Opinion · Supreme Court of North Carolina
Whitted v. Webb
Whitted v. Webb, 22 N.C. 442 (N.C. 1839)
- Type
- Opinion
- Court
- Supreme Court of North Carolina
- Jurisdiction
- North Carolina
- Date
- 1839-12-05
- Topic
- estate-planning
Gaston, Judge, after stating the case as above, proceeded as follows: Many serious charges made in the bill, have been completely abandoned. There is no dispute, but that the conduct of the defendant, in the arrangement he made for buying at the sales, was prompted by honest motives, and resulted in a real benefit to the estate, under his care. It is also admitted, that the compromise made with Fawcett, was a highly advantageous one for the estate. He thereby obtained more than a reimbursement of the principal and interest of the capital invested by Whitted, when it is proved that the concern did a losing business, and sunk a part of the capital. The important matter in controversy is, whether the defendant is not liable, in whole or in part, for the uncollected balance of the decree against Dickey.
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UpLaw has not yet analyzed Whitted v. Webb. The absence of a flag is not a finding that it is good law.
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WHITTED v. WEBB,22 N.C. 442(1839)
ATTILIA WHITTED ET AL. v. JAMES WEBB ET AL., EXECUTORS OF
JAMES WHITTED.
Supreme Court of North Carolina
(December Term, 1839.)
2. In a bill for an account by the legatees against the executor of a deceased partner, in which they seek to charge him for not collecting the amounts of certain decrees which he had obtained against the surviving partner, upon a bill taken pro confesso against him, if it appear that the decrees were erroneous, and the sums decreed therein too large, and the executor has in fact obtained from the surviving partner as much, or more, than the amount due from him, the executor shall not be charged with the balance remaining unpaid on the decrees, and which cannot now be collected because of the insolvency of such surviving partner.
3. If an executor make a compromise for the estate of his testator, which is, as a whole, highly advantageous to it, he shall not be charged because, in a single particular, it is not so; for, being advantageous upon the whole, the estate must take it with its inconveniences as well as its benefits.
4. An executor is entitled to charge for actual expenditures incurred in the faithful discharge of his duty; and the expenses of attending sales in which the estate is interested, and of sending an agent out of the State to collect a debt of considerable amount, are of that character.
5. The Court will not disturb the commissions allowed an executor by the master, though they were in part allowed on some items not the proper subjects of a commission, if the master has reported the whole sum allowed for commissions to be reasonable, and, excluding from the account every item not properly the subject of a commission, the gross amount allowed will not exceed 5 per cent on one side of the account.
6. A commissioner, by reporting an account annexed to the defendant's answer to be correct, adopts it as his account.
7. Where claims against a partnership appear to have been unsatisfied at the death of one of the partners, the exhibition of the vouchers of payment by his executor, in a suit by the legatees against him, is prima facie evidence that he made the payment, though the mere production of the testator's notes by an executor does not establish payment by him, where it does not appear that the notes were unsatisfied at the testator's death.
8. In a bill by the legatees against the executor of a deceased partner, it is immaterial whether the partnership debts were paid by the executor or the surviving partner. They were charges upon the assets, and the plaintiffs are entitled only to the clear residue of these assets after payment of the charges upon them.
9. The Court will not disturb the master's allowance of commissions because he has not allowed any on the disbursements, if it is satisfied with the amount allowed as a compensation for the executor's services.
