Opinion
07-16-1873
BOYD'S Sureties v. OGLESBY & als.
B. R. Johnston, Gilmore and Baxter, for the appellants. J. W. & J. P Sheffey and Terry & Pierce, for the appellees.
Absent-- Staples, J.
1. An administrator is invested by law with full dominion over the assets, and with full discretion for the liquidation and settlement of all claims due to or from the estate. He may make settlements and compromises with creditors, and give them confessions of judgments.
2. An administrator of a deceased partner may settle and compromise with the surviving partner, with a view to the interest of the estate he represents. And if he acts fairly, in good faith, and with a due regard to the interests of the estate, the distributees will be bound by his acts, and he will be protected.
3. The fairness of a contract, like all its other qualities, must be judged of as at the time it was entered into.
4. The administrator of O, a deceased partner, who had the sole management of the business of the concern, is employed by G the surviving partner, to wind up the partnership affairs; and after the input capital is returned, he enters into a contract with G to allow the latter a certain sum for his share of the net profits; and G. relinquishes to the administrator all the remaining assets of the partnership. At the time this contract is made there is a large claim in suit against one of the debtors of the firm, who sets up a payment of $1,000 as having been made to O; but which he had not entered on the books of the concern; and this contest delays the trial of the case, until the debtor who was solvent when the contract was made, becomes insolvent; and then the credit is allowed by the jury, and a verdict and judgment for the balance. HELD:
1. The verdict and judgment is conclusive that the debtor was entitled to the credit.
2. It being owing to the conduct of O, the deceased partner, that the administrator and surviving partner were not informed of the true state of the account when the contract between them was made, and also that the delay in the suit occurred; in estimating that contract the estate of O is to be charged with the $1,000, and also the amount of the judgment.
5. The amount of commissions to be allowed to an administrator or executor is not fixed by law, and though five per cent. on receipts is generally allowed, yet this allowance may be increased, and the court of probate is the most competent tribunal to make the allowance; and this court will be disinclined to disturb the allowance, especially after a long acquiescence in it by the distributees of the estate.
On the 23d of October, 1835, Nicholas P. Oglesby and Robert Gibbony entered into partnership for the purpose of carrying on a merchandizing business at the town of Evesham, in the county of Wythe, which was to last three years. Each partner was to put in $4.000 as capital in the concern; and for any other sums put in by either of them, he was to be allowed interest. Oglesby was to have the whole management of the business, for which he was to be allowed $350 a year; and at the close of the partnership, after payment of debts and expenses, and the allowance to Oglesby, the capital furnished by each partner was to be returned to him; and the net profits to be equally divided between them. And it was agreed that the money on hand at the termination of the partnership should be applied, first to pay the expenses, then to pay the capital put in, first paying any overplus of capital furnished by either, with its interest; and the balance of money, if any, should be equally divided between them; and if they should not at the close of the partnership, make a distribution of the uncollected debts, Oglesby was to have the management of their collection; but either partner might at any time after the expiration of the three years, require a division of said debts.
The partnership was continued until the death of Oglesby. He died intestate, in February, 1838, leaving a widow and four infant children; and the widow having renounced her right to administer on his estate in favour of Thomas J. Boyd, he qualified as administrator of Oglesby in March; and the business of collecting the debts and winding up the business of the partnership was committed to him by Gibbony, the surviving partner.
Boyd seems to have proceeded with great diligence and efficiency, to collect the debts due to the partnership, and to pay the debts they owed. The former were numerous, and generally for small amounts, nine-tenths of them ranging from twenty-five cents to fifty dollars. To pay the debts of the concern, he borrowed near $5.000, for which he bound himself personally; by which means he seems to have prevented all suits by the creditors of the partnership. He sold to Gibbony the one-half of the goods on hand to which Oglesby was entitled; and in August, 1840, Gibbony being then indebted on account of goods received by him, in the sum of $2.213 89, they entered into an agreement, by which Gibbony was to retain of that sum, $2.013 89, in full satisfaction of his entire interest in the net profits of the partnership; and in consideration therefor, he surrendered all claim to any part of the uncollected funds of the partnership. And he was not to be responsible for any debts of the concern, or for the failure to collect any part of any due to it, except for one-half of so much as George R. C. Floyd should obtain credit for, on an account due by him to said firm, then in suit in Wythe county, unless Gibbony could show that by law Oglesby should lose the whole of such credit.
