Opinion
02-11-1903
FIELDER v. BEEKMAN et al.
James Buchanan, for complainant . John T. Bird, for defendants.
Bill for accounting by John W. Fielder, Jr., against John D. Beekman and others. Decree for complainant.
James Buchanan, for complainant .
John T. Bird, for defendants.
REED, V. C. In conformity with the suggestion at the end of my previous conclusions, the bill in this cause has been amended. The purpose of the bill, in its present shape, is to charge Mr. Beekman with the two overdrafts, one by Dey and the other by William S. Fielder, and certain other accounts receivable, which Mr. Dennis refused to collect. On January 11, 1896, Mr. Beekman bought out the interest of Mr. Dey, one of the then four partners in the business, each owning a one-fourth interest. At that time Mr. Dey had personally overdrawn from the assets of the firm the sum of $781.16. When Mr. Beekman bought out Dey's interest, he agreed with Dey that he would pay this overdraft. Dey's stock account at that time was estimated on the books of the firm to be worth $1,750. Mr. Beekman paid Dey for his one-fourth interest in the firm $1,150, in two checks and one note, besides, as already remarked, agreeing to pay the $781.16, the amount of Dey's overdraft. The date of the agreement for the purchase of Dey's share, as already observed, was January 4, 1896, and on this date a new partnership agreement was entered into between the three remaining partners, namely, John W. Fielder, William S. Fielder, and John V. D. Beekman. The capital of this new firm was to be the property and assets of the old firm, which it took over. Mr. Beekman, by his purchase of Dey's interest in the property and assets of the old firm, became the owner of a one-half interest in the firm property, and was to have the same interest in the assets of the new firm. The new firm continued its business up to March 2d of the same year. On that date Mr. William S. Fielder had drawn of the funds of the firm $2,310 in excess of his share. On March 2, 1896, William S. Fielder sold and assigned all his interest in the firm to Mr. Beekman, the latter agreeing with William S. Fielder to pay this sum of $2,310. By his purchase Mr. Beekman became the owner of a three-fourths interest in the assets of the old firm. Mr. Beekman and John W. Fielder, the two remaining partners, entered into a new partnership agreement, which, although dated March 1st, was obviously co-temporaneous with and followed the purchase by Mr. Beekman of William S. Fielder's interest on March 2, 1896. By the terms of this agreement the property of this new firm was to consist of all the property, real and personal and mixed, of the preceding firm. The last firm continued in business until the execution of the dissolution agreement, which became effective on December 18, 1897. By the terms of the dissolution agreement it was covenanted as follows: All bills or accounts receivable, not in the schedules mentioned, and all bills, accounts, and notes receivable which are now charged to profit and loss, shall be collected by Fergus A. Dennis, for the aforesaid firm, within one year from date, and all sums and other sums of money collected shall be paid to John V. D. Beekman, of which sums of money three-fourths, or 75 per cent., shall belong absolutely to said Beekman, and the remaining 25 per cent. or one-fourth, thereof, shall be paid to the said Beekman for the purpose of paying and satisfying two promissory notes given by John W. Fielder, Jr., and indorsed by the firm of Beekman & Fielder—one in the Princeton Bank for $410, and one in the National Bank of Highstown for $575. Mr. Dennis did not attempt to collect these overdrafts, and for this reason the complainant seeks to have them applied in payment of the notes already mentioned. The purchase by Mr. Beekman of Dey's interest, as between him and Dey, ipso facto discharged all debts due by Dey to the firm. Without any assumption of or release of Dey's overdraft, Beekman himself was precluded from calling upon Dey for any accounting. Schlicher v. Vogel, 61 N.J.Eq. 138-162, 47 Atl. 448. The position of Dey, as to the other members of the firm, however, was not affected by Beekman's purchase in any particular, save that such purchase operated as a dissolution of the old firm. Dey was still liable to account, and upon such accounting he, after the payment of the debts of the firm, would have been entitled to a one-fourth interest in the remaining assets, less the amount of his overdraft. If his overdraft had exceeded his stock account, he would have been liable for the amount of his overdraft, less the value of his one-fourth interest in the assets. Stated in another form, the property of the firm, including the overdrafts, after deducting the firm's debts, would have been divisible into four parts, and Dey would have been entitled to a one-fourth, less the amount of his overdraft. Now, Beekman got that interest when he purchased Dey's share in the partnership property. If no new firm had been organized, Beekman's position would have been the same as Dey's had been. He would have been entitled to receive what Dey would have been entitled to receive, had he not assigned: and, as already remarked, Beekman would have been liable upon his assumption only to the extent that Dey would have been liable. Dey would have been liable to pay to the firm only in case his overdraft was in excess of his share. Now, when the firm was reorganized, after Dey's withdrawal, the property and the debts of the old firm was continued as the property and debts of the new firm; the only difference being that Beekman stood in the place of Dey, with his rights and his responsibility. His rights were to receive in settlement what Dey would have been entitled to receive. It thus appears that Mr. Beekman, holding Dey's right to have his interest in the first assets applied upon his overdraft, owed nothing to the firm, eitherby reason of his purchase or because of his assumption.
