Gleeson v. Costello

• Decision Date: 13 February 1914
• Docket Number: Civil 1299
• Citation: 15 Ariz. 280,138 P. 544
• Parties: MARY M. COSTELLO, as Executrix of the Last Will and Testament of MARTIN COSTELLO, Deceased, Appellant, v. JOHN GLEESON, Appellee
• Court: Arizona Supreme Court

138 P. 544

15 Ariz. 280

MARY M. COSTELLO, as Executrix of the Last Will and Testament of MARTIN COSTELLO, Deceased, Appellant, v. JOHN GLEESON, Appellee

Civil No. 1299

Supreme Court of Arizona

February 13, 1914

APPEAL from a judgment of the Superior Court of the County of Cochise. J. E. O'Connor, Judge. Reversed.

The facts are stated in the opinion.

Mr Joseph Scott, Mr. Ben Goodrich, Messrs. Ellinwood & Ross Messrs. Williams & Flannigan and Mr. Lee O. Woolery, for Appellant.

Mr Eugene S. Ives, for Appellee.

OPINION

McALISTER, J.

This is an equitable action, prosecuted by John Gleeson, appellee, against Mary M. Costello, as executrix of the last will and testament of Martin Costello, deceased, appellant, praying for the dissolution of an alleged partnership, for an accounting, and for an order directing a conveyance to John Gleeson by the said executrix of an undivided one-third interest in the mining claims described in the second amended complaint and alleged to belong to the partnership. From a judgment for plaintiff and an order denying defendant's motion for a new trial, this appeal is taken.

The record in this case is voluminous. However, a statement of the essential allegations of the second amended complaint and answer, supplemented by a recital, under each assignment of error discussed, of the facts relevant thereto will disclose the issues on the merits of which the appeal must be determined. Appellee alleges that in December, 1901, he was the owner of an option to purchase from one Patrick Power, within 18 months from May 1, 1901, for $20,000, three patented mining claims, located in the Turquoise mining district, in Cochise county, Arizona, and known as the San Francisco, Fennard and Batavia, which option was of the value of $20,000 over and above the purchase price to be paid said Power; and that Martin Costello and one James Reilly were the owners of a certain mining claim known as the Mono, located contiguous to the above-named three mining claims, which was of the value of $20,000; that in December, 1901, said John Gleeson, Martin Costello, and James Reilly entered into a copartnership agreement having for its object the owning, working, developing and dealing in mines and mining claims, whereby Gleeson contributed said Power option, and Costello and Reilly the said Mono mining claim to form the assets of said partnership, but, in order that the contributions of the three partners might be equal, it was agreed that Costello and Reilly would pay to Patrick Power the purchase price of the said option; that on July 1, 1902, the partnership abandoned the said Power option in order that a new one might be procured at a later date on more favorable terms, whereupon a second option, covering the same claims, was obtained on June 6, 1903, on the same terms as the first one, except that it recited the payment thereon of $1,250, which included $750 paid by Gleeson on the first option, which said second option was taken in the name of Martin Costello, to be held in trust for the partnership, and was thereafter, to wit, on November 4, 1904, exercised, when a deed to the claims covered by it was made and delivered to Martin Costello for the use and benefit of the partnership; that on February 4, 1902, the partners decided to extend the scope of the partnership by purchasing other mines and mining claims in said district, and, in pursuance of said policy the partnership did acquire thereafter in said district about 30 mines and mining claims, for which it expended $79,652.50 in purchase price, about $7,000 in securing patents, and about $8,000 for work, expenses and taxes thereon; that, on the day it was agreed to extend the scope of the partnership, Martin Costello had in cash over $300,000, and was indebted to said James Reilly in the sum of $90,000, and the appellee was the owner of four promissory notes of the Copper Belle Mining Company aggregating $53,000, the said notes being secured by a mortgage on the mines and mining claims of the said Copper Belle Company; that thereafter, to wit, on July 31, 1902, appellee sold and transferred to Martin Costello the said Copper Belle notes and mortgage, and received in payment therefor from Costello, on January 8, 1903, with other consideration, $25,000, which said $25,000 was repaid to Costello, through said James Reilly, within a few days thereafter, to wit, January 26, 1903, as appellee's contribution to the said partnership in its extended scope; that Gleeson, because of his experience as a practical mining man in the Turquoise mining district, should have charge of the selecting, buying and working of said mines, for which service he was to receive $250 per month, and, in addition thereto, $60 per month for the use of his wagon and teams; that the partnership received in cash from two options given on certain of said mining claims $107,000; that said Martin Costello first repudiated the partnership as to certain of said claims in the early part of September, 1908, but within two weeks before the commencement of this action denied its existence as to all of said claims, when an accounting was demanded by appellee and by Costello refused; that the interest of said James Reilly in said partnership was acquired by said Martin Costello before this suit was filed, and that the same is now claimed and held by said appellant; that, in addition to the $15,750 for wages and $3,780 for wagons and teams, the appellant is indebted to appellee in the sum of $6,525, which appellee was compelled to pay because said Costello refused to carry out an option on certain of said claims which appellee had negotiated to L. W. Powell for the Calumet and Arizona Mining Company.

