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or a legacy until the expiration of a year after his appointment, and ordinarily he ought not to pay debts until the expiration of that time. Rev. Laws, c. 141, § 1. If there is no doubt about the solvency of the estate, he properly may pay them earlier. But if he pays before the end of the year, he does it at his own risk in reference to the possibility that the estate may prove to be insolvent. Hale v. Hale, 1 Gray, 518-523. His risk in this respect should apply to the estate that remains after turning over to the widow such part of the personalty as the probate court allows her for necessaries; and in paying debts before the end of the year, he is bound to know that the amount applicavie to the payment of them is liable to be diminished by the making of an allowance.
In the present case the testator died on December 6, 1904. The executors of his will were his daughter and her husband. On February 7, 1905, they obtained from the probate court a license to sell all his real estate to pay his debts, and on March 28, 1905, the real estate was sold. The present petitioner received no notice and had no knowledge of these proceedings until after the sale was made. It appears from the papers in the case, which are made a part of the report, that of this indebtedness more than $800 in amount was upon notes of the testator running to his son-in-law, one of the executors. The widow's petition for an allowance was filed on April 12, 1905, about four months after the death of her husband, and notice thereof was duly given to the executors. They then, on April 26, 1905, filed a first and final account of their administration, showing that they had used all the assets in the payment of debts and charges of administration, and they relied upon the facts stated in it as a bar to the petition for a widow's allowance. Objection was made to the allowance of the account, and no hearing has yet been had upon it.
The widow's petition was filed within a reasonable time. Lisk v. Lisk, 155 Mass. 153, 29 N. E. 375. Her husband left personal property of which the court had jurisdiction, from which an allowance might properly be made to her, and nothing appears to meet the facts which show that an allowance should be made, except the fact that the executors, very quickly after the death of the testator, used all the personal estate in paying debts, a very large part of which were paid to one of themselves. This action did not deprive the widow of her rights or the court of its powers under the law. While the judge has found that payments were made as stated in the account, the account has not been allowed, and the court may hereafter disallow it on the ground that the payment in full of debts that were not preferred was not properly made. We are of opinion that the decree of the probate court was valid, and that the entry should be.
Decree of probate court affirmed.
(192 Mass. 499)
ESTABROOK et al. v. WOODS et al. (Supreme Judicial Court of Massachusetts. Suffolk. Sept. 5, 1906.)
1. PARTNERSHIP - CONTRACTS THIRD PERSONS.
If two persons connected in business have such rights and interests as to make them partners in fact, no contract modifying or limiting the liability of either partner, or increasing the liabilty of the other as between themselves, is effective as against third persons. [Ed. Note.-For cases in point, see vol. 38, Cent. Dig. Partnership, §§ 29-32.]
2. SAME-PARTICIPATION IN PROFITS.
Where there is an arrangement between two persons that one of them shall receive a part of the profits of the business conducted by the other, whether they are partners is to be determined by whether he has a share or interest in the profits as profits, or whether his interest in the profits is merely as a measure of his compensation for something that he does or furnishes under a contract.
[Ed. Note.-For cases in point, see vol. 38, Cent. Dig. Partnership, §§ 39-44.] 3. SAME.
W. agreed to furnish B. capital to establish and carry on a cigar business for himself, agreeing to receive from B., as compensation, not only interest on the amount invested, but for a certain period a sum equal to one-half of the net profits after reckoning B.'s time at $20 per week, and for a certain longer time a sum equal to one-quarter of the profits. B. was to be the sole debtor for everything procured for the business, and W. was to have security by mortgage from B. for his entire investment and liability. Held, that B., under such contract, was not a partner as to third persons.
[Ed. Note. For cases in point, see vol. 38, Cent. Dig. Partnership, §§ 34-44.]
Reported from Superior Court, Suffolk County; Wm. Schofield, Judge.
