Watts v. Patton

• Decision Date: 04 March 1889
• Citation: 66 Miss. 54,5 So. 628
• Court: Mississippi Supreme Court
• Parties: JOHN WATTS v. W. H. PATTON

5 So. 628

66 Miss. 54

JOHN WATTS v. W. H. PATTON

Supreme Court of Mississippi

March 4, 1889

FROM the chancery court of Clarke county, HON. S. EVANS Chancellor.

APPEAL from a decree sustaining a demurrer to a bill.

Appellant Watts, in his bill of complaint against appellee, Patton alleged in substance the following: That he and appellee were partners, under the firm-name of W. H. Patton & Co. conducting a mercantile business at Shubuta and at Sandersville, Miss., complainant owning something less than a half interest; that during the spring of 1886 the firm became involved in debt, and in March of that year made an assignment for the benefit of creditors, but the creditors ignored the assignment, and various attachments were sued out and levied upon the assigned effects; that the debts amounted to about thirty-five thousand dollars, and the assets consisting of goods, notes, and accounts, amounted to fifty-five thousand dollars; that both partners used every endeavor to compromise with creditors, but to no avail, and complainant, in despair, gave up further effort in this direction; that the defendant, Patton, continued his efforts and met one T. B. Bonner, with whom he effected an arrangement by which he, Bonner, was to advance the money for the assets and pay the firm debts, provided the creditors would settle for the price or sum at which the effects were to be taken; that Patton returned to complainant and informed him of the arrangement with Bonner, stating that Bonner was to take the goods, twenty-four thousand dollars, invoice price, and nineteen thousand dollars of the accounts at sixty cents on the dollar, and the remainder of the accounts, nine thousand dollars, at twenty-five cents on the dollar, provided the creditors would settle at a sum not exceeding this price, and provided further that complainant Watts would accept two thousand five hundred dollars of the assets and relinquish all his interest; that Patton further represented that Bonner was to take him, Patton, as a profit partner in the business for three years; that these were the best terms that Bonner could be induced to make, and that the only benefit that would accrue to him, Patton, would be to continue in business and share equally with Bonner in the profits for three years; that complainant relied implicitly upon these statements of his partner, and knowing, if they were true, that Patton would receive no greater benefit than he, and being unable to make better terms, he acceded to the arrangement, and quit-claimed all his interest in said assets to Bonner, receiving, as agreed, two thousand five hundred dollars of the same as consideration; that Bonner and Patton took the assets, assumed all liabilities of the firm, and continued the business until November 1, 1886, when they dissolved, Bonner receiving the goods and choses in action at Sandersville, and Patton receiving as his share the goods and accounts at Shubuta, worth at least twenty-five thousand dollars.

The assets were received by Bonner and Patton in April, 1886. The bill in this case was filed August 29, 1888, against Patton alone. In addition to the above, the following statement is made, which constitutes the gravamen of the bill: "From these facts, some of which have recently been brought to the knowledge of complainant, together with other circumstances, your orator has been driven to the conclusion, and therefore charges, that the representations made to him by defendant as to the terms upon which the said Bonner offered to buy the assets of said partnership and pay off the indebtedness and admit defendant a partner with him, were wholly false and fraudulent, and made for the express purpose of inducing complainant to sell his interest in said partnership assets for a nominal sum. Complainant charges that the terms offered by the said Bonner were much more favorable to the interest of defendant than the latter represented to him, and he avers that but for said representations he never would have parted with his interest in said partnership property at so great a sacrifice."

It was further alleged that, of the two thousand five hundred dollars paid to complainant for his interest in the effects, he accepted a mortgage for one thousand four hundred and seventy dollars, which both parties believed to be good, but which turned out to be invalid and worthless by reason of a defect in the acknowledgment.

Complainant prays that the conveyance made by him to Bonner and Patton may be declared fraudulent and cancelled, so far as the defendant, Patton, is concerned; that an account be taken in respect to the partnership effects, and that a decree be entered for the value of his share against the defendant.

Without filing any answer denying the allegations of fraud, the defendant demurred to the bill, and the demurrer was sustained, after which the decree recites: "Thereupon the complainant asked leave of the court to amend his bill, which leave is refused by the court."

Decree affirmed.

D. W. Heidelberg, for appellant.

The question is not whether the bill is demurrable, but whether a case could be presented upon proper amendment which would entitle complainant to relief. If in any aspect complainant is entitled to relief, he should have been permitted to amend. Hiller v. Cotton, 48 Miss. 593.

The representations made by Patton are alleged to have been false and fraudulent, and they constitute ground for equitable relief. Mitchell v. Kintzer, 47 Am. Dec. 408; Mitchell v. Zimmerman, 51 Ib. 717; 3 Wait's A. and D. 454.

Patton in making the arrangement with Bonner was not acting for himself alone. He was a partner, and stood in a confidential relation to Watts at the time of making the representations. He will not be allowed to hold any advantage which he obtained by misrepresentation to one who trusted him. Story's Eq. Ju., §§ 218, 220, 307, 323, 465, 466; 2 Kent 483; 3 Wait's A. and D. 436; 4 Kent 371.

This is not a bill for rescission. It is in the nature of an action for deceit, equity having jurisdiction because a discovery and an account are necessary. As an accounting is involved, a jury could not make the investigation, and equity has jurisdiction. 1 Story's Eq. Ju., § 459; 2 Ib. p. 1. If complainant was entitled to any kind of relief, the amendment should have been allowed.

It is not necessary that the defendant should be put in statu quo. Of course, the goods were sold in a short while.

Complainant is not to be prejudiced because of his efforts to collect the one thousand four hundred and seventy dollar mortgage. This mortgage was accepted under a mutual mistake of fact, both parties supposing it good. But equity will grant relief even in case of a mistake of law.

The demurrer was to the whole bill. If it is good in part, the demurrer should have been overruled. Story's Eq. P., § 443; 50 Miss. 113.

The bill charges fraud, directly and positively. It avers certain facts, and charges, from these facts, "together with other circumstances," that the representations were false and fraudulent, and were made to mislead complainant. This was sufficient to call for an answer.

J. S. Hamm, and Witherspoon & Witherspoon, for appellee.

The bill does not show what was the interest of complainant in the effects. It avers that he owned less than a half interest. But the real value of the goods and choses in action is not stated. As the firm was in debt, the interest of complainant was necessarily uncertain and contingent; it might be something, or it might be nothing. He was a member of the firm and knew the value of the goods, and was willing to sell on the terms proposed by Bonner. There was no room for deception. He deliberately acceded to the proposition. Now, after the lapse of more than two years, being relieved from all the liabilities and...