
    William C. Bryant, as Executor, etc., App’lt, v. Sarah A. Gay et al., Resp’ts.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed June 21, 1895.)
    
    Evidence — Burden.
    A party, who seeks to impeach an account rendered pursuant to an order-obtained by him, has the burden of proof.
    Appeal from a judgment dismissing the complaint
    
      Martin Clark, for app’lt; George Wadsworth, for resp’ts.
   Ward, J.

— Joseph 1ST. Tift died on the 22d day of April, 18731 Previous to and at the time of his death, he was one of a firm carrying on business in Buffalo, manufacturing steam engines and boilers, under the firm name of George W. Tift, Sons & Co. The-other members of the firm were George W. Tift, John Y. Tift, Clarence L. Whiting, C. F. Gay, Mary A. Plimpton, and one share held by G. W. Tift in trust for Lewis Whiting Gay. There were fourteen shares, in all, in the concern. Joseph N. Tift was the owner of two and a half shares. The members of the firm were closely related, and no difficulty seems to have occurred prior to-the death of Joseph. Joseph left a last will and testament, which was duly admitted to probate, and John Y. Tift and the plaintiff' were named as executors. On the 1st day of May, 1873, the survivors of this firm, together with Sarah A. Gay, organized a new one under the same name, which took possession of the assets of the old firm, and carried on the business. While the old firm was in existence, and in July, 1868, John Y., and George W. Tift, Whiting, and C." F. Gay, with four other parties, organized in Buffalo a joint-stock association, under the laws of the state of New York, named the Plimpton Fireproof Elevating Company, the capital stock of which was $300,000. Joseph subscribed for 42,000 of the stock, and was a director in the association up to the time of his death. This association erected and operated a fireproof elevator in Buffalo, which was completed and .ready for business in 1869. The old firm of G. W. Tift, Sons &. Co., furnished a large part of the material and means for the construction •of this elevator. On October 30, 1869, the association mortgaged the property to secure the payment of $200,000. Joseph joined in the mortgage. The association had some real estate in Buffalo. 'The value of the elevator at the time of the death of Joseph, as found by the referee, was $255,000. The referee also found that <at that time the association was indebted to the firm, on open account, in the sum of $36,122.35, and on promissory notes in the •sum of $200,000. The firm held stock in the association, the par value of which was $170,000, which account, notes, and stock were a part of the assets of the firm at the time of the death of •Joseph. In July, 1873, George W. and John Y. Tift and others •organized a corporation, under the laws of the state of New York, under the title of the Tift Fireproof Elevating Company, and the Plimpton Fireproof Elevating Company conveyed its real estate, including its elevator, to this corporation. The consideration for ■such conveyance, recited in the deed thereof, was $190,000. No money was in fact paid, but for this amount the Tift Fireproof Elevating Company issued to the stockholders of the Plimpton ■Company 1,900 shares of its stock, of the par value of $100 per share, and on the same day the Plimpton Company executed and •delivered to George W. and John V. Tift, and Charles L. Whiting, Charles C. Gay, and Mary A. Plimpton, a mortgage on said «levator property, conditioned for the payment of $237,542.10, of which $200,000 was to secure the payment of the notes made by the Plimpton Company, and held by the survivors of the old firm ■of G. W. Tift, Sons & Co., and the balance to secure an account •owing by the Plimpton Company to the firm. These facts the referee finds, and that the transactions were in entire good faith, and to the best interests of all concerned.

This action was commenced in 1880, and was brought against the survivors of the old firm and Sarah A. Gay, and the personal representatives of such of those survivors as had died, for an ac•counting of and concerning the property and effects of the old firm, and the disposition thereof by the survivors, and the profits •made by them out of the assets of the firm, and demanded judgment in favor of the plaintiff for a large amount. The defendants answered, denying liability, and the issues were referred to a referee to hear, try, and determine. The referee entered upon the trial, and discovering that an accounting by the defendants was •essential to the proper determination of the case, and upon the application of the plaintiff, asking that an account be rendered of the affairs of the firm since the death of Joseph N. Tift, and thp assets of the firm (the defendants being heard in opposition), ordered that the defendants render an account in the action, which should embrace a full and itemized statement of the property, liabilities, and uncompleted contracts which were of the old firm upon the death of Joseph, and a full statement of the transactions of the new firm to the date of the accounting, and of the present assets of the new firm as it then existed, which order was made on the 21st of March, 1885. The defendants, in pursuance of this order, made a very full and elaborate accounting, under oath, as required. This accounting was submitted to the referee and parties, and the plaintiff took certain exceptions thereto, among which was to an item of $112,000 specified in the account, and required a detailed statement thereof, which was duly rendered, and made a part of the original accounting. Afterwards, and on the 3d day of August, 1887, the parties, by its attorneys, stipulated as to the issues of fact to be tried by the referee, and the stipulation recited as follows:

