Opinion
06-26-1867
ROBERTSON & als v. READ'S adm'r & als.
1. A claim probably just originally, disallowed and rejected in consequence of its staleness, and of the probable impossibility from lapse of time and the death of parties, of ascertaining the facts of the case and doing justice; and also because it may reasonably be presumed that the said claim if originally just, had been abandoned or satisfied.
2. M, A and R partners dissolved their partnership; M being a large creditor, to whom debts due to the concern were transferred in in payment, with the agreement that if any of these debts could not be collected other debts were to be transferred in lieu of such. A was the acting party and transferred debts to M in lieu of such as could not be collected. In settling the account between M and the partnership and A and the partnership, M is to be credited as of the date of the agreement, with a debt returned; and he is to be charged with the amount of the debt, principal and interest transferred, in lieu of the first, as of the date of the transfer; and A is to be credited in his account with the same amount as of the same date, as if it had been paid in money.
3. In such case on the dissolution of the partnership they place a large amount of bad and doubtful debts in the hands of G, an attorney, for collection, and G is also the agent of M, to whom A and R are indebted. G makes considerable collections from the debts in his hands, and is directed by A and R to apply their portion to satisfy the debts they owe M. HELD: G's account is to be settled with annual rents, bearing interest from the end of the year, and applying his disbursements to the principal, on the principles applicable to the accounts of fiduciaries. And the funds in his hands, principal and interest, to which A and R are entitled, are to be applied at proper periods to the payment of the debts due by A and R to M.
This was a suit in equity, brought in 1834 by Samuel Read's administrator against Boyd Miller and Archibald Robertson, the former partners of Read, for the settlement of the partnership accounts.
Boyd Miller, Archibald Robertson and Samuel Read were partners as merchants, doing business at Lynchburg, under the style of A. Robertson & Co., and at Otter Bridge in Bedford county, under the style of S. Read & Co. The Lynchburg store was managed by Archibald Robertson, and the Bedford store by S. Read. Boyd Miller resided in London, England. The last term of each of these partnerships expired by limitation on the 31st day of August, 1819. At that time Miller was creditor of each of said firms to a large amount, but the accounts were so kept that the entire debt to him appeared on the books of the Lynchburg store; the Bedford store accounting to the Lynchburg store.
At the expiration of these partnerships in 1819, an inventory and balance sheet of said concern were made out, showing its assets and liabilities. The debts due to each firm were distributed into two classes: one called " good," and embracing all debts supposed to be good; the other called " bad and doubtful," and embracing all debts considered bad or doubtful. Besides the debt to Miller there were debts due by each firm to other parties, which were to be provided for.
Boyd Miller being in this country and being desirous of closing up his business here, the parties got together in the fall of 1819, and entered into certain arrangements hereafter mentioned. One of the questions in this case was, whether these arrangements were designed by the parties to be a settlement of their affairs, as far as they went. This court held that such was their design and effect, and it is unnecessary to give a detail of the facts bearing on that question.
The firms not having money to pay the debt to Miller, amounting to £ > > > > 29,171, 9s, 1d, Virginia currrency, it was agreed that he should take debts due to the said firm, and supposed to be good, in payment of his debt, but with a stipulation that if after the use of due diligence any of such debts could not be collected, they might be returned and others substituted for them, until his debt should be fully paid. At the same time the goods at the Lynchburg store were divided. Miller sold to Read his share of the goods at the Bedford store, and sold to Robertson his share of the good debts at both stores and his share of the real estate in Lynchburg. He took bonds from Read and Robertson, respectively, for what he sold them; the bonds of Robertson being payable in one, two and three years. The bad and doubtful debts were placed in the hands of Samuel Garland for collection, on the joint account of the parties.
