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the territory.

11 F.(2d) 9

The effect of section 1462, supra, is to relieve the witness from the burden of attending, unless the subpœna is indorsed as provided therein. This section of the statute is doubtless taken from section 818, Oregon Laws. The Oregon statute has been construed by the Supreme Court of that state in Egan v. Finney, 72 P. 133, 42 Or. 599, 606, and Kohlhagen v. Cardwell, 184 P. 261, 93 Or. 610, 620-622, 8 A. L. R. 11. It is held that the adverse party is not entitled to complain of the failure to indorse on the subpœna an order requiring the attendance. of the witness. If he attends, he is entitled to his mileage and per diem. We think that this construction of the statute is correct, and that defendants' exceptions to the mileage taxed were properly denied. The per diem is limited to the days the witnesses were in attendance at the place of trial. The per diem is not taxable for the time spent in coming and going. 15 C. J. 133. In this last respect defendants' exceptions are well taken. [19] James Hagan, a witness for plaintiff, was a deputy United States marshal under salary. He traveled on a pass on the government railroad in attending the trial. Under the rule announced in United States v. Southern Pacific Co. (C. C.) 172 F. 909, 912, he was entitled to his necessary expenses in going to, returning from, and attendance on, the court. These expenses are taxable as costs. The witness fees of Hagan should be retaxed, and the per diem of the witnesses Keller, Fairborn, Doner, Bentley, Williams, Wrangstedt, and Raeburn should be limited to the period of their attendance at the place

of trial.

The judgment for costs is reversed, with directions to retax in accordance with the above conclusions. In other respects the judgment is affirmed.

cert. den icd
2712es 686 20 LED. 1151,
46 Jeep CT. 638.

SMITH v. HOVLAND.*

(Circuit Court of Appeals, Ninth Circuit. Feb-
ruary 15, 1926. Rehearing Denied
March 22, 1926.)

No. 4366.

1. Courts 405 (16)-Petition for certiorari

and for diminution of record not filed until two terms of court had passed, and motion to join additional parties, will be denied (C. C. A. Rule 18).

Where petition for certiorari and for diminution of record was not filed until after two terms of Circuit Court of Appeals had passed, and no satisfactory cause was shown for not having moved promptly under C. C. A.

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

Rule 18, held, that parties were bound by record as stipulated by counsel, and petition will be denied and motion to join additional parties overruled.

2. Appeal and error

931(10), 1022(1).

Master's findings confirmed by trial court are presumptively correct, and, in absence of obvious error in applying law or serious mistake in considering evidence, will be permitted to stand.

3. Partnership 333-Partner held entitled to credit for value of property turned over to firm without reduction because of litigation then pending affecting title.

In partnership accounting suit, partner was entitled to credit for value of property turned over to partnership without reduction, because when partnership was formed litigation was pending over title which reduced its value, where such litigation failed to impair title.

4. Partnership 333-Partner who retained proceeds of sale of firm property after dissolution of firm held chargeable with interest thereon.

Partner, who retained proceeds of sale of firm property, which he received five years after dissolution, held chargeable with interest thereon, notwithstanding he sued for accounting soon after paying out certain sums in settlement of firm debts due to himself personally. 5. Partnership 282, 333.

After dissolution, either partner may sell firm property and use proceeds to pay firm debts, but if he withholds proceeds he is chargeable with interest.

Appeal from the District Court of the United States for the District of Arizona.

Suit by Hoval A. Smith against Henry B. Hovland. From a decree entered on the master's report, both parties appeal. cree modified, and, as so modified, affirmed.

De

Suit in equity commenced by Smith against Hovland April 11, 1917, for an accounting and settlement of the partnership affairs of Hovland & Smith. After issues were made up, the court referred the cause to the standing master to hear and determine all of the issues of law and fact, state an account between the parties, to make findings of fact and conclusions of law, to make a report to the court, and generally to exercise such powers as might be exercised by a master in chancery of the court.

