« ForrigeFortsett »
chiuf; and such a power was assumed by Lord Apsley, in 1771, without any question being made as to the fitness of the exercise of it. (e) In the civil law, it was held by the civilians to be a clear point, that an action might be instituted by, or on behalf of the partnership, if a partner, in a case in which no provision was made
by the articles, should undertake to dissolve the partnership *62 at an unseasonable moment; * and they went on the ground
that the good of the association ought to control the convenience of any individual member. (a) But such a power, acting upon the strict legal right of a party, is extremely difficult to define, and I should think rather hazardous and embarrassing in its exercise.
(6.) By the inability of the parties to act.
Pothier says, that if a partnership had been contracted between two persons, founded on the contribution of capital by the one and of personal labor and skill by the other, and the latter should become disabled by the palsy to afford either the labor or skill, the partnership would be dissolved, because the object of it could not be fulfilled. (6) This conclusion would be extremely reasonable, for the case would be analogous in principle to that of insanity, and equally proper for equitable relief. The same result would arise if one of the partners had lost his capacity to act sui juris, by conviction and attainder of treason, or by absconding for debt, or crime, or felony, or any state-prison offence. (c)
If the partners were subjects of different governments, a war between the two governments would at once interrupt and render unlawful all trading and commercial intercourse, and, by necessary consequence, work a dissolution of all commercial partnerships existing between the subjects of the two nations residing within their respective dominions. A state of war creates disabilities, imposes restraints, and exacts duties, altogether inconsistent with the continuance of every such relation. This subject had been
(e) Chavany v. Van Sommer, cited in 3 Wood. Lec. 416, and i Swanst. 512, note.
(a) Dig. 17, 2, 65, 5 ; Pothier, Traité du Con. de Soc. Nos. 150, 151, 154. By the Roman law, says Mr. Justice Story. (Com. on Partn. $ 276,) a partner might, by his own act, primarily insist upon a dissolution, which, however, would not be valid unless for just cause, and affirmed to be so by a court of justice.
(6) Traité du Con. de Soc. Nos. 142, 152; Bell's Com. vol. ii. 634, 635. (c) Story on Partn. § 304; Whitman v. Leonard, 3 Pick. 177.
largely discussed, and the doctrine explicitly settled and declared by the courts of justice in New York. (d)
(7.) Consequences of the dissolution.
When a partnership is actually ended by death, notice, or other effectual mode, no person can make use of the joint
property in the way of trade, or inconsistently with the 63 purpose of settling the affairs of the partnership, and winding up the concern. The power of one partner to bind the firm ceases immediately on its dissolution, provided the dissolution be occasioned by death, or bankruptcy, or by operation of law, though in cases of a voluntary dissolution, due notice is requisite to prevent imposition on third persons who might continue to deal with the firm. (a) The partners, from that time, become distinct persons, and tenants in common of the joint stock. One partner cannot indorse bills and notes previously given to the firm, nor renew a partnership note, nor accept a bill previously drawn on it, so as to bind it. He cannot impose new obligations upon the firm, or vary the form or character of those already existing. (6) If the paper was even indorsed before the dissolution, and not put into circulation until afterwards, all the partners must unite in putting it into circulation, in order to bind them. (c) But until
(d) Griswold v. Waddington, 15 Johns. 57; S. C. 16 Johns. 438. (a) Story on Partn. $ 336; Marlett v. Jackman, 3 Allen, 287.
(6) Torrey v. Baxter, 13 Vermont, 452; Woodworth v. Downer, Id. 522. But a retired partner may give authority even by parol to a continuing partner, who is winding up the concern, to indorse bills in the partnership name, after a dissolution of the partnership. Smith v. Winter, 4 Mees. & W. 454. But after the dissolution, one partner cannot give a cognovit for the firm. Rathbone v. Drakeford, 6 Bing. 375.
