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11 F.(20) 9 the territory. The effect of section 1462, Rule 18, held, that parties were bound by record supra, is to relieve the witness from the bur- as stipulated by counsel, and petition will be

denied and motion to join additional parties den of attending, unless the subpona is in

overruled. dorsed as provided therein. This section of the statute is doubtless taken from section 2. Appeal and error Ew931(10), 1022(1).

Master's findings confirmed by trial court 818, Oregon Laws. The Oregon statute has

are presumptively correct, and, in absence of been construed by the Supreme Court of that obvious error in applying law or serious misstate in Egan v. Finney, 72 P. 133, 42 Or. take in considering evidence, will be permitted 599, 606, and Kohlhagen v. Cardwell, 184 P. to stand. 261, 93 Or. 610, 620–622, 8 A. L. R. 11. It 3. Partnershipm333—Partner held entitled to is held that the adverse party is not entitled credit for value of property turned over to to complain of the failure to indorse on the

firm without reduction because of litigation

then pending affecting title. subpæna an order requiring the attendance of the witness. If he attends, he is entitled entitled to credit for value of property turned

In partnership accounting suit, partner was to his mileage and per diem. We think that

over to partnership without reduction, because this construction of the statute is correct, and when partnership was formed litigation was that defendants' exceptions to the mileage pending over title which reduced its value,

where such litigation failed to impair title. taxed were properly denied. The per diem is limited to the days the witnesses were in 4. Partnership Cw333–Partner who retained attendance at the place of trial. The per

proceeds of sale of firm property after disso

lution of firm held chargeable with interest diem is not taxable for the time spent in com

thereon. ing and going. 15 C. J. 133. In this last

Partner, who retained proceeds of sale of respect defendants' exceptions are well taken. firm property, which he received five years [19] James Hagan, a witness for plaintiff, after dissolution, held chargeable with interest was a deputy United States marshal under thereon, notwithstanding he sued for accounting

soon after paying out certain sums in settlement salary. He traveled on a pass on the gov

of firm debts due to himself personally. ernment railroad in attending the trial. Under the rule announced in United States v.

5. Partnership C282, 333. Southern Pacific Co. (C. C.) 172 F. 909, 912, firm property and use proceeds to pay firm

After dissolution, either partner may sell he was entitled to his necessary expenses in debts, but if he withholds proceeds he is chargegoing to, returning from, and attendance on, able with interest. the court. These expenses are taxable as costs. The witness fees of Hagan should be

Appeal from the District Court of the retaxed, and the per diem of the witnesses United States for the District of Arizona. Keller, Fairborn, Doner, Bentley, Williams,

Suit by Hoval A. Smith against Henry Wrangstedt, and Raeburn should be limited to the period of their attendance at the place master's report, both parties appeal. De

B. Hovland. From a decree entered on the of trial.

cree modified, and, as so modified, affirmed. The judgment for costs is reversed, with directions to retax in accordance with the Suit in equity commenced by Smith above conclusions. In other respects the against Hovland April 11, 1917, for an acjudgment is affirmed.

counting and settlement of the partnership cert. deri

affairs of Hovland & Smith. After issues

were made up, 46 sept. 638

all of the issues of law and fact, state an SMITH V. HOVLAND. *

account between the parties, to make find(Circuit Court of Appeals, Ninth Circuit. Feb- ings of fact and conclusions of law, to make ruary 15, 1926. Rehearing Denied a report to the court, and generally to exMarch 22, 1926.)

ercise such powers as might be exercised No. 4366.

by a master in chancery of the court.

The findings, so far as material to these I. Courts m 405(16)-Petition for certiorari and for diminution of record not filed until two appeals, were in substance as follows: By a terms of court had passed, and motion to join verbal contract the parties agreed that as of additional parties, will be denled (C. C. A. January 1, 1905, they would become partRule 18).

ners in the business of examining and dealWhere petition for certiorari and for dim- ing in mining properties and real estate, inution of record was

until two terms of Circuit Court of Appealso had acquiring and disposing of options and conpassed, and no satisfactory cause was shown tracts for leasing, purchase, development, for not having moved promptly under C. C. A. and operation of mines, mining properties,

*Certiorari denied 46 S. Ct. 638, 70 L. Ed.

