
    The Continental Trust Co., as Administrator, v. Henry Nobel.
    (Supreme Court
    New York Special Term,
    November, 1894.)
    Where a surviving partner fails to close up the business at once, pay debts and divide the balance, he is liable to account to the representatives of his deceased, partner for the profits made from the copartnership property.
    Upon the death of one of the members of a partnership his wife, who was an infant, was appointed administratrix of his estate and, for a valuable consideration, executed a bill of sale of the decedent’s interest in the partnership to the surviving partner. The appointment of the wife was subsequently vacated on the ground of infancy and the plaintiff appointed in her place. Held, that the bill of sale was a nullity so far as the estate was concerned; that the surviving partner could be required to account for profits made with the copartnership property to the time of the accounting, but was entitled to be credited with the amount paid to the wife, not exceeding her interest in her husband’s estate, and that the wife was a necessary party to the action for the purpose of determining such interest. “
    Action for an accounting by defendant as surviving partner in a copartnership of which plaintiff’s intestate was a member.
    
      Luden Bwdseye, for plaintiff. '
    
      Ghristicun G. Moritz and Henry Hoyt, for defendants.
   Ingraham, J.

Since the decision of the General Term of this court in Knox v. Nobel, in which the validity of the appointment of the testator’s widow as administratrix was in question, it is settled that the act of the surrogate in issuing letters to the widow was void, as she was then a minor, and that any contract made by her as administratrix, so far as it attempted to bind the estate of her husband, was also void. See 77 Hun, 232.

The letters that the surrogate issued which attempted to appoinf; testator’s widow as administratrix being void, there was no representative of the estate with whom the defendant could deal or make any contract that would bind the estate. The bill of sale that he received from the widow was, therefore, an absolute nullity so far as the estate was concerned, and the plaintiff, having been duly appointed administrator and being in a position to enforce the rights and obligations of the estate, is clearly entitled to require the defendant, as surviving partner, to account for the copartnership property in his hands.

It is not necessary that I should pass upon the question as to whether or not Nobel had knowledge of the fact that the widow was a minor and that the letters issued to her were void, or that he procured her appointment as administratrix for the purpose.of defrauding the estate of her husband. It is a little difficult to understand how the defendant, who was the testator’s partner, could have been ignorant of the fact that the widow, who was at that time under nineteen years of age, was an infant. But, assuming that he had knowledge of that fact, it is not at all clear that he knew that an infant could not be appointed administratrix. And as the legal rights of the estate would not be materially affected by his knowledge of that fact, or his knowledge of the legal effect of the appointment of an infant as administratrix, it is not necessary in this action to protect the estate that that question should be determined.

Upon the death of the plaintiff’s testator, it was the duty of the surviving partner at once to 'close up the business, reduce the estate to cash, pay the debts and divide the balance remaining ; but where the surviving partner fails to perform this duty, he is held accountable for all profits made with the copartnership property up to the time of a final decree dissolving the copartnership and directing an accounting. Thus the rule is stated in the American and English Encyclopaedia of Law, volume 17, page 1166 : “ And if the surviving partner continues the trade or business with the partnership stock, it is at his own risk, and he will be liable, at the option of the representatives of the deceased partner, to account for the profits made thereby, or to be charged with interest upon the deceased partner’s share of the surplus, besides bearing all the losses.”

In this case the estate of the deceased partner has elected to require the surviving partner to account for the profits made from the copartnership property, and the plaintiff is entitled to such a judgment.

