Scott v. Dilks

SCOTT (R. H.), J. pro tem.

Defendant appeals from a judgment for plaintiff in an action in equity to set aside a judgment in a former action in which the same plaintiff brought suit against the same defendant to dissolve a partnership and for an accounting.

Plaintiff and defendant had been partners in the business of making and selling patented oilers. Less than one year after the partnership was formed plaintiff sued defendant for dissolution of the partnership and for an accounting. Prior to the trial of that action the parties entered into a stipulation for judgment predicated upon a statement by defendant as to the financial condition of the partnership. Pursuant to that stipulation judgment was signed May 24, 1929. It awarded $10,000 to plaintiff, awarded the business to defendant and gave the right to each to use the patent to manufacture the oiler.

Nearly ten years later plaintiff filed this suit against defendant. The amended complaint was filed January 18,

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1939, and sought to vacate the stipulated judgment above referred to and to secure an accounting on the grounds of extrinsic fraud on the part of defendant in securing the stipulation for the former judgment. Plaintiff contends and the trial court in this case found that defendant’s representations as to the assets and financial condition of the partnership in 1928 and -1929 were knowingly false and untrue; that they induced plaintiff to enter into the stipulation for a consent judgment in the first case and that such first judgment should be set aside. The court further found that an accounting showed that, allowing credit for the $10,000 already paid, plaintiff was entitled to judgment for an additional amount of $1500 with interest from May 24, 1929. Thereupon judgment was rendered for plaintiff awarding that amount and including provisions similar to those contained in the former judgment, dissolving the partnership and giving the parties equal rights to use the patent.

On appeal defendant questions the right of plaintiff to bring such an action, challenges the sufficiency of evidence to support the findings and asserts that the action was barred by the statute of limitations and was

res judicata.

A review of the evidence shows ample support for the findings. Defendant had control of the books of the partnership, and they did not show the true financial operations and condition. Among other matters it appears that $4781.76 in good accounts were deducted as “bad debts” and that $1700 were set up as loss on old oilers which were brought in to be exchanged for new ones, although each such exchange required payment by the customer of a sum which more-than covered the entire cost of the new oiler plus a profit.