In 1842 commissioner Mathews settled the accounts of Boyd as agent of Gibbony, the surviving partner, and also as administrator of Oglesby. In the first account it appeared, that including the money he had borrowed to pay the debts, he had received up to March 1839, $14,516 98; and including payments of part of the money he had borrowed, the disbursements amounted to $14,097 89. And the commissioner allowed him a commission of five per cent. on $16,324 74, which is the balance of receipts and disbursements for the year, after excluding $12,290 14, which made up the money he had borrowed and paid back, and moneys collected or paid by Gibbony; on which no commissions were allowed. In the year ending March 1840, his receipts were $7,751 57, and his disbursements were $8,565 39; but there was included in these disbursements, moneys retained by Boyd, as adm'r of Oglesby. And he was allowed 5 per cent. commissions on $6,399 84, which sum was the balance of receipts and disbursements, after deducting the sum of $9,200 for moneys retained by Boyd as above stated, that being double the sum so retained. From March 11 to August 1st 1840, when Gibbony and the administrator contracted for the adjustment of the partnership accounts, as before stated, the receipts were $4,165 35, including the debt of Gibbony to the partnership, and the disbursements including the moneys retained by the administrator, were $4,165.35; and the same commissions were allowed on $1,836 48, the balance after deducting Gibbony's debt, and the amount retained by the administrator.
The administration account of Boyd is stated by the commissioner, and he brings into it all moneys received by him, whether of Oglesby's individual estate, or from the partnership effects, and he credits the administrator with the payments made to the widow and guardian of the children; and allows him five per cent. on receipts and disbursements. And the account shows that the administrator paid over the moneys received by him, to the widow and guardian as fast as he received it.
In April, 1858, Jane C. Oglesby, the widow of Nicholas P. Oglesby, and his four children, one of them an infant by his next friend, filed their bill in the Circuit court of Wythe county, in which after setting out the partnership, the death of Oglesby, the qualification of Boyd as his administrator, and the agency of Boyd in settling up the partnership business, and the settlement of his accounts by commissioner Mathews, they say that in the conduct and management of Boyd in his agency, and in the settlement of that, apart from the individual estate of Oglesby, they find nothing of which they propose to complain. But they do object to the purchase made by said Boyd of Gibbony's interest, after returning all capital advanced, and allowing him, as surviving partner, the sum of $2.013 89, on the score of net profits; because Boyd, after returning to the estate of Oglesby, all capital stock which had been paid in, failed to realize for the benefit of the estate an amount of profits equal to that allowed and paid to the surviving partner. And they object further to the allowance of five per cent. commissions on the receipts and disbursements in the settlement of Boyd's account of his administration on the estate of Oglesby. And making Boyd and his sureties and Gibbony defendants, they pray that the administration account of Boyd be surcharged and resettled as to the allowance of $2.013 89 to Gibbony, and the commissions of five per cent. upon receipts and disbursements; and for general relief.
Gibbony and Boyd answered the bill. They both relied on the account settled by Mathews, and the time that had since elapsed, as forbidding the opening the account at this late day. Boyd insisted that he had authority to make the contract with Gibbony, and that it would have been favourable to the estate, but for the action of Oglesby in relation to moneys received by him on Floyd's debt, and of which Boyd was not informed when the contract was made. He insisted further, that the question of his commissions had been well considered by commissioner Mathews, when he made the allowance; and indeed, under all the circumstances of the case, was a small compensation for the time, labour, and responsibility which he was subjected to.