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97134b8bKE: 1157, to the standing muster to hear and determino

or real estate; and in the promotion of cor- The master found that Smith was entitled to porations for the purchase, sale, develop- a credit for the reasonable value of the equiment, and operation of mines, and of ac- ties and options and commissions as of March quiring, managing, and disposing of shares 1, 1905. As a result of the promotion of of stock of such corporations, and engaging the Warren Company, Smith for the benefit in such other enterprises as might be agreed of the partnership received from the Warren upon between the partners. Each was to Company an option to buy 6,000 shares of have a half interest and contribute equally the capital stock of the Warren Company at to the capital assets and to exercise equal $15 per share, and thereafter, with the conauthority. Property then or thereafter held sent of the partnership, he conveyed 2,000 or acquired in the name of either party shares to one Cole, 2,000 shares to defendwas to be held and disposed of for the use ant, and 2,000 shares to himself, which shares and benefit of the partnership. Smith was remained the personal property of those to contribute to the capital his interest in

three persons. the Arizona King group of mines together Until June, 1910, the half interest in with his interest in certain other mining the Arizona King group of mines was held properties at the then reasonable value there- by Smith for the benefit of the partnership. of, and also his equities, rights, and options About that time the Union Mines Company in certain mining claims at the then reason- was organized by the partnership to take able value thereof. These mining claims, op- over the titles to the Arizona King group tions, and commission rights are found to and certain other claims which had been have become partnership property and were acquired by the partnership, titles to which treated as such. The partnership books of had been in the name of Smith. Thereupon account were kept in the name of Smith at Smith conveyed all of said interest and Bakerville, Ariz. They recorded all sums of properties to the Union Mines Company and money received and expended by the part- received 21,000 shares of the capital stock nership or either of the partners for it, but which was carried in his name until transno credit to Smith was made or entered on ferred in 1912 to one Shattuck as security account of Smith's contribution to the part- for partnership debts owing to Shattuck nership of his half interest in the Arizona and other creditors. King group of claims, or on account of the During the existence of the partnership, equities, rights, and options hereinbefore Hovland contributed approximately $227,mentioned, and no agreement was ever made 000 and Smith $113,000, in addition to the between the parties fixing the exact amount contribution of his interest in the Arizona to be credited to Smith for such contribu. King group and his equities, options, and tions.

rights already referred to. No claim for inIn 1905 the partnership aided in the terest on the sums advanced to the partnerpromotion of the Warren Realty & Develop- ship was ever made until February, 1912, ment Company. In that matter in consider when Hovland claimed interest. ation of $38,000 and the issue of 8,000 shares In 1908 Hovland, for the benefit of the of paid-up stock of the Warren Company, partnership, secured an option to buy the the Bisbee Copper Development Company Live Oak and certain other mining proprelinquished to the Warren Company all of erties in Arizona, and the partnership prothe interest of the Bisbee Company in cer- ceeded to promote the Live Oak Developtain options and properties which the Bisbee ment Company to which Hovland, for the Company had theretofore secured from benefit of the partnership, transferred his Smith, including the Union group of mines. options and property rights for $10,000; Smith waived certain prospective profits, and in further consideration of an option equities, and commissions under the options, granted by the Live Oak Company to Hovthus permitting the Warren Company to land for the benefit of the partnership, an buy the property held by the Bisbee Company agreement was made to purchase 15,000 at a much lower price than that which the shares of the capital stock of the Live Oak Bisbee Company would have had to pay un- Company. The option was subject to the der its option, and as a result of the trans- condition that if development work proved action the partnership realized profits of the existence of a mine any portion of the approximately $40,000, and Smith conveyed 15,000 shares then unissued should be forthhis interest in the East Bisbee group of with issued and delivered, full paid, to Hovmines to the Warren Company for $15,000 land. Prior to November 27, 1909, out of which was received by the partnership and the 15,000 shares covered by the option, credited to Smith on the partnership books. 3,038 were issued to Hovland or his order. 11 F.(20) 9 These shares were partnership property tween the United States and the Warren when received by Hovland and were dis- Development Company and Hovland & posed of by him, but it is found that he Smith wherein the United States sought to did not account to the partnership for them cancel certain patents which had been isand had not been debited on his account sued to the property belonging to the Wartherefor.

