McIntosh v. Ward
| Decision Date | 15 November 1907 |
| Docket Number | 1,340. |
| Parties | McINTOSH v. WARD et al. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Appellees' decedent, Benton, began this suit to dissolve a partnership between himself and appellant McIntosh, and to have a full accounting. The bill charged that McIntosh had wrongfully applied partnership funds to his individual use, had imperiled the funds in rash speculations, had mismanaged the business, and in other respects had been guilty of misconduct and fraud. The property consisted mainly of leases of coal mines in Indiana, machinery and tools. On Benton's motion the Circuit Court on the 29th of November, 1899, appointed a receiver to take possession of the assets and to continue the business by operating the mines, marketing the product, etc. McIntosh denied Benton's charges, averred that the balance was in his favor. and prayed that a full accounting be had. On the pleadings, evidence, and master's report the court adjudged on July 18, 1903, that the averments of the bill were true; that on November 29, 1899 (the day on which the court through its receiver took charge of the property and business of the partnership), the firm owed Benton $80,376.32, and McIntosh owed the firm $34,651.63 that to equalize account McIntosh should pay to Benton $57,513.93, with interest thereon from November 29, 1899 $12,557.21; that until the accounts were equalized by such payment McIntosh should not be entitled to any share in the assets, and Benton should have a lien thereon and be paid therefrom; that if the accounts were not eventually equalized either by payments from McIntosh or by the liquidation Benton should have a deficiency judgment against McIntosh; that all taxable costs should be assessed against McIntosh; that the remaining assets should be sold in a lump, and the proceeds applied first to the payment of the taxable costs and the expenses and liabilities of the receivership, second, to claims of creditors, and, third, to the discharge of Benton's lien; and that any balance should be divided equally. All questions not disposed of in that decree the court reserved for further adjudication.
The assets were sold for $2,000. In the decree appealed from entered on April 7, 1906, the court found that the $2,000 proceeds of sale should be paid to certain creditors, but that the payment could not then be made because $1,809 of those proceeds had been applied by the receiver 'to the proper costs of litigation. ' McIntosh was ordered to pay $1,809 into court so that the $2,000 might go to the creditors in question. The claims of those creditors were based on loans made to the receiver to enable the receiver to meet pay rolls during his operation of the mines. These payments for labor in the mines were held to be expenses of the receivership, and were adjudged to be 'costs of administration in this suit. ' During his conduct of the business the receiver had taken from the assets of the firm for compensation for his services $13,005.81. His action in this respect was approved by the court, and his compensation was adjudged to be 'costs of litigation.' The court decreed that the foregoing items of 'costs of administration' and 'costs of litigation' should be taxed against McIntosh, and the clerk was ordered so to tax them. It appearing that Benton would get nothing from the assets, and that McIntosh had made no payment toward equalizing the accounts, the court awarded Benton a personal judgment against McIntosh for $95,966.05 as being the sum of the following separately stated items:
Amount due Nov. 29, 1899 . . . $57,513 97
Interest thereon from Nov. 29, 1899, to July 18, 1903 . . . 12,557 21
Interest from July 18, 1903, to April 7, 1906 . . . 9,373 39
One-half of firm debts paid by Benton since July 18, 1903 . . . 1,515 67
'Costs of administration' paid as aforesaid from assets of the firm 2,000 00
'Costs of litigation' similarly paid . . . 13,005 81
And finally, the court reserved the right to make such further orders and decrees in the cause as might be necessary to secure the benefits of the present decree to the parties entitled thereto 'either against the defendant McIntosh or the...
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