The principal matters in controversy between the parties related to the conduct of the executor, Webb, in his transactions with the surviving partners of a mercantile concern in which his testator was interested at the time of his death. In November, 1815, the testator formed a partnership with Chesley L. Fawcett and Joseph Dickey, upon the terms that the testator had advanced, as his part of the capital stock, the sum of $4,000, in goods then on hand, and Fawcett and Dickey should advance $1,000 each; that the business should be carried on on Stony Creek in Orange County, by Fawcett, under the name and style of Chelsey Fawcett Co., and at Bruce's Cross Roads, in Guilford County, by Dickey, under the name of Joseph Dickey Co.; and that the profits of the partnership should be divided among the partners, one-half to Whitted and one-fourth to each of the others. In April, 1817, Fawcett and Dickey respectively sold at public sale the goods of the firm at the different establishments whereof they had the management. These sales were attended by the defendant; and for the purpose of preventing an injurious sacrifice, and after consultation with William Whitted, a gentleman of much experience and sound judgment, and the father of defendant's testator, the defendant made an arrangement with Dickey to purchase such of the goods as they believed were not likely otherwise toPage 361command a fair price; and they accordingly bought, in the name (445) of Dickey, at Fawcett's sale, to the amount of $1,490.48, and at Dickey's sale, to the amount of $1,105.16. Upon these purchases the defendant and Dickey sustained a considerable loss. Fawcett and Dickey from time to time made collections and applied sums of money in satisfaction of the demands of the creditors of the firm, principally through the defendant. The defendant, becoming dissatisfied with the delay of Fawcett and Dickey in closing the affairs of the partnership, filed a bill against them at March Term, 1819, of the Court of Equity for Orange, charging them with neglect of duty in collecting and misapplication of the partnership funds, praying for a full settlement and for the appointment of a receiver. At September Term, 1819, it was ordered by the court that the books and accounts of Fawcett Co. be delivered over to Thomas Clancy, that Joseph Allison be appointed receiver and collector, and that Thomas Clancy take an account of all moneys received and paid over by Fawcett. Dickey, at the time this bill was filed, was out of the State, and never afterwards returned thereto. As against him the bill was, at September Term, 1819, taken pro confesso and an account ordered. Fawcett and the present defendant entered into a compromise, in pursuance of which a decree was entered up against Fawcett, at September Term, 1820, whereby the said Fawcett was decreed to pay to the executors of Whitted the sum of $715, in certain installments, but with interest from 20 September, 1820, and to transfer to them, for the benefit of the estate of their testator, the amount due from Dickey for purchases at Fawcett's sale, then amounting, with interest, to $1,728.96; that Fawcett should indemnify the estate of Whitted from all claims of the creditors of Fawcett Co.; that he should pay all the costs of the suit, and that thereupon the books and papers of Fawcett Co. should be redelivered to him. With this decree Fawcett fully complied. At the same term it was decreed that Dickey should pay to the executors of Whitted forthwith the said sum of $1,728.96, with interest thereon from the said 20 September, 1820; that the cause be retained for further proceedings against Dickey on account of his transactions for Joseph Dickey Co.; and the commissioner was again directed to state an account thereof, and report (446) to the next term. At the succeeding term the commissioner made a report in relation to that part of the suit which involved the accounts of Joseph Dickey Co. In that report he estimated that this branch of the concern, besides being able to refund to the partners all the capital invested, with interest thereon, had made an extra profit of $1,055.09. He therefore found Dickey in debt to the executors of Whitted in the sum of $2,450, being his share of capital advanced and interest thereon from the date of the advance, and also in the further sum of $537.54,Page 362said Whitted's share of the said profits; whereupon it was decreed that Dickey should pay the executors of Whitted, in addition to the sum decreed at the former term, the further sum of $2,977.54. Thus the amount of the two decrees against Dickey was $4,706.50. The defendant, unable to get satisfaction of this decree in North Carolina, caused Dickey to be arrested by some process which he sued out against him in the State of Maryland, and succeeded in coercing from him the sum of about $3,000. The residue of the decree remained unsatisfied, and Dickey afterwards died insolvent.
Badger for defendant.
