Ransom v. Harroun

Citation113 So. 206,147 Miss. 579
Decision Date13 June 1927
Docket Number26039
CourtUnited States State Supreme Court of Mississippi
PartiesRANSOM v. HARROUN. [*]

Division A

1 PARTNERSHIP. Partner paying notes, given for money for operation of partnership with personal indorsement of partners may recover share from the other.

Where money for operation of partnership was secured on notes of concern with personal indorsement of partners, neither of whom advanced any appreciable sum in cash, partner advancing money for payment of such notes may recover proportionate share from the other.

2. APPEAL AND ERROR. Plea of limitations cannot be for first time interposed on appeal.

Plea of limitations as bar to recovery must be submitted to lower court and cannot for the first time be interposed on appeal.

3 PARTNERSHIP. Chancellor may refer partnership accounting to master or make Ms own calculations, in his discretion. Discretion relative to ordering reference to master for partnership accounting in complicated cases is vested in chancery court, and chancellor if he so desires may make his own calculations or have counsel do it or refer same to master.

Suggestion of Error Overruled June 29, 1927.

APPEAL from chancery court of Leflore county.

HON. C L. LOMAX, Chancellor.

Suit by A. L. Harroun against F. T. Ransom. Decree for complainant, and defendant appeals. Affirmed.

Affirmed.

S. L. Gwin and S. Rosenthal, for appellant.

The appellee asserts that the partnership existed by virtue of a verbal agreement. Appellant contends, under oath, that no partnership ever existed between him and appellee. The burden of proving the partnership was, therefore, upon appellee. Wise et al. v. Cobb et al., 100 So. 189; Yarbrough v. Donoghue, 99 So. 389.

Should the court hold that there was a partnership upon the evidence introduced in the trial of this case, we contend that the court must necessarily find it to be a partnership in which one partner contributed his time, skill and labor and the other his money. In partnerships of this kind, the universal rule seems to be that if the firm proves to be a failure, the one contributing the money cannot demand contribution from the one contributing his time and labor. Heran v. Hal (Ky.), 35 Am. Dec. 178; Baker v. Safe Deposit, etc., Co., 90 Md. 744, 45 A. 1028, 78 A. S. R. 825. See note in Ann. Cas. 1916D, page 825; 20 R. C. L. at page 930.

The organization of the corporation and the assumption by it, at the instance and with the consent and approval of complainant, released the defendant from his alleged liability for any indebtedness of the defendant to the complainant arising out of the alleged partnership business.

The written contract speaks for itself, and specifically states that the corporation assumed all the indebtedness of the alleged partnership organization. Appellee attempts to exclude the indebtedness of appellant to the organization from this contract. Certainly, he cannot go in the face of the contract and the contrary statement of appellant. 1 Fletcher on Corporations, page 332; 7 R. C. L., page 86; Shields v. Clifton Hill Land Co., 94 Tenn. 123; 45 A. S. R. 700; 26 L. R. A. 509.

In the case in controversy, appellant and appellee could be considered promoters only between themselves, and appellee could not maintain a bill against appellant as a partner. Both appellee and appellant agreed to the assumption of all assets and liabilities. Appellant immediately upon the organization of the corporation assigned without any further consideration his stock in the corporation to the appellee. As between the appellant and appellee the old contract was destroyed and a new one made--a novation--and between them they could not sue each other upon the old contract. Graham v. Thornton (Miss.), 9 So. 292.

The authorities all hold that a partner cannot maintain an action against his co-partner on partnership notes or accounts, even though he may have paid the notes out of his personal funds. His only remedy is for final settlement and accounting, after which he may sue for the balance. The bill of complaint prayed for an accounting, but the court disregarded the prayer of the bill and gave a personal decree on the notes and accounts sued on. In 21 A. L. R. at 86 is an exhaustive note to the proposition stated.

The Mississippi cases cited in support of the above rule of law are as follows: White v. Waide, 1 Walk. 263; Scott v. Searles, 5 S. & M. 25; Hunt v. Morris, 44 Miss. 314; and Evans v. White, 31 So. 833. See, also, Foss v. Dawes, 72 Neb. 608, 101 N.W. 237; Jones et al. v. Cade (Ala.), 94 So. 255.

The following Mississippi decisions support the proposition that an accounting and final settlement of all the partnership affairs is essential before judgment can be rendered against any partners for any debts due to partners for partnership transactions. Randle v. Richardson, 53 Miss. 176; Hunt v. Gordon, 52 Miss. 194; Davis v. Davis, 60 Miss. 615.

With reference to the notes of the alleged partnership claimed to have been paid by appellee, the statute in such case would run from the date of payment and was at the time of filing of this suit, in all cases, over four and a half years past. Prewit v. Buckingham, 28 Miss. 92; Gow on Partnership 102; Angell on Lim. (2 Ed.), 160; Partee v. Mathews, 53 Miss. 141; Berger v. Dempster, 85 So. 392, 20 Ala. 305.

We contend that all indebtednesses of the alleged partnership were barred at the time of the filing of the bill of complaint in this suit and, therefore, the appellee could not bring suit for contribution on those claims and the chancellor was in error in allowing these claims.

H. C. Mounger, also, for appellant.

"On a bill, by a partner for a dissolution the case should be referred to a master with power to examine the partners, to cause production of the books of the firm, and to state an account between them, each partner being credited with advances to, and charged with receipts from the partnership." Randall v. Richardson, 53 Miss. 176.

