Peters v. McLaren

• Decision Date: 10 October 1914
• Docket Number: 2636.
• Citation: 218 F. 410
• Parties: PETERS v. McLAREN et al.
• Court: U.S. Court of Appeals — Sixth Circuit

218 F. 410

PETERS v. McLAREN et al.

No. 2636.

United States Court of Appeals, Sixth Circuit.

October 10, 1914

D. F Pugh and L. R. Pugh, both of Columbus, Ohio, for appellant.

J. E Todd and A. T. Seymour, both of Columbus, Ohio, for appellees.

Before WARRINGTON and DENISON, Circuit Judges, and TUTTLE, District judge.

PER CURIAM.

At the suit of Valentine & Co. against the Columbus Buggy Company Daniel McLaren was appointed receiver of the Columbus Buggy Company, and appellant by intervention sought to recover the property in the hands of the receiver, claiming that such property was a trust fund belonging to appellant because of a partnership contract between appellant's testator and one Clinton D. Firestone, and because of the particular manner in which certain of the partnership property passed to the Columbus Buggy Company, a corporation in which Firestone was the controlling stockholder. Two grounds of defense were urged: (1) That the trust claimed by appellant did not exist and (2) that in any event appellant through her own conduct was estopped from making such claim. In the District Court Judge Sater sustained the appellees on both defenses. We approve of those portions of Judge Sater's opinion which are printed below.

The decree is affirmed, with costs.

SATER District Judge.

On June 29, 1882, George M. Peters (hereinafter designated as Peters), Oscar G. Peters, and Clinton D. Firestone (hereinafter called Firestone), entered into articles of copartnership to conduct the business of manufacturing and selling carriages, buggies, and dashes under the name of the Columbus Buggy Company and Peters Dash Company of Columbus, Ohio. * * * On November 9, 1894, Oscar G. Peters died. His interest was withdrawn from the business, and his estate settled but not wholly released from the partnership debts. The articles of copartnership, as originally drawn, remained in force excepting in so far as affected by his death. The extinguishment of his interest left Firestone and Peters as equal partners in and owners of the business. On August 1, 1896, * * * the partnership made an assignment under the (Ohio) state statute in trust for the benefit of its creditors. * * * Its liabilities at that time were about $1,250,000. Prior to the execution and filing of the deed of assignment the partnership * * * gave certain preferences, one of which was, at Peters' instance, in the form of a chattel mortgage for thirty or more thousand dollars, to Mrs. Peters on property in Kansas City, Mo. * * * Peters had an individual estate outside of his partnership belongings. He also had life insurance of some importance, the amount of which was from $60,000 to $75,000. A composition with creditors was suggested, at their first meeting, which was held * * * in October or November, 1896. Peters had become seriously ill, and on his account the meeting had ben deferred. He was, however, present, although a very sick man. A creditors' committee was appointed to work out a composition. A preliminary meeting of the committee was held, at which Peters and all others present were of the opinion that if the partnership estate was converted into money it would yield but a small dividend to the creditors, that some arrangement ought to be made to continue the business, and that Firestone should get his resources together and make some sort of a proposition with that end in view. Peters' health was such that he was at the office and around but a few days only after such meeting. Firestone and the creditors' committee agreed upon a composition proposal, after which he devoted himself almost exclusively to its accomplishment until it was finally wrought out. Both Peters and the creditors looked to Firestone to bring about that result. Peters desired to protect his individual estate, his life insurance, and his wife's preferential mortgage. * * * To effectuate the settlement and accomplish the desire of creditors and of both Peters and Firestone, Peters on December 16, 1896, executed and delivered to Firestone the quitclaim deed whose import is the subject of this controversy. As it embodied agreements as to certain matters to be done by each of the parties, it was executed and acknowledged by both grantor and grantee. The preparation and consideration of the deed extended through some weeks. * * * The deed was executed at the Peters residence, he then being confined to his bed. * * * The deed was fully read to Peters and its purport explained to him, although he had prior knowledge of it and its contents, and on two or three occasions he interrupted the reading to ask an explanation as to the legal effect of certain provisions, his counsel responding to his inquiries. * * *