“To expedite the trial of this action, we stipulate and agree that the only issues of fact to be hereafter tried and decided are as hereinafter stated, and all other issues of fact, charges against, and objections to the account rendered by, the defendants impleaded, except questions of law arising upon said account, „are hereby waived and abandoned, except as hereinafter stated.”

Then follow the issues, seven in number, covering the questions, mainly, which will be hereafter discussed. The parties proceeded to give evidence; the plaintiff insisting that the defendants be required to proceed with their proof upon the trial, on the ground that the burden rested upon the defendants. This motion was denied by the referee, and the plaintiff excepted. The proof that was given very largely related to the Plimpton Elevator, and its value. The account, as rendered, seems to have been treated as evidence by the court and counsel upon the trial. In the account, as rendered, which covered 316 pages of printed matter, there was an inventory of the assets of the old firm, as of May 1, 1873, eight days after the death of Joseph. The inventory contains a table, first of nominal values, and then of actual values, and also of liabilities. The value of nominal assets is stated at $605,658.74; the actual value of the assets and property, $135,862.42; liabilities, $386,878.97; nominal surplus, $218,779.77; actual deficiency, $251,016.49. In this table the nominal value of the Plimpton accounts, notes, and stock of the old firm is put at $407,122.35. The actual value of the property embraced in this item is not given, but the accounts, notes, and stock are treated as vauleless.

The referee found, as a fact, that at the time of the death of Joseph the value of the assets of the old firm was $135,862.48, and that the liabilities were $386,878.97, and-that the firm was insolvent, and that the excess of liabilities over assets of the old firm, being $251,016.49, had been paid by the members of the new firm out of their private and individual means, and not mt of the assets or property of the firm; that the actual value of the assets and property of the old firm was as specified in the inventory, and not the nominal value, as therein stated ; that the Plimpton Elevating-Company, at the time of the death of Joseph, was insolvent, having a total indebtedness of $159,867.43, in addition to the indebtedness owing to tlie old firm on accounts and notes, above given, of $236,122.35. The referee found that the interests of the firm in the Plimpton Fireproof Company were of little or no value. The referee fo’und that in March, 1879, the Tift Fireproof Elevating Company sold its real estate, including its fireproof elevator (the Plimpton Elevator), for $255,000, and that in making such sale the new firm acted in entire good faith, and that that sum was the best price that could be obtained for the property. The referee also found the several issues set forth in the stipulation in favor of the defendants; that they had made diligent efforts, and in good faith, to realize as much as possible from the claims held by the old firm against the Plimpton Elevating Company, and to realize as much as they could, and did realize, in fact, as much as they possibly could, out of and from all the assets and properties of the said old firm; that they had fully, fairly, and completely accounted in this action for all the assets and properties of the said old firm ; and, in effect, that the survivors and the defendants, in all their transactions with the partnership property, had acted in good faith, and in the best interests of all concerned. The effect of the accounting and the referee’s conclusions were that nothing remained to the estate of Joseph, either out of the original assets of the old firm, or out of any accretions or profits that had resulted from the use of the partnership property by the survivors, and therefore the complaint should be dismissed, with costs against the estate of Joseph. The plaintiff attacks these conclusions, arid asks for a reversal of the judgment because the referee was not warranted in his conclusions of fact from the evidence; that, as the referee had found, there was no accounting by the defendants until made in the present action; that the business had been continued by the survivors a great length of time, and new enterprises had been engaged in with the property of the old firm; that as the survivors (being, in a sense, trustees for the estate 'of Joseph) had wrongfully commingled the funds of the old firm with other enterprises in which they were interested, either as stockholders or personally, they should be held to a rigid rule of accountability, and, from all the evidence, it was apparent that their accounting was not reliable, and that the claims set forth in the complaint were established.

