Coe v. Winchester

• Decision Date: 01 June 1934
• Docket Number: Civil 3359
• Citation: 43 Ariz. 500,33 P.2d 286
• Parties: TASSO COE, Appellant, v. MYRTLE HAYES WINCHESTER, Executrix of the Estate of RANNEY VAN NORMAN WINCHESTER, Deceased, Appellee
• Court: Arizona Supreme Court

33 P.2d 286

43 Ariz. 500

TASSO COE, Appellant, v. MYRTLE HAYES WINCHESTER, Executrix of the Estate of RANNEY VAN NORMAN WINCHESTER, Deceased, Appellee

Civil No. 3359

Supreme Court of Arizona

June 1, 1934

APPEAL from a judgment of the Superior Court of the County of Pima. Fred W. Fickett, Judge. Judgment reversed and cause remanded with directions.

Messrs Ellinwood & Ross, Mr. Wm. H. McKay, Mr. Francis J. Ryley and Mr. Norman S. Hull, for Appellant.

Messrs Knapp, Boyle & Thompson, for Appellee.

OPINION

ROSS, C. J.

Ranney Van Norman Winchester and Tasso Coe were partners in a merchandise brokerage business under the firm name of Winchester-Coe Company, in Phoenix and Tucson, Arizona, from July 1, 1924, until May 22, 1930. On this last date Winchester died. The widow, Myrtle Hayes Winchester, was appointed executrix of his estate. The survivor, Tasso Coe, refused to account to her for any portion of the partnership assets, whereupon she brought suit for an accounting in which suit she was sustained by the trial court. Coe has appealed.

Before stating the grounds of the appeal and the contentions of the parties, it seems best that the facts, which are not in dispute, should be given. Originally the partnership contract was oral. The record does not disclose its terms in detail, but it was one in which they were equal partners. On May 8, 1926, they entered into the following written contract:

"We, Tasso Coe and R. V. Winchester, doing business as Winchester-Coe Company, agree to operate a merchandise brokerage business, dividing the profits equally.

"We agree that neither of us shall sign bonds, or endorse any notes, unless done jointly.

"As a result of a ten-thousand dollar life insurance policy taken out by each of us, Coe's with the Aetna and Winchester's with the Pacific Mutual Life, premiums on which are to be paid by Winchester-Coe Company. In event of Coe's death, his wife or heirs is to receive the face of this policy, and Winchester receives Coe's interest in the business. In the event of Winchester's death his wife or heirs to receive the face of the policy and Coe receives Winchester's interest in the business.

"Signed by us this 8th. day of May, 1926.

"Tasso Coe

"R.V. Winchester

"Witness:

"J.M. Aitken

"A.T. Long."

The only evidence aliunde the contract throwing light thereon is a letter written by Winchester to Coe on January 25, 1926, three months and thirteen days before the contract was signed, which reads as follows: "Dear Tasso: --

"The two Kansas City Life grafters were in this morning: I signed an application for $10,000, providing they sold you and it goes thru alright.

"My idea of the proposition is as follows: In case of my death my policy would be paid to my estate, you to receive the entire business. In case you died your policy would be paid to your wife and I would receive the entire business, the two policies to be paid by the firm.

"I think this is an excellent proposition and think we should go on with it.

"When you have bought and passed let me know and I will have my medical examination and go on thru with it.

"Yours truly,

"Bob."

Coe testified that he typed the contract, while Winchester "more or less" dictated it. The assets of the partnership consisted of personalty only, and its net worth at the time of Winchester's death was $19,819.39; one item thereof being $8,000 for the partnership "good will."

The partners were married and their contributions to the partnership were from the marital community of each. While the wives of the members of the firm were not actually or nominally partners, therein, because the assets of the firm were community property they had a direct contingent interest in such assets. Under the community law of this state the spouses own their common property and the wife's interest is equal to that of the husband's. Such being the rule, the assets of the partnership belonged in equal parts to the partners and their wives. The wife, however, during coverture has no power of disposition of the community personalty. The law, for reasons of convenience and expediency, places that power exclusively in the husband, who may exercise it in any way he chooses, except that he cannot make a testamentary disposition of his wife's interest or dispose of it in fraud of her rights. La Tourette v. La Tourette, 15 Ariz. 200, 137 P. 426, Ann. Cas. 1915B 70. These are the only limitations on the husband's control or disposition of the community personalty.

The trial court took the view that Winchester by the contract effectively disposed of his interest in the partnership, which was fixed as one-fourth of the assets, to Coe, but that he could not and did not dispose of his wife's one-fourth interest therein to Coe. The appellee contends that the court's conclusions were correct, whereas appellant contends that Winchester's agency over the community vested him with full power and authority to dispose of the entire community interest in the partnership, and that he did dispose of such interest by the partnership contract of May 8th.

We are satisfied that the agency of Winchester over the community personal property vested him with full and complete power to make a contract in the nature of the one in question. We know of no legal reason, and indeed none is suggested, against the husband's exercising such power over the community personalty. The contract certainly was beneficial to the wife of the partner that died first, for the reason that she obtained $10,000 cash instead of her husband's one-half interest in a business worth only $19,819.39, itemized $11,819.39 in personalty and $8,000 "good will." Without the insurance arrangement the appellee's share would have been a little over $5,000 of the tangible assets and one-half of whatever might have been realized for the partnership "good will" upon a falling market in 1930 and since. It is apparent that the reason which prompted the partners to reduce their contract to writing was not that they feared each other, or that they wanted a written memorial of their agreement, but that their primary purpose in doing so was that the wife of the one who should first die would be provided for as well or better than if she took her deceased husband's one-half interest, and the survivor would have the business without having forced upon him a partner not of his choosing or someone unfit or incapable of contributing the necessary skill to make the business successful. By this arrangement the survivor secured the business and an existing policy of insurance for $10,000 in favor of his wife. Whether his wife would receive the face of her policy depended upon his ability to continue to pay the premiums. If the business proved unprofitable because of hard times or depressions, and future premiums were defaulted, his wife would get nothing. The arrangement certainly was an admirable one and was made by the two partners to provide for their wives when they could no longer do so. The mutual promises of the partners and the performance of...