Huger v. Cunningham

56 S.E. 64, 126 Ga. 684, 1906 Ga. LEXIS 515

• Court: Supreme Court of Georgia
• Decided: November 12, 1906
• Status: Published

Opinion

Evans, J.

(After stating the facts.)

1. When the amendment to the plaintiff’s petition, the substance of which is disclosed by the foregoing statement of facts, was proffered, the defendant Huger objected to its allowance, on the grounds that it did not specify the date of the alleged pajunent of the debt to Morrell, did not state specifically whether the payment was. made before or after the filing of defendant’s answer, and, Morrell being a party to the original petition, the amendment dismissing the action as to him (there being no objection to its dismissal) did not strike the prayers of the petition relating to the performance-prayed as to Morrell and Huger. While it is a rule of law to which there is, perhaps, no exception, either at law or in equitjf, that to recover at all there must be some cause of action at the commencement of the suit, yet the allegation that'the plaintiffs had discharged the debt due by the partnership to Morrell, and their effort to have-this amount included in the accounting and_ settlement between the-partners, did not operate as an abandonment of the original cause-of action and the introduction of another in its stead. The primary purpose of the original suit was to have an accounting and settlement between the partners. An element in the partnership-transactions was a certain debt which the plaintiffs alleged was due-to Morrell. Before there could be any final adjustment of th& respective rights of the partners this debt due by the partnership had to be provided for. It was perfectly immaterial whether the-debt due to Morrell had been transferred to the plaintiffs or had been paid by them subsequently to the filing of the defendant’s, answer. It would be indifferent to either of the partners, if the-debt was a-just obligation of the partnership, to whom it was due,, as necessarily it had to be taken into consideration in adjusting the-balance between the different partners.

2. The striking of Morrell as a party defendant eliminated all objections on the ground of multifariousness or misjoinder of parties, urged by way of demurrer. The remaining grounds of the-demurrer were to the effect that there was no equity in the petition,, because it showed on its face that the accounts were not complicated,, and discovery was waived. There was a distinct allegation in the-petition that the accounts between the partners were complicated and difficult, and the demurrer admitted the truth of this allegation. But, aside from the nature of the accounts between the partners, a court of equity has jurisdiction in all cases of an accounting and settlement between partners. Civil Code, § 3989; Bennett v. Woolfolk, 15 Ga. 213; Epping v. Aiken, 71 Ga. 682. It is not necessary,, in a suit between partners for an accounting, that discovery should be prayed 'of the partner against whom the petition is filed; if th& complaining partner desires to search, the conscience of the defendant as to the partnership-affairs, he may pray discovery; if not, he may expressly waive discovery, without affecting his right to have an accounting in a court of equity. Under the Civil Code, § 4962, if discovery is sought, it must be specially prayed; but the failure to pray discovery, or an express waiver of discovery, does not change the equitable character of the suit. It is the partnership relation which gives equity its jurisdiction. In some instances, in suits between partners for an accounting, where proper allegations are made and the proof shows that a money verdict can fully settle the rights in dispute, the plaintiff may proceed at law even against his partner. Pool v. Perdue, 44 Ga. 459. But that in certain instances a court of law may have concurrent jurisdiction with a court of equity, in an accounting and settlement between partners, affords no reason for holding that the jurisdiction of a court of equity is necessarily ousted. The nature of the accounting prayed for shows that the remedy at law is not as efficacious as the plaintiff would be entitled to in equity; and in no view of the matter did the court err in overruling the demurrer to the petition as amended.

3. On the trial the defendant tendered in evidence the following letter: “Savannah, Ga., Jan. 8, 1900. Mr. W. G. Morrell, City. Dear Sir: Mr. J. A. Huger is authorized by me to draw on you for such amounts as are weekly needed by him for the purpose of planting the Befuge Plantation, and such amounts as he draws you are authorized to pay and charge to my account. [Signed] J. H. M. Clinch.” This letter was repelled from evidence, upon the objection that it was irrelevant and immaterial. The contract of partnership established the relation between the parties to the case, and we cannot see how this letter in any wise threw any light upon any issue involved. The court also refused to allow the defendant to introduce evidence to the effect that the testator of the plaintiffs had made the same offer as to partnership to his nephew, who had declined it. This evidence was properly'excluded, because it was utterly immaterial what proposition relating to the management of the rice plantation had been submitted by the plaintiffs’ testator to a third person prior to the partnership arrangement made with the defendant.

4. In the original petition the plaintiffs alleged that they were entitled to receive one half of the proceeds realized from the sale of all the rice-straw on hand at the time of the filing of the suit. By amendment-to their petition they insisted that they were entitled to two thirds of such proceeds. On the trial the defendant contended that as the plaintiffs had admitted in their pleading that he was entitled to one half of the proceeds of the rice-straw, they were bound by this solemn admission in judicio, and were estopped from claiming any greater proportion of the proceeds which might be derived from a sale of this straw. The quantum of interest originally claimed by the executors was but a statement of their conclusion of what they were entitled to under their construction of the contract of partnership; if, subsequently, they discovered that this conclusion was erroneous, and that their testator had a larger interest in the rice-straw, they were at liberty to amend their petition so as to claim this larger interest, and their previous allegation as to the interest which their testator had in the rice-straw would in no way bind them as an admission in judicio. Their allegations concerning this matter did not amount to an assertion of any fact, but stated merely a conclusion deducible from the facts alleged.