Action by one Estabrook and others against one Woods and others. Plaintiff alleged that defendant Woods was a copartner of defendant Bigelow, and as such was liable for debts of the latter contracted in the In course of defendant Bigelow's business. the superior court a verdict was directed for plaintiff, and the case was reported to the Supreme Judicial Court. Judgment for defendant Woods.
Hutchins & Wheeler, for plaintiffs. George Chandler Coit, for defendants.
KNOWLTON, C. J. The principal question in this case is whether the defendant Woods is liable as a partner with the defendant Bigelow for goods sold by the plaintiffs, for the price of which this suit is brought. Woods was the party of the first part and Bigelow the party of the second part in a contract in writing, the substantive portions of which are as follows:
"1. The party of the first part agrees to loan party of the second part two hundred dollars for three years, with interest payable semi-annually at the rate or six per cent. per annum, said loan to be secured by a chattel mortgage of the stock of goods and fixtures in a cigar store to be located in the building at the southerly corner of Pember
ton Square and Tremont street in Boston, in the county of Suffolk and said commonwealth.
"2. The party of the first part agrees to secure for the party of the second part a stock of cigars and tobacco to an amount of not more than two hundred and fifty dollars (and said stock of goods may at the option of party of the first part, be obtained for said. store by said party of the first part, by credit or by cash payments); and upon payments by the party of the first part for such goods, he shall be allowed by said party of the second part, interest at the rate of six per cent. per annum on such payments, until the same are repaid by the party of the second part. and the same shall be secured by the mortgage above mentioned.
"3. This agreement is conditioned upon the party of the first part being able to secure for the party of the second part, a lease for three years of a store to be constructed at the corner of the said premises, at a yearly rental of four hundred and eighty dollars, and shall guarantee said lease.
"4. The party of the second part agrees to conduct a cigar and tobacco store in said premises, and to devote his time and attention to the conduct of the business, and he agrees hereby that he will not engage in any other business or occupation until after six o'clock p. m. during the term of said lease, or so long as the party of the first part shall be liable thereon.
"5. He shall, from the proceeds of the business, first pay the expenses incurred in the conduct of the business and maintain the stock of goods; second, pay interest due party of the first part; third, take on account of his services, for his own use, any balance not exceeding the sum of twenty dollars per week; fourth, pay one-half of the remaining balance that is the net profit- to party of the first part, and keep the remaining onehalf for his own use. sj * That is, it is agreed after July first, 1902, whenever the party of the second part shall have re- paid all sums advanced by the party of the first part, that thereupon and thereafter, in lieu of said one-half of the net proceeds as hereinbefore provided, the party of the second part shall pay the party of the first part one-quarter of the net profits until the expiration of three years from the date of the lease of said premises."
sons connected in business have such rights and interests as to make them in fact partners, no contract modifying or limiting the liability of either partner, or increasing the liability of the other as between themselves, would have any effect upon the rights of third persons to hold both upon proper contracts made by either in the partnership business. Apart from the liability which one may create by holding himself out as a partner when he is not one, this is the true meaning of those cases which seem to recognize a difference between being partners inter sese and being partners as to third persons. In fact, the conditions referred to constitute the persons actual partners, although they may have contracted with one another to modify, as between themselves, some of the usual liabilities of partners.
When there is an arrangement between two persons that one of them shall receive a part of the profits of a business conducted by the other, the usual test to determine whether he is a partner, liable for debts, is to ascertain whether he has a share or interest in the profits as profits, or whether his interest in the profits is merely as a measure of his compensation for something that he does or furnishes under a contract. By the application of this test most if not all of the following cases can be reconciled: Denny v. Cabot, 6 Metc. 82; Pratt v. Langdon, 12 Allen, 544; Holmes v. Old Colony Railroad Company, 5 Gray, 58; Bradley v. White, 10 Metc. 303, 43 Am. Dec 435; Pettee v. Appleton, 114 Mass. 114; Dame v. Kempster, 146 Mass. 454, 15 N. E. 927; Meehan v. Valentine, 145 U. S. 608, 12 Sup. Ct. 972, 36 L. Ed. 835; Cox v. Hickman, 8 H. L. Cas. 312. For one to share in the profits as profits, within the true meaning of the cases, is to stand in such relations to the business that the profits, or a share of them, are in his ownership as they accrue. He must have a proprietary interest in each dollar of profits as it is earned, so that he then has a right of possession or control of it for the purpose of retaining his share. This involves an ownership of an interest in the business that produces the profits. Through this comes the implied agency on which the liability of a partner for the contracts of his co-partners is founded.
