Wilhelm v. Caylor

32 Md. 151, 1870 Md. LEXIS 21

• Court: Court of Appeals of Maryland
• Decided: February 25, 1870
• Status: Published

Opinions

Alvey, J.,

delivered the opinion of the Court.

The bill of complaint in this case ivas filed on the 28th of November, 1848, and it alleges that the partnership, of which it prays an account as between the partners, was dissolved by mutual consent on the 28th of March, 1841. It also alleges that, at the time of dissolution, an account was taken between the partners of the funds and moneys belonging to the firm, when it appeared that a large sum ivas then standing to the credit of the firm in the Bank of Westminster, and of such money in bank the sum of $3,350 was the share or proportion admitted by the appellee’s testator to belong to the appellant and bis brother, since deceased.

The bill further alleges that, of the sum thus admitted to belong to the appellant and his brother, subsequently and up to the 12th of June, 1841, inclusive, the sum of about $2,200 was drawn out of bank by the appellee’s testator, by cheques in the name of the firm ; the balance of the 03,350 having been drawn out by the appellant, and part of it applied to the discharge of partnership liabilities before the 12th of June, 1841, and the residue to the use of himself and his brother. It is also alleged that the appellant had frequently, before filing his bill, requested of the appellee’s testator an account, and that it had been always refused. The bill discloses nothing on its face to show that there was any dealing or transaction between the partners themselves after dissolution, or as between the partners, or either of them, and third persons, on account of the partnership, after the 12th of June, 184.1; nor does the bill allege anything to show why so much time was allowed to elapse before it was filed.

The appellee’s testator, by liis answer, denied that he was ever unwilling or refused to account with his co-partners of and concerning the business and profits of the firm, but averred and insisted that the appellant and his brother Henry had received more than their full and just proportion of the funds, moneys and effects of the partnership; and he utterly denied that he ever drew any money out of the bank that was not his own, or to which the appellant and his brother could make any just claim. He also, in his answer, pleaded and relied on the Statute of Limitations as a complete bar to the relief prayed.

On the answer being filed, and without proof, the Court, on the 6th"of September, 1849, passed an order referring the cause to the Auditor, with directions to take proof and to state an account of what was actually due to the appellant on his claim as one of the partners, and as surviving partner of his brother Henry, and to report the same to the Court for its future action, “to be either ratified and confirmed or rejected.” And the Auditor, accordingly took proof, stated an account, and reported the same, as directed; and, on final hearing, without going into the merits of the account stated by the Auditor, the Court below, sustaining the defence of the Statute of Limitations, dismissed the bill, with costs.

The first and leading question in the case as presented to to this Court is, whether, as between the original parties to the bill, the defence of limitations taken in the answer be available to defeat the right to an account ?

The defence set up here is not that which is peculiar to Courts of Equity, founded merely upon the lapse of time and the staleness of the claim, and in reference to which the Court acts upon its own inherent doctrine of discouraging, for the peace of society, stale demands, by refusing to interfere in favor of a party guilty of laches, or unreasonable acquiescence in the assertion of an adverse claim; but it is in the nature of a positive bar, created by statute, to the right asserted in the bill.

The bill is filed by one partner against another for an account and settlement of partnership affairs. At law an action of account will lie by one partner against his co-partner. Co. Litt., 171, a; Bac. Abr. Account; Chitty’s Plead., 39; Duncan vs. Dyon, 3 John. Ch. Rep., 351. And the proceeding in an action of account is very much like that had on bill in equity. The first judgment is that the defendant account with the plaintiff, which is called a judgment quod computet, answering to the preliminary decree to account in equity; after which the Court assigns Auditors to take and declare the account between the parties, and, upon that being done, the final judgment -is, that the plaintiff recover against the defendant so much as may be found due. And, as observed by Chancellor Kent, in Duncan vs. Dyon, it is difficult to perceive any good reason why the action of account has fallen into disuse, unless it is, as we suppose, because Courts of Equity, having concurrent jurisdiction with Courts of Law in matters of account, afford some facilities that cannot be obtained at law.

