Estate of Mustin , 188 Pa. 544 ( 1898 )

Opinion by

Mr. Justice Dean,

About the year 1887, John Mustin, the testator, became a special partner with his son, Thomas J. Mustin, in the manufacture and sale of knit goods in Philadelphia, and contributed as his share of the capital, $50,000. In 1888, they, with Robert Patterson, an employee, who contributed only a small sum of money that he might make up three in number, formed a joint stock company in the same business under the act of June 2, 1874, taking the name of “ The Thomas J. Mustin Knitting Company, Limited,” to continue for five years. The capital was $70,721, of which John Mustin contributed in knit goods and materials $30,000; Thomas J., in cash, goods, machinery and promissory notes of third parties, $23,811.74; and Patterson, $100 in cash. Yery soon after the organization, Thomas J., the son, died. Soon after, his father, John Mustin, on May 23, 1888, delivered to Ida C. Mustin, his son’s widow, this writing: “ I hereby agree that Ida C. Mustin shall receive a salary of $4,000 for her services as. treasurer of the Thomas J. Mustin Knitting Company, Limited, in consideration of her acceptance of that position and that she may continue that manufacturing business until such time as she may deem proper to sell it. Signed, John Mustin.” One year thereafter he died, leaving a will, of which he appointed his wife Mary executrix, and on her death, Ida C., widow of his son, Thomas J., and Margaret Mustin, widow of his son William, executrices. His widow Mary died in 1890, and the two daughters-in-law at once assumed the office of executrices. Ida C. Mustin, still acting as treasurer, continued to carry on the business of the knitting company in the same name. In January, 1893, she and her coexecutrix presented their petition to the orphans’ court, setting forth that the estate of John Mustin was largely interested in the company; that they had been unable to dispose of the business of the company by sale, and praying leave to borrow, as executrices of John Mustin, a sum not exceeding $20,000, to be used in the prosecution of the company business, by paying its debts, and thus preserving the estate of the testator from loss. Upon consideration, the court granted them leave to borrow as prayed for, and they did borrow from the Mechanics’ National Bank at four different times, on their notes a sum aggregating $20,000, which notes were renewed from time to time, but no part of them was paid. In 1896, the knitting company failed, and all its stock and fixtures were sold by the sheriff on a judgment against the company for the comparatively small sum of $3,500. It turned out that the company, from failure to comply with certain requirements of the act of 1874, was probably nothing but a common-law partnership, and the liability of the partners, nothing less than that of the members of an ordinary partnership.

On March 29, 1897, Ida C. Mustin (afterwards married to Lloyd), and Margaret Mustin filed the account of Mary Mus-, tin, their predecessor, as executrix of her husband, and this account came up for adjudication. The auditing judge, Ashman, decided, on the evidence, that the partnership of the knitting company ended by its own terms December 31,1892 ; that thereafter those who carried it on were general partners, and the liability of the estate of the deceased partner as to future debts ended; that of this creditors were bound to take notice, and thereafter look to the liability of those who in fact carried on the business as general partners; but an exception was made in favor of the Mechanics’ National Bank, which loaned its money on the faith of a decree of the orphans’ court. As to this debt, the estate of John Mustin was held answerable. On exceptions, the court, composed of the auditing judge and Judge Pjeneose, was divided, and the adjudication was therefore confirmed. It is now argued on this appeal that the orphans’ court had no jurisdiction to authorize the borrowing of the $20.000, and of this the lender was bound to take notice.

We think the court had jurisdiction to make the decree. True, it is one which should be very cautiously and very rarely exercised. To preserve an estate from great loss the personal representatives may in good faith advance money and will be protected in such advancement, and the orphans’ court will see that they are reimbursed on settlement of their accounts. This has been frequently decided. What the court will thus ratify and approve it may by precedent decree, authorize. It is highly probable that if the executrices had of their own motion borrowed the money and invested it in the partnership the court would, not, in view of the facts developed, have approved such action on the adjudication of the account. But that only shows the authorization to borrow was decreed on insufficient evidence. The ex parte statement of the petitioners were accepted as true; the adjudication developed, they were not in all respects true, and did not state nearly all the material facts. The mistake, while suggesting the importance of extreme caution before such decree is entered, in no way affects the conclusiveness of it. It was a judicial decree which the court had power to make, and it protects him who loaned his money on the faith of it. We think the auditing judge was right in awarding to the Mechanics’ National Bank the amount of its loan.

The other exceptions to the adjudication have no merit which warrants discussion, and the adjudication is affirmed.

The appeal is dismissed at costs of appellant.