Webster v. Estate of Lawson , 73 Wis. 561 ( 1889 )

Lyom, J.

One of the principal grounds upon which the claim of Webster against the estate of Lawson, his former partner, is predicated, is stated in paragraph 10 of the complaint, which is set out at length in the foregoing statement of facts. Those allegations are, in substance, that in the division of the assets of the firm of Webster & Lawson on the dissolution of their copartnership, the “Olintonville account,” so called, including the chattel mortgages, the demands against Clinton, Gillis & Go. thereby secured, the interest of Webster & Lawson in the mortgaged property and in all contracts and transactions growing out of the mortgages, and all the rights of the firm therein and thereunder, were transferred by the firm, or rather by the partners which constituted it (the firm having theretofore been dissolved), to Lawson, who thereupon assumed all obligations and liabilities of the firm in respect to the mortgaged property and the dealings therewith.

Under the above allegations, it is clear that Webster and Lawson segregated the property and rights thus transferred to Lawson, and the obligations and liabilities pertaining thereto or incurred on account thereof, from the balance of the partnership assets (if there were any other assets), and vested the whole title thereto and interest therein in Lawson. From thenceforth Lawson became and was primarily chargeable with all such obligations and liabilities, and Webster was merely his surety for the faithful performance of such obligations and the discharge of such liabilities. See Gates v. Hughes, 44 Wis. 332, and cases there cited. After such transfer to Lawson, the property and rights so transferred ceased to be partnership property, and could no longer have any place in an accounting of partnership affairs.. The sum which Lawson agreed to pay therefor, and which was charged to him, would alone enter into such accounting, just as the money would enter into it had he paid cash therefor, or had the same been sold for cash to any other person.

In view of these considerations, we cannot doubt that, had Lawson lived, Webster could, after paying the Clinton judgment, have maintained an action against him on account thereof, without reference to other partnership transactions. Such is the doctrine of Sprout v. Crowley, 30 Wis. 187, and the cases there cited. If Webster could have maintained such an action had Lawson lived, certainly the cause of action may properly be interposed in the county court by Webster as a claim against Lawson’s estate after his death.

There seems to be no necessity that Stacy be made a party to an action or proceeding upon such claim. No independent charge of liability on account thereof is made against him. All such charges are against Lawson or the firm of Stacy & Lawson. For the consequences of the mismanagement or fraud of that firm Lawson was responsible, and no valid reason is perceived why Webster may not hold his estate to such liability without proceeding against his partner, Stacy. Webster contracted with Lawson alone, and, after the transfer to him of the “ Clintonville account,” trusted to him alone properly to deal with and dispose of the mortgaged property. If others participated in the alleged mismanagement of the property to the injury of Webster, the latter may maintain actions therefor against them, but this does not interfere with his right to present his claim therefor in tire county court against the estate of Lawson, in which proceeding the other wrong-doers cannot be joined. Joint as well as several claims against the estate of a deceased joint debtor may be presented to the county court, and there adjudicated. R. S. sec. 8848.

The case made by the complaint, in the aspect in which it is above considered, may be briefly summarized as follows : Before the dissolution of the firm of Webster & Lawson, it took possession of the mortgaged property, and became chargeable with the duty of disposing of enough of it to pay the debts secured by the mortgages, and returning to the mortgagors the residue of the property, or the proceeds of such residue. The value of the property was largely in excess of such debts. Lawson.assumed the charge of the property and the performance of such duties. While in the execution thereof, and, as Webster believed, in the proper execution thereof, the firm was dissolved, and the interest thereof in the “ Olintonville account,” including the mortgages, the debts they were given to secure, and the mortgaged property, was duly transferred to Lawson, who assumed all of the obligations, liabilities, and duties pertaining thereto which Webster & Lawson owed Clinton, Gillis & Co. As between Webster and Lawson, the former was thereafter merely a surety for Lawson for the faithful performance of his duties in the premises to Clinton, Gillis & Co. Lawson failed to perform those duties, and the result of his failure was the judgment of Clinton, Gillis & Co. against Webster, which could not have been recovered had Lawson properly dealt with the mortgaged property. The administrators of Lawson’s estate refused to assume the defense of the action of Clinton, Gillis & Go., and Webster was compelled to defend it at great expense, and after-wards to pay such judgment and interest thereon. Hence he was compelled to pay, and did pajq a large sum of money, which in justice and equity Lawson, were he alive, ought to repay, and against whom an action for money paid, laid out, and expended for his use by Webster, could be maintained. We cannot doubt that such cause of action is the proper subject matter of a claim against Lawson’s estate, which the county court may adjudicate.

