Valentine v. Wysor

• Decision Date: 22 March 1890
• Docket Number: 10,071
• Citation: 23 N.E. 1076,123 Ind. 47
• Parties: Valentine et al. v. Wysor
• Court: Indiana Supreme Court

23 N.E. 1076

123 Ind. 47

Valentine et al. v. Wysor

No. 10,071

Supreme Court of Indiana

March 22, 1890

From the Delaware Circuit Court.

The judgment is affirmed, with costs.

O. T Boaz, W. W. Herod and F. Winter, for appellants.

W Brotherton and C. E. Shipley, for appellee.

OPINION

Mitchell, C. J.

This suit was instituted by Emily E. Valentine, Martha M. Little Parmelia R. Gilbert, Mary E. Wood and Florence T. Horne, the children and heirs at law of John Jack, late of Delaware county, deceased, against Jacob H. Wysor.

The questions for decision arise upon the complaint, from which we summarize the following facts: John Jack, father of the plaintiffs below, died testate in the month of October, 1859. At and before that date he was in partnership with the defendant, Jacob H. Wysor, the two composing the firm of Wysor & Jack. The testator was also a member of the firm of Wysor, Jack & Kline, which was composed of the above named, Jacob H. Wysor, John Jack, and William B. Kline. This last-named firm was engaged in the milling business, and owned a flouring mill, together with sixty-five acres of land adjacent, each member being the owner of an undivided one-third of the business and property. The business of the firm of Wysor, Jack & Kline was in no way connected with that of Wysor & Jack, the last-named firm being the owner of three hundred and eighty acres of land, which constituted part of the firm assets, in which each partner had an equal interest. The character of the business of Wysor & Jack does not distinctly appear, but the land owned by them is treated by both parties as partnership property.

By the first, second and third clauses of his will the testator appointed executors to carry the will into execution, made provision for his wife, by giving her a life-estate in his real estate, and expressed a desire that she should be admitted into the firm and continue the business as a partner with Wysor and Kline, his former associates in the milling business.

The fourth and fifth clauses of his will read as follows:

"4th. I will and direct, that my said executors, and, in case of the death or failure to serve of either, the survivor of them, shall adjust, settle and compromise any and all debts, claims or demands, due to or from me, according to the best of their or his judgment, without any further authority from any court or jurisdiction whatever; and, further, that they shall make settlement with my said partners, and each of them, of the partnership affairs, and of the profits heretofore arising therefrom, together with any matters of dealing between myself and them, or either of them, in manner according to his or their judgment, without any further authority from any court whatever.

"5th. I do further will and direct that my said executors, or in case of the failure from any cause of either to serve, then the remaining executor, shall sell and convey so much of my personal or real estate, at either public or private sale, with or without appraisement, on such terms, at such place, and in such manner as to him or them shall seem best, as may be necessary to pay and satisfy all my just debts, reserving, however, to my said wife the title and possession of the house and grounds where I now live, otherwise selling such parcels, the sale of which will least injure the remainder."

As to the remainder of his property, after the termination of the life-estate of the widow, the testator died intestate. After the testator died Wysor, as surviving partner of the firm of Wysor & Jack, and Wysor and Kline, as surviving partners of Wysor, Jack & Kline, continued in possession of the property of their respective firms until June 23d, 1866, when the executors of the last will of John Jack, assuming to act under the provisions of the fourth and fifth clauses of the will above set out, made a settlement, and entered into an agreement with the defendant Wysor, whereby in consideration that the latter agreed to pay the indebtedness of the firm of Wysor & Jack, and certain debts due from the testator to Wysor, and also to pay his share of all the unpaid indebtedness of Wysor, Jack & Kline, and all other indebtedness of the testator, including the cost of administration, and in addition convey certain property to the widow, and secure to her a one-third interest in the property of Wysor, Jack & Kline free from any debts, the executors and widow agreed to convey to the defendant Wysor all the interest of the testator, excepting certain designated parcels, in the real estate owned by the firm of Wysor & Jack. This agreement was consummated and conveyances were made accordingly by the widow and executors in June, 1866, and it is charged that the defendant claims, in virtue of these conveyances, to be the sole owner of the property, and denies the title of the plaintiffs. These conveyances stood without question until in February, 1880, when this suit was instituted.

