Lynch v. Foley , 32 Colo. 110 ( 1904 )

Chief Justice Gabbert

delivered the opinion of the court.

Appellee instituted an action in her capacity as administratrix of the estate of Tim Foley, deceased, as plaintiff, against appellant and others, as defendants, for an accounting, and to recover from the defendants an alleged interest in the Aztec mine, situate in New Mexico, to which the plaintiff, in her representative capacity, claimed to be entitled under an agreement entered into between the deceased and defendants. Appellant was the only party served with process. The others, T. B. Catron and Y. S. Shelby, did not appear. The theory of the action, as claimed by counsel for plaintiff, was, that under a contract entered into between deceased and the defendants, a mining partnership was created between the parties to such contract, which contemplated the acquisition of the Aztec mine; that upon compliance with conditions expressed in the contract, the deceased was to become the owner of an interest therein, and a like interest in the proceeds arising from the sale of the property or its operation; that the deceased had complied with these conditions, and that plaintiff, as his administratrix, had succeeded to all his rights in the property under and by virtue of such contract. The complaint upon which the case was tried did not allege any sale of the mining premises, but charged that the defendants, in working and operating it, had extracted a large amount of ore at a profit. The defendant, Lynch, answered, and, among other defenses interposed, was one to the effect that the deceased had not complied with the terms and conditions of the agreement mentioned in the complaint. He also alleged that before the commencement of this action, Y. S. Shelby had died. On the trial of the case it developed that the defendants had sold the property, and upon taking an account of the amount received therefor, after deducting the expenses incurred in operating the mine, over and above the amount received for ores extracted, and other items which it is not necessary to mention, judgment was rendered against the defendant Lynch for the full amount which the account exhibited the plaintiff was entitled to from all of the defendants. From that judgment the defendant Lynch appeals.

In the original opinion handed down, that judgment was reversed, because we concluded it did not appear that the plaintiff was entitled to any judgment at this time for two reasons: (1) The testimony did not establish an account from which it appeared that any sum was due plaintiff.; and (2) it did not appear that either of the defendants was guilty of'any fraud or acts-of bad faith. On petition for rehearing, counsel for plaintiff insist that we have mistaken the testimony bearing on these questions. The cause has been re-argued, and we are now convinced that the judgment must be reversed, without regard to what the testimony may establish on the subject of the account, or alleged bad faith of the defendants, because it cannot be sustained under the pleadings in any event, for two reasons: (1) There was no issue of fraud or bad faith; and (2) on account of the trial being had in the absence of indispensable parties, there being no attempt in the complaint to plead facts which would justify the court to proceed to an accounting as between the plaintiff and the defendant Lynch, in the absence of other parties interested in the transactions growing out of the contract upon which plaintiff bases her rights to maintain this action.

In an accounting between partners, where neither is guilty of acts, omissions or concealments, involving a breach of legal or equitable duty towards the other, they are only liable to account to each other severally, and not jointly. In such circumstances, each can only be held to account to every other for himself, and not for his copartners.— Bloomfield v. Buchanan, 14 Oregon 181.

On behalf of appellee it is insisted that the testimony establishes fraud and bad faith on the part of appellant, and his associates. The complaint nowhere charges fraud, nor is that question raised by any other pleading in the ease, and that issue, therefore, cannot be taken into consideration. In the absence of an averment in the pleadings to the effect that the defendant Lynch had been guilty of fraud or a breach of faith, he could not be held liable to account to plaintiff for the entire amount to which she might be entitled.

The other parties to the contract, and whose interests should be settled and adjusted in this proceeding, were not before the court. In an action for an accounting, all the partners or their representatives must be before the court, unless it appears that the presence of those absent is not necessary to the just ascertainment of the cause upon its merits as between those who are before the court, or facts are alleged which in law are sufficient to justify the court to proceed to judgment notwithstanding the absence of parties whose presence is ordinarily indispensable.— 15 Enc. Pl. & Pr. 1074; Towle v. Pierce, 12 Met. (Mass.) 329; Mudgett v. Gager, 52 Me. 541; Story’s Eq. Pl., §§ 77, 78, 81.

Appellant objected to the trial of the cause in the absence of other parties who, from the pleadings, should have, been before the court, in order to fully settle and adjust the rights of all in one judgment. This objection should have been sustained, because neither the complaint nor other pleadings contained averments from which it could be inferred that the case could proceed to judgment, as against appellant in the absence of the other parties who were interested in the object of the action.

It is also suggested by counsel for appellant, that there is a fatal variance between the averments of the bill, and the facts as found by the trial court upon which the judgment was predicated. We shall not .attempt to pass upon this question, because it is clear that on account of the insufficiency of the pleadings and the absence of indispensable parties, without any statement in the pleadings which would justify the court to proceed with the trial in their absence, that the judgment of the district court must be reversed as directed in the original opinion, independent of the question of alleged variance or the merits of the case, as disclosed by the testimony.

The original opinion is withdrawn, the petition for a rehearing is denied, and the judgment of the district court reversed.

Judgment reversed.

Steele, J., not sitting.