In pursuance of this agreement, Boyd Miller, on the 22d December, 1820, drew an order on Robertson, directing him to deliver to Samuel Garland good debts to the amount of £ 17,256, 0s, 8d, in discharge of the balance due to him on the books of A. Robertson & Co. due 31st August preceding. On the same day he drew an order on Read directing him to deliver to Thos. L. Leftwich debts to the amount £ 11,915, 8s, 5d, " being the balance due from the Bedford to the Lynchburg store and transferred to me by A. Robertson & Co." Robertson filled the order on him by delivering debts to Garland to the full amount, the debts being reduced to cash on the 31st of August, 1819. Read objected that the order on him was drawn for more than the Bedford store owed to the Lynchburg store, and claimed a deduction from the order on him on that account. The amount of the deduction claimed was £ 517, 18s, 2d, and by a letter dated October 26, 1820, William Barrett of Richmond, agent for Boyd Miller, who had returned to England, instructed Leftwitch that the exact sum for which debts were to be handed over to him by Read was £ > > > > 11,397, 10s, 3d, which was less than the amount of the order on him by £ 517, 18s, 2d, and Read settled with Leftwich accordingly. This error seems to have arisen mainly from putting down the debts of Lynch and Shepherd in the " good" list instead of the " bad and doubtful" list of the Bedford store. This, however, did not account for the whole amount of the deduction. It did not fully appear how the residue was made up.
There were figures in the hand writing of Robertson on the margin of each of the balance sheets, in which the £ 517, 18s, 2d, was deducted from the amount of the order on Read and the same sum added to the amount o the order on Robertson. From this it was contended by the appellees, that Robertson was apprised of the deduction from the order on Read, and that he also recognized his own liability to pay to Miller the amount of that deduction. It was further contended that the practical effect of the arrangement was, that the Lynchburg store owing the whole debt to Miller, transferred to Miller the amount due to it from the Bedford store, as indicated by the language of Miller's order on Read, and that consequently Robertson, representing the Lynchburg store, was liable to Miller for so much of that amount as Read, representing the Bedford store, failed to pay. This was controverted by the appellants, who insisted that Miller made separate arrangements with the two houses, looking to each for the amount of the order drawn upon it. The terms of the arrangement made by Miller, Robertson and Read, were not reduced to writing, or proved by a witness, but on this point as well as others, had to be collected as well as they could be from the papers. It is unnecessary, however, to state in detail the evidence bearing on this point, this court being of opinion that Robertson was probably liable to Miller for the amount deducted from the order on Read.
By a letter dated January 21, 1820, Read informed Miller that there had been a " change in the list of balances," which he said would be recognized by Robertson if approved by Miller. In this letter Read made some explanation in reference to Lynch's and Shepherd's debts. Miller in a letter to Robertson, dated January 3, 1820, stated that Samuel Garland would account for his [Millers's] proportion of Lynch's and Shepherd's debts " not extended in Read's list," so that that need not interfere with the payment of Robertson's bonds to him.
On the 20th day of November, 1822, William Barrett, as agent for Miller, executed to Robertson a receipt for the amount of his two first bonds to Miller given for the purchase of Miller's share of the good debts and lots sold to Robertson in 1819, and an agreement in the same paper, that the third and last bond should remain unpaid and undemanded from Robertson, until it should be fully ascertained what deduction was to be made for bad and doubtful debts assigned to Miller, and in this paper Barrett further agreed that if said last bond should not be sufficient to pay Miller's proportion of such debts, he would pay the deficiency.
In a letter to Robertson, dated April 22, 1825, Miller says he is sorry to hear that some of the debts which were considered good will prove bad, but that at all events that need not prevent the payment of Robertson's bond for debts bought by him, of which he took the whole risk, and that he hoped soon to hear from Mr. Barrett that it was settled.
In October, 1830, Miller brought a suit against Robertson in the Federal court upon the said third and last bond. On the 8th day of June, 1831, Robertson made an affidavit in said suit, stating that he had offsets to nearly if not the whole amount of the said bond by reason of having furnished good debts in place of debts transferred to Miller, which had been returned as bad, for one-third part of which Miller was responsible, and which, by agreement, was to be applied in discharge of said bond. On the 12th of August, 1831, Robertson addressed to Miller a letter, in which he complained of Barrett for suing him on his last bond to Miller, referred to the fact that many of the debts placed in the hands of Samuel Garland for Miller had been replaced by others, which, he added, " will necessarily reduce the amount of your share transferred to me fully as much if not more than the amount of my bond to you now in suit." He again expresses the belief that he will owe Miller nothing on a settlement, says he has drawn nothing from Garland on account of his share of the bad and doubtful debts, and states that debts had been handed to Garland to the amount of more than $10,000 over and above his (Robertson's) proportion of Miller's claims against A. Robertson & Co. and S. Read & Co.
