Green v. Stacy

Pinney, J. 1. The copartnership between the plaintiff and defendant was dissolved when the defendant sold out the stock of goods at Keshena belonging to the firm and terminated its business. As there was no agreement to the contrary, each partner had then a right to insist on a sale of' the partnership assets and that they be converted into-money, and neither had the right to have the partnership property or any portion of it divided in specie. The right to wind up its affairs — that is to say, to get in its credits, convert its assets into money, pay its debts, and divide the residue — belonged as much to one of the late partners as to-another. If recourse is had to the court for that purpose, it will, if necessary, appoint a receiver, direct a sale of the-assets and payment of partnership debts, settle all questions52 of account between the partners, and make division of the residue, if any, in proper proportions. Lindley, Partn. (6th. ed.), 602-604. This action was instituted to effect these purposes. It was as essential to the proper winding up of the affairs of the firm that an account should be taken of its ■debts or dealings with third persons as of its assets or of the dealings and accounts of the partners of the firm. 2 Daniell, Ch. Prac. *1249. The rights of the firm creditors are worked ■out through the equities of the partners, upon a dissolution, to have the partnership property applied to the payment of the debts of the partnership. The rights of partners are restricted to the residue that may remain after the payment of the creditors and the adjustment of the accounts of the partners. Lindley, Partn. 430; Tobey v. McFarlin, 115 Mass. 101. It does not appear that any proper account has been taken or stated of the partnership debts. Each partner had . an equal right to insist that the partnership assets should be first applied to the payment of its debts and then to the .adjustment of their partnership claims as against each other. It is only the residue, if any, that may be divided between them as profits. The court should have reduced the notes, -accounts, etc., of the face amount of $11,000, to money, by the collection or sale of them through a receiver, before rendering a final judgment charging the defendant with a gross sum as the plaintiff’s share of the profits, upon the supposition and belief that the uncollected assets would more than pay the unpaid debts to the amount of $600. An account of all partnership matters and dealings is essential to a final decree in an action for accounting by one partner against the other, for all partnership matters should 'be adjusted by the decree. The rule is stated to be that “no personal decree is to be rendered against individual partners until the assets have been converted into money; that is to say, the excess of receipts by a partner over his -disbursements is not to be ordered paid in by him to the re [53] ceiver before the assets have been exhausted, but is a mere item to be debited to him on the final balance; nor, -where all the debts have been paid except what is owing from one partner to the other, should this be ordered paid until the assets are collected,— that is, the creditor partner is to be paid out of the proceeds of the assets if possible.” Bates, Partn. § 971. And this view seems to be well sustained, Tyng v. Thayer, 8 Allen, 391; Paine v. Paine, 15 Gray, 299, 300; Brinley v. Kupfer, 6 Pick. 181; Wild v. Milne, 26 Beav. 505; Rosenstiel v. Gray, 112 Ill. 286; McGillvray v. Moser, 43 Kan. 219; Johnson v. Mantz, 69 Iowa, 710; Allison v. Davidson, 2 Dev. Eq. 79, 87; Moore v. Wheeler, 10 W. Va. 35, 41. The defendant was entitled to have the partnership property and assets reduced to money by sale or collection, and applied to the payment of the debts of the partnership, before the plaintiff could have a judgment im, personam against him for his supposed share of the profits. Eor this reason the judgment of the circuit court will have to be reversed, and the cause remanded with directions to appoint a receiver for that purpose. 2. As the’ defendant denied the existence of the partnership, and denied that profits had been realized, the rule laid down in Caroll v. Little, 73 Wis. 52, should be applied to-the case, and interest on the sum finally found due should be allowed only from the commencement of the action. This proper here to state that the defendant was not entitled to any greater sum for interest on goods or cash contributed' than the $400 stipulated in the written contract between the parties. The evidence does not establish any subsequent-agreement for any other sum as interest, and therefore his-claim in that respect was properly disallowed. Bates, Partn. § 781; 1 Lindley, Partn. 389. 3. The bill of exceptions and the printed record are in such an obscure, confused, and contradictory condition that [54] we cannot attempt to review the case npon the facts with any assurance that we will not be committing instead of correcting error. About seventy amendments were proposed to the bill of exceptions and filed with the clerk, with the stipulation that all but four of them should be “ and a/re hereby incorporated in said bill,” but no attempt was made to embody them in the bill. The appellant seems to have embodied some of them in the printed case, but respondent’s counsel devotes seven pages of his brief to showing in detail that many of them were not so printed and that matter •agreed to be stricken out had been printed and insisted on by appellant as ground for reversal. The court is left to locate these amendments in their proper places, and then to ascertain, if possible, how nearly the printed case conforms to the record when thus corrected. It is obvious that the bill of exceptions has been prepared and settled in entire disregard of correct practice, and ample cause existed for .striking it out. The case appears to have occupied the attention of the referee fourteen days, and the circuit court seems to have carefully reviewed and in some respects corrected his report in minor particulars, increasing the amount found due from the defendant to the plaintiff about $172; but of this increase no complaint is made. We cannot, in this condition of the record, safely affirm that the referee or court erred in any of its findings as to the facts. 