Herron v. Wampler

Opinion by

Mr. Justice Brown

This appeal is from a decree confirming the report of an auditor making distribution of moneys in the hands of the receiver of the late firm of Neel & Wampler. The report exhibits great care by the learned auditor in considering and passing upon the matters brought before him; and in awarding a dividend on the claim of the First National Bank of McKeesport he made a proper discrimination between it and ordinary indebtedness which a surviving partner undertakes to incur in the firm’s name after its dissolution by the death of one of its members. The evidence in connection with the bank’s claim is intelligently reviewed and the findings of fact, fully justified, will not be disturbed. Upon the facts so properly found the auditor’s judgment as to the legal status of this claim on the fund before him was correct. No good purpose can be served by our calling attention to the evidence in detail and discussing the legal and equitable rights of the bank, for the learned auditor has done his work so well that we refer the appellants to it, as furnishing all the reasons why the bank’s claim was properly allowed. If we believed it to be needful to give our own, we could not tell them better than in the following words of the auditor:

“ From a most careful and painstaking search of the books of the firm as kept by Mr. Wampler, and from the exhibits taken therefrom and submitted to the court, it is beyond all controversy that all the moneys received by the firm from the bank upon the foregoing notes went into the business and was paid out in connection with it; that the purchase of real estate by Wampler, payment of the purchase money for the same, payment of mortgages, principal and interest, taxes, repairs, insurance, municipal assessments, was for the benefit of the firm, preserved the same to the estate, and has resulted in great benefit and gain, not only to the firm, but to the estate of James Neel, as well as to Mr. Wampler. These facts and results, taken in connection with the wording of the agreement of February 19, 1895, and of the stipulation of April 13, 1896, throw around this claim of the bank such equities that the claim should be allowed, and I, therefore, have allowed it.

“ In allowing this claim I do not for one moment forget or overlook the strict letter of the law bearing upon partnerships such as this one was, that by the act of God and operation of law the partnership ceased and ended upon Mr. Neel’s death, and that the plain duty of the surviving partner is to collect the assets of the partnership, receive and receipt for payments, pay and settle partnership debts, settle and wind up the partnership business and distribute the net surplus among the parties entitled to it. Nor do I forget that the law is, that none of the partners can create any new contracts or obligations binding upon the partnership, none of them can buy or sell or pledge goods on any account therefor, none of them can indorse or transfer the partnership securities to. third parties, or in any way make their acts the acts of the partnership. And it is true that the law will not permit the estate of a deceased partner to become liable for debts contracted after his death unless distinctly made so by the clear language of the partnership agreement or by the will of the deceased.

“ This case differs from the above principies. If the contention in this part of the proceeding under this bill in equity was between the partners, then this rule would prevail, and I would not hesitate a moment to rule that the surviving partner was controlled by them. The controversies between the partners, so far as the auditor is concerned, have been found and reported to the court. This, however, is a claim by a creditor upon a fund arising out of real estate, largely obtained for and used to protect and preserve, during a period of great financial depression, the estate of the firm, and out of moneys loaned the firm, not upon the firm’s own paper, but largely upon the paper of other parties taken in payment of the sales of the commodity owned and trafficked in by the firm. Under all these facts and circumstances the claim of the bank is surrounded and protected by such equities that I feel that the claim should be allowed.”

The disallowance of the claims made on various mortgages need not be discussed further than to say that they were all properly disallowed. None of the mortgagees appeared as claimants upon the fund, and any allowance upon these claims presented by counsel for the appellee could not be sustained on legal or equitable grounds. The mortgages remained unaffected by anything- done by Wampler or the trustees, and the respective owners of the properties bound by them must make provision for their payment. The assignments of error on this point do not seem to be pressed.

The court below, believing the auditor’s findings of fact and conclusions of law to have been correct, formally confirmed his report, and in overruling all the assignments of error we do so for the same reason.

Decree affirmed and appeal dismissed at the cost of appellants.