.

was ever subjected to any test. But this tent under the exact physical conditions set test, if made, is not found to have been a forth in the contract, nor were they ever standard or recognized one, or one permitted tested under an exact 15-foot or 18-foot head under the contract, nor is it found that it by any kind of test. was an accurate test. The accompanying Appellants failed to make a test which facts not only fail to show its accuracy, but was expressly provided for by them, to be on the contrary tend to discredit it. It is made before installation, which it appears found that there never was any measure-would have given some definite assurance of ment by any approved device of the volume a fulfillment of warranties or otherwise afof water available at the dam, or the water ter installation. And after installation they used by any of the turbines; that the read-made no such test as shows a breach of the ings of the power generated were taken from warranties. the switchboard after the power had been [10] Furthermore, the finding, while it developed through electrical generators, re- states that the turbines did not show an duced by transformers attached thereto, and efficiency of 75 per cent. as warranted wholly thence transferred to a switchboard from fails to show the extent of the deficiency in which the readings were made and in this the per cent. of efficiency. In this respect it test one of the generators was run as a mo- is too uncertain upon which to base any tor and another as a generator. None of certain amount of damages. The finding as these electrical instruments, including the to the shortage in horse power as found is, measuring devices, were found to be ac- obviously, 13 per cent. of that which the turcurate, but, on the contrary, it is found that bines were warranted to produce. In fixing two of the three generators used had broken the amount of damages it is apparent that down and required rewinding which was the trial court added to the contract price done prior to the test of June, 1904, and of all the articles involved in the contract were not afterwards tested as to their ef- of sale, both “Exciter Line Turbines" and ficiency. And it is also found that the ac- "Generator Line Turbines” and their apcuracy of other electrical instruments used purtenances, the amount expended by appelwas shown either immediately before or lants in the installation, and fixed the damafter the readings were taken which disclos ages to appellants from the alleged breach ed the result of the test. These measurings of warranty as to horse power of the “Genand readings were made by employés of the erator Line Turbines” at 13 per cent of the operating company and not by either appel- sum of this addition. The correctness of this lee or appellants. It is found that the only method of measuring such damages is vigbasis of all statements as to power of the orously assailed by counsel for appellee, and turbines is the result shown by the power price of certain of the articles about which

justly. The per cent. is calculated on the generated through the electric generators above referred to.

there was no controversy, the "Exciter Line This, we think, falls short of showing with sufficient certainty and the cost of installing all. Manifestly if

Turbines,” as well as those in controversy, even an accurate electrical test and it cer- the percentage method were permissible at tainly does not meet the test provisions of the contract as shown by the findings of the all, the application of it in the manner here

made would be wrong. There was no findcourt. Under the circumstances shown it

ing of the value of the "Generator Line Turwould be as reasonable to use the turbines

bines" delivered. It has been held in a to test the generators as to use the gener- similar case that this method of ascertainators to test the turbines. It appears from the ing the damages is purely speculative and not findings that appellee had, prior to the mak- permissible. Hooper v. Story (1898) 155 N. ing of the contract, refused to sell its tur-Y. 171, 49 N. E. 773. The usual rule is that bines with any guaranty depending upon an the measure of damages for a breach of warelectrical test to show its fulfillment. The contract as made does not provide for an ference between the value of the machinery

ranty in the sale of machinery is the difelectrical test, and the only test the char-delivered and the value of such as would acter of which is specifically named therein have complied with the warranty, and the is one which the finding shows to be a me contract price is prima facie the latter' value. chanical brake test. This the appellee per- Street V. Chapman (1867) 29 Ind. 142; sistently claimed from the beginning, and Booher v. Goldsborough (1873) 44 Ind. 490 ; when differences arose over the test and ap- Hooper v. Story, supra; Parker v. Fenwick pellee had refused to accede to an electrical (1905) 138 N. C. 209, 50 S. E. 627; 35 Cyc. test appellants received and installed the 468 to 470; Beach on Contracts, $ 291. third and fourth units. We think appellants Numerous other questions are raised by were bound to show by a mechanical test appellee under its assignment of cross-errors a failure of the turbines to fulfill the war which have all a relation to the main conranty. Such a test the court finds was never tention that the second and third conclusions made and their power never ascertained by of law are erroneous, but the conclusion or through any such test, and, further, that reached makes an examination of them unthe turbines either in whole or in part, were necessary. never tested by any kind or character of It follows that the court committed error

