Schenk v. Lewis

• Decision Date: 27 June 1923
• Docket Number: 11261.
• Parties: SCHENK ET AL. v. LEWIS ET AL.
• Court: South Carolina Supreme Court

118 S.E. 631

125 S.C. 228

SCHENK ET AL. v. LEWIS ET AL.

No. 11261.

Supreme Court of South Carolina

June 27, 1923

On Petition for Rehearing. August 16, 1923.

Appeal from Common Pleas Circuit Court of Kershaw County; I. W Bowman, Judge.

Action by Leo Schenk and another, against Sallie Lewis and others. Judgment for defendants, and plaintiffs appeal. Affirmed as modified.

L. A Wittkowsky and M. L. Smith, both of Camden, for appellants.

Laurens T. Mills and W. B. de Loach, both of Camden, for respondents.

COTHRAN J.

Action by Leo Schenk and G. H. Baum, as surviving partners of the firm of L. Schenk & Co., composed of Leo Schenk, G. H. Baum and C. R. Lewis, against the heirs at law of C. R. Lewis, deceased, and the administrator of his estate, for an accounting and settlement of the partnership affairs. C. R. Lewis died in November, 1914, and the action was commenced in May, 1916.

At some time prior to March 1, 1917 (the exact date not appearing in the record for appeal), the case was referred to I. C. Hough, Esq., as special master, to decide all issues of law and fact. Testimony was taken at references beginning March 1, 1917, and on May 5, 1921, more than four years thereafter, the hearings were concluded, and the report of the special master was filed. He found that the estate of C. R. Lewis was entitled to a credit of $3,503.18, exclusive of his interest in the real estate; he recommended that certain contracts for the sale of land entered into by L. Schenk & Co. prior to the death of C. R. Lewis and by the surviving members of the firm after the death of C. R. Lewis, be consummated, and that certain other real estate be sold by the special master, and the proceeds divided according to the plan indicated in the report. The details of his findings and recommendations will be hereinafter stated.

To this report both plaintiffs and defendants excepted, and the matter was heard by Hon. I. W. Bowman, presiding judge, at November term, 1921. He filed a formal decree overruling all of the exceptions and confirming the report of the special master. From this decree the plaintiffs alone have appealed.

It appears that the firm of L. Schenk & Co. was organized in 1902; the partners being Leo Schenk, G. H. Baum, and C. R. Lewis. There were no written articles of partnership, but there was, however, a verbal agreement between them that each partner was to receive an annual salary: Schenk $900; Baum $400; and Lewis $650. Subsequently the salary agreement was changed to: Schenk $1,500; Lewis $900; and Baum nothing. In addition to their salaries, the partners were to divide the net profits as follows: Schenk 46 per cent.; Baum 46 per cent.; and Lewis 8 per cent.

It does not appear that the respective contributions of the partners to the capital of the partnership are material to the controversy, but, by way of narrative, it may be stated that Lewis contributed $1,000 and only that; that Baum at the outset contributed $7,000, and that he and Schenk contributed further amounts as the business required; Baum's contributions being in excess of Schenk's. The particulars do not appear in the record.

The partnership did a general mercantile business, bought and sold land, and operated a farm upon several adjoining tracts of land known as the Lockhart farm, containing 501 acres, 250 of which were in cultivation.

The special master found that at the date of his report, May 5, 1921, the amount due to the estate of C. R. Lewis by the surviving members, Schenk and Baum, was $3,503.18, and he recommended that that amount, representing his interest, exclusive of the real estate, be paid out of the shares of the surviving partners in the proceeds of the sale of certain real estate which he recommended to be sold. No point is made by the appellants that this balance was properly payable out of the assets of the partnership and not out of the shares of the survivors; for, as we shall see, the exceptions question only the correctness of certain items composing the special master's statement of the account. The special master's finding, confirmed by the circuit decree, unexcepted to, must therefore stand, so far as this question is concerned.

