Bell v. McCoy

Barclay, J.

The suit is in equity for a partnership accounting and other relief. The trial court found for plaintiffs, and defendant brought the case to the supreme court for review.

*556 The parties to the suit. were at the outset as follows :

■ Mary C." Bell, administratrix of the estate of Isaiah A. Bell, deceased; Mary C. Bell, administratrix of the partnership estate of Bell & McCoy; Mary C. Bell, guardian of Leroy Bell and Fred Bell, minors, heirs at law of Isaiah A. Bell, deceased; Mary C. Bell, widow of Isaiah. A. Bell, deceased, in her own right and Leroy Bell, plaintiffs, against Margeretta McCoy, administratrix of the estate of John P. McCoy, deceased; Margeretta McCoy, Mary A. Spires and Jesse Spires, her husband, Fred G. McCoy, a minor, and Nora E. McCoy, a minor, defendants.

The petition demanded an account to ascertain Bell’s share of the partnership property of Bell & McCoy, alleged to be in ¡possession of the estate of McCoy, and to belong to plaintiff, Mrs. Bell, as administratrix of the partnership estate.

All of the defendants, except Mrs. McCoy, as administratrix of the estate of J. P. McCoy, demurred to plaintiffs’ petition on the ground that they were neither. proper nor necessary parties- defendant. The court sustained the demurrer, and the widow and heirs (as such) were “eliminated” from the case, leaving Mrs. McCoy, as administratrix, the sole defendant. The case proceeded to trial upon the original petition and the answer and reply, the general nature of which will sufficiently appear in the course of the opinion.

The following dates will aid to an understanding of our outline of the case:

July 28, 1888. Mining lease by Hilliard and Brewster estate to McCoy.

May 1, 1889. Transfer of half interest in the lease by McCoy to Bell.

Oct. 3, 1889. Deed of Hilliard and Brewster heirs to Murphy and Brewster.

*557 Oot. 24, 1889. Last named deed recorded.

Dec. 9, 1889. Bell died.

Dec. 18, 1889. trix of his estate. Mrs. Bell appointed administra-

Jan. 15, 1890. and Brewster. Quit-claim by Hilliard to Murphy

Feb. 20, 1890. Clark & Co. Deed of Murphy and Brewster to

July 20, 1890. New lease by Clark & Co. to McCoy.

Jan. 30, 1892. Mrs. Bell qualified as administratrix of Bell & McCoy partnership estate.

May 3, 1892. McCoy died.

May 9, 1892. Mrs. McCoy appointed administratrix of his estate.

May 26, 1892. This suit was begun.

At the time of the first lease above mentioned, the east half of the southeast quarter of section thirty-three, described therein, was owned by Mr. Hilliard and the estate of Mr. Brewster, deceased, in equal parts. The lease was for ten years. It was executed to McCoy by Hilliard in his own right and as administrator of the estate of Brewster, although no order of the probate court had authorized it. All parties, however, acted on it as valid. It was mentioned expressly as a- subsisting term when the owners transferred the paramount freehold to Murphy & Brewster, October 3, 1889.

When McCoy sold the half interest to Bell in May, 1889, they formed a partnership to develop the mineral resources of the land. Their agreement was, in substance, that McCoy should superintend the active mining operations, purchase the necessary machinery and materials, employ and manage the required labor; keep the books; sell the product; pay all expenses, including the royalty (as provided by the lease) to the *558 owners, and render periodical statements to Bell, who was not expected to give personal attention to the work. McCoy was to receive a certain sum per day for his services; Bell was to furnish funds as needed to carry on the proje,ct, upon statements of account by McCoy.

The firm (under the mangement of McCoy) put up machinery of various kinds on the leased property and went forward to carry out the objects of the venture, until the death of Bell. After that event, and the appointment of Mrs. Bell as administratrix of the estate, McCoy had several interviews with her (and also with her attorney)-in which he (McCoy) acknowledged the partnership relation as subsisting in regard to the property. McCoy had then possession of the tract of eighty acres to which the first lease applied, and also of the machinery and other assets of the old firm. In July, 1890, the lessors of the property, Messrs. Clark, Cochran, and Phelps, proposed to McCoy that if he would surrender one half of the firm tract, they would make a new lease for another term of ten years for the remaining half. This proposition McCoy accepted. He then took a new lease in his own name. Afterwards valuable mineral developments were made on the land, so that the share due the Bell & McCoy partnership estate was found by the trial court to be $2,781.50 at the time of the decree on the circuit.

