Berkey v. Judd

• Decision Date: 23 November 1875
• Citation: 22 Minn. 287
• Parties: HIRAM BERKEY <I>vs.</I> GEORGE B. JUDD & ORANGE WALKER, late Partners, etc
• Court: Minnesota Supreme Court

22 Minn. 287

HIRAM BERKEYvs.

GEORGE B. JUDD & ORANGE WALKER, late Partners, etc

Supreme Court of Minnesota.

November 23, 1875.

COPYRIGHT MATERIAL OMITTED

On and for some years prior to September 24, 1858, the plaintiff and the defendants, George B. Judd and Orange Walker, together with Albert H. Judd and Asa H. Parker, were copartners in business as Judd, Walker & Co. This firm carried on a general logging and lumber business at Marine, in this state, having a saw-mill and store at that place, and being the owner of a large amount of pine lands and other real estate. The firm had also an one-half interest in a lumber yard and business carried on at St. Louis, Missouri, in the name of Judd & Leeds. George B. Judd lived at St. Louis, and had the management of the one-half interest in the firm of Judd & Leeds. Walker had charge of the store and the general business transactions at Marine. Parker looked after the logging interests of the firm, while the plaintiff had charge of the saw-mill and lumber at Marine, and Albert H. Judd, who lived in Illinois, took no active part in the business. In the autumn of 1857 all the partners agreed to a dissolution of the firm, to be effected in the following year. Pursuant to this agreement they all met at Marine, in the summer of 1858, where an inventory was made of the assets and liabilities of the firm, and, on September 24, 1858, and after some time spent in negotiation, Parker sold his interest, which was two-ninths, and the plaintiff his interest, which was one-ninth, to the Judds and Walker, they agreeing to pay the firm debts. Immediately upon the dissolution thus effected, the Judds and Walker formed a new partnership, under the old name, and continued the old business until January, 1865, when Albert H. Judd died, leaving the defendants sole surviving partners of the last-named firm. Upon the sale by plaintiff of his interest in the firm, it was agreed that he should receive in payment property of the partnership, at an agreed value, to the amount of $17,730.90, while Parker also received property to the amount of $35,000.00.

In 1867 the plaintiff brought this action to have the sale or settlement of September 24, 1858, declared void as to him; that an account be taken of all the assets and liabilities of the old firm of Judd & Leeds; for judgment for the difference between the amount actually received by him and the value of his one-ninth interest in the firm; and for general relief. The grounds of plaintiff's claim were that the price he was to receive upon the sale was to be a gross amount, equal to his one-ninth interest; that the defendants fraudulently imposed upon him, as a true inventory of the assets of the firm, a statement from which the net value of the one-half interest in the firm of Judd & Leeds, amounting to $35,000.00, was fraudulently omitted, and in which were other omissions of assets, and exaggerated statements of the liabilities of the firm. He also alleged, as a second cause of action, that among the property taken by him in payment were certain described pine lands, of the agreed value of $4,260.90, which the defendants fraudulently included in the inventory of assets, and represented to plaintiff as belonging to the old firm, and which were taken in payment by plaintiff on the faith of such representations, but which lands had, in the year 1853, been sold and conveyed by the firm, at divers times, to John D. Ludden and Elam Greeley, all the conveyances having been executed on behalf of plaintiff by the defendant, Orange Walker, under a general power of attorney. The plaintiff further alleged that the sale made by him was to defendants and Albert H. Judd, as composing the new firm of Judd, Walker & Co., and that none of the facts constituting the alleged frauds were discovered by him until April, 1865.

