Martin v. McBryde, 182 N.C. 175 (1921)

Oct. 19, 1921 · Supreme Court of North Carolina

182 N.C. 175

J. REID MARTIN v. D. L. McBRYDE.

(Filed 19 October, 1921.)

1. Reference — Findings—Courts—Evidence—Appeal and Error.

Where the trial judge, after reviewing the evidence, approves and adopts the referee’s findings of fact thereon, it is sufficient, and his action will not be disturbed on appeal when there is evidence to support the findings so made.

2. Same.

Conclusions of law in the report of a referee are not based upon the evidence, but upon the facts found therefrom, and an exception that a conclusion of law was based on an erroneous finding of fact, which was approved and adopted by the trial judge, is not reviewable on appeal, when there is evidence to support such finding.

3. Actions — Partnership—Independent Business.

Where one of the partners is engaged in an independent business unrelated to that of the partnership, and has for such individual enterprise purchased goods, wares, and merchandise from the partnership, the principle upon which one partner cannot sue the other except for a settlement of partnership affairs has no application.

4. Attachment — Undertakings in Lieu of Property — Statutes.

Where attachment has been levied on the defendant’s property necessary for the prosecution of his business, and upon his giving bond, he or his receiver is permitted by the court to continue operations, the giving of the bond is in lieu of the lien acquired in attachment, and analogous to the proceedings in discharge authorized by statute (Pell’s Revisal, secs. 774 and 775) ; and he may not take advantage of the bond by continuing to ship his property thereunder beyond the jurisdiction of the court, and thereby repudiate it.

5. Same — Appeal and Error.

Where the court has adjudged that the defendant in attachment, who in the course of his business, has rapidly been shipping lumber beyond the State, continue therein upon giving a bond in substitution of the lumber' attached, conditioned upon the payment of the debt, he or his receiver may not thereafter except to the order made for his benefit, and at his request.

■6. Attachment — Appearance—Undertakings in Lieu — Benefits—Waiver— Pleadings.

An attachment debtor waives any defect therein by appearing and pleading to the merits of the action; and also by accepting the benefits of an order of court substituting at his request an undertaking in lieu of the property subject to the attachment.

Appeai, by defendant from Bond, J., at May Term, 1921, of SampsoN.

This action was brought to recover the sum of $3’,663.90, alleged to be due by account stated. An attachment was issued and levied upon ■ certain personal property of the defendant, an itemized list of which was annexed by tbe sheriff to bis return. The attachment was after-wards ordered by Devin, J., to be set aside at the request of J. E. Parker, receiver, in order that the operations of the Garland Lumber Company could be resumed, under its contract with defendant, and it was further ordered that “the latter” keep in his possession at least 400,000 feet of lumber pending the further hearing of this cause on the return day thereof, “which lumber shall be subject to any liens which the plaintiff may legally assert against the same.”

The plaintiff alleged on affidavit that McBryde was disposing of the lumber, or had already disposed of it, in disobedience of the former order of the court, whereupon Guión, J., ordered that defendant show cause why he should not be attached for contempt, and afterwards discharged the rule upon the defendant’s filing a sufficient bond in the sum of $5,000, which should stand in the place of the lumber ordered to be held by the defendant for the purpose mentioned in the former order, and “shall be conditioned to pay any such lien judgment as plaintiff may recover against defendant herein.”

The court appointed a referee to take and state the account. He made his report, which was set aside so that defendant might introduce further evidence, the notice to him of the hearing of the referee having been deficient. Thereupon Mr. Richard L. Herring was appointed referee for the same purpose, and he filed the following second and final report, as it is termed in the case :

To the Superior Court of Sampson County:

The undersigned, Richard L. Herring, referee, appointed in this cause by order of his Honor Guión, J., having formerly made a report 29 January, 1921, and said cause having been referred to said referee by order of Bond, J., at March Term, 1921, of the Superior Court of Sampson County, begs to report as follows:

On 5 April, 1921, at 12 o’clock noon, in the law office of Grady & Grahamj Clinton, N. O., the plaintiff being absent in person, but represented by counsel, Henry A. Grady, and the defendant being present in person and also represented by counsel, Messrs. Q. K. Nimocks and E. S. Smith, the defendant proceeded to offer his evidence, which is contained in the typewritten report thereof herewith sent to the court, the plaintiff having heretofore by consent, at a former meeting, offered in evidence the same testimony that was offered before J. Abner Barker, referee, which appears in the file; and upon all of the evidence, pleadings, exhibits, and admissions of the parties, the referee makes the following findings of fact, it being agreed by all parties that this report should be heard and passed upon at May Term, 1921, all parties waiving time:

