Not overruled or negatively treated on appealinfoCoverage
Supreme Court of AlabamaFeb 20, 1947
248 Ala. 660 (Ala. 1947)
248 Ala. 66029 So. 2d 133

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4 Div. 422.

January 16, 1947. Rehearing Denied February 20, 1947.

Appeal from Circuit Court, Dale County; J. S. Williams, Judge.

J. C. Fleming, of Elba, and Jack Crenshaw, of Montgomery, for appellant.

A court of equity will not authorize a discovery for purpose of enabling a party to search out evidence or witnesses to determine whether or not he has a good cause of action. State Tax Com'n v. Tenn. C. I. R. Co., 206 Ala. 355, 89 So. 179; Federal Trade Comm. v. American Tab. Co., 264 U.S. 268, 44 S.Ct. 336, 68 L.Ed. 696, 32 A.L. R. 786; L.R.A.1918C, 594; 17 Am.Jur. 10, 14. It is not enough that complainant has no actual and accurate knowledge as to facts upon which his right of action depends. Dorrough v. Mt. Pleasant Fert. Co., 210 Ala. 530, 98 So. 735; Pate v. Bruner, 243 Ala. 648, 11 So.2d 356. The mere fact complainant is entitled to a discovery does not entitle him to an accounting, for this would make it appear that every case is a matter of equitable jurisdiction. Everson v. Equitable Life Assur. Soc., 3 Cir., 71 F. 570, 18 C.C.A. 251; Foley v. Bell, 2 H. L. Cas. 28, 9 Repr. 1002. Where only relief sought is recovery of money, court of equity will not assume jurisdiction merely because it has jurisdiction for accounting. Wynn v. Tallapoosa County Bank, 168 Ala. 469, 58 So. 228; Merchants Nat. Bank v. Roche, 227 Ala. 639, 151 So. 591. Where bill seeks accounting on ground that confidential relations existed between parties, it must allege facts showing existence or other such confidential relationship placing party from whom accounting is sought under duty to account. Mere allegation of agency is insufficient. Where bill alleges on information and belief in alternative that there was partnership or joint adventure or some other business relationship, which other relationship would not put upon respondent duty to account, then the bill is insufficient. Pelkey v. Pelkey, 236 App. Div. 55, 258 N.Y.S. 562; St. Paul F. M. Ins. Co. v. Amer. Trust Co., Mo.Sup., 222 S.W. 137; 1 C.J.S. Accounting § 19, p. 656; Reilly v. Woolbert, 196 Ala. 191, 72 So. 10. Complainants were guilty of laches. Ussery v. Darrow, 238 Ala. 67, 188 So. 885; Bromberg v. First Nat. Bank, 235 Ala. 226, 178 So. 48; Meeks v. Meeks, 245 Ala. 559, 18 So.2d 260; Johnson v. Delony, 241 Ala. 16, 1 So.2d 11; Oxford v. Estes, 229 Ala. 606, 158 So. 534. Complainants cannot take the inconsistent position of filing a sworn bill that knowledge of relationship is exclusively with respondent for purpose of invoking jurisdiction, and then ask relief by attacking their own sworn allegation. 27 C.J.S. Discovery § 14, p. 26; Thompson v. Clark, 81 Va. 422, Fant v. Miller, 17 Grat. Va., 187; Smith v. Smith's Adm'r, 92 Va. 696, 24 S.E. 280; Butler v. Catling, 1 Root Conn., 310; 18 C.J. 1027, n. 34, 34(a). Burden of proving existence of partnership, denied by respondent, was upon complainants. Butts v. Cooper, 152 Ala. 375, 44 So. 616. No person having pecuniary interest in result of suit shall be allowed to testify against party to whom his interest is opposed as to any transaction with or statement by a deceased person whose estate is interested in result of suit. Code 1940, Tit. 7, § 433; William v. Dent, 233 Ala. 109, 170 So. 202. Where administration is already pending in equity court an heir may require executor or administrator to render account of his administration. 24 C.J. 939; Minor v. Thomasson, 236 Ala. 247, 182 So. 16; Crews v. U.S. F. G. Co., 237 Ala. 14, 185 So. 370. Since appellees as administrators are only chargeable on final settlement of estate for funds coming into their hands as administrators, equity has jurisdiction to require them as individuals to account in court for funds collected by them as agents prior to appointment as administrators. Miles v. Meade, 191 Ala. 80, 67 So. 1012. Orderly practice in equity for accounting is first to decree complainant entitled to accounting and then order a reference to state the account. Smoot v. Miller, 243 Ala. 80, 8 So.2d 571; Jones v. Jones, 245 Ala. 613, 18 So.2d 365. In proceeding to settle partnership accounts a debt owing by one party to the other should be allowed on his individual account to be deducted from final balance due. Pitts v. Walker, 212 Ala. 645, 103 So. 850.