In September, 1859, the court directed a commissioner to take an account of Boyd's administration upon the estate of Oglesby. And subsequently upon application by the commissioner to the judge in vacation, for in strructions as to the principles upon which the account should be stated, he was directed to ascertain the net profits realized by the firm of Oglesby & Gibbony, and what proportion of such profits Oglesby's administrator is entitled to, and charge him with such amount; and that he allow the administrator five per cent. commission on receipts; and also what in his opinion would be a reasonable compensation to said Boyd in the way of commissions, if in his opinion five per cent. was not enough. The accounts already settled, so far as they went, to be taken as the basis of his settlement, with the foregoing exceptions.
In February, 1867, commissioner Caldwell returned his report. In ascertaining the net profits of the partnership, he disregarded the contract between Gibbony and Boyd, of August 1st, 1840; and holding that it was the duty of the surviving partner to wind up the business without compensation, he struck out of the agency account all the credits for commissions, and added these amounts to the balances of net profits; and charged the administrator with one-half of the net profits so ascertained. And allowing five per cent. upon his receipts, charged in the administration account, and $367.38 arrears of interest, as an additional allowance, he reported the administrator to be indebted to the estate of his intestate, on the 17th of February, 1847, in the sum of $2.008 93, of which $1.866 95 was principal, and $522 21 is interest.
The defendants filed twenty-six exceptions to the report; but it is not necessary to state all of them. They excepted, first, to the agency account, because no such account was directed by the court; and because the bill expressly disclaimed any intention to complain of that account as settled by comm'r Mathews: Again, because in both accounts the agreement between Gibbony and the administrator was disregarded: Again, because the commissions allowed by comm'r Mathews were disallowed in the report; and no compensation having been allowed for settling up the business of the partnership: Again, because Oglesby's estate was not charged with the $1,000 paid to him by Floyd, and not credited to the partnership on their books. There were further exceptions to particular items of charge in the administration account, some of which were included in other charges.
In relation to the Floyd debt it appeared that George R. C. Floyd dealt with the concern; and on the 7th of March 1838 he owed upon his account, $2,417.10; upon which there was a credit on the books of the partnership, of $1,000 under date of April 23d 1837. Floyd insisted that he had paid to Oglesby the further sum of $1,000. In July 1840 suit was instituted against him by Gibbony as surviving partner, in the Circuit court of Wythe county, for the recovery of the debt. In this suit Floyd claimed credit for this additional payment; and in consequence of this dispute, the case was not tried until April 1842, when the jury allowed the credit claimed by Floyd, and rendered a verdict for $427.83, with interest from the 12th of August 1838; and the judgment was accordingly. It appears further that Floyd was good for the money in 1840; but when the judgment was obtained in 1842, he had become bankrupt
The cause came on to be heard on the 28th of March 1872, when the court held that the plaintiffs, by their bill, acquiesced in the account rendered of the partnership transactions of Oglesby and Gibbony, including the allowance of commissions to the defendant as agent for settling the partnership business; and therefore sustained the exception to the disallowance of these commissions; and overruling all the other exceptions, confirmed the report in all other respects; and directed a commissioner to restate the account.
The account as restated found Boyd to be debtor to his intestates estate, on the 17th of February 1847, in the sum of $1,199.75 of principal and $340.68, of interest. And the cause coming on to be finally heard, on the 2d of April 1872, the court confirmed the statement and made a decree in favour of the plaintiffs for this sum, with interest, against Boyd and his sureties. And thereupon the representatives of two of the sureties who were dead, applied to this court for an appeal; which was allowed.
B. R. Johnston, Gilmore and Baxter, for the appellants.
J. W. & J. P Sheffey and Terry & Pierce, for the appellees.
OPINION
ANDERSON, J.