NERS

against appellee in stating the second and death of the partner having been allowed as a third conclusions of law.

credit. The first conclusion of law, which awarded

[Ed. Note. For other cases, see Partnerappellee the sum of $12,804.45, was based on ship, Cent. Dig. 88 552–561; Dec, Dig. § 255.*

] the finding that there was due appellee on 6. PARTNERSHIP (§ 255* )-SURVIVING PARTthe purchase price a balance of $9,871.25, to

ACCOUNTING — Loss OF CORPORATE

STOCK. which was added interest from the dates

A surviving partner continuing the busiwhen the payments under the contract were ness to save a sacrifice held telephone stock due to the date of the finding, which amount of the value of $600 as firm assets and turned to $2,933.20. The judgment is reversed on of reorganization in good faith and under or

ed over the stock to the company for purpose appellee's assignment of cross-errors with in- der of court and received new stock in exstructions to the lower court to strike out change. Other stock was sold to outsiders its second and third conclusions of law and at par. He then agreed on his own motion:

with other stockholders that he would not to render judgment in favor of appellee on sell, with a result that the company became the first conclusion of law with additional insolvent and the stock worthless, and an interest on the balance of the purchase price assessment was levied which the partner paid. ($9,871.25) from the date of the finding to charged with the amount of the stock and

Held, that the surviving partner would be $ the rendition of judgment added thereto.

the assessment for his failure to sell, though no offer was ever made therefor.

[Ed. Note.-For other cases, see Partner

ship, Cent. Dig. 8:8 552–561; Dec. Dig. 8 (180 Ind. 229)

255.*] HARRAH v. DYER. (No. 22,411.) 1 (Supreme Court of Indiana. June 6, 1913.). 7. PARTNERSHIP (

8253*)—SURVIVING PART

NERS COMPENSATION FOR WINDING. UP 1. PARTNERSHIP (8 308*)-SURVIVING PART- BUSINESS. NERS-ACCOUNTING-INTEREST.

The rule applicable to merchandising partUnder Burns' Ann. St. 1908, § 9718, re- nerships is that, in the absence of an agreequiring a final settlement by a surviving part-ment therefor in the partnership articles or a ner within two years from the time of filing statute providing for it, a surviving partner inventory, unless for good cause shown the is not entitled to compensation for winding up court grants a longer time, a surviving part- the affairs of the partnershiy. ner delaying for four years after inventory to

[Ed. Note.-For other_cases, see Partnerthe court is chargeable with interest on the ship, Cent. Dig. & 550; Dec. D'ig. 253.*]

§ funds in his hands.

8. PARTNERSHIP (8$ 253, 255*)—SURVIVING [Ed. Note. For other cases, see Partner

PARTNERS COMPENSATION FOR WINDING ship, Cent. Dig. $$ 713, 714; Dec. Dig. 8

UP BUSINESS. 308.*]

Where a surviving partner represented

to the court that it would be for the best in2. PARTNERSHIP (8255*)-SURVIVING PART- terests of the estate to continue the business

NERS CONTINUING BUSINESS ACCOUNT- for a time, and it was so ordered, though ING.

against the wishes of the personal representaWhere a surviving partner continues the tive of the deceased partner and his widow, business with permission of the court and the and the partner made no effort to sell the widow of the deceased partner ran a money business except a petition for a private sale account in the store for her support, on final which was set aside, and he failed to account account such advance must be added to the until four years after inventory, he will not funds in the hands of the surviving partner be entitled to recover for his individual servand then subtracted from a half thereof, and ices in carrying on the partnership and windnot subtracted at once from such funds.

