Dupont v. McLaran

• Decision Date: 31 January 1876
• Citation: 61 Mo. 502
• Parties: HENRY DUPONT, et al., Plaintiffs in Error, v. CHARLES MCLARAN, CHARLES M. WILLIAMS AND GEORGE S. SAXTON, Defendants in Error.
• Court: Missouri Supreme Court

61 Mo. 502

HENRY DUPONT, et al., Plaintiffs in Error,

v.CHARLES MCLARAN, CHARLES M. WILLIAMS AND GEORGE S. SAXTON, Defendants in Error.

Supreme Court of Missouri.

January Term, 1876.

Error to St. Louis Circuit Court.

Martin & Lackland, for Defendants in Error.

I. It has been held that an absolute assignment of the share of a partner in a firm does not necessarily operate as a dissolution. If he continues in the firm, to do business, as before, there is no dissolution. (Receiver vs. Goodwin, 1 Halst., 334; State vs. Quick, 10 Iowa, 451; Taft vs. Buffum, 14 Pick., 322; Buford vs. Weely, 2 Dev. Eq., 481; Ferrero vs. Buhlmeyer, 34 How. Pr., 33; Bank vs. Fowle, 4 Johns Eq., 8.)

If it does not operate as a dissolution, then he remains, if at all, clothed with all the powers of a partner. He can also, at a dissolution, do all that a partner is authorized to do in respect to the disposition of the assets and payment of the debts.

II. The instrument of April 13th, 1869, was only a temporary mortgage, and after its execution Saxton remained in equity as well as in fact, owner and proprietor of the mortgaged share. (4 Kent Com. [4th Ed.] 134; Smith vs. Beattie, 31 N. Y., 542; Holmes vs. Crane, 2 Pick., 610; Langdon vs. Buel, 9 Wend., 83; Robinson vs. Campbell, 8 Mo., 365; Dean vs. Davis, 12 Mo., 112; Woods vs. Hildebrand, 46 Mo., 284; Kennett vs. Plummer, 28 Mo., 145; Raynor vs. Wilson, 6 Hill, 469; Astor vs. Hoyt, 5 Wend., 615.)

III. In addition to his authority as a mortgaging partner, he remained in possession by the consent of plaintiffs, representing the third interest mortgaged to them. A person taking a mortgage on the interest of a partner, takes it subject to his dominion and control as a partner, in respect to all the uses and purposes of the firm, within the scope of its business. The mortgagee takes it subject to the claims of creditors, and to the claims of co-partners. (Receiver vs. Goodwin, supra;Glynn vs. Phetteplace, 26 Mich., 383.) By what authority in law can a mortgagee, before foreclosure, prevent the dominion and management of the partner? It is admitted that a mortgagee has a right to an account from all the partners. (Bentley vs. Bates, 4 Y. & C., Ex. 182; Faucet vs. Whitehouse, 1 R. & M., 132; Wilson vs. Greenwood, 1 Swanst., 471.)

IV. The charge of $502 to Saxton's private account, taking it from the general expense account, was only the correction of an error. It should have been so charged originally.

V. There was no error in imposing one-third of the costs of adjusting this partnership upon the plaintiffs. The reference and settlement of the accounts was as much for their interest as the defendants. The chancellor has a discretion in the adjudication of costs. (Shields vs. Bogliolo, 7 Mo., 134; Walton vs. Walton, 19 Mo., 667.)

T. L. Blakeman, for Plaintiffs in Error.

I. Saxton had no authority to become a party to the disposal of the stock and assets of McLaran, Saxton & Williams, at the dissolution. He had, by the assignment of April 13th, 1869, conveyed all his interest, capital stock and profits, to plaintiffs in error. McLaran and Williams had held Saxton's interest in trust for plaintiffs in error from the 1st of April, but at the dissolution their trust was closed, and they were bound to account to plaintiffs in error for the whole of Saxton's interest in the concern.

Saxton had no power to dispose of the property at a valuation. (Sto. Partn., § 351; Sigourney vs. Mun, 7 Conn., 20.)

II. The decree of the court, compelling the plaintiff in error to pay one-third of the costs of this action, was a gross violation of the rights of plaintiffs. (Dan. Chy. Pr., 1458, 1461, and cases there cited; Hunn vs. Norton, 1 Hopkins, 344.)

HOUGH, Judge, delivered the opinion of the court.