The plaintiff contends that the nominal value of the property in the inventory should be charged upon the defendants, as they had not, by proper explanatory evidence, shown that the actual value of the property, as stated by them in the inventory, was the true value, and that the referee should have found with him upon this question, as a matter of law. We cannot sustain this contention, as the referee had the right to consider the whole evidence as to the value of the inventoried property; he had the right to take into account all the proofs as to the value of the interests of the old firm in the Plimpton Elevator property, which constituted the chief assets of that firm. Both sides gave proof as to the value of that elevator property. The tendency of the plaintiff’s proof was that it was worth the nominal value stated in the inventory, while the defendants’ proof, showing the use of the property and its value, brought the property down to a much lower valuation. Besides, the plaintiff relies upon the account of the defendants to show the nominal value of this property, and of the other properties of the old firm stated in the inventory. The defendants are also entitled to the benefit of their statement in the inventory as to its actual value, in connection with the statement as to the nominal value; and, from a review of the evidence, we do not differ from the referee’s conclusions as to the value of the property.

The plaintiff seeks to charge the defendants with the amount of the consideration mentioned in the deed from the Plimpton Association to the Tift Bireproof Elevating Company, of $190,-000; but in view of the fact that the company (the Plimpton Company) received nothing but shares of stock in the Tift Company at par value, and that this was not an individual transaction, but between an association and a corporation, and the property received by the corporation for the shares so issued to the Plimpton Association was of little, if any value, this contention also falls.

The plaintiff also contends that the point was well taken before the referee that notwithstanding the accounting that had been insisted upon by him, and obtained, the burden, upon the trial of the stipulated issues, still remained with the defendants, and that it was for them to show by further and more conclusive proof the good faith and propriety of their actions, and that nothing remained to the estate of Joseph in their hands. The plaintiff had waived, by his stipulation, all objections to the accounts of the defendants, except such questions of law as might arise. He had brought the defendants into court, charged in the complaint with dereliction of duty as survivors, with regard to the property of the old firm, and that there remained in the hands of the defendants property of the estate, for which judgment should be given to the plaintiff. He had forced an accounting by the defendants, and he cannot now object that the order made by the referee for such accounting was irregular, or that it had not all the force of an order made by the court. While the burden was thrown upon the defendants to make the account, in a proper sense, still, when it was made, the burden shifted, and fell upon the plaintiff to attack .that account, and remained with him to the end to establish the cause of action set forth in his complaint. The referee was therefore right in his ruling upon-this subject.

The appellants concedes that the debts of the old company were the' amount stated in the inventory, of nearly $400,000. There seems to be abundant evidence to sustain the conclusions of the referee that the value of the assets of the old firm was about $131,000. This large difference against the old firm, of over $250,000, there seems to be but little question, was made out of the private means of the survivors. This bare statement would seem to put at rest any claim that Joseph 1ST. Tift, at the time of his death, owned a farthing’s interest in the property of the old firm. Charging him with this large deficit, it is not apparent from the evidence in this case how it was overcome by the subsequent management of the property of the old firm by the new so as to leave anything for the plaintiff. It is true that while the old firm might in fact-have been insolvent at the time of the death of Joseph, if there were subsisting contracts or property out of which might spring in the future, if judiciously managed, profits that would wipe out the liabilities of the old concern, and leave a balance, the plaintiff might share in that, but there is nothing in this case to justify such hopeful conclusions.

. Certain exceptions were taken by the plaintiff to the admission of rejection of evidence upon the trial. We do not deem it necessary to consider them here, because if even they embraced the errors alleged by the plaintiff, they could not have possibly affected the result, or averted the inevitable conclusions that the referee reached, and which we have reached from the papers before us, — that at the time of the death of Joseph the old firm was hopelessly insolvent, and there was nothing for the survivor’s of the firm to build upon, out of which to work any benefit to the plaintiff.

The judgment should therefore be affirmed, but as it was proper for the plaintiff to bring this action and obtain the accounting, no costs should be imposed upon the plaintiff, as administrator, upon this appeal.

All concur.  