ing it up. [Ed. Note.-For other cases, see Partner- [Ed. Note.-For other cases, see Partner: ship, Cent. Dig. 88 552–561; Dec. Dig. $ 255.*]ship, Cent. Dig. 88 550, 552-561; Dec. Dig. $$ 3. PARTNERSHIP ($ 255*)-SURVIVING PART. 253, 255.*] NERS-ACCOUNTING. A surviving partner continuing the busi

Appeal from Circuit Court, Greene Counness may not be credited with the expenses ty; Chas. E. Henderson, Judge. of an expert accountant, as he should keep Exceptions by Fred E. Dyer, administrator, his books in such shape as not to need such to the final report of William B. Harrah, · services. [Ed. Note. For other cases, see Partner- surviving partner. From the judgment, the

, ship, Cent. Dig. 88 552–561; Dec. Dig. $ 255.*] surviving partner appeals. Affirmed. 4. PARTNERSHIP ($ 255*)-SURVIVING PART

See, also, 96 N. E. 41. NERS-ACCOUNTING-EXPENSES OF SUIT. Transferred from the Appellate Court A surviving partner continuing the busi- under clause 2, § 10, Acts 1901, p. 565;

, though successful, may not have credit for ex: Burns' Ann. St. 1908, $ 1394. penses of the suit, as the suit was not de

H. C. Shaw, of Indianapolis, and Cyrus fended for the benefit of the estate.

E. Davis, of Bloomfield, for appellant. John [Ed. Note.-For other cases, see Partnership, Cent. Dig. 88 552-561; Dec. Dig. 8 255.*] T. Hays, of Sullivan, and Wm. T. Douthitt 5. PARTNERSHIP ($ 255*)—SURVIVING PART- and Henry W. Moore, both of Terre Haute,

— NER-ACCOUNTING-WORTHLESS NOTES.

for appellee. Where a surviving partner continues the business under permission of the court to save

COX, J. Appellee, as administrator de a sacrifice, he may not be credited with worthless notes taken during such time; the worth bonis non of the estate of Frank A. Fellows, less notes held by the partnership at the deceased, filed exceptions to the final report of

appellant as surviving partner of the com-ation of the specific objections which are mercial firm of Harrah & Fellows, of which made to the conclusions of law. firm appellee's decedent was in his lifetime. The conclusions of law were to the followa partner. The exceptions filed were exten-ing effect: (1) That appellant was legally sive, made charges of fraud and wrongdoing chargeable with each of the various items against appellant in closing the affairs of the shown by the findings making up the aggrepartnership, demanded the addition to the ac- gate above stated; (2) that he was legally count of many specific items of charge, and entitled to the credits as shown making the excepted to many specific credits claimed by aggregate sum stated above; (3) that he appellant in the report. The issues formed was not legally entitled to certain credits on the report and exceptions were tried by claimed which are set forth in the findings; the court. Upon request the court made a (4) that the law was with the exceptor; and special finding of the facts and stated con- that appellant should pay within 20 days two clusions of law thereon which were favor- certain judgments shown by the findings and able to appellee, and a judgment was ren- within 20 days should pay into the hands of dered in accordance with the conclusions of the clerk for the use of the exceptor $4,026.law. From this judgment appellant appeals .08; and that thereupon the final report and relies for a reversal on assignments of should be approved and appellant as surviverror which involve the correctness of certain ing partner discharged. of the conclusions of law, the action of the Appellant excepted to the first, third, and court in overruling appellant's motion for a fourth conclusions of law. new trial, and in overruling his motion to [1] The court found that August 11, 1903, modify the judgment.

