Moore v. Westbrook, 156 N.C. 482 (1911)

Nov. 9, 1911 · Supreme Court of North Carolina

156 N.C. 482

J. B. MOORE v. J. A. WESTBROOK.

(Filed 9 November, 1911.)

1. Partnership — Contribution of Partners — Dissolution—Payment of Creditors — I nterest — Profits.

A partner is not entitled to interest on his contribution to the partnership funds or assets .until after the date of the dissolution of the Arm and the partnership creditors have been paid, in the absence of an agreement to that effect; and the reason applies with greater force to the interest upon profits, which cannot be sooner ascertained.

2. Partnership — Contributions—Dissolution—Payment of Debts— Adverse Interests — Statute of Limitations.

The statute of limitations begins to run against a claim of an advancement made by one of the partners to the firm upon a dissolution after the firm’s creditors have been paid, for at that time the relationship between the_ parties becomes adverse.

3. Appeal and Error — Statute of Limitations — Burden of Proof— Evidence — Objections and Exceptions.

When without exception appearing, and jury trial waived, the trial judge has found against a party pleading the statute of limitations, as to whether the ruling of the judge can be reviewed on appeal, the burden being upon the party pleading the statute, qucere.

4. Appeal and Error — Reference—Findings of Fact — Objections and Exceptions — Assignments of Error — Procedure.

A party appealing from a finding of fact by the referee, upon the ground that there was no evidence to support it, should enter his exception to the evidence before the referee as well as to the findings of fact, and have both exceptions reviewed by the judge, and then on appeal embrace in his assignments of error the exceptions to the evidenée, for the appellate court is not required to examine the record for incompetent evidence not pointed out by exception, and pass upon its admissibility.

5. Reference — Issues Demanded.

The trial judge should submit to the jury issues demanded by a party to a case referred who has not waived his right, under the reference, to a jury trial.

6. Appeal and Error — Trial Court — Discretion.

Exceptions to the rulings of the trial judge made within his discretion are not reviewable on appeal.

7. Reference — Trial—Pleadings—Amendments—New Matter — Evl- . dence.

On additional matters entering the controversy upon amendment to pleadings allowed after reference of the cause has been made and the referee’s report received, the parties should be allowed to introduce further evidence; but no reversible error is found if, notwithstanding the refusal of the trial judge to permit such further evidence, the jury has' found in favor of the party excepting, on the new matter introduced by the amendments.

Appeal from Peebles, J., at March Term, 1911, of Pender.

Tbe summons in this action was issued on 23 August, 1907. Tbe plaintiff filed bis complaint on 18 December, 1907, in wbicb be alleged:

1. That be and tbe defendant and one S. W.'Troublefield, on or about tbe .... day of., A. D. 1892, formed a co-partnership for tbe purpose of growing truck and other produce for market, tbe agreement being that tbe said J. B. Moore was to furnish tbe land for said copartnership at and for tbe price of $7 per acre per year and to pay one-tbird of tbe expenses and to receive one-tbird of tbe profits; and tbe said J. A. West-brook was to pay one-tbird of tbe expenses and receive one-tbird of tbe profits; and tbe said S. W. Troublefield was to be paid tbe sum of $16.50 as a salary for bis time 'not taken by tbe firm of J. A. Westbrook & Co., one-tbird of said salary to go as bis part of tbe expenses of said firm, and to receive one-tbird of tbe profits, said firm, to operate under tbe firm name of Westbrook, Moore & Co., which said firm continued in active business up to and including tbe year 1899, when it ceased active business.

2. That during all tbe years tbe said firm was actively engaged in said business, tbe defendant kept tbe books of account of the-said firm and received all tbe moneys coming to said firm, and now has them in bis possession.

3. That from tbe time of tbe organization of said firm, and for each year it did business, tbe said firm was prosperous and made a considerable profit from said business, having used 17% acres of land furnished by tbe plaintiff at tbe rate of $7 per acre, and said firm has never paid tbe plaintiff tbe rent due for tbe said land.

4. That during all tbe years the said firm did business, and up to the present, the defendant has had the use of the money belonging to the said firip and has used the same for his profit and gain, and though the said .firm ceased active business in the year 1899, the affairs of the said firm have not been settled up between the partners, though all the debts have long since been paid except the rent money due this plaintiff, and this plaintiff has demanded of the defendant a settlement of the said firm’s affairs and a payment to him of his share .of the profits of the said business, but the defendant has failed and refused to settle with the plaintiff, though he has repeatedly promised to do so.