In April 1858, the widow and children, distributees of Nicholas P. Oglesby, dec'd, filed their bill in chancery in the Circuit court of Wythe county, against Thomas J. Boyd, administrator of said Oglesby, and his securities, and Robert Gibbony, surviving partner of Oglesby & Gibbony. The bill alleges the partnership of Oglesby & Gibbony, the death of Oglesby, the taking out letters of administration on his estate by said Boyd, and his undertaking, under an agreement with the surviving partner, to collect and settle up the business of the firm of Oglesby & Gibbony; the payment to Gibbony on the 1st of August 1840, $2.013.89, in full of his entire interest in the concern, having previously paid him the capital which he had put in, and the advances, with interest, which he had made to the firm; which was in effect allowing him that sum, as his share in the net profits: that afterwards said administrator blended Oglesby's individual estate with the unsettled business of the firm; and on the 1st day of August 1842, made a settlement before commissioner John P. Mathews, in which they were so treated after the 1st of August, 1840: a copy of which settlement is exhibited with the bill.
The complainants then say: " In the conduct and management by said Boyd, as the agent for the surviving partner of the business of the firm of Oglesby & Gibbony, and in the settlement of that, a part from the individual estate of N. P. Oglesby, complainants find nothing of which they propose to object. But complainants do object to the purchase made by said Boyd of said Gibbony's interest, after retaining all capital advanced, and allowing him as surviving partner, the sum of $2.013-89, on the score of net profits; because complainants allege that said Boyd, after returning to the estate of N. P. Oglesby, dec'd, all capital stock which had been paid in, failed to realize for the benefit of the estate an amount of profits equal to that allowed and paid to the surviving partner." They then aver that said arrangement was such as the administrator and surviving partner had no right to make, and that it is not binding on them; and that both are responsible, and should be held accountable to them for whatever profits should have been realized by the estate of N. P. Oglesby, from the business of the firm. And they charge that by this arrangement between the surviving partner and the administrator, there was lost to the estate a considerable sum.
They also allege, that in the settlement of the administration account, the adm'r is allowed 5 per cent. commissions upon the aggregate receipts and disbursements; and they insist that 5 per cent. commission upon the receipts, under the circumstances, would have been ample compensation. And they surcharge the said settlement upon these, and only these two grounds. Their prayer is, that an account may be taken to show the true amount of net profits realized by the firm of Oglesby & Gibbony, and that there be such a reduction of commissions, and only so much allowed the administrator, as would be proper under the circumstances, and a decree for the balance which may appear to be justly due them, and for general relief.
Upon the first ground, for the impeachment of the settlement of 1842, made in the court of probate, the court is of opinion that an administrator is invested by the law with full dominion over the assets, and with full discretion for the liquidation and settlement of all claims due to or from the estate; these powers being necessary to a proper discharge of the duties of his office. He may make settlements and compromises with creditors, and give them confessions of judgments. Braxton, adm'r & c., v. Harrison's ex'ors, 11 Gratt. 54; Wheatly v. Martin's adm'r, 6 Leigh 62, 71. He has a right to demand and receive from the surviving partner of his intestate the share of the partnership effects due to the estate of the deceased partner, whom he represents. And to this end he has the power to settle and compromise with him, with a view to the interest of the estate. It is true that in such transactions he may lay himself liable to a devastavit. But if he acts fairly, in good faith, and with a due regard to the interests of the estate, the distributees will be bound by his acts, and he will be protected.
The transaction complained of, was in effect a compromise and settlement, between Boyd, as the representative of the deceased partner, and Gibbony, the surviving partner. The latter agreed to take $2,013.89, in full of his remaining interest in the concern, and to turn over, and relinquish the balance to the estate of his deceased partner, with the understanding that he was not to be liable for any further claims against the firm, or any losses which might be sustained upon debts due the firm, except as hereinafter noted. Was this a fair and reasonable compromise and settlement between the adm'r of the deceased partner and the surviving partner?