First. That heretofore, prior to 1. January, 1915, tbe plaintiff and tbe defendant were engaged in tbe mercantile business at Garland, N. 0., under tbe firm name and style of South Eiver Supply Company; and on said 1 January, 1915, tbe defendant, D. L. McBryde, conveyed to tbe plaintiff, "W". Eeid Martin, all of bis right, title and interest in and to said mercantile business, by written conveyance, filed with tbe referee and marked Exhibit “E.”

Tbe referee finds that said paper-writing was intended as a chattel mortgage, made for tbe purpose of securing tbe plaintiff for certain moneys advanced by him in tbe conduct of said business.

Second. That during tbe conduct of tbe business tbe said D. L. McBryde was operating a large sawmill and lumber plant near tbe town of Garland, which was not connected with tbe South Eiver Supply Company; that be employed a number of bands and made settlement with said bands with metal pay checks, which were cashed at tbe store of tbe plaintiff at par; that it was understood and agreed between tbe plaintiff and tbe defendant that said pay checks should be received at the store of tbe plaintiff as cash, with tbe further understanding and agreement that tbe plaintiff should bold said checks in tbe same manner, and that tbe same should be collectible upon tbe same basis as if held by tbe original parties from whom they were purchased by tbe plaintiff, and in furtherance of this agreement tbe defendant executed a certain paper-writing in words and figures as follows:

1 April, 1914.

W. Eeid MartiN, Proprietor,

South Eiver. Supply Company,

Garland, N. C.

Dear Sir: — I hereby authorize you to handle and accept metal pay checks that I issue to my laborers in exchange for their work, tbe same to be due and payable to you on my regular pay days, tbe same as if held by said laborers, and I hereby agree that all accounts and holdings of same due and collectible on tbe same basis as if held by tbe original parties to whom tbe checks are paid.

Yours respectfully,

D. L. McBryde.

Third. That during tbe course of business tbe plaintiff purchased from tbe laborers of tbe defendant, under tbe agreement referred to in tbe second finding of fact, metal pay checks amounting in value to $5,404.05.

Fourth. That this action was commenced 13 October, 1916, and thereafter, on 17 October, 1916, J. F. Parker, receiver of the Commonwealth Land and Timber Company, came into court and made himself a party to this action, and upon affidavits filed by the said J. E. Parker and others, an order was entered by Devin, J., at Kinston, N. C., dissolving the warrant of attachment which appears in the file and providing as follows:

“And it is further ordered that the. said D. L. McBryde proceed to resume operations under his said contract, as though said attachment had not been issued or served, and that he keep in his possession at least 400,000 feet of lumber pending the further hearing of this cause on the return day thereof, which lumber shall be subject to any liens which the plaintiff may legally assert against the same.”

Fifth. That thereafter, on or about 9 January, 1919, a petition was filed in this cause, alleging that all of said lumber had been disposed of, in violation of the order entered by Devin, J., hereinbefore referred to, and thereupon his Honor, Guión, J., issued an order requiring the defendant to appear before him at the courthouse in Clinton, N. O., on Saturday, 8 February, 1919, and show cause why he should not be punished for disobeying the former orders made in this cause; and thereafter at the hearing of said motion said writ was vacated upon condition that the defendant file a good and sufficient bond in the sum of $5,000, payable to the plaintiff, which bond was filed by the defendant with W. L. Williams, Jr., B. F. McBryde, and E. S. Smith as sureties thereto, and contains the following provision:

“The condition of this obligation is such that whereas the plaintiff has sued the defendant herein for a certain alleged indebtedness amounting to $3,663.90, and claims a lien on certain lumber, as appears by the pleadings and papers herein: Now, therefore, if the plaintiff shall recover judgment against the defendant herein and shall be adjudged entitled to a lien on said lumber as security for 'the payment of said judgment, or any part thereof not exceeding the amount sued for, and if the defendant shall pay such judgment as the court may find and adjudge subject to such lien, then this obligation to be null and void, otherwise to be and remain in full force and effect.”