The trial court found that the firm was the equitable owner of the lease to McCoy of date, July 20, 1890, and gave judgment for the profits arising therefrom. It was also adjudged that plaintiff, as administratrix of the firm estate, was entitled to possession of the said leasehold for the purpose of administration of the partnership assets of Bell and McCoy,

Defendant appealed, December 28, 1893, from the finding and judgment after the ordinary preliminary *559 motion and exceptions. Plaintiffs also appealed, at a later day of the same term; but only the defendant filed a transcript or any record in the supreme court.

1. It is claimed by defendant that the trial court erred in holding that the Clark & Co. lease of 1890 was part of the firm assets of Bell and McCoy because that lease was not mentioned in the petition. The plaintiffs’ pleading counts upon the facts of the original partnership relation, the interest of the firm in the first lease, and asks an accounting of all the partnership dealings, and general relief.

The answer set up fully the last lease, claiming it as the exclusive property of McCoy; which claim plaintiffs denied by the reply.

No objection was made to the lease when offered by plaintiffs, nor was any objection of want of conformity of the evidence to the allegations suggested at the trial. Any objection now interposed to the state of the pleadings, which could have been obviated by an amendment of the pleadings on the circuit, ought to be ignored if it was not first submitted there. We have sought to find somewhere in the record of the circuit hearing any intimation of such an objection, but as we have found none we pass by the assignment of error on this point without further comment than that we regard the objection as unavailing. R. 8. 1889, sec. 2302.

2. McCoy had possession of the leasehold property of the old firm, and upon surrender of one half of it, secured a new lease to himself (for a long period) to the remaining one half of the original tract. Defendant argues that McCoy had the right to thus acquire the leasehold title to the old firm property. We do not agree to that contention. So long as the firm affairs were not wound up, McCoy was bound to account in equity for his management of its property. *560 He could not dispose of the firm property without being obliged to account for any profit he might thereby secure for himself. He expressly recognized his relation to the property as a partner, even after the death of Bell. He could not equitably be thereafter permitted to change the firm title into his individual title, except under the obligation to account for advantages thereby gained, and for which his estate has been called upon to respond in the suit at bar. Had he desired he might have taken steps to wind up the partnership affairs and sever the interests of the partners. But while he retained the partnership assets, and continued to prosecute the firm’s enterprise, he could not escape the liability to account for his partner’s share of any profits secured through the means which 'the firm’s resources placed at his command.

A claim is advanced in argument that Bell had failed to comply with his agreement to furnish funds for the firm’s operations, and that he in effect abandoned the partnership and its assets to his partner before his (Bell’s) death. But the learned trial court evidently found against that claim by declaring that the partnership existed at the time of Bell’s death, and that the firm then owned the leasehold first above mentioned. The evidence fully sustains those findings.

The original lease was never forfeited by any of the landlords. The exchange for a new lease (covering half of the original holding) was the result of negotiations between one of the landlords and McCoy, in which the latter was informed that, as to half the land, the Hilliard lease was probably not valid for want of due authority to charge the Brewster estate. When McCoy took the new lease the old one was in force, and its surrender certainly formed at least part of the consideration for the new lease to him alone.

*561 In such, circumstances we consider that the estate of McCoy was answerable for the profits of the new lease and that the property it embraced i&as equitably that of the firm of Bell and McCoy.

3. Until there is a liquidation of the partnership estate, the realty of the firm may be dealt with, and managed, by the administrator of the partnership estate just as any other asset of the firm. Plaintiff Mrs. Bell, as administratrix of that estate in this case, is entitled to the possession and control of the leasehold, and it is not material whether it is regarded as real or personal in nature, so far as concerns the present controversy.

4. The plaintiffs insist that they are entitled on this appeal to open up the question of the correctness of the trial coui’t’s ruling sustaining the demurrer of the defendants who were discharged from the case as improperly joined. But the plaintiffs did not file any transcript on appeal, and hence must be held to have abandoned the same. The act of 1895 (Laws, 1895, p. 94) does not apply to the case at bar which had been long pending and in which the appeal had been already allowed. R. S. 1889, secs. 6596, 6598; Risley v. St. Louis (1864), 34 Mo. 404 .

If certain defendants (who were let out of the suit on the demurrers) were essential parties to the judgment reached, a different question from that before us might require to be met. But as the case stands, the defendant in court is in possession of the partnership property, and the judgment as rendered is in conformity to law. It is affirmed.

Brace, C. J., and Maoearlane, J., concur. Robinson, J., does not take part.