Miller replied to this letter under date of September 28th, 1831. He said he did not know what connection the bond in suit had with the debts placed in Garland's hands for his benefit; that he did not know what Robertson meant by saying that debts to the amount of more than $10,000 over and above his share of Miller's claim, had been put into the hands of Samuel Garland; but he expressed his willingness to submit the whole matter to said Garland, who, upon being satisfied that Miller's claim would be adjusted in a reasonable time, would have the suit dismissed.
Archibald Robertson was one of the executors of William Brown deceased, who was partner of Miller in a firm styled William Brown & Co., which preceded the partnership between Miller, Read and Robertson. Between the 1st day of January, 1820, and the 26th day of November, 1822, Boyd Miller, as surviving partner of William Brown & Co., made numerous payments to Archibald Robertson, executor of William Brown deceased, amounting, in the whole, to over $100,000, as appeared by the report of a commissioner in the suit of Boyd Miller v. William Brown's executors in the Federal court.
In March, 1834, the administrator of Samuel Read deceased, filed the bill in this cause against Boyd Miller and Archibald Robertson, setting forth the partnership, that a partial settlement was made in 1819, the transfer of debts to Miller, that many of those debts had proved insolvent, and praying that the defendants might set out and show the settlement theretofore had, and that a final settlement of the said partnership might be had. Miller filed his answer in February, 1835, admitting the partial settlement in 1819, setting forth its terms, stating that many of the debts which had been transferred to him by the Lynchburg store had proved insolvent, setting forth the settlement with and the order on each store; that Read, as Miller had been informed by Lelftwich, never did deliver the full amount due from him; that the bad and doubtful debts had not been embraced in the settlement of 1819, expressing his anxiety that the whole matter should be adjusted in the most speedy and amicable way, and consenting to an immediate reference of the accounts for that purpose. At February term 1835, the same at which Miller filed his answer, the case, by consent of parties, was referred to Charles W. Christian, special commissioner, to take an account of the transactions between the parties. Robertson having died in June, 1835, the cause was revived in January, 1836, against Maurice H. Garland, his administrator, by consent of parties. In May, 1837, Thomas McKinney was substituted as special commissioner in place of Christian. In May, 1840, the cause, which had been commenced in the Circuit superior court of law and chancery for the town of Lynchburg, was removed to the Circuit superior court of law and chancery for the county of Amherst, where it was docketed at the August term 1840. At the same term, the powers of the plaintiff having been revoked, the case was revived in the name of the administratrix de bonis non of Samuel Read. At March term 1841, Maurice H. Garland having died, the cause was revived by consent against Samuel Garland, executor of Maurice H. Garland deceased, and administrator de bonis non of Archibald Robertson deceased. Nothing further was done in the cause until April, 1849, when it was referred to Commissioner Tinsley with instructions to settle the accounts.
In the bill in this cause no allusion was made to the deduction of £ > > > > 517, 18s, 2d, from the order on Read, or to any liability on Robertson on account of any error in the settlement of 1819, and in the answer of Miller, though allusion was made to the fact that Read had not delivered to Leftwich debts to the full amount of the order on him, no suggestion was made of any liability on Robertson on that account. And in all the correspondence and transactions between the parties, from the time of the settlement in 1819 down to 1849, when the cause was referred to Commissioner Tinsley, it does not appear that any claim was made by Miller, or by Barrett, his agent, against Robertson on that account. And from October, 1820, when Barrett, in his letter to Leftwich authorized the deduction from the order on Read, there does not appear any allusion to that deduction, or to the failure of Read to fill the order upon him, until that which was made in Miller's answer.