appellant had on hand, over and above cerThe finding of facts shows that appellant tain building and loan association stock and and Fellows had been, for a number of years rent account, also mentioned in the findings, prior to the death of the latter, which oc- a sum not less than $4,500 above liabilities, curred November 18, 1901, equal partners and that by January 1, 1904, he could have in the hardware business, owning a stock of filed his final report; that since that time up such merchandise and certain real estate in to the time of filing the report, August 11, the town of Worthington; that January 15, 1908, there had been unreasonable and un1902, appellant took upon himself the duties necessary delay in the final settlement; and of surviving partner under the statute for that appellant was chargeable with interthe purpose of winding up the business as est at the rate of 6 per cent., amounting to provided by law and filed an inventory show- $1,341. It is contended that the court erred ing merchandise on hand of the value of in stating as a conclusion of law that appel$8,174.66, notes

notes due the partnership of lant was legally chargeable with this or any $4,018.65, accounts due the partnership amount of interest. The contention cannot amounting to $2,081.89, and telephone stock, be sustained. The statute requires a final $600, making a total of $14,875.20; that settlement within two years from the time of March 11, 1902, appellant, without notice filing the inventory unless for good cause to the heirs or legal representatives of the shown the court grants a longer time. Burns deceased partner, upon representations that | 1908, § 9718. It does not appear that time it would be to the best interest of the part was granted, and manifestly it appears that nership, procured an order from the circuit good cause did not exist upon which it might court to postpone the sale of the partnership have been granted. . After a lapse of a reaproperty and to continue the business of buy- sonable time for settlement, the rule is that ing and selling until further order of the the surviving partner is chargeable with incourt, and conducted it without further or- terest. 30 Cyc. p. 699 (c); 22 Am. & Eng. der until the sale of the stock in bulk, May Encyc. of Law (2d Ed.) p. 219 (4); Bates on 26, 1903; that during the time appellant so Partnership, $$ 786 to 789; Sanders v. Scott conducted the business he bought goods at (1879) 68 Ind. 130; 4 Ann. Cas. note, p. 180. wholesale to the amount of $22,608.31, and [2] The court found that, after his death, sold them at retail at a gross profit of $6,- the widow of the deceased partner was allow087.75; that he sold the stock in bulk at ed to and did run a money account in the private sale May 26, 1903, for $6,100, which store for the support of herself and minor sale was approved by the court, and the children and was advanced out of the funds finding shows the amount realized was all of the business $739.28; and that by agreethat the stock was then reasonably worth; ment of the appellant and appellee this sum that the final report was not filed until Au-was to be deducted from any amount found gust 11, 1908. The account cast by the court due the exceptor, and when so deducted in the finding of facts contained many charg- should be a full satisfaction of the claim es which it was found were properly charge against the widow. The court added this able against appellant and which aggregated amount to all the other charges against $31,181.38, and credits allowed to the amount the appellant, and it constituted one item of of $21,650.64, leaving a balance of $9,530.74. the total charges against him. The amount The finding of facts is long and need only be was then deducted from the half of the balfurther set out in connection with a consider- ance of $9,530.74, with which appellant was

.

found chargeable, leaving $4,026.08, the sum | claimed were all taken by appellant during awarded to appellee. It is claimed that in the time he conducted the business thereafter charging this item of $739.28 against appel- and before the sale. The purpose of permitlant the court erred. On the contrary, we ting a surviving partner to continue the busithink it quite obvious that the amount was ness for a time is not primarily to make mon- . properly added to the sum with which appel- ey, but to preserve the business as a going conlant was chargeable. A simple illustration cern for an advantageous sale. And where, will show the fallacious nature of the claim as here, the order of court for continuing the made in appellant's behalf. If the amount business is made at the instance of the suradvanced to the widow had been $5,000 and viving partner and upon his representations the actual balance in the hands of the appel- that it is to the best interest of the estate, lant had been $10,000, it is at once apparent it will not serve to protect him in making that the estate of the deceased partner could sales on credit to irresponsible parties. The realize nothing from the $10,000 balance general rule is that the surviving partner who without adding the $5,000 to it, while the continues the business must bear losses from surviving partner would keep it all, making bad accounts. 30 Cyc. 636 (1), 637 (2); Hentwo-thirds of the proceeds of the business ry's Probate Law (3d Ed.) 8 451. received by him, while the estate of the de