" The fairness of a contract, like all its other qualities, must be judged of at the time it was entered into." Fry on Specif. Perf. top p. 173, side p. 107. At the time this contract and settlement was made, there appears to have been partnership effects in the hands of Thomas J. Boyd, (including an account against George R. C. Floyd, amounting to $1,417.17,) sufficient to pay to the distributees of Oglesby, after paying all the debts of the firm, a larger sum on account of profits, than had been paid to the surviving partner. The books of Oglesby & Gibbony, which were kept under the sole direction of Oglesby, showed that the whole of the said sum was due from Floyd to the firm, no credit having been entered on the books for the one thousand dollars, which Floyd claimed to have paid Oglesby on the 23d of March 1837, and which would be determined by the suit then pending in the name of the surviving partner against Floyd. The suit was brought on the 28th April, 1840; and in consequence of this controversy, judgment was not rendered until the 14th of April 1842. The verdict is for $427 83, with interest from the 12th of August, 1838; which is confirmed by the judgment of the court. Floyd had property and credit when the adm'r entered into this settlement on the 1st of August 1840, and was then good for the whole amount of the account; but at the date of the judgment he had become insolvent, and the whole debt was lost. Boyd could not have known that this account, which appeared, from the books kept by his intestate, to be due to the firm, was subject to a credit for $1,000, which had been paid to his intestate, according to the proof in the cause, and which he had neglected to credit. He was justified, therefore, in including the whole of this debt, in the estimate which he made of the profits of the business. But, through abundant caution, he required Gibbony to stipulate in the contract, that if that credit should be allowed to Floyd, he would return one-half the amount, unless he could show that the whole of it was chargeable by law to Oglesby. and the distributees are entitled to whatever of benefit that stipulation gives. If it has not been shown that Oglesby's estate is chargeable in law to the firm, with the amount so paid to him by Floyd, its recourse is upon Gibbony, who is before the court in this suit in the capacity of surviving partner, and not against Boyd, who has paid the money to Gibbony, and has not a dollar of it in his hands. But Gibbony was only liable to pay the one-half of it, in case the whole of it was not legally chargeable to the deceased partner. Has that been shown?
The court is of opinion that, in the absence of all fraud and collusion, the judgment of the court in the suit by the s. surviving partner, who represents the firm, against George R. C. Floyd, is conclusive against the distributees of the deceased partner, in the matters decided thereby, and that the effect of the said judgment is to sustain the claim of said Floyd, that he had paid the money to Oglesby. And the proof in the record, upon which the verdict is found, if it proves that the money was paid, proves that it was paid to Oglesby; and he not having given the firm the benefit of it, by entering it as a credit to the account of Floyd on the books of the firm, he is debtor to the firm in the place of Floyd, for the amount so received; and in computing the assets or effects of the firm, it is proper to charge his estate with the whole amount so received by him and interest thereon; and consequently, Gibbony is not bound by his said stipulation, in his said contract with Boyd, to pay back any thing on account of the credit to which Floyd established his right.
But if the surviving partner and the administrator of the deceased partner, had the power to make a settlement and compromise as to what was due from the one to the estate represented by the other, the former had the right to propose to pay so much to the administrator for the interest of his intestate, just as he had to purchase his interest in the stock of goods; or vice versa to take so much for his interest, and to surrender the balance to the estate of his deceased partner; and the representative of the deceased partner had the right to accept his proposition. And if the contract was fair and unaffected by fraud or collusion, it would not only be binding on the partics to it, but would conclude the distributees. If there was fraud or collusion the distributees might obtain relief in a court of equity to set aside the contract, and to hold both the parties to it responsible to them; or if they could show that the administrator had not acted in good faith, or that by a careless disregard of the interests of the estate which had been entrusted to him, he had allowed himself to be over-reached and the estate involved in loss, they might hold him to a devastavit. But the court is of opinion, that in this case there is no ground for such an imputation against the surviving partner or the administrator. On the contrary, the contract was fair and reasonable, and as matters stood at the time, was to the advantage of the estate; and that it did not prove to be such in the end, was no fault of the administrator.
