Trust Company v. Sedgwick
| Decision Date | 01 October 1877 |
| Parties | TRUST COMPANY v. SEDGWICK |
| Court | U.S. Supreme Court |
APPEAL from the Circuit Court of the United States for the Southern District of New York.
The facts are stated in the opinion of the court.
Mr. E. S. Van Winkle for the appellant.
Mr. F. N. Bangs, contra.
Prior to the 1st of December, 1865, a copartnership existed in the city of New York, under the name of J. K. & E. B. Place. They are dealers in groceries. The members of the firm were James K. Place, Ephraim B. Place, and James D. Sparkman. The latter was a special partner. Under the law of New York, such partners can put a limited sum at risk, and are liable for nothing beyond it. At the date mentioned, this copartnership was dissolved. E. B. Place retired, and a new firm was formed, under the name of J. K. Place & Co. The members were James D. Sparkman and James K. Place. By the terms of the agreement, Sparkman was to contribute capital to the amount of $200,000, and Place to the amount of $600,000, and the profits were to be apportioned accordingly. After making due allowance for the payment of all liabilities, the estimated value of Sparkman's interest in the assets of the old firm was $262,000, of James K. Place's $227,000, and of E. B. Place's $168,000. The latter sum E. B. Place had a right to draw out at any time, and he subsequently received the most of it. The debts of the old firm at the time of the creation of the new one, exclusive of the sum due E. B. Place, amounted to $3,850,000. Adding what was to be paid to him, they exceeded $4,000,000. A part of the assets of the old firm was merchandise on hand, valued in gold at $996,000. To this was added, to show its value in currency, forty-eight per cent, making an aggregate of $1,474,000. There was also cash on hand, consisting of balances in the banks with which the firm dealt, to the amount of $137,000. The other assets were chiefly bills receivable and accounts in favor of the firm. J. K. Place & Co. put no new capital into their concern. They bought the merchandise of the former firm at $1,474,000, the amount at which it was estimated in currency. This was nearly $1,000,000 in excess of the aggregate of the sum to which they severally claimed to be entitled out of the assets of that firm. They remained at its place of business, used its books, and applied its means in all respects as if that firm still subsisted.
By a deed bearing date on the 30th of November, 1865, James D. Sparkman assigned the leasehold premises here in question to James K. Place. By a like deed, dated on the 1st of December following, Place assigned the same premises to Mary A. Sparkman, the wife of James D. Sparkman. Both these deeds were acknowledged on the 5th and recorded on the 9th of the month last mentioned. The premises were the family residence of Sparkman. At the time of this transaction he settled upon his wife also the horses, carriages, and furniture which formed a part of the establishment. He likewise directed his counsel to prepare the proper instrument for settling upon his wife $40,000 of seven per cent bonds of the United States, which he had received as his proportion of a larger amount of those securities belonging to the old firm. He afterwards claimed that this settlement had been made. In one of his answers to the bill in this case he said: 'That being about to embark as a general partner in the said firm of James K. Place & Co., and being well advanced in years, he was desirous of making, in favor of his wife, Mary A. Sparkman, since deceased, a settlement of a portion of his property; and on or about the first day of December, 1865, having paid in his proportion of the capital to be contributed by him to the firm of James K. Place & Co., he directed his counsel to take the proper steps to secure to his said wife, from his then existing remaining property, the sum of one hundred thousand dollars ($100,000), or thereabouts.'
What was done touching the property mentioned was the intended realization of this plan. It is not questioned that the several items were worth the amount proposed to be settled. Mary Ann Sparkman died on the 13th of October, 1866. By her will, which bore date on the 20th of July of that year, she gave the income of her estate to her husband, James D. Sparkman, for life, and after his death, the estate to his children. She had no children.
After her death, the leasehold premises were sold and conveyed by her executor to John Q. Preble. He paid $18,196.60 in cash, and gave his bond and mortgage for $40,000, being the balance of the purchase-money.
On the 27th of December, 1867, J. K. Place & Co. failed, and made an assignment to Burrit and Sheffield, for the benefit of their creditors. Subsequently, both the partners, Place and Sparkman, went into voluntary bankruptcy, and Sedgwick, the complainant, became their assignee under the bankrupt law. He filed this bill in the District Court to reach the $40,000 of government bonds and the proceeds of the leasehold premises, and to subject them to his administration. That court decreed in his favor with respect to the bonds, but dismissed the bill as to the real estate. He thereupon appealed to the Circuit Court. There the decree of the District Court was affirmed as to the bonds and reversed as to the realty. The court decreed, among other things, that the bond and mortgage of Preble should be delivered to the complainant; that the amount due upon them should be paid to him; and that the executor of Mary Ann Sparkman should pay to the complainant, out of the assets of her estate, the sum of $28,304.89.
This amount was made up of the cash payment received by James T. Sparkman, while executor, from Preble, with interest to the date of the decree, and interest paid to the executor by Preble on his bond and mortgage, with interest upon that also to the same period.
The executor thereupon removed the case to this court by appeal.
The appeal was limited to the leasehold premises and the money decree against the executor. None was taken with respect to the bonds of the United States. That subject is not therefore involved in the controversy as it is now before us.
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