5. That the plaintiff verily believes that his share of the profits of the said business for the said years amounts to the sum of $2,700, if not more; the exact amount thereof this plaintiff cannot say, for the reason that the books of account of said business and the money is now and always has been in the hands of the defendant, and this plaintiff has not had access to the same.

The defendant answered, admitting the partnership on the terms alleged, and its dissolution in 1899, and denying any liability for rents, or that there were any profits made by the partnership.

. At January Special Term, 1910, an order of reference was made, the defendant not excepting thereto, and to which the plaintiff excepted, reserving the right to have the issues of fact tried by a jury.

The referee filed his report on 23 September, 1910, as follows :

1. That the plaintiff, J. B. Moore, the defendant, J. A. 'West-brook, and one S. W. Troublefield, did, in the early part of the year 1892, form and enter into a copartnership for the purpose of growing truck and other produce for market on the terms and conditions set out in the first paragraph of the complaint and admitted in the answer.

2. That pursuant to said copartnership agreement, work was begun about February, 1892, the several parties complying with tbeir respective parts of the partnership contract set up in the first paragraph of the complaint and admitted in the answer.

3. That the copartnership began to ship strawberries in the spring of 1893, and continued in .business without interruption until the close of the strawberry season in 1899, to wit, on or about 1 June, 1899.

4. That beginning with the year 1893, the partners met from time to time, after the close of the shipping seasons, and went over the business for the past year.

5. That at these several meetings all the parties were present with their books, papers, and records, at which times they ascertained the net results of the respective years in dollars and cents, showing profits or loss, as the ease might be, and how much.

6. That according to the terms of the agreement between the copartners, Mr. J. A. Westbrook, the defendant, was to receive the-moneys derived from the sale of produce, and did receive them, and Mr. Troublefield and Moore to keep the expense account.

7. That at these annual meetings, every item of expense connected with the conduct of the business was considered and added together and the sum total was deducted from the total receipts, showing the net profit or loss, as the case happened to be.

8. That after deducting the total expenses incurred in the conduct of the business, the copartners, operating under the firm name of Westbrook, Moore & Co., made the following profits for the respective years:

1893..’.$ 426.00

1894. 546.00

1895. 486.00

1896. 552.87

1899.'. 195.87

Making a total of.$2,206.74

But that no money was paid to plaintiff on account of said profits, except $14.70.

9. That after considering all expenses and receipts for the years 1897 and 1898 combined, the copartnership lost, during these two years, about $657.81.

10. That the plaintiff, J. B. Moore, was entitled to one-third of the profits, and was chargeable with one-third of the loss of said copartnership.

11. That no final settlement or accounting has been had among said copartners.

Upon the foregoing “findings of fact” the referee draws the following conclusions of law:

1. That the contract made and entered into by the plaintiff, J. B. Moore, the defendant, J. A. Westbrook, and one S. W. Troublefield, as set forth in the first allegation of the complaint, was a copartnership contract.

2. That such a contract is lawful and contains nothing illegal, immoral, oppressive, or contrary to public policy, and that said contract was binding upon all parties thereto.

3. That the defendant, J. A. Westbrook, stood in a fiduciary capacity with respect to his copartners, plaintiff J. B. Moore and S. W. Troublefield, which relationship imposed upon him the burden of a strict accounting to his copartners, plaintiff J. B. Moore and S. W. Troublefield, for all funds coming into his hands in such capacity.

4. So that the referee recommends that the plaintiff recover judgment against the defendant for $735.58, being one-third of the total amount of profits made by the copartnership during its existence, less $219.27, being the plaintiff’s share of the loss for the years 1897 and 1898, and $9.80 being two-thirds of the check for $14.70 not heretofore accounted for. That is to say, that plaintiff is entitled to recover judgment agains.t the defendant for the net sum of $506.51, together with the costs of this action.

5. Considering this case in the light of all circumstances, the referee recommends that the plaintiff should not recover any interest on the amount due, except from the date of summons, 23 August, 1907.

Respectfully submitted, this 23 September, A. D. 1910.

R. W. HeRRING, Referee.

Both parties filed exceptions to tbe report, and tbe plaintiff demanded a jury trial.

Tbe exceptions of tbe defendant were as follows:

As to findings of fact:

1. To finding of fact No. 6, for tbat it appears from tbe plaintiff’s own evidence tbat plaintiff Moore and one S. W. Troublefield received some of tbe moneys derived from tbe sale of produce by said firm.