The findings, so far as material to these appeals, were in substance as follows: By a verbal contract the parties agreed that as of January 1, 1905, they would become partners in the business of examining and dealing in mining properties and real estate, acquiring and disposing of options and contracts for leasing, purchase, development, and operation of mines, mining properties,

or real estate; and in the promotion of corporations for the purchase, sale, development, and operation of mines, and of acquiring, managing, and disposing of shares of stock of such corporations, and engaging in such other enterprises as might be agreed upon between the partners. Each was to have a half interest and contribute equally to the capital assets and to exercise equal authority. Property then or thereafter held or acquired in the name of either party was to be held and disposed of for the use and benefit of the partnership. Smith was to contribute to the capital his interest in the Arizona King group of mines together with his interest in certain other mining properties at the then reasonable value thereof, and also his equities, rights, and options in certain mining claims at the then reasonable value thereof. These mining claims, options, and commission rights are found to have become partnership property and were treated as such. The partnership books of account were kept in the name of Smith at Bakerville, Ariz. They recorded all sums of money received and expended by the partnership or either of the partners for it, but no credit to Smith was made or entered on account of Smith's contribution to the partnership of his half interest in the Arizona King group of claims, or on account of the equities, rights, and options herein before mentioned, and no agreement was ever made between the parties fixing the exact amount to be credited to Smith for such contributions.

In 1905 the partnership aided in the promotion of the Warren Realty & Development Company. In that matter in consideration of $38,000 and the issue of 8,000 shares of paid-up stock of the Warren Company, the Bisbee Copper Development Company relinquished to the Warren Company all of the interest of the Bisbee Company in certain options and properties which the Bisbee Company had theretofore secured from Smith, including the Union group of mines. Smith waived certain prospective profits, equities, and commissions under the options, thus permitting the Warren Company to buy the property held by the Bisbee Company at a much lower price than that which the Bisbee Company would have had to pay under its option, and as a result of the transaction the partnership realized profits of approximately $40,000, and Smith conveyed his interest in the East Bisbee group of mines to the Warren Company for $15,000 which was received by the partnership and credited to Smith on the partnership books.

The master found that Smith was entitled to a credit for the reasonable value of the equities and options and commissions as of March 1, 1905. As a result of the promotion of the Warren Company, Smith for the benefit of the partnership received from the Warren Company an option to buy 6,000 shares of the capital stock of the Warren Company at $15 per share, and thereafter, with the consent of the partnership, he conveyed 2,000 shares to one Cole, 2,000 shares to defendant, and 2,000 shares to himself, which shares remained the personal property of those three persons.

Until June, 1910, the half interest in the Arizona King group of mines was held by Smith for the benefit of the partnership. About that time the Union Mines Company was organized by the partnership to take over the titles to the Arizona King group and certain other claims which had been acquired by the partnership, titles to which had been in the name of Smith. Thereupon Smith conveyed all of said interest and properties to the Union Mines Company and received 21,000 shares of the capital stock which was carried in his name until transferred in 1912 to one Shattuck as security for partnership debts owing to Shattuck and other creditors.

During the existence of the partnership, Hovland contributed approximately $227,000 and Smith $113,000, in addition to the contribution of his interest in the Arizona King group and his equities, options, and rights already referred to. No claim for interest on the sums advanced to the partnership was ever made until February, 1912, when Hovland claimed interest.

In 1908 Hovland, for the benefit of the partnership, secured an option to buy the Live Oak and certain other mining properties in Arizona, and the partnership proceeded to promote the Live Oak Development Company to which Hovland, for the benefit of the partnership, transferred his options and property rights for $10,000; and in further consideration of an option granted by the Live Oak Company to Hovland for the benefit of the partnership, an agreement was made to purchase 15,000 shares of the capital stock of the Live Oak Company. The option was subject to the condition that if development work proved the existence of a mine any portion of the 15,000 shares then unissued should be forthwith issued and delivered, full paid, to Hovland. Prior to November 27, 1909, out of the 15,000 shares covered by the option, 3,038 were issued to Hovland or his order.

