Scott v. Buffum

Under the provisions of chapter 106, General Statutes, upon the death of either partner, the copartnership affairs may be fully adjusted and settled in the probate court, either by the surviving partner, or the representative of the deceased partner, or by arbitration. But if not thus settled, they may be adjusted in a court of equity the same as before such statute was enacted. Where, upon the death of one partner, his administrator has one half of the partnership property appraised as belonging to his estate, and disposes of the same knowing that there are company debts outstanding, such administrator will be charged with the whole amount of such property as against creditors of the firm, and with his just proportion of the company debts, not exceeding the whole amount of such property, as against the other member of the firm, before any of such property can be taken to pay the private debts of the deceased partner. In such case a creditor of the partnership may prove his debt against the estate of the deceased partner, or he may collect it of the surviving partner, and such claim will not be barred, except by'the general statute of limitations.

In Equity. Charles W. Scott, of Winchester, in said county, complains against Lurana Buffum, of said Winchester, and Henry Starkey, Jr., of Brattleboro’, in the county of Windham and State of Vermont, and says, that on or about January 1, A. D. 1861, he and one' David Buffum, 2d, then of Swanzey in said county, entered into and formed a copartnership in business, under the firm name of Buffum & Scott, for the purpose of manufacturing and selling bedsteads at said Swanzey, and that he and the said Buffum continued in said business as such copartners — each being equally interested therein — until about October 1, A. D. 1.862, at which time, — both having enlisted into the sixteenth regiment New Hampshire volunteers, — they made a settlement of their private dealings with each other, and so far adjusted and settled their copartnership affairs and business, that nothing remained undisposed of and unsettled except the partnership property and liabilities, in which each was equally interested; that as the result of that settlement the said Buffum gave to the plaintiff the said Buffum’s promissory note for $200, payable on demand with interest; that on June 19, A. D. 1863, the said David Buffum deceased intestate, and on September 1, A. D. 1863, the said Lurana Buffum, his'widow, and said Henry Starkey, Jr., were duly appointed administrators of his estate, and accepted and entered upon the discharge of the duties of that trust; and that afterwards, upon their representation, said estate was decreed to be administered in the insolvent course. The plaintiff further says, that at the time of the decease of said Buffum there were debts to the amount of $1,600 and upwards outstanding against and due from said firm of Buffum & Scott; that of this indebtedness $931.04 only was proved against the estate of said Buffum ; and that the whole of said partnership indebtedness has since been paid and discharged by the said plaintiff with his private funds, with the exception of about $390 paid by the said defendants. The plaintiff further says, that at the time of the decease of the said Buffum there was personal property of the value of $2,200 belonging to said firm, one undivided half of which the said Lurana and Henry caused to be inventoried as a part of the estate of said Buffum, and, on November 9, A. D. 1863, sold to the plaintiff for the sum of $1,100 ; that in payment and as security for said sum the plaintiff surrendered to the said Lurana and Henry the note for $200, herein-before mentioned, which he then held against the said Buffum and his estate, and gave to her his three promissory notes of that date, all payable on demand with interest, — one for $200, one for $300, and one for $400 ; that, at the time of the purchase of said undivided half of said copartnership property by the plaintiff, it was understood and agreed between the said plaintiff and the said Lurana, as administratrix, — and such understanding and agreement formed a material part of the consideration of said purchase and said notes, — that said co-partnership indebtedness should be paid equally by them ; and that, in case more than one half thereof should be paid in the first instance by the plaintiff, the said Lurana, administratrix as aforesaid, would deduct the amount so paid by him in excess of one half of said indebtedness from the amount due upon and secured by the plaintiff’s said notes, and allow the same to him in payment so far thereof. The plaintiff further says, that the said Lurana and Henry have never paid any part of said partnership indebtedness to the creditors of said firm, nor repaid to him any part of the sum so paid by him, as hereinbefore stated, in excess of one half thereof, or allowed any part thereof in payment of said notes, or either of them; but that, in violation of the agreement and understanding between her and the said plaintiff, the said Lurana has sold and assigned to third persons, — to whom the plaintiff has been compelled to pay the same in full, — said notes for $200 and $300 ; that the said plaintiff was compelled to pay, and did pay, in the month of September, A, D. 1869, upon said note for $400 the sum of $225 ; and that the said Lurana is threatening and intending to collect of him the remainder of said note. The plaintiff further says, that the said Lurana and Henry, as administrators of the estate of said David Buffum, 2d, have received, as proceeds of said partnership property, and still retain in their hands, more than sufficient to pay and discharge one half of said partnership liabilities; that the private estate of said deceased was more than sufficient to pay and satisfy all his private liabilities, and that all such have been paid and satisfied; that the said Lurana and Henry have never settled their account as such administrators, and there has been no distribution of the funds remaining in their hands after payment of the private debts of said deceased ; that the plaintiff has repeatedly requested them to enter into an accounting with him of the affairs of said copartnership, with the view of ascertaining and determining the amount which may be due on account of said partnership from him to the estate of said deceased, or from said estate to him, and to pay over to him any balance which should be found due to him upon such accounting : but the said Lurana and Henry have neglected and refused, and still neglect and refuse, so to do. Wherefore the said plaintiff prays that an account may be taken of all the said copartnership transactions and dealings until the time of the decease of said David Buffum, 2d, and since'; and that the said Lurana Buffum and Henry Starkey, jr., as such administrators, may be directed to pay to the plaintiff what, if