2. To finding of fact No. 8, for tbat there is no competent evidence upon wbicb to base said finding.

3. To finding of fact No. 11, for tbat tbe testimony of tbe plaintiff and tbe witness Troublefield shows a settlement to have been made with tbe defendant.

4. To tbe above referred to finding of fact No. 8, for tbat tbe same is so vague and indefinite as to amount to no finding in law, in so far as it is attempted to find tbat any profits were made by tbe said firm.

As to conclusions of law:

1. To conclusion of law No. 4, if tbe same shall be considered by tbe court to be a conclusion of law, for tbat tbe same is based upon findings of fact without competent evidence to support such findings, and wbicb finding is so vague and indefinite as to amount to no finding.

2. To conclusion of law No. 5, in so far as tbe same may be considered as a conclusion of law by tbe court, and in so far as it may involve any conclusion tbat there is any amount due from tbe defendant to tbe plaintiff.

At March Term, 1911, an amendment to tbe complaint was allowed alleging, in addition to tbe matters set out in tbe original complaint, tbat be bad made advances to tbe partnership amounting to about $1,500, and tbat the defendant was liable for one-tbird thereof and interest.

Tbe defendant answered tbe amendment, denying tbat tbe advancements were made, and pleading tbe three-years statute of limitations thereto.

He also asked to be allowed to plead tbe statute of limitations as to the claim for rents, but bis Honor would not permit him to do so, because tbe claim for rents was in tbe original complaint, and tbe defendant excepted.

Evidence as to tbe advancements made by tbe plaintiff was offered by botb parties before tbe referee and be made bis finding tbereon. Tbe case was tried before tbe jury upon tbe evidence taken before tbe referee.

Tbe defendant offered additional evidence, not introduced before tbe referee, on tbe claim for advancements, and, upon tbe refusal of bis Honor to allow it, excepted.

Tbe jury returned tbe following verdict:

Second. Should tbe said J. A. Westbrook -have turned over to tbe plaintiff bis one-tbird of said profits, on tbe 1st day of J une of tbe year tbey were made, and as tbey were earned, and did be fail to do so, and used tbe plaintiff’s one-tbird of said profits as bis own ? Answer: Yes.

Third. Has tbe defendant paid to tbe plaintiff any part of said net profit, and if so, when, and in wbat amount ? Answer: No.

Fourth. Did tbe plaintiff advance to tbe said firm tbe items as set out and claimed by him to have been advanced, in plaintiff’s fourth exception, during tbe years mentioned in said exception, aggregating tbe sum of $1,559.04, or any part thereof, and if so, which items, if be did not advance them all? Answer : Yes.

Fifth. Did the defendant Westbrook pay to tbe plaintiff any other sums of money on accoimt of tbe said copartnership, other than tbe credit mentioned in tbe fourth exception, amounting to tbe sum of $916.32, and if so, wbat sums were so paid, and tbe date of payment? Answer: No.

Sixth. Did tbe defendant keep tbe "money of tbe said firm with bis own, and use.it as bis own, except that part paid out by him for said firm? Answer: Yes.

Seventh. Did tbe defendant Westbrook ever pay to tbe plaintiff any money on account of bis share in tbe profit of said firm; if so, when and wbat amount? Answer: No.

Eighth. Should tbe plaintiff recover interest on tbe amounts advanced by him to tbe firm, and' not repaid to him, from tbe 1st day of June of each year that they were advanced, until repaid, and if not, then from what date should the plaintiff recover interest? Answer: No; from the time the firm ceased to do business.

Ninth. Should the plaintiff recover interest on his share of the profits of said firm from the 1st day of June of each year when they were earned, until paid, and if not, then from what date should the plaintiff recover interest? Answer: No; from time firm ceased to do business.

Tenth. What amount of yearly rent is the plaintiff entitled to recover of the defendant, if any, for the years 1892, 1893, 1894, 1895, 1896, 1897, 1898, and 1899? Answer: $40.83%.

Eleventh. Is the plaintiff entitled to interest on the rent money due him, from the 1st day of June of each year that the rents became due, and if not, from what date should the plaintiff recover interest on the rents? Answer: No; from time firm ceased to do business.

Twelfth. Were the copartners to meet on or about the 1st day of January each year, after the shipping season, and have a settlement with each other, and divide the profits, as claimed by the plaintiff in his fifth exception? Answer: Yes.

