Cothran v. Knox

• Decision Date: 01 July 1880
• Docket Number: CASE No. 889.
• Parties: COTHRAN v. KNOX.
• Court: South Carolina Supreme Court

13 S.C. 496

COTHRAN

v.KNOX.

CASE No. 889.

Supreme Court of South Carolina.

Jul. 8th, 1880.

1. An award is not binding upon a party not accepting it, where there is no evidence of a previous dispute between the parties concerning the matters submitted, and it does not clearly appear what matters were submitted, or to whom.

2. An award will be set aside where the evidence shows that the arbitrators acted with partiality towards one of the parties.^a1

3. In the absence of special contract, a partner has no right to commissions upon his collections and disbursements in the settlement of the partnership business. Cooper v. Reid, 2 Hill Ch. 549, followed.

4. A finding of fact by a referee, reversed by the Circuit judge, sustained upon a review of the evidence.

Before FRASER, J., Abbeville, April, 1879.

McGowan, A. J., having been of counsel in this cause, did not sit at the hearing.

This is an action brought in August, 1870, by James S. Cothran, as executor of Joel J. Cunningham, deceased, against John Knox. The pleadings and facts of the case are stated in the report of Ellis G. Graydon, Esq., special referee, to whom it was referred to state the accounts. His report is as follows:

This action was originally begun by complaint on a sealed note dated August 26th, A. D. 1870, whereby the defendant promised to pay to plaintiff's testator one day after the date thereof, the sum of $5091.85, together with interest thereon from January 1st, of the same year, at the rate of ten per centum per annum. The complaint admits a payment of $966.65, made on September 1st, of the same year of its execution, and claims judgment for the balance.

The answer admits the execution of the note with the credit endorsed, and alleges-

I. By way of defence:

That on April 7th, 1873, the defendant and plaintiff's testator submitted their matters to T. B. Millford and J. C. Wosmansky, who made a settlement and delivered a copy to each of them, which settlement was accepted by them as correct and final, and by which the defendant was found to be indebted to the plaintiff's testator on that day in the sum of $749.73.

II. By way of counter-claims-

1. Draft in testator's favor drawn April 14th, 1873, for $60.

2. Draft in testator's favor drawn April 15th, 1873, for $90.60.

3. Note paid to Quarles & Perrin, May 22d, 1873, for $214.48, with interest from January 1st, 1873, at twelve per centum per annum.

4. Account for 1873 for $44.25.

The answer also offers to pay plaintiff $512 and costs in discharge and satisfaction of this claim.

The reply denies all knowledge of the matters set up by way of counter-claims in the answer.

The plaintiff, subsequently, by leave of the court first had and obtained for that purpose, amended his complaint so as to demand of the defendant an account of the partnership affairs of J. Knox & Co., which firm was composed of the defendant and plaintiff's testator.

The answer to the amended complaint alleges-

1. That the partnership began January 2d, 1868, and ended December 21st, 1869.

2. That soon after the close of the partnership, a settlement was made which adjusted everything relating to partnership matters, except uncollected assets and outstanding debts of the firm, and which resulted in the note for $5091.85 now in suit.

3. That defendant has collected assets and paid debts, and that he has on hand a number of notes and accounts deemed worthless, and that upon a fair adjustment, he thinks his late co-partner will fall in his debt.

4. That the settlement hereinbefore referred to made on April 7th, 1873, by T. B. Millford and J. C. Wosmansky, reduced the note for $5091.85 to $749.73.

5. That the hotel property mentioned in the complaint was held by them rather as joint owners than as partners, and that all matters relating to it had been fully adjusted between them, leaving a small lot of a half acre still unsold.

6. That defendant has paid taxes on said lot, and has been at considerable trouble and expense collecting assets, &c., and claims remuneration for the same.

I am of opinion, after careful consideration, that the defence set up in the answer of settlement and award made by Messrs. Millford and Wosmansky must be overruled for the following reasons:

1. Because of partiality in the arbitrators. They got all the books and papers used by them from the defendant Knox. They were attended by said defendant during the time they were making the settlement, but never summoned the plaintiff's testator to come before them. They allowed the defendant to explain and contradict writings by his unsupported and parol testimony, and after the statement had been made, they signed it together in the presence of the defendant, without giving Cunningham notice of the time and place of such meeting. Partiality to avoid an award need not be corrupt partiality; it is sufficient if the conduct of the arbitrators has been such as to give either party an advantage over the other.