While Commissioner Tinsley was engaged in settling the accounts under the order of April, 1849, he discovered the deduction from Read's order, and for the purpose of getting information in respect to it, he addressed a letter on the 16th of February, 1850, to Boyd Miller. In this letter he suggests that the amount deducted from Read's order ought to have been added to the amount paid by Robertson, and asks explanations from Miller on the subject. Miller replied, but was unable to give any satisfactory explanation on the subject. In a subsequent letter, dated March 7th, 1850, Tinsley gives further explanations to Miller as to the deduction from Read's order, founded upon what he conjectured to be the true state of the facts. It is not necessary for the purposes of this report to give the particulars of these letters. In 1849 and 1850 letters passed upon this subject between Samuel Garland and Boyd Miller, but it is unnecessary to state the particulars. Miller seemed to have but little recollection of the facts and could give no definite explanation.
In the investigation before Commissioner Tinsley, the facts appeared as they are set out in the preceding narrative. The commissioner held that Robertson was liable to Miller for the £ 517, 18s, 2d, deducted from the order on Read, and settled the account accordingly. The widow and heirs of Robertson excepted to the report, on the ground that this sum ought not to be charged to Robertson; but the court overruled the exception, and confirmed the reports in this respect.
In the foregoing narrative of facts many details have been omitted, but the narrative contains an outline of the principal facts, and is believed to be sufficient for a correct understanding of the decision of the court in relation to the item of £ 517, 18s, 2d.
The commissioner stated an account between Boyd Miller and A. Robertson & Co., and another account between Archibald Robertson and A. Robertson & Co. The account between Boyd Miller and A. Robertson & Co. was balanced on the 31st of August, 1819, by the debts transferred in payment of it, according to the arrangement between the partners heretofore explained. When a debt was returned by Miller as not collectable, and another debt substituted in place of it, the amount due on such substituted debt was applied first to pay the interest due on the returned debt and the balance was applied to the principal. But in the account between Archibald Robertson and A. Robertson & Co., the returned debts were estimated with running interest on the principal from the time of the return to the close of the account. The result was that A. Robertson & Co. got credit with Boyd Miller for more than Archibald Robertson got credit for with A. Robertson & Co. The widow and heirs of Robertson excepted to the report on this ground, and contended that the account between Archibald Robertson and A. Robertson & Co. should at least be balanced annually, according to the usage of the firm, and interest charged upon the balances from year to year.
This exception was referred back to the commissioner for further consideration. The commissioner in his report under this order, thought that there could be no objection to the mode of calculating interest in the account between Boyd Miller and A. Robertson & Co.; that being an account between debtor and creditor, to which the rule established in Lightfoot v. Price, 4 Hen. and Mun. 431, applied. His remarks upon the mode of calculating interest in the account between Archibald Robertson and A. Robertson & Co. were as follows: " As to the account of A. Robertson & Co. with Archibald Robertson partner, and of S. Read & Co. with Samuel Read partner, I am fully sensible of the hardship of this rule, and will adopt a fairer, if I can be satisfied there is any rule of court or of law to justify it. The hardship consists only in this, that there are no credits to be applied from time to time in extinguishment of interest, and is the same hardship borne by every creditor whose debt remains a long time at interest without payments. To charge interest upon interest, as indicated by the exception, is not deemed allowable; neither does it appear to me to be right to continue, after dissolution, the rule of the concerns to make annual balances on the 31st of August in each year. So long as the partnership continued, this was done according to the articles of co-partnership, and so far as done, these settlements will be respected; but when the co-partnership was dissolved, and the parties ceased to keep books and make annual settlements, and it becomes the duty of the court to settle for them, that rule no longer applies, but the rule of law must be adopted. See Cary on Partnership 289." The commissioner stated the account in conformity with these views. The widow and heirs excepted, but the court overruled the exception, and confirmed that part of the report.
Commissioner Tinsley stated the account of Samuel Garland for the collection of bad and doubtful debts upon the principles applicable to the accounts of fiduciaries, charging the disbursements against the principal, and charging interest on the annual balances from the end of each year. The widow and heirs of Robertson insisted by an exception, that, as Garland was Miller's agent, and as the proceeds of the bad and doubtful debts were pledged by Robertson and Read to the payment of Miller's debt, Robertson's share of the proceeds of Garland's collections should be applied, at the end of each year, to the reduction of Miller's debt.
