Scott v. Buffum , 52 N.H. 345 ( 1872 )

Sargent, C. J.

It appears in proof that the partnership was formed in 1861, the interest of the partners being equal; that in 1862 both partners went into the army; that Buffum died in June, 1863 ; that in September, 1863, these-defendants were appointed administrators of his estate, and accepted that trust; that they administered the estate as insolvent; that in appraising the property of the estate, the said Buffum’s half of the partnership property was appraised at' $970.75, as stock in trade; and that there were debts of the company proved against his estate, amounting to $931.04. But all the debts of the firm were not thus proved against his estate. In November, 1863, the plaintiff purchased of Mrs. Buffum, one of the administrators, the half of the company property belonging to the Buffum estate, for $1100. He gave his notes, which have since been paid, for $800, a note which he held against the said Buffum, deceased, for $200, and whether he has paid the other hundred or not is in dispute between him and Mrs. Buffum ; and it is not material here whether it has been paid or not. That is a matter for them to adjust.

The two hundred dollar note of Buffum would seem, upon all the evidence, to have been received instead of so much money, in payment, as far as it went, for the property purchased. We should have no doubt that Mrs. Buffum had made herself chargeable for it to the estate of her deceased husband, at the face of the note and interest, from the course she has pursued in relation to it; for although it does not yet appear whether the estate is solvent or not in fact, yet, so far as does appear, we see nothing to indicate that it might not have been perfectly solvent if it had been properly administered. Yet it appears that she never presented this note to the commissioner on his estate to have it allowed with the other claims, so as to receive any dividend if the whole should not be paid. It is not material here, however, to undertake to settle whether the estate of Buffum is solvent or insolvent. The note was received by Mrs. Buffum at par and interest, as it would seem, in payment for this property, and that ends the matter so far as this case is concerned. Whether she shall be charged with the whole amount of the note or not, as administrator of her husband’s estate, or whether that estate is solvent or not, should have been settled long ago in the' court of probate, but has not been.

The whole amount of debts due from the firm was (when paid) $1633.20 ; but this includes the interest upon them, for a year or so, until paid. Of this amount, the plaintiff has paid $1240.98, and the defendants have paid $392.22. The plaintiff has collected of debts due the firm $31, and the defendants have collected $49.80. Deducting what each has collected from the amount paid by each on the firm account, and the plaintiff’s balance is ($1240.98 — $31) $1209.98, and the defendants’ balance is ($392.22 — $49.80) $342.42. Total paid, above collections, $1552.40 : the amount for each to pay, $776.20.

It is immaterial whether we cast interest upon the amount of company funds in the hands of each up to the time of these payments and then deduct them, or how the proper balances are arrived at; but it is apparent, at a glance, that both the plaintiff and the defendants had enough of company funds in their hands to pay their half of the company debts. Supposing the defendants are to be charged with this company property at the appraisal, — which is the most favorable view to take of the matter for them, — and reckon interest on the same for one year at five per cent.=48.54, which, added to the principal, makes ($970.75+48.54) $1019.29, from which deduct one half the amount of debts (1019.29 — 776.20), and it leaves a balance of $243.09, with interest thereon for some nine years, for which these defendants should account to the estate of Buffum, after paying one half of all the firm debts. - This, of course, is only approximating the true result.

One way that this partnership business might have been properly settled and adjusted was for the surviving partner, Scott, to have sold out all the partnership property, paid all the partnership debts, and then have divided the surplus equally between himself and the representatives of Buffum’s estate. But that course was not taken, and, so far as appears, the defendants may not have desired that it should be. They assumed the control and custody of one half of it, and had it appraised as a part of the estate, as perhaps they would have the right to do, if they chose; but, knowing as they did that there were company debts to be paid, they of course must know that this property must first be held to pay the company debts before any of it could go to pay the individual debts of either Scott or Buffum ; and when the defendants not only had the property of the firm appraised as one half belonging to Buffum’s estate, but assumed as they did to treat it as their own private property, and sell the same without obtaining or asking for any license to do so from the court of probate, they cannot certainly be heard to complain that some other course was not taken to settle the partnership transactions different from the one that was taken, nor can they be heard to say that they are not to be charged with this property, as administrators, at least at its appraised value, they being allowed to discharge themselves first by paying one half the company debts ; for there is no doubt the creditors of the partnership could follow this property of the firm into these defendants’ hands, and enforce their lien upon it for the payment of the company debts before it could be applied to pay Buffum’s private debts. In this case, the company debts are all paid; but we think that, as between Scott and the estate of Buffum, the party who should pay more than his half of the firm debts might in equity properly be considered as an assignee of those claims, to the extent that the amount paid by him should exceed his legal proportion of the firm debts, and that as such assignee he could follow the company property, and enforce the creditors’ lien upon it, in the hands of these defendants, so that each member of the firm should thus be made to pay his just proportion of the company debts. 2 Story’s Eq. Jur., sec. 1253.

