Waugh v. Mitchell, 21 N.C. 510, 1 Dev. & Bat. Eq. 510 (1837)

June 1837 · Supreme Court of North Carolina

21 N.C. 510, 1 Dev. & Bat. Eq. 510

WILLIAM P. WAUGH, et al. v. ANDERSON MITCHELL, et al.

June, 1837.

Upon a bill to review a decree founded upon an award, the original is not, if erroneous, to be revived, but only to be corrected in those particulars in which it is wrong, and made to be what it originally ought to have been.

This is a bill to review a decree made in a cause in which Mitchell and Martin, as the administrators of -Ambrose Parks, deceased, were plaintiffs, and- William P. Waugh, John Finly, and Benjamin J. Parks, (the present ■complainants,) were defendants.

The original bill charged, that in 1822, (immediately •after the death of one George Parks,) Ambrose Parfe, of the first part, the defendants William P. Waugh and John Finly, under the firm of Waugh & Finly, of the second part, and the said Waugh and the other defendant, Benjamin J. Parks, under the firm of Waugh & Parks, of the third part, entered into an agreement of copartnership, to carry on the mercantile business together, at Wilkes* borough and at Ashe Court House; the latter under the -direction of the said Ambrose, and the former under the .joint direction of said Waugh and Benjamin J. Parks: that the parties did so until February, 1826, at which time the said Ambrose died, after large profits were made, having large stocks of merchandize on hand, and debts due to the firms, all which came to the hands of the original 'defendants, as surviving partners. The bill sets forth the terms of copartnership, and the interest of the respective partners, in the manner following: that in July, 1820, it had been agreed by and between the said Waugh and Finly, of one part, the said Ambrose, of the second part, -and one George Parks, of the third part, that these four persons should be copartners to carry on the trade of merchandize, in Wilkesborough and Ashe, aforesaid, upon a capital stock of thirteen thousand dollars; whereof Waugh and Finly were to advance the sum of ten thousand dollars, and each of the said partners, Ambrose and George, the sum of fifteen hundred dollars: that Ambrose was to eon- duct the business at Ashe by. himself, and by clerks employed and paid by him, under the firm of Ambrose Parks & Co.: and that George was in like manner to conduct that at Wilkes by himself, and by clerks paid by him, under the firm of George Parks & Co-.: that at the expiration or dissolution of the business, the capital of the respective partners, with interest thereon, should in the first place be paid; and the surplus or profits should be divided, one-half to Waugh and Finley, and one-fourth to each of the other partners: that the partnership should continue for five years, notwithstanding the deaths of the said Waugh and the said Finly; but that upon the death of either of the Parks, the concern should be closed or continued, at the election of Waugh and Finly. The bill then charges, that the business began and proceeded according to the articles, until the Autumn of 1822, when George Parks died: that thereupon the business was not continued for the benefit of the estate of George Parks, upon the footing of the articles ; neither was it closed by a settlement with the representatives of the said George. But it was then agreed by all the partners, that Waugh and Benjamin J. Parks should represent said George in the firm, by assuming to those beneficially-entitled to his share, the responsibility therefor,' and by taking on themselves, as between them and the other partners, all the duties and rights of the said George, under the said original agreement: that accordingly the business proceeded at Ashe, under the charge of said Ambrose, and at Wilkes, under that of Waugh and Benjamin J. Parks, for the whole term limited in the articles, and afterwards, by mutual consent, until the death of Ambrose, in 1826, as aforesaid: that administration of his effects was granted to the plaintiffs, Mitchell and Mastin; and they had repeatedly applied for an account, and to be paid the share of their intestate ; but that the defendants, Waugh and Benjamin J. Parks, who were the active managers, and represented George Parks under the new agreement, failed, and refused to render such account, which the bill prayed for in the broadest terms; and that the partnership accounts and transactions might be finally settled, under the directions of the Court.