anything, shall upon such account appear to be due to him from them as such administrators, the plaintiff being ready and willing, and hereby offering to pay to them what, if anything, shall appear to be due to them on account of said copartnership business and dealings ; that the said Lurana may be enjoined and prohibited from attempting to collect or negotiate said note for $400 until after said account shall have been taken; and that such other orders and decrees may be made as justice shall require.. To this bill a demurrer was filed, alleging that the plaintiff was not entitled upon said bill to the relief he prays for, because he therein seeks to charge the estate of said David Buffum, 2d, the defendants’ intestate, on a contract made by one administrator after the intestate’s decease ; and because it appears by said bill that the partnership affairs are so adjusted that there is no account to be taken; and because the plaintiff has a plain and adequate remedy at law. Upon this demurrer it was held, at the June term, 1871, Sargent, J., delivering the opinion of the court, that this was not an attempt to charge the estate upon a contract'made with the administrator. Such a contract is stated, to be sure, rather as explanatory of the past conduct of the plaintiff, and also, perhaps, of his present position; but the court is not asked to enforce it. On the contrary, the defendants having violated it, as is admitted by the demurrer, the plaintiff now asks that the same steps may be taken which would have been necesry in the first place to settle the partnership affairs if no contract had been made. Although something had been done towards adjusting the partnership matters by the partners themselves, yet something remained to be done. Partnership property remained undisposed of, and partnership debts unadjusted: while such was the fact, either party might resort to a court of equity'to complete such settlement. The General Statutes, ch. 190, sec. 1, provide that the supreme court shall have the power of a court of equity in cases cognizable in said court, and may hear and determine according to the cause of equity, (among other things) “ in case * * * of the affairs of copartners, joint tenants or owners, and tenants in common.” This has been one of the subjects over which the supreme court has always had original equity jurisdiction, by express provision of the statute, since full equity powers were conferred upon the court in 1832. And so, when the law of 1855 was passed authorizing limited partnerships,-it was specially provided that the supreme' court may hear and determine, as a court of equity, all questions arising under this chapter. There are, no doubt, many questions connected with partners and partnerships that may be settled in actions at law. See chapter 106, General Statutes. But courts of equity are not ousted of their jurisdiction because courts of law have adopted equitable principles, or because some other way has been provided for settling some of those questions where equity had originally exclusive jurisdiction ; but where courts of law have now assumed the same equitable jurisdiction, both courts will continue to exercise concurrent jurisdiction, and a party may apply to either for relief, while in other cases the general rule is, that equity will not assume jurisdiction of a case where a party has a plain and adequate remedy at law. Judge Story says,' — “ It can excite no surprise that courts of equity now exercise a full concurrent jurisdiction with courts of law in all matters of partnership, and, indeed, it may be said that, practically speaking, they exercise an exclusive jurisdiction over the subject in all cases of any complexity or difficulty.” 1 Story’s Eq. Juris., sec. 683. See also Heath v. Derry Bank, 44 N. tl. 174, and cases cited; Walker v. Oheever, 35 N. H. 339 ; Wells v. Pierce, 27 N. H. 503. Demurrer overruled. Thereupon the defendants filed an answer. The answer admits the partnership, the death of Buffum, and that the defendants are the administrators of his estate ; that they had one half of the partnership property appraised as belonging to his estate, supposing that to be their duty; that Buffum’s half of said property was appraised at $970.75 ; that after said appraisal, said Starkey has had nothing to do with said property or the proceeds thereof, or with any negotiations pertaining thereto ; but that said Lurana has had the entire control and management of said property, and that she alone disposed of the half of the partnership property belonging to Buffum’s estate to the plaintiff for $1,100, receiving a note for $200, signed by her deceased husband, and the plaintiff’s notes for $800, and his verbal promise to pay the other hundred, — but denies that. he has ever paid the same; — admits that he has paid all the notes he gave, though a portion of one of them had been paid since this suit was commenced, under some arrangement between the parties; says that the defendants had no knowledge of the amount of the partnership debts outstanding, if any, and did not know whether said Buffum’s estate was solvent or otherwise, but that a commissioner of insolvency upon said estate was duly appointed, with the plaintiff’s knowledge, and that said Lurana supposed that the partnership debts, if any, would be proved before said commissioner for allowance against said Buffum’s estate, and that it would be the plaintiff’s business to see that such claims were so presented, if he intended to charge the estate of Buffum, and that the plaintiff’s note which she received would be assets in her hands, as administratrix, to apply in payment of partnership debts which might be allowed by the commissioner, but not to pay any other partnership debts not thus allowed; that the amount of partnership claims allowed * by the commissioner was $931.04, of which sum said Lurana has paid $392.23, and that she has offered the plaintiff' to pay her just half of the residue so allowed, and is ready so to do on demand ; but as to any other partnership debts mentioned in the bill as paid by the plaintiff, the defendants have no knowledge, and deny the same, and deny their liability to pay him therefor. ' They allege that the plaintiff, as surviving partner of said firm, had full power and authority under the law to close up and settle the partnership affairs, but chose the method above stated rather than to proceed under the statute in such case provided, under which he had a plain and adequate remedy; that they do not know whether said Buffum’s private estate is more than sufficient to pay his private debts and expenses of administration, as they have never settled their administration account. Wherefore the defendants say that there arc no partnership transactions or dealings to be settled or adjusted by the court, and pray that the bill may be dismissed. The case was heard upon bill, answer, and proofs.