Tennant v. Dunlop

• Decision Date: 29 June 1899
• Citation: 97 Va. 234,33 S.E. 620
• Parties: TENNANT et al. v. DUNLOP et al.
• Court: Virginia Supreme Court

33 S.E. 620

97 Va. 234

TENNANT et al.

v.DUNLOP et al.

Supreme Court of Appeals of Virginia.

June 29, 1899.

EQUITY—AMENDMENT—STATING NEW CASE-PARTNER—PURCHASING INTEREST OF DECEASED PARTNER—ADEQUACY OF CONSIDERATION—BURDEN OF PROOF—JUDGMENT-GOOD WILL AND TRADE-MARKS.

1. Where a bill sets forth a sale by an executrix to defendant of property of testator at a grossly inadequate price, averring undue influence and fraud on the part of defendant, and that he reaped all the benefit arising from the devastavit of the executrix, and asks that he may be made to account for the actual value of the property so obtained, an amendment to it repeating all the averments of the original bill, supplementing it with averments of additional facts in substantiation of the same charge of fraud, but changing the prayer for relief so as to ask for a rescission of the sale, does not make a new case, so as to be subject to demurrer.

2. A surviving partner, purchasing the interest of a deceased partner, must give his representative full information as to the assets, and the facts from which their value may be estimated or inferred. It is not sufficient that he does not withhold or conceal such information. He must disclose all facts within his knowledge from which a sound judgment as to the value of the interest may be formed.

3. The good will and trade-marks of a business are partnership property, and must be accounted for by the surviving partner, the same as the other assets of the firm.

4. The good will and trade-marks of a business may be sold separately from the property and book accounts of the concern.

5. Where a surviving partner, in purchasing the interest of a deceased partner from his representative, told her that the good will and trade-names of the firm belonged to him, and that they were decreasing in value, when they in fact belonged to the firm, and were increasing in value, it is incumbent upon him to prove that the price paid by him was adequate.

6. Where a surviving partner, in purchasing the interest of a deceased partner, without fraud, but under a mistaken claim of title as to some of the assets, obtained such interest for an inadequate consideration, the court will not rescind the sale and require the partner to account for profits, but will require him to pay the real value of the interest purchased.

Appeal from circuit court of city of Petersburg.

Suit by one Tennant and others against one Dunlop and others. There was a decree for defendants, and complainants appealed. Reversed.

B. B. Munford, Stiles & Holliday, Allan Potts, Leake & Carter, and W. R. McKenney, for appellants.

Alexander Hamilton, R. B. Davis, and F. W. Christian, for appellees.

RIELY, J. The ground of the demurrer is an alleged inconsistency between the original and amended bills, wherefore both, it is asserted, are demurrable, and no relief can be given under either of them.

It is further asserted that the amended bill is a radical departure from the original bill, and makes a new case; that this is not allowable under the rules and practice of equity pleading, and is a valid ground of demurrer to the amended bill.

The original bill sets forth the sale by the executrix of D. B. Tennant, deceased, to the appellee David Dunlop of the interest of her testator in the good will and tobacco brands of the late firm of D. B. Tennant & Co., composed of the said Tennant and Dunlop, and of a private tobacco brand of D. B. Tennant used by the firm, and charges that the sale was made at a grossly inadequate price, whereby the executrix committed a breach of duty; that the breach of duty resulted in a loss to the plaintiffs, and in a corresponding gain to Dunlop; that the sale was induced by the undue influence, misconduct, and fraud of Dunlop; that he has reaped all the benefit resulting from the devastavit of the executrix, and should be made primarily liable therefor, —and asks that he may be made to account for the actual value of the assets so improperly obtained, with a prayer for such other and further and general relief as the nature of the case may require and to equity may seem meet. The bill conforms, in its frame and structure, to that exhibited in the case of Patteson v. Bonduranf s Ex'rs, 30 Grat. 94, where it was held that one who received a benefit arising from a devastavit committed by an executrix, knowing the facts, was primarily liable.

The amended bill repeats all the averments of the original bill. It embodies, indeed, the whole of the original bill, in totidem verbis, supplements it with averments of additional facts, discovered since the filing of the original bill, in substantiation of the same charge of misconduct and fraud, and asks, on account thereof, that the sale made by the executrix to Dunlop of the good will and tobacco brands be rescinded; that the same be sold by public auction, and the proceeds of sale equally divided between the estate of the deceased partner and the surviving partner; and that the latter be also required to account to the estate of the deceased partner for an equal share of the profits realized from the use of the good will and brands since his purchase of the interest therein of the deceased partner.

