Holden v. . Peace

39 N.C. 223
Supreme Court of North Carolina·Decided June 5, 1846·Published·Cited by 1 cases

Opinion

*227 Ruffin, C. J.

Joseph Peace is justly charged with a reasonable rent of the premises, occupied by himself or his family. There is no ground on which he could have the use of the property gratuitously, more than he could take merchandize from the store without being charged for it. He did< not purchase the property as his own, but the firm bought it, took the conveyances, and made all the outlays on it. If it was decayed or was burned, the loss would have been that of the partnership ; and, as he exclusively enjoyed it, he ought to pay to the partnership a' fair rent. Of course the Court cannot undertake to enquire into the period of his occupation, nor the proper rent to be charged, nor is it supposed the parties expect it, or that the Court should do more than determine the principle. If they cannot agree upon those points, they must be referred to the master.

With respect to the heavier item of interest, the law, we think, is against the defendant. The general rule for interest, on accounts in ordinary dealings si, that it is chargeable only after an account has been rendered, so that the parties can see which is the debtor and what he has to pay, unless it be agreed otherwise, or the course of business shews 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 the accounts of the firm ; in other words, without a dissolution: and it is impossible to tell before, what 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the parties mean, that interest should be charged on the accounts of the partners, for dealings in the shop and money withdrawn for personal expenses or other things, from year to year, the course is to come to an agreement, to that effect, and then for balances appearing, upon those individual accounts annually or oftener, according to the agreement, charges of interest are made from time to time, or, if omitted, will be allowed in making the final *228 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. In Dexter v. Arnold, 3 Mas. Rep. 284, Mr. Justice Story lays it down, that interest is not allowed upon partnership accounts generally, until a balance is struck on a settlement between the partners, unless the parties have otherwise agreed or acted in their partnership concerns. And Chancellor Kent, in Stoughton v. Lynch, 2 John C. C. 209, says, that the time of dissolution is the périod to adjust the balance between the partners, and the party, then found the debtor, becomes so with obligation to pay, and is, therefore, charged with interest on that debt. In that case, the partners had made no settlement, but the master in taking the accounts in a suit to settle the partnership, found the balance at the period of dissolution, and thenceforward allowed the interest thereon; and the Chancellor approved of it, saying that it was the general practice, as wrell as the good sense of the thing, that a rest should be made on the liquidation and adjustment of accounts, at the period of the dissolution of the concern. These positions render it clear, that there can be no charge of interest before the death of, Joseph Peace, and that interest ought to be charged after that event, on the amount found to have been then due from him. It' cannot be allowed before', because it is admitted that there was no agreement for it, nor even a suggestion of it in conversation ; and the accounts had just been kept on in the books, without being examined or even added up, upon the entire confidence of the brothers, in the good faith of each other, that all proper charges were respectively made by each against himself. It is absolutely certain, we think, *229 that Joseph Peace had no idea that he was to pay interest, else he would have charged it, or mentioned it at least; and it is nearly certain, that the defendant had had as little thought of charging him with it, though he is now from peculiar circumstances, induced to prefer the claim against his administrator. But the benevolence of his view, as to the disposition of what he might gain by the charge, cannot change the law. If he had been dissatisfied with the amount of his brother’s expenditures, he might either have stopped the business, or made an agreement as to interest. Having done neither, and knowing that no interest had been charged at any time during forty-four years, it is presumed that it was not intended to be charged Tfie omission of this charge has a very different effect from the omission merely of the charge of rent, since the latter required an adjustment, as to the proper amount between the parties, while the other would have required but computation. We have said, that interest cannot be allowed before the death of Joseph Peace — which is, because there had been no dissolution before. It is true the buying and selling of goods had been stopped ten years, but nearly all their property remained joint, and all their accounts went through the books of the firm, regularly kept up to his death, which event alone dissolved the concern. But upon the principle held in Stoughton v. Lynch, the balance then due must be ascertained, and interest computed thereon from that time until the settlement be made.

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Holden v. . Peace, 39 N.C. 223 (N.C. 1846).

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