If the foregoing views are correct, thej^ overrule all objections interposed to the complaint on the merits, leaving onU for determination the objection that the claim was not filed in the county court within the time limited by statute. Strictly, this objection is not available on this motion to quash and dismiss the claim and complaint. The motion is the equivalent of a general and special demurrer to the complaint. It is general, because it denies that a cause of action is stated therein; and special, because it asserts that the complaint shows on its face that some statute of limitation has run against the claim. The complaint does not state when the claim was filed in the county court, or the time allowed for the presentation of claims. Hence, it does not appear on its face that it is barred by the statute, and a special demurrer thereto on the ground that the statute had so run would necessarily be overruled. But it is stated in the printed case (perhaps it is conceded) that the time allowed by the county court for the presentation of claims against the estate of Lawson expired July 12, 1883, and that the claim herein was filed in that court May 11, 1887. We will dispose of the objection, therefore, on the theory that those facts are properly before the court.

It has already been observed that, as between Webster and Lawson, the former stood in the relation of surety for the latter,, for the proper performance of the obligations which the firm of Webster & Lawson was under to Clinton, G-iliis & Co. on 'account of the mortgaged property. The liability of Lawson to Webster was a contingent liability, and remained so until Webster actually paid money on account of his obligation to Clinton, Gillis & Co. On August 7, 1886, he paid the judgment which that firm recovered against him because of Lawson’s failure to perform his obligations and discharge his liabilities. The claim of Webster then became absolute, and the statute gave him one year from that date to present it to the county court. R. S. see. 3860. He so presented it May 11, 1887, which was within the year.

It was argued by the learned counsel for the administrators that the liability became absolute at an earlier date, and he cited cases elsewhere to sustain his position. We do not care to review those cases, for the reason that it was settled by this court in Ernst v. Nau, 63 Wis. 134, that the claim of a surety against a principal debtor remains contingent until the surety pays the debt; and that, if the debtor has deceased, sec. 3860 gives the surety the right to present his claim, which by such payment became absolute, to the county court for allowance within one year thereafter. That decision rules the present case, and further discussion is unnecessary. Of course there is nothing in the objection that the sis years statute of limitation has run against this claim.

We conclude, therefore, that the county court properly denied the motion to quash the complaint and dismiss the claim, and that the circuit court properly affirmed the order of the, county court in that behalf.

What the effect would be were that portion of paragraph 10 of the complaint omitted therefrom in which are alleged the transfer of the chattel mortgages, etc., to Lawson, and the assumption by him of all liabilities growing out of the transactions connected therewith, is not here determined. We must take the complaint as it is drawn, and decide this appeal upon the allegations it contains. It is sufficient that these make a case within the jurisdiction of the county court.

Only a single other averment in the complaint requires notice. It is alleged therein that a portion of the logs included in the chattel mortgages remained in Lawson’s possession, undisposed of, at the time of his death, and that the same were converted to his own use by one of the administrators of Lawson’s estate. Neither the value thereof nor the date of such conversion is stated. It may be doubtful whether the estate of Lawson is chargeable with the value of these logs. We are now inclined to think it is so chargeable. The legal title to the logs was in Lawson when alive, and after his death in his administrators. It would seem that the estate should be held for their value, and that the remedy of the administrators is against the party who so converted them. We leave this question undecided, however, until the circumstances are fully developed by the proofs. If the facts show that such value is not so .chargeable, the same should be deducted from Webster's claim herein. We also withhold any ruling upon the question of Webster's right to be reimbursed for his expenses in his litigation with Clinton, Gillis & Co.

By the Court.— The judgment of the circuit court affirming the order of the county court is affirmed.