The law implies equality between partners, and does not favor
claims of the survivor for services rendered after dissolution of
the firm and which lead to efforts to prove disparity.
Each partner is bound to devote himself to the firm's business,
and there is no implied obligation on the part of the other
partners to pay him more than his proportion for performing his
duty, and this rule applies to a surviving partner completing the
business of the firm.
While equity at times makes exceptions to the general rule that
a surviving partner is not allowed compensation for winding up the
affairs of the copartnership, this case does not fall within such
exceptions.
A limited partnership formed by two lawyers to prosecute claims
against the government, one of whom had already secured the claims
and the other of whom was to attend to the prosecution,
held not to be one in which either the lunacy or death of
the former would amount to a dissolution or entitle the survivor to
extra compensation for prosecuting the claims after such events to
a successful conclusion, the partnership gains being payable
in
solido and dependent upon success, and the record showing that
the deceased partner did not at any time aid materially in the
prosecution of the claims, and was not expected to.
A surviving partner of a law firm prosecuting claims under
powers of attorney from the claimants to the deceased partner
cannot retain the business individually and claim that the powers
to the deceased partner were revoked by his death; he must account
to the representatives of the deceased partner for his share of the
fees.
If the defendant should have previously accounted, but wantonly
refused or neglected so to do, interest is properly chargeable from
the filing of the bill.
Page 222 U. S. 263
If a defendant did not except to a ruling fixing a date for
calculating interest on an account, and asked to be allowed
interest on advances from the same date, he is deemed to have
acquiesced in the ruling, and cannot complain of it in this
Court.
A curator and administrator of a deceased member of a
partnership who has no power of sale is not chargeable with laches
because he waits until the surviving partner has realized the
assets of the copartnership before demanding an account. The
interests of his ward and intestate are founded in contract, and
cannot be destroyed by mere nonaction.
33 App.D.C. 132 affirmed.
The facts in these cases are fully set out in the decisions in
the various appeals reported in 17 App.D.C. 269, 24 App.D.C. 36, 30
App.D.C. 540, 33 App.D.C. 132. Only what is material to an
understanding of the assignments of error need be now stated.
George B. Edmonds was an attorney in Washington, practicing in
the Court of Claims. Under agreements to pay contingent fees, and
giving him power of substitution, he represented a large number of
clients, who had claims pending in that court and before Congress.
A schedule was attached to a contract made in 1888 by Edmonds with
Gilbert Moyers, also an attorney, in which they agreed "as special
partners to prosecute these claims in Congress and before the
court." The fees and expenses were to be equally divided. Edmonds
also stipulated therein that said "Moyers shall represent and be
associated with me in the prosecution of the said claims as joint
attorney of record."
Edmonds was adjudged a lunatic in 1891, and Cummings was
appointed his committee. There had only been a few collections, and
most of the claims were still pending at the time of Edmonds'
death, in 1896. By virtue of appropriations made in March, 1899,
Moyers collected a large amount in May, 1899. Cummings made a
demand on him for a settlement, and Moyers several times promised
to make a statement, explaining that the delay
Page 222 U. S. 264
was caused by bad health. Nothing having been done, Cummings was
appointed administrator of Edmonds on August 22, 1899, and on
September 16, 1899, filed a bill for accounting. Among other
things, Moyers, in his answer, claimed that Edmonds, in
consideration of money advanced by him in ignorance of the lunacy
proceedings, had conveyed to Moyers all his interest in the fees
that might be collected. This transfer he claimed operated as a
dissolution of the firm. The court ordered an accounting; Moyers
appealed. That decree having been affirmed, the case was referred
to a master. He found that Edmonds had not sold his interest in the
fees and that the partnership had not been dissolved, but allowed
Moyers credit for the amount advanced in 1892. He found that the
fees earned aggregated about $26,000, and after deducting the
expenses and allowing Moyers credit for the advances, found balance
in favor of complainant, with interest thereon, from September 16,
1899, the date Moyers should have accounted. Moyers, on the appeal,
offered no objection to this award of interest, but claimed that,
under the same rule, interest should have been allowed him on the
advances made in 1892. The Court of Appeals sustained this view and
directed that, in restating the account, interest should be allowed
Moyers on these advances from, say, January, 1893, to September 16,
1899. On a subsequent hearing, the account was thus restated. On a
later appeal, the court held that, as Moyers had taken no
exception, this ruling was conclusive. The court also held that
Moyers was entitled to credit for expenses advanced in claims which
were finally disallowed by the court.