Commissioner Tinsley, to whom this exception was referred, balanced Garland's account at the end of 1824, and again at the end of 1835, and again at the close of the report, and applied the balance, at each of these periods, to the reduction of Miller's claim against Robertson, giving his reasons for adopting these several periods.
The widow and heirs excepted to the report made upon this basis, but the court overruled the exception, and confirmed that part of the report.
The court having rendered a decree based upon the principles hereinbefore stated, the widow and heirs of Robertson appealed.
The case in this court was argued, in print, by Mosby, for the appellants; and by Garland and Slaughter, for the appellees; and orally by Jones, for the appellants, and by Garland and Tucker, for the appellees.
OPINION
JOYNES, J.
The court is of opinion that the transactions between Boyd Miller, Archibald Robertson and Samuel Read, as of August 31, 1819, in reference to the affairs of the mercantile firms of A. Robertson & Co. and S. Read & Co. of which they were the members, was a settlement between the said parties of the affairs of said firms as far as it was practicable at that time to settle the same, and embraced everything relating to said affairs, except the bad and doubtful debts, and the liabilities that might arise out of the return to the said firms, or either of them, of any of the debts transferred to the said Boyd Miller, according to the agreement then made between the said parties. The court is further of opinion, that if, as alleged by said Samuel Read, there was an error in the said settlement, in charging the Bedford store with too much by the sum of £ 517, 18s, 2d, the said sum was properly allowed to said Samuel Read as a deduction from the order of said Boyd Miller on him. And it further seems probable, as far as the agreement between the parties to these transactions can now be ascertained, that in consequence of the said deduction from the order on said Samuel Read, the said Boyd Miller became entitled to receive from the said Archibald Robertson the said sum of £ 517, 18s, 2d, in addition to the amount of said Miller's order on said Robertson, and that said Robertson became entitled to a deduction from his bonds to said Miller of one-third part of said sum, or of one-third part of so much of said sum as was made up of bad debts set down as good in the balance sheet of the Bedford store.
But the court is of opinion, that while it would have been proper to make a full correction of the said error, if a proceeding for that purpose had been instituted in due time, yet after so great a lapse of time from the discovery of said error, after so many transactions have taken place between the said Archibald Robertson and the said Boyd Miller and his agents, and as the said Boyd Miller and his agent Wm. Barrett, failed to make or suggest any claims against the said Archibald Robertson or his representatives, on account of the said error, until thirty years after it was discovered, when said Archibald Robertson and Samuel Read were both dead, and after the claim had been suggested to said Miller by Commissioner Tinsley, although, during the interval, the said Robertson had claimed large credits on his bonds to said Miller, on account of returned debts, the claim set up in this cause by the said Miller to charge the said Robertson's representative with £ > > > > 517, 18s, 2d, on account of said error, ought to be disallowed and rejected, in consequence of its staleness and of the probable impossibility, from lapse of time and death of parties, of ascertaining the facts of the case and of doing justice, and also because it may reasonably be presumed that the said claim, if originally just, had been abandoned by said Miller, or satisfied by said Robertson.
The court is, therefore, of opinion that the Circuit court erred in overruling the 1st, 2d, 3d and 4th, exceptions of the appellants to the first report of Commissioner Tinsley in respect to the said sum of £ > > 517, 18s, 2.
The court is further of opinion, that the debt of $1,000, due by Nicholas Harrison, which was not returned to Archibald Robertson in his lifetime and accepted by him as a returned debt, ought not to have been charged as a returned debt, because it had not been ascertained that any part of it would be lost, and it was just, under the circumstances of the case, that Boyd Miller should await the result of the legal proceedings in which the said debt was involved.
The court is, therefore, of opinion that the Circuit court erred in overruling the eleventh exception of the appellants to the first report of Commissioner Tinsley, so far as the same relates to the said debt of $1,000.
The court is further of opinion, that the interest account between Boyd Miller and A. Robertson & Co., and between Archibald Robertson and A. Robertson & Co., in relation to the returned and substituted debts, should be stated in accordance with the following general principles.
