were never collected, and others which were not due entirely to the Berea, Paint Lick and Lancaster Line, but were to be prorated with the other lines. The books which Fish kept are frequently referred bo, and reference is made in the record to an abstract of the books which he filed as an exhibit, and also to an abstract which Bawlings filed as an exhibit. Neither of the exhibits is in the record. According to Fish’s testimony, the receipts for the Berea, Paint Lick and Lancaster Line during the whole time that he was secretary and treasurer, amounted to only $675.07, while the disbursements amounted to $992.27. Bawlings’ statement from the same books, as testified by him, shows the receipts to be $993.64, while the disbursements were $801.34. It appears that in 1906 Fish, without consulting Baw [766] lings, sold a one-half interest in the Berea, Paint Lick and Lancaster Telephone Line and one-half of his .stock in the Berea, Kingston and Richmond Telephone Company, and also a one-half interest in the Berea Exchange, to W. H. Porter, for the sum of $2,500. In the same year Fish, Porter and one Claggert organized a corporation known as the “Berea Telephone 'Company,” the capital stock of this company being $30,000, divided into 300 shares of $100 each. $10,000 of this capital stock was estimated by the incorporators as having been paid up in the following manner; Claggert contributed $3,333.33 in cash; Fish and Porter each put in $500 in cash. Fish also put in his remaining half-interest in the Berea, Paint Lick and Lancaster Line, the remainder of his stocks in the Berea, Kingston and Richmond Company and his remaining half-interest in the Berea Exchange and accessory lines. In 1907, Fish sold to Porter his other one-half interest in said property, that is his one-third interest in the corporation, the Berea Telephone Company, for $2,500. It will thus be seen that Fish received for all the properties the sum of $5,000, less $500, or $4,500. Porter says that in- making the purchases from Fish, they put upon the various properties the following estimate: (1) Berea, Paint Lick and Lancaster Telephone Line, $500; (2) Berea, Kingston and Richmond Telephone Company stock (38 shares) $1,000;. (3) Berea Exchange and accessory lines, $3,500. The testimony for Fish is that the Berea, Paint Lick and Lancaster line was in a run-down condition, and was practically worthless. On that account it had to be re-built. This state of affairs is testified to not only by Fish and Porter, but by the manager of the East Tennessee Telephone Company at Frankfort, Kentucky, who examined the line with a view of purchasing it for his company. The testimony for Fish is also to the effect that the franchise was worthless, as anybody could get a franchise. Fish swears that the Berea, Paint Lick and Lancaster Line was not worth over $500. The managers of the East Tennessee Telephone 'Company at Frankfort state that it was worth considerably less than that. !At first Fish swears that the company was indebted to him in the sum of $135. He afterwards made a few changes in his books, and fixed this sum at $323.20. This sum he claims to have advanced out of his individual funds in order to pay the debts of the line. Fish claims to be’ the. solé [767] owner of the Berea Exchange. He says that he brought poles from his mountain farm and purchased all the wire used in the Exchange, and that Rawlings had no interest whatever in it. On the other hand, Rawlings, while admitting that he did not put any money into the Berea Exchange, claims that he helped to construct it, and made the arrangements for the switch-board. He also claims that Fish constructed the Berea exchange with the proceeds of money received by him from the connecting telephone lines, and that half of these proceeds belonged to Rawlings. It is estimated that the Bierea, Paint Lick and Lancaster line originally cost about $788.56. This is exclusive of the franchise and of the work done by Fish and Rawlings. In the written contract between the parties each of their shares is estimated to be worth $500. Rawlings insists that the valuation placed by Fish’s witnesses on the Berea, Paint Lick and Lancaster line is entirely too low, while that placed on the Berea Exchange, which Rawlings claims cost only |about $600, is excessive. Rawlings also insists that he is an equal partner with Fish in the Berea Exchange. The chancellor evidently fixed the value of the Berea, Paint Lick and Lancaster line at about $900. The parties themselves fixed it at about $1,000 by the pártnership contract, and we see no reason to disturb the value thus fixed. As to whether or not there was a partnership in the Berea Exchange, the evidence is very conflicting. Fish swears one way and Rawlings the other. It is evident that Fish paid for the poles and wires, while it is equally true that Rawlings had something to do with making the contracts for the switch-boards. Rawlings insists that even if Fish did pay for the poles and wires, he did it with receipts from the telephone company. The evidence fails to show that the receipts exceeded the expenditures. and the written contract between the parties makes no reference to the Berea Exchange. The chancellor was evidently of the opinion that the partnership did not include the Berea Exchange. Fish insists that the judgment is erroneous because of the provision with reference to the two shares of stock in the Berea, Kingston and Richmond Telephone Company. It is argued that the judgment is manifestly for $50 too much, and that Fish does not desire the two shares of stock held by Rawlings. It is clear that the [768] two shares1 of stock are valued in the judgment at $50; If Rawlings surrenders the stock, the judgment is for $500; if he fails to surrender it, the judgment is for $450. The judgment, therefore, in effect is simply a judgment for $450 and we see no reason to disturb it because of the stock feature. Fish .also insists that the court failed to give him credit for the $323 which 'he paid in excess of the receipts from the telephone company. We are unable to pass on this item, because neither the books nor the abstracts from the books, referred to as exhibits in the testimony are before us. The important question in this case is: Did the partnership embrace the Bieirea Exchange. In view of the conflicting evidence upon this question, and of the fact that upon a consideration of the whoíé case the mind is left in great doubt, and we are unable to say with any reasonable degree of certainty that the chancellor erred in his conclusion, the finding of the chancellor will not be disturbed. Byassee v. Evans, 143 Ky., 415; Wathen v. Wathen, 149 Ky., 504. Judgment affirmed both on original and cross appeals.