The grounds of defence were that the sale or settlement by plaintiff was made to and with the old firm, and not the new firm, which was not formed till after the sale and settlement; that none of the representations alleged in the complaint were made or were fraudulent; that in the inventory the assets of the old firm were overvalued and its liabilities understated; that it was agreed that plaintiff should receive, not the value of an one-ninth interest in the firm, but the gross sum of $17,730.90, by way of compromise, which sum was actually greater than the value of an one-ninth interest; that the plaintiff had at all times access to the books, etc., of the firm, and knew, or might have known, the condition of its property and debts, as well as any of the other partners; that an inventory was made up by the book-keeper of the firm, with the aid of all the partners; that long prior to the final settlement this inventory was equally accessible to all the partners, and was repeatedly examined, discussed and considered by all of them, including the plaintiff; that the lands conveyed to plaintiff were among the lands embraced in the inventory, and discussed and considered by all the partners; that they were not conveyed to plaintiff at the agreed value of $4,260.90, or at any agreed value; that such lands were never conveyed to Ludden and Greeley by the partnership, or otherwise; that at the time of the conveyance to plaintiff the defendants believed such lands to belong to the firm. The defendants also denied that they ever made any representations to plaintiff in regard to the inventory or the lands, or that plaintiff made the sale or settlement on the faith of any representations of the defendants, and they denied in detail all the allegations of fraud in the complaint. They also pleaded the statute of limitations and the non-joinder of the representatives and heirs at law of Albert H. Judd.

After the decision of the former appeal (reported 14 Minn. 394) the action was by consent referred to C. K. Davis, Esq. At the trial before him the statement mentioned in the complaint was introduced in evidence, and marked exhibit A, and is so referred to in the opinion. It appeared that at the beginning of each year a statement of the condition of the concern of Judd & Leeds was sent to the firm at Marine, and plaintiff testified, under objection and exception, that he did not examine any of those statements sufficiently to know the condition of that concern and the state of its accounts; and that during the negotiations preceding the sale he did not examine the books at Marine sufficiently to know the condition and state of affairs of the firm. In the deposition of Ellis N. Leeds the witness, in answer to a question calling for a detailed statement of the assets and liabilities of the firm of Judd & Leeds, gave a detailed statement, one item of the assets being as follows: "Merchandise, (some bad, in petty ledger,) $13,977.56." At the trial one Wilkie, the book-keeper of the firm of Judd, Walker & Co., and a witness for defendants, was asked whether this statement represented the state of the books of the house of Judd & Leeds, or an inventory of its effects. He was also asked, What is a petty ledger? Both these questions were ruled out on plaintiff's objection, and defendants excepted. The other exceptions taken are fully stated in the opinion. The referee found that defendants were indebted to plaintiff in the sum of $5,459.88, with interest from September 24, 1858, making the amount of $10,032.10, and ordered judgment for that amount. A motion for a new trial was denied by the district court for Ramsey county, Wilkin, J., presiding, and defendants appealed.

Bigelow & Clark, for appellants.

Henry J. Horn, for respondent.

CORNELL, J.

Assuming that the referee erred in refusing to dismiss the action at the close of plaintiff's testimony, on the ground of the insufficiency of the evidence to maintain and establish the alleged cause or causes of action, this error was cured if, in the subsequent progress of the trial, sufficient competent evidence was introduced to supply such deficiency. The question then arises whether, upon the whole case, there is such a want of evidence in respect to any material fact found by the referee as will warrant this court in disturbing the finding on that ground.

The real turning-point in the controversy is upon a question of fraud charged against defendants, which is made the ground for reopening a transaction which otherwise had long since been put at rest by the quieting effect of the statute of limitations. Two trials have already been had, conducted in each instance by able and experienced counsel, and with a like favorable result to plaintiff upon this question. In the former it was determined by a jury, in the latter by a chosen referee, whose judgment challenges such additional weight as conceded ability, professional experience and impartiality can give. So far as appears, no circumstance of bias, passion, or prejudice in any way contributed to the result at either of the trials, and the long interval of time between them raises a fair presumption that no such influence, if any ever existed, could have operated at the last. The case is now here for the second time, fully and elaborately presented on both sides. In the equally careful consideration which we have endeavored to give it we fully realize that in a case of this character, when so much time elapsed before the discovery of the alleged fraud, the rule requiring satisfactory proofs of its existence, instead of presumptions and conjectures leading to no certain conclusions, should be strictly upheld; and though — sitting as a trial court with such evidence of fraud only as is disclosed by the paper-book, unaided by the manner and appearance of the witnesses, and other like circumstances frequently attending the conduct of a trial, and oftentimes rightfully influencing its result, but which can never be incorporated in a case — we might find it difficult to fully coincide with the referee in his findings of fact, yet upon a full consideration...