The fair interpretation of the contract in the present case is that Woods was to fur
Property was obtained to fit up a cigarnish Bigelow capital to establish and carry store in accordance with this contract, and it was mortgaged by Bigelow to Woods to secure the payment of a note of $533.53, the consideration of which was the liability of Bigelow to Woods under the contract.
There was no evidence that the defendant Woods ever held himself out to the plaintiffs or any one else as a partner of Bigelow, and the question is whether this contract made him a partner in the business carried on under it. That depends upon the actual relation of Woods to the business. If two per
on the business for himself, and as this would be a pretty risky investment, he was to receive from Bigelow as compensation, not only interest on the amount invested at 6 per cent. per annum but also, for a certain period, he was to have one-half of the net profits, reckoning Bigelow's time at $20 per week, and for a certain longer time he was to have one-quarter of the net profits. From beginning to end, Bigelow was to be the sole debtor for everything procured for the business or used in it. Woods was to have se
curity by mortgage from Bigelow for his entire investment and liability. The only interest that he had, in the success of Bigelow's enterprise, was to get back the money that he had furnished, and to get for the chance that he took something more than 6 per cent. interest on his loan, namely, a sum of money to be determined by the amount of the net profits for the term of three years.
If Bigelow failed to pay him according to the agreement, his only remedy was under his mortgage, or to sue for the amount as anybody else would sue for a liability under a contract. He had no right to take control of the business or of the profits earned in it, or to interfere in the management of it in any way. Under the cases cited above, he was not a partner, and was not liable for debts contracted by Bigelow in conducting the business.
The same considerations show that he was not an undisclosed principal for whom Bigelow was acting as an agent.
Judgment for the defendant Woods.
(192 Mass. 531)
FARMERS' NAT. BANK OF ANNAPOLIS v. VENNER et al.
VENNER v. FARMERS' NAT. BANK OF ANNAPOLIS.
(Supreme Judicial Court of Massachusetts. Suffolk. Sept. 5, 1906.)
1. BILLS AND NOTES-PAYMENT-PLACE-DEMAND-NECESSITY.
Where a note was payable on demand at a particular place, no demand was necessary as a condition precedent to the holder's right to sue thereon.
[Ed. Note.-For cases in point, see vol. 7, Cent. Dig. Bills and Notes, §§ 1022, 1287.] 2. SAME.
Where a note was payable on demand at a particular place, a refusal to pay on a demand made at a place other than that specified was sufficient to constitute a default in payment. [Ed. Note. For cases in point, see vol. 7, Cent. Dig. Bills and Notes, §§ 1022, 1287.] 3. SAME-FOREIGN LAW-PRESUMPTIONS.
Where a note was made in New York, payable on demand in Baltimore, and no proof was made as to the law of New York on the subject of the necessity of a demand, it will be presumed that the law of New York was similar to that of the forum. 4. PLEDGES
FORECLOSURE -INADEQUACY OF PRICE.
Where certain collaterals were pledged under a contract authorizing the pledgee to purchase on a sale of the collaterals, and the sale was made in good faith by reputable auctioneers to the pledgee after failure of the pledgor to comply with a demand for payment or further security, mere inadequacy of price for which the collaterals sold was not in itself sufficient ground for setting aside the sale.