ren Company. Smith went to Washington Prior to November 27, 1909, Smith, for in December, 1910, and procured a dismissal the use and benefit of the partnership, ex- of the suits for which services he was alercised the option to the extent of 962 lowed certain sums by the Warren Compashares of Live Oak stock which was sold ny as compensation, which sums, it is found, by him at a profit of $6,891.87, all of which he should account for to the partnership, money Smith turned over to the partner- less costs and expenses incurred in the pership and devoted to its use, one half there formance of his services. of being credited to Hovland and the other When the partnership was dissolved, it half to Smith. About that time it was dem- owned the Rough Rider group of mines for onstrated that there was a mine in the Live which applications for patents were then Oak property, and it was ordered that the re- pending. Smith at his own expense remained maining unissued stock covered by the op- in Washington and obtained patents to those tion (11,000 shares) should be and the same claims, for which service it is found he is was issued to Hovland. These 11,000 shares entitled to $12,000 as reasonable compensawere property of the partnership and were tion. so received and held by Hovland.

In April, 1917, Smith negotiated and conIn January, 1911, at Duluth, the part summated a sale of the Rough Rider group ners met and discussed their affairs, but at to the Phelps-Dodge Corporation for $200,that time there was no agreement of dis- 000, of which amount he received $100,000 solution and no meeting of minds as to upon delivery of conveyances. Out of this ownership or distribution of the assets. Aft- sum he discharged all the partnership debts er the Duluth meeting relations became un- except one claim and an unliquidated acfriendly, and on February 11, 1912, at Chi- count. Thereupon he brought the present cago, each partner presented a statement. suit. By the terms of the Rough Rider sale Hovland claimed interest on the amounts con- agreement, the balance of the purchase price tributed by him and credit for certain stock ($100,000) was to be paid by the purchaser alleged to have been purchased for the bene- if and when the conveyance made and de fit of the partnership. Smith disputed the livered by Smith to the Phelps-Dodge Corclaims, and thereafter on March 1, 1912, poration and the title to be conveyed therenotified Hovland that from that date the by shall be approved and confirmed by Hovpartnership was dissolved, that firm debts land individually and as a member of the should be promptly paid out of firm proper- partnership, or if and when the conveyance ty, and that thereafter the assets should be and the title shall be finally confirmed and divided. Smith specially objected to Hov- validated by judicial decree in any litigaland's claim for interest on contributions to tion brought for the settlement of the partfirm capital and to his claim that certain nership affairs of Hovland & Smith. But stock purchases other than Live Oak stock some months before the sale, to wit, February allotments

copartnership ventures. 28, 1917, the Rough Rider group was sold Smith claimed that 4,400 shares of Warrior under execution directed against Smith, in Development stock and the 11,000 shares of whose name the partnership title was held. Live Oak stock and the profits from sales This sale was pursuant to a judgment in the of such stock were firm property to be ac- state court in Arizona wherein the judgcounted for by Hovland.

ment creditor sought to collect certain debts The partnership was dissolved on March of the partnership. Immediately after the 1, 1912. In that year the Union Mines Com- instant suit was filed by Smith Hovland filed pany property was sold for $97,500 cash, a petition praying for an order restraining which was paid to Shattuck as trustee to Smith from collecting upon the sale of the secure the debts owing by the partnership to' Rough Rider group, and in the alternative, him and to a bank. Any balance was to be if Smith had completed the sale and collectheld by Shattuck for the benefit of the ed, to restrain him from disposing of the creditors of Hovland & Smith, to be paid on proceeds and requiring him to pay the monjoint approval.

ey into court. Restraining order was issued, In 1910 Smith, with Hovland's knowledge but nothing in the order was to prevent and consent, managed certain litigation be Smith from making conveyance pursuant to


the contract of sale theretofore made provid- Inspiration stock as may be found owing