The plaintiffs insist, in the first place, that there is a clear loss sustained by the estate by reason of the culpable negligence and misplaced confidence of the defendant. Joseph Dickey was a man of slender means, and proved himself incapable, or unfaithful, in settling the affairs of that part of the mercantile concern where with he was charged. The defendant took no measures to bring him to an account as managing partner until two years after the expiration of the partnership, and after he had left the State, so as to be beyond the reach of the process of our court. And it is therefore just that this loss should fall on the negligent trustee, and not upon his innocent cestui que trusts. In examining this charge, it is proper to bear in mind the perfect integrity and zeal for the interest of those whom he represented which have generally marked the conduct of the defendant in the execution of his trust. His efforts to save the estate from loss in the sales made by the surviving partners, and which actually resulted in loss to himself, are evidences of this zeal. It is in proof, too, that throughout the whole of his administration he habitually consulted with and acted under the counsel ofPage 363the best friend of the family, and a friend characterized by great sagacity. We can have scarcely, then, a reason to doubt but that the defendant meant to discharge his duty faithfully, and that if he erred, it was an error of judgment. Was it a culpable error? Dickey had enjoyed so fully the confidence of his testator as not only to be taken into partnership, but to be entrusted with the sole management of the affairs of the firm that were to be conducted out of the country. All the evidence concurs in establishing that he was a young man of fair character. He was the one selected by Webb and the elder Mr. Whitted to unite with the defendant in the plan of defensive operations against Fawcett. The goods were sold on a credit, which expired 1 January, 1818. Between the day of sale and the time when Dickey went away, which was in the summer or fall of that same year, he did not remain inactive — paying no attention to the winding up of the affairs under his charge. We cannot ascertain with certainty the amount, but (448) from the statements accompanying the report in the suit against him, during that period nearly $3,000 appear to have passed through him to the present defendant, towards the discharge of the demands against the firm. Not a single witness has testified that there was any suspicion entertained of his integrity up to this time. What ground had the executor, then, for filing a bill against him? If he had filed a bill, what pretense could he have alleged — and the allegation should be on oath — for appointing a receiver and depriving Dickey of his legal rights as a surviving and managing partner? We acquit the defendant of this charge of culpable neglect.
It is next insisted that the money collected from Dickey ought to be applied to the satisfaction of the second decree made against him, and that the defendant is personally liable for the $1,728.96 first decreed against Dickey. In support of this proposition it is said that Dickey and the defendant were joint purchasers at Fawcett's sale to the amount of $1,490.48; that this sum, with interest from 1 January, 1818, to the date of the decree, amounted to $1,728.96, and that the transfer and assignment to the executors of a debt personally due from one of the executors is so much assets of the estate in his hands. Admitting the correctness of the argument, we yet see that, in the account, the defendant is charged with this sum. He is debited for the amount received on compromise with Fawcett, $2,443.96, which includes the transfer of this claim as so much cash, $1,728.96, and the cash actually paid by Fawcett, $715. The estate, therefore, is actually credited and the defendant debited with this sum. The obscurity and perplexity attending the investigation of this case seem mainly to arise from what appears to us an error against Dickey in the first decree charging Dickey with the amount of those purchases. It appears clearly from the exhibits therein thatPage 364Dickey, in his transactions with the present defendant, had fully accounted for what he personally owed for those purchases, as well as for the purchases made at his own sale, and was somewhat in (449) advance beside. Properly, therefore, is the defendant charged in this account for both these purchases — the former $1,728.96, and the latter $1,105.16. But why should Dickey have been charged in the former suit with the amount of the purchases at Fawcett's sale as an existing debt transferred from Fawcett to Whitted's executors? It was in truth extinguished, and the sum with which Dickey ought to have been charged was the balance, whatever it might be, due from him as managing partner of Joseph Dickey Co. to Whitted's executors for advances made by them to discharge the debts of Joseph Dickey Co. above the payments which they had received from him. What was this balance does not distinctly appear, but it is manifest that it fell short of the amount thus improperly debited to Dickey. It is quite apparent that this is not the only error injurious to Dickey to be found in the proceedings against him. In the account on which the second decree is founded, the amount of debts due Joseph Dickey Co. is set down as "taken from the list of balances" at $6,654.47, whereas it will be seen from the exhibit in the cause that the amount of debts in that list of balances is $6,359.37; that to this was to be added $137.60 because of balances overlooked, making the amount $6,496.97, and $20 cash, which would raise the whole to $6,516.97. But the commissioner, by mistake, added the $137.60 and the $20, not to the $6,359.37, but to the $6,496.97, thus in effect charging him with $137.60 twice. Moreover, in that account Dickey is charged in account with Whitted's executors with the full amount of capital put in by their testator in goods, and with interest thereon, and $527.54, their testator's share of profits. Now, there cannot be a question, upon Fawcett's testimony, that the business was a losing one, and that upon a fair settlement with Dickey, Whitted's estate would not have received the principal advanced, much less principal, interest, and profits. Fawcett declares that the compromise which he made with respect to the claim against himself was, speaking in a business sense, "the worst act of his life," whereby he sunk from $500 to $1,000; that the share of capital advanced by Mr. Whitted was in old goods, and at a time when the price of goods was rapidly declining, and continued (450) to decline until after Mr. Whitted's death; that the branch of the concern under his management had a large number of bad debts, and that he verily believes the business of Joseph Dickey Co. was a losing business, both from his knowledge of it at the time of Whitted's death from the inquiries made by him about it afterwards. It may be remarked that it was probable that Fawcett would take care to be well informed on the subject, as he was a partner in the concern,Page 365and entitled to a share in the profits thereof, if, in truth, profits had been made. Nor is it strange that in taking an account of the dealings of a partnership against the managing partner, without the attendance of himself or any agent on his behalf, in the presence of those whose duty it was to press against him every claim apparently well founded, and in the absence of all vouchers for his discharge, the most conscientious commissioner should report an amount due much beyond the truth — as we hold was unquestionably the case in that suit. The loss which the plaintiffs complain of by reason of a large part of the decree against Dickey remaining unpaid is more apparent than real. Indeed, we greatly doubt, if a bill had been filed before Dickey went away and the accounts of both branches of the copartnership had been accurately taken, whether Mr. Whitted's estate would have had a decree against both the surviving partners for as much as has been actually realized for the estate from them.
