Court of Appeals of Kentucky.
Oct. 6, 1905.
ACTION: Affirmed

Appeal from Circuit Court, Clay County.

John E. White owned a tract of timber land in Clay county. He and Wm. Swafford entered into a parol contract of copartnership, whereby White furnished the timber and Swafford cut, peeled, hauled, and pitted it, and took it to a designated point on Goose creek, where it was to be rafted and floated out at the expens e of the firm, and sold in the markets of the Lower Kentucky river. Before the timber had all been marketed Swafford died. This suit was instituted by his administrator against White as surviving partner for an accounting and settlement.

White did not contest the fact or nature of the partnership. The cause was referred to the master commissioner for proof and settlement, who reported that White was indebted to Swafford in the sum of $194.41. Swafford's administrator excepted to the commissioner's report on various grounds, and prosecuted this appeal to correct the judgment overruling his exceptions and confirming the settle ment reported by the commissioner.

It developed in the proof that White had advanced to Swafford money and teams to enable him to comply with his part of the contract, as well as had become his surety for another team bought for the same purpose, for which appellee had to pay about $112. Appellant's contention as to these items is that they are not properly partnership items; that there was no partnership in fact until after the logs were delivered to the agreed point in Goose creek, and that, as the money and teams were furnished to Swafford before that event, they constituted personal demands owing by Swafford to White; that the latter would have to present them, properly proven, to the administrator for payment, and in the meantime pay over to the administrator for distribution among all Swafford's creditors one-half of the proceeds of the partnership timber, less expenses incurred after the timber had reached Goose creek. This contention cannot he allowed for at least two reasons: In the first place, the partnership existed from the moment Swafford cut a tree on the land agreed on. The fixing of the point of delivery on Goose creek, where both partners were to equally share the expenses of running the timber to market, was merely the dividing line between contributions to capital and the firm's undertaking. White contributed the timber to capital. Swafford contributed the labor necessary to get it into Goose creek as his share of the capital. The adventure was nevertheless a copartnership from its beginning. To the extent, therefore, that White advanced Swafford's share of capital, the latter owed it to the former. No complete settlement of the partnership accounts could have been had that did not include such items. In the next place, even if it had been an independent and personal debt owing by Swafford to White, it was the subject of set-off in the settlement between them, especially where the rights of firm creditors did not intervene. For, if White, on settlement of partnership affairs, owed Swafford, it was a simple debt, and any sum owing by Swafford to White on any other account ought to have been set off against it. Any other course would have sent White to court to collect a debt, the means of paying which he already had in his hands. To avoid such needless and wasteful circuity and injustice, the doctrine and practice of set-off was long ago originated and has ever since been applied by the courts.

White accounted for all the logs that he sold after the death of Swafford, 195 in number. When measured in Goose creek, about a year before they were finally delivered at High Bridge or Valley View on Kentucky river, they contained 73,240 feet; but when measured at point of delivery, where they were sold by White, they were measured to contain only 64,198 feet. Appellant contends that White should have been charged with the first measurement. The discrepancy is accounted for by the fact that part of the logs were lost in transit, and the remainder would naturally lose something by sap rot, and by being scaled at point of delivery for defects not allowed for in the first measurement. As White accounted for all he got, it was right that he should not have been charged with what was lost through no fault of his.

The circuit court adjudged that the costs be divided equally between plaintiff and defendant. White was not denying the partnership, nor its terms. He and the administrator had tried to settle, but had failed to agree, mainly because the latter would not allow credit for the items which we have decided above were proper credits. Either party had the right to resort to the court under such circumstances for settlement. The expense of settling a partnership is a partnership liability, and was properly so adjudged. A final item objected to is too small to warrant a reversal of the judgment, though it had been erroneous. We advert to it to commend the practice indulged in by appellee. Upon the death of Swafford, White, as surviving partner, applied to the county court having jurisdiction to grant administration to appoint appraisers of a partnership estate. They were appointed, and their report was filed in the county court clerk's office. The item objected to, $1.30, was the clerk's fees about that matter. While there is no statute directing such proceeding, it is quite likely that fewer controversies would arise, or at least that there would be less grounds for suspicion of the surviving partner's actions, if such course were generally pursued. Thereby the representatives of the deceased member would have preserved by impartial men data showing the status of the partnership assets before they could have been materially changed since the deceased member's death.

We perceive no error in the record, and the judgment is affirmed.

Ky.App. 1905.


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