The answer of Waugh and Finly admitted substantially the several allegations of the bill, except that it was stated that the first agreement of partnership was made between Waugh and Finly, of the one part, and George Parks, of the other, in which the former were to advance five thousand dollars, and the latter fifteen hundred dollars; and that it was reduced to writing, and contained the stipulations touching the duties and rights of the parties thereto, as set forth in the bill respecting the store at Wilkes-borough: that afterwards a similar agreement was entered into with Ambrose Parks, as to a store at Ashe, under his management: that it was not reduced to writing, but was to be governed by the other; and that Ambrose Parks and George were to be partners in each house, so as to make both firms really one, though in different names. The answer thereupon insists, that upon the death of George Parks, Ambrose was bound to perform his duties; and that as they were performed by Waugh and Benjamin J. Parks, those persons are entitled to an allowance from the plaintiffs therefor: that upon the death of Ambrose Parks, the defendant Waugh employed the plaintiff Mastin and other clerks to close the business; and that the plaintiff Mastin had the actual custody of the books, notes, and other effects of the concern: that the plaintiffs and the defendants came on the 1st March, 1828, to an agreement for a partial settlement, in which the terms thereof were fixed, and then reduced to writing; whereby the sum of four thousand dollars was set apart to cover balances of debts for goods then outstanding, and securities allotted to Waugh and Finly for their capital and interest, and to the plaintiffs for that of their intestate; and the residue of the effects were to be divided, one-half to Waugh and Finley, and the other half to Waugh and Benjamin J. Parks, and the administrators of Ambrose : and that said Waugh and Parks, and said administrators should bear in equal shares the expenses for clerk-hire, from November, 1825, until the business should be closed. The answer further states, that the settlement was not concluded, because the parties differed as to the persons who should bear the charges of clerk-hire before November, 1825; and also upon the charges brought forward by said Waugh for his expenses in purchasing goods for the Wilkesborough store, and giving his general superintendence to the business there; and closing both concerns upon the dissolution; and it is insisted, that Waugh was entitled to such allowances, and was not liable for any part of the clerk-hire. The answer then stated, that the defendants were advised that there ought to be other parties. But they submit to a settlement and division, if it can be ordered with safety to them; insisting, however, upon the demands of Waugh, before mentioned.

The defendant Benjamin J. Parks did not answer; and the bill was taken pro confesso as to him.

The bill was filed in March, 1829; and after several orders, the parties, at September Term, 1833, referred it by rule of Court to James R. Dodge, Esq., to make his award upon the matters in controversy in the suit.