On the 13th day of April, 1869, the defendant, Saxton, being then a member of the firm of McLaran, Saxton & Williams, and indebted to the plaintiffs in the sum of $7,888.47, executed and delivered to the plaintiffs, with the knowledge and consent of McLaran & Williams, the following agreement in writing:

“This agreement made and entered into this the 13th day of April, A. D., 1869, by and between George S. Saxton, of the city of St. Louis, of the one part, and Henry DuPont, Elenthere I. DuPont, Samuel DuPont and Eugene Du Pont of Wilmington, Del., partners trading under the firm name of E. I. DuPont. De Nemours & Co., of the other part,” Witnesseth. That, whereas the said George Saxton is justly indebted to the said E. I. DuPont, De Nemours & Co., in the sum of $7,888.47 due by three promissory notes made by said Saxton, bearing the same date of this instrument, payable one day after date thereof to said E. I. DuPont, De Nemours & Co. * *

And, whereas, the said George Saxton is now one of the firm of McLaran, Saxton & Williams, and has in said firm the sum of $4,380.26 capital stock or interest therein, and is entitled to one-third interest in the net profits of said firm.

And whereas, the said E. S. DuPont, De Nemours & Co., are desirous and willing that said Saxton shall have a reasonable opportunity of paying said sum without injury to himself, or removing his said interest out of said firm of McLaran, Saxton & Williams, and the said Saxton being willing to secure the said E. I. DuPont, De Nemours & Co., in the payment of the said sum of money, doth hereby convey to them his interest in said firm of McLaran, Saxton & Williams, as collateral security under the following stipulations and conditions, viz:--In consideration of said indebtedness of $7,888.47, and the further consideration that said Saxton be given time to work out said debt by continuing his interest in said firm of McLaran, Saxton & Williams, for the space of three years until said debt shall be paid, or said firm dissolved, and also the sum of one dollar in hand, paid by said DuPont, De Nemours & Co., to said Saxton, the said George S. Saxton, doth hereby sell, transfer, assign and convey to said E. I. DuPont, De Nemours & Co., all the principal or capital stock or interest he has in said firm of McLaran, Saxton & Williams, together with all the accumulating profits thereof for the space of three years or longer, as the case may be, except the sum of two hundred and fifty dollars per month, to be paid to said Saxton monthly by C. M. Williams or Chas. McLaran, the other partners of said firm, or in case of necessity to be determined by said Williams or McLaran, to exceed that sum not beyond four hundred dollars per annum, over and above said mentioned sum.

It is further understood and agreed that the said E. I. DuPont, De Nemours & Co. are to receive the amount of one of said notes and interest thereon, each year, if the profits due said Saxton, after deducting the said allowance above stated should amount to that sum, until the whole amount due on said notes shall be paid, or in case the three years shall expire, or said firm of McLaran, Saxton & Williams shall be dissolved before the same shall be paid; then, and in either of these events, the whole amount due to said Saxton out of the firm of McLaran, Saxton & Williams, or so much thereof as shall be sufficient to satisfy said debt, all interest and costs, shall be paid by said firm to E. I. DuPont, De Nemours & Co. And the said George S. Saxton doth hereby agree that the said Charles McLaran and Charles M. Williams shall hold, manage and control said interest of said Saxton, in conformity with this agreement, to be paid as herein above stated and agreed. The remainder, after paying said debt, interest and costs, if any, is to go to the said Saxton, or his legal representatives.

It is further understood and agreed that this instrument is not to be so construed as to prevent said DuPont, De Nemours & Co. from availing themselves of any other opportunity whereby they might make or secure their said debt. * *

In witness whereof, the said George S. Saxton has hereto set his had and affixed his seal, the day and date above written.”

(Signed)

GEORGE S. SAXTON. (Seal.)

The defendants being unable to get along harmoniously together, dissolved their co-partnership on the 20th day of September, 1869, and published the following notice of dissolution:

St. Louis, Sept. 20, 1869.

“The firm of McLaran, Saxton & Williams has this day been dissolved by mutual consent, to take immediate effect. McLaran and Williams are alone authorized to receive monies due the late firm, and will settle all its liabilities.”

(Signed)

CHARLES MCLARAN,

GEORGE S. SAXTON,

CHARLES M. WILLIAMS.

“Referring to the above, we will continue the jobbing hardware business at the same stand under the firm name of McLaran, Williams & Co.”

(Signed)

CHARLES MCLARAN,

CHARLES M. WILLIAMS.

“Referring to the above, I will advise my friends that I can still be found with the above firm.”

(Signed)

GEORGE S. SAXTON.

At the same time they entered into the following agreement:

“It is mutually agreed, in dissolving the firm of McLaran, Saxton & Williams, that, provided Mr. George S. Saxton performs the duties of salesman to the satisfaction of McLaran, Williams & Co., up to the first day of January, 1870, he shall be entitled to the same interest in profits as if he had remained in the firm up to that time, inventory of stock and fixtures to be taken as near the first day of January as practicable and settlement made, fixtures and old or damaged stock to be appraised by three employees remaining in the house on the first of January.”

(Signed)

CHARLES MCLARAN,

GEORGE S. SAXTON,

CHARLES M. WILLIAMS.

In pursuance of this agreement an inventory and appraisement were made of the stock on hand on the first day of January, 1870, and McLaran & Williams, with the consent of Saxton, took all of said stock at its...