Chas. O. Stokes, of Ozark, for appellees.

The bill has equity as one for discovery and accounting by appellees against appellant. 21 Am.Jur. 880; 40 Am.Jur., 450, 361, 356; Kilbourn v. Sunderland, 130 U.S. 505, 9 S.Ct. 594, 32 L.Ed. 1005; Hall v. McKellar, 155 Ala. 508, 46 So. 460; Lindsey v. Standard Ins. Co., 230 Ala. 633, 162 So. 267. Under the facts, complainants cannot be said to be barred by laches. It was not necessary that the bill be verified. Hall v. McKeller, supra. Personal representatives are the proper parties to maintain the suit. 21 Am.Jur. 875, 901; Tillery v. Tillery, 155 Ala. 495, 46 So. 582. The testimony here involved is not within the purview of Code 1940, Tit. 7, § 433. Appellant's admissions as to existence of partnership, and as against his interest are admissible. Chisholm v. Cowles, 42 Ala. 179; 20 Am.Jur. § 544; 40 Am.Jur. §§ 84, 85; Central R. B. Co. v. Smith, 76 Ala. 572, 578, 52 Am.Rep. 353. Appellant and other distributees of the estate are entitled to an accounting from the administrators, but this accounting is to be made on final settlement. Where debtor of estate is appointed administrator, the law charges him with the amount of his debt as assets in his hands as administrator. Miles v. Meade, 191 Ala. 80, 67 So. 1012; Arnold v. Arnold, 124 Ala. 550, 27 So. 465, 82 Am.St.Rep. 199. The court may, in its discretion, dispense with a reference and proceed to state the account. Smoot v. Miller, 243 Ala. 80, 81, 8 So.2d 571.

The appellees are the personal representatives of the estate of W. M. Faust, Sr., deceased, by appointment of the Probate Court of Dale County wherein administration proceedings were originally instituted after the death of said Faust in the year 1940. After procuring the removal of said administration proceedings to the circuit court in equity from said probate court, the appellees as joint administrators of said estate filed this bill against the appellant R. L. Faust ancillary to the administration proceedings, seeking to discover and recover assets in the hands of the defendant who, as the bill alleges, occupied a fiduciary relation to the said decedent, "Either as partners or as joint adventurers or as business associates in some capacity to complainants unknown * * * and complainants do not know * * * and are unable here and now to state the exact and precise nature and character of said enterprise between the said intestate and R. L. Faust."

This appeal is from a final decree granting relief to complainants after ascertaining the nature of said fiduciary relation as that of partners in business equal in interest and decreeing that the complainants were entitled to recover from the defendant $4,500, the value of the interest of said W. M. Faust, deceased, at the time of his death.

The defendant demurred to the bill for want of equity and on sundry specific grounds and the demurrer was overruled. He now insists that in overruling the demurrer the court committed reversible error, his contention being that the bill is purely a fishing bill to ascertain facts to support the complainants' cause of action and that the allegations which we have quoted from the bill and as set forth in appellant's brief are indefinite and uncertain as to the business relation existing between the deceased and the defendant prior to and up to the time of decedent's death. These contentions are not sustained. The bill is one for discovery and relief, ancillary to the administration proceeding pending in the court wherein this bill was filed, and the discovery sought is incidental to the equities in the complainants as the personal representatives of the estate to discover and recover assets belonging to said estate. Dudley v. Martin et ux., 241 Ala. 435, 3 So.2d 7; Alabama Butane Gas Co. et al. v. Tarrant Land Co., 244 Ala. 638, 15 So.2d 105; Shelton et al. v. Timmons, 189 Ala. 289, 66 So. 9; Adams v. Adams, 199 Ala. 46, 73 So. 984.