The rule is properly applicable here, and ceased partner would have received one-third the court correctly refused to allow the credonly. On the other hand, by adding to the it claimed. It is perhaps true that where the $10,000 balance the sum of $5,000 advanced, contract of partnership provided for continu$ the estate of the deceased partner would re ing the business upon the death of either ceive $2,500 after deducting the $5,000 charge partner, or where it was continued with

$

the consent of the personal representative against the distributive share of the estate of $7,500, while the appellant would be left or heirs of the deceased partner, or where

profits far beyond losses were made, equity with an equal share, $7,500.

[3] It appears from the finding that appel- ! would permit a credit for losses to a survive

[ lant employed an expert accountant to ex. but the case before us does not require it.

ing partner who had not been negligent;

! amine the books of the partnership from but the case before us does not require it. January 1, 1902, to the date of filing the trial court in its conclusions of law to allow

[6] Complaint is made of the refusal of the final report and to marshal the facts for the appellant credit for $600, the appraised value report, and paid him therefor out of the of telephone stock, held by the partnership funds of the partnership $200, which the at the time of the death of Fellows, and an court found was a reasonable charge, but re- assessment made on it thereafter and paid fused to allow the sum to appellant as a by appellant out of the funds of the partner. credit. In this the court did not err as claim- ship amounting to $203.16, and the sum of ed by appellant. It was appellant's duty two judgments amounting to $696.84, which to so keep his accounts that the services of were taken against him on account of furan expert accountant would not be required ther assessments. The finding of the court in the preparation of his reports.

with reference to this matter was that the [4] It is next contended that the court erred partnership owned an undivided two-fifths inin refusing to allow appellant credit for the terest in a telephone plant in the town of sum of $1,621.10 which it is found was paid Worthington, which was inventoried as partby him to his attorneys for services ren-nership property and appraised at $600; dered in the defense of an action brought in that at the time of the death of Fellows, and 1904 by appellee against appellant and his up until the 28th day of March, 1902, the bondsmen based on various breaches of his property of the telephone plant was worth bond, and which action resulted in a judg- $2,350; that on said 28th day of March, 1902, ment against appellant which was subse- the appellant upon his own petition and withquently reversed by the Appellate Court, and out any notice to the heirs or legal reprewas still pending at the time of the finding. sentatives of Frank A. Fellows was granted The court found that the amount was reason- an order by the Greene circuit court to able, but concluded as a matter of law that invest said interest in a corporation formed appellant was not entitled to credit there for the purpose of taking over said property ; for in his settlement. The case was not de- that for the interest held by said partnership, fended for the benefit of the estate, but to 36 shares in said corporation, of the par valsave appellant and his bondsmen from lia- ue of $25 each, were taken by appellant, and bility to it, and the court's conclusion was the transaction was duly reported to and manifestly right.