A demurrer to the second amended complaint being overruled, the appellant answered, denying specifically, upon information and belief, every substantial averment contained therein, and alleged, among other things, that said Martin Costello, in December, 1901, and up to the time of his death, was the sole owner of the Mono claim, the said James Reilly never having owned or claimed any interest therein; that the Power option owned by appellee in December, 1901, was forfeited by him by failure to comply with its terms, and that Costello did afterward take an option on and purchase from Patrick Power the mines and mining claims covered by said first option with his own funds and for his own use and benefit, and that all the claims described in the second amended complaint as having been acquired by the partnership were purchased by Costello for his own use, paid for out of his own funds, and deeds thereto taken in his own name; that the $107,000 alleged to have been received by the partnership from the two options given on certain of said claims was, in fact, received by Martin Costello, but for his own use and benefit, and was at no time the property of the alleged partnership, the existence of which Costello at all times repudiated and denied; that the organization on August 4, 1903, of the Costello Copper Company, as a corporation, by Costello, Reilly and Gleeson, for the purpose of purchasing a portion of the mines mentioned in the second amended complaint, which said corporation was abandoned without the transaction of any business, was the only dealing had by the said parties relating to the matters contained in the said complaint; that Costello did employ personally said appellee to look after the assessment work on his mines and mining claims, but that he was paid in full for said services; that his right of action, if any ever existed, having accrued in 1906, appellee is guilty of laches for having delayed the filing of this suit until after the death of said James Reilly in June, 1909, who was alleged to have been a member of the said partnership and who would have testified, had he been alive, that no such partnership agreement ever existed.

The case was tried with the aid of a jury, which returned a verdict, signed by ten jurors, in favor of appellee. Judgment was thereupon entered in accordance with the verdict, decreeing appellee to be the owner and entitled to the possession of an undivided one-third interest in the mines and mining claims described in the second amended complaint, and that he recover of appellant, as executrix, the sum of $4,362.24 and costs. Numerous errors are assigned, but in appellant's brief they have been grouped for argument under eleven separate propositions which, in reviewing, we do not follow consecutively.

We consider first the contention that appellee has mistaken his remedy. It is urged that a suit in equity by an individual partner for an accounting and settlement of partnership affairs cannot be maintained by a surviving partner who, upon the dissolution of the partnership by death, is given ample authority under the statute to take possession of the partnership property and settle its affairs. This contention is based on the provisions of paragraph 1829 of the Revised Statutes of 1901, the relevant parts of which read "When a partnership exists between the decedent, at the time of his death, and any other person, the surviving partner has the right to continue in possession of the partnership and settle its business, but the interest of the decedent in the partnership must be included in the inventory, and be appraised and appropriated as other property. The surviving partner must settle the affairs of the partnership without delay, and account with the executor or administrator, and pay over such balances as may from time to time be payable to him in right of the decedent." If the alleged partnership was dissolved by Costello's death, appellant's contention is sound, for appellee then became the surviving partner, with his rights and duties fixed by this...