It does not appear from the complaint that there was any disparity between the value of the property conveyed and the amount of debts assumed, or that the debts had not been paid according to the agreement, or that there was any fraud or collusion between the surviving partner and the executors, or that the latter were in any way overreached.

It is claimed, however, that the power of sale contained in the will did not extend to the partnership real estate, except that specifically mentioned therein; that if it did, it only authorized the executors to sell the testator's interest in so much thereof as remained after full payment of the partnership debts. Moreover, it is claimed that even if the executors had authority to sell, the transaction as disclosed by the complaint was not a sale within the meaning of the language employed in the will, and that because the sale was made by the executors without having given notice of the time, place and terms of sale, and without having included the value of the real estate in the bond given by them when they qualified, the conveyance was invalid and void. It is claimed, too, that Wysor, being the surviving partner of the firm of Wysor & Jack, was a trustee of the partnership property, under a duty to the heirs and creditors, and that he was, therefore, incompetent to purchase and receive a conveyance from the executors. For all these reasons, it is urged that the conveyance is illegal and ought to be set aside, and that an accounting of the affairs of the firm of Wysor & Jack should be had, the appellants alleging their readiness to pay whatever may be found due the defendant Wysor.

While it is undoubtedly true, as a general rule, that an action to compel a surviving partner to account can only be maintained by the personal representative of the deceased partner, yet circumstances may appear which create an exception to the general rule and make it proper that a court of equity should entertain an action on behalf of the heirs. Where it is shown that there is collusion between the surviving partner and the executor, the latter refusing to compel an accounting by the former, or where there has been such dealing between the two as renders it probable that the executor will not make a bona fide effort to secure an accounting, or other like circumstances appear, it has been held that the heirs may maintain the action. In the absence of special circumstances, heirs have no locus standi against the surviving partner. 2 Lindley Part. 494; Harrison v. Righter, 3 Stock. 389; Hyer v. Burdett, 1 Edw. 325. Assuming, without deciding, that the facts as pleaded in the present case make it apparent that the executors have placed themselves in such an attitude towards the surviving partner and the transaction sought to be set aside, as to bring the case within the exception, it becomes pertinent to inquire whether or not the appellants as heirs show any interest in the property of the late firm of Wysor & Jack upon which to predicate an action.

If the executors had no power under the will to sell and convey, or the surviving partner was incompetent to purchase or receive a conveyance, or if, for any other of the reasons urged, the transaction between the executors and the surviving partner was illegal, and the conveyance void, then the property remained in the possession and under the qualified ownership of the surviving partner, unaffected by what transpired. It is familiar law, that a surviving partner has the right to the control and possession of the property of the firm, and that he may dispose of it in order to adjust the partnership accounts, and is only liable to the representatives of the deceased partner for what remains in his hands after the partnership affairs are settled; and there is nothing more thoroughly settled in the law of partnership than that the rights of the heirs of a deceased partner are subject to the adjustment of all claims between the partners, and attach only to the surplus which remains when the partnership debts are all paid, and the affairs of the firm wound up. Until all the debts are paid the rights of the heirs do not attach. Grissom v. Moore, 106 Ind. 296, 6 N.E. 629, and cases cited; Walling v. Burgess, 122 Ind. 299, 22 N.E. 419; Deeter v. Sellers, 102 Ind. 458, 1 N.E. 854.

The heirs of a deceased partner have no interest as such in the property of the firm, their only remedy is to compel the surviving partner to account for the surplus after the settlement of all the partnership liabilities, and ordinarily a court of equity will not entertain jurisdiction of the affairs of a partnership until by its decree a final adjustment of the business can be effected. Thompson v. Lowe, 111 Ind. 272, 12 N.E. 476, and cases cited; Scott v. Searles, 13 Miss. 25; Rossum v. Sinker, 12 Cent. L. J. 202,...