By the statute law of this State, (Act 1715, ch. 23; 1 Code, Art. 57, sec. 1,) the common law action of account is not only recognized as an existing remedy, but is required to be brought, by express limitation, within three years from the time the cause of action accrued. This being the limitation to the right to have an account taken in an action at law, the question is, whether the same' or a different period applies to the analogous proceeding for the same thing in equity; or, in other words, whether it be in the power of the party seeking an account, to avoid the operation of the statute by simply electing to proceed in one forum rather than another. Wo think the statute cannot be so evaded, and that it is equally a bar to a bill for an account in equity as it is to an action of account at law.

One of the earliest cases in which the Statute of Limitations was distinctly recognized as applicable to proceedings in equity, was that of Lockey vs. Lockey, Prec. in Chan., 518. That was a case of a bill filed for an account of an infant’s estate, but was not filed until six years after the plaintiff' had come of age; and Lord Chancellor Macclesfield declared his opinion to be, that “ if the infant lies by for six years after he comes of age, as he is barred of his action of account at lain, so shall he be of his remedy in this Court; and there is no sort of difference in reason between the two cases,” and he decreed accordingly. And, according to the same principle, the subsequent case of Prince vs. Heylin, 1 Atk., 493, was decided by Lord Hardwicke. There was, in that case, a demand of an account by one tenant in common against another, and the Lord Chancellor, holding that the statute was a bar to the demand further back than six years, said: “ An action of account lies for one tenant in common against another, and such action is expressly mentioned in the Statute of Limitations, and as there is no remedy at law, (after six years,) there can be no reason for any in equity.” These two cases were not between partners, it is true, but they were bills for account, and where the Statute of Limitations was strictly applied, because the remedies at law and in equity were concurrent.

But the doctrine was still more compi’ehensively expounded by Lord Camden, in Smith vs. Clay, 3 Bro. Ch. Cas., 639, note, not more, however, in reference to a bill in equity for an account than to the subject matter of all other cases in that Court falling within the reason and policy of the Statute of Limitations. Plis Lordship asserted that the maxim, expedit reipublicce ut sit finis litium, had prevailed in that Court in all times, without the help of an act of Parliament; but, as the Court had no legislative authority, it could not properly define the time of bar, by a positive rule, to the hour, or the year; it was, therefore, governed by circumstances. But, as often as Parliament had limited the time of actions and remedies to a certain period, in legal proceedings, the Court of Chancery adopted that rule, and applied it to similar cases in equity. For, said he, when the legislature had fixed the time at law, it would have been preposterous for equity, (which, by its own proper authority, always maintained a limitation,) to countenance laches beyond the period that law had been confined to by Parliament; and therefore, in all cases where the legal right has been barred by Parliament, the equitable right to the same thing has been concluded by the same bar. And in no less clear and decided terms has the same doctrine been stated by Lord Redesdale, in Hovenden vs. Lord Annesley, 2 Sch. & Lefr., 607, a case which has been repeatedly sanctioned by the decisions of this Court. That learned Chancellor, in the course of his examination of the subject, said: “But it is said, that Courts of Equity are not within the Statute of Limitations. This is true in one respect. They are not within the words of the statute, because the words apply to particular legal remedies; but they are within the spirit and meaning of the statute, and have been always so considered. I think it is a mistake, in point of language, to say that Courts of Equity act merely by analogy to the statute; they act in obedience to it. The Statute of Limitations, applying itself to certain legal remedies for recovering the possession of lands, for recovery of debts, &c., equity, which, in all cases, follows the law, acts on legal titles, and legal demands, according to matters of conscience, which arise, and which do not admit of the ordinary legal remedies. Nevertheless, in thus administering justice, according to the means afforded by a Court of Equity, it follows the law.” He further added, that “ the statute must be taken virtually to include Courts of Equity; for, when the Legislature, by statute, limited the proceedings at law in certain cases and provided no express limitations for proceedings in equity, it must be taken to have contemplated that equity, followed the law; and, therefore, it must be taken to have virtually enacted in the same cases, a limitation for Courts of Equity also.”