During the litigation, other claims were pending in the Court of
Claims. But in view of the controversy over the fees, Moyers
abandoned some of them, and on his advice a few of the claims were
put in the hands of attorneys associated with Moyers in business.
They made collection, but the master charged Moyers with the
proportion of the
Page 222 U. S. 265
fees thereon due Edmonds under the original contract. Other
claims were withdrawn by clients and placed with attorneys not
connected with Moyers in business. Congress passed additional acts
of appropriation, by virtue of which some of the other claims in
the schedule were collected. These items were included in the
master's final statement of account. This was approved by the
chancellor and affirmed on appeal. The case is here on numerous
assignments of error, all of which have been abandoned except those
in which Moyers' administrators claim that (1) he should have been
allowed compensation for services after the dissolution of the
firm; (2) that he should not have been charged with interest from
September 16, 1899, but only from the final decree of November,
1908, when for the first time the amount due was made certain, and
(3) the refusal to dismiss the bill on the ground of complainant's
laches.
Page 222 U. S. 269
MR. JUSTICE LAMAR, after making the foregoing statement,
delivered the opinion of the Court.
In this accounting of the affairs of a special partnership
between attorneys at law, the survivor claims compensation for
services rendered after dissolution of the firm.
Claims of this sort are not favored. They lead to efforts to
prove a disparity between the partners, when the law implies
equality. They necessitate a balancing of the value of the work of
each in securing the business and earning the profits, as well as a
comparison of the time they may spend on the matters under
consideration. Each partner is bound to devote himself to the
firm's business, and there is no implied obligation that, for
performing this duty, he should be paid more than his proportionate
share of the gains. Neglect by one to do his part may be of such
character as to justify a dissolution. But as long as the firm
continues, there is usually no deduction because one partner has
not been as active as the other. The same is true where death
prevents either of the partners
Page 222 U. S. 270
from performing his contract. The law did not permit him to
appoint a substitute, nor can his personal representative, no
matter how well qualified, assist winding up the affairs of the
firm. Whether that be considered a right or duty, it is in either
event cast on the survivor. In performing, it he only carries out
an obligation implied in the partnership relation, and is therefore
entitled to no compensation for thus doing what he was bound to do,
and what would have been imposed on the other had the order of
their death been different. To allow the survivor compensation
wherever he continues the business would be to offer an inducement
to delay the settlement, which ought to be made as soon as
possible.
To this general rule there are exceptions where, under peculiar
circumstances, the principles of equity entitle the survivor to
compensation.
Thayer v. Badger, 171 Mass. 279. Thus,
where, by authority of law or under a power in the will, the
personal representative consents that the business may be continued
by the survivor, the estate must pay for such additional services.
Or where, without such consent and at his own risk, the survivor
continues the business and makes a profit, the estate is bound to
allow reasonable compensation if it elects to share in the gains
thus made.
So, where a member of a firm, by his voluntary act, dissolved
the partnership, the partner who continued the business was allowed
compensation for performing services in which he had the right to
have expected the continued assistance of the other. Extra
compensation has also been allowed in a few cases where, in order
to realize on the assets, it was absolutely necessary for the
survivor to continue the business beyond the reasonable time
allowed for winding up its affairs.
See Justice v. Lairy,
19 Ind.App. 272;
Zell's Appeal, 126 Pa. 329;
Schenkl
v. Dana, 118 Mass. 236;
Gray v. Hamil, 82 Ga. 375;
Beatty v. Wray, 19 Pa. 516;
Cameron v.
Francisco,
Page 222 U. S. 271
26 Ohio St.190;
Robinson v. Simmon, 146 Mass. 167;
Holmes v. Higgins, 1 Barn. & C. 74. Then too, there is
a suggestion in
Denver v. Roane, 99 U.
S. 359, that there may be
"a different rule in cases of winding up partnerships between
lawyers and other professional men, where the profits of the firm
are the result solely of professional skill and labor."
This point is not involved, and on it no ruling is made, because
we are not dealing with questions between the administrator of the
deceased and the surviving member of an ordinary law partnership,
where the latter conducts to a conclusion the business of the firm,
under circumstances where there may be a right from time to time to
call on the client for compensation for the value of services
rendered, and even though the case is finally lost. Here, the
agreement related solely to litigation in which compensation was
for success, and not for the value of services rendered. Such
payment was to be
in solido, and the partners agreed that
the fees should be divided in solido.