11 F.(2d) 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 in December, 1910, and procured a dismissal of the suits for which services he was allowed certain sums by the Warren Company as compensation, which sums, it is found, he should account for to the partnership, less costs and expenses incurred in the performance of his services.

Prior to November 27, 1909, Smith, for the use and benefit of the partnership, exercised the option to the extent of 962 shares of Live Oak stock which was sold by him at a profit of $6,891.87, all of which money Smith turned over to the partnership and devoted to its use, one half thereof being credited to Hovland and the other half to Smith. About that time it was demonstrated that there was a mine in the Live Oak property, and it was ordered that the remaining unissued stock covered by the option (11,000 shares) should be and the same was issued to Hovland. These 11,000 shares were property of the partnership and were so received and held by Hovland.

In January, 1911, at Duluth, the partners met and discussed their affairs, but at that time there was no agreement of dissolution and no meeting of minds as to ownership or distribution of the assets. After the Duluth meeting relations became unfriendly, and on February 11, 1912, at Chicago, each partner presented a statement. Hovland claimed interest on the amounts contributed by him and credit for certain stock alleged to have been purchased for the benefit of the partnership. Smith disputed the claims, and thereafter on March 1, 1912, notified Hovland that from that date the partnership was dissolved, that firm debts should be promptly paid out of firm property, and that thereafter the assets should be divided. Smith specially objected to Hovland's claim for interest on contributions to firm capital and to his claim that certain stock purchases other than Live Oak stock allotments were copartnership ventures. Smith claimed that 4,400 shares of Warrior Development stock and the 11,000 shares of Live Oak stock and the profits from sales of such stock were firm property to be accounted for by Hovland.

The partnership was dissolved on March 1, 1912. In that year the Union Mines Company property was sold for $97,500 cash, which was paid to Shattuck as trustee to secure the debts owing by the partnership to him and to a bank. Any balance was to be held by Shattuck for the benefit of the creditors of Hovland & Smith, to be paid on joint approval.

In 1910 Smith, with Hovland's knowledge and consent, managed certain litigation be

When the partnership was dissolved, it owned the Rough Rider group of mines for which applications for patents were then pending. Smith at his own expense`remained in Washington and obtained patents to those claims, for which service it is found he is entitled to $12,000 as reasonable compensation.

In April, 1917, Smith negotiated and consummated a sale of the Rough Rider group to the Phelps-Dodge Corporation for $200,000, of which amount he received $100,000 upon delivery of conveyances. Out of this sum he discharged all the partnership debts except one claim and an unliquidated account. Thereupon he brought the present suit. By the terms of the Rough Rider sale agreement, the balance of the purchase price ($100,000) was to be paid by the purchaser if and when the conveyance made and delivered by Smith to the Phelps-Dodge Corporation and the title to be conveyed thereby shall be approved and confirmed by Hovland individually and as a member of the partnership, or if and when the conveyance and the title shall be finally confirmed and validated by judicial decree in any litigation brought for the settlement of the partnership affairs of Hovland & Smith. But some months before the sale, to wit, February 28, 1917, the Rough Rider group was sold under execution directed against Smith, in whose name the partnership title was held. This sale was pursuant to a judgment in the state court in Arizona wherein the judgment creditor sought to collect certain debts of the partnership. Immediately after the instant suit was filed by Smith Hovland filed a petition praying for an order restraining Smith from collecting upon the sale of the Rough Rider group, and in the alternative, if Smith had completed the sale and collected, to restrain him from disposing of the proceeds and requiring him to pay the money into court. Restraining order was issued, but nothing in the order was to prevent Smith from making conveyance pursuant to

the contract of sale theretofore made provided the purchaser should pay the balance of the purchase price into court. As a matter of fact, Smith had consummated the sale and delivered the conveyance and had received the $100,000 before the restraining order was issued. The master finds that the sale should now be confirmed and the purchaser should pay the balance into court to await further orders.