It was also objected by the plaintiffs, in relation to this part of the case, that the defendant had acted culpably in discharging Fawcett, by the compromise, from liability to contribution because of Dickey's defalcation. We think this objection unfounded. It is admitted on all hands that the compromise was one highly advantageous to the estate; and the estate must take it with its inconveniences as well as its benefits.
The Court, therefore, overrules the 2d 5th, and 6th exceptions of the plaintiffs.
The first exception is also overruled, for it seems to us that the commissioner, by reporting that the account A, annexed to the defendant's answer, is correct, adopted that as his account.
The Court allows the third exception in part, that is to say, (451) as to the sum of $14, with which it holds that the defendant had been improperly credited for personal services. The residue of the exception is overruled. The defendant is entitled to charge for actual expenditures incurred in the faithful discharge of his duty. The Court holds those of attending the sales and employing Watts to have Dickey arrested to be expenditures of that character. Some of the items on which commissions have been calculated are not indeed the proper subjects of a commission, but the Court will not disturb the report on that account, for the commissioner hath reported the whole sum allowed for commissions to be reasonable; and excluding from the account every item not properly the subject of a commission, the gross amount allowed will not exceed 5 per cent on one side of the account.
The 4th exception is also overruled. There is satisfactory evidence that the demands paid off against the concern of Joseph Dickey Co. were bona fide demands, existing at the death of Mr. Whitted. In the exhibits of the former equity suit it will be seen that Fawcett and DickeyPage 366upon the death of Whitted inventoried the debts due to and those owing from their concerns respectively. In that of Dickey's these are found. Besides, in regard to every one of them there is particular evidence either conclusive per se or corroboratory of that furnished by the inventory. It is seldom, indeed, that such old transactions can be proved as clearly as these have been. But it is objected that it does not appear that they have been paid by the present defendant, and, furthermore, that in the account on which the last decree against Dickey was founded he is credited with the amount of these demands as having been paid by him. This last observation is founded on a misapprehension of the account to which it refers. To enable the commissioner to ascertain what was due from Dickey as the managing partner of the firm of Joseph Dickey Co., it was necessary to take the accounts of the firm, and in (452) doing this he is charged with all its effects and is credited with all its debts, whether paid or to be paid. The exhibition of the vouchers of payment by the defendant is prima facie evidence that he made the payment. The decision in Finch v. Ragland,17 N.C. 142, that the production of the testator's notes by an executor does not establish payment by the executor, applies where it does not appear that these were unsatisfied at the testator's death. But, in truth, it is of little moment to the plaintiffs by whom, whether by Dickey or by the defendants, these demands were paid. They were charges upon the assets; and the plaintiffs are entitled only to the clear residue of these assets after payment of the charges upon them.
The defendant has filed one exception for that the commissioner has not allowed a commission also on the disbursements. The Court overrules that exception, because it is satisfied with the amount allowed as a compensation for defendant's service.
The account returned will be modified according to this opinion, and a decree rendered for the plaintiffs for the balance that will be then due. The costs of taking the account are to be paid equally by the parties — and as to the other costs, the parties will respectively pay their own. The commissioner is allowed $25 for his report.
PER CURIAM. Decree accordingly.
Approved: Moore v. Brown,51 N.C. 108; Rogers v. Holt,62 N.C. 111.Page 367
(453)