PIRTLE v. PENN.

(Court of Appeals of Kentucky, 1835. 3 Dana, 247, 28 Am. Dec. 70.)

ROBERTSON, J. Henry Pirtle filed a bill in chancery against Shadrack Penn, alleging that they were partners in the publication of Pirtle's Digest; that Pirtle, as author, was to furnish the manuscript, and Penn, as mechanic, was to execute the printing and binding, and each to be entitled to half of the proceeds to be derived from the sale of the books; that Penn was not bound to commence the printing unless he should be satisfied that the public patronage would be satisfactory and sufficient; that the state subscribed for 500 copies, and that afterwards Penn had printed 2,000 copies and bound about half of them, but that, after, dividing equally the gross sum paid by the state for 500 copies, he had refused to permit Pirtle to have any control over the books, or any participation in the sale of them-alleging for the first time, that he was entitled only to half of the net profits, after deducting the cost' of the printing and binding, which had not yet been wholly reimbursed; and, lastly, that Penn was insolvent, and therefore praying for an account of sales which had been made, and for an injunction restraining further sales, and for the appointment of a receiver.

Penn, in his answers to the bill and amended bill, admitted the partnership as alleged, with only one material qualification, and that is that his personal supervision and interest on his capital expended in the publication were, by the agreement, to be set off against Pirtle's skill and labor in preparing the manuscript, and that the net profits only were to be divided, after reimbursing the amount expended in the printing and binding and in the purchase of materials. He denied that he was insolvent, and, after exhibiting a general account, insisted that Pirtle had received about as much as he had himself received.

The circuit court having, on final decree, dismissed the bill, this appeal is prosecuted to reverse the decree.

As there was no prayer for a dissolution of the partnership, interim management, by a receiver or otherwise, under the control or direction of the court, was not authorized by the established rules and usages of courts of equity. Gow on Part. 120, 139; Cary, 32. And it has been said that without a prayer for dissolution a court of equity will not entertain a bill for an account, because such bills might be annual, or of indefinite recurrence. But both principle and authority tend to the conclusion that a bill for an account between copartners may be maintained without a prayer for a dissolution of the partnership, if there be any good reason for compelling an account and settlement. Cary, 34; Gow, 120-136. A court of equity may, moreover, compel a specific execution of a partnership contract, and may sometimes enjoin a partner from persisting in improper conduct, jeoparding the rights or derogating from the power or authority of his copartner,

and when the latter