(c) Kilgour v. Finlyson, 1 H. Blacks. 155 ; Abel v. Sutton, 3 Esp. N. P. 108; Lansing v. Gaine, 2 Johns. 300; Sanford v. Mickles, 4 Ibid. 224; Foltz v. Pourie, 2 Desaus. Ch. 40; Fisher v. Tucker, 1 M'Cord Ch. 173 ; Poignand v. Livermore, 17 Martin, 324 ; Tombeckbee Bank v. Dumell, 5 Mason, 56; Woodford v. Dorwin, 3 Vermont, 82; National Bank v. Norton, 1 Hill (N. Y.) 572; Dickerson v. Wheeler, 1 Humph. (Tenn.) 51 ; Story on Partn. § 322.
1 He cannot indorse a note in the name of the firm, even to pay a prior debt of the firm. Humphries v. Chastain, 5 Georgia, 166 ; Glasscock v. Smith, 25 Ala. 474 ; Fellows v. Wyman, 33 N. Hamp. 351. But see Temple v. Seaver, 11 Cush. 314; Fowle
v. Harrington, 1 Id. 146.
A general authority to one partner, upon a dissolution, to settle the business of the firm, does not authorize him to give a note in the name of the firm, for a firm debt, or to renew one given before the dissolution. Long v. Story, 10 Missou. 636 ; Parker »
the purpose of finishing the prior concerns be accomplished, the partnership, as we have already seen, may be said, in a qualified sense, to continue ;2 and if the object be in danger of being defeated, by the unjustifiable acts or conduct of any of the partners, a court of equity will interfere, and appoint a manager or receiver to conduct and settle the business. (d) A dissolution is, in some respects, prospective only, and either of the former solvent and competent partners can collect and receive payment of debts due to the firm, (e) and adjust unliquidated accounts, and give acquittances and discharges. (f) On the dissolution by death, the surviving partner settles the affairs of the concern, and the Court of Chancery will not arrest the business from him, and appoint a receiver, unless confidence be destroyed by his mismanagement or
(d) Wilson v. Greenwood, 1 Swanst. 480 ; Crawshay v. Maule, Ibid. 506, 528; Gowan v. Jeffries, 2 Ash. 296 ; Peacock v. Peacock, 16 Vesey, 49, 57; Ex parte Ruffin, 6 Vesey, 119, 126; Murray v. Mumford, 6 Cowen, 441 ; Crawshay v. Collins, 15 Vesey, 226; Story on Partn. 463 – 470, 475, 476 ; Ex parte Williams, 11 Vesey, 5; Gow on Partn. 114, 231, 232, 356 ; Collyer on Partn. 226, 240 – 244. After the dissolution, each partner becomes a trustee for the others, as to the partnership funds in his hands, in order to effect a fair settlement and just distribution of the effects. But if any one pays over the funds in his possession to the acting partner, or general receiver of the trust, he is not liable for the insolvency of the latter, if the payment was not made in bad faith. Allison v. Davidson, 2 Dev. (N. C.) Eq. 79, 84.
(e) Platt J., 19 Johns. 143; King v. Smith, 4 Carr. & Pa. 108. By the New York statute of April 18, 1838, c. 257, entitled “An Act for the relief of partners and joint debtors," on the dissolution of any copartnership firm, by consent or otherwise, any individual thereof may make a compromise with all or any of the creditors, and obtain a discharge, as far as respects himself only; but such composition or compromise shall not impair the right of the creditor making it to his remedy against the other members of the firm, nor impair the right of the other copartners to call on such partner for his ratable proportion of such partnership debt. This statute provision extends equally to joint debtors, any one of whom may compound for his joint indebtedness, under the same limitations. The proper remedy for one partner against the other, is by a bill in chancery, or an action of account at law.
(f) Fox v. Hanbury, Cowp. 445 ; Smith v. Oriell, 1 East, 363; Harvey v. Crickett, 5 Maule & Selw. 336 – 344 ; 2 Bell's Com. 543; Story on Partn. 88 328, 341.8
Cousins, 2 Gratt. 372; Lusk v. Smith, 8 Barb. (N. Y.) 570; Hurst v. Hill, 8 Md. 399; Palmer v. Dodge, 4 Ohio (N. S.) 21 ; Hamilton v. Seaman, i Cart. (Ind.) 185; Fowler v. Richardson, 3 Sneed, 508 ; Merrit v. Pollys, 16 B. Mon. 355 See, however, Kemp v. Coffin, 3 G. Greene, 190. And one partner of a firm, even after dissolution, may indorse the note of the firm payable to himself, given before dissolution. Temple v. Seaver, 11 Cash. 314.