5. SAME NOTICE DESCRIPTION OF BONDS PLEDGED.
Where, before certain 6 per cent. bonds were pledged, the interest was changed to 5 per cent., but they had never been so stamped, and in a notice of foreclosure sale they were described as 6 per cent. bonds, such misdescription was not fatal to the validity of the sale;
there being uncontradicted testimony that 6 per cent. bonds of the same issue were sold by the same auctioneers before and after the sale in question for the same price as the 5 per cent. bonds.
Exceptions from Superior Court, Suffolk County; Jas. B. Richardson, Judge.
Suit by the Farmers' National Bank of Annapolis against C. H. Venner and others to recover the balance due on a note after the sale and application of collateral pledged to to secure it, and by C. H. Venner against the Farmers' National Bank of Annapolis in tort for the conversion of $26,000, par value of the bonds of the American Waterworks of Omaha, Neb., pledged to secure such note. The suits were tried together. The court found for plaintiff in the first suit in the sum of $24,865.26, and for the defendant in the second suit. From such findings, defendant Venner brings exceptions. Overruled.
H. E. Bolles, C. H. Tyler, and B. D. Barker, for Farmers' Nat. Bank of Annapolis. C. F. Choate, Jr., Fred'k H. Nash, and A. F. Clarke, for C. H. Venner.
MORTON, J. These two actions were tried together by the court sitting without a jury. The first is an action of contract by the plaintiff bank as holder against the defendants as makers, to recover the balance alleged to be due on a certain promissory note after the sale and application of the collateral. The note is dated "New York City, May 14th, 1892," and is payable on demand after date to the order of the makers at the office of Wilson, Colston & Co., Baltimore, and was indorsed by the defendants. The writ was dated May 13, 1898, the last day before action would have been barred by the statute of limitations. The plaintiff is a banking association organized under the laws of the United States and haying its usual place of business at Annapolis in the state of Maryland. The defendants were formerly copartners doing business in New York City under the name of C. H. Venner & Co. Personal service was made in this state on the defendant Venner, but no service was made on either of the other two defendants. The firm of C. H. Venner & Co. was dissolved July 31, 1892, and the assets became the sole property of the defendant Venner.
The second action is tort for the conversion of $26,000, par value, bonds of the American Waterworks of Omaha, Neb., pledged as collateral to secure the payment of the above note. The note provided, amongst other things, that the holder might sell the collateral or any part thereof on nonperformance of his promise by the maker "in such manner as the holder hereof may deem proper without notice at any stock exchange or at public or private sale at the option of the holder hereof, and with the right on the part of the hoider hereof to become
purchaser thereof at such sale." It also It also contained a provision that "in case of depreciation in the market value of the security hereby pledged * * * a payment is to be made on account or additional approved security given on demand so that the market value of the security shall always be at least ten (10) per cent. more than the amount unpaid on this note. In case of failure to do so this note shall be deemed to be due and payable forthwith * * and the holder hereof may immediately reimburse himself by a sale of the security in the manner provided for above." The note is signed "C. H. Venner & Co." and the words "Due on demand" immediately precede the signature. There was evidence tending to show, or from which it could have been found, that the note and bonds were presented to the defendant Venner in person at his office in New York City and a demand for payment was made. There was also evidence that a demand was made upon him for the payment of $5,000 on account
and for additional collateral under circum
stances which justified the latter according
to the terms of the note. Neither of the demands thus made was complied with. There was no evidence of a presentment or demand at the office of Wilson, Colston & Co. in Baltimore, or that there were funds there to meet the note if it had been presented. The collateral was sold through the firm of A. H. Muller & Son in New York City and was bid in for the bank at a price, except as to one bond, very much less, as there was testimony tending to show, than other bonds of the same issue were sold for before and after the sale in question. This constitutes the conversion complained of. It is conceded, or, at least, is stated in the bill of exceptions as a fact, that A. H. Muller & Son were proper auctioneers, and that the place where the bonds were sold was a proper place to sell them.
The court found for the plaintiff in the first action in the sum of $24,865.26, and for the defendant in the second action. The cases are here on exceptions by the defendant Venner to the refusal of the court to give certain rulings requested by him and to the finding that was made.
