O'Brien v. O'Brien

Decision Date25 June 1943
Citation294 Ky. 793
PartiesO'Brien v. O'Brien et al.
CourtSupreme Court of Kentucky

2. Executors and Administrators. — Where partnership agreement provided that in event of death of any partner, his interest should remain in the partnership five years, administrators with will annexed of deceased partner became the legal owners of the deceased partner's interest in the partnership and had the right to speak and act for the deceased partner's estate.

3. Partnership. — Where surviving partners sought to acquire the interest of deceased partner in the partnership, they were under the same duty of acting in utmost good faith or "uberrima fides," as if the transaction was the acquisition of the interest of an inactive partner who was ignorant of the firm's affairs.

4. Partnership. — A surviving partner is in effect the "trustee" of the assets of the deceased partner and, as such, must faithfully and truly recognize and perform the obligation such a fiduciary owes a cestnui que trust.

5. Trusts. A trustee may not handle the trust or act in any manner in relation thereto so as to profit personally or to reap an advantage at the expense of the trust.

6. Partnership. — Surviving partners who desired to purchase deceased partner's interest in the partnership were obliged to deal fairly with the deceased partner's widow, who was his sole beneficiary, and voluntarily disclose full and accurate information concerning the partnership business, affairs and values, and their duty was active and not merely passive.

7. Partnership. — If deceased partner's widow, who was his sole beneficiary, relied on duty of the surviving partners who desired to purchase deceased partner's interest in partnership, to disclose full and accurate information concerning partnership business, and surviving partners did not do so, widow was entitled to a rescission of contract of sale of deceased partner's interest or other equitable relief.

8. Partnership. — Widow's action to rescind a sale of the deceased partner's interest was required to be determined by what the surviving partners actually did and not by what they intended to do, but if the surviving partners' intention in alleged failure to make full disclosure of partnership affairs was evil, careful scrutiny of what was done was demanded.

9. Partnership. — Deceased partner's widow, who was his sole beneficiary, had the right to rely on the representations of the surviving partners with respect to the partnership business, but if the widow relied on facts in possession of herself, or counselors, the widow could not claim in action to rescind contract of sale of the interest of the deceased partner to one of the surviving partners, that she was deceived.

10. Partnership. — The fact that widow of deceased partner had capable counselors did not relieve surviving partners of any of their duties to disclose full and accurate information to the widow concerning the business, affairs, and values of the partnership before purchasing the deceased partner's interest from the widow.

11. Partnership. — Where the business of a partnership is of such character and extent that the partnership has a substantial good will, it is generally regarded as an "asset" to be accounted for in the sale of an interest therein.

12. Partnership. — Where articles of partnership provided that partners and survivors of them would continue to remain under the firm name for a term of 50 years if they or any two of them should so long live, the firm name could not be sold under any other condition.

13. Partnership. — In suit by deceased partner's widow who was his sole beneficiary to rescind an executed contract of sale of deceased partner's interest in the partnership to one of the surviving partners, on ground of fraud, evidence that surviving partners failed to call the item of good will to the widow's attention as perhaps one of value did not establish "fraudulent concealment" on part of surviving partners, where the good will was an element well known to the widow and her counselors.

14. Partnership. — A retroactive valuation of partnership assets, based on percentages of profit and in the light of subsequent events which proved profitable, could not be regarded as the standard in determining whether surviving partners concealed the true value of the partner's assets from deceased partner's surviving widow.

15. Partnership. — In suit by deceased partner's widow who was his sole beneficiary against surviving partners and others to rescind an executed contract of sale of deceased partner's interest in the partnership to one of the surviving partners, on ground of fraud and deceit, widow's evidence was insufficient to establish that surviving partners concealed the true appraised value of the partnership's assets.

16. Partnership. — Ordinarily, failure of surviving partners who seek to acquire deceased partner's interest in partnership, to disclose accrued profits, is a violation of the obligation of "uberrima fides."

17. Partnership. — Where deceased partner's widow who was his sole beneficiary, made offer of compromise to surviving partners that one or more of them could purchase the deceased partner's partnership interest, including all accrued and unpaid dividends and net earnings or income thereon for certain sum with offer to remain open until and including November 15, 1935, widow "waived" what might otherwise have been a violation of duty of surviving partners to her to disclose profits of partnership for fiscal year ending November 30, 1935.

18. Partnership. — Surviving partners who purchased deceased partner's interest in partnership from deceased partner's widow, had no duty to disclose to widow increase in value of stock and bonds owned by partnership, where widow and her counsellors had a complete list of those investments a year before purchase of interest, there was no substantial change during the year, and all securities were listed on stock exchanges and their value reported daily in newspapers.

19. Partnership. — Surviving partners who purchased deceased partnear's interest in partnership from deceased partner's widow had no duty to reveal to widow appraised valuations of property and income of partnership's subsidiary corporations, where each subsidiary corporation was the alter ego of the partnership, and audits of partnership were in possession of widow.

20. Partnership. — The general rules pertaining to allowance of interest for use of money do not apply in partnership settlements.

21. Partnership. — The rules pertaining to allowance of interest for use of money, which is followed where there is a dissolution of partnership because of the death of one of partners, and where the survivors carry on the business and retain and use the share of the deceased partner, do not apply in partnership settlements.

22. Partnership. — Ordinarily, in absence of a special agreement, in settlement of partnership accounts, interest is not chargeable or allowed until after a balance has been struck, but in an exceptional case the adjustment and the equities may demand that such a charge be made the question being determinable on the circumstances of each particular case.

23. Partnership. — Surviving partners who purchased deceased partner's interest in partnership from deceased partner's widow were not liable to widow for interest on overdraft of one of the partners, on ground that there was a fraudulent concealment, where overdraft was shown on audits in possession of widow and her counsellors, though audits did not reveal that interest on overdraft had not been charged partner with the overdraft.

24. Partnership. — In suit by deceased partner's widow against surviving partners to rescind an executed contract of sale of deceased partner's interest in partnership, on ground of fraud and deceit, burden rested on widow to show a failure to reveal material facts in the settlement.

25. Partnership. — Where both parties to partnership settlement are acquainted with partnership affairs, and neither reposes special confidence in the other, burden of proving failure to reveal material facts of the settlement is greater than where one does not have full knowledge of the business and relies on the other.

26. Constitutional Law. The trial court's erroneous rulings rejecting and admitting evidence and denying motion for subpoena duces tecum do not deprive complaining party of "due process of law" and "equal protection under law" guaranteed by federal and state constitutions (Const. Ky. secs. 3, 14; U.S.C.A. Const. Amend. 14).

27. Constitutional Law. "Due process of law" does not assure litigant against wrong interpretation of law, especially procedural, or against judicial error in admission or exclusion of evidence (Const. Ky. secs. 3, 14; U.S.C.A. Const. Amend. 14).

28. Constitutional Law. — The trial judge's manifestation of impatience because of plaintiff's garrulity in testifying did not violate plaintiff's constitutional rights to "due process of law" and "equal protection under law," especially in absence of jury whose views might be affected thereby (Const. Ky. secs. 3, 14; U.S.C.A. Const. Amend. 14).

29. Judges. A court's severe criticism of testimony of witness whom he disbelieved will not support charges that he prejudged case or showed bias, prejudice or capricious disbelief of evidence in disposition thereof, nor nullify or otherwise affect his findings on evidence which he believed credible.

Appeal from Jefferson Circuit Court.

Wilbur...

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