The defendant, of course, would be entitled to be credited with all the debts of the estate that he had paid, including funeral expenses, as well as the disbursements made by him in carrying on the business, and to be charged with all the receipts from the business, including the value of the copartnership property at the present time. All renewals of leases of the hotel made since the death of the plaintiff’s testator are to be considered as belonging to the copartnership. See Mitchell v. Reed, 61 N. Y. 123. The answer sets up as a defense that there is a defect of parties defendant, in that the widow is not joined as a party to this action, and this presents a more serious question, especially in view of the allegations of the answer and complaint, whereby it appears that this defendant paid to the widow $6,500 for an assignment by her, presuming to act as administratrix, of the share of the plaintiff’s testator in the copartnership. I think, however, that that defense fails, because whatever defect of parties there was appeared on the face of the complaint, and the defendant should have taken that objection by demurrer (see Code, § 498), and by section 499, where the objection appears on the face of the complaint and is not taken by demurrer it is waived. The defendant, however, alleges; as an equitable defense, that he is entitled to be credited in the accounting with the amount that he paid to the infant, which has been received and retained by her.

Under the Statute of Distribution the widow would be entitled to a third of the testator’s personal estate, and thus would be entitled absolutely to one-third of the amount realized upon the sale of this copartnership property. She has received from the defendant the sum of $6,500, and that has been retained by her. And I think it clear that the defendant is entitled on an accounting to a credit for the amount' that he paid to her, not exceeding, however, her interest in her husband’s estate. This is clearly within the principle established by the Court of Appeals in the case of Wuesthoff v. Germania Life Ins. Co., 107 N. Y. 592 ; but to-determine that question the presence of the widow as a party to the action is necessary; and although the defense that there is a defect of parties defendant is waived by not demurring to the complaint, the court has power, under section 452 of the Code, where a complete determination of the controversy cannot be had without the presence of the other parties, to direct them to be brought in. Before the entry of the interlocutory judgment I shall direct the widow to be made a party to this action, and upon her being brought in and made such a party, she having the right to be heard, and presenting no valid objection, I would direct an interlocutory judgment requiring the defendant to account for the copartnership property in his hands.

The plaintiff also applies for the appointment of a receiver of the copartnership property. I am somewhat reluctant to appoint such receiver at the present time, as it would entail large expenses upon the parties, and would seem to me to be unnecessary until after the accounting. I am disposed, therefore, to deny the application for a receiver in the interlocutory judgment; the judgment to contain, however, a provision enjoining the defendant from disposing of any of the copartnership property, except in the usual and ordinary course of carrying on the business of closing up the copartnership). The order directing the widow to be made a party defendant to this action is to be settled on notice, further proceedings in the action, including the entry of the interlocutory judgment, to be stayed until such order has been complied with.

Several questions as to the admissibility of the testimony taken under the commission were reserved.

Objections to the following interrogatories to John J. Stewart are overruled:

Second interrgatory.

Fourth interrogatory.

The last clause of the answer to the fourth interrogatory is stricken out, viz., “Mr. Nobel objected to the employment of any other lawyer than Mr. Glass.”

Fifth interrogatory. The motion to strike out the answer to the interrogatory is denied.

Sixth interrogatory. Except that clause in the answer of the sixth interrogatory, “ It was the first time we had ever seen Mr. Glass,” is stricken out.

The objections to the following interrogatories are sustained, and the answers stricken Out: Third, seventh and eighth.

The objections to the ninth and last interrogatories are overruled.

Objections as to the interrogatories to be administered to Annie L. Stewart:

The objection to the third interrogatory'is sustained and the answer stricken out. The objection to the fourth interrogatory is overruled and the words “ they agreed upon Glass, I think,” in the answer to that interrogatory, stricken out.

The objection to the fifth interrogatory is overruled; but all after the phrase, “ I have already answered that in the question before,” in the answer to the fifth interrogatory, is stricken out.

The objection to the sixth interrogatory is overruled, but the following portions of the answer are stricken out: “ I know that Nobel got very excited that time before; ” “My daughter was much excited, because she had been'waiting on her husband all through his sickness, and it made her very nervous.” And the last clause in the answer, commencing “My daughter and Mr. Niesterman’s brother were always good friends.”

The answer to the seventh interrogatory is stricken out.

The motion to strike out any portion of the answer to the eighth interrogatory is denied and the objection to the ninth interrogatory is overruled. The answer to the last interrogatory is stricken out.

Ordered accordingly,  