The administrator made his award thereupon, and returned the same to March Term, 1834, and therein found that Ambrose and George Parks did not stipulate for each other in the original agreement; but that each of them was to manage the store under his particular care at his own expense ; and that Waugh and Benjamin J. Parks took the place, in this respect, of George, upon his death,. and must therefore exclusively bear the clerk-hire of that store; and between them, therefore, they had one-fourth of the profits ; especially as they had in 1827 settled with the representatives of George Parks, and been allowed therein by his representatives for the hire of the clerks in his time, as a charge against George’s share in the concerns. Further that Benjamin J. Parks had left this state before the death of Ambrose, and that upon thelatter event all the effects of both stores came to the hands of the defendant Waugh: that Waugh and Finly had received their capital and interest, and the plaintiffs had received that of their intestate and interest: that payment had been fully made to the representatives of George Parks, for all his capital, interest and profits, up to the time of his death by the surviving partners in 1827: that Benjamin J. Parks was indebted to the concern more than his share of the profits, and that he was insolvent. He charges to the plaintiffs, all the clerks’ hire at the store in Ashe, in conducting and closing it; and to Waugh and B. J. Parks, all that in Wilkes, from the beginning of the business by George Parks & Co.; but he limits the period to eighteen months from the death of Ambrose, as a reasonable one, when Waugh ought to have closed the business, and therefore does not allow the payments made by him, for clerks after that time. He refused to make any allowance to Waugh personally, for closing the concerns, because Waugh was bound by contract to settle the concerns of the store-in Wilkes, as George Parks would have done, and because those of the store in Ash, had been settled by clerks employed by Waugh, whose wages the arbitrators made the plaintiffs pay. The award, then proceeded to find that the debts which either of the stores had contracted, had all been paid, except the sum of eighty-seven dollars and thirty-six cents, with interest from the 23rd day of March, 1828, which was still owing to the plaintiff Mastin, in his own right. It finds the whole personal assets of the firms including the accounts of the respective partners to be fifteen thousand four hundred and fifty-eight dollars, and sixty-one cents, whereof the plaintiffs were entitled to one fourth, or the sum of three thousand eight hundred and sixty-four dollars, and sixty-five and one-fourth of a cent. That B. J. Parks’s account, exceeded his share, by the sum of four hundred and three dollars, of which one-fourth, or one hundred and thirty-four dollars and thirty-three and one-third cents was to be borne by the plaintiffs, and being deducted from their share, left to their credit the sum of three thousand seven hundred and thirty dollars and thirty two cents: but the account of Ambrose Parks, and the debts of clerk-hire to be ’paid by him, amounted to three thousand and seventy-three dollars, and ten cents, which left a balance really due to the plaintiffs, of six hundred and fifty-seven dollars, and twenty-three cents, with interest from the first of March 1828. The arbitrator then states the accounts of each of the other partners with the companies, and finds the balance due to Mr. Waugh and to Mr. Finly; and awards that Waugh, in whose hands are all the funds, shall pay to Finly, the sum of five hundred and seventy-seven dollars and fifty-seven cents, with interest, and to the plaintiff the said sum of six hundred and fifty-seven dollars and twenty-three cents and interest, as before mentioned; and likewise shall pay into the office the sum of eighty-seven dollars and thirty-six cents, and inter es, to satisfy the debt of Mastin: that B. J. Parks, shall pay to Waugh, Finly and the plaintiffs, each the sum of one hundred and thirty-four dollars and thirty-three and one thifid cents. The arbitrator then finds, that the defendant Waugh, has securities for debts due from insolvent debtors to the firms, to the amount of four thousand nine hundred and sixty-three dollars and nineteen cents, which he divides between the parties by schedules, and awards that the division shall be final, and that each party may use the names of the others, to collect his sharebut at his own expense, and without any claim for contribution in case the debts shall prove absolutely bad. He then proceeds to find, that George Parks & Co., had purchased four tracts of land in Wilkes with the partnership funds, and in the course of their joint dealing: that the value of them had been accounted for, with George Parks’s representatives, by the surviving partners, and that the land now formed part of the effects of the firms he was then settling, in addition to the effects before mentioned, and must be sold, before a final settlement could be made; that the arbitrator doubted his authority to award such sale; but if under the facts found by him, he had such, power (which he refers to the Court,) he did then award that those four tracts (which he described) and any other lands belonging to the said firms, should be sold under the direction of the Court, and the money arising therefrom be divided between the parties, that is to say, one eighth to B. J. Parks, two-eighths to the plaintiff, two-eighths to. Finly and the remaining three-eighths to Waugh : that the-share thereof, which might belong to- B. J. Parks, should be applicable, first, to that part of the costs of the suit which he was awarded to pay ; and secondly, to the payment prorata, of the sums awarded to be paid by him, to the other parties respectively; but the same should be cons>dered as a collateral security only for those sums ; and that the said parties might proceed otherwise to collect the said moneys from said B. J. Parks. The award concludes by directing B. J. Parks to pay his own costs, and Waugh to pay the residue of the costs.

To the award the defendant Waugh alone objected. He moved to set it aside on several exceptions. First, that the arbitrator rejected legal evidence of payments made by him on account of the concerns. Secondly, that he erred in awarding upon matters not submitted to him. Thirdly, that he erred in not awarding on all the matters submitted. Fourthly, that the award is not final, as it leaves the parties exposed to further litigation as regards the subject-matter submitted. There were other exceptions, but they related exclusively to the conduct of the arbitrator, in deciding certain questions of fact, upon certain evidence given, and were not supported by any affidavits, or evidence in this cause.

Upon the hearing, upon the pleadings and award and exceptions, the Court denied the motion of the defendant Waugh, and proceeded to decree according to the award ; that the defendant Waugh should pay into the master’s office, the sum of eighty-seven dollars thirty-six cents, with interest thereon, for the use of the plaintiff Mastin, in discharge of the debt owing to him by the said A. Parks & Co.: that'*hg should pay the parties, Finly and the plaintiffs, as administrators, the sums due to them which the decree specified as in the award: that the debts reported as beinginsolvent, should, as directed in the award, belong to the several parties, who should be at liberty to collect them, if they could, at their own expense and use, and for their several use. That B. J. Parks should pay to each of the other parties, the sum of one hundred and thirty-four dollars thirty-three cents, and that executions might issue therefor; but as the said Benjamin J. was found to be insolvent, it was declared that the said sums, and the costs decreed against him should be a charge against his one-eighth part of the proceeds of the land mentioned in the award and directed therein, and in the decree to be sold, unless the said B. J. Parks should otherwise pay the same. The Court further decreed, that the four tracts of land mentioned in the award and particularly described, should be sold by the clerk and master; and that the money arising therefrom should be divided as follows : to wit, one-eighth to Benjamin J. Parks; two-eighths to the plaintiff; two-eighths to Finly; and the remaining three-eighths to Waugh; all which is in full satisfaction of the respective claims of the said parties litigant against each other. The decree then ordered B. J. Parks to pay his own costs ; and the defendant Waugh to pay the other costs.