There should have been a reference to a master to take and state an account between the partners, if there was a partnership, and Harroun should have been charged with all the assets that were turned over to him at the time that the corporation was formed. He makes no showing as to what he got for them except the bare statement that they were sold and applied to the payment of the debts. Reid v. Freed, 100 Miss. 48. The complainant has been guilty of laches in bringing his suit. 20 R. C. L., page 1016, Partnership, section 259. See also note citing Cowan v. Hudson, 105 Miss. 507, 62 So. 275; 45 L. R. A. (N. S.) 720; 8 C. J., page 259, Bills and Notes, section 409. By mutual agreement a corporation was formed. An assignment was duly executed by Harroun and Ransom, transferring all the assets of the business to the Mokano Motor Sales Company. This was just as much an accord and satisfaction as is done when the note of a third person is taken in settlement of an individual debt. See 1 C. J., 548; 50 Miss. 259; Whitney v. Cook, 53 Miss. 55; Clayton v. Clark, 74 Miss. 503; Pulliam et al. v. Taylor, 50 Miss. 257; 1 Fletcher Ency. of Corporations, page 332; 14 C. J. 269-70 and note; 1 Williston on Contracts, section 306; Bank of Forrest v. Orgill Bros., 82 Miss. 83, 34 So. 325.

Harroun could not renew the notes himself without the authority of Ransom, and Ransom is not bound by these renewed notes; yet they form the basis in part of the final decree. We submit that the decree of the lower court should be reversed.

Osborn & Witty, for appellee.

Harroun and Ransom were partners, not promoters. It was never agreed by the creditors of the partnership and it was never agreed by Harroun, that the corporation alone should be liable for the debts of the partnership. Therefore, all that is said in appellant's brief about Harroun and Ransom being promoters and about the corporation assuming all the debts and about there being a novation so as to release Ransom from his liability on the debts, is wholly out of place.

Appellant on the trial in the supreme court, for the first time contends that Harroun's claim against Ransom is barred by the statute of limitation. Under the clear and unequivocal holdings of this court it was necessary for Ransom to have plead the statute of limitations in order to avail himself of that defense in this court. Central Trust Co. v. Meridian Light & Ry. Co., 64 So. 216; Y. & M. V. R. R. Co. v. McGee-Dean Co., 76 So. 264, 115 Miss. 282; Hines v. Potts, 56 Miss. 346; Standard Oil Co. v. Nat'l Surety Co., 107 So. 559, 143 Miss. 841; Raleigh Co. v. Fortinberry, 97 So. 722, 133 Miss. 467; Y. & M. V. R. R. Co. v. Kirk, 58 So. 710, 102 Miss. 41, and on suggestion of error reported in 58 So. 834, 42 L. R. A. (N. S.) 1172, Ann. Cas. 1914C 968; Bridgeforth v. Payne, 62 Miss. 777; Boyd v. Barrenger, 23 Miss. 269; Hines v. Potts, 56 Miss. 346. Not only is the rule we have stated well settled in Mississippi, but it is practically the same everywhere. 37 C. J., page 1221.

But even though the six-year statute had been properly plead, or even though the three-year statute had been properly plead--although neither of these was done--the statute of limitations is of no avail to Ransom. The record shows without any dissent that all three of the debts of the partnership which were paid by Harroun were evidenced by promissory notes, and that all three debts were originally contracted by Ransom himself.

This was a partnership debt contracted by Ransom and on May 1 1919, the very day when the partnership assets were conveyed to the corporation and the very day when, as the appellant contends and as we are willing to concede, the partnership was dissolved, Ransom executed new notes for thirty-five hundred dollars to this bank, dated May 1,...

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4 cases
  • Dulion v. Folkes
    • United States
    • Mississippi Supreme Court
    • October 15, 1928
    ... ... & M. 304; Exum v. Canty, 34 ... Miss. 533; Kennedy v. Sanders, 90 Miss. 524; ... Noxubee County v. Long, 141 Miss. 72; Ransom v ... Harroun, 147 Miss. 579. We also direct the attention of ... the court to the following cases taken from the decisions of ... other states, ... ...
  • Armstrong Tire & Rubber Co. v. Payton
    • United States
    • Mississippi Supreme Court
    • May 9, 1966
    ...from the record that the point was first made in this court.' 178 Miss. at 376, 172 So. at 303. We pointed out in Ranson v. Harroun, 147 Miss. 579, 113 So. 206 (1927), that a plea of limitation to bar recovery must be submitted to the trial court and cannot be for the first time interposed ......
  • Hancock's Estate v. Pyle
    • United States
    • Mississippi Supreme Court
    • February 19, 1940
    ... ... first time on appeal ... 3 C. J ... 709, par. 604; 4 C. J. S. 452, par. 1; Ransom v ... Harroun, 147 Miss. 579, 113 So. 206 ... Defendant ... cannot for the first time on appeal urge the laches of ... complainant in ... ...
  • National Casualty Co. v. Hallam
    • United States
    • Mississippi Supreme Court
    • January 4, 1932
    ... ... all the facts are before the court, the accounting may be had ... and rendered by the court without appointing a master ... Ransom ... v. Harronn, 113 So. 206 ... In ... order to establish liability on the bond, it was not ... necessary to show that principal had ... ...

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