In this case, much more than half the company debts were proved against Buffum’s estate. If the administrators had paid all those debts from the estate, they might have needed the same rule applied in their favor as against Scott. The original creditors probably would not be obliged to regard these equities between the original members of the firm or their representatives, but might follow the partnership property into the bands of either member, and secure their debts. But where the debts have all been paid, the above principle may be applied in adjusting the equities between the members of the firm. In speaking of the lien of the partnership creditors upon the property of the firm for the payment of their debts, we do not mean that there is any specific lien upon the identical property, so that it could be followed into the hands of third persons who bad purchased it without knowledge of the facts in the case, or any lien by which the specific property would be held in preference to other property, but simply that these defendants, having received one half of the firm property with full knowledge that there were company debts to be paid, will be held to bold that amount of property in trust, — first, for the payment of company debts as against creditors ; and then in trust to pay the proper proportion of those company debts, as between themselves and the other member of the firm, before the property is taken to pay the private debts of Buffum.

We find in this case, that whatever has been done by Mrs. Buffum in relation to her late husband’s property and estate, has been done by tlie consent and with the knowledge of both the administrators, and that they are therefore botli responsible for whatever has been done by Mrs. Buffum in that regard. Neither the estate of Buffum nor those defendants can in any way be injured by this arrangement. The defendants will be charged with the property of the firm that came to their hands at its appraised value, which proved to be less than its actual value; and' after adjusting the debts with this plaintiff, they will have the same balance to account for to the estate that they would have had if the company affairs had been settled up by Scott and the balance paid over to them.

But it is said that it was the plaintiff’s duty to have had the debts all paid and proved before tlie commissioner of Buffum’s estate, so that, the defendants could know just what they amounted to. That might, perhaps, have been convenient had it been practicable; but “wo can readily see that it might not have been possible. The creditors might prove tlieir claims against the estate or not, as they chose; they might call on the plaintiff as surviving partner if they chose; and they might not choose to do either until after the commission was closed, and tlie report returned to court and accepted. Not being obliged to prove tlieir claims before tlie commissioner upon Buffum’s estate, there was no statute of limitations that could apply to their claims, except the general six years’ limitation which applies in ordinary cases ; so that there might bo claims which the plaintiff could not adjust or obtain, and in which no payment could be made until too late to have them proved before the commissioner. But this cannot release the defendants from their liability to contribute to their payment, after having received funds of the firm with which to pay tlieir just proportion of all the debts, and more.

There has been too much delay in this case by the defendants, because it was their duty to have settled the estate of which they were administrators years ago. As soon as the debts were paid, they should have adjusted their share of them with Scott, and then have settled Buffum’s estate at once. If they could not agree how to settle with Scott, they should have instituted proceedings similar to the present, and thus procured a settlement of the partnership matters, and, when these were' adjusted, should have closed up the settlement of the estate.

Much is said about Buffum’s estate being insolvent. The evidence does not show conclusively how that is, nor is it of any consequence here how that fact is. It is sufficient for this case that there was partnership property enough, and more, to pay all the partnership debts ; and those debts are first to be paid from the partnership property., and the balance should half of it then go to pay Buffum’s private debts ;— and whether there shall be enough to pay them or not is of no account here.

Nor has the sale of the property by Mrs. Buffum to Scott anything to do with this case. She sold it for $1,100, which shows that it was worth more than the appraisal, so that no injustice can be done the administrators by charging them with the partnership property at the appraisal.- Whether she has received her pay or not, or how she received it, was a matter of private arrangement between the parties. But that question has nothing to do with the settlement of this case.

The court-of probate, when these administrators come to settle the estate of Buffum, may, if the judge think proper, hold them to pay or to account to the estate for the difference between one half of the company debts and the $ 1,100 for which they sold the half of the company property, with interest thereon. But that question is not before us. It is shown here that there was company property enough to pay the company debts that these defendants have received one half of it; and wo think they should pay just half of the company debts and interest out of it first, and then account to the estate for any balance which the court of probate may charge them with, to go for the benefit of Bufum’s estate.

A master may be appointed to find how much is due the plaintiff, and to settle the whole'matter.

Master appointed.