To review the foregoing decree, the defendants in that suit, William P. Waugh, John Finly, and Benjamin J. Parks, have now jointly brought their bill, alleging the following errors. 1st. That the decree does not pursue the award. 2d. That the award and decree was erroneous, in ordering the sum of eighty-seven dollars and thirty-six cents, with interest, to be paid to the plaintiff Mastín, as he was a party only as administrator of Ambrose Parks, and the said sum is recovered by him in his individual capacity. 3d. That in ordering the payment of said sum, and in ordering the sale of the land, the arbitrator exceeded his authority, as those matters were not in issue or controversy in the suit, and so were not submitted, 4th. That the Court ought not to have decreed the sale of the land, because the heirs of Ambrose Parks and George Parks were not before the Court: and that the Court ought not to have made any decree in the cause, because neither the award nor decree could be final, inasmuch as neither the heirs nor personal representatives of George Parks were parties, and they may yet call for an account from these parties, and draw them into litigation again for the same matters. 5th. That the Court improperly overruled the exceptions, without declaring any reason therefor; and made the decree without declaring any facts as the grounds therefor. To this bill the defendants put in a demurrer, which was removed to this Court for argument.

An award which directs the share of a party in specific partnership ■■property to be applied 'in payment ■ofhis debts '•to his co-partners, is ■not incon•sistent with a decree which diTects it to be paid to 'the partner ■■himself. And if it "were, it is not erroneous ; that partner being himself a plaintiff to a bill to revive the decree, he cannot object to it for directing money to be paid him, and what is binding upon him is so upon his co-plaintiff,

Devereux, for the defendants.

Caldwell and Badger for the plaintiffs.

Ruffin, Chief Justice,

after stating the pleadings and proceedings in the former suit as above, proceeded :—

The plaintiffs are of course confined to the errors pointed out in the bill, and unless some of them go to the whole ground of the decree, it is not to be absolutely annulled, but reversed, as far as it is erroneous, and corrected by making it what it ought to have been. Supposing the award, therefore, to stand, any departure from it in the decree would simply call for its modification so as to make it conformable to the award, in the particulars in which they do not agree, provided such correction be asked by a person prejudiced by the decree as pronounced. The only difference brought to our notice, between the decree and the award on which the decree professes to be founded, is, that the latter directs the share of JB. J. Parks, of the proceeds of the land, after payment of his costs, to be applied to the satisfaction of his debts to the othqr parties, and the former, it is said, orders it to be paid to Parks himself. There are several answers to that position. In the first place, Parks is one of the plaintiffs in the bill of review; then surely he cannot complain of the direction in the decree, that he should receive that money: and supposing that the other plaintiffs by themselves might, yet as they have thought proper to connect themselves with him, they must abide his fate. But, secondly, the Court apprehends that the supposed discrepancy does not exist. The award and decree are substantially the same, as far as they could be, upon this subject. The arbitrator awarded that the land should be sold, and appropriated the proceeds, first, by declaring the shares of the respective parties in it, and secondly, by subjecting the share of Parks to the satisfaction of his awarded debt to the others, unless otherwise paid. The arbitrator could not himself sell the land and divide the proceeds. He could award that the parties should sell, or that the sale should be made under the directions of the Court; and the latter was the better method, as the award was made under a rule of Court, in a cause then pending, iq which all necessary orders might be make to render the award directly effectual. The Court ordered the sale to be made by its officer, and expressly declares the same charges on the proceeds that appear in the award.

