Opinion
(February Term, 1896.)
PARTNERSHIP — SURVIVING PARTNER — DUTY AND LIABILITY OF ASSIGNEE — SALE OF NOTES AND ACCOUNTS BY ASSIGNEE OF DEBTOR — SALE OF GOOD NOTES, ETC., BELOW THEIR VALUE — INTEREST — COMMISSIONS — REFEREE'S REPORT.
1. An assignee is chargeable with the full value of good and solvent notes and accounts sold by him at auction for much less than their value, when he might have ascertained the financial condition of the debtors.
2. Where the surviving partner of a firm conveyed the assets to an assignee to settle the estate, it was the duty of the assignee, notwithstanding a contrary custom existing in the town where the business has been conducted, to charge and collect interest on all good overdue accounts from the end of a year after dissolution of the copartnership, and is liable to the surviving partner for his failure to do so.
3. Where the assignee of a surviving partner collected about $14,000 within six months after the assignment, and large additional sums within the next six months, and within the year paid out only about $4,200 on an indebtedness of $18,000, much of which was drawing interest, and knew or might easily have ascertained who were the creditors of the partnership: Held, that the assignee was chargeable with interest on the moneys he kept after twelve months from the time he assumed the trust until he disbursed it.
4. The assignee of a surviving partner who was appointed to settle the estate, had ten days' public sale and four months' private sale of the stock of goods, from which he realized $13,200, and collected, without suit, notes and accounts amounting to $6,400; he unnecessarily and negligently delayed the payment of debts and the settlement of the estate: Held, that two and one-half per cent. commissions on receipts and disbursements is enough to be allowed the assignee for his services, under the circumstances.
5. The report of a referee should not be argumentative.
(12) ACTION heard before Green, J., on the report of a referee, at Fall Term, 1895, of PASQUOTANK.
E. F. Adylett for plaintiff.
J. H. Sawyer for defendant.
Various exceptions of the plaintiff, some of which are referred to in the opinion of Associate Justice Montgomery, were overruled, and plaintiff appealed. The facts sufficiently appear in the opinion.
Upon the dissolution of the partnership composed of S. Weisel Son, the son being Moses Weisel, the plaintiff in this action, by the death of S. Weisel, it appears that the surviving partner, the plaintiff, was told by the defendant, who knew that the plaintiff was a partner of his deceased father, that the best thing and the only thing for the plaintiff to do was to administer upon his father's estate, or get some one else to do so. The plaintiff, on 14 June, 1886, called upon the clerk of the Superior Court to qualify as administrator of the deceased father, and offered a bond with the defendant as one of the sureties, which seems to have been intended to cover not only the individual estate of the deceased partner, but also his interest in the partnership property. The clerk declined this bond. The plaintiff then remarked to the clerk that he (plaintiff) had some interest in the firm property, and that he would open the store and run it on his own responsibility, whereupon (13) the clerk, according to Weisel's testimony, told him: "If you do, I will have it closed as you have no right to open the store without first becoming an administrator." The clerk denied that he threatened to close the store in case Weisel opened it. Two days after this conversation between the clerk and the plaintiff, the defendant was appointed administrator of the deceased partner. At the time of the qualification of the defendant as administrator and just after the bond had been signed, the plaintiff being one of the sureties, the defendant took from his pocket a paper-writing, remarking at the same time to the plaintiff: "Here is something else for you to sign." This document was an assignment by the plaintiff, as surviving partner, to the defendant as administrator of the deceased partner, of all of the stock of goods, all notes and accounts and choses in action, and all of the property of said firm, and to sue for and collect all notes and accounts, and to legally account for all amounts and moneys so collected and received by virtue of said assignment. The defendant then proceeded to reduce the partnership assets to cash, and to pay from this source the debts of the firm and the individual debts of the deceased partner, without discrimination.
The suit was brought by the plaintiff against the defendant for an accounting of the defendant's actions under the assignment. At the September Term, 1892, of the Superior Court, the case was by consent referred to W. J. Griffin, and upon the coming in of the report his Honor, being of opinion that the action could not be maintained against the defendant individually, but that he must be sued as administrator and his liability adjusted according to the laws applicable to an administrator, granted defendant's motion to dismiss, from which judgment the plaintiff appealed.