The insistence that the allegations as to the business relation between the defendant and W. M. Faust, deceased, is indefinite is not presented in the absence of specific demurrer which pointed out this defect. Equity Rule 14, Code of 1940, Tit. 7 Appendix, p. 1052; Whiteman v. Taber, 203 Ala. 496, 83 So. 595; Louisville N. R. Co. v. Cowley, 164 Ala. 331, 50 So. 1015; Grayson v. Roberts, 229 Ala. 245, 156 So. 552.

The insistence that the complainants are guilty of laches in the assertion of their right to relief against defendant is without merit. W. M. Faust, Sr., died in 1940. The bill was filed in 1942 by the personal representatives and it does not appear from the face of the bill that the complainants were guilty of unreasonable delay in the institution of this proceeding.

The appellant insists that the complainants' testimony shows that they had full knowledge of the relation between the decedent and R. L. Faust at the time the bill was filed and hence this testimony disproves the allegations of the bill upon which its equity rests as a bill for discovery and, therefore, the complainants were not entitled to relief.

As we have pointed out, the bill is not one strictly for discovery but is for relief and discovery and is ancillary to the administration proceedings over which the court has assumed jurisdiction. In these circumstances the verification of the bill was wholly unnecessary and the sole effect of such verification, if the verification was inconsistent with the allegations of the bill, goes to the credibility of the testimony and not its admissibility. Hall v. McKeller, 155 Ala. 508, 46 So. 460. Another reason why this contention is unsound is the averments of the bill are made on information and belief and do not affirm as a positive fact that complainants were without knowledge as to the true fiduciary relation between the parties.

After careful consideration of the testimony in the case, we find evidence that warranted the conclusion stated by the court in the decree that the relation existing between the defendant and W. M. Faust, deceased, was that of partners in business; that they each invested in said business $2,500 in cash and at the time of the death of said W. M. Faust the partnership had assets in mortgages and notes showing a face value of some nine to ten thousand dollars and in the absence of evidence on the part of defendant to show that the said securities were not worth their face value and the persistent evasions and refusal of the defendant to disclose any facts pertinent to the value of the assets of said partnership, the court was justified in accepting the proof as sufficient to justify the decree which was rendered.

The admissions of the defendant to his brother Col. Faust were admissions against interest that not only tended to show the fiduciary relation but also the nature and extent thereof and these admissions were not within the rule of exclusion of Code of 1940, Tit. 7, § 433. 22 C.J. p. 297, § 324; 31 C.J.S., Evidence, § 272; Warner et al. v. Warner, Ala.Sup., 28 So.2d 701.

It is also settled law that parties to a joint business adventure though not strictly a partnership are entitled to invoke the jurisdiction of a court of equity for accounting and settlement of their affairs. Elledge v. Hotchkiss, 222 Ala. 129, 130 So. 893; Murphy v. Craft, 226 Ala. 407, 147 So. 176.

Whether the court should order a reference or proceed to state the accounts between the parties was a matter addressed to the court's sound discretion. Smoot v. Miller, 243 Ala. 80, 8 So.2d 571.

The defendant by cross-bill seeks to require an accounting from the complainants as personal representatives of W. M. Faust, deceased, and as individuals for money of said decedent alleged to have been collected by them during his life and converted to their own use and for which they are alleged to be liable as for money had and received. The cross-bill was dismissed on final hearing and its dismissal is made the basis of one of the assignments of error. If as alleged in said cross-bill the said W. M. Faust, Jr., and Virginia Ragsdale collected money belonging to said W. M. Faust, Sr., during his lifetime, this constituted a debt for which they were liable to him, and when they procured their appointment as personal representatives of his estate and accepted that office, said indebtedness due from them to the decedent was transmuted from a chose in action to a chose in possession in their hands in their representative capacity, as assets of said estate, for which they were required to account in the final settlement of said estate in the administration proceedings. Miller v. Irby's Adm'r, 63 Ala. 477; Lindsey v. Lindsey, 229 Ala. 578, 158 So. 522; Code 1940, Tit. 61, § 295.

We find no error in the record. The decree is affirmed.


GARDNER, C. J., and LIVINGSTON and SIMPSON, JJ., concur.

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