Opinion
(December Term, 1838.)
1. Without a special agreement, partners are not entitled to charge each other for services in relation to the partnership business, except where a partner is appointed an agent for a special purpose, in which case he may be entitled to the usual compensation in relation to such agency.
2. The entries in the books of a firm are prima facie evidence as between the partners. Knowledge of them is presumed, and evidence is required to rebut such presumption.
IN October, 1825, William H. Philips and Josiah Turner formed a co-partnership for carrying on a mercantile business in the town of Hillsboro, under the firm and style of Turner Philips. They afterwards changed the name of the firm to that of Josiah Turner Co., and continued to carry on the joint concern until January, 1833. The copartnership was then dissolved, and Turner being regarded as the more responsible of the late partners, took upon himself the office of paying off the debts of the concern. Philips and Turner joined in an assignment of all the effects and credits of the copartnership to Allen Parks, in trust to collect the said debts and to pay the proceeds thereof, as well as the proceeds of the said effects, to Turner, for the purpose of enabling him to pay off the debts of the firm; and Philips further conveyed to the said Parks certain property belonging or claimed to belong to the said Philips individually, in trust to secure Turner from loss. In August, 1836, Philips filed his bill of complaint against Parks and Turner, alleging that the property of the copartnership had been more than sufficient to pay off its debts; that these had all been discharged accordingly; that a considerable amount of money was in the hands of the defendants, or one of them, to a part whereof the said Philips was entitled; and praying to have the necessary accounts taken and the (124) defendants decreed to pay over to him what should thereupon be found due. The defendants severally answered this bill. The defendant Parks set forth an account of his management of the trust property, showing the amount received, the amount paid over to Turner, and the debts yet remaining to be collected. The defendant Turner set forth an account of the debts which he had paid and of the moneys which he had received from the trustee, according to which account he had paid a large sum over the amount of his receipts, and exceeding any sum which could probably be realized from the trust funds. Turner then filed a cross-bill against Philips, alleging that on a settlement of the partnership accounts Philips would be found largely indebted to the firm and to him as copartner; that all the property assigned to Parks was not sufficient to discharge the debts of the copartnership, much less to pay unto him the balance justly due from Philips upon said partnership, and prayed that an account might be taken of their partnership, and that Philips might be decreed to pay what should ultimately be found due him. Philips answered the cross-bill, and insisted that upon taking the account prayed for by Turner it would be found that Turner would be largely indebted to him.
W. A. Graham for Philips.
No counsel for the other parties.
An order was made directing the master to take an account of all the matters in controversy between the parties and report the same to the court. The master made his report, to which exceptions were taken by Turner, and the cause was transmitted to this Court for hearing.
The first exception is for that the master hath allowed to Philips $500 annually for his personal services to the firm. The master states that there was no evidence before him of any special agreement between the partners that Philips should receive a compensation for the care and management of the joint property; but that this allowance appeared to him proper, inasmuch as the business of the firm was almost exclusively under the personal superintendence of Philips.
We take the rule to be perfectly established that, without (125) special agreement, partners are not entitled to charge each other for such services. The only exception that we are aware of, if indeed it can be called an exception, is where a partner is appointed an agent for a special purpose, in which case he may be entitled as against the firm to the usual compensation in relation to the subject of such agency. It is not unusual for partnership associations to be formed upon the very basis that one is to contribute his credit and the other his personal services to the success of the undertaking. This exception is allowed.
The second exception is for that the master hath credited Philips in account with the firm for $900 advanced by him as stock at the commencement of the copartnership, without any evidence of such advance except the statement in the partnership books, which is not shown to have been known unto Turner. This exception is disallowed. The entries in the books of a firm are prima facie evidence as between the partners. Knowledge of them is presumed, and evidence is required to rebut such presumption.
All the other exceptions relate to profits alleged to have been made by the concern. We can neither allow nor overrule them, for the master hath not returned any account of profit and loss. Such an account is indispensable to the settlement of the partnership. The report, therefore, must be recommitted for this purpose. Being thus recommitted, the commissioner will also carry on the account of the trustee so as to embrace any further collections and payments that may have been made since the account now rendered thereof, and will proceed to execute the decretal order in every respect in which the report now recommitted is imperfect.
The report is recommitted to Edmund B. Freeman, with full power to examine witnesses, to command the production of books and papers, and to examine the parties on interrogatories. The parties also may take testimony to be used on this reference by commissions in the usual way.
PER CURIAM. Decree accordingly.
Cited: Butner v. Lemly, 58 N.C. 149.