author: Lea, J.

text:
    N. Girod’s Legatees v. H. Pargoud.
    A vendee has no claim against his vendor for the reimbursement of expenses incurred in defending a title which was set aside for fraud, of which the vendee not only had knowledge, but in which he participated.
    As between two executors, the action of the court cannot he invoked for the purpose of assessing their proportionate shares of a liability growing out of a joint fraudulent administration.
    Where it was stipulated, in a consent judgment, that an intervention, to which an exception and answer in reconvention had been filed,'should be‘withdrawn, and the whole litigation terminated, Held,: that the consent judgment cannot be considered merely as a judgment on the exception, dismissing the intervention, but as a final judgment on the adverse claims of the intervenor and the defendáis.
    APPEAL from the Sixth District Court of New Orleans, Cotton, J.

      Soulé and L. Janin, for plaintiff. Benjamin, Bradford & Finney, for defendant.
   Lea, J.

The facts out of which the litigation in this case arises are substantially as follows-:

C'uaad Frangois Girod, a resident of the parish of Assumption, in this State, died in the year 1813, leaving a last will and testament, by which (after making certain particular legacies) he bequeathed the bulk and residue of his estate in equal shares to eight of his brothers and sisters. One of these brothers, by name Jean Frangois Girod, died subsequently, leaving a will; by which he constituted, as his universal legatee, his brother, who bore the same name with himself. Thus the surviving Jean Frangois Girod became entitled to two-eighths of the estate of Claude Frangois Girod.

By the terms of the will of Claude Frangois Girod, his brothers, Nicholas and Jean Frangois Girod, both then residents of this State, were appointed his testamentary executors, which trust, it appears, they administered unfaithfully. By means of sales made under the sanction of judicial authority they became, through persons interposed, the purchasers of the entire estate of their testator: Nicholas becoming the purchaser of the property in New Orleans, and his brother, Jean ‘Frangois, and himself becoming the joint purchasers of the lands and slaves in the parish of Assumption and elsewhere. Some years afterwards Jean Frangois sold out his half of the joint purchase to Nicholas for $70,000, who thus became the possessor of the entire estate of his brother Claude, which he held until he died, in 1840, leaving a will, by which he bequeathed the sum of $710,000 in different and unequal sums to several public institutions and private individuals in this city, who are the plaintiffs in this suit.

After the death of Nicholas Girod, and when it appeared that so large a portion of his estate had been diverted from the ordinary channel of inheritance, the legal heirs of Claude Frangois Girod instituted a suit in equity in the Circuit Court of the United States, sitting in New Orleans, against the legatees and legal representatives of Nicholas Girod, setting forth the foregoing facts, and many other matters of detail, which it is not necessary to recapitulate, claiming that the sales to Nicholas and Jean Frangois Girod, and the settlements based upon their accounts as executors be set aside and annulled as fraudulent, “ that the property be treated as belonging to the estate of Claude Frangois Girod, that it should be again sold, and its proceeds distributed among the heirs of Claude Frangois Girod, according to his will, and that the defendants be ordered to render an account of the rents and profits of the property from the time of those sales.”

This suit was brought against the estate of N. Girod alone, the whole of the property having been transferred to him before his death, as before stated. Jean Frangois having ceased to be a resident of the country, was not made a party to the litigation.

The plaintiffs gained their case. The court ordered that the adjudications to Jean Frangois and Nicholas, of the property belonging to the estate of Claude Frangois Girod be set aside and treated as nullities, and that the settlements based upon their accounts, as executors, be also set aside; that the adjustment of the mutual rights and credits to which the parties litigant were entitled should be referred to a master in chancery to take an account of the same and report thereon. And the court further decreed, (inasmuch ns Jean Frangois Girod was not a party in the cause, but was nevertheless, under the wills of his two brothers, entitled to a share of the estate of Claude Frangois to the extent of one-fourth part thereof,) that he should be permitted to “ become a party to the proceedings,” for the purpose of claiming his share in the general distribution, but stating at the same time that his claim would be subject to all the equities subsisting between the said Jean Frangois and Nicholas, and especially to the/allowance of the purchase money given by Nicholas to Jean for the one-half of the joint purchase of the property of their testator, with interest, etc.

