Teter v. Moore

• Court: Supreme Court of West Virginia
• Citation: 93 S.E. 342
• Decision Date: 08 May 1917
• Docket Number: (No. 3005.)
• Parties: TETER. v. MOORE.

93 S.E. 342
(80 W.Va. 443)

TETER.
v.
MOORE.

(No. 3005.)

Supreme Court of Appeals of West Virginia.

May 8, 1917.

Rehearing Denied Sept. 18, 1917.

(Syllabus by the Court.)[93 S.E. 343]

Appeal from Circuit Court, Barbour County.

Bill by Dwight H. Teter, administrator, against Samuel A. Moore, for the annulment of a partnership settlement, and for the ascertainment of the true state of partnership affairs, and of the rights of the parties. Decree for complainant, and defendant appeals. Affirmed in part, reversed in part, and remanded.

Cato & Bledsoe, of Charleston, and Wm. T. George and J. Blackburn Ware, both of Phillippi, for appellant.

J. Hop Woods and Harry H. Byrer, both of Phillipi, for appellee.

POFFENBARGER, J. If the procedure and practice in this cause are sufficient to raise them, the three vital questions developed are: (1) Whether a copartnership respecting the subject-matter of the controversy or a joint interest so far analogous to a relation of copartnership as to make applicable, in the settlement thereof, the principles governing a settlemen of copartnership matters, existed between the plaintiff's de-

[93 S.E. 344]

cedent and the defendant S. A. Moore; (2) whether any settlements were made between the parties to such relation; (3) whether if, in any settlement, the defendant perpetrated fraud upon the plaintiff's decedent of such character and extent as, in law, wholly and entirely vitiates the settlement. The circuit court, regarding the procedure as sufficient, entered upon these inquiries, responded to them affirmatively, by its decree, set aside the settlements found to have been made, and ordered a full and complete accounting. Defense was made under the equitable principle of laches and the statute of limitation. Of the two statements revealed and relied upon as settlements, the bill specifically attacks only the first. Relying upon the second as being final, complete, and conclusive, the defendant denies the sufficiency of the bill to reach it. A demurrer and answer in one instrument and 12 separate special pleas were tendered at the same time. The first plea denied the partnership, the second set up an account stated, the third interposed the defense of laches, and the other 9 set up the five-year statute of limitations against the several demands of the bill, predicated upon allegations of fraud and mistake. All these defenses were likewise made in the answer. On motion of the plaintiff, the court struck out all of the special pleas, except plea No. 2, and then the defendant withdrew that plea. Assignments of error are predicated upon these rulings. Alleged prematureness of the decree of reference to a commissioner is the ground of another assignment of error. Another ground of complaint is the overruling of an exception to the commissioner's report, on the ground of disqualification by reason of interest.

The bill filed by the decedent in his lifetime alleged the existence of a partnership between himself and the defendant, entered into 1902, only partially settled and remaining undissolved. It exhibited a statement dated October 19, 1906, relied upon as a partial settlement, showing assets to the amount of $27,027.39, and an excess of resources over liabilities amounting to $15,659.24. This statement was based upon books alleged to have been kept by the defendant, and the bill charges that the defendant made, or caused to be made, numerous fraudulent entries and omissions in the books, and that the plaintiff, relying upon the honesty and integrity of the defendant, believing the books had been properly kept and having no cause or reason to suspect the contrary, did not discover the alleged frauds until a short time before the institution of the suit.