It was agreed that the judge might pass upon the issues of fact raised by the plea of the statute of limitations to the amendment of complaint.

The court then found as a fact from, the said evidence and the pleadings that the plaintiff’s claim for his advances was barred by the statute o.f limitations, to which finding of the court the plaintiff excepted.

There was no evidence that the partnership owed any debts at the time of the dissolution in 1899, except the debts between the partners, or that there was anything to be done, except to settle.

The plaintiff demanded settlement of the defendant from time to time, and the defendant denied any liability.

His Honor rendered judgment in favor of the plaintiff for his part of the profits and rents, with interest thereon from 1 January, 1900, and denied bis motion for judgment for advances made, bolding tbat tbis claim was barred by tbe statute of limitations.

Tbe plaintiff excepted:

(1) Because bis Honor beld tbat 'tbe claim for advances was barred by tbe statute of limitations.

(2) Because tbe court erred in refusing to give judgment for tbe plaintiff for interest on bis rents and profits from tbe year tbey became due or were earned.

Tbe defendant excepted:

(1) For tbe error in refusal of tbe court to overrule finding of fact No. 8, as found by tbe referee, and conclusions of law Nos. 4 and 5, as found by tbe referee, first exception, for tbat no competent evidence was introduced upon wbicb to base tbe said finding of fact and said conclusions of law.

(2) Tbat tbe court committed error in submitting to tbe jury eacb and all of tbe issues wbicb appear in tbe record.

(3) Tbat tbe court erred in submitting to tbe jury tbe evidence taken before tbe referee and in submitting tbe cause to tbe jury upon sucb evidence.

(4) Tbat tbe court erred in refusing to permit tbe defendant to plead tbe statute of limitations as to tbe amounts alleged to be due as rents.

(6) Tbat tbe court erred in reftising to allow tbe defendant’s motion to set aside tbe verdict.

(7) Tbat tbe court erred in refusing to grant tbe defendant a new trial.

(8) Tbat tbe court erred in signing tbe judgment wbicb appears of record.

E. K. Bryan, J. T. Bland, E. L. Larhins, and John D. Kerr for plaintiff.

Bobert Ruarle for defendant.

PLAINTIFF’S APPEAL.

Allen, J.,

after stating tbe ease: Tbe exceptions of the plaintiff cannot be allowed.

As to tbe claim for interest, it is alleged in tbe complaint tbat tbe partnership “continued in active business up to and including tbe year 1899, wben it ceased active business,” and tbe judgment appealed from, based on tbe findings of tbe jury, allows interest from 1 January, 1900, wbicb according to tbe complaint was tbe time of tbe dissolution. There is no claim tbat tbe defendant agreed to pay interest.

“A partner is not entitled to interest on capital wbicb be contributes to tbe firm, although bis contribution is greatly in excess of tbat of bis copartners, unless they have agreed be may have interest.” Oye., vol. 30,- p. 698.

Tbe eases cited in tbe note fully sustain tbe text. Sheppard v. Smith, 20 Ala., 750; Carpenter v. Hathaway, 87 Cal., 439; Tutt v. Land, 50 Ga., 350; Thompson v. Noble, 108 Mich., 25; Lamb v. Rowan, 83 Miss., 53; Smith v. Smith, 18 R. I., 722; Hart v. Hart, 117 Wis., 663; Rodgers v. Clement, 162 N. Y., 422.

In tbe last ease tbe Court says: “If tbe moneys advanced by tbe plaintiff to tbe firm were contributions of capital or additions to plaintiff’s capital, then be was not entitled to interest on tbe same, since be must rely upon tbe profits of tbe business to compensate him for tbe investment, unless there was a special agreement between tbe partners tbat interest should be allowed.”

Tbe reason applies with greater force to tbe claim for interest on profits, wbicb cannot be ascertained until after tbe dissolution.