Acting upon the permission granted by the decree of the court, Jean Frangois Girod did intervene in the subsequent proceedings, and claimed one-fourth of all the property and sums of money which, by the aforesaid decree, were due or might become due by the estate of Nicholas Girod to the estate of Claude Frangois Girod, subject to the deduction of the purchase money paid by the said Nicholas Girod toihc saidintervenor, as appears from an act passed before Lavergne, notary, on the 19ft January, 1831, via: the sum of $70,000, with interest” from the periods at which the several installments respectively became due, according .to the stipulations of the act of sale.

To this intervention the legatees made appearance, and on grounds in the exception set forth, excepted to the right of Jean Frangois to make himself a party to the proceedings, and claimed “ in case that the court should he of opinion that notwithstanding the exceptions the said Jean Frangois Oirod is entitled to make himself a party to the said suit in chancery, that then the said Frangois should account not only for the sums set forth in the petition, with interest, hut also for all the damage and injury resulting from his illegal and fraudulent conduct as one of the executors in the administration, or rather mismanagement, of the succession of his testator,” which damage was alleged to exceed the sum of $300,000.

In this position towards each other stood the respective parties to this suit nearly five years after the original litigation had commenced.. Tired of the past, and uncertain of the future, they concluded to effect a compromise. Its terms are set forth in the briefs of counsel. In payment of the five-eighths of the balance due the estate of C. F. Oirod, belonging to the plaintiffs, they were to receive certain designated sums and specified credits, which it appears they were willing to take; the sixth article of the act of compromise, however, stipulates as follows: This proposition is made on the footing that the claim of J. F. Oirod is withdrawn; that the whole litigation is terminated; that the above amount is to be received by the plaintiffs clear of any costs, etc., and that thereafter the estate of Nicholas Oirod can divide any remaining assets among the legatees. The terms and stipulations of this compromise were embodied in a consent decree based upon it, bearing date of the 24th April, 1847.

Since then Jean Frangois Oirod has also died, leaving Hypolite Pargoud, the defendant, his universal legatee, and it is against him in that capacity, as the representative of Jean Frangois Oirod, that the plaintiffs in the institution of this suit have sought to make him responsible, first, for the sum of $70,000, being the price of the half of the joint purchase sold by.C. F. Oirod to his brother Nicholas; second, for the sum of $5000, with interest from the 19th January, 1830, being the proceeds of a tract of land sold by C. F. Oirod, for which the estate of N. Oirod was held accountable under the judgment before referred to; and third, on the sum of $24,000, with interest, being the one-half of the expenses incurred by the estate of N. Oirod in defending the defective title obtained from said J. F. Oirod by the act of sale of 19th January, 1880.

The claim for $5000 on account of the sale to Robinson and Ballard was abandoned on the trial of the cause in the District Court; and we consider that a claim against a vendor for reimbursement of expensés incurred in defending a title which was set aside on the ground of fraudulent dealings, of which the vendee not only had full knowledge, but in wliich he participated, cannot be seriously entertained by the court.

We may add, as an incident of the litigation in this case, that the same remark would apply, and would have applied to any claim, as against each other, for a division of their liability for damages growing out of their joint maladministration. Neither party could invoke the assistance of the court to determine rights of such a character.

The only issue, therefore, which we think it important to examine is tljat which has reference to the plea of res judicata. What rights were determined in the compromise upon which the judgment of April 24th, 1847, was based?

The plaintiffs who represented an interest equal to five-eighths of the estate of Claude Frangois Oirod, had obtained a judgment annulling all proceedings had.. during the previous administration thereof, and reinstating the entire succession in a condition to be the subject of a partition among the heirs. The decree provided that all the heirs, whether plaintiffs or not, might intervene to claim a distributive share. Jean Frangois was an heir to the extent of one-fourth of the whole estate.

His right to intervene would have been subject to any claims or offsetts which his co-heirs might have against him, but his participation in a fraudulent administration did not and could not destroy his capacity as heir. But whether his right to intervene might have been successfully contested or not, the fact is, that he did intervene, and claimed rights amounting in value to $140,000, tendering at the same time reimbursement of the $70,000, the price of the sale made by him to N. Oirod of the joint purchase they had made from the estate of their deceased brother. The legatees, excepting to his right to intervene, claimed from him not only “the sums set forth in his petition, with interest,” but also $300,000 damages.