Moyers insists, however, that the peculiar facts of this case
bring him within the other exceptions pointed out above; that, when
Edmonds was adjudged a lunatic, in 1891, the firm was dissolved;
that with the knowledge of Cummings, who was acting as Edmonds'
committee, Moyers continued to prosecute the claims, paid out large
sums for necessary expenses, and, in spite of probable failure,
rendered valuable services, which finally earned the fees now to be
divided. He claims that in equity and good conscience he should be
paid reasonable compensation for this work, in which Edmonds
rendered no assistance.
Moyers put in his services against the claims turned over to the
firm by Edmonds, who stipulated that Moyers should represent him,
and to that end "be associated in the prosecution of the claims as
joint attorney of record." Edmonds rendered little or no
assistance, and apparently was not expected to do so, for Moyers
himself testified that
Page 222 U. S. 272
the contract was
"an employment of me to attend to certain business for him in
the Court of Claims in regard to certain cases. It might be styled
a limited partnership. It was not a general partnership."
In prosecuting the claims and collecting the money, Moyers
therefore only did what he contracted to do, and is not entitled to
compensation beyond that set out in the agreement. That these
services extended over a long period does not increase his share
nor lessen Edmonds' interest in the profits. Under the contract,
Moyers agreed to prosecute the claims, and could neither abandon
them without just cause nor advise clients to put them in the hands
of others. If he did so, he is chargeable with the fees which
should have been earned by him under the articles of partnership.
Neither can Edmonds' interest be diminished on the ground that the
contract of employment by the client was revoked by his insanity or
death. They made no such objection, and apparently acquiesced in
Edmonds' arrangement by which they were put in the hands of Moyers.
The survivor cannot retain the business thus coming to him by
virtue of a contract with Edmonds without accounting for his share
of the fees.
Moyers was charged with interest on the balance due from
September 16, 1899, when the suit was filed, being the date on
which the master found he should have accounted with the
complainant. Moyers contends that what, if anything, was due was
uncertain; that it required numerous references in order to
properly side the account; that it was not liquidated until the
final decree in November, 1908, when, for the first time, the true
balance was ascertained, and hence that interest should only run
from that date. Interest is allowed by way of damages for failure
to pay money when it is due, and frequently is not allowed except
from the time the amount to be paid has been definitely
ascertained. But there are many cases in which interest is charged
from a prior date. Here, the defendant
Page 222 U. S. 273
at first promised to make a statement, then contended, without
substantial support, that the partnership was dissolved because
Edmonds had transferred his interest in the fees. He resisted the
accounting, failed to produce books, vouchers, and statements
proper to be kept by a surviving partner. As the Court of Appeals
said, the delay and difficulty in reaching a conclusion were
largely due to his failure to keep proper books. Under the
circumstances, the master properly allowed interest from the date
the bill was filed.
Spalding v. Mason, 161
U. S. 395;
Nashua & Lowell R. Corp. v. Boston
&d. R. Corp., 61 F. 237, 247. Moyers did not except to
this method of calculating interest; on the contrary, he obtained a
ruling that, on the same basis, he should be allowed interest from
1892 on advances then made by him to Edmonds. He cannot now
complain that the account was stated in accordance with a rule in
which he acquiesced, and the benefit of which he invoked.
In the last assignment, it is alleged that the court erred in
not dismissing the bill because of complainant's laches in filing
it. It is contended that, after Cummings was appointed committee of
Edmonds in 1891, he knew of the contract of special partnership and
that Moyers was prosecuting these claims, and not only made no
demand for a settlement, but permitted Moyers to do all the work,
incur all of the expenses, and run all of the risks without
notifying him that Edmonds' representative would claim one-half of
the profits. It is urged that such conduct was inequitable, and
that to wait until eight years before filing proceedings
constituted laches which requires a dismissal of the bill. We find
nothing in the facts or in the relation of the parties that made it
incumbent on Cummings to warn Moyers of Edmonds' claim, even if
Cummings had the full knowledge of all the facts which is necessary
to raise any such obligation. Edmonds' right was rooted in the
contract, and has only been enforced in pursuance
Page 222 U. S. 274
of its terms. Cummings had no title to Edmonds' property, but
was a mere curator, with limited powers. He could not have sold
Edmonds' interest in these claims to Moyers or anyone else without
an order of court. For a much stronger reason, he could not
accomplish the same result and destroy Edmonds' right therein by a
mere nonaction. The fees were not collected until the spring of
1899, and within four months thereafter the bill for an accounting
was filed.
The decree is affirmed.
