Iverson v. Reton

• Decision Date: 07 December 1926
• Citation: 211 N.W. 152,192 Wis. 418
• Parties: IVERSON v. RETON.
• Court: Wisconsin Supreme Court

192 Wis. 418

211 N.W. 152

IVERSON

v.RETON.

Supreme Court of Wisconsin.

Dec. 7, 1926.

Appeal from Circuit Court, Portage County; Byron B. Park, Judge.

Action by Aurilla M. Iverson, as administratrix of the estate of S. S. Iverson, deceased, against John Reton, as surviving partner of the firm of Reton Bros. & Company, wherein defendant filed cross-complaint for accounting making Aurilla M. Iverson a party defendant in her individual capacity. Judgment for defendant, John Reton, and plaintiff appeals. Affirmed in part, and in part reversed and remanded.--[By Editorial Staff.]

The action brought by the plaintiff prays for a partnership accounting. The cross-complaint of the surviving partner, John Reton, among other things alleges that the deceased partner, Iverson, during the existence of the copartnership, had charge of the financial affairs and the bookkeeping of the firm, and that during his lifetime he converted large sums and property belonging to the firm to his own use, and in the prayer for relief he also demands an accounting. Aurilla M. Iverson, the widow of the deceased partner, was made a party defendant in her individual capacity; it being alleged in the cross-complaint that she participated in her husband's acts in the conduct of the firm business, and co-operated with him.

Iverson, the deceased partner, died on April 11, 1911, and the plaintiff's complaint was served on January 19, 1912. On the 29th day of January, 1913, the issue was referred by the court to one Franklin E. Bump, to hear, try, and determine. On the 7th day of October, 1919, by agreement between the parties, an expert accountant, one Penner, was ordered by the court to examine the books and accounts of the partnership, and, upon the trial before the referee, such accountant was the principal witness.

The trial was concluded March 11, 1921, and on August 23, 1922, the referee's report and decision was filed. The examination of the accountant, in an effort to extract and to build a statement, covered a period of about 3 years, during which time he consumed about 300 days in actual work, for which he presented a bill which the referee allowed and ordered to be paid out of the partnership assets. During the meantime, between the appointment of the referee and the filing of his report, changes occurred in the attorneys interested, by death and change of residence. The World War also required Penner, the expert accountant, who was an officer in the army, to be absent from the state for a considerable period of time. The final judgment of the court was not entered until 1925, after the lapse of about 13 years from the time of the commencement of the action.

Many of the facts in the case are undisputed, and are found in the referee's report. Among the findings of fact are the following:

“That on August 2, 1886, the defendant John Reton (then about 17 years of age), and his brother, Niels Reton (then about 19 years of age), entered into a copartnership resting in parol for the purpose of carrying on the business of jewelers and dealing in watches, jewelry, silverware, glassware, firearms, musical goods, sewing machines, notions, etc., in the city of Stevens Point, Portage county, Wisconsin. * * *” That this business was continued until September 16, 1886, when one S. S. Iverson, now deceased, who was then about 30 years of age, and who had for a considerable period of time theretofore been living and boarding at the home of the said Retons and their mother, was admitted to the firm as an equal partner. That this new copartnership also rested in parol,and no agreement was entered into for the continuation of the same for any definite period of time. That on June 27, 1902, said last named copartnership was dissolved by mutual consent, said Niels Reton having withdrawn therefrom, he being paid for his interest the sum of about $1,700, and that the interest of the said Niels was thereupon transferred to the other two copartners.

That, after the withdrawal of Niels, the remaining partners continued the business under the same firm name and in the same way as theretofore, as equal partners, but that there were no written articles of agreement entered into, and no time limit fixed for the continuance of the business, and that, during the entire existence of the firms above mentioned, up to the time of the death of Iverson on April 11, 1911, no settlement or adjustment of the affairs and accounts was ever had. That the Reton Bros. were practical jewelers, and devoted their time to this branch of the business almost exclusively, and that Iverson was intrusted with the absolute and exclusive management and control of all the assets, books of account, and financial transactions of the firms.

