McCutcheon v. Smith

Opinion by

Mr. Chief Justice Sterrett,

In 1867, William McCutcheon, the plaintiff, and George E. Smith, the defendants’ testator, formed an equal copartnership in the name of George P. Smith & Co., which continued until April, 1876, when by mutual consent it was dissolved. One of the outstanding assets of the firm was an overdue account of about $7,000 against Samuel Hare, which the latter was willing but unable to pay. Afterwards, with the view of realizing at least part of this, and other delinquent accounts, the late partners concluded to purchase the “ Hare farm,” the deed for which had been made to the wife of their principal debtor. They accordingly bought the same at judicial sale, each contributing one half of the purchase money and taking title to an undivided half interest. As found by the learned master, “ the purchase was made for the purpose of selling for the best price they could obtain, and out of the profits, if any, make up a portion or all of the loss they had jointly sustained while carrying on the business in the firm name of Gr. F. Smith & Co.” He also found that while each was authorized by the other to seek a purchaser for the farm, Smith, with the consent of McCutcheon, was the more active in managing the place, and in endeavoring to eif ect a sale thereof; that in the purchase, ownership and sale of the common property, the parties were equally interested and occupied a confidential relation towards each other; that during the existence of that relation Smith entered into a contract with J. Gr. Rolshouse whereby the latter agreed to pay $8,500 for the farm. Immediately after doing so he went to McCutcheon and, without disclosing to him the fact that Rolshouse had agreed to give $8,500 for the farm, succeeding in purchasing his undivided half and obtaining a conveyance thereof to himself for $2,500. Smith received $500 from Rolshouse on the execution of his contract, $6,000 in about two weeks thereafter; and shortly after Smith’s death the residue of the $8,500, with interest, was paid to his personal representatives.

The facts above outlined, and other material, as well as strongly corroborating facts, — found by the learned master on abundantly sufficient evidence, — are clearly and concisely stated by him hi his able and very satisfactory report, and need not be further referred to here.

In view of the facts thus conclusively established, the master was fully warranted in his conclusions that Smith’s duty in the premises was to fully inform McCutcheon of the Rolshouse contract ; that the relation of trust and confidence, which had so long bound them together, could not be severed by the one buying out the other’s interest in the farm without first divulging to the fullest extent all the knowledge he possessed concerning their joint enterprise. Smith did not do this; on the contrary, at the very time he induced McCutchen to sell and convey his half interest in the farm to himself for $2,500, he had Rolshouse’s agreement to pay $8,500 for both interests, and adroitly concealed the fact until he accomplished his purpose.

If authority for the legal conclusions of the master, of which the decree is predicated, be needed it will be found in the cases cited by him; to which may be added Swisshelm’s Appeal, 56 Pa. 475; Rich v. Black, ante, p. 92, and cases there cited.

We find nothing in the record that would warrant us in sustaining any of the assignments of error; nor do we think that either of them requires discussion. In the circumstances, the amendment of plaintiff’s bill was rightly allowed, and the testimony received and considered by the master was neither irrelevant nor incompetent.

There was no error in dismissing the exceptions to the master’s report, nor in entering the decrees recited in the fourth and fifth specifications.

Decree affirmed and appeal dismissed, with costs to be paid by the defendants.