Now, turning to the W. S. Fielder overdraft, much of what has been already said respecting Mr. Beekman's relation to the Dey overdraft can be said of it. After Mr. Beekman's purchase of W. S. Fielder's interest, and his assumption of Mr. Fielder's overdraft, his rights and his liabilities were the same as Mr. Fielder's had been. The difference between the Dey overdraft and the Fielder overdraft is that the latter is in excess of Mr. Fielder's stock account. It is true that there has been no accounting to ascertain the value of Mr. Fielder's interest in the assets. Such an accounting would now be very expensive, and, I think, unnecessary. The stock account of each partner, fixed at the value of $1,750 for each of four interests, has been carried upon the books of the firm and into the accounts kept by Mr. Beekman in a manner that implies an assent to that sum as an approximate valuation of W. S. Fielder's share. Adopting this as the sum which W. S. Fielder would have been entitled to apply upon his overdraft, it would leave a remainder of $560 still due from him to the firm. This would have been the sum for which he was indebted to the Arm. It is quite clear to my mind that Mr. Beekman's liability for this overdraft can in no view exceed this sum. Of course, it is true that upon a general accounting this result would leave the right to all the remaining assets in the parties other than W. S. Fielder. Neither W. S. Fielder nor his assigns could claim any portion of them. But it is to be kept in view that the present question is not what Mr. Beekman's position would have been were this a general accounting to ascertain Mr. Fielder's interest in the assets of the firm. Mr. Fielder, upon dissolution, might have demanded such an accounting. Instead, however, of having an accounting, the two parties agreed upon a basis of division of the firm property. Mr. Beekman took over the tangible real and personal property of the firm, and assumed the payment of all the debts appearing upon the books. The parties divided $3,000 worth of bills receivable, each taking $1,500. Mr. Beekman paid Mr. Fielder $281 in cash. Then there were certain accounts receivable not included in those already divided. These bills receivable, as already observed, were to be collected by Mr. Dennis. Three-fourths of the amount collected was to be paid to Mr. Beekman, and one-fourth was to be applied to the payment of two notes made by John W. Fielder and indorsed by the firm of "Beekman & Fielder"—one in the Princeton Bank for $410, and the other in the Highstown for $575. The present question, therefore, is, how far, under the terms of this dissolution agreement, the complainant retains the right to enforce the assumption by Mr. Beekman of the W. S. Fielder overdraft. Under this agreement the claim of the complainant must rest upon a debt due the firm, and the only debt due the firm in connection with this overdraft is the difference between the overdraft and the stock account. Indeed, it is entirely clear that it was never in the mind of the parties at the time of the execution of the dissolution agreement that Mr. Fielder should be responsible for the entire amount of the Dey and W. S. Fielder overdrafts. It is true that the evidence that there was an understanding between John W. Fielder and Mr. Beekman that, in case Mr. Beekman bought out the interest of Dey and the interest of W. S. Fielder, Mr. Beekman should be discharged from all liability arising from his assumption of those overdrafts, is not certain enough in its character to satisfy me of that fact. But the circumstances themselves surrounding the execution of the dissolution agreement are strongly evidential that these overdrafts were not in the minds of the parties as collectible accounts when the agreement was signed. If Mr. Fielder had supposed that Mr. Beekman owed the firm over $3,100 for these overdrafts, he would never have consented to the arrangement contained in the dissolution agreement for the payment of these two notes. It is manifest from the testimony that Mr. Beekman was the financier of the firm, and would have to look out for the paper in bank either made or indorsed by the firm. Now, it is absurd to suppose that at the time of the dissolution agreement either party thought for a moment that there was to be collected from Mr. Beekman over $3,100, one-fourth of which was to be applied to the payment of these notes. If such had been the intention, there would have been an arrangement that Mr. Beekman should directly pay one-fourth upon the notes either then or at the maturity of the paper. Mr. Beekman's liability must rest upon the strict terms of the dissolution agreement, by ignoring the overdraft itself as a debt, but treating the difference between it and Mr. Fielder's stock account as a debt due from Mr. Fielder to the firm, and as such assumed by Mr. Beekman. With some misgivings as to whether even this was within the terms of the dissolution agreement, I have concluded that for one-fourth of this amount Mr. Beekman should account.
There are other balances appearing in an account kept by Mr. Beekman, for which balances it is insisted that he should account. These accounts, although entered in the books of the firm, were really concerning matters relating to the purchase by Mr. Beekman of Mr. Fielder's interest. They were Important to these parties only—more particularly to Mr. Beekman—in any settlement of their affairs which Mr. Fielder might demand, he having reserved the right to repurchase property which he had conveyed to Mr. Beekman as a part of the same transaction. These accounts appear in different form, some of the same credits and debitsappearing in each account. Different balances arise from different arrangement of the same items mingled with different items. The stock account and the overdraft figure in these accounts. But apart from the difference between the stock account and the overdraft, of which I have already spoken, I find nothing which I can call "an account receivable" due from Mr. Beekman to the firm. I will qualify this general statement. There do appear certain items of indebtedness of certain debtors to the firm whose debts W. S. Fielder had assumed, and which debts Mr. Beekman assumed when he took over Mr. Fielder's interest. It appears that in purchasing W. S. Fielder's interest, Mr. Beekman purchased some property which W. S. Fielder owned personally. As part of the consideration paid by Mr. Beekman for the entire purchase, he assumed the payment of debts owed by W. S. Fielder, amounting altogether to $317.50. But only a part of these were due to the firm. The debts due to the firm are clearly bills receivable, for which Mr. Beekman is liable in equity, by reason of his assumption. To save the expense of a reference, I will try to fix that part of these debts which were due to the tirm. The conclusion I reach from the explanation given by Mr. Beekman and Mr. J. W. Fielder regarding these debts is that of the assumed debts $185.50 was due to the firm; the two items for which I have found Mr. Beekman liable to account, namely, $560 and $185.50, together amounting to $745.50. Mr. Beekman should account for one-fourth of this sum, with interest from the date of the dissolution of the partnership, and this one-fourth should be applied upon the notes, according to the terms of the dissolution agreement.
In regard to costs, comparing the scope of the claim made in the bill with the limited scope of the decree advised, I think that equitably each party should pay his own costs.