Collins v. Hudson's Adm'x

Decision Date09 June 1939
Citation282 Ky. 810,140 S.W.2d 365
PartiesCOLLINS v. HUDSON'S ADM'X.
CourtKentucky Court of Appeals

As Modified on Denial of Rehearing May 17, 1940.

Appeal from Circuit Court, Fayette County; King Swope, Judge.

Suit by Frank Hudson's Administratrix against George Collins for accounting and settlement of partnership business. The defendant filed a counterclaim. From the judgment, the defendant appeals, and the plaintiff cross-appeals.

Affirmed in part, and reversed in part on the appeal, and affirmed on the cross-appeal.

Hunt &amp Bush and Frank S. Ginnocchio, all of Lexington, and Leslie W Morris, of Frankfort, for appellant.

Allen Duncan & Duncan, of Lexington, for appellee.

SIMS Commissioner.

Frank Hudson and George Collins were friends and successfully engaged in the oil operating business as partners, and as a side line they formed a partnership in 1924, the purpose of which was to breed and race thorough-bred horses. As their oil business is not involved in this litigation, it will be understood when we refer to their partnership, or to any partnership business, we have reference to the horse breeding partnership. Mr. Hudson died May 1, 1925, and his widow, Mrs. Frances Hudson (now Mrs. Alley, but to whom we will refer in this opinion as Mrs. Hudson, since her name so appears in the greater part of the record), qualified as his administratrix. Mr. Collins, as the surviving partner, proceeded to wind up the affairs of the partnership.

All accounts between the partners had been settled up to January 1, 1925. The assets of the partnership consisted of $500.06 in the partnership account in the First National Bank and Trust Company of Lexington, Kentucky, eight brood mares, one 2 year old racing filly, Lucky Donna, four yearlings, five sucklings, and a small amount of stable equipment. Among the brood mares was one named Startle, a very fine animal which was declared diseased in the spring of 1925 by Dr. Demock, a veterinary. Despite Demock's diagnosis, Collins bred this mare to Black Toney, in the spring of 1925, and over the protest of Mrs. Hudson, did not put her in the auction sale when the other stock were disposed of December 9, 1925, for the sum of $23,375. It developed Startle was in foal and Collins sold her privately on March 8, 1926, for $20,000 from which was deducted $2,000 commissions he paid Thomas Cromwell for making the sale. The parties agreed on this sale of Startle, and also, there is no complaint about the price the stock brought at the auction. Prior to the death of Hudson, the filly Lucky Donna was placed in training with Harry Fleming, who raced her a few times. After the death of Hudson, Collins continued to keep this filly in racing form but she was unsuccessful at racing and an expense of $1,878.75 was incurred in training and racing her.

It was not long after Hudson's death until dissension arose between his widow and his surviving partner, Collins, over the management of the partnership affairs, and as time progressed, so did their dissension. On August 1, 1925, Collins mailed Mrs. Hudson a statement showing expenses he had paid on the horses since January 1, 1925, to that date and made demand upon her for payment of one-half thereof. She did not remit and Collins continued to send her monthly statements. On May 24, 1926, he mailed Mrs. Hudson a statement showing the amount of the partnership expenses, the amount realized from the sale of all partnership assets and enclosed her a check for $13,244.13, the amount Collins admitted was due from him as the surviving partner to Hudson's administratrix upon settlement of the partnership. On June 12, 1926, Mrs. Hudson returned this check to Collins, advising him the formal settlement of the partnership was not satisfactory and she requested the privilege of examining the books. This privilege was granted her and the partnership books were taken to the office of Collins' attorney in Frankfort on July 17, 1926. Without the fault of anyone some confusion arose as to the time the books were to be examined in Frankfort and they were not examined there, but were brought back to Lexington. John Ginnocchio was bookkeeper for Hudson and kept the accounts for the partnership and had possession of the records which were lost, or misplaced, or disappeared, from his office subsequent to July 17, 1926.

