Philips v. Turner, 22 N.C. 123, 2 Dev. & Bat. Eq. 123 (1838)

Dec. 1838 · Supreme Court of North Carolina

22 N.C. 123, 2 Dev. & Bat. Eq. 123

WILLIAM H. PHILIPS v. JOSIAH TURNER, et al. JOSIAH TURNER v. WILLIAM H. PHILIPS.

Without a special agreement, partners are not entitled to charge each other for services in relation to the partnership business ; except where a partner is appointed an agent for a special purpose, in which case he may be entitled to the usual compensation in relation to such agency. , .

The entries, in the books of a firm are prima,facie evidence as between the partners. Knowledge of them is presumed, and evidence is required to rebut such presumption. . • . •

In the month of October, 1825, William H. Philips and Josiah Turner, formed a copartnership for carrying on mer-cantile business in the town of Hillsborough, under the firm and style of Turner and Philips. They afterwards changed the name of the firm to that of Josiah Turner and Co., and continued to carry on the joint concern until the month of January, 1833. The copartnership was then dissolved, and Turner being regarded as the more responsible of the late partners, took upon himself the office of paying off the debts of the concern. Philips and Turner joined in an assignment of all the effects and credits of the copartnership, to Allen Parks, in trust, to collect the said debts, and to pay the proceeds thereof as well as the proceeds of the said effects, to Turner,' for the purpose of enabling him to pay off the debts of the firm'; and Philips further conveyed to the said Parks certain property belonging or claimed to belong to the said Philips, individually in trust, to secure Turner from loss. In August, 1836, Philips filed his bill of complaint against Parks and .Turner, alleging that the property of the copartnership had been more than sufficient to pay. off its debts, that these had all been discharged accordingly, that a considerable amount of money was in the hands of the defendants or one of them, to a part whereof the said Philips was entitled; and praying to have the necessary accounts taken, and the defendants decreed to pay over to him, what should thereupon be found due. The defendants severally answered this bill. ^113 defendant, Parks, set forth an account of his management of the trust property, showing the amount received, the amount paid over to Turner, and the debts yet remaining to be collected. The defendant, Turner, set forth an account of the debts which he had paid, and of the money’s which he had received from the trustee, according to which account he had paid a large sum over the amount of his receipts, and exceeding any sum which could probably be realized from the trust funds. Turner then filed a cross-bill against Philips, alleging that on a settlement of the partnership accounts, Philips would be found largely indebted to the firm and to him as copartner ; that all the property assigned to Parks was not sufficient to discharge the debts of the co-partnership, much less to pay unto him the balance justly due from Philips upon said partnership, and prayed that an account might be taken of their partnership, and that Philips might be decreed to pay what should ultimately be found due to him. Philips answered this cross-bill, and insisted that upon taking the account prayed for by Turner, it would be found that Turner would be largely indebted to him. An order was made directing the master to take an account of all the matters in controversy between the parties and report the same to the Court. The master made his report, to which exceptions were taken by Turner, and the cause was transmitted to this Court for hearing.

W. A. Graham, for Philips.

No counsel appeared for the other parties in this Court.

Gaston, Judge,

having stated the case as above, proceeded as follows: The first exception is, for that the master hath allowed to Philips the sum of $500 annually, for his personal services to the firm. The master states that there was no evidence before him of any special agreement between the partners that Philips should receive a compensation for the care and management of the joint property ; but that this allowance appeared to him proper, inasmuch as the business of the firm was almost exclusively under the personal superintendence of Philips. We take the rule to be perfectly established, that without a special agreement, partners are not entitled to charge each other for such services. The only exception that we are aware of, if indeed it can be called an exception, is where a partner is appointed an agent for a special purpose, in which case he may be enti-tied as against the firm to the usual compensation in relation to the subject of such agency. It is not unusual for partnership associations to be formed upon .the very basis that one is to contribute his credit and the other his- personal services to the success of the undertaking. This .exception is allowed.

An ac-ble to the ofa part-'’ nershlP-

The second exception is, for that the master hath credited Philips in account with the firm for $900 advanced by him as stock at the commencement of the copartnership, without any evidence of such advance except the statement in the partnership books, which is Hot shbwn to have been known unto Turner. This exception is disallowed. The entries in the books of a firm are -prima- facie evidence as between the partners. Knowledge of them is presumed, and evidence is required to rebut such presumption.

All the other exceptions relate to profits alleged to have been made by the concern. We can neither allow nor overrule them, for the master hath not returned any account of profit and loss. Such an account is indispensable to the settlement of the partnership. The report therefore must be re-committed for this purpose. Being thus re-committed, the commissioner will also carry on the account of the trustee so as to embrace any further collections and payments that may have been made since the account now rendered thereof, and will proceed to execute the decretal order in' every respect in which the report now re-committed is imperfect.

•The report is re-committed to Edmund B. Freeman, with full power to examine witnesses, to command the production of books and papers, and to examine the parties on interrogatories. The parties also may take testimony to be used on this reference by commissions in the usual way.

Per Curiam. Decree accordingly.