The amended bill does not make a new case, or depart in substance from the original bill. It does not differ materially from the original bill, except in the prayer for relief. There is no inconsistency between their respective averments. They both charge the same misconduct and fraud. The amended bill merely accentuates it by the averment of additional facts discovered since the filing of the original bill and the taking of testimony in the cause, which averments are not inconsistent with those of the original bill, nor make a new or different case of misconduct and fraud, but confirm, if true, that charged in the original bill. The additional allegations of the amended bill were germane to the subject-matter of the original bill, and might with entire propriety have been incorporated in it. The gravamen of both bills is the misconduct and fraud of Dunlop in obtaining the interest of his deceased partner in the property in controversy; and virtually the same evidence would be required to sustain either bill, whether the relief sought was adequate compensation, as contemplated by the original bill, or a rescission of the contract of sale, as asked for in the amended bill. The averments of the amended bill were pertinent to the case charged in the original bill, and, as above stated, might have been incorporated therein; and the complainants, being uncertain as to the particular relief to which they were entitled, might have framed the special prayer of the original bill in the alternative, —praying for adequate compensation for the property, and, in the alternative, for a rescission of the contract, and a public sale of the property, and an account of profits; the special relief of each kind being consistent with the case made by the bill. Story, Eq. Pl. §§ 42a, 42b; Bart. Cb. Prac. 266; Col-ton v. Ross, 2 Paige, 396; Lloyd v. Brewster, 4 Paige, 537, 540; Lingan v. Henderson, 1 Bland, 236, 252; Murphy v. Clark, 1 Smedes & M. 221, 236; and Hardin v. Boyd, 113 U. S. 756, 763, 5 Sup. Ct. 771.

As this variance in the special prayers for relief of the original and amended bills constitutes the only material difference between them, it does not render the latter demurrable. Under the liberal rules of chancery practice which prevail in this country, and particularly in this state, there is no valid objection to the amended bill, and the demurrer to it and also to the original bill was properly overruled. Belton v. Apperson, 26 Grat. 207; Parrill v. McKinley, 9 Grat. 1; Ferry v. Clarke, 77 Va. 397; Hanby's Adm'r v. Hen-ritze's Adm'r, 85 Va. 177, 7 S. E. 204; Anthony v. Leftwich's Representatives, 3 Rand. 238; Hurt v. Jones, 75 Va. 341; Hardin v. Boyd, 113 U. S. 756, 5 Sup. Ct. 771; Graff am v. Burgess, 117 U. S. 180, 6 Sup. Ct. 680; and Richmond v. Irons, 121 U. S. 27, 7 Sup. Ct. 788.

In the year 1867 David B. Tennant, who had been engaged for many years in the manufacture of tobacco, associated David Dunlop with himself in the conduct of the said business, under the firm name of D. B. Tennant & Co., which co-partnership continued from its formation until the death of Tennant, on October 6, 1885. The business during the existence of the partnership was eminently successful and profitable. Dunlop, after the death of Tennant, declined to continue the business in partnership with the widow ofhis deceased partner, and, having decided to continue it by himself, had frequent interviews with her, as the executrix of the decedent, with the view of acquiring his interest in the good will and trade-marks of the late firm. Being unable to agree upon persons to fix the value thereof, and Dunlop asserting that the good will and trade-marks survived to him, as surviving partner, and were his property, but offering to pay $1,000 for the interest of her testator in the good will of the business and in the brands and labels of the firm, and $500 for an individual brand of D. B. Tennant used by the firm, and called the "Shellard Brand, " she accepted his offer.

The complainants, who are the children and residuary legatees of D. B. Tennant, charge in their bills that the sum of $1,500 for the interest of their father in the good will and trade-marks so acquired by Dunlop was grossly inadequate compensation therefor, and that the sale for such insufficient sum was a devastavit by the executrix, in which Dunlop fraudulently participated, and from which he has reaped immense benefits. Upon this charge the issue was made up. The inquiry therefore is, shall the purchase as made by Dunlop stand, or shall relief be granted, and, if the complainants be entitled to relief, what shall be the nature and extent thereof? This is the main question in the case before us for decision.

The suit was promptly instituted after the eldest child of...