A day or so before Hudson's death, he gave Ginnocchio a check for $8,700 directing him to deliver $8,500 to an undisclosed person. On May 29, 1925, Ginnocchio deposited this $8,700 check in the "horse account" of Hudson & Collins, in the First & City National Bank of Lexington, and on the same day Ginnocchio drew a check for $8500 on this account payable to himself as trustee and deposited same to his credit as trustee. It appears Collins knew nothing about this "horse account", nor this $8,700 item. After some conferences looking toward a settlement of the differences between Collins and Mrs. Hudson, Collins agreed to raise by $600 the sum he previously offered her. On December 14, 1926, a settlement was agreed upon for $13,844.13, and a petition was drawn asking the court to approve this settlement, but before it was approved by the court and the settlement consummated, the "horse account" was discovered by Mr. Duncan, the attorney for appellee. Upon discovering this "horse account", Mrs. Hudson and her attorney would not go on with the settlement and even refused to discuss the matter of settlement until Ginnocchio divulged the information for whom he was acting as trustee. Ginnocchio gave his check to Mrs. Hudson as administratrix for the $8500 he had drawn from the "horse account", which he had deposited to himself as trustee, but he steadfastly refused to give the name of the person for whom he was trustee.

Collins testified that on December 15, 1926, he placed in his lock box in the Security Trust Company of Lexington $13,844.13 in gold and held it there until he paid it into court April 16, 1932.

On July 13, 1927, the administratrix filed this suit in the Fayette Circuit Court seeking a settlement of the partnership. The sheriff failed to get service on Collins and on December 14, 1927, the administratrix brought the same character of suit against Collins in the Franklin Circuit Court. Service was then had on defendant in both suits and he filed an answer and counter claim in the Franklin Circuit Court, and in the Fayette Circuit Court he pleaded the suit in the Franklin Circuit Court as a bar. The administratrix dismissed her petition in the Franklin Circuit Court without prejudice, and the Fayette Circuit Court decided the suit in the Franklin Circuit Court was a bar to the suit in the Fayette Circuit Court and dismissed the petition. Collins had filed an answer and counter claim in the suit in the Franklin Circuit Court, and when plaintiff dismissed her petition in that court it did not affect the counter-claim of Collins. When the case was tried in the Franklin Circuit Court it was decided plaintiff and defendant had entered into a binding settlement for $13,844.13. The administratrix prosecuted an appeal from the judgment of the Fayette Circuit Court and an appeal from the judgment of the Franklin Circuit Court. The two cases were heard together in this court and are reported as Hudson's Adm'x v. Collins, 239 Ky. 131, 38 S.W.2d 975. We held the compromise settlement had not been approved by the Fayette Circuit Court and it was not binding on the estate; that Collins' counter-claim in the Franklin Circuit Court should have been dismissed without prejudice; that the administratrix had instituted her suit in the Fayette Circuit Court and its jurisdiction was not disturbed by her going into the Franklin Circuit Court on the same cause of action.

Upon the case being returned to the Fayette Circuit Court, Collins, after due notice to plaintiff, paid into court on April 16, 1932, $13,844.13, the amount he admitted was due the plaintiff from the partnership; also he paid the court costs up to that day amounting to $157.45. The court required Collins to reform his pleadings and to state in one pleading his entire defense to plaintiff's action. Therefore, in conformity with the court's order, he filed his reformed answer and counterclaim on July 12, 1932, and after setting out in detail all receipts coming into his hands and all expenditures made by him since Hudson's death, he asserted that the $13,844.13 he had paid into court on April 16, 1932, belonged to the plaintiff and was being held by the clerk of the court subject to her orders. Plaintiff tendered an amended petition wherein she sought to recover her attorney's fees and expenses incurred in that action, which pleading was refused by the court. The issues were completed by plaintiff's reply to the reformed pleading of Collins.

The case was referred to Hon. R. J. Colbert, Master Commissioner of the Fayette Circuit Court, who heard a vast amount of proof on numerous items, after which he filed a full and complete report containing 58 pages. The commissioner found Collins was indebted to the plaintiff in the sum of $14,983.47, instead of $13,844.13 which Collins had paid into court, but he refused to allow plaintiff interest thereon. Collins filed no exceptions to the report of the commissioner but the plaintiff excepted to the following items: 1. Allowing Collins the expense of training Lucky Donna subsequent to 30 days after Hudson's death; 2. The allowance of counsel's fees of $1,000 to Collins in winding up the partnership affairs; 3. Failure to allow interest on the amount found to be due from Collins; 4. Failure to charge Collins with all the costs of the suit and in dividing same equally between the parties; 5. Allowing wages paid to Jim Young for caring for Startle; 6. Allowing $40...

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