This being a legal demand, as we have seen, but the Court of Equity having a concurrent jurisdiction in regard to it, it follows from the principles plainly announced in the authorities just cited, that the statute is equally a bar to it as if pleaded at law to an action of account. And so it is regarded by Judge Story, in 2 Eq. Jur., section 1520, where he says that “ the Statutes of Limitations, when they are addressed to Courts of Equity as well as to Courts of Law, as they seem to be in all cases of concurrent jurisdiction at law and in equity (as, for example, in matters of account,) to which they directly apply, seem equally obligatory in each Court. It has been very justly observed,” said he, “that in all such cases, Courts of Equity do not act so much in analogy to the statutes, as in obedience to them.”

But, instead of its being a legal demand and the subject of an action of account at law, suppose the appellant’s right to an account to be only equitable, and for which no other remedy exists but a bill in chancery, is he in any better position in reference to the defence of the Statute of Limitations? Clearly not. In such case, the statute applies strictly by analogy, and bars equally as if the demand was purely legal. The bill in .equity is an analogous proceeding to an action of account, and there is no reason why one proceeding should be barred and not the other. They are both equally within the reason and policy of the statute.

In Bond vs. Hopkins, 1 Sch. & Lefr., 428, it was expressly held by Lord Redesdale, that “if the equitable title be not sued upon within the time within which a legal title of the same nature ought to be sued upon to prevent the bar created by the Statute; the Court, acting by analogy to the Statute, will not relieve. If the party be guilty of such laohes in prosecuting his equitable title, as would bar him if his title were solely at law, he shall be barred in equity.” And in the case of Medlicot vs. O’Donel, 1 Ball & Beatt., 156, Lord Manners said that he considered the Statute of Limitations founded upon the soundest principles and the wisest policy; and that the Court of Chancery, for the peace and quiet of society, was bound to adopt it in cases where the equitable and legal titles so far corresponded, that the only difference between them was, that the one must be enforced in a Court of Equity, and the other in a Court of Law.

Having thus noticed some of the leading British authorities upon the subject, it is now proper that we should notice a few of our own; and, although it does not appear that there has ever occurred in this Court a case of a bill for partnership accounts to which the principles of the authorities referred to have been applied, the Statute of Limitations has, nevertheless, been repeatedly applied to other cases of account.

In the early case of West vs. Jarrett, 3 Har. & John., 485, being a bill for account of rents and profits, it was held that limitation was a good plea in bar of an account, except for the three years immediately preceding the filing of the bill. And, in the case of Watkins vs. Harwood, 2 Gill & John., 307, it was held to be a settled principle that Chancery follows the law; and, acting in obedience to the statute, the plea of limitation is as available in equity as at law, in relation to the same subject matter.

In the case of Sindall vs. Campbell, 7 Gill, 66, the Court, viewing the bill as one for an account of rents and profits, said that if there could be an action at law for the same purpose, the statute would be a bar to a suit brought in equity; as, in all cases of concurrent jurisdiction at law and in equity, the statute is equally obligatory in both Courts. And in that case the Court determined that the statute would bar a bill in equity for an account; and they instance the case where one had received the profits of an infant’s estate, and after six years had elapsed from his coming of age, the infant brought á bill for account, and the Court held that the Statute of Limitations was a bar to such suit, as it would be to an action at common law; and they cite the case of Lackey vs. Lackey, Prec. in Ch., 518.

The only case occurring in our reports in which the question was made of the right to take partnership accounts after a considerable lapse-of time is that of Glenn, Adm’r of Lindenberger, vs. Hebb, 12 Gill & John., 271. But, in that case, the Chancellor decreed under an agreement, and the Statute of Limitations was not pleaded or relied on; and the Court of Appeals, in reversing the decree, say, in reference to the argument, that too much time had elapsed to allow the account to be taken; that, in view of the facts of that case, such defence could not prevail, and that, where the partnership is stated in the bill and confessed in the answer, the general rule is, that an account is of course, unless the party has slept upon his rights. It is nowhere intimated in the opinion that the Statute of Limitations would not have barred the right to an account if it had been pleaded or relied on; nor does the question of its application appear to have been at all considered. It is plain, therefore, that that case is no authority on the question now before us.

