Hall v. Clagett

Stewart, J., delivered the opinion of the Court. The bill in this case was filed the 1st of February, 1856. Amongst other things it avers a partnership had existed between the brothers H. C. & P. E. Scott, commencing in the year 1825, and was actively engaged in merchandising until the year 1842, and up to the death of P. E. Scott in 1855; that after the year 1842, there was no new business, and its partners were confined to the winding up of what had been antecedently thereto actively conducted. It further charges, “that although upon a just settlement of the partnership, H. C. Scott is largely indebted to his co-partner, yet that he has exhibited and had passed by the Orphans’ Court a pretended claim against the estate of P. E. Scott, made up of alleged over-payments on the partnership accounts, embracing only the period of three or four years preceding the death of his co-partner, and omitting to include any account of the partnership anterior thereto.” That he has also exhibited and had passed by the Orphans’ Court, a claim for $1000, against the estate of the said P. E. Scott, purporting to be founded on a note in favor of Thos.

H. Osbourn, assigned to H. C. Scott, dated 28th October, 1852, with interest from January, 1850. This claim the complainant charges is founded on, and is the joint and several bill of H. C. & P. E. Scott, given for a liability of H. C. Scott, with which P. E. Scott was in no way concerned; and that the same is unjust, and an improper charge, and ought not to be allowed against the separate estate of P. E. Scott. ²³⁴ These aré grave charges in truth, of fraud and perjury, requiring to be sustained on the part of the complainant, by clear and conclusive testimony, without which a Court of equity cannot sustain them by its decree, — and it may be remarked here, that we fail to discover in the proof any grounds for the charge. The bill prays an account of the partnership between the brothers, showing its condition in 1842, when it ceased active business, and at the time of the death of P. E. Scott in 1855, when it was to all intents dissolved, and the relative indebtedness of the partners to the firm, at those periods, and to have the assets applied to the payment of its debts, and the residue distributed between the parties. The bill was amended by consent on the 7th November, 1856, by making Mary C. Scott party complainant, by Charles Clagett her next friend, and on the same day, H. O. Scott filed his answer.

On the 12th November, 1856, a decree was passed for the parties to account, and the case was referred to the auditor to take proof. H. O. Scott the respondent, died in 1860, and his widow as his executrix, was made a party defendant. After sundry interlocutory proceedings referred to hereafter, the final decree in the cause was passed on the 19th June, 1873, determining “that there is due by the representatives of H. C. Scott, to the representatives of P. E. Scott, growing out of the partnei’ship of H. C. & P. E. Scott, the sum of $1250.76, and directing Hall, administrator of H. C. Scott, to pay to C. C. Magruder, administrator of P. E. Scott, that amount, with interest from the 7th of May, 1855, and costs. This was afterwards modified by requiring the payment to be made out of any assets in his hands.

This decree does not, in terms, provide for a distributive portion of the surplus, after payment of the debts of the firm, to be paid as prayed by the bill, to the complainant. ²³⁵ The debts of the partnership outstanding, it was irregular to undertake to distribute any assets thereof, amongst the partners, until they were paid. The right of any partner or his representative, could be only to his share of any surplus, and such was the prayer of the bill. Collyer on, Part., sec. 187; Story on Part., sec. 97. Before this final decree the auditor having reported in pursuance of the decree to account, the matter was referred back on the 13th April, 1857, and a mass of testimony with voluminous and detailed accounts, were presented on the 16th September, 1861, requiring it seems an interval of four years to accomplish such result, but still leaving the subject-matter of controversy in doubt and utter uncertainty.

Exceptions were filed to these statement of the auditor, and elaborately argued by the respective counsel. On the 8th of June, 1863, the opinion of the Court was pronounced, the result of which was, by its order of the 10th June, to again refer the case to the auditor, under special instructions, but requiring further proof to be taken. The special auditor on the 23rd June, 1871, after what appeared to have been an arduous search through the immense mass of proof, during the intervening period of some eight years, filed accounts Nos. 19, 20 and 21. These were not satisfactory, and exceptions were taken by the respective parties in April, 1872.

