§ 230. Who may demand accounting.-The application for the accounting may be made by a partner or one who stands in the right of a partner (actions between partners being the only subject involved in this chapter); by the personal representative of a deceased partner; by the assignee or purchaser of the interest of a partner; by the purchaser of a partner's share upon a sale on execution; but not usually by a general creditor. 83 4. Of Receivers. § 231. When will be appointed. Receivers are frequently appointed in the settlement of partnership affairs, though the appointment is not a matter of course and will not be made unless good grounds exist for it. Since a receivership usually ousts the partners of their possession, involves additional expense, and commits the management to a stranger, courts feel a reluctance to appoint one. A receiver will not usually be appointed except upon dissolution; but the appointment may be made before, if a dissolution is inevitable, or if the partnership is insolvent and the assets are being wasted or improperly applied; but mere dispute or ill-feeling among the partners is not a sufficient ground.84 It may be made also where one partner is insolvent and is wasting the assets or breaking up the business.85 So, "wilful acts of fraud by the defendant, such as misappropriation of firm funds, making false and improper entries upon the firm books, depriving complainant of access to the books, and concealing from him the true condition of the business, afford sufficient ground for appointing a receiver."' 86 88 See Bentley v. Harris (1873), 10 R. I. 434, 14 Am. Rep. 695; Freeman v. Freeman (1884), 136 Mass. 260; Gerard v. Bates (1888), 124 Ill. 150, 7 Am. St. Rep. 350, 16 N. E. 258; Channon v. Stewart (1882), 103 Ill. 541. Under the Uniform Partnership Act, see §§ 22 and 27. 84 See New v. Wright (1870), 44 Miss. 202, Mechem's Cas. 319; Allen v. Hawley (1855), 6 Fla. 142, 63 Am. Dec. 198; Heflebower v. Buck 86 High on Receivers (3d ed.), $483. A receiver may be appointed to supersede a surviving partner or a sole managing partner if he is acting wrongfully or misusing or misapplying the assets.87 One of the partners may be appointed receiver if he is otherwise a suitable person. The occasion for the appointment of a receiver usually arises in actions between the partners themselves or their representatives. The mere general creditors of the partnership or of a partner have rarely any standing to apply for a receivership over the partnership property, unless a statute provides for it. § 232. Powers and duties of receiver.-The receiver is an officer of the court and acts under its direction. He may be authorized to continue the business long enough to permit its being wound up without sacrifice. He has not, ordinarily, in the absence of a statute or an assignment, the title to the property,88 but he has the right of possession and disposition, and should be given control of all of the assets of the firm. By the weight of authority, probably, the receiver has no inherent authority to sue in his own name to collect the debts or recover the property of the firm 89 and he cannot usually be sued upon the firm debts without the consent of the court, nor can creditors of the firm levy upon the property in his possession.00 "The appointment of the receiver does not absolve the co 87 See Word v. Word (1889), 90 Ala. 81, 7 So. 412. 88 The ordinary receiver of partnership property, appointed by courts of equity, has ordinarily no title to the property, unless there has been an assignment of it made to him or unless there is some valid statute so providing. (The case of insolvent corporations is usually different.) See Heffron v. Gage (1894), 149 Ill. 182, 36 N. E. 569; Harrison v. Warren Co. (1903), 183 Mass. 123, 66 N. E. 589; Stokes v. Hoffman House (1901), 167 N. Y. 554, 60 N. E. 667, 53 L. R. A. 870; Singerly v. Fox (1874), 75 Pa. 112; Murtey v. Allen (1899), 71 Vt. 377, 45 Atl. 752, 76 Am. St. R. 779. Some courts, however, regard him as in effect an assignee. See Wilkinson v. Rutherford (1887), 49 N. J. L. 241, 8 Atl. 507. 89 Garver v. Kent (1880), 70 Ind. 428; Wilson v. Welch (1892), 157 Mass. 77, 31 N. E. 712; Battle v. Davis (1872), 66 N. Car. 252; Yeager v. Wallace (1863), 44 Pa. 294. But compare Wilkinson V. Rutherford supra; Baker v. Cooper (1869), 57 Me. 388; Henning v. Raymond (1886), 35 Minn. 303, 29 N. W. 132. 90 See Jackson v. Lahee (1886), 114 Ill. 287, 2 N. E. 172. partners from their partnership debts, nor stay or prevent actions against the members of the copartnership for the recovery of such debts. Judgments so obtained cannot, however, be enforced by execution levied on the assets in the hands of the receiver, for they are in custodia legis, but may share in the assets upon a proper application to the court." 91 5. Action by One Partnership Against Another Having Common Partners. 93 § 233. Jurisdiction of equity.-As has been seen in an earlier section,92 it is commonly held that no action at law can be maintained by one partnership against another where the two have one or more partners in common. The forum for such cases is said to be in equity. This is because of the difficulty as to the common partner being both plaintiff and defendant at law-a difficulty which equity is able to avoid. As has also been seen, it has been held in some of the States having the so-called "code" procedure that this result can be reached in such States under the "civil action." It has been denied that even equity would entertain the action, unless there was to be an accounting between the partners in the respective partnerships as well as the adjudication of the claim of the one partnership against the other.94 This would not be necessary if the two firms had already settled an account between themselves.95 Some courts have held that the action in equity can be maintained without an accounting between the partners, at least unless some showing is made that it would be inequitable to do so.96 Judge 91 Bogert v. Turner (1909), 135 N. Y. App. Div. 530, 120 N.*Y. S. 420. 92 Ante, § 219. 93 Ante, $220. 94 See 5 American Law Review 47; Dixon, Partn. 268; Rogers v. Rogers (1847), 40 N. Car. 31. 95 See Calvit v. Markham (1839), 4 Miss. (3 How.) 343. 96 See Burrows v. Leech (1898), 116 Mich. 32, 74 N. W. 296; Re Buckhouse (1874), 2 Low. 331, Ames' Cas. 446. See, also, Haven v. Wakefield (1866), 39 Ill. 509; Crosby v. Timolat (1892), 50 Minn. 171, 52 N. W. 526, Gilm. Cas. 469; Noyes v. Ostrom (1910), 113 Minn. 111, 129 N. W. 142; Gibson v. Ohio Farina Co. (1859), 2 Disney (Ohio) 499, 13 Ohio Dec. 306. Story said, many years ago,97 that "Courts of equity in all such cases look behind the form of the transactions to their substance, and treat the different firms for the purposes of substantial justice exactly as if they were composed of strangers, or were in fact corporate companies.' 97 Story's Eq. Jur. (13th ed.), § 680; (14th ed.), § 923. |