Can it be contended that upon such pleadings a judgment in favor of the defendants for the whole of their demand would not have embraced the $70,000 with interest, which was referred to in the defendants’ answer as the “ sum set forth in the petition, with interest ?" or that a judgment in favor of the intervenor would not equally have recognized and disposed of this claim, as being included in the general adjustment of their mutual rights?

It is quite clear, then, that Jean Frangois Oirod was a party to the litigation as well as to the compromise; and had such a judgment as either of those above referred to been rendered on the pleadings, that future litigation with reference to the claim of $70,000 would have been forever closed. But no such judgment was rendered. The parties preferred immediate mutual concession to the uncertainty of future triumph. Jean Frangois consented to withdraw and forever abandon his claims; that the estate of Nicholas Oirod might divide any remaining assets among the legatees, upon the understanding, however, “ that the whole litigation is terminated.”

That was the consideration for the withdrawal of his claims. It matters not for what object they -were urged, or with what motives they were withdrawn. His motives or his intentions formed no part of his contract. His part of that contract has been performed. The plaintiffs have had the benefit of it according to its spirit and tenor, and we think the defendant is entitled to the benefit of the only stipulation contained in it which conferred upon his testator any solid advantage, or extended to him any useful protection, for we have before remarked that, as between the two executors or their representatives, the action of the court could not be invoked for the purpose of assessing their proportionate shares of a liability growing out of a joint fraudulent administration.

It is ordered that the judgment appealed from be affirmed, with costs.


source: Caselaw Access Project

author: VooEniES, J. Spofford, J. Vooehibs, J.,

license: Public Domain

text:
    Dwight Durkee v. Price, Frost & Co.
    Defendants received a claim for collection from D. T. W. & Co. The firm of D. T. W. & Co. was dissolved, and B. who had been one of the members, instructed defendants to put the proceeds of the claim, when collected, to the credit of plaintiff, which defendants accordingly did, and so instructed B. and the plaintiff. Subsequently defendants paid the money under instructions from D. T. W., as liquidating partner of D. T. W. & Co. Plaintiff then brought this suit for the amount of the claim. JTeZd: That after defendants had notified plaintiff that, as requested by B., they had placed the money collected to plaintiff’s credit; they had no right to divest the funds without plaintiff’s assent; that having done so, they were liable to plaintiff.
    After the dissolution of a partnership, no one of the partners can use the social name so as to bind the others; and to draw or endorse a note in the name of the former partnership, the authority must be express and special. Any subsequent power mdst be derived, not from the previous relations of the parties as partners, but from a new contract!* which is one of mandate, and this mandate must be express and special. Yoorhies, J., dissenting.
    No one of the partners, after the dissolution, can alienate anything more than his own interest in the partnership property. He is not permitted to do any act, still less, to malee use of the partnership funds in a manner inconsistent with the purpose of a just and proper settlement. Yoorhies, J., dissenting.
    APPEAL from the Second District Court of. New Orleans, Lea, J.

      Biunton, for plaintiff. Wolfe S Singleton, for defendants and appellants.
   VooEniES, J.

