Logan v. Dixon

Tayloe, J. Upon this appeal it is contended by the learned counsel for the appellants (1) that the claim of the surviving partners, if they have any, against the estate of the deceased partner, was a proper one to be presented to the county court for allowance in the settlement of the estate of the said H. S. Dixon, deceased, and, not having been presented to said court within the time limited by law, their right of action is barred; (2) that the circuit court has no jurisdiction of this action; (3) that the findings should have stated an account between each member of the firm, before it can be ascertained or adjudged how much the defendants ought to pay. The learned circuit judge held that the first objection of the appellants w&s not well taken, because the county court bad not made the proper order or given the proper notice to the creditors of II. S. Dixon, deceased, to present their claims for allowance, and so the statute relied upon was no bar to the plaintiff’s action. Whether the learned circuit judge decided this question rightly, or not, we do not deem it necessary to determine on this appeal, as we are of the opinion that the plaintiffs could maintain their action if the county court had made the proper order and given the proper notices for limiting the time within which claims phould be presented to said court against the estate. It is very clear to our minds that the claim of the plaintiffs against the estate of II. S. Dixon, for contribution for the payment of the debts of said partnership, was a contingent claim of the surviving partners against said estate, and — 537 — that such claim did not become absolute in favor of said survivors until they had settled and paid all the debts of said firm', and applied all the assets of said firm to the payment thereof; and if such contingent claim was one which might have been presented to the county court for adjustment (a question which we do not decide), still the plaintiffs were not bound under the law to present the same until it became absolute and ascertained by the settlement and payment of the debts and liabilities of said firm and the application of the assets of the firm to that purpose. The law is very plain that the surviving partners must wind up the affairs of the partnership. This proposition is not controverted. Pars. Partn. (3d ed.), 440; Peters v. Davis, 7 Mass. 257; Evans v. Evans, 9 Paige, 178; Dyer v. Clark, 5 Met. 562; Miller v. Jones, 39 Ill. 54; Gleason v. White, 34 Cal. 258. Until the affairs of the firm are wound up and all the debts paid, “neither partner has any remedy against or liability to the other for payment from one to the other of what may have been advanced or received ” in said business. Richardson v. Bank of England, 4 Mylne & C. 172; West v. Skip, 1 Ves. Sr. 242; Howard v. Priest, 5 Met. 585. The representative of a deceased partner may, however, upon a proper showing apply to a court of equity for the appointment of a receiver and the settlement of the partnership business in that way. Evans v. Evans, 9 Paige, 178, 180; Pars. Partn. (3d ed.), 446. After the affairs of the partnership are closed up and all the debts paid, if there be a balance of assets they must be divided among the partners according to their respective interests in the partnership; and if the firm is insolvent, and some of the partners have paid more than their proportionate share towards the discharge of such debts, they may maintain an action for contribution against those members of the firm who have not paid their just proportion of such debts. Gleason v. White, 34 Cal. 258; 3 Pom. Eq. Jur. sec. 1416. — 538 — Under the foregoing rules of law applicable to the rights and liabilities of partners as between themselves, it is very clear that the surviving partners could not maintain any action or proceeding against the representative of the deceased partner for contribution for the losses sustained by the firm until after the business of the firm had been wound up and settled by the survivors, and, until that was done, their claim against the estate of the deceased partner was a purely contingent claim, not clearly ascertainable until the business of the firm was wound up and fully settled. The surviving partners hold the property of the firm in the character of trustees, for the settlement and payment of the debts of the firm, and for the purpose of distributing the surplus, if there be any, to the several members of the firm, and to the representative of the deceased member. Pars. Partn. (3d ed.), 443, and notes. If the firm be insolvent, the survivors assume the character of sureties for the deceased partner, if the creditors of the firm elect to proceed against them to collect their claims dpe from the partnership, and in the character of sureties for the deceased partner they can maintain no action against the estate of the deceased partner until they pay the debt of the firm. In any view of the case, the claim of the surviving partners against the estate of the deceased partner for contribution is a contingent claim within the meaning of the statute, and became absolute only when the business of the firm was finally settled, the assets converted, and the debts paid. This, we think, was fairly settled by this court in the case of Ernst v. Nau, 63 Wis. 134. Having satisfactorily shown that the claim of the plaintiffs was a contingent claim against the estate of the deceased partner, the plaintiffs had an option either to present the claim against the estate as a contingent claim, under secs. 3858, 3859, R. S., or to delay until the claim became absolute by the settlement of the affairs of the firm, and then — 539 — present the claim under sec. 3860, E. S., within one year after it shall' become absolute. When a creditor presents a claim under sec. 3860, he can only be paid out of the assets of the deceased still remaining in the hands of the executor or administrator not then lawfully distributed or applied to the payment of other debts theretofore presented and allowed against the estate; and sec. 3861 provides that when, at the time such claim is presented under the provisions of sec. 3860, the executor or administrator shall not have sufficient assets to pay the