“That there is no evidence by any competent witness or otherwise that the said control and management of the books, accounts, records, and financial transactions of the said firm by the said S. S. Iverson was against the will or without the consent of his said partners and partnership, nor that they did not have access to the said books and records of said transactions and opportunity to examine the same. That neither the said John Reton nor Niels Reton, nor, after the latter's said withdrawal from the business, the said John Reton had any actual knowledge that the said S. S. Iverson was keeping the accounts and records, or conducting the affairs of said copartnership in a negligent, improper, or wrongful manner, but that the said John Reton, by the use of reasonable diligence in the inspection of the books of accounts and records of said former copartnership and by reasonable inquiry, after the dissolution thereof, June 27, 1902, could have ascertained the conditions of said business as the same had been conducted by the said S. S. Iverson now complained of by him.

That the said books and records kept by the said S. S. Iverson were kept in such inaccurate, incomplete, negligent, and wrongful manner and so imperfectly preserved by him that it was and is impossible to ascertain therefrom as of any time during the life of either of said copartnerships, of which he was a member, the true state of the business and accounts thereof or of the said partners' several interests therein. * * *

That the said copartners at various times enlarged the scope of their business by the purchase of real estate consisting of farm lands and city lot property. That they took in trade for merchandise and purchased for cash a large amount of live stock and placed same upon said farm property, and from time to time sold and otherwise disposed of the same. That they purchased farm machinery and equipment and placed the same upon said farms and constructed buildings and otherwise improved and developed said farms. That all of said farm operations were in the direct and exclusive charge and management of the said S. S. Iverson. That the title of some of such real estate acquired and owned by said copartnerships was taken in the name of S. S. Iverson only and some in the name of the said John Reton only, but that such titles were held in trust for the said copartnership. That the title to other of said real estate was taken directly in the name of the said John Reton Bros. & Co. That all of said real estate, so acquired and owned by the said copartnerships at different times, together with all of the farm personalty and live stock on said farms, had been sold or otherwise disposed of and no longer belonged to said copartners, or either of them, at the time of the death of the said S. S. Iverson, except that described in the tenth and eleventh findings of fact following.

That, on the date of the death of the said S. S. Iverson, the said copartnership, composed of John Reton and himself, were the owners of record of the real estate and the store building thereon occupied by them as their business property, * * * and were also the owners of record of lots 1, 2, 3, 4, and 5 of block 8, of Central addition to the city of Stevens Point. * * *

That on the date of the death of the said S. S. Iverson, the said copartnership composed of John Reton and himself were the owners of record of the farm referred to * * * as the Eau Pleine Farm, * * * the record title of which had been in the name of the said S. S. Iverson, for said partnership, from the time it was acquired until September 16, 1910, on or about which day the said S. S. Iverson, in wrong of the said partnership, and without real or adequate consideration therefor, executed a warranty deed thereof to Aurilla M. Iverson, his wife, which deed was delivered to her at some uncertain time prior to his death or was taken possession of by her after such death, and was kept secret from the said John Reton, and was not recorded until April 12, 1911, the day following the death of the said S. S. Iverson.”

That on the 26th day of September, 1912, the stock of merchandise was sold at public auction, by order of the court, to Niels Reton, for $6,500.

“That the said copartnership * * * at the time of Iverson's death owned no tangible real or personal property or interest in such, other than that heretofore mentioned.”

That the defendant John Reton, during the period of his copartnership with Iverson, engaged in other business not connected with the firm, as follows:

“In 1903 or 1904 in the state of Oklahoma, about 10 months in 1906 in Peoria, Ill., and on the Isthmus of Panama about 3 months; in 1907 in Peoria, Ill., about 2 weeks; in 1908 in Peoria, Ill., and Panama about 2 1/2 months; in the fore part of 1909 in Panama about one month; and from the latter part of 1909 to the latter part of 1911 in Panama about 2 years.

That at no time during the life of the said S. S. Iverson, either before or after the dissolution of the said copartnership composed of John Reton, Niels Reton, and S. S. Iverson, did the said John Reton demand any accounting or settlement of the affairs, accounts, business, and interests of said last-mentioned...