The facts of this case may be briefly summed up as follows: The firm of D. T. Wheeler & Oo., composed of D. T. Wheeler and Samuel B. Bulloch, of St. Louis, Mo., enclosed to the defendants a claim of theirs against Turner, Wilson & Oo., of the city of New Orleans, for collection. The claim was collected by suit brought in the name of B. T. Wheeler & Oo. against Turner, Wilson & Oo., by Messrs. Wolfe & Singleton, attorneys at law, and the net proceeds, $1529 75, paid over to the defendants on the 7th December, 1852. On the 11th September, 1852, 8. B. Bulloch addressed a letter to the defendants, instructing them to place the proceeds of this claim, when collected, to the credit of Burhee, Amtell & Go., of which firm he was then a member. This firm continued in business until January, 1858, when Axtell withdrew, and then continued in the name of Burhee & Bulloch. 8. B. Bulloch, in a letter to defendants, dated.19th October, 1852, says: “This claim I have placed in the hands of Mr. Dwight Burhee, for a specific purpose, which, when collected, you will please apprise him and pay to his order.” The firm of B. T. Wheeler & Oo. was dissolved on the *Uh June, 1852, Conceding the authority of Bullock to transfer this claim, still it may be observed in passing, that this could hardly be construed into a transfer vesting the absolute ownership in Burhee ; indeed the subsequent acts of the parties clearly indicated that such was not their intention. Bulloch, in a letter of the 11th December, 1852, to the defendants, says: “ Tour favor of the 1st instant is at hand, I wish you to invest the proceeds of the claim against Turner, Wilson & Oo., in your own bill on Frost & Foster, New Torlc, at 70 days, in favor of James 8. Felps, and remit the same to me.” The letter of the 1st instant referred to, announced the collection of the claim by Messrs. Wolfe & Singleton. On the 7th of the same month, the defendants enclosed to S. B. Bullock a statement of the attorneys, showing the settement of the claim on Turner, Wilson & Go., and informing him that the net proceeds, $1529 75, were placed to the credit of Dwight Dwhee, as requested. The latter was also advised of this by letter of the same date. On the 13th December, 1852, Bulloch wrote to the defendants, acknowledging the receipt of this letter and informing them of the tenor of his letter of the 11th, adding: “On another page you will please find an order from Mr. Dwight Du/rhee for the same.” The order referred to is as follows, viz :

“ Saint Louis, Dec. 13th, 1852.

Messrs. Price, Frost & Go., Mew Orleans.

. Gentlemen : Your favor of 7th instant is received. You will please invest the amount to my credit, in a seventy day bill, as requested and directed by Mr. 8. B. Bullock in a late communication from him to you. On the other page you will find those instructions copied.

Dwight Durkee.”

This new disposition of the fund held by the defendants was then fully acquiesced in and ratified by the plaintiff, who thereby ceased to have any further interest therein. It is clear that this fund then reverted back to the late firm of D. T. Wheeler & Go., even supposing that it had been legally transferred to the plaintiff. That transfer had been made by Bulloch in his individual name, as we have seen, and it does not appear that D. T. Wheeler ever had any notice of it. The following draft was drawn by the latter on Messrs. Wolfe & Singleton, viz:

“Alton, December 1st, 1852.

“ For value received, please pay to the order of W. 8. Gilman any funds you have, or may hereafter collect, on account of a judgment obtained in favor of D. T. Wheeler & Go., against Turner, Wilson & Go., of New Orleans, after paying your fees and the necessary expenses attending its collection.

D. T. Wheeler & Co.,

By D. T. Wheeler in liquidation.”

In this draft we see Wheeler assuming an authority to act for the late partnership in the liquidation of its affairs; and in the absence of proof to the contraiy, we are bound to presume that he had the same authority so to act as the other partner Bullock. Mr. Wolfe's testimony shows that shortly after the money collected had been paid over by Wolfe & Singleton, within a few days, this draft was presented to them. It was taken to Price, Frost & Go., and by them paid to the extent of $1529 75. The plaintiff and Bullock were both notified of the paj'ment of this draft, by letters addressed to them respectively by the defendants, and which, the evidence shows, they received about the 26th December, 1852. No answer appears to have been given to either of these letters.

