Roots Et Als. v. Mason City S. & M. Co. Et Als.

• Citation: 27 W.Va. 483
• Court: West Virginia Supreme Court
• Decision Date: 13 February 1886
• Parties: Roots et als. v. Mason City S. & M. Co. et als.

27 W.Va. 483

Roots et als

v. Mason City S. & M. Co. et als.

Supreme Court of Appeals of West Virginia.

Submitted January 27, 1886.

Decided February 13, 1886.

1. Where a case is made out between co-defendants by evidence arising from pleadings and proofs between plaintiffs and defendants, it is the duty of a court of equity to make a decree between the defendants in order that such defendants shall not be obliged to litigate such case in another suit. (p. 488.)

2. A bill in equity is filed by all the individuals composing the partnership of R. & Co. and others to which the said partnership as such and others are made defendants, the principal object of the bill is to sell the property of a corporation and distribute the pro- ceeds among the holders of coupon bonds which are liens on said property, but the bill also avers that the defendants R. & K. are indebted to R. & Co. in a specified sum, to secure which R.&Co. hold as collaterals a number of said coupon bonds owned by R. & K., the defendant K., of the firm of R. & K., by his answer denies that any such indebtedness exists or that said bonds are held by R. &Co. as collaterals. Held:

The controversy thus raised between R. & Co. and R. & K. must be regarded as a controversy between them as plaintiffs and defendants, and not between them as co-defendants, it being immaterial that R. & Co, are not as a firm made plaintiffs to the bill since all the members composing said firm are plaintiffs and as such assert their claim against R. & K. (p. 489.)

3. Where the dealings between merchant and merchant or merchant and factor have ceased and the accounts between them have been so adjusted that the party in whose favor the balance appears might bring an action at law thereon, then from the time of such adjustment the statute of limitations will commence to run as against such balance, (p. 490.)

4. The accounts between merchant and merchant or merchant and factor, which are excepted from the operation of the statute, must be a direct concern of trade; liquidated demands which are only traced up to the trade of merchandise are too remote to conie within the description, and they are not excepted from the bar of the statute, (p. 491.)

5. By the dissolution of a partnership, the authority of one partner to bind the partnership in reference to any new contract, is revoked; therefore, after the dissolution, one partner can not, without speeial authority or the consent of his co-partners, execute a note for a debt due from the partnership that will bind the other partners; nor can he, without such authority or consent, transfer or pledge the partnership goods or securities to a third person even to secure a debt due to such third person from the partnership, (p. 492.)

6. Where a creditor holds a pledge or collateral security for his debt, he will be entitled to retain the same in his possession against tl.e pledger or debtor, notwithstanding the statute of limitations is, or might be, successfully pleaded against the debt for the security of which the pledge was made. (p. 494.)

7. One partner is not entitled to claim from the partnership compensation for his services in the business without a special contract for such compensation.

J. W. English and Gunn $ Gibbons for appellant.

Knight ft Couch and Simpson $ Howard for appellees.

Snyder, Judge:

In August, 1872, J. A. Waddell, assignee in bankruptcy of the Mason City Coal and Salt Company, conveyed to James P. Kilbreth the coal and salt property lately owned by said company, consisting of about 287 acres of land with the improvements thereon, and certain privileges and franchises attached thereto, situate at Mason City, Mason county, in this State. By an arrangement between G. Y. Roots and said Kilbreth, they became the joint owmers of said property, and from August, 1872, to December, 1875, they as partners under the firm name of Roots & Kilbreth, conducted the business of manufacturing and selling salt on said property. During the same time, Roots & Co., a partnership of which said G. Y. Roots was the owner of seven tenths, were engaged in the commission business in the city of Cincinnati in the State ot Ohio, and the business ot both of said firms was for the greater portion of said time under the immediate supervision and management of said Roots, and especially was such the fact in regard to the firm of Roots & Kilbreth.

In October, 1875, a corporation was created by the name of The Mason City Salt and Mining Company for the purpose of manufacturing salt, &c., at Mason City, with a paid up capital stock of $160,000.00, divided into shares of $50.00, each of which shares said Roots owned 1, 592, said Kilbreth 1, 592, A. E. Smith 4, James R. Murdock 4, and N". H. McLean 4; and by deed dated November 4, 1875, Kilbreth conveyed the aforesaid property to said corporation. And on December 1, 1875, said company conveyed said property to said Kilbreth, as trustee, to secure the payment of 140 coupon bonds of $500.00 each, issued by the company.

