Evans v. Boggs

• Decision Date: 08 August 1951
• Parties: EVANS et al. v. BOGGS et al.
• Court: Tennessee Court of Appeals

Page 641

245 S.W.2d 641

35 Tenn.App. 354

EVANS et al. v. BOGGS et al.

Court of Appeals of Tennessee, Western Section, at Jackson.

Aug. 8, 1951.

On Petition to Rehearing Sept. 12, 1951.

Certiorari Denied by Supreme Court Dec. 12, 1951.

Clarke, Norris & Matherne, of Brownsville, for appellants.

A. M. Carlton and Bond & Haywood, all of Brownsville, for appellees.

SWEPSTON, Judge.

Both parties have appealed from the decree of the Chancellor.

The defendant, Mrs. Boggs appeals from the action of the Chancellor in ordering a reference for an accounting and from an adverse decree holding her indebted to complainants.

Complainants appeal from the failure of the Chancellor to allow interest on the recovery and failure to render judgment in favor of complainant receiver for the full amount due the partnership hereinafter referred to and failure to decree payment out of said fund of the expenses of the litigation.

Defendant's appeal will be considered first.

The original bill was filed by and in the name of J. F. Evans and Edger C. Evans against Mrs. Laura Boggs, Rufus Grantham and H. B. Compton individually and as executors of W. L. Compton, deceased. It is alleged and admitted in the answers that several years ago, the proof showing about the year 1933, an oral equal partnership composed of the complainants, the defendants Grantham and H. B. Compton, and W. L. Compton was formed for the ownership and operation of a cotton gin about 8 miles from Brownsville, Tennessee, under the name of Compton-Evans Gin Company.

It appears without dispute that W. L. Compton acted as manager of the operation and upkeep of the gin plant until his death May 23, 1947; that he and H. B. Compton were brothers, Mrs. Boggs is a daughter, and Grantham is a son-in-law of H. B. Compton; further that one of complainants is married to a cousin of Mrs. Boggs; obviously a family business.

It is alleged that Mrs. Boggs was employed to assist in the operation of the business and to keep the books and records thereof and that she had sole supervision of the books, cash and bank accounts, but the sole supervision is denied by Mrs. Boggs.

It is further alleged what W. L. Compton devised to her his fifth interest in the gin property and partnership; that thereafter Mrs. Boggs entered into and continued to be a member of the firm and they began to plan for the next season of 1947-8; that thereafter at the request of complainants Mrs. Boggs rendered them a statement of the operation of the business for the two seasons, 1945-6 and 1946-7, which showed a loss for the former and a very small profit for the latter season and was so incomplete as to be unintelligible, but they accepted the check tendered in payment of what she showed to be due them; that subsequently it came to their attention that said statement was false in several material particulars set out in the bill; that complainants had the books for the 1946-7 season and when they requested the 1945-6 records, she refused to turn them over; that on account of the dissention which arose complainants decided to withdraw from the firm and their two fifths interest was purchased on September 3, 1947 by Mrs. Boggs and others; that having confidence in her at the time of the statement they accepted the check in settlement, but they now charge her with fraudulently withholding large sums and wrongfully refusing to turn over the remaining records to them.

They pray for the appointment of a receiver to wind up the business of the partnership and for an accounting with Mrs. Boggs as a member of the firm, etc. for the two seasons only.

Mrs. Boggs answered denying that she had ever been a partner or that she was ever in sole charge of the records and finances of the firm, but alleged that she was only a part time employee assisting the partners in keeping their records, paying bills and making gin and seed tickets; she alleged that the firm used her store, which was nearby the gin, as the gin office; that all partners assisted in running the business, handling the cash and writing checks etc., and frequently inspected the records such as they were, and were familiar with the condition of the business; alleged that she requested them to provide her with an adequate set of books but they refused; that they kept no expense account book but instructed her to put paid bills on a wire file and that same have been lost or mislaid.