But if the administrator had, in this instance, erred in udgment, and had made a contract of settlement with the surviving partner, which at the time was injudicious, from a mistaken view of the true interests of the estate which he represented, after the extraordinary devotion which he had evinced to the interests of the estate, by his abnegation of personal interests, and the assumption of personal responsibilities for its benefit, by which numerous suits were probably avoided, and large sums saved to the estate in the shape of costs; after his extraordinary success in collecting the numerous debts due the firm, a large portion of which were unsettled, and due by open account, through a period of the most unexampled pecuniary distress--a fact of public history which may be judicially known--and paying the numerous debts due from the firm, largely to northern merchants, without loss to the estate or to the firm, or the costs of suit to enforce their collection in a single instance; or by the payment of discount on the depreciated currency, which prevailed in the country where the debts were due the firm, and in which they had chiefly to be collected; exhibiting, it is but just to the administrator to say, a diligence, carefulness and financial skill, and fidelity to the trust confided to him, which it is to be regretted is rarely exhibited in the conduct of fiduciaries; and of which the plaintiffs in this suit are enjoying the fruits. After all this, even in the case supposed, it would be extremely harsh and rigorous, to hold the administrator to a devastavit.
But when as we have seen, 1st, that the administrator and surviving partner were invested with power to make such a contract of settlement; 2d, that it was bona fide and reasonable, and beneficial to the estate of the deceased partner at the time it was made; and that its not being so in the end, was not the fault of the administrator. 3d, that it was approved by the commissioner who settled the accounts in July 1842, and by the court of probate; and 4th, that it was acquiesced in by the widow and the guardian of the infant distributees, for nearly sixteen years before the bringing of this suit, the conclusion cannot be resisted that said contract of settlement is binding not only on the parties to it, but that the distributees are concluded by it.
With regard to the only other ground charged in the bill, for the impeachment of the settlement of 1842, the allowance of excessive commissions to the administrator, it is usual, and we think most proper to allow commissions only on the receipts. But in this case commissions are not allowed on all the receipts and disbursements, and we find from an examination of the accounts, that 5 per cent. commission upon all the receipts alone, with which the said Boyd is charged, both as administrator and as agent of the surviving partner, would be inconsiderably less than the commission which he has been allowed. This includes a commission on the money borrowed, which was a most advantageous operation for the estate and firm, and involved personal responsibility and labor on the part of the administrator and agent, which ought to have entitled him to a commission, though none was claimed by him. It also includes a commission on all moneys which passed through the hands of the administrator as such, or as agent, all of which involved trouble and responsibility, though upon a considerable part thereof he did not claim commissions, for the reason, doubtless, that upon a part of the funds which passed through his hands, he had been allowed commissions both on the receipts and disbursements. But there is no law which prescribes what commission shall be allowed an executor or administrator. The amount that should be allowed him is not fixed by law, but rests in the discretion of the court; and what court is so competent to make the allowance as the court of probate. In some cases, perhaps, less than 5 per cent. has been allowed, and in some cases as high as 10 per cent. has been allowed, and approved by this court. We are disinclined to disturb the settlement upon this ground, especially after it has been so long acquiesced in by the widow and the guardian of the infant distributees. Indeed it seems to us that the administrator's compensation is not greater than his services were worth to the estate.
The settlement of 1842 shows that the administrator, on the day said settlement was closed, paid to the widow and to the guardian of the infant distributees, their respective shares of the exact balance which appeared to be due them by that settlement, for which they gave their several receipts. And having acquiesced in that settlement so long; and the account exhibited by the administrator with his answer, showing that all the assets which came into his hands subsequently to that settlement, have been fully administered, and that there is nothing in his hands due the distributees, the court is of opinion that this suit ought not to have been brought, and that the decree must be reversed, and the plaintiffs' bill dismissed, with costs.
The decree was as follows:
The court is of opinion, for reasons stated in writing and filed with the record, that the said decree is erroneous. Therefore it is decreed and ordered that the same be reversed and annulled, and that the appellees do pay to the appellants their costs by them about their appeal in this behalf expended. And this court, proceeding now to render such decree as the said Circuit court ought to have rendered in the premises, it is further decreed and ordered, the bill of the appellees, who were plaintiffs below, be dismissed, and that the said appellees do pay to the defendants below their costs by them about their defence in that court expended.
DECREE REVERSED.