' ed the purchaser should pay the balance of from him to the partnership, and should rethe purchase price into court. As a matter imburse the partnership for dividends which of fact, Smith bad consummated the sale have been paid since the organization of the and delivered the conveyance and had re- Inspiration Company up to the time of the ceived the $100,000 before the restraining filing of this suit or should respond in damorder was issued. The master finds that ages to be ascertained upon accounting; the sale should now be confirmed and the that Hovland should be credited in the acpurchaser should pay the balance into court counting for moneys paid by him in satisto await further orders.

fying a judgment recovered against him by Between December 22, 1914, and June one Fairchild for failure to deliver to Fair. 27, 1916, Smith out of his own funds paid child 1,000 shares of Live Oak stock; that taxes and for assessment work for which Hovland must account for 5,000 shares of he is entitled to credit. He is held accounta- the capital stock of the Warrior Developble for the $100,000 received on account of ment Company received by him for the the sale of the Rough Rider group and should benefit of the partnership; and that a claim be credited with sums paid out of that sum made by one Fox for services rendered to on account of partnership debts, and for Smith in connection with the Rough Rider any sums he may have paid since the dissolu- group is a partnership liability to pay which tion of the partnership in satisfaction of sufficient sums should be retained. partnership debts, and should be charged The master reported Smith entitled to with interest on the sum remaining of the net credits of $187,460.76, and Hovland's net $100,000 since its receipt by him. The part- debits as $1,072,214.62. nership books kept at Bakerville are found Many exceptions were filed, and after to be a proper basis for the account. elaborate argument the District Court held

Hovland asserted that he ught certain that the master had reached a correct conshares of stock in mining and other compa- clusion as to the facts and that the facts nies at a cost of $158,000 for the benefit of as found by the master were such as would the partnership and asked credit according- have been found by the court. But the ly. The master found that in view of the learned judge disagreed with the master in fact that partnership books failed to show respect to 7,850 shares of Live Oak stock a credit to Hovland for the purchase of which Hovland was held to be accountable such shares, they have always been his in- for to the partnership. These 7,850 shares dividual property and should not be charged or 15,700 shares of Inspiration, their equivato the partnership.

lent, were considered by the master as of It is found that in January, 1911, Hov- the market value of $56 per share on April land without right treated the Live Oak 11, 1917, the date of the filing of the comstock belonging to the partnership as his in- plaint in this suit. The dividends which dividual property and made contracts con- the master found Hovland would have recerning the same without the consent or ceived upon those shares up to that date, if knowledge of Smith, and exchanged the they had remained in his possession, amountpartnership Live Oak stock for stock in the ed to $145,225. The master added interest Inspiration Copper Company at the rate of to these amounts at the rate of 6 per cent. two shares of Inspiration for one of Live from April 11, 1917, to November 1, 1921, Oak, and caused the Inspiration stock to be when the master's report was filed, making issued in his (Hovland's) name, and there- a total charge for Live Oak stock of $1,305.after, in disregard of the rights of the part- 041.11. The court was of the opinion that, nership, pledged the Inspiration stock to se- inasmuch as the property belonged to the cure a loan of $300,000 in New York for partnership and that inasmuch as it had been his personal use, and that the action of Hov- agreed between the partners that property land caused a loss of the stock through fore acquired in the name of either should be closure of the pledge thereof, and that Hov- held and disposed of for the use and benefit land should account for all of the Live Oak of the partnership subject only to the duty stock and Inspiration stock belonging to the ‘of the partner holding title to account to the partnership, and should pay into court for partnership, it was not the duty of Hovthe benefit of the partnership the value of land in March, 1912, to hold the stock and the stock at the time of the filing of this account for it to the partnership in kind, suit, with interest and all dividends with in- but that he had a right to dispose of it for terest, or should purchase and deliver proper the benefit of the partnership and to accertificates of such number of shares of count, and that not only was it the right of 11 F.(2d) 9 Hovland to dispose of it, but it was his for the appellant disclaimed any participaduty to do so "as it was the only partner- ' tion in the matter of the petition. ship asset immediately available for the pay