In view, then, of the principles stated, what is there in a partnership account, as between the partners, where there have been no dealings within three years before filing the bill, nor any admission made to remove the bar, to take it out of the general rule? Nothing, "that we can perceive. After all dealings have ceased, and matters closed as between the partnership and third persons, why should there be any greater delay in settling the account as between the partners than is allowed in other cases of account ? It is equally withiu the policy of the Statute, and there is no reason why a Court of Equity, which is always averse to delay, should extend the time in such case beyond the period prescribed by the Legislature for bringing an action of account. And to this effect is the decision of Sir William Grant, in Barber vs. Barber, 18 Ves., 286, where he determined that a bill, praying an account against the representatives of a surviving partner, was within the Statute of Limitations, all accounts having ceased six years, the period within which, by the Statute of 21 James I, ch. 16, an action of account could be brought. And Collyer, in his work on Partnership, (sec. 374,) states it as the settled law that the Statute of Limitations is a good plea in bar of a bill by one partner against another for an account.

Such being the case, all notion that this account is embraced in the exception of the Statute, in regard to accounts that concern the trade or merchandise between merchant and merchant, is precluded.. And, accordingly, it is now well settled that an account between one partner and another, in reference to their partnership affairs, is not embraced within the exception. Coalter vs. Coalter, 1 Rob. (Va.) Rep., 79; Ang. on Lim., sec. 164.

It has been suggested, however, that the decree of the 6th of September, 1849, referring the cause to the auditor, with directions to state an account between the parties, and to report the same for the future action of the Court, adjudicated the appellant’s right to an account, and, consequently, overruled the defence of the Statute of Limitations; and that, therefore, the Court below, in disregarding the prior adjudication in the case, which should have been taken as conclusive upon the question of the application of the Statute of Limitations, fell into error.

Be this, however, as it may, in regard to the Court below, such decree or order by no means precludes this Court from examining the questions raised by the defence taken in the cause.

It is not, of course, contended that the decree of the 6th of September, 1849, was final; and at the time it was passed, the Act of 1830, ch. 185, as modified by the Acts of 1841, ch. 11, and 1845, ch. 367, was in force, (the provisions of which as modified are embodied in the Code,) and by that Act, on appeal from the final decree or order, “ all previous orders and decrees passed in the cause ” were declared to “ be open in the Appellate Court, in the same manner as if such previous orders or decrees had been appealed from, within nine months from the time of the passing of the same.” The Acts of 1841, ch. 11, and 1845, ch. 367, gave the immediate right of appeal, in certain enumerated cases, but they only modified the Act of 1830, ch. 185, in so far as the latter Act restricted the right of immediate appeal in certain cases; but the provision that all previous orders and decrees should be open in the Appellate Court, on appeal from the final decree, was left in force. It became, therefore, optional with the party, after the Acts of 1841, and 1845, either to prosecute his appeal directly from orders of a certain character described in those Acts, or to wait for the final decree, and appeal from that, which brought the whole case before the Appellate Court, including all previous orders and decrees. Dugan vs. Gittings, 3 Gill, 138; Phelps vs. Stewart, 17 Md., 237.

But this order of the 6th of September, 1849, was only preliminary to a decision upon the rights of the parties. It settled no right, nor did it declare any principle upon which the account was to be stated, and by which the Court was bound in the subsequent progress of the cause. No right of appeal existed from such order, and the whole case was left open by it to be disposed of on final hearing. That such is the light in which such orders have been viewed by this Court, will be seen by reference to the cases of Snowden vs. Dorsey, 6 H. & J., 114; Hagthorp vs. Hook, 1 Gill & J., 270; Hungerford vs. Bourne, 3 Gill & J., 133; Roberts vs. Salisbury, 3 Gill & J., 425; and Clagett vs. Crawford, 12 Gill & J., 275.

(Decided 25th February, 1870.)

The majority of this Court concurring with the Court below in the decree of dismissal of the bill, such decree will be affirmed. „

Decree affirmed.