Sixth. That at the time of the institution of this action D. L. McBryde was indebted to the South River Supply Company, on account of metal pay checks taken under the written contract hereinbefore referred to in the sum of $5,404.05, and in addition thereto was personally indebted to said company for goods sold to him individually in the sum of $527.03, so that on 1 January, 1917, the assets of said company consisted of the following items:

Cash, in bank.$ 19.63

Merchandise on hand. 318.21

Open accounts.28.81

Personal account D. L. MeBryde.. 527.03

Metal pay checks account.!. 5,404.05

Total.$6,297.73

Seventh. That at the time above referred to, 1 January, 1917, the South Eiver Supply Company was indebted to plaintiff Martin in the sum of $1,754.46 for money loaned to said company from time to time.

That the plaintiff has received from the cash in bank, merchandise on hand and open accounts, the sum of $366.65, which should be charged against him and deducted from his one-half interest in the business, so that the account between the two copartners should be stated as follows:

Total assets of the company.$6,297.73

Account due Martin for money advanced to company.. 1,174.46

Net worth of business.$4,543.27

Of this Martin is entitled to one-half. 2,276.68.5

Of this MeBryde is entitled to one-half. 2,276.68.5

Total .$4,543.27

Amount due Martin, one-half of business. 2,276.68.5

Less amount received from accounts and cash in bank 366.65

Balance .$1,910.03.5

Amount due Martin, one-half business. 2,276.68.5

Amount due Martin for money advanced business. 1,754.46

Total amount due Martin.$3,664.49.5

Eighth. That at the time of the institution of this action the defendant MeBryde was in serious financial difficulties, there being many recorded judgments against him; that he was in fear of executions being issued on said judgments and his property seized by his creditors; that he was shipping lumber from Garland, N. O., to J. S. Kent & Co., of Philadelphia, Pa., as fast as the railroad facilities would permit, which bad tbe effect of removing tbe property beyond tbe reach of tbe court and of bindering, delaying and defeating bis creditors from collecting tbe amounts due them, and sucb was bis intention.

Ninth. That tbe order requiring tbe defendant to keep in bis possession at Garland, N. 0., tbe 400,000 feet of lumber hereinbefore referred to, was consented to by all of tbe defendants to this action, and was made at tbe suggestion of defendant, J. F. Parker, receiver, and be is bound thereby.

Upon tbe foregoing findings of fact tbe referee makes tbe following conclusions of law:

1. That by reason of tbe written contract entered into between tbe defendant and South Biver Supply Company, be thereby created a valid lien upon tbe lumber, etc., cut at bis mill, and subrogated tbe said South Biver Supply Company to any rights of lien that might have been asserted by bis employees, to whom tbe metal pay checks were given, and to all other remedies that said employees might have asserted.

2. That by reason of the fact that tbe defendant MeBryde, at tbe time this action was instituted, was financially embarrassed, and was shipping bis assets beyond tbe State, etc., as found in finding of fact No. 8, tbe issuance of tbe writ of attachment herein was provident and proper, and tbe plaintiff thereby secured and was entitled to a valid lien upon all of tbe property seized by tbe sheriff, consisting of tbe 400,000 feet of sawed lumber described in tbe return of said sheriff.

3. That by reason of tbe fact that tbe amount due tbe South Biver Supply Company by D. L. MeBryde on account of metal pay cheeks is in excess of tbe total amount due tbe plaintiff Martin, tbe plaintiff is entitled to assert tbe amount of bis recovery as a lien against said 400,000 feet of lumber, and require tbe defendant MeBryde to accept bis open account as a credit on bis one-balf in tbe business.

4. That all of tbe defendants are bound by tbe order entered herein, requiring tbe defendant to keep 400,000 feet of lumber on band to pay any judgment that may be recovered in this action by tbe plaintiff, which is adjudged to be a lien on tbe lumber seized by tbe sheriff, and ■by reason of tbe fact that tbe $5,000 bond filed herein was substituted in lieu of sáid lumber, that tbe defendant and the sureties on said bond are liable for tbe amount of tbe recovery adjudged in this action.

