McCullough v. Barr , 145 Pa. 459 ( 1891 )

Opinion,

Me. Justice Mitchell :

These are appeals by complainant and' respondents, respectively, from the same decree, and will be considered together. In the course of the litigation the learned court below delivered three opinions; and as the last, accompanying the final decree, confirms the master’s report, and dismisses all exceptions, without detailed examination, it will be most convenient to refer directly to the master’s report, rather than to the opinion of the court.

The rights of the parties must be determined by the agreement of May 31, 1882. By this it appears that Graham and McCullough had been in partnership from about April, 1859, in a general country store, and in land purchases, lumber operations, and other ventures, apparently without any settlement for more than twenty-three years. McCullough, being sick and approaching his death, desired an account and settlement, and the agreement in question was prepared and executed as such. The learned master well says that “ the agreement shows that the parties recognized the impossibility of stating an account, and intended that there should be no attempt at raking over what was past. Instead of a statement or.settlement of accounts, they agreed that, as a short cut to what they were both satisfied was just to each, everything was to be taken as owned jointly, and the proceeds and profits of what then existed as the result of their years of business should be equally divided.” This is a concise and accurate summary of the substance of the agreement. Its legal character is that of an executed and binding contract. It is objected by the defendants that it was without consideration, or at most a promise upon a consideration wholly past and insufficient to support a decree of performance. But, passing over the technical consideration imported by the seal, there is a plain admission of a partnership, of the possession of the assets by Graham, and a specific agreement upon the mode in which his resulting duty to account and pay over shall be performed. The surrender of mutual rights to a detailed accounting was ample consideration.

Upon the construction of the agreement defendants contend, and this is the stress of the case, that it must be limited in its application to the profits of the store at Fryburg, and properties or investments clearly made out of such profits. The preamble recites the partnership in the store, and, further, that several tracts of land, etc., “have out of the profits of said business, been purchased; ” and it might be natural to expect that the agreement to follow would be confined to the subject matter thus recited as introductory. But in fact it is not. Such a sense might readily be given to it, as defendants suggest, by the word “ said ” introduced before the agreement, “that all [said] property, of every nature and kind,” etc. But the parties have not used that word. The principle of law contended for by the defendants is unquestionable, that, however general the terms of a contract, it shall be held to apply only to the things which the parties had in contemplation, and about which their intention was to contract; and their intention may be ascertained from the situation and circumstances, including the recitals and preamble of the contract itself. No rule of construction is more valuable, but it is equally well settled that the insertion of a word which materially changes the meaning of a contract, is only justified on the clearest evidence that it was in contemplation of the parties, and was omitted by accident or mistake. There is no such evidence in the present case. The most that can be said'is that the parties might have meant to so limit their agreement, but they have not done so. What the3r have said is that “ all property of every nature and kind in the state of Pennsylvania, held b3r said Graham, save his household furnishment, whether separately and individually or jointly, . ... is in fact owned in common by said P. Graham and P. McCullough in equal shares,” etc. It would be difficult to make language broader and more comprehensive than this ; and that it was intentionally so made and understood is not only the natural conclusion from the words used, but is rendered additionally probable by the exception of Graham’s “ household furnishment,” which the parties understood would otherwise be included; and still more by the further express exceptions in the second portion of the paper, which, though of the same date as the first, seems to have been the result of after-thought or further consideration, apparently on this very subject of the extreme comprehensiveness of the terms in which the joint possessions are described. To quote again, with slight modification, from the convincing report of the learned master: “ The language is too broad and positive to be controlled by the preamble. The parties knew that the various moneys that went into the purchase of these lands could not be traced; and, as a result of their deliberations, they agreed and declared, in language unmistakable in clearness, that it should all be taken to be firm property.”

The same considerations, which need not be repeated in detail, answer the further contention that the word property, in the agreement, did not include accounts, notes, and choses in action, but was limited to tangible property, if not to real estate.