2 Roberts v. Eberhardt, 23 Eng. L. & Eq. 245; Mayson v. Beazley, 27 Miss. 106 ; Johnson v. Totten, 3 Cal. 343; Milliken v. Loring, 37 Maine, 408.
3 Major v. Hawkes, 12 Ill. 298; Gordon v. Freeman, 11 Id. 14.
improper conduct. (g) 4 The surviving partner (or partners, as the case may be) is alone suable at law, and he is entitled to the possession and disposition of the assets, to enable * him to * 64 discharge the debts and settle the concern. (a)? But relief may be had in equity against the representatives of the deceased partner having assets, if the surviving partner be insolvent;(6) and it is now held, that a partnership contract, upon the death of a partner, is in equity to be considered joint and several, and to be treated as the several debt of each partner. (c) Each party may insist on a sale of the joint stock ; 2 and when a court of equity winds
up the concerns of a partnership, it is done by a sale of the
(9) Philips v. Atkinson, 2 Bro. C. C. 272; Evans v. Evans, 9 Paige, 178.
(a) Barney v. Smith, 4 Harr. & Johns. 485; Murray v. Mumford, 6 Cowen, 441; 2 Bell's Com. 645. In Louisiana, the surviving partner does not possess the right, until he is authorized by the Court of Probates, to sue alone for, or receive partnership debts. Flower v. O'Conner, 7 Louis. 194; Connelly v. Cheevers, 16 Id. 30; 19 Idem, 402, 404, S. P. This is an anomaly in the English law of partnership; but it follows the doctrine of the French law, which will not allow the surviving partners, after the dissolution of the partnership, to administer the concerns of the partnership, nor even to receive payment of debts due to the same. They must apply to the courts of justice for power. Pothier, de Société, n. 157, 158, 169; Civil Code of France, art. 1865. 1872; Story on Partn. 8 333 ; Code of Louisiana, art. 2852, 2853.
(6) Simpson v. Vaughan, cited in 2 Vesey, 101 ; Jenkins v. De Groot, 1 Caines Cas. 122; Van Reimsdyk v. Kane, 1 Gallison, 371, 630; Hamersley v. Lambert, 2 Johns. Ch. 508 ; Gow on Partn. 358, 359.
(c) Vulliamy v. Noble, Merriv. 593; Wilder v. Keeler, 3 Paige, 167. A joint creditor may file a bill against the representatives of a deceased partner, though the survivor be not insolvent; and if the survivor be insolvent, he may do it without regard to the state of accounts as between such deceased partner and the surviving partners. Devaynes v. Noble, 2 Russ. and My. 495. He is not compelled to sue the survivor in the first instance separately, as at law, but he must be joined in a suit in equity against the estate of the deceased partner, because interested in taking the account. Wilkinson v. Henderson, 1 My. & Keen, 582 ; Devaynes v. Noble, i Meriv. 529 ; Sleech's case, Ibid. 563 ; Collyer on Partn. 343 - 346; Sumner v. Powell, 2 Meriv. 37; Story on Partn. § 362.3 But the doctrine in these latter cases of Wilkinson v. Henderson, and Devaynes v. Noble, allowing the partnership creditor to seek satisfaction out of the estate of the deceased partner, without regard to the partnership fund, and without first resorting to the surviving partner, and exhausting the remedies against him, or showing him insolvent, though strongly sanctioned by Judge Story, is pointedly condemned in Lawrence v. Trustees, &c. 2 Denio, 577.