4. The contention that the referee erroneously refused to .admit proof to show that the Stacy Logging Company, consisting of the parties to this action and three others, was not •a financial success and was heavily indebted, and that the charge against that company, as it appeared upon the books «of the Keshena store, for $2,528.16, had not been paid, and that the defendant had not received any portion thereof, is not sustained by the record. The statement of this ruling in the bill appears to have been stricken out by amendment. This sum of $2,528.16 is for goods and supplies sold by the [55] parties to this action to the Stacy Logging Company, and ■was dne to their firm. Whether it had been paid to or the defendant had received the benefit of that sum as a credit in his personal account and dealing with the Stacy Logging Company, was a question tried before the referee and determined in favor of the plaintiff, and that finding was approved hy the court. Evidence was given tending to sustain the ■charge as a proper one against the defendant; and although the defendant testified that he never made any arrangement with the plaintiff whereby he was to assume that account, and did not know or think that it had been credited to him and the plaintiff, or himself personally, upon the books of the Stacy Logging Company, yet, on cross-examination, he ■testified that “the heft of this was credited up to me at Oshkosh,” and he does not deny that he received the benefit of the entire sum. In view of all the facts and circumstances and the condition of the record, we cannot say that he was improperly charged with this item. 5. The allowance of $184 to the plaintiff, complained of, was not for his personal services, but for the work of his team in the partnership business at Keshena, and seems to be free from objection. 6. The evidence in respect to the charge of $500 for insurance money, and $500 for the lot at Bessemer, belonging in fact to the plaintiff, tends to show that the money for these items was received by the defendant and used in the partnership business, and that the plaintiff was credited with it on the books. But it was urged that this charge and an item.of $250 charged to Stacy as advanced to him or for his use and benefit, and in respect to which the evidence is not entirely clear, were not partnership transactions or proper items in the partnership account, but were individual claims by the plaintiff against the defendant, and could not be properly litigated in this action. The rale is that merely personal claims are not cognizable in an action to take and [56] settle partnership accounts, even though there are, as in this case, only two partners. In Smith v. Diamond, 86 Wis. 359, which was on demurrer, it was said that: “Neither partner can ascertain and enforce in such action any individual account against his copartner, no matter how such claim arose- or what the state of the account of each partner with the firm may be, . . . for a partner has no claim against his copartner individually on account of partnership transactions. If a partner is in arrears in his partnership account, he is the debtor of the firm, not of his copartner. But, if he owes an individual debt to his copartner, the firm has nothing to do with it, and a claim therefor cannot have any place in an action to dissolve the partnership and settle-its affairs.” Objection was made on this ground to the claim for $1,000 for the insurance money and proceeds of' the Bessemer lot, but the parties thereafter proceeded to-litigate the items mentioned, on the merits, and they have been passed upon by the referee and court. The objection is, in substance, that it would be a misjoinder of causes of' action to admit these claims; but where, as in this case,, there are only two parties, and it is plain that no inconvenience or embarrassment has been occasioned from the course pursued, and that no injustice has resulted, we think that the objection must be regarded as waived, and that the error in this case is one that does not “ affect the substantial rights of the adverse party,” and that under sec. 2829, R. S., it furnishes no ground for reversal of the finding or judgment. Decker v. Trilling, 24 Wis. 610, 615. 7. The item of $1,470, objected to by the defendant, was-for goods purchased by the plaintiff of Upham & Russell in his own name, and which went into the business of the firm,, and he was allowed that sum in his credits by the referee and the court. The evidence tends to show that the goods were purchased by the plaintiff in his own name with the-defendant’s knowledge and in fact at his suggestion. It was57 the duty of the defendant, as between Mm and tte plaintiff, to have furnished these goods. The plaintiff furnished them, and he was on tMs basis rightly entitled to credit for the amount. The evidence does not show that the defendant ever became or was liable to Upham & Russell for the goods, and, as they were furnished to him by the plaintiff,, the credit seems to be just. The result is that, except as already stated, we are not able to say that there is any reversible error in the account so far as it was taken; but, for the error specified in prematurely rendering a personal judgment against the defendant, the judgment of the circuit court must be reversed,, and the cause remanded with directions to appoint a receiver to reduce the remaining assets to money and to take an account of the debts of the partnership remaining unpaid, and for further proceedings according to law. By the Goivrt.— Judgment is ordered accordingly.