Tbe question was considered by Chief Justice Ruffin in Holden v. Peace, 39 N. C., 228. He says: “Tbe general rule for interest, on accounts in ordinary dealings, is tbat it is chargeable only after an account has been rendered, so that tbe parties can see wbicb is tbe debtor and what be has to pay, unless it be agreed otherwise, or tbe course of business shows it to have been otherwise understood. This applies still more forcibly as between partners, because their accounts cannot be fully made up between them without, in truth, taking all tbe accounts of tbe firm — in other words, without a dissolution; and it is impossible to tell before wbat either would be bound to pay or entitled to receive. Therefore; if the parties mean' that interest should be charged on the accounts of the partners, for dealings in the shop and money withdrawn for personal expenses or other things, from year to year, the course is to come to an agreement to that effect, and then for balances appearing upon the individual accounts annually or oftener, according to the agreement to that effect, charges of interest are made from time to time, or if omitted, will be allowed in making the final settlement. If there be no agreement upon the subject, it must be understood that the parties, especially when they have no separate property, were aware that each must draw from the firm the means of supporting himself and his family, and that an exact equality could not be expected in those matters, and, therefore, that it was not intended that interest should be charged during the partnership.”

The exception to the ruling that the claim for amounts advanced by the plaintiff is barred by the statute of limitations is equally untenable.

It does not appear that there were any debts to be paid or collected at the time of the dissolution of the partnership, and nothing remained to be done except to settle. The relationship between the parties then became adverse, arid the right of action accrued to the plaintiff.

The case of Murray v. Penny, 108 N. C., 324, seems to be directly in point. In that case the partnership between the plaintiff and defendant was formed in 1884, and dissolved in 1885. The action was commenced in 1890 to recover $400, which the plaintiff alleged to be due him on a fair accounting, and the defendant relied on the limitation of three years as a defense. It was held that the plaintiffs cause of action was barred, and the Court said: “Unless there is some agreement, express or implied, fixing a period for accounting beyond the time of dissolution, or circumstances that render an accounting ■impossible, the statute begins to run from the time the partnership is in fact dissolved. Wood on Lim., sec. 210. During the existence of the partnership the partners mutually sustain the relation of trustee and cestui que trust. Where there are debts still due the firm, and after dissolution one of the partners is to collect them, or other circumstances showing that a settlement is impossible, the relation of trust between the partners may continue till some act puts them in adversary position to each other. Nothing of that kind is in evidence. There is nothing to show that any debts were outstanding and uncollected, or that any trust remained to be executed. On the contrary, it appears that an immediate settlement was possible, and that both partners agreed that it should be made at once.”

We have passed on the exception of the plaintiff as to the statute of limitations, but it is doubtful if he can raise the question on this record, as the pleá of the statute by the defendant casts the burden on the plaintiff to prove that his cause of action is not .barred (Hussey v. Kirkman, 95 N. C., 64), and a jury trial being waived on this issue, the judge, without any exception to evidence, has found the fact against the plaintiff.

We find

No error. DEFENDANT'S APPEAL.

Allen, J.

The first exception of the defendant is to the refusal of the court to overrule a finding of fact made by the referee.

The exception is not based upon the ground that there was no evidence to support the finding, but that there was no competent evidence, and a proper consideration of it would require us to go through the entire record, and pass on the admissibility of evidence, when there is no assignment of error that incompetent evidence had been admitted.

This we are not required to do. If the appellant desired to preserve the exception, it was his duty to enter his exception to the evidence before the referee, and to except also to the finding of fact, and to have both exceptions reviewed by the judge, and then on appeal to embrace in his assignments of error the exceptions to the evidence.

We find, however, on an examination of the evidence of the plaintiff, that he testified to facts justifying the finding, and tbe rale is well settled tbat we cannot review the action of the judge when there is any evidence.

It was the duty of the judge to submit the issues to the jury, upon demand of the plaintiff, as he had not waived his right to a jury trial, and the exception of the defendant to such action cannot be sustained.

The fourth, fifth, sixth, and seventh assignments of error are to -rulings within the discretion of the judge; and the eighth assignment is formal for the purpose of preserving the other exceptions.

The third assignment would not be free from difficulty if it had not been held that the claim of the plaintiff for advances made to the firm was barred by the statute of limitations; but with this decision in favor of the defendant, he cannot complain that he was not allowed to offer evidence in addition to that introduced before the referee on the claim.

The general rule is, undoubtedly, as his Honor held, that upon the coming in of a report, under a compulsory reference, the issues are to be determined by the jury on the evidence before the referee; but if an amendment is allowed, after the report is filed, containing an additional charge, the parties ought to be allowed to offer evidence as to such charge, because it was not embraced in the reference.

The defendant has not, however, suffered any injury by the refusal to allow him to introduce the evidence, as there is no recovery against him on the additional matter contained in the amendment.

We find no error of which the defendant can complain.

No error.