whole of such claim, the creditor shall have the right to recover such part of his claim as there are not assets in the hands of the executor or administrator to pay, from the heirs, devisees, or legatees who shall have received sufficient real and personal property from the estate that was liable for the payment of the debts of the deceased. The allegations in the complaint in this case show that the administrator of the estate of EL S. Dixon, under an order and decree of said county court of Waupaca county, duly settled his accounts as such administrator on the 22d day of May, 1882, and distributed to the widow and heirs at law of deceased all of said estate, and that the amount of the estate so distributed by order of said court was over $12,000, and that on the same day said administrator was discharged; and it is further alleged that said administrator has not now, and has not had since the date of said decree distributing said estate, any assets, estate, money, or property belonging to the said estate of said EL S. Dixon. These allegations are not denied in the answer. The complaint also alleges that the plaintiffs, as surviving partners of the said firm, fully completed the settlement of the affairs of the said copartnership on or about the loth day of May, 1885, and that the claim of the plaintiffs against said EL S. Dixon, deceased, became absolute on that day. These allegations of the complaint are not denied by the answer, al — 540 — though the answer denies that they proceeded with due diligence to settle the affairs of said partnership; and there are other denials as to the amount of the debts owing by the firm, and the amount of debts paid by the surviving partners in the settlement of the business of said partnership. This action was commenced in November, 1885. Plolding, as we do, that the claim of the plaintiffs against the estate of IT. S. Dixon was a contingent claim which could not have been adjusted or allowed by the county court until the surviving partners had settled and wound up the business of the firm, and which did not become absolute before the estate of Dixon had been settled and the assets distributed to the heirs and widow, it was not barred by sec. 3844, R. S., and the plaintiffs could properly pursue their remedy against the heirs and distributees of said deceased, under the provisions of oh. 141, R. S. This question was fully considered by this court in Mann v. Everts, 64 Wis. 372. In that case the chief justice says: “According to our view, the statute refers to a contingent claim or liability which can be established by proof, and tho amount ascertained. Where a contingent liability exists, and the contingency happens so that the contingent liability becomes an absolute debt which may be proven by the creditor before the settlement of the estate has been closed and the property distributed, there the statute bars the claim if not presented to the commissioners or the county court within the time allowed.” See, also, Webster v. Estate of Lawson, post, p. 561, in which an opinion is now filed; McKeen v. Waldron, 25 Minn. 466. No argument has been made on the part of the appellants that the evidence does not support the findings of fact so far as such findings relate to the amount of losses Avhich were sustained by the said New London Stave Company in carrying on and closing up said business. We must therefore consider that such- findings are supported by the — 541 — evidence. But it is insisted by the learned counsel for the appellant that it does not follow that because the losses were in fact the sum of about $12,000 the estate of the said deceased partner is liable to contribute to the amount of one sixth part of said losses, and that to determine the question as to how much each partner should pay of said losses an account of the partnership business must be stated as between the several partners, showing the state of the account of each several partner with the firm. It is insisted that upon such an accounting it might appear that the partnership was indebted to the estate of the deceased partner in a sum sufficient to balance the one-sixth part of said losses, and that in such case the estate of said deceased partner could not be compelled to contribute to the other partners for the amount of the losses of the firm. There is no doubt that, in order to make out a case for contribution from the estate of a deceased partner, the state' of the accounts of the several partners with the firm ought to be shown, as well as the fact that there were losses incurred on the closing up of the whole business which were paid by the surviving partners out of the money not the property of the firm. This case, we think, proceeded upon the theory that there were six equal partners composing the firm. In fact, this is alleged in the complaint and admitted by the answer of the defendants. We think the trial proceeded also upon an implied understanding that neither partner had contributed more than his equal share of the capital stock of said firm, and that, if there were any losses upon the closing up of the business of the firm, each.was liable' to contribute equally in paying such losses. No evidence was given on the trial tending to show that any one partner had contributed more or less than his equal share. No exception was taken to the findings by the appellants because such findings did not show the state of the accounts between the separate partners and the firm, nor was there — 542 — any request made to the court, either to take proofs on that question or to make findings in that respect. Nor is it claimed by the learned counsel upon the argument of this appeal that, if such an account were taken, it would be in any way beneficial to their clients. Considering the admissions in the pleadings and the character of the evidence in the case, the want of exceptions to the findings upon the point now raised in this court, and in the absence of any claim even that the appellants would be benefited by such an accounting, we do not think the judgment should be set aside for the want of a formal finding upon a subject which would apparently be of no advantage to the appellants. By the Court.— The judgment of the circuit court is affirmed.