On the 22d February, 1853, the plaintiff drew a draft at sight on the defendants, in favor of and to the order of Lucas S Simons, for the sum of $1629 75, and is closed as follows: “and charge the same to account of as advised by your letter of December 7th, 1852.” It is endorsed in blank by Lucas & Simons and Matthews, Finley & Go., and protested for non-payment on the 1st March, 1853. This draft, with the blank endorsements stricken out, and the defendants’ letter of the 7th December, 1852, formed the basis of the plaintiff’s action, which was resisted by the defendants on various grounds, among others, that they had paid the draft in favor of W. S. Gilman on Messrs. Wolfe & Singleton, of which the plaintiff immediately advised, and knew at the time he drew this draft that he had no funds to his credit on their books, and by his silence acquiesced in the disposition of said funds; that shortly after this claim was sent to the defendants, the firm of B. T. Wheeler & Go. was dissolved, and 8. B. Bullock formed a commercial partnership with the plaintiff, who still continues to be his partner; that the plaintiff paid no valid consideration for this claim, and the funds belonged to B. T. Wheeler S Go. at the time they were paid over to the defendants; that the plaintiff and Bulloch had fraudulently combined to make the defendants pay this debt twice, although they had no other interest in the matter than to ..give their friendly assistance to B. T. Wheeler & Go. to collect their claim; .that at the time said draft was paid by them, said funds were still under the control of B. T. Wheeler & Go. We have before us the testimony of both B. T. Wheeler and 8. B. Bulloch. Wheeler says he knew nothing of the transfer to plaintiff, but it was agreed between himself and Bullock, at the time of the dissolution of their firm, that the debt due by Turner, Wilson & Go., when collected, should be applied to the payment of a judgment against them in favor of J. Goons; that he drew an order on Wolfe & Singleton, in the name of B. T. Wheeler & Go., for the amount of the claim ; $712 62 of which were applied to the payment of one-half of Goon’s judgment, the other half having been paid by 8. B. Bullock, and the balance was paid to W. 8. Gilman for money borrowed from him and placed in the firm of B. T. Wheeler & Go. as capital.

Bullock says, that he is now and has been, since the dissolution of the firm of B. T. Wheeler & Go. connected with the plaintiff as partners in business ; that Mr. Wheeler, senior member of the firm of B.‘ T. Wheeler & Go., was collecting debts and selling claims of said firm; and at the same time refusing to appropriate the funds thus received to the payment of debts due by the firm, but applied the same to the payment of his individual debts. He was putting property out of his hands to prevent the payment of debts justly due by the late firm of B. T. Wheeler & Go., and forcing them upon him. 'Phis was the condition of their business when he (Bullock) wished, and was determined, that the assets of the firm, as far as he could control them, should be appropriated to the payment of the debts due by the firm. “ There was a suit of $1250 against the late firm of B. T. Wheeler é Go., in one of their courts in St. Louis city, somewhat connected with'the case against Turner, Wilson & Go., and was willing to transfer their claim against the latter to the plaintiff in that suit, but his proposition was declined. He then wished the plaintiff to advance him the money on it to pay the debt of the late firm of B. T. Wheeler & Go. This was declined by the plaintiff, on the ground that he did no't wish to be troubled with the suit. After some persuasion he assented, and a transfer was executed in his favor.

Under this state of facts, we are of opinion, the defendants are clearly not liable to the plaintiffs.

It is therefore ordered and decreed, that the judgment of the District Court be avoided and reversed ; and the demand of the plaintiff against the defendants be rejected at his costs; said appellee to pay costs of both courts.

A rehearing having been granted in this case, the judgment of the court was pronounced by

Spofford, J.

(Voorhies, J., dissenting.) Upon a reconsideration of this case, a majority of the court have become satisfied that the judgment formerly rendered should be changed.

The defendants treated with 8. B. Bullock, as the person who had control of this particular asset of the dissolved partnership of B. T. Wheeler &, Go.

At Bullock's request, they placed the funds which they had collected from the claim, to the credit of Dwight Durkee, the plaintiff, and notified him thereof in a letter, stating that the amount was “ subject to his order.” After that, they had no right to divert the fund without his assent. The only way for them to exonerate themselves from liability to the plaintiff, would be to show that they had obeyed his instructions with regard to the disposition of the fund.

They have not done so. He directed them to invest the amount they had to his credit, “in a seventy day bill, as requested and directed by Mr. 8. B. Bullock, in a late communication.” Bullock's communication, written two days earlier, requested them to invest the amount in their own bill on Frost & Forest, New York, at seventy days, favor of James 8. Phelps, and remit the same to him.

They do not pretend to have paid the slightest attention to this joint request of the party with whom they had constantly corresponded and dealt, as the person who had the rightful control of the claim, and of his new partner, the plaintiff, Durkee, to whose credit they had put the sum on their books, notifying him of the same.