* Collins v. Young, 28 Eng. L. & Eq. 14; Butchart v. Dresser, 31 Id. 121; Terrell 0. Goddard, 18 Geo. 664 ; Renton v. Chaplain, 1 Stockt. 62. 1 Rice v. Richards, 1 Busb. Eq. 277 ; Shields v. Fuller, 4 Wisc. 102.
Lyman v. Lyman, 2 Paine C. C. 11. 8 Hills v. MÄRae, 5 Eng. L. & Eq. 233; Camp v. Grant, 21 Conn. 41; Fillyau v. Laverty, 3 Florida, 72. Contra, Bennett v. Woolfolk, 15 Geo. 213. See Parker ». Jackson, 16 Barb. (N. Y.) 33.
property, real and personal, and a conversion of it into money. (d) If, however, before a sale or a settlement of the joint concern, the partner in possession of the capital continues the trade with the joint property, he will do it at his own risk, and will be hound to account with the other partner, or the representatives of a deceased partner, for the profits of the trade, subject to just allowances. (e) The good-will of a trade is not partnership stock. It has been decided to be the right of the survivor, and which the law gives him, to carry on the trade, and that the representatives of a deceased partner cannot compel a division of it. (f) But it was afterwards doubted whether the good-will did survive, and could be separated from the lease of the establishment, and especially if the survivor continued the trade with the joint funds. (g) 5
(d) Gow on Partn. 234 – 237; Sir John Leach, in Fereday v. Wightwick, Tamlyn, 261 ; Collyer on Partn. 146, 204 – 214; Crawshay v. Collins, 15 Vesey, 218, 227 ; Crawshay v. Maule, 1 Swanst. 495, 506 ; Cook v. Collinridge, Jacob, 607. Mr. Justice Story, in his Commentaries, $ 355, very justly prefers the English to the Roman or French law on this point, where the division and distribution of the partnership assets among the partners were by valuation and lot, and in specie. Dig. 10, 2, 4; Pothier, de Société, n. 169 to 173. In Scotland, tho English and not the civil law prevails. 2 Bell's Com. 632, 633.
(e) Brown v. Litton, 1 P. Wms. 140; Hammond v. Douglas, 5 Vesey, 539; Craw. shay v. Collins, 15 Vesey, 218; Featherstonhaugh v. Fenwick, 17 Ibid. 298, 309, 310; Sigourney v. Munn, 7 Conn. 11. The surviving partner or partners who collect the debts, adjust accounts, and wind up the concern, have no compensation for trouble or services, unless the same be stipulated. The same rule applies as if the original partnership had continued. See, supra, p. 37 ; Story on Partn. § 331. But the new transactions will not bind the firm, if they be not within the scope and business of the original partnership, or the third person had notice of dissolution, or in the case of a dormant partner who had already retired. Story on Partn. § 334.
(f) Hammond v. Douglas, 5 Vesey, 539; Farr v. Pearce, 3 Madd. 74; Lewis v. Langdon, 7 Sim. 421. But see Crawshay v. Collins, 15 Vesey, 227, a doubt expressed as to the survivorship of a good-will, and that doubt overruled in 7 Sim. 421.
(9) Lord Eldon, in Crawshay v. Collins, 15 Vesey, 224, 227. The good-will of a
Beatty v. Wray, 19 Penn. 516. In the case of Willett v. Blanford, 1 Hare, 253, Wigram, V. C., held, that, in taking an account between the surviving partner, who had carried on the business in part with the capital of the deceased partner, the rule was not absolute that the profits should be determined by the aliquot shares of the partners in their lifetime, or the amount of the agreed capital, or by the actual amount of capital of each estate, but might be affected by the circumstance of the case.
5 The good-will of a business is often a very valuable interest, and, in proper cases, the court will order it sold ; and will restrain the former owners from pursuing a business which would render it valueless to the purchasers. Williams v. Wilson, 4 Sandf. Ch. 379 ; Van Dyke v. Jackson, 1 E. D. Smith (N. Y.) 215. See, also, Dayton o. Wilkes, 17 How. Pr. R. 510. It seems to be now settled that the good-will of a business is copartnership assets, and will be sold; or its value may be ascertained by an in