Between December 22, 1914, and June 27, 1916, Smith out of his own funds paid taxes and for assessment work for which he is entitled to credit. He is held accountable for the $100,000 received on account of the sale of the Rough Rider group and should be credited with sums paid out of that sum on account of partnership debts, and for any sums he may have paid since the dissolution of the partnership in satisfaction of partnership debts, and should be charged with interest on the sum remaining of the $100,000 since its receipt by him. The partnership books kept at Bakerville are found to be a proper basis for the account.

Hovland asserted that he bought certain shares of stock in mining and other companies at a cost of $158,000 for the benefit of the partnership and asked credit accordingly. The master found that in view of the fact that partnership books failed to show a credit to Hovland for the purchase of such shares, they have always been his individual property and should not be charged to the partnership.

It is found that in January, 1911, Hovland without right treated the Live Oak stock belonging to the partnership as his individual property and made contracts concerning the same without the consent or knowledge of Smith, and exchanged the partnership Live Oak stock for stock in the Inspiration Copper Company at the rate of two shares of Inspiration for one of Live Oak, and caused the Inspiration stock to be issued in his (Hovland's) name, and thereafter, in disregard of the rights of the partnership, pledged the Inspiration stock to secure a loan of $300,000 in New York for his personal use, and that the action of Hovland caused a loss of the stock through foreclosure of the pledge thereof, and that Hovland should account for all of the Live Oak stock and Inspiration stock belonging to the partnership, and should pay into court for the benefit of the partnership the value of the stock at the time of the filing of this suit, with interest and all dividends with interest, or should purchase and deliver proper certificates of such number of shares of

Inspiration stock as may be found owing from him to the partnership, and should reimburse the partnership for dividends which have been paid since the organization of the Inspiration Company up to the time of the filing of this suit or should respond in damages to be ascertained upon accounting; that Hovland should be credited in the accounting for moneys paid by him in satisfying a judgment recovered against him by one Fairchild for failure to deliver to Fairchild 1,000 shares of Live Oak stock; that Hovland must account for 5,000 shares of the capital stock of the Warrior Development Company received by him for the benefit of the partnership; and that a claim made by one Fox for services rendered to Smith in connection with the Rough Rider group is a partnership liability to pay which sufficient sums should be retained.

The master reported Smith entitled to net credits of $187,460.76, and Hovland's net debits as $1,072,214.62.

Many exceptions were filed, and after elaborate argument the District Court held that the master had reached a correct conclusion as to the facts and that the facts as found by the master were such as would have been found by the court. But the learned judge disagreed with the master in respect to 7,850 shares of Live Oak stock which Hovland was held to be accountable for to the partnership. These 7,850 shares or 15,700 shares of Inspiration, their equivalent, were considered by the master as of the market value of $56 per share on April 11, 1917, the date of the filing of the complaint in this suit. The dividends which the master found Hovland would have received upon those shares up to that date, if they had remained in his possession, amounted to $145,225. The master added interest to these amounts at the rate of 6 per cent. from April 11, 1917, to November 1, 1921, when the master's report was filed, making a total charge for Live Oak stock of $1,305.041.11. The court was of the opinion that, inasmuch as the property belonged to the partnership and that inasmuch as it had been agreed between the partners that property acquired in the name of either should be held and disposed of for the use and benefit of the partnership subject only to the duty of the partner holding title to account to the partnership, it was not the duty of Hovland in March, 1912, to hold the stock and account for it to the partnership in kind, but that he had a right to dispose of it for the benefit of the partnership and to account, and that not only was it the right of