Upon a ters in dis-tween co-jDg or settling ¶— cannot Abecause it fó^ay an™ outstand-thfpartner-sIllP-

It does not direct the money to be paid to Parks, but only declares his share. In such a case the sale is not made until confirmed by the Court. Consequently, the money could not be paid by the master until a further order, but it was his duty to bring' the sum into Court, and it would there be subject to the applications directed in the award and decree.

We likewise think the objections to the award upon the score of the sum of eighty-seven dollars thirty-six cents, to be paid to Mastín, and of the sale of the lands which had been purchased by George Parks and Co., untenable. It is an error to say that those were points not within the submission, and involved subjects and interests which the arbitrator or Court could not bind.

The submission included all matters in controversy in that suit. The suit was for the settlement of partnerships between the parties: the bill covers the whole partnership dealingand effects. The object and effect of every such bill, is to bring all the effects, of whatever consis ting, into Court for division; and to inquire into all demands against the firm, and cause them to be settled. For only the net balance, belongs to the parties, and it cannot be told what the assets will be until they have been turned into money, and all claims of third persons cleared off. This is particularly beneficial to the partner who has the effects in hand; for if they were taken from him, he would be left liable to pay a creditor of the company out of his own pocket. In this case, the original defendants were the surviving partners, and therefore alone liable at law to the creditor. If the creditor had been a third person, altogether unconnected with the cause, the Court would probably have directed the payment by interlocutory order, before making the final decree, because nothing short of actual payment would bind the creditor, or secure the partners. But there was no impropriety in making the decree for payment in this case, as the creditor was in one capacity a party to the suit, and did not object to it. The funds were not ta^en fr°m him; and it was for the protection of Waugh and Finly, that the debts should be satisfied out of the funds in the hands of Waugh, before a distribution. It is not a decree of recovery simply, but it is a step taken to-reduce the assets to their true amount.

Where a siifp owned land, and deathof one of the ther’eove-nants to stand in his place as to tots™™' cannot ob-award and decree do-sal^of that land, that the representatives of the deceased partner were not parties to the bill.

So, also, with respect to the land. If it belonged to the company, a sale was necessary. There could be no final adjustment without it. It might have been directed to precede a division, so as to bring the proceeds into account in making the division. But the award, as drawn, is not the less final; for all the other assets are ascertained and divided, and these directed to be ascertained in an infallible mode, namely, by sale, and then divided in the same proportions.

But it is said, that these lands did not belong to the-but had been purchased by George Parks & Co. in-the lifetime of George Parks; and therefore that the arbitrator could not determine the rights of George Parks, nor the decree bind them. It is admitted, that nothing done in this suit can affect George Parks’s representatives, jgut the question between these parties is wholly uncon- , , , ,- ,xrl . . „ nected with that subject. W hatever interest the firm or-company had in the land, as a firm or company, might properly be ordered to be sold; although that might not be an absolute or exclusive interest, either at law, or in equity. Between these parties, indeed, the land was to be deemed the property of the new company, formed after the death of George, into which B. J. Parks was admitted. He and Waugh undertook, with the others, that they would represent George in every respect. To the other members the property was to be made good as if Waugh and B. J. Parks had been partners from the beginning, and George had never been a partner. They contracted to satisfy George Parks, and to put him out of the concern, as respected the other members. If, therefore, George Parks’s heirs could claim this land, or a part of it, and could bring these parties into litigation, it would be solely because the present plaintiffs have not fulfilled their agreement with the present defendants. The original bill was not to settle the firm of George Parks & Co., as such, but to settle that of which B. J. Parks was a member; and the firm of George Parks & Co. is only mentioned by way of reference, to show the terms upon which the new partnership was formed, and of- what a part of its effects consisted. If these lands belonged to George Parks and Co., Waugh and B. J. Parks stipulated that they would make them assets of the new company, and they ought not to raise an objection that they are not so. The arbitrator properly treated them as assets of the partnership he was adjusting, and directed a sale. The award was final between these parties, although some of them might be responsible to others on another contract, in respect of an interest in the land. The award would „ not have been final, if it had not directed a sale, or some disposition of this land; because, unquestionably, this company had some interest in it; and when the award directed the sale of the land, it means the sale of the interest of the firm therein. It may be prudent and advantageous, with a view to the settlement of a partnership, to sell an uncertain and disputed claim in the state it is in, and not wait to have the title cleared; and there could have been no settlement in this case without it.