5. The disposition made of the case by the judge turned upon the construction of the contract of partnership. This- contract provided for two contingencies, (1) if the operations of the rice season were successful, the net profits over and above the expenses (two thirds of which were to be charged to one of the partners and one third to the other) were to be equally divided between the partners; and (2) if, from any unforeseen reason, the crop should be a failure, and no net profits should be realized, but more or less loss sustained, then the expenses attending the raising of the crop, incurred by the partnership, should be borne by the partners — not equally, but by charging two thirds of the expense to one of them and one third to the other. In either event the crop, when gathered, would belong, not to one of the partners rather than to the other, but to the partnership ; the proceeds arising from a sale of the crop would likewise 'belong primarily to the partnership, and the disbursement of these proceeds was to be in accordance with the usual and regular custom governing the affairs of a partnership, liabilities being discharged before any division of the proceeds was made between the partners, since neither was entitled to receive anything except his share of the net profits of the enterprise. Each, by obligating himself to bear his stipulated portion of the expenses, became chargeable with that proportion of the partnership debts; and for all advances'made by him to the partnership he would sustain towards it the relation of a creditor. Not until each member of the partnership came to a full settlement with it could he, as against his copartner, claim any right to a division of the proceeds of the crop; and not then, unless there remained in the hands of the partnership some amount representing the net profits of a “successful harvesting and marketing of the crop.” The contract made provision for a division of only net profits arising from a successful harvest; a division of the proceeds of the crop, irrespective of the partnership liabilities or of the expenses of making the crop, was not contemplated. Provision was made for sharing the expenses of making a crop which for any unforeseen reason might prove “a failure,” in which event it was certain that none of the proceeds of the crop would be left in the hands of the partnership to be distributed as net profits, and when the likelihood was that each of the partners would be called on to bear his portion of an actual loss sustained by the partnership by incurring expenses in excess of the gross amount realized from a sale of the crop. In a word, the parties to the contract stipulated for a division of net profits when there were net profits to be divided between them, and for payment by them of the losses of the venture when losses were sustained by the partnership operations. Ordinarily, losses of a partnership fall equally upon its members, and they share equally in net profits; the contract under consideration simply varied this general rule by providing that one of the partners should be chargeable with two thirds of the expenses incurred by the partnership, and that his copartner, though liable for only one third of the expenses in the event the venture was unsuccessful, should share equally with him in whatever profits might be realized by the partnership. The trial judge correctly so construed the contract; and under the undisputed facts concerning the status of the accounts between the partners the verdict which the jury were directed to return was demanded.

6. The partnership venture for the last season resulted in a loss. One of the partners, plaintiffs’ testator, died before the maturity of the crop. After the crop was harvested, one of the executors applied to the defendant for a division of the rice into equal parts. Huger consented, and the rice was divided equally between him self and the executors. The defendant contends that this division of the rice amounted to an accord and satisfaction, and that the executors were estopped from denying that the defendant was entitled to one half of the crop, irrespective of the question whether the crop did or did not yield a net profit for the season of 1904-5. There was no plea of accord and satisfaction, and the evidence was not such as to justify a finding that the executors and Huger had come to any settlement regarding the interest which the estate of the deceased partner had in the rice, under the articles of partnership. Á surviving partner is entitled to the assets of a partnership for the purpose of winding up its affairs. While the executors had no legal right to demand a surrender to them of any portion of the partnership assets until the partnership business had been fully wound up by the surviving partner, he voluntarily agreed to divide the rice in kind, instead of insisting upon his right to dispose of it for the benefit of the partnership and its creditors. At the time of this physical division of the rice, they agreed upon its value per bushel, but did not undertake to construe the contract of partnership or to make any accord and satisfaction thereunder. The defendant was in no way misled into the belief that the executors would not subsequently call upon him for a full accounting under the terms of the contract, nor did they do anything which could operate upon them as an estoppel in asserting the rights of their testator under that contract.

7. The defendant moved in arrest of judgment upon various grounds. All of these related to matters which could have been urged by way of special demurrer or bjr plea in abatement. Defects in pleadings which are of an amendable nature should be taken advantage of by demurrer and can not be reached by a motion in arrest of judgment. Likewise, matters which may be pleaded in abatement afford no reason for arresting a judgment which is authorized by the pleadings. The verdict was authorized by the pleadings and demanded by the evidence, and the decree followed the verdict. There was, therefore, no merit in the attack made upon the decree.

Judgment affirmed.

All the Justices concur.