We see no error in the rulings or refusals to rule, or in the finding that was made.
The plaintiff contends in the first place that no action can be maintained on the note because no demand was made for its payment at the office of Wilson, Colston & Co., in Baltimore. It is settled in this state both at common law and recently by statute and by the weight of authority in this country, contrary to the law in England, that, where a note or bill of exchange is payable at a particular time and place, no demand or presentment at the place named is necessary in order to entitle the holder to maintain an action upon the note or bill
against the maker or accepter. Ruggles v. Patten, 8 Mass. 480; Carley v. Vance, 17 Mass. 389; Payson v. Whitcomb, 15 Pick. 212; Wright v. Vermont Life Ins. Co., 164 Mass. 302, 41 N. E. 303. Rev. Laws, c. 73, § 87. For a collection of cases see 1 Daniel on Negotiable Instruments (3d Ed.) 643; 1 Parsons on Notes and Bills (1st Ed.) p. 305 et seq.; 4 Am. & Eng. Ency. of Law (2d Ed.) 373. We see no valid distinction between a note payable on time at a particular place and a note payable on demand at a particular place. No demand is necessary, before suit, where a note is payable generally on demand. And as we have seen no demand is necessary when a note is payable on time at a particular place. And it seems to us that the fact that both circumstances are found in the same note cannot operate to change the rule and render a demand necessary when it would not otherwise be required. McKenney v. Whipple, 21 Me. 98; Gammon v. Everett, 25 Me. 66, 43 Am. Dec. 255; Haxtun v.
Bishop, 3 Wend. (N. Y.) 13; Montgomery v. Elliott, 6 Ala. 701; Dougherty v. Western
Bank, 13 Ga. 287; Bowie v. Duvall, 1 Gill
& J. (Md.) 175.
We think, therefore, that the refusal of the court to rule as requested, that in order to maintain the action the plaintiff was bound to prove a demand at the office of Wilson, Colston & Co. and that a refusal of a demand to pay the note at any other place did not constitute a default in the payment of the note, was correct, and that the court was right in ruling, as it did, that a sufficient demand was made though not made at the office of Wilson, Colston & Co. in Baltimore. The note is dated and apparently was made in New York. But it was given in renewal of a note previously held by Wilson, Colston & Co. and was to be paid in Baltimore, and, it fairly may be inferred, was delivered to the plaintiff bank at its usual place of business in Annapolis. It must be regarded, therefore, either as a New York or Maryland contract. If it is to be regarded as a Maryland contract then the decisions by the highest court in that state which were put in by the plaintiff bank would seem to show, so so far as they bear upon the question, that a demand at the office of Wilson, Colston & Co. was not necessary in order to enable the plaintiff to maintain its action. Bowie v. Duvall, 1 Gill, & J. (Md.) 175. No evidence was introduced as to the law of New York and in the absence of such evidence it is to be assumed that the law of that state is the same as the law of this. Hazen v. Mathews, 184 Mass. 388, 68 N. E. 838.