An aware under a rule of Court which finds facts, and submits the law arising from them to the judgement of the Court, is final.

when a partnership owns land, difficulty in the title to it is no objection, upon a dissolution and settle, ment of the partnership, to ordering a sale of such title as the partnership has.

But it is again said, that the award was not final, because it did not positively direct the sale. It finds the facts conclusively, and does expressly direct the sale, if in law it be competent for an arbitrator to do so. That is the common mode in which a question of law is raised upon an award, upon a reference to counsel, upon the recommendation of the Court. It is simply saying such and such ,, c . , . , J , • , T < are the tacts upon which arises a point which 1 mean to decide according to the rule of law ; if the law be one way on it, I award in that way ; but if the law be otherwise, I award the other way. This leaves the only question in dispute — that of the law on a precise point — to the most competent tribunal, the Court.

But it is further contended, that if the arbitrator was authorized to award that the interest of the new firm should be sold, the Court ought to have confined the decree to such interest, and not directed a sale of the land, as if it had belonged wholly to these parties, since they could not make a good title, and might be answerable to George Parks, or to the purchaser, if they entered into general covenants. The answer is, that Waugh and B. J. Parks cannot, against their contract, make this objection, were it in itself valid. But it does not seem to the Court to have much difficulty in itself. It is assumed in the objection, that the land belonged to the partnership of George Parks & Co., and was acquired in the course of their dealings, for the purposes of partnership. Upon the death of George Parks, then, we suppose that at law it vested in the survivors, to be disposed of and accounted for by them to the representatives of the deceased partner, as money, according to the act of 1784. A good title could in that case have been made by these parties to the purchaser. But whether it could or not, that was a question for the purchaser, upon a motion for confirmation of the sale, and for the parties w'hen the covenants to be contained in their conveyances came to be settled. The difficulty in making a title might prevent the best sale from being effected, but it furnishes no reason why such a sale as could be made of such interest as this firm had in the land, should not be made. It might aid the discretion of the Court, in fixing the time of the sale, if either of the parties could show that the title could be made clearer within a reasonable period, and that it would make a real difference in the price. Nothing of that sort occurred here. It was not suggested, that any loss would actually arise from an immediate sale. On the contrary, it was found, by the arbitrator, that these very plaintiffs had, in a settlement with George Parks’s personal and real representatives, treated this land as part of the personal effects of the firm of which he was a member, and accounted for and paid his share, so as to vest in them the equitable as well as the legal title. Time, therefore, could not have improved the price, nor the title. The objection, indeed, is not addressed to the merits, as arising from a probable injury or loss by the state, but it is to the power of the arbitrator and the Court for the want of parties. The arbitrator does not pretend to bind George Parks’s representatives. It was his business to find in what the assets of this partnership consisted; and he states that this land is a constituent part, and why it is. This is the same as if he had found a tract of land to belong to the firm which A. B. conveyed to it. It is a mode of describing the subject, and also of showing how their claim was acquired. It does not profess to bind A. B., as if he were a party to the submission. This award does not profess to bind the representatives of George Parks; but it finds that they are bound by their own acts, and the law arising on them; and that by those means the land in question became exclusively vested in the parties to this suit. It being thus found and undisputed, the Court might very properly not only order an immediate sale, but a sale upon which the parties, Waugh and B. J. Parks should be compelled to covenant against the claim of all persons under George Parks; it is not perceived how any of the present plaintiffs could be injured thereby.

This Court is therefore of opinion, that it was competent for the arbitrators to direct the sale of the lands in the award as part of the assets of the copartnership in the pleadings mentioned: that the award would indeed have been defective, if it had not provided for some disposition of them; and that in the case found by the award, they belonged at law to Messrs. Waugh and Finly, but in equity, to this partnership, as such.

It is most proper, that the pleadings and proofs upon which a decree is founded, should be shortly recited in it. But it is not the practice in this state to do so, except by a general reference to them., In this case, the award is confirmed; and the decree is given upon the bill, answer, former order and award. We must understand a decree which professes to be made upon an award, to imply thereby that the matters decreed are thus decreed, because in the award they are thus awarded. Upon the whole, the Court does not decree the decree erroneous, in any of the matters alleged; and therefore the bill of review must be dismissed with costs; and the decree in the original cause stand affirmed.

Per Curiam. Bill dismissed.