In re Swift

• Decision Date: 31 October 1902
• Parties: In re SWIFT et al.
• Court: U.S. District Court — District of Massachusetts

118 F. 348

In re SWIFT et al.

United States District Court, D. Massachusetts.

October 31, 1902

Freedom Hutchinson, pro se.

Albert S. Hutchinson, for trustee.

Elder &amp Whitman, for individual creditor

Bancroft G. Davis, for firm creditor.

LOWELL District Judge.

The question in the case concerns the marshaling of assets between joint and separate creditors. Certain seats in the Boston and New York Stock Exchanges and the Chicago Board of Trade stood in the name of Hodges. Originally they belonged to him. Before 1899 Hodges had done business as Hodges & Co. one Lowry being a nominal or salaried partner. By the rules of the stock exchanges, the seats could not stand in the name of the firm, and the fact that they stood throughout in the name of Hodges throws no light upon their real ownership. In 1899 Hodges entered into an agreement for a partnership, to last six months, subsequently renewed for six months more with Frederick Swift; Lowry remaining a partner, though he did not sign the written agreement. This was informal, and provided that 'the New York and Boston seats standing in the name of Hodges shall draw interest up to the amount of $50,000, which shall be charged to the general expense account.' Counsel for the joint creditors raised certain formal objections, based upon the state of the record. It is sufficient to say that this court has not hitherto required, and does not intend to require hereafter, any particular formalities to be observed in seeking a review by the judge of the orders or other proceedings of a referee. If the matter in dispute is substantially set out, that is enough. No formal exceptions to the referee's findings or rulings need be filed. If this practice shall seem lax to some, the answer is that it has hitherto been found convenient in this district, both for the judge and for the parties, and it has not been abused. A stricter practice has been adopted in some other districts, doubtless because it has been deemed convenient there.

Again, no precise quantitative weight is in this district assigned to the findings of fact made by a referee. If those findings are based largely upon the good or bad faith of witnesses seen and heard by the referee, this court will always bear in mind that the referee's means of judgment are, in an important respect, better than its own. If on the other hand, the findings depend upon inferences to be drawn from admitted facts, this court's means of judgment are nearly as good as the referee's. The weight to be assigned to the referee's findings in the two cases supposed is by no means the same. No labor-saving formula will determine the weight of the finding, or show just how strongly the court must incline against it in order to reverse. To say that the finding should not be set aside unless it is 'clearly erroneous,' 'manifestly erroneous,' 'so manifestly erroneous as to invoke the sense of justice of the court,' or 'unless it discloses prejudicial errors by the referee, some of which may, without exaggeration, be denominated gross,' is to darken counsel, if more is meant than that the court will not set aside the finding unless it is deemed erroneous, after due allowance for the circumstances under which it was made. Artificial and quantitative presumptions of fact are foreign to the spirit of the common law, and the introduction of these presumptions has been rare and unfortunate.

We come next to the merits of the case. Property originally owned by one or more partners, and used in the business of the partnership, may be joint or separate estate, as the partners agree. Originally separate estate, it may be converted into joint estate without formal conveyance, even without any writing, by a parol agreement made between the partners without any other act. The oral agreement need not be express. It may be proved by a course of conduct; e.g. by entries upon the partnership books. These written entries do not change the title to the goods in question by converting them from separate into joint estate. The entries are rather evidence of an understanding or agreement between the parties, which understanding or agreement operates the conversion. It follows that in the absence of express agreement, written or oral, the separation of joint and separate estate must often depend on circumstantial proof of a state of mind or intention. But it happens not infrequently that the difference between joint and separate estate was not brought to the attention of the partners, and so in fact they had no definite intention in the matter. The court must then determine which of the possible alternatives-- joint or separate estate-- better accords with the general intention of the parties. This is the question presented by the case at bar. The intentions of both parties, Hodges and Swift, were vague. The original partnership between Hodges and Lowry was of an uncertain character. Lowry was called by Hodges a 'nominal partner,'-- a term unknown to the law of partnership. Hodges added that Lowry had no interest in the assets of the business; that he had the right to sign the firm's name, was the 'Co.' of Hodges & Co. and continued in the firm after Swift entered it. Lowry called himself a ...