Freyvogel v. Anderson , 91 Pa. 265 ( 1880 )

Mr. Justice Sterrett

delivered the opinion of the court,

_ It is claimed in the 1st assignment of error that the testimony pf the plaintiff below should have been stricken out, because the defendant died pending the proceedings before the master and before the witness was cross-examined.

It appears that on February 1st 1875, the plaintiff Freyvogel was sworn as a witness in his own behalf, and his examination-in-chief was continued at the next- meeting. ' The hearing was then adjourned for a week, and again until the 18th of the same month, at which time, the defendant being absent, his counsel declined to cross-examine. The examination-in-chief was then resumed, but nothing important was elicited. A meeting appointed for March 25th was adjourned until the 29th of the same month. In the meantime, on March 27th, the defendant Anderson died, and proceedings were suspended until his personal representative, was substituted. At the next meeting thereafter the administrator appeared, and moved to strike out the testimony of Freyvogel for the reasons above stated. The motion was denied, and at the next meeting the plaintiff presented himself for cross-examination, but defendant, resting on his objection to the competency of plaintiff’s testimony, declined to cross-examine.

When the plajntiff testified he was undoubtedly a competent witness, and nothing that occurred thereafter would have justified the court or master in excluding his testimony. Under the circumstances, we think it was rightly retained and considered in connection with other' testimony in the cause. It was not the fault of the plaintiff that defendant, by reason of sickness, was prevented from being present in person to cross-examine, or to testify in his own behalf. During the lifetime of the original parties, they were both competent witnesses, and either had a right to testify or have his testimony perpetuated, so that it might be used in the event of sickness or death. After plaintiff was first examined in chief, and before the decease of defendant, an opportunity was given to cross-examine, but it was waived by counsel then present, representing the defendant. The most that could be done by plaintiff, after defendant’s death, was done. He presented himself for cross-examination, but the administrator declined to avail himself of thé óffer. The right of cross-examination was thus waived by counsel before, and by the administrator after, the decease of the defendant; We think the master and court were clearly right in refusing to strike out the testimony.

The next subject of complaint is that defendant is charged with $40,000 for the lease, machinery, &c., of Anderson & Freyvogel, on hand at the time of the dissolution. This charge is mainly based on a memorandum contained in the book or schedule entitled “Inventory of stock, tools, machinery, &c., of Anderson & Freyvogel, September 1st 1872,” which contains an itemized statement Of the machinery and other articles purchased in January 1871 from Vankirk, without giving the separate valuations of each. At the end of the list the bookkeeper of the firm made this memorandum: “All the foregoing articles, machinery, &c., was purchased from William Vankirk, assignee, for $40,000.” There is nothing in this to indicate that it was a valuation, as of that date, by which Anderson was to be charged. On the contrary, it appears to be merely a statement of the property purchased nearly two years before, and its value, or rather the price then paid for it. The items of furniture, stock, - &c., that follow in the schedule, are extended with separate valuations affixed to each. Mr. Hay, the bookkeeper who made the schedule, says nothing in his testimony of any appraisement. He testifies that when he placed the amount $40,000 in the inventory, he “ put down the old figures taken from the bill of sale from Vankirk.” The schedule was footed up by Mr. Kirkpatrick, who was employed to assist the master. He testifies that the $40,000 item was charged to Anderson’s account by him; that he did it because he found these figures in the inventory, and was told by the plaintiff Freyvogel that it' was all right, and he had nothing to do but add it up. He also testifies that he had no knowledge of the matter except what he derived from the inventory and Freyvogel, and says: “ I observed the $40,000 item was put there as a memorandum of the original cost of the purchase from Vankirk, and not as an appraisement.” It would be difficult indeed to draw any other conclusion from the memorandum, and yet this and Freyvogel’s declaration that it wás all right appears to be the only warrant he had for making the charge as he did. The testimony is wholly insufficient to show that the items composing fhe charge of $40,000 against Anderson were appraised at the time of the dissolution, or that he agreed to take them at that or any other fixed valuation; nor does the bill aver that any valuation or' appraisement was ever made. In the seventh paragraph it is alleged that in pursuance of the agreement of dissolution the plaintiff took charge of the assets of William J. Anderson & Co., “ and took a regular inventory and account of the samethat Anderson took charge of the property and assets of Anderson & Ereyvogel, but it is not alleged that any appraisement of the latter was made then or at any other time. If an appraisement had ever been made or a valuation agreed upon by which Anderson was to be charged on settlement, it is not at all probable that the plaintiff would have failed to aver the fact in his bill. In addition to this, the plaintiff, after Anderson’s death, claimed possession of the property as surviving partner of Anderson & Ereyvogel, and threatened to restrain the administrator from exercising any control over it — a position utterly inconsistent and irreconcilable with that afterwards assumed by him, that Anderson was to be charged with the lease and property purchased from Yankirk at original cost.

The plaintiff’s demand on the administrator for possession resulted in the agreement of April 30th 1875, in which it is provided that the administrator shall proceed and sell the lease, fixtures and machinery at public sale, upon the terms therein named, and hold the proceeds “ until it is determined whether the whole or any part of the same belongs to the plaintiff as surviving partner of Anderson & Ereyvogel, or to the said administrator, when said fund shall be applied by said administrator as directed by the court by final decree in this case.” Pursuant to this agreement, the property was sold by the administrator, on February 3d 1876, for $16,000. In the absence of qualifying circumstances, this would be the amount at which it should be charged in settlement of the partnership accounts; but while we find that Anderson did not take the property at the valuation claimed by the plaintiff, or at any other fixed sum, it is very clear that he retained and used it in the prosecution of his individual business after the' dissolution. Having done so, we think he should be charged with what it was fairly worth at that time, and not at the amount realized by the administrator more than three years thereafter. The testimony shows that it had depreciated from eight to twelve thousand dollars beeween the date of its purchase by the firm and the dissolution, and the result of the administrator’s sale shows a still greater depreciation afterwards.