The remaining question relates to the sale of the collateral. The defendant asked the court to rule "that the relation of the Farmers' National Bank holding the collateral pledged as security for the payment of the note declared upon and the makers of said note was that of trustee and cestui que trust; that the Farmers' National Bank was in
duty bound and has the burden to prove that when it sold said collateral to itself it paid and has since accounted to the makers for the full value thereof." The court gave the first clause and refused the second. The defendant's contention is in substance that the plaintiff bank did not exercise that care in the sale of the collateral which in view of the relation that existed between it and the makers, it was bound to exercise, and he seeks to hold the plaintiff bank accountable for the amount which he contends should have been received. We assume, without deciding, that this defence, which is in the nature of an equitable defence or remedy, is open to him in these proceedings. Jennings
v. Moore, 189 Mass. 197, 75 N. E. 214. But we see no ground on which it can fairly stand. The collateral was sold November 8, 1893. There was ample evidence that the defendant Venner had been notified of the intention of the plaintiff bank to sell the collateral if the note was not paid or the $5,000 that was called for was not provided, or if the additional collateral demanded was not furnished. On October 31st, preceding the sale, a notice of the date and place of sale was left at his office, by the Chemical National Bank of New York, acting for the plaintiff bank, and could have been found to have been received by him. On November 2d, the plaintiff bank also sent him a notice of the date and place of sale, and on November 8th, the day of sale, another notice of the time and place of sale was left by the Chemical National Bank at the defendant's office. It did not appear whether these last two notices were in fact received by the defendant before the sale. But as already observed, there was evidence warranting a finding that he had previously received actual notice of the date and place of sale. There was also evidence, though not perhaps so satisfactory as it might have been, warranting a finding that notice of the sale was advertised in the New York Times, the Evening Post, the Journal of Commerce, and the Tribune. It was conceded that A. H. Muller & Son, through whom the bonds were sold, did the largest auction business of securities in New York City, and also, as already observed, that they were proper auctioneers, and that the place where the bonds were sold, which was at one of the regular auction sales of A. H. Muller & Son at the New York Real Estate Salesroom, 111 Broadway, was a proper place. We do not see any ground on which it can be successfully contended that there was a lack of proper care and diligence on the part of the plaintiff bank in the sale of the collateral. The fact that the bonds were sold for very much less than bonds of the same issue had been sold for previously and were sold for subsequently, and the further fact, if such was the fact, that Mr. Quinlan, who bid off the bonds for the plaintiff bank, was the only
bidder, do not invalidate the sale. There is nothing to show that other bidders were not present, and mere inadequacy of price is not of itself sufficient ground for setting aside a foreclosure sale. Austin v. Hatch, 159 Mass. 198, 34 N. E. 95; Stevenson v. Dana, 166 Mass. 163, 44 N. E. 128; Fennyery v. Ransom, 170 Mass. 303, 49 N. E. 620. The note provided expressly that the pledgee might purchase at any sale of the collateral, and there is nothing, therefore, in the fact that the plaintiff bank was the purchaser to invalidate the sale. Neither do we think there is anything in the fact that the bonds, with one exception, never had been stamped as 5 per cent. bonds, but were advertised and sold as 6 per cent. bonds, which they originally were. ly were. They had been made 5 per cent. bonds before they were pledged by the defendant, but he had never caused them to be stamped as such. And although he had called the attention of the plaintiff to the reduction in interest, and had suggested that it have the bonds properly stamped, i. e. stamped as 5 per cent. bonds, there is nothing to show that he did anything more, or that he was not content that the bank should hold them and deal with them as 6 per cent. bonds though they were in fact 5 per cent. bonds. Nor is there anything to show what caused the bonds to sell for the price for which they did; or that the bank or its agents had or should have had any reason to suppose that the sale would be adversely affected, if it was so affected, if the bonds were advertised as 6 per cent. bonds instead of 5 per cent. bonds, or that it was the duty of the bank to cause them to be stamped as 5 per cent. bonds. There was uncontradicted testimony that 6 per cent. bonds of the same issue were sold at auction by the same auctioneers before and after the sale in question for the same price as the 5 per cent. bonds, and both the bank and the auctioneers may well have supposed that it would make no difference whether the bonds were advertised and sold as 6 per cent. or 5 per cent. bonds. What rights or property the plaintiff bank acquired or became entitled to under the reorganization of the water works by virtue of the possession and ownership of the bonds, cannot, of course, affect the validity of the sale.
It is to be observed, that although the defendant Venner had information of the sale shortly after it took place, and wrote to the plaintiff bank protesting against it, he took no steps to have it set aside until the bank sued to recover the balance due it, nearly six years afterward.
A question as to whether the plaintiff was entitled to interest was raised at the trial by the defendant but it has not been pressed and we therefore treat it as waived.
The result is that we think that the exceptions should be overruled.