We are therefore of opinion, with the learned master, that the true construction and scope of the agreement are that it “requires that there shall be ascertained what property, of every nature and kind, real and personal, was held and owned at the date of the making of the agreement, and division made thereof, or of the proceeds thereof, in equal shares between the parties, first'deducting payments made by Graham’s representatives, for debts of the firm, proper expenses,” etc. And, the fact of the holding of any item of property at the date of the agreement being established, the master was also right in adopting the presumption that such item should be included in the account, unless shown for special reasons to be outside of the agreement; while, on the other hand, as to items merely shown to be in Graham’s hands after the date of the agreement, the burden of proof would be on the plaintiff to show that they were part of the property intended to be included. In thus assigning the burden of proof to the one party or the other according to the circumstances, there was no violation of the equity rule that requires the evidence of two witnesses to overcome an answer responsive to the bill. The argument to this effect overlooks the force of the admission by Graham in the agreement. It is not the rule in equity, any more than in law, that a plain acknowledgment in writing, by a decedent, of an existing debt, will be overcome by an answer of his executor, “ to the best of his knowledge and belief,” that no such debt was owing. Relief in equity is of grace, and is only given where the right to it is clearly made out. Hence, if the facts out of which the right grows are denied by respondent under oath, there must be more than the complainant’s oath to overcome it. This is the substance of the rule; and it is not to be so fettered by technical limitations as to impair its real meaning, especially since parties have been made competent witnesses, and their testimony thus put on an equality, not only as to each other, but as to other evidence. If it is oath against oath, at law the jury must decide between them; and for myself I see no good reason why, in equity, the chancellor should not do the same thing, keeping in mind always that relief is of grace, and the right to it must be clear. As in a criminal prosecution, though not for the same reasons, it is sufficient for the defendant to raise a reasonable doubt.

These main principles governingthe controversy having been ably and correctly decided by tbe learned master, it remains only to consider such applications of them, assigned for error, as are not sufficiently covered by what has been already said.

The master allowed Graham’s salary up to the date of the agreement, but held that it terminated then. Complainant excepts to the allowance, because, as he contends, the salary was only to be payable on the settlement of the partnership affairs, which Graham did not make. This view, however, is not tenable. The language of the agreement is, “ In settling the affairs of said partnership, said Graham is to receive, however, for services, a salary of seven hundred and fifty dollars a year for attending to said business, to be taken out before a division,” etc. This clearly means for attending to the business in the past, not for making the settlement; and the expression “ in settling the affairs” is equivalent to “ when the affairs are settled.” On the other hand, the respondent excepts because the master refused to allow interest on the salary, and also because he held that it did not continue after the date of the agreement. Interest was clearly not intended by the parties. As already quoted, their language is, “ In settling, .... Graham is to receive (i. e., to be credited with) a salary of seven hundred and fifty dollars per year; ” that is, at the rate of seven hundred and fifty dollars a year; and “ after deducting this sum, the division is to be equal,” etc. It was plainly regarded as one entire sum, not due from year to year previously, but agreed upon at the time as a proper allowance, on, but not before the final settlement. With regard to the continuance of the salary after the agreement, there is room for doubt whether the paper was meant as a dissolution of the partnership, or a mere settlement to date. If it were necessary to decide that question, we should incline, notwithstanding some difficulties, to the former view. But the death of McCullough only a few weeks later makes this question unimportant. By that event, if not before, the partnership was certainty dissolved; and thereafter Graham was a surviving partner, with the duty to wind up the business and settle the account. It does not appear just what he did towards this end, but it is undisputed that the business was not settled, nor the accounting done, until after his death, by his administrator. Under these circumstances, we cannot say that the learned master was in error in holdiug that the right to salary ceased at the date of the agreement.

The master allowed the defendant Barr commissions on. the assets which he collected as administrator of Graham, and to this plaintiff excepted. It would seem to be settled in this state, contrary to the general rule, that a surviving partner is not entitled to compensation for winding up the business: Beatty v. Wray, 19 Pa. 516; Brown v. McFarland, 41 Pa. 129; Gyger’s App., 62 Pa. 73; Brown’s App., 89 Pa. 139. Whether the rule extends to his representative after his death, does not appear to have been considered, nor is it necessary to do so now. Graham died before making the settlement; and, as found by the master, the circumstances in which he left the business were exceptional. The basis of it was a country store, carried on most of. the time in his individual name, with no cash account kept, nor any books from which the profit or loss could be ascertained ; and from this original business branched out land and lumber operations, by himself and with others, involving large amounts. At the end of twenty-three years, all this was agreed and declared a partnership matter, and within another year both partners died, and the administrator was called upon to unravel this long and tangled skein. For the condition of affairs both partners were partially responsible ; and the master was right in holding that under the circumstances the defendant was entitled to commissions from the joint estate.

Defendants’ last assignment, to the refusal of credit for certain moneys claimed to be trust funds, would be well taken if supported by the facts. Notwithstanding the extreme generality and conprehensiveness of the language of the agreement as to all the property, of every nature and kind, held by Graham, it cannot be taken to include the moneys or property of others held by him in trust. And so the learned master held; for he deducted, $9,040.26, as trust funds, from the gross col-, lections, aud reported that “ none of the money or notes (other than the $9,040.26) has been identified as trust moneys.” The contention cannot be sustained.

The other assignments of error, on both sides, are sufficiently treated in the general discussion of the contract, or are to findings of fact as to which no errors by the master and court have been made clear to us.

Both appeals are dismissed, at the costs of the respective appellants, and the decree affirmed.