11 F.(2d) 9

Hovland to dispose of it, but it was his duty to do so "as it was the only partnership asset immediately available for the payment of partnership debts." It was therefore held that Hovland did not incur more than a partner's liability, notwithstanding the fact that he assumed to dispose of it as an individual, and that he should be held accountable for the highest price received by him when the stock was sold, or $16.25 a share, and that upon the amount received on that basis he should be charged with interest from March 18, 1914, until the date of the decree. Thus the debits of Hovland to the partnership on the Live Oak stock as of April 12, 1922, were reduced from $1,305,041.11 to $378,605.50. With such modification and an item of $15 costs, decree was made, approving the findings of the master and his conclusions of law. The court appointed a special master and directed him to proceed to execute the provisions of the decree, and retained jurisdiction to make any orders that might seem proper in equity. Appeals and cross-appeals were taken.

Ellinwood & Ross, John E. Sanders, and John M. Ross, all of Bisbee, Ariz., for appellant and cross-appellee.

John H. Campbell, S. L. Kingan, and A. R. Conner, all of Tucson, Ariz., and Charles C. Montgomery, of Los Angeles, Cal., for appellee and cross-appellant.

for the appellant disclaimed any participation in the matter of the petition.

Examination of the record on appeal shows that the contents of the transcript to be filed in this court for the purposes of Hovland's appeal and of Smith's cross-appeal were settled by stipulation of the parties through their respective counsel of record and by order of the District Court dated August 13, 1924, and subsequent stipulation and order dated October 8, 1924, and also that as far back as January, 1922, the principal facts upon which Hovland now relies as grounds for his petition were matters of record in the case. Two terms of this court passed after this appeal was filed, yet no petition for certiorari was made as required by rule 18 of the court, and no satisfactory cause is shown for not having moved promptly in the premises. We therefore hold that the parties are bound by the record as stipulated by their counsel, and deny the petition for certiorari and diminution of record, and overrule the motion to join additional parties.

[2] To enter upon an extended statement of the evidence upon the merits would greatly lengthen this opinion, and is unnecessary. The findings of fact, having been approved by the District Court after a review of the evidence, are to be taken as presumptively correct, and unless obvious error has intervened in applying some principle of law or some important mistake has occurred in weighing the evidence, the decree will not

Charles R. Morfoot, of Los Angeles, Cal., for Hovland. Before HUNT, RUDKIN, and McCAM- be reversed. Furrer v. Ferris, 12 S. Ct. 821, ANT, Circuit Judges.

HUNT, Circuit Judge (after stating the facts as above. [1] Nearly a year after the record was filed in this court and during the term at which the case was set for hearing, Hovland filed a petition for certiorari and for diminution of record based upon the ground that Smith was and is not the sole party in interest; that Phelps-Dodge Corporation and others are necessary parties and should be joined; and that certain papers used in a case pending in the state court of Arizona and an interlocutory decree entered January 30, 1922, in the United States District Court for the District of Arizona in the present case and a stipulation on which the interlocutory decree was entered should be certified to this court. The petition is signed by Hovland by Charles R. Morfoot. Mr. Morfoot does not appear as attorney of record in the appeal proper, and upon the hearing before us counsel of record

145 U. S. 132, 36 L. Ed. 649; Road Imp. Dist. v. Wilkerson (C. C. A.) 5 F.(2d) 416. We shall refer briefly to the more important features.

ter and the court erred: (1) In allowing Hovland's contentions are that the masSmith a credit of $30,000 on account of the Arizona King group of mining claims; and (2) in allowing him a credit of $139,497.66 or any other sum as the value of certain options and commissions; (3) in finding that the partnership was dissolved as of March 1, 1912; (4) in finding that on March 1, 1912, Hovland had 7,850 shares of Live Oak stock and that certain stocks were purchased by Hovland for himself and not for the partnership.

Smith by cross-appeal predicates error (1) upon a charge to him of interest amounting to more than $22,000 on part of a sum received by him for the sale of the Rough Rider claims; (2) upon the decision of the court disaffirming the finding of the master allowing a debit to Hovland of $1,305,041,

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