Upon the return of a debt by Boyd Miller (supposing it to be one of those transferred to him as of the 31st August, 1819), the amount of said debt, on said 31st August, 1819, should be put to the credit of said Boyd Miller in account with A. Robertson & Co., by a cross-entry of that date, so as to leave unpaid so much of said Miller's debt as had been originally paid by the debt returned; the effect of returning the debt being to cancel the payment to Miller, pro tanto. When another debt of the firm is substituted by Robertson in place of the debt returned, the amount due upon it, at the time of the substitution, principal and interest, is the amount paid by it on account of the debt of A. Robertson & Co. to Miller, and Archibald Robertson must leave credit with A. Robertson & Co., for that amount, and interest must be allowed upon it, just as if the amount had been paid in money. Thus, Archibald Robertson will receive credit with A. Robertson & Co. for as much as A. Robertson & Co. get credit for with Boyd Miller, the interest on one side will exactly balance the interest on the other, and the injustice will be avoided of subjecting Robertson to a loss in consequence merely of his standing as a middle man between Boyd Miller and A. Robertson & Co. When the amount due on the substituted debt is less than the amount due to Miller on account of the debt returned, it must be applied first to pay the interest due him, in like manner as if the amount had been paid in money.
Or, instead of stating an account as aforesaid between Archibald Robertson and A. Robertson & Co., the whole of the transactions in question may be stated in an account between Boyd Miller and A. Robertson & Co., in which account said Boyd Miller, will be credited and said firm will be charged with the amount, principal and interest, of all debts returned by said Miller; and said Miller will be charged and said firm will be credited with the amount, principal and interest, of all debts of the firm substituted for those returned. In this mode of stating the account, the firm will, of course, lose what Boyd Miller recieves, and neither more nor less, and the practical result will be the same as on the other mode of statement above mentioned.
The court is further of opinion, that in the account of Samuel Garland for the collection of bad and doubtful debts, he should be charged with interest on the annual balances from the end of each year, and that his disbursements should be charged against the principal, according to the principles applicable to the accounts of fiduciaries. And as the interests of Archibald Robertson and Samuel Read in the said bad and doubtful debts, were pledged to make good the claims of Boyd Miller against A. Robertson & Co., for the collection of which claim said Samuel Garland was agent of said Miller, the funds in the hands of said Samuel Garland arising from the collection of bad and doubtful debts, should, in the opinion of the court, be applied, at proper periods, to the payment of said claims of said Boyd Miller. And the court is further of opinion that as the collections of said Samuel Garland from bad and doubtful debts were of small amount prior to January, 1824, it would not be proper to make a rest in said account for the purpose of applying the balance due from said Samuel Garland as a credit upon the claims of said Boyd Miller, until the end of the year 1824, at which time the amount due by said Samuel Garland on said account, principal and interest, except so much as might properly have been retained by him to meet expenses, should be applied to the credit of A. Robertson & Co. in account with Boyd Miller, and that after that time, the balance should be struck in said Garland's account aforesaid at the end of each year, and the amount thereof, except so much as might properly have been retained to meet expenses, applied, at the date of such balance, to the credit of A. Robertson & Co. in account with Boyd Miller.
The court is therefore of opinion that the Circuit court erred in overruling the 28th, 30th and 31st exceptions to the first report of Commissioner Tinsley, so far as the accounts and statements to which the said exceptions apply are inconsistent with the foregoing principles.
Decree reversed, with costs, so far as declared to be erroneous, and affirmed in all other things, and cause remanded.
RIVES, J.
I concur in the opinion of the court with one exception. That relates to the disallowance of the item of £ 517, 8s, 2d, to Miller, because of the deduction of that sum from the Bedford list of balances at the instance of Read. This deduction was assented to by Miller's agent (Barrett), on the assurance of Read that its propriety was recognized by Robertson; and the calculations of Robertson in his own hand, seem to me sufficient proof that this correction was made with his consent; and that thereby this amount was assumed by him, as it was undoubtedly due to Miller. I therefore consider it as a contemporaneous correction of the settlement by the parties thereto; and, therefore, unexceptionable on the score of lapse of time.