Martin v. Bush
| Decision Date | 02 July 1930 |
| Docket Number | 601. |
| Citation | 154 S.E. 43,199 N.C. 93 |
| Parties | MARTIN v. BUSH et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Buncombe County; Johnson, Special Judge.
Civil action by Julius Martin, 2d, trustee, against James R. Bush and others, in which plaintiff seeks the aid of equity in the administration of his trust. From the judgment, plaintiff and certain defendants appeal.
No error.
Motion to confirm part of referee's report after general issue had been answered by jury held properly denied; claimant having excepted to referee's findings and conclusions.
Civil action in which the plaintiff seeks the aid of equity in the administration of his trust.
The plaintiff's case on appeal contains the following statement: The complaint alleges, in substance:
1. That the plaintiff is the trustee and assignee of the assets of the defendant James R. Bush, doing business under the name and style of "James R. Bush Brokerage House," by virtue of an assignment by said Bush to the plaintiff under the authority and in pursuance of chapter 28 of the Consolidated Statutes of North Carolina, whereby the plaintiff became vested with "all and singular the outstanding debts now due and owing to him, the said debtor on account or in respect of his trade or business of stockbroker, as aforesaid; also any and all assets, real personal or mixed, including trade debts, equities, claims demands, choses in action, to which he may be in any manner entitled"; said instrument expressly authorizing and empowering the plaintiff to "call in, collect, compel payment of, and receive such outstanding debts," and particularly authorizing him "to bring such legal proceedings as in his judgment shall be necessary to properly reduce the same to possession"; and all said property and assets to be held by the plaintiff upon trust "for the equal benefit of his said creditors, and that the net proceeds of the collection of such assets shall be applied equally upon a percentage basis to the discharge of proven debts held by said creditors against the said debtor."
2. That the plaintiff, in the performance of the duties devolved upon him by said deed of assignment, has possessed himself of all the records, books, papers, and accounts of the debtor's said business, but that said records are in such a confused and unorganized condition that the plaintiff is unable to ascertain to his satisfaction the true state of the accounts of said business, and that it has become apparent to the plaintiff that, by reason of the nature of the business of his assignor, there would be conflicting claims between the creditors of said business in respect of the validity of the claims of many of the prima facie creditors of said business which must needs result in litigation and a multiplicity of suits and injurious waste of the trust estate.
3. That the apparent liabilities of said business, including claims of the general creditors of the assignor, would probably aggregate an amount in excess of $180,000; and the value of the undisputed assets of the trust estate, as will appear by the inventories which the plaintiff has filed in the office of the clerk of the superior court of Buncombe county, N. C., as required by law, will aggregate approximately $10,000.
4. That the defendant Hope T. Robertson claims to be a creditor of plaintiff's trustor to an amount in excess of $100,000, but that the plaintiff has information, both through papers and records in his hands and by parol, which lead plaintiff to believe, and he therefore alleges, that the true relation of the defendant Hope T. Robertson to the brokerage business of the defendant Bush is that of a silent and secret partner, so that, as against the lawful creditors of said brokerage business, said defendant Hope T. Robertson has no right or status as a creditor; and, on the contrary, that said defendant is obligated and bound, equally with the defendant James R. Bush, for the payment of all lawful indebtedness of said brokerage business.
5. That the defendants James R. Bush and Hope T. Robertson, contriving to contravene the laws and public policy of the state as to the individual liability of partners to the creditors of the partnership, and to create an unlawful preference in favor of said Hope T. Robertson in respect of liabilities incurred by her in aid of said partnership, had made and entered into a certain written agreement between themselves, of date the 14th day of April, 1927, attached to the complaint and marked "Exhibit A"; and further pursuing said unlawful designs, the defendant Bush had executed a deed of trust to the defendant Ellis C. Jones, conveying to said Jones several tracts of land therein described, in trust, for the purpose of securing the payment of the promissory note of the said Bush, in the sum of $50,000, payable to Troy Wyche, but which said Wyche had indorsed without recourse to said defendant, Hope T. Roberston; by reason of which all the security, benefits, and advantages so afforded to said defendant Hope T. Robertson by said deed of trust results and inures to the plaintiff for the benefit of the creditors of said "James R. Bush Brokerage House."
6. That an accounting in this action is required to enable the plaintiff properly to discharge the duties devolved upon him by said deed of assignment; and the plaintiff prays for such an accounting, and furthermore prays for judgment establishing the individual liability of said Hope T. Robertson for the lawful indebtedness of said brokerage house, and to charge her as trustee for the creditors of all the security, benefits, and advantages received by her by virtue of the aforementioned deed of trust, and for an accounting of said trust, for costs, and for general relief.
Sundry of the defendants named as prima facie creditors of plaintiff's assignor made answers to said complaint, in which they pleaded their claims as such creditors, and in which they associated themselves with the plaintiff in alleging that the defendant Hope T. Robertson was a partner with the assignor in the conduct of said brokerage business, and praying that she be held liable as such.
The defendant Hope T. Robertson answered said complaint denying that she was a partner with said Bush in said business, denying all material allegations of said complaint tending to charge her as such, and further pleading as a counterclaim for affirmative relief the indebtedness of the said Bush to her on open account in the sum of $35,000, and by the note secured by the deed of trust aforementioned in the sum of $50,000, and praying judgment accordingly.
Upon the issues joined by said pleadings, the case was sent to W. B. Snow, Esq., by compulsory reference to try all of said issues except the issue as to the alleged partnership between plaintiff's assignor and the defendant Hope T. Robertson, which said latter issue was retained for trial by jury.
With very few exceptions, the claims of all persons against said estate were disallowed by the referee upon the ground that the transactions out of which said claims arose were had in violation of the trading in futures act, and upon exceptions to said referee's report the findings of said referee were in most instances sustained, either by the rulings and findings of his honor, the judge presiding, or by jury verdict in cases where trial by jury had been reserved by the claimants; with the result that only a very small number of the claimants had judgments signed in their favor. Divers claimants whose claims were disallowed are prosecuting several appeals to the Supreme Court, all of which will fully appear by the record.
The following issue, excepted in the order of reference, was answered by the jury in the negative: "Was the defendant Hope T. Robertson a partner with the defendant James R. Bush from and after April 14, 1927, as alleged in the complaint?"
On the trial of this issue the plaintiff offered in evidence:
1. The following agreement and Hope T. Robertson's admission that she had signed it:
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