2. Because of error apparent on the face of the settlement considered along with the papers on which it was based. In several instances due-bills and notes signed by the decedent and made payable to J. Knox & Co., were charged against him as if they had been made payable to defendant alone, upon defendant's unsupported testimony; that they ought to have been made payable to him, although the defendant still had in his possession the whole of the assets of J. Knox & Co. It was error in the arbitrators to allow the defendant to contradict these writings by parol testimony of any kind, and more especially by his own unsupported testimony.

3. Because the alleged settlement was never acquiesced in by the decedent. It is alleged in the answer that it was, but there is no proof of it, the only witness examined on that point testifying that it was not.

4. Because it professes to be a settlement of individual matters and not to include partnership matters, but includes matters which clearly relate to the partnership. In fact, all the transactions between the defendant and decedent were such as grew immediately or remotely out of their connection as partners.

I am of opinion that it is incumbent upon the defendant Knox, standing as he does in a fiduciary relation to the decedent, to show affirmatively that the settlement was fair and impartial; that it is free from error either in law or in fact; that it was acquiesced in by the decedent, and that it embraces all such matters, and only such, as it professes to embrace. This he has failed to do.

I further find that the counter-claims set up in the defendant's answer are valid claims against plaintiff's testator, and must be allowed as claimed.

I have deemed it best to keep individual matters and partnership matters separate and distinct as far as possible, and I therefore first give a statement showing the amount due on the note in suit. In making the statement I strike a balance on January 1st, of each year, considering all accounts made with the defendant by the plaintiff's testator during the preceding year as due on that day, and allowing the defendant interest on all notes and due-bills drawn in his favor by plaintiff's testator, and on all sums of money paid by him to or for said testator during the preceding year from their dates respectively to that day. The note is dated August 26th, 1870, payable one day after date, with interest from January 1st, 1870, at the rate of ten per centum per annum, and according to my view of the law I have computed interest on it from January 1st, 1870, to August 27th, 1870, at ten per centum. I then compute interest at seven per centum from August 27th, 1870, on the amount of principal and interest due on that day, and in like manner up to the date of this, my report, subtracting payment as above.

The account will stand as to the note as follows:

[Here follows a statement of accounts.]

In making up the foregoing statement, I have not allowed the defendant credit for certain accounts of S. W. Cunningham for 1870 and 1871, because there is no proof of a promise, verbal or written, by plaintiff's testator to pay them. The letters in the margin of the statement correspond with those made on the documents put in evidence. I next give a statement showing the amount due by the defendant to plaintiff's testator on account of the partnership affairs of the late firm of J. Knox & Co. This statement includes all matters in which the defendant and the testator had a joint interest, as well those not connected with the mercantile adventure as those that were. In making it I have considered it best to treat all moneys received each year as if received on January 1st of the ensuing year, and all payments made during the year as if made on that day. Applying the rule as to trustees, I think it but just that the defendant should have commissions of five per centum on all collections made by him, and I accordingly next allow them. I then divide the remainder, if any, by two, subtract from this quotient any sums of money due by the testator to the firm of J. Knox & Co., and compute interest on the residue to the date of this my report. The account will then stand as follows:

[Here follows a statement of accounts.]

The claim of plaintiff that the note to Eakin & Knox, marked “A,” was included in a former settlement is not allowed. It does not anywhere appear, and the fact that it was still in the hands of defendant raises a presumption, conclusive to my mind, in the absence of proof to the contrary, that it has never been paid. ***

EXTRACTS FROM SO MUCH OF THE TESTIMONY AS IS MATERIAL TO THE CASE MADE IN THIS COURT.

The award is a bare statement of accounts between J. J. Cunningham and John Knox, below which is written:

The above is a settlement, individually, between J. Knox and J. J. Cunningham. Settlement between J. Knox & Co. and J. J. Cunningham not included in the above.

7th April, 1873.

J. C. WOSMANSKY,

T. B. MILLFORD.

$326.00.

June 15th, 1868.

One day after date I...