5. That tbe plaintiff Martin is entitled to recover of tbe defendant MeBryde, as principal, and B. E. MeBryde, E. S. Smith, and W. L. Williams, Jr., sureties, tbe sum of $5,000, tbe penalty of tbe bond filed herein, to be discharged upon payment to tbe plaintiff, W. Beid Martin, of tbe sum of $3,664.50 with interest thereon from 1 January, 1917, together with tbe costs of this action to be taxed by tbe clerk.

The date above named, 1 January, 1917, is an arbitrary date fixed by the referee, on account of the fact that the business was in process of being wound up at that time, said date being subsequent to the issuance of summons herein.

All of which is respectfully submitted this 23 April, 1921.

Eichabd L. HebeiNG, Referee.

The defendant filed nine exceptions to this report, each of which was based upon the following ground: “The defendant excepts to the findings of fact in the referee’s report, for that it is contrary to the evidence taken in the ease”; and he also filed five exceptions to said report, each of which was based upon the following ground: “The defendant excepts to the conclusions of law found in another article of the report, for that the same is not a correct conclusion of law based upon the evidence taken in the above cause, and that said conclusion of law was based upon erroneous finding of fact.” The above exceptions to findings of fact and those to conclusions of law were, therefore, all alike in form and substance.

The defendant further excepted to said report because the referee failed to nonsuit the plaintiff at the conclusion of the plaintiff’s evidence and again at the close of all the evidence. Bond, J., approved and confirmed the report of Beferee Herring in all respects, and rendered judgment against defendant for the sum of $3,663.90 and costs, to include referee’s fee of $50, and premium on attachment bond.

Defendant appealed and assigned the following errors:

“1. To the referee’s denial of defendant’s motion for nonsuit.

“2. To referee’s denial of defendant’s motion to vacate the attachment.

“3. To referee’s denial of defendant’s motion at the close of all evidence for nonsuit.

“4. To referee’s denial of defendant’s motion at the close of all evidence to vacate the attachment.

“5. To the refusal of the presiding judge to sustain the defendant’s exceptions to the referee’s findings of fact and conclusions of law, as more fully set out in the record.

“6. To the refusal of the presiding judge to allow defendant’s motion of nonsuit and to vacate the attachment made before the referee, as above stated and renewed before the presiding judge at the hearing before him on exceptions to referee’s report.

“7. To the judgment as signed, as appears of record.”

Grady & Graham for plaintiff.

Q. K. Nimocks, B. 8. Smith, and Murray Allen for defendant.

Wahker, J.,

after stating tbe case: It is -useless to consider tbe exceptions filed to tbe referee’s report as to tbe facts, further than to say tbat tbe judge afterwards reviewed tbe evidence and findings of fact by tbe referee, and approved and confirmed tbe same, adopting tbem as bis own. We bave repeatedly beld tbat, where this is the case, we will not review tbe judge’s final decision in this respect, where there is evidence to support tbe findings. Dorsey v. Mining Co., 177 N. C., 60, at p. 62; Maxwell v. Bank, 175 N. C., 180; Southern Spruce Co. v. Hayes, 169 N. C., 254, where this Court beld: “As said in another case, McCullers v. Cheatham, 163 N. C., 63: ‘The misfortune of tbe defendants (tbe plaintiff in tbe case at bar) in this case is tbat tbe referee has found all tbe essential facts against tbem, and when these findings were reviewed and approved by tbe judge, upon consideration of tbe report and exceptions, there being evidence to warrant tbem, we are precluded from changing tbe report in this respect, but must decide tbe case upon tbe findings of fact as made by tbe referee and approved by tbe court. . . . We will not review tbe referee’s findings of fact, which are settled, upon a consideration of tbe evidence, and approved by tbe judge, when exceptions are filed thereto, if there is some evidence to support them.’ ” Turning to McCullers v. Cheatham, supra, we find tbat tbe following cases are cited there: Boyle v. Stallings, 140 N. C., 524; Harris v. Smith, 144 N. C., 439, and cases cited; Thornton v. McNeely, ib., 622; Frey v. Lumber Co., ib., 759; Thompson v. Smith, 160 N. C., 256. There was some evidence in this case to support tbe rulings of tbe referee and judge as to tbe facts.