The amount which the special master reported to be due the estate of C. R. Lewis was arrived at in the following statement:

He credits the estate with the following items:

1. What he terms the capital stock of Lewis, $3,019.15, "less $596.42, the proportionate part of real estate deducted as an asset" (a matter which calls for a more extended explanation hereinafter made) ..................... $2,412 63 2. Account of C. R. Lewis, guardian .......................... 123 86 3. Cotton sold in 1915 from the crop of 1914 and not credited ................................................... 121 16 4. Proportionate part of account struck off and placed back on books by surviving partners to their own credit (there is no explanation of this item; but, as no objection appears, it will be passed by) ............................. 414 72 5. Interest for 5 years and 4 months at 7 per cent. (it is impossible to tell from the report upon what sum this is allowed; but, as no objection appears, it will be passed by) ........................................................ 784 25 6. Share of Lewis estate in rents of Lockhart farm for 7 years including the year 1921 ............................ 1,230 00 7. Share of Lewis estate in profits on sale of Orangeburg lot and 75 acres known as Burrows tract ..................... 26 03 -------- Total credits allowed ............................................ $5,112 65

He charged the estate with the following:

1. Accounts of Mrs. Lewis and children after death of Lewis, including his personal account ..................	$1,444 62
2. Proportion of taxes not previously charged off ............	64 85	$1,509 47
	---------	---------
Balance .......................................................		$3,603 18

(The figures submitted by the special master as taken above show a balance of $3,603.18, instead of $3,503,18, as reported by him. The total of the accounts of Mrs. Lewis and children, and the personal account of Lewis, is, according to Exhibits S and T, $1,455.51 instead of $1,444.62, as reported. No exceptions having been entered to these discrepancies, they will be disregarded.)

The appellants object to the allowance of the credit items 1, 3, and 6. They will therefore be considered, and the objections disposed of:

Item 1.--Allowance of credit to the Lewis estate for $2,412.63, as the amount due to Lewis on "capital stock" account, $3,019.15, "less $596.42, the proportionate part of real estate deducted as an asset."

The figures $3,019.15, as the amount representing C. R. Lewis' "capital stock," as it is called, inclusive of his interest in the real estate, were obtained from a statement of the account of C. R. Lewis with the partnership, rendered by the survivors, dated April 16, 1916. That statement is as follows:

	Dr.
To merchandise account 1915 ..............	$ 505 69
To cash account 1915 ........................	642 06
To merchandise account January 12, 1916 ......	61 60
To cash account April 16, 1916 ..............	246 16
To balance to credit ......................	1,687 22
	---------
	$3,142 73
	---------
	---------
	Cr.
By balance due (capital stock) ..	$3,019 15
By C. R. Lewis, guardian ...........	123 58
	---------
	$3,142 73

Tracing the item of $3,019.15 back to the books where the capital account of C. R. Lewis appears:

We find that the account made up as of January 1, 1914, shows:

A credit balance in his favor of ....		$4,133 65
And he is charged with""
Account 1914 ..............	$353 33
Profit and loss year 1914 ...	761 17	$1,114 50
	-------	---------
Balance to credit .............		$3,019 15

The account made up as of January 1, 1915, shows:

A credit balance of .........		$3,019 15
And a charge of""
Merchandise 1915 ..	$505 69
Cash 1915 ..........	642 06	1,147 75
	-------	---------
Balance to credit .....		$1,871 40

The account made up as of January 1, 1916, shows:

A credit balance of ..	$1,871 40
Credit item ..............	59 88
Credit item ...............	8 24	$1,939 52
	---------	---------
And a charge of .....................		20 86
	---------
Balance to credit ...........		$1,918 66

On July 25, 1915, the survivors handed to the attorney for the Lewis estate a statement of the affairs of the partnership showing Lewis' interest as follows (made up as of January 1, 1915):

	Assets.
Stock of goods .......	$21,905 42
Cash ...................	1,058 44
Accounts receivable ...	36,643 17
Land accounts ..........	5,184 23
Real estate ............	7,455 24
	----------
	$72,246 50
	Liabilities.
Accounts, notes, etc ..	$45,473 72
Credit balance .........	26,772 88
	----------
	$72,246 60

(An error of 10 cents in the credit balance.)

Estimating Lewis' interest in the credit balance of $26,772.88 at 8 per cent.:

He is credited with		$2,459 25
And charged with""Merchandise 1914 ..	$353 33
Account ..............................	26 02	379 35
	-------	---------
Credit balance ...........................		$2,079 90

(How Lewis' proportion of the credit balance of

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