She denied that she ever undertook to furnish complainants with a financial statement, but she merely assisted them in getting up the settlements for the 1945-6 and 1946-7 seasons and the checks issued by her at the end of the latter season were given under the instructions of all the partners and that they all agreed to the settlement as made; that said settlement was made according to the established custom of fixing the net profits by taking the amount of cash on hand at the end of the ginning season after payment of all bills, without a proper checking of the incomplete books and records. She denies that she has made any misrepresentations to complainants and she alleges that she believes said statement for said two seasons to be correct. She denies she is indebted to complainants in any amount or that they are entitled to a receiver or that there are any assets of the firm remaining.

The other defendants filed a joint answer which need not be stated in detail but which was in accord with the answer of Mrs. Boggs.

Upon the filing of the bill the Chancellor appointed the Clerk and Master receiver of the books and records only, but not of the partnership assets.

Upon the issues made by the bill and answer much proof was taken on depositions by complainants, which tended to show that the business for the 1945-6 season had made just about the usual amount of profit as in prior years, instead of no profit as shown on the statement furnished by Mrs. Boggs, and for the season of 1946-7 an unusually large profit, instead of the usual profit, and certain other apparent discrepancies.

Whereupon complainants were allowed to and did file an amended and supplemental bill in the alternative for the purpose of holding Mrs. Boggs to account, either as a partner or as an employee, for the funds they alleged she had wrongfully abstracted and fraudulently appropriated to her own use, and again praying for the appointment of a receiver to be made a co-complainant in order that any recovery to be had against Mrs. Boggs as an employee might be had in the name of the receiver for the benefit of all the members of the firm whether appearing as complainants or defendants in the suit.

Defendants demurred to same upon numerous grounds not necessary to be here stated, the same was overruled and they were allowed to rely on same with their answer, which was duly filed denying the material allegations of the amended and supplemental bill.

Mrs. Boggs was allowed to amend her answer so as to plead an account stated and settled and that the allegations of the amended and supplemental bill were too indefinite to entitle complainants to surcharge and falsify said account. Complainants moved to strike this amendment because same was inconsistent with and contradictory of her original answer that she had not furnished complainants a financial statement, which motion was overruled.

Complainants were then allowed to amend the prayer of the bill so as to pray that the written settlement sheet relied on by Mrs. Boggs be set aside and held for naught, for a general accounting and to pray for interest on any funds she might owe the partnership; also, if the Court should hold it to be an account stated, to amend the bill so as to permit surcharging and falsifying said written statement in further detail.

Defendants' demurrer to same was overruled.

The cause was then referred to the Master to take and state the account (1) whether Mrs. Boggs was indebted to the firm from the two seasons, (2) if so, in what amount and (3) the amount due the two complainants by the firm, and directing that the Master consider the proof then on file and such other proof the parties might take.

The Master filed his report in which he found that Mrs. Boggs was in charge of the finances of the firm and was indebted to it in the net amount of $9,059.73 for the two seasons; that the firm was indebted to Edgar Evans in the net amount of $1,988.15 and to J. F. Evans in the sum of $1,916.49, or a total of $3,904.64.

The Court overruled all exceptions of defendants to the Master's report, confirmed the same, appointed J. F. Evans receiver and rendered judgment in his favor for the above amount less 2/5 of $53.06 in the hands of the Clerk which sum had been in the firm's bank account at the commencement of the suit, or the net judgment of $3,883.42.

The record in this case consists of almost 2000 pages.

Defendants have 81 assignments of errors, some of which, however, cover the same principles and counsel have treated many of them in groups. We shall do likewise.

Counsel are familiar with the rule that a concurrent finding by the Master and the Chancellor is conclusive on appeal, unless the finding be on an issue not proper to be referred, or is based on an error of law, or upon mixed law and fact, or is not supported by any material evidence. Black v. Love & Amos Coal Co., 30 Tenn.App. 377, 206 S.W.2d 432; Code, Section 10620.

A part of Assignment #34 should be considered at the outset.

The Pleadings disclose that a basic issue was whether or not Mrs. Boggs was in sole charge of the finances of the firm.

The complaint is that this was a question of law and should not have been referred to the Master and that there is no evidence to support his finding.

It was not expressly referred as the order of reference discloses, but the Master found that she was in sole charge.

We think it a pure question of fact, being one of the controlling issues of fact and that it should have been determined by the Chancellor before the...