In February, 1884, G. Y. Roots, A. E. Smith, H. P. Piefer, J. R. Murdock and C. M. Vancleaf brought this suit in the circuit court of Mason county against the said Mason City Salt and Mining Company, the two firms of Roots & Kilbreth and Roots & Co. and others; and the plaintiffs, after stating the foregoing facts, allege in their bill, among other matters, that the coupon bonds issued by said company and secured by said trust deed of December 1, 1875, are now held and owned as follows: G. Y. Roots $15,000.00, John W. and James P. Kilbreth $10,000.00, M, M. White $5,000.00, and the late firm of Roots & Kilbreth $40,000.00; that while the said Roots & Kilbreth were in business as partners they became indebted to Roots & Co., in the sum of $23,568.93, including interest to March 1, 1884, which latter firm is now composed of the plaintiffs, G. Y. Roots, A. E. Smith and H. P. Piefer, and said firm is still the owner of said debt; that Roots & Kilbreth deposited with Roots & Co. as collateral security for said debt the $40,000.00 of bonds so owned by their late firm, and that Roots & Co. now hold said bonds as such security; that owing to the insolvency of said Mason City Salt and Mining Company it has been unable to carry on its corporate business for upwards ot two years, and that in consequence thereof a large portion ot its property is deteriorating in value and will continue to do so; they therefore pray that all the property of said company, real and personal, may be sold by a decree of the court and the proceeds held subject to its order, until the court can ascertain, by report of one of its commissioners, to whom said proceeds are due; that the affairs of said company may be wound up and a decree entered dissolving it according to law, and for general relief.

None of the defendants answered the bill except the said James P. Kilbreth, and he in his answer denies that the said $40,000.00 ot bonds are held by Roots & Co. as collateral security for said alleged indebtedness of $23,568.93, or that said indebtedness in fact exists, and prays by way of affirmative relief for an account to be ordered by the court to ascertain the state of accounts between the firms of Roots & Kilbreth and Roots & Co., and that the latter be required to show in what said alleged indebtedness consists, the items ot which it is composed and how it was created, The defendant, Kilbreth, filed pleas of usury under the statutes of this State and of the State of Ohio, averring that said alleged indebtedness of Roots & Co. against Roots & Kilbreth is usurious, and he also filed a plea alleging that said indebtedness was barred by the statute of limitations.

The property ot said company embraced in the trust deed to secure said coupon bonds was sold under a decree, and the sale confirmed without objection at the price of $12,500.00, which after deducting some charges left about $12,000.00 of which tour sevenths or, say, $6,850.00 would be applicable to the payment of the $40,000.00 of said bonds owned by Roots k Kilbreth.

By decree of September 12, 1884, the cause was referred to a commissioner to report who are the present holders of said coupon bonds, and "to settle the accounts existing between the firms of Roots & Kilbreth and Roots & Co. mentioned in the plaintiff's bill, and report in whose favor the balance exists."

The controverted matters litigated in the circuit court and the only questions presented by the record tor the decision of this Court are those arising, nominally, between the firms of Roots & Co. and Roots & Kilbreth, though actually between the plaintiff, G. Y. Roots, and the defendant, James P. Kilbreth, in regard to the said claim of $23,568.93, and the application of the said $6,850.00 realized from the sale of the trust property for the payment of the $40,000.00 of bonds owned by Roots k Kilbreth, and which Roots & Co. assert are held by them as collateral security for the payment of said claim of $23,568.93. On these matters the commissioner took a great mass of depositions, and in his final report he finds and reports, "that Roots k Co. held the bonds amounting to $40,000.00 as collateral security for the payment of a note executed by Roots k Kilbreth, and payable to said Roots & Co. or order, for $23,568.93 dated March 1, 1884, payable six months after date with interest from date at seven per rent.;" and he also reports, that the amount of said note, with interest at seven per cent, added to May 4, 1885, is $25,507.47. The defendant Kilbreth excepted this report and to each of these findings by the commissioner upon various grounds.

On May 20, 1885, the court pronounced its final decree in the cause, and the said decree, so far as it regards the matter in controversy in this Court, is as follows: "And the court now proceeding to make distribution of the proceeds of the said real and personal estate, is of opinion and doth decide that the aforesaid indebtedness of said Mason City Salt...