No doubt special plea No. 1, denying the partnership relation, and the pleas of the statute of limitations were intended to operate as companion pleas, reducing the defense to a single point, in conformity with the rule applicable to pleas in equity. If there was a copartnership which had not termi nated at the date of the commencement of the suit, the statute had not begun to run against the unsettled part of the account. Code, c. 104, § 6 (sec. 4419). If there was no such relation, nor anything in the nature of the contract which deferred the commencement of the operation of the statute, it would run against each item of the account, and every demand set up by the bill would be barred. These pleas, however, do not so operate. The relation of partnership or merchant and merchant trading together are not the only instances of postponement of the statute. A continuing contract, whatever its nature may be, is not subject to the operation of the statute of limitations until it has been completed. Rowan v. Chenoweth, 49 W. Va. 287, 38 S. E. 544, 87 Am. St. Rep. 796; Douglass v. Railway Co., 51 W. Va. 523, 41 S. E. 911; Schoonover v. Vachon, 121 Ind. 5, 22 N. E. 777; McCay v. McDowell, 80 Iowa, 146, 45 N. W. 730; Morrissey v. Faucett, 28 Wash. 52, 68 Pac. 352; Page, Cont. § 1656; 1 Rob. Pr. 488; 1 Wood, Lim. 347; Angell, Lim. § 181; Hopkins v. Hopkins, 4 Strob. Eq. (S. C.) 207, 53 Am. Dec. 663; Estes v. Stokes, 2 Rich. Law (S. C.) 133; Land Co. v. Dance, 98 Va. 239, 35 S. E. 720. If these ten pleas, Nos. 1 and 4 to 12, inclusive, could be regarded as reducing the case to a single point of defense, concluding the cause and absolving the defendant from defense on the merits, is sustained by proof, agreeably to the requirements of the plea in equity, it may be that they should have been entertained. But they have no such effect. Although, strictly speaking, there may have been no relation of partnership between the parties, there may have been a continuing contract between them, giving rise to demands by each against the other, not subject to the operation of the statute of limitations until after final and full completion of the contract or dissolution of the relation.

Manifestly the matter set up in the third special plea does not constitute ground of a good plea in equity. To determine whether right to relief is barred or lost by reason of the defendant's inability to produce books, papers, contracts, receipts, and vouchers, due to delay in the assertion of the demands set up in the bill, it would be necessary for the court to enter upon inquiries respecting all of the demands, and determine, in each instance, whether the principle of estoppel so operates. Some of the demands might be barred in that way and others not. It would be impossible to say, in any instance, that prejudice has resulted without consideration of the evidence. In view of this necessity, it is perfectly apparent that the plea of laches would not shorten the case. Loss of evidence essential to determination of the right; respecting all of the numerous demands made, some of which are very large, could not safely be assumed.

[93 S.E. 345]

As the plea would necessarily go separately to every ground of relief set up in the bill, it would be as broad in one sense as an answer, and its conclusiveness as to particular demands would depend upon the state of the evidence applicable thereto. In no respect, therefore, does it comply with the requirements of a plea in equity. Such a plea should, if sustained by proof, end the case on a single issue of fact, though that fact may depend upon numerous circumstances tending to establish it.

[41 The decree of reference was entered on the bill taken for confessed. That state of the case may have justified entry thereof. Interposition of an answer making full defense, before the order was executed, however, may have made it the duty of the court, in strictness of procedure, to set it aside and postpone the reference until after the introduction of sufficient proof to make out a prima facie case. But the error of the court, respecting the order of reference, if any, is harmless and may be disregarded. The order was purely interlocutory, and any error therein susceptible of correction in the further progress of the cause. The depositions, whether taken before the commissioner or notaries, were taken for all purposes of the cause, and could be considered by the court in the determination of the issues raised. A premature reference might detract from the value of the commissioner's findings, but it could have no effect upon the court's findings upon the evidence brought up with the commissioner's report by exceptions thereto. Some of the evidence in this cause was taken before the commissioner, but numerous depositions were taken before notaries in the ordinary way, some at Charleston, some at Fairmont, and some at Pittsburg. There were exceptions to the commissioner's report, which brought them all before the court for consideration. If the decree appealed from is sustained by the pleadings and the evidence, any error in the decree of reference, therefore, will be treated as being harmless and disregarded. Seabright v. Seabright, 28 W. Va. 412, syl. point 6.

In response to the exception to the report of the commissioner, on the ground of disqualification by interest, affidavits were filed proving the defendant's knowledge of the existence of the alleged disqualifying interest before the appointment of the commissioner, and his appearance and defense, without objection to the appointment or reference. The commissioner was a stockholder of a bank which held indebtedness against the estate of the plaintiff's intestate, and his wife was also a creditor of that estate in the sum of $773. Defendant's participation in the hearing, after knowledge of the relations of the commissioner to the creditors of the estate represented by the plaintiff, without objection, constitutes a waiver. Dillard v. Krise, 86 Va. 410, 10 S. E. 430; Etter v. Scott, 90 Va. 762, 19 S. E. 776; Fox v. Hazel ton, 10 Pick. (Mass.) 275; Duckworth v. Diggles, 139 Mass. 51, 29 N. E. 221; Carroll v. Lufkins, 29 Hun (N. X.) 17. "So partiality or misconduct of the referee, where...