On the 25th of April, 1873, C. C. Magruder, surviving administrator of P. E. Scott, by order of the Court was made a party defendant, and leave was granted complainant to file the amended and supplemental bill. The defendants filed answers thereto ; on the part of the appellant, it is claimed that the decree is erroneous as to the merits of the case ; and that the proceedings have been so irregular, as to demand its reversal on that account. Amongst other objections to the form of the proceeding, it has been urged that the complainant had no right ²³⁶ to have filed the original bill, and that the supplemental bill could not repair its infirmity — that the administrator of P. E. Scott should have been made a party in the first instance — that the pendency of the creditors’ bill for the sale of P. E. Scott’s real estate, and the interlocutory proceedings in that case on the part of the complainant, precluded the right to file this bill. That the implication was not filed in time to make the issue, and therefore the respondent’s answer was competent evidence, according to our practice.

Erom the view we take, it is not deemed necessary to decide these several points of objection ; but it is proper that we should dispose of this last objection, as we discover no error in the ruling of the Circuit Court in the exclusion of the respondent’s answer, as testimony in the cause. Not having been required by the bill to be made under oath, and not being read at the hearing by the complainant, the answer could not be made evidence against her. Act of 1852, oh. 133. This Act.as construed by this Court in Warren vs. Twilley, 10 Md., 39 , has no application to a case heard upon bill, answer and exhibits, because under the prior practice, where such case was set down for hearing by consent, the answer must be taken to be true, in all respects ; and the Legislature could not have intended to prevent a party from so consenting.

The answer in such case was treated as true, because no replication having been filed, no opportunity was offered the defendant to supply proof of his defence, and therefore, the truth of the answer must be conceded. After the case is so set down, ivithout any proof being taken, the complainant has no right to put in a replication without the consent of the Court, or the defendant, because his rights are affected thereby ; but where proof has been taken, the case is different, the defendant has had the opportunity to support his answer by evidence. ²³⁷ The case is ordinarily at issue, only, when the replication has been put in, and the pleadings closed. Story’s Eq. Plea., sec. 886.

But the cause may be at issue by consent, express or implied, without replication ; as in this case, if no replication had in fact been filed, from the order of the proceedings; the'consent for the issuing of the commission to take testimony, of which each party availed itself, virtually imported that the parties were at issue without the formality of a replication. Md. & N. Y. C. and I. Co. vs. Wingert, 8 Gill, 178 . The replication was in fact filed before the case was submitted for final hearing, and the objection is not available in any aspect under the ruling in Warren vs. Twilley. Questions of more gravity are involved in the disposal of the case upon its merits.

Whilst differing with the Circuit Court in some of its conclusions, it is but just to say, that we have been much aided in our examination of the vast volume of this case, by its patient and comprehensive review of the testimony and its copious reference to authorities, and its forcible reasoning thereon. The two brothers, H. C. and P. E. Scott, were engaged as partners, in the mercantile business in the year 1826, under the name of H. C. Scott & Co., the profits and losses to be shared two-thirds to H. C. Scott, and one-third to P. E. Scott. This partnership was dissolved by mutual consent, and another substituted in the year 1831, under the name of H. O. & P. E. Scott, in which they were to be equally interested. It appears that much of the assets of the first, made up the second firm, the active business of which terminated about the year 1842, although it was not finally dissolved, until the death of P. E. Scott, who died intestate, in the year 1855, leaving his only child, his heir and distributee, the present complainant. ²³⁸ At the close of its active business in 1842, as we understand the testimony, the partnership had hut little assets, its stock of goods not exceeding one thousand dollars; but encumbered with a large mass of indebtedness to be settled up by the brothers.

The hooks and accounts were so loosely kept, that it seems to be a difficult, if not an impossible task, to learn from them the profits and losses of the firm. No settlement appears ever to have taken place, nor any balance struck. Each party was individually engaged in planting and other pursuits, and a large portion of their crops was carried into the firm', and much of their individual indebtedness settled by it. Their joint and individual concerns were indiscriminately blended ; and there is no statement from the books or other accounts, clearly and satisfactorily to distinguish the one from the other.

A mass of testimony has been taken, and considered by several intelligent auditors, experts at accounts. After laborious efforts to digest and simplify the same, their reports leave the matter in controversy involved in obscurity, and furnish no satisfactory solution of the same, sufficiently reliable to justify a decree in Chancery, especially adjudicating the questions involved. The Circuit Court after elaborately examining the subject, gave its opinion and directions to the auditor, by special order No. 14, to charge the firm with the receipt of a