confirmed by the court on the 1st day of [5] A further claim is made that the court April, 1902; that at the time of said investerred in its conclusions of law in refusing ment all the stockholders in such company to allow appellant a credit of $1,196.72 repre- in good faith believed that said stock was sented by worthless notes. It is shown by worth par, and that the reorganization of the finding that full credit was given for all said business would greatly enhance the valworthless notes held by the partnership at ue of said telephone property; that stock the time of the death of Fellows, and that therein was sold to outsiders at par; that holders, including the appellant, that no one [7,8] The contention is earnestly pressed would sell any part of his holdings in said that the conclusion stated by the court, that corporation unless all sold; that an effort appellant was not entitled to credit for a was made to sell the same within a year or sum claimed for his individual services in two, and an offer was made by a prospec- managing the business until its sale in maktive purchaser, who was ready, able, and willing settlement of the trust, was erroneous. ing to buy, but unwilling to pay the price In relation to this claim for credit, the court demanded; that appellant at no time made found that at different times in 1902, the any effort to sell the stock of the partnership widow of the deceased partner made demand in said corporation; that the interest in said on appellant for the interest of her husband partnership, both before and after the forma in the partnership, and in September, 1903, tion of the corporation, was worth at least the appellee made a like demand; that ap$600; that the appellant at no time received pellant conducted the business under and by any offer to buy said stock, nor did he have virtue of the orders of the court as stated any opportunity to sell the interest of said in other findings and gave his personal supartnership, nor did he offer the same for sale pervision to the business; that reasonable at any time; that later said telephone cor- pay for such services was $1,400; that reaporation met with reverses owing to competi- sonable pay for the final winding up of the tion and other difficulties, all without the affairs of the partnership was $100, making fault of appellant, and growing out of cir- a total of $1,500; that during the time from cumstances beyond the control of the officers the death of Fellows to February 16, 1903, and stockholders of said company; that it appellant asked for no order of court to sell became necessary for the corporation to the merchandise in bulk, and made no effort make an assessment against all the share- whatever to sell the same, but on the date holders, under the law of the state, to meet mentioned did file his petition to sell the its liabilities from time to time, and was stock at private sale in bulk, and an order compelled to sell its plant for less than an was granted March 14, 1903, and the sale amount necessary to pay its indebtedness; made; that appellee filed exceptions to the that in the year 1906 appellant was assessed report of that sale, and it was set aside and on the 36 shares of stock in said corporation a resale ordered and made as before stated belonging to said partnership and paid out May 23, 1903; that after the sale ordered in of the funds of said partnership the sum of March, 1903, was made and set aside, ap$203.16; that creditors of said telephone pellee filed an application for a receiver uncorporation recovered judgments in the ag- der the provisions of the statute (section gregate sum of $696.84, being the residue of 9716, Burns 1908), but final action was not the amount allowed by law to be assessed taken upon it. against the shares of stock so held by the It is claimed by counsel for appellant that, surviving partner in said corporation, and for having been charged with gross profits rewhich the surviving partner is liable; that alized in conducting the business, appellant all the other shareholders were assessed un- was entitled to an allowance for services. der the law the same as the surviving part- It may be said that, while the finding shows ner.

that gross profits resulted from continuing It will be noted that the telephone stock at the business, appellant was credited with all the time of the death of Fellows was worth proper expenses including clerk hire, and $600, and was so appraised; that, after the the finding fairly shows that the estate was interest held by the partnership had been in- not benefited by any net profits. The statvested in 36 shares of the corporation, the ute of this state relating to surviving partvalue of the stock was at least $600. While nerships provides: "In case of the death of the investment was made by order of court one partner, the surviving partner or partand confirmed by the court, there was no or-ners shall proceed to settle and close up, as der directing the appellant to hold said stock, speedily as may be practicable, the partnerand it was his clear duty under the law to ship affairs in accordance with the law now dispose of it as promptly as possible in the in force, and the provisions of this act.” His settlement of the partnership affairs. The duties were clearly set out in the act, and, finding shows that after the formation of if he fails to take upon himself such duties, the corporation the stock was worth par, or it is provided that the court having probate $900, but that appellant had entered into an jurisdiction shall appoint a receiver who agreement with the other stockholders not to shall settle the partnership affairs. It is sell unless all sold. In the meantime disaster also provided that the surviving partner came upon the company resulting in the loss shall settle such partnership business within es set out. While it is found that the ap-two years from filing the inventory, unless, pellant, neither before nor after the organiza- for good cause shown, he be granted a longer tion of the corporation, ever received an offer time. There is no provision in the statute for the stock, it is also found that he never for payment to the surviving partner for his offered the same for sale. We think the services, and the question whether he is encourt was clearly right in charging these titled to compensation has not, we believe, losses to the surviving partner. 30 Cyc. 636- been determined by this court. Resort there640.

fore must be had to the general principles of 102 N.E.-2