Examination of the record on appeal ment of partnership debts.” It was there- shows that the contents of the transcript to fore held that Hovland did not incur more be filed in this court for the purposes of than a partner's liability, notwithstanding Hovland's appeal and of Smith's cross-apthe fact that be assumed to dispose of it as peal were settled by stipulation of the paran individual, and that he should be held ac- ties through their respective counsel of reccountable for the highest price received by ord and by order of the District Court dated him when the stock was sold, or $16.25 a August 13, 1924, and subsequent stipulation share, and that upon the amount received and order dated October 8, 1924, and also on that basis he should be charged with in- that as far back as January, 1922, the printerest from March 18, 1914, until the date cipal facts upon which Hovland now relies of the decree. Thus the debits of Hovland as grounds for his petition were matters of to the partnership on the Live Oak stock as record in the case. Two terms of this court of April 12, 1922, were reduced from $1,- passed after this appeal was filed, yet no 305,041.11 to $378,605.50. With such modi- petition for certiorari was made as required fication and an item of $15 costs, decree was by rule 18 of the court, and no satisfactory made, approving the findings of the master cause is shown for not having moved promptand his conclusions of law. The court ap- ly in the premises. We therefore hold that pointed a special master and directed him the parties are bound by the record as stiputo proceed to execute the provisions of the lated by their counsel, and deny the petidecree, and retained jurisdiction to make tion for certiorari and diminution of record, any orders that might seem proper in equity. and overrule the motion to join additional Appeals and cross-appeals were taken. parties.

[2] To enter upon an extended statement Ellinwood & Ross, John E. Sanders, and of the evidence upon the merits would greatJohn M. Ross, all of Bisbee, Ariz., for appel- ly lengthen this opinion, and is unnecessary, lant and cross-appellee.

The findings of fact, having been approved John H. Campbell

, S. L. Kingan, and by the District Court after a review of the A. R. Conner, all of Tucson, Ariz., and evidence, are to be taken as presumptively Charles C. Montgomery, of Los Angeles, correct, and unless obvious error has interCal., for appellee and cross-appellant.

vened in applying some principle of law or Charles R. Morfoot, of Los Angeles, Cal., some important mistake has occurred in for Hovland.

weighing the evidence, the decree will not Before HUNT, RUDKIN, and McCAM- be reversed. Furrer v. Ferris, 12 S. Ct. 821, ANT, Circuit Judges.

145 U. S. 132, 36 L. Ed. 649; Road Imp. Dist. v. Wilkerson (C. C. A.) 5 F.(20) 416.

We shall refer briefly to the more important HUNT, Circuit Judge (after stating the

features. facts as above. [1] Nearly a year after

Hovland's contentions are that the masthe record was filed in this court and during ter and the court erred: (1) In allowing the term at which the case was set for hear- Smith a credit of $30,000 on account of the ing, Hovland filed a petition for certiorari Arizona King group of mining claims; and and for diminution of record based upon (2) in allowing him a credit of $139,497.66 the ground that Smith was and is not the sole party in interest; that Phelps-Dodge tions and commissions; (3) in finding that

or any other sum as the value of certain opCorporation and others are necessary parties the partnership was dissolved as of March and should be joined; and that certain pa- 1, 1912; (4) in finding that on March 1, pers used in a case pending in the state court 1912, Hovland had 7,850 shares of Live Oak of Arizona and an interlocutory decree en- stock and that certain stocks were purchased tered January 30, 1922, in the United States by Hovland for himself and not for the District Court for the District of Arizona partnership. in the present case and a stipulation on Smith by cross-appeal predicates error which the interlocutory decree was entered (1) upon a charge to him of interest amountshould be certified to this court. The petition ing to more than $22,000 on part of a sum is signed by Hovland by Charles R. Mor- received by him for the sale of the Rough foot. Mr. Morfoot does not appear as at- Rider claims; (2) upon the decision of the torney of record in the appeal proper, and court disaffirming the finding of the master upon the bearing before us counsel of record allowing a debit to Hovland of $1,305,011,

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