Now as to tbe exceptions taken to tbe referee’s conclusions of law. One ground of these exceptions is tbat they are not correct conclusions based upon tbe evidence. Tbe conclusions of law are not based upon tbe evidence, but upon tbe facts found by tbe referee; and tbe other ground, tbat tbe conclusions of law were based uj>on an erroneous finding of fact, is but saying tbat tbe facts were erroneously found by tbe referee and judge, which we bave shown is a matter not reviewable in this Court.

When tbe assignments of error are considered, they really present but two questions: First, was it error in tbe court to refuse tbe motion to nonsuit; and, second, should tbe referee and judge bave vacated tbe attachment? There may be a third question, which we also will consider, though it is not definitely and sufficiently raised by tbe defendant in bis exceptions and assignments of error, and tbat is, could tbe plaintiff sue tbe defendant, tbe latter being bis partner ? as defendant alleges and, we think, erroneously.

1. The court did not err .in refusing a nonsuit. This really involves the two questions as to the right of plaintiff to sue the defendant, and the attachment.

It is contended that the plaintiff could not sue the defendant, because they were partners and one can sue the other only for a settlement of the partnership affairs. But this, if correct generally, is not so with reference to the particular facts of this case. Here the plaintiff alleges his right to recover damages because he had, upon defendant’s request, furnished to him “goods, wares and merchandise and feed supplies in order that McBryde could carry on the business in which he was then engaged, it being the operation of a lumber and mill plant.” This is in no way connected with any partnership affair, but entirely separate therefrom, if any partnership existed, and altogether independent thereof. The following is settled, according to George on Partnership, 314 (131) :

“A partner may maintain an action at law against his copartner upon a claim due to the one from the other as individuals. The following classes of cases fall within the above rule:

“(a) Claims not connected with the partnership.

“(b) Claims for an agreed final balance.

“(c) Claims upon express personal contracts between partners.”

And Euling Case Law, vol. 20, p. 926, says: “The general rule prohibiting the bringing of suits by one partner against another until a balance is struck does not apply to all possible cases which might appear to be within its scope. The limitation may be removed by statute or agreement between the parties. Thus one partner may sue another at law on a promissory note executed by the partnership to him, where there is a statute providing that all contracts which by the common law are joint shall be construed as joint and several, and that in all cases of joint obligations of copartners and others, suits may be prosecuted against any one or more of them who are liable.” The general rule, therefore, even as between partners, is not inexorable, but has its exceptions. The case of Owen v. Meroney, 136 N. C., 475 (opinion by the Chief -Justice), as reported in 1 A. & E. Anno. Cases, 834, is an apposite one. The substance of it, as stated in the headnote to 1 A. & E. Anno. Cases, supra-, is as follows: “An action may be maintained by one partner against another to recover damages for the failure of the latter to comply with an agreement made by him as a condition precedent to the formation of the partnership.” There is a valuable note to that case at pp. 835, 836, in which, among other things, it is said: “Thus, an action -will lie for a breach of promise to furnish money or property for carrying on the partnership. A partner may recover the damages suffered by him personally, unless ascertainment of such-damages involves an examination of the partnership accounts, when the only remedy is in equity.” The note is amply supported by the citation of relevant authorities. And in Newby v. Harrell, 99 N. C., 149, this Court held: “While the general rule is that one partner cannot maintain an action against his copartner to recover money which might have been taken into account of the partnership, until after a settlement, he may sue before such settlement to recover for the wrongful conversion or destruction of the joint property, or for the loss or destruction of his individual property used in the business, resulting from the negligent use by the other partner.”

If the plaintiff, who happens to be a partner, can recover on a promissory note given by the firm to him individually, or for damages suffered by him in the same way, and resulting from a breach of contract, or a tort, there is no conceivable reason why he cannot recover here for the sale of goods, wares and merchandise sold or supplied to defendant, even if the two were partners in the supply business (which is denied), because the goods were furnished to defendant personally for the express purpose of enabling him to supply his hands who were operating his mill plant, with which the plaintiff had no connection, except as bookkeeper. The debt due the plaintiff was, in no sense, an item in any partnership account, and the case in no view falls within the principle invoked by the defendant.