The testimony as to the value of the property at the date of the dissolution is somewhat indefinite, but as nearly as can be determined, it was then worth $32,000, or $8000 less than is charged in tbe account stated by tbe master. Three-eighths of this difference, $3000, should be borne by the plaintiff, and consequently that amount should be charged back to him.

The 3d assignment relates to the ownership of the South Pittsburgh lot. The first master found that it belonged to Anderson individually; the second master found it was purchased in trust for the firm, and that the net profits realized in the transaction should be treated as partnership assets.

While the testimony shows that the lot was purchased with the view of occupying it for the business of the firm, it is very evident from the title papers and entries made in the books at the time and as they stood for more than a year after the lot was sold, that the purchase was made by Anderson in his own right, and not in trust for the firm; and it should require something more than is furnished by the testimony in this case to convert the property or the proceeds thereof into partnership assets. The conveyance was to Anderson, and in March 1871, he and his wife conveyed the lot to the South Pittsburgh Planing-Mill Co., ata net profit of $6779.35. It is true the funds with which to pay the purchase-money in part were raised on the note of the firm discounted by the .Exchange National Bank, but the discount on the first note, as well as the several renewals thereof, and taxes, were charged on the books of the firm to the individual account of Anderson. Some of these entries are in the handwriting of Freyvogel, and others are made by the book-keeper under his direction. They are entirely consistent with a purchase by Anderson in his own right, and at the same time irreconcilable with the allegation that it was a partnership purchase. In one of the entries made by Ffeyvogel the discount is charged as paid on “ his (Anderson’s) note in the Exchange Bank.” When the note was reduced by payment of $2000 thereon, this amount was charged to the individual account of Anderson. In like manner the expenses incident to placing a mortgage on the property and interest paid on the mortgage debt, were charged to him personally. All this is not easily reconciled with the claim that has since been set up. We think it very evident that Anderson purchased in his own right, and that the credit of the firm was loaned to enable him to pay part of the consideration-money, and that the idea of its being a partnership transaction was an after thought. If the lot had been sold at a loss' instead of a net profit, it is not at all probable that it ever would have been heard of as partnership property. More than a year after it was sold, Freyvogel directed a new account to be opened in the firm books called the “ South Pittsburgh lot account,” to which he transferred all the items of discount, expenses, &c,, previously charged to Anderson individually, and credited himself with one-half of the net profits. One witness says that when Anderson saw this new account he objected and said it should not be there. Another, who was present at the same interview, testifies that the ground of his objection was the manner in which the profits were divided. Be this as it may, the testimony is wholly insufficient to justify the master in finding that the lot was purchased by the firm or in trust for the firm. The manner in which the conveyance was made, and the entries in the books contemporaneously with each step in the transaction, show satisfactorily that such was not the case. The correction of this error makes a difference of $2542.25 against the plaintiff, and requires that amount to be charged back.

The fourth assignment relates to the credit of $1509.10,'allowed on the Stark, McMahon & Co. account. The first master disallowed this claim, and we see nothing in the additional testimony before the second master to justify his finding. How the firm of •William J. Anderson & Co., was liable on “ a note of James Wood & Co., which the firm of Stark, McMahon & Co. owed,” does not sufficiently appear. There were no facts proven from which such liability would arise. If it was claimed that they were liable as indorsers, or in any other form, the facts necessary to create such liability should have been proved. We think there was error in allowing this credit.

The following sums for which the plaintiff has received credit in the account stated by the second master should be disallowed, viz.:

1st. Three-eighths of $8000 — excess in charge for lease, machinery, &c., . . . . ... . $8000.00

2d. Three-eighths net profits realized, on sale of South Pittsburgh lot, by Anderson, .... 2542.25

3d. Amount erroneously credited to plaintiff on the Stark, McMahon & Co. account, . . . 1509.10

Making in all, ...... $7051.35

Erom which deduct amount found by decree of Common Pleas for plaintiff,..... 6985.55

$65.80

Which leaves balance, $65.80, due to defendant, from which amount there should be a decree in his favor.

To that part of the decree fixing the master’s fees, and directing how they and the costs shall be paid, there is no exception. The court very properly directed that they should be paid by the parties in the proportions of their respective interests in the firms. The appointment of the receiver is not complained of. Whatever may be realized by him, out of assets not embraced in the account stated by the master, will be the subject of distribution by the court hereafter.

The decree of the Court of Common Pleas is reversed, and it is now adjudged and decreed that there is due from the appellee, John O’Keefe, as assignee in bankruptcy of Henry A. Freyvogel, to the appellant Malcolm Hay, Esq., administrator of William J. Anderson, deceased, sixty-five dollars and eighty cents ($65.80), which sum the said appellee is hereby ordered to pay to said administrator out of the assets of said bankrupt in his hands; and it is further ordered and decreed that the master’s fees, as fixed by the Court of Common Pleas, and the costs, including the costs of this appeal, be paid as follows, viz.: Three-eighths (fths) thereof by the said appellee, and the residue by the appellant; and the order of court appointing the receiver is affirmed.