They are, therefore, liable to the plaintiff. There is no evidence that he ratified what they say they have done with the funds. The alleged payment was upon an order of Wheeler, not directed to them, but to a legal firm out of whose control the funds had passed. It is not pretended that either Bullock or Durkee authorized this diversion of the fund. The defendants, themselves, were conscious that it was a departure from the usual course of commercial .dealings, for they took advice about paying the money on Wheeler's order to Wolfe & Singleton, and finally said that “ they knew Wheeler^ & Go. trusted in them, and would pay the draft; they supposed it would be all right, and if it was not right, they would make it so.”

It is therefore ordered, that the judgment heretofore rendered by this court in this cause, be set aside. , And it is further ordered, adjudged and decreed, that the judgment of the District Court be affirmed, with costs.

Vooehibs, J.,

dissenting. I am unable to concur with the other members of the court in the opinion, that the judgment heretofore rendered should be disturbed.

I hold it to be well settled under our jurisprudence, that after the dissolution of a partnership, no one of the partners can use the social name so as to bind the others; and that to draw or endorse a note in the name of the former partnership, the authority must be express and special. Any subsequent power must be derived, not from previous relations of the parties as partners, but from a new contract, which is one of mandate.; and this mandate must be express and special. 11 R. R. 95. 6 Ibid, 70. C. C. 2966.

It is equally well settled, that no one of the partners, after the dissolution, can alienate any thing more than his own interest in the partnership property. 9 R. 149. He is not permitted to do any act, still less to make use of the partnership funds, in a manner inconsistent with the purpose of a just and proper settlement. 2 An. 87. The fund in question belonged to the firm of D. T. Wheeler & Go., which was dissolved on the 7th of June, 1862. Could Bullock, in October following, alienate any thing more than his own interest in this fundi It is clear that he could not, without express and special authority from his former partner, who was a joint owner of the same. It cannot be said that the plaintiff was ignorant of the nature or origin of this claim, for it is fully disclosed by the correspondence between S. B. Bulloch and the defendants, and on which his pretensions are founded. Neither could he have been ignorant of the dissolution of the partnership, for we find that he shortly afterwards formed a partnership himself with his transferrer.

In the case of Prudhomme v. Henry, 5 An. 700, it is held, that where a liquidating partner has borrowed money to pay the debts of the firm, the partnership is liable so far as the evidence shows the money was used for the benefit of the firm. Is it shown here that the plaintiff had advanced for the payment of the debt of the firm of D. T. Wheeler & Go., the amount equivalent to the fund thus transferred to him ? The testimony of Biilloelc shows that the transfer was for money advanced and to be advanced by Dwight Dur-hee to him, to pay the debts of D. T. Wheeler & Go. Was such an advance made? Bullock says: I paid $500 of that' amount, received of Durhee, to meet a note of D. T. Wheeler & Go., and $20Q for a draft drawn by D. T. Wheeler & Go. on Philadelphia, held by Q. T. Swearingen. Durhee himself, testifies that he advanced the $500 in August, 1852, and the $202 in January, 1853, to Bulloch, to make those payments; and, also, in January, 1853, $712 75, to pay part of a judgment against D. T. Wheeler & Go. in favor of Dr. Goon, of St. Louis. He says : “The object of the transfer was to secure me in my advancement of these three sums.” -It is then clear that Dwight Durhee was fully conversant of the nature of his transferrer’s title to the funds in the defendants’ hands. Now, it appears from the testimony of Mr. Wolfe, that the draft drawn by D. T. Wheeler & Go. on Messrs. Wolfe & Singleton, was paid by the defendants, shortly after the amount was collected from Turner, Wilson & Go., and placed in their hands. The evidence leaves no doubt on my mind that this was previous to the month of January, 1853. The testimony of D. T. Wheeler proves that he knew nothing of the transfer, but that it was agreed between himself and Bulloch, at the time of the dissolution of their firm, that the debt against Turner, Wilson & Go. should be applied to the payment of a judgment in favor of Andrew J. Goon, against the firm ; that he drew the order on Wolfe & Singleton, in the name of the firm of D. T. Wheeler & Go. and applied $712 62 of the amount thereof to the payment of that judgment; and the residue was applied to the reimbursement of money borrowed from W. S. Gilman, and placed in the firm of D. T. Wheeler S Go., as capital. Under this state of facts, it appears to me clear, that the plaintiff, is not entitled to a recovery.