(14) The appeal was heard by this Court at February Term, 1894, Weisel v. Cobb, 114 N.C. 22. It was decided there that the action was properly brought, could be maintained against the defendant individually, and that he must account for his trusteeship. The Court said: "If George W. Cobb, administrator, had applied those assets, as they were legally and properly applicable, all well. That will protect George W. Cobb. If either George W. Cobb, or George W. Cobb, administrator, has misapplied them, it is not well, and George W. Cobb must answer for the breach." When the case was sent back to the court below, the exceptions which had been filed to the report of the referee by the plaintiff were heard before Judge Armfield. The exceptions were overruled, but his Honor remanded the report to the referee with instructions "to ascertain and state the account between the members of the late firm and Moses Weisel, and to find and report the interest of each in the business; to ascertain and report the value of the services of the defendant assignee and what services were performed; that under the assignment described in the pleadings the defendant assignee is required to apply the assets of the firm assigned to him, first, to the payment of the debts of the firm; second, to the cost of settling its business; third, to account for and pay over to Moses Weisel his interest in the assets for his own use and benefit," and sustained the plaintiff's exception as to this.
The plaintiff excepted to the overruling of the exceptions. The exceptions were so numerous and many of them of so trivial a character that the plaintiff could not have anticipated a favorable ruling of the court thereon; but some of them, involving serious matters, were well taken, and ought to have been sustained. (1) The referee found that at the second sale of the notes and accounts of S. (15) Weisel Son by the defendant at public auction, several of them against good and solvent debtors were sold for sums greatly below their value, and that because the defendant was ignorant of the financial condition of the debtors, and because the plaintiff did not inform him that they were solvent, the defendant was chargeable only with the sums actually collected from the sale of such notes and accounts and not with their full value. The plaintiff excepted to this ruling as to matter of law. His Honor overruled the exception, and in that there was error. The defendant ought to have been charged with the full value of such notes and accounts. (2) The defendant failed to collect interest on the accounts due to the firm, delaying to collect the principal even, in many cases, for six, twelve and eighteen months, and the referee held that there was a custom in Elizabeth City that open accounts on merchants' books carried no interest. However that may be, the defendant was not put in charge of this estate to continue the business of the partnership, but to settle it, and he should have charged and collected interest on all good accounts from the end of 1886, the year in which the partnership was dissolved. This exception of the plaintiff ought to have been sustained, and his Honor committed error in overruling it. (3) The defendant took possession of the firm assets on 16 June, 1886. The names of the creditors of the firm appeared on the firm books, and no other debts than those were ever presented to the defendant for payment. The indebtedness of the partnership amounted to about $18,000, with interest on certainly some of it, probably all of it. During 1886, the defendant collected more than $14,000 from the sale of goods and from other sources, and paid out during that time only about $4,000, not including his commissions. Up to (16) 15 June, 1887, twelve months from the time he took charge of the estate, he had not paid $200 more, though he had collected large sums in addition to the $14,000 collected in 1886.
It is a fact admitted, and so found by the referee, that all of this money was deposited in the name of George W. Cobb, administrator of S. Weisel, with the banking concern of C. Guerkin Co., of which concern the defendant was one. The plaintiff insisted that the defendant should be charged with interest on the amounts he had on hand or in his bank after a reasonable time allowed to him for the settlement of the debts of the partnership. The referee held that he was not chargeable with interest, and that he ought to be allowed the same time to execute the trust in his hands as is allowed to administrators (two years) to settle estates. His Honor sustained the referee's ruling, and in so doing we think there was error. We are of the opinion that defendant ought to be charged, under the circumstances of this case, with the interest on whatever sums he kept after twelve months from the time when he assumed the trust, that is, on whatever amount he kept after 15 June, 1887, until he disbursed it. He knew who the creditors of the firm were, and if he did not, he ought to have found out by reasonable means within the twelve months after he took upon himself the trust, and should have paid to them their debts. The referee in his report allowed the defendant $1,824.85, 10 per cent on receipts and disbursements, and also $773 to various persons, several of whom were in his own employment on salary, for clerical and other services connected with the trust, making in all $2,597.85 to execute the assignment. He had ten days of public sales and four months of private sales of the goods. From these sales he realized $13,207.46, and he collected, without suit and at the store or at the bank from notes and accounts, $6,415.53, making (17) a total of cash from assets of $19,632.99. The plaintiff excepted to the amount allowed the trustee as excessive. His Honor overruled the exception, and we think he committed error therein. For the reasons set out in this opinion, we think that 2 1/2 per cent on receipts and disbursements is enough to be allowed the defendant for his superintending the execution of this trust. The amount paid for clerical aid is large, but we will not disturb that.
This case is remanded to the court below, to the end that an order be made that the referee conform his report according to the decision of this Court as to the exceptions herein discussed and passed upon.
In this connection it may be remarked that the former reports of the referee are subject to the criticism of being too argumentative — a fault that ought to be avoided.
Modified and Remanded.
In defendant's appeal.
For reasons given in the opinion in the plaintiff's appeal there is
No Error.