Now as to the lien of plaintiff, under the contract with the defendant set forth in the case. The judge did not discharge the attachment on the merits, but he was evidently proceeding, or at least in analogy to the proceeding for a discharge, as authorized by the statute (Pell’s Revisal, vol. 1, secs. 774 and 775), and the bond required by the judge, and given by the defendant in place of the 400,000 feet of lumber, was so conditioned as to requirfe the defendant “to pay any such judgment in the action as plaintiff may recover against him therein,” in addition to the bond being held to secure any lien which plaintiff had on the lumber, for which the bond was a substitute, the object of all this being to release the property attached so that defendant or the receiver could use it in the prosecution of the business. It would be a clear perversion of the true intent and purpose for which the bond was allowed to be filed, as an accommodation to the defendant so that he might use the property attached or the lumber held in lieu of it, if we should hold otherwise. We must decide according to the letter and spirit of the transaction, and not let the defendant take advantage of his own repudiation of his agreement, upon the faith of which he, or the receiver, secured the release of the attached property and afterwards of the lumber, so that the work of the mill might proceed.

The referee, in his admirable report upon the facts and the law, has found as a fact that the defendant being involved in serious financial difficulties, and being much embarrassed, there being many recorded judgments against him, and while he was in fear of executions being issued against his property, was shipping lumber from Garland, N. 0., to points outside the State as rapidly as possible, which had the effect of hindering, delaying and defrauding his creditors, and such was his intention. The defendant does not say in his exceptions that there was no evidence of those facts, but that they were found by the referee contrary to the evidence'. We have already discussed the character of such an exception where the referee’s findings have been considered and approved by the judge on exceptions filed to the referee’s report. However, there was some evidence to support the findings.

Attention is called by.the appellee to the fact that there was no exception taken to the orders of the court as to the lumber or the bond of $5,000, and also to the special condition of the bond requiring any judgment recovered to be paid. The attachment being regular and valid, and intended to bring the defendant before the court to answer in the cause, and the defendant having answered, and the receiver intervened for the purpose of discharging the attachment, for the special purpose just mentioned, and substituting security therefor, first, in the form of lumber, and, second, by bond in lieu thereof, it is apparent that it is too late now to claim that the same security, in the form of a lien on the lumber, was not transferred to the bond when it was given in place of that lien, and further that defendant has waived any defect in the attachment (if there was any, and we concur with the referee that there was not), by appearing and pleading to the merits, and further that the court did not vacate the attachment because of any defect therein, or because of insufficient grounds for issuing it, but simply, at the request of defendant and the receiver that it be done, so that the prosecution of the -mill business, then in the hands of the receiver, would no longer be interrupted. It was held in Rocky Mount Mills v. R. R., 119 N. C., 693 (affirming order of Soke, J., refusing to vacate an attachment), that “Where a defendant, brought into court on attachment process, subsequently entered a general appearance and filed an answer to the merits, a motion to dismiss the attachment on the ground that it would not lie under the statute was properly refused as immaterial.” In Symons v. Northern, 49 N. C., 241, Battle, J., said: “A defendant may come into court without process, and confess a judgment (Farley v. Lea, 20 N. C., 307), and we cannot perceive any reason why he may not come in, in the same way, and accept the plaintiff’s declaration and plead to it. If this be so, why may he not appear and plead upon the defective process? Tbe main object o£ tbe leading process is to bring tbe defendant into court, and if be does not cboose to object in limine to tbe manner in wbicb be bas been brought in, it would be wrong to allow bim to do so after be bas, by bis acts, admitted bimself to be there, ready to defend himself against tbe plaintiff’s action.” Toms v. Warson, 66 N. C., 417. And in Price v. Sharp, 24 N. C., 417, it was held that “In an attachment tbe defendant by accepting a declaration and pleading to tbe merits, waives all objections to any defects in tbe process.” It, perhaps, may be useless to state that a lien is acquired by tbe levy of an attachment (McMillan v. Parsons, 52 N. C., 163), as such a proposition will hardly be gainsaid. C. S., 767. Tbe lien of tbe original levy created by tbe statute was not destroyed or vacated, but is now represented by tbe bond of tbe defendants, a new form of security, to be sure, but only as a substitute for tbe old, upon wbicb tbe plaintiff is entitled to judgment for tbe satisfaction of bis debt. Tbe report of Referee Herring was properly approved and confirmed by tbe court in its judgment, wbicb will not be disturbed.

Having taken this view, it is unnecessary to discuss tbe question as to tbe alleged laborers’ and mechanics’ lien arising from possession of tbe metal checks.

We find no error.

Affirmed.