The following is a copy of the instrument in question omitting the acknowledgment:

'Whereas, on the first day of August, 1896, George M. Peters and Clinton D. Firestone, partners as the Columbus Buggy Company and Peters Dash Company, made, executed, and delivered a certain deed of assignment, and thereby transferred and conveyed to William A. Miles and John M. Thomas, their successors and assigns forever, in trust for the benefit of all creditors, all the real and personal property and assets of the said partnership, wherever the same might be situated or located, which said deed of assignment was duly filed on said day in the probate court of Franklin county, Ohio, as will more fully appear, reference being had to said deed and the records of said court, and which said assignment so made is now pending in said probate court of Franklin county, Ohio; and

'Whereas, it is desirable that a proposition to compromise, settle, and liquidate the debts and obligations of said partnership and the claims and demands against said assigned estate should be made by one or both of said partners; and,

'Whereas, for the purpose of enabling Clinton D. Firestone to make an offer of compromise, liquidation, and settlement to the creditors of said partnership,

the said George M. Peters is ready and willing to relinquish all his right, title, estate, and interest in said partnership property and assets and in the business of said partnership, including the good will thereof and all the estate, right, title, and interest reserved to him in said deed of assignment:

'Now, these presents witnesseth: That I, George M. Peters, of Columbus, Ohio, in consideration of one dollar ($1.00) to me paid by Clinton D. Firestone, the receipt of which is hereby acknowledged, and in consideration of the covenants, agreements, and conditions hereinafter contained and set forth to be kept, observed, and performed by the said Clinton D. Firestone, have covenanted and agreed to, and do hereby, remise, release, relinquish, and forever quitclaim to the said Clinton D. Firestone, his heirs and assigns forever, all my right, title, estate, interest, claim, and demand of, in, and to all and singular the lands, tenements, appurtenances, fixtures, machinery, goods, chattels stock, wares, merchandise, patents, tools, appliances, apparatus, patterns, franchises, leases, promissory notes, credits, choses in action, evidences of debt, claims, and demands, and all the real and personal property and assets of said partnership, including the right to use said partnership name, and the good will of said business, of whatsoever kind or description, and wheresoever the same may be situated or located. To have and to hold unto the said Clinton D. Firestone, his heirs and assigns forever, each and every item, piece, and parcel of said above-mentioned property, with all the privileges and appurtenances thereof or thereunto belonging, provided, nevertheless, and these presents are upon this express condition: That the said C. D. Firestone has agreed and does hereby agree to use his best efforts and to endeavor to obtain the assent and acceptance of the offer of compromise, settlement, and liquidation so to be made by him, by each and all of the creditors of the said partnership. Now, if the said Clinton D. Firestone shall not obtain the assent or acceptance of said offer of compromise and settlement by eighty-seven (87%) per cent. of all the creditors of said partnership in amount, then this release, transfer, quitclaim, and instrument shall be void, if the said George M. Peters, or his executors or administrators so elect; otherwise, to be and remain in full force and virtue in law forever.

'It is expressly understood and agreed by and between the said George M. Peters and Clinton D. Firestone that each of them shall be and remain liable to the other for his proportionate part of any debt now existing against them as partners, or any judgment that may be rendered against either by any court of competent jurisdiction upon any debt now existing against them as partners, and shall be liable each to the other for their proportionate part of any attorney's fees or court costs incurred in defending any suit that may be brought or any debt or obligation now existing against them as partners. And on any such debt or claim it is mutually agreed that neither shall have the right to confess judgment without the consent of the other, and each of them hereby agrees to use all reasonable efforts to notify the other of any and all suits that may be brought and to defend the same so far as a legal defense thereto may exist.

'And the said C. D. Firestone does further stipulate and agree for himself and for the officers and employes of any new firm or company, into whose possession the books and papers heretofore used by the said partnership may go, so far as his control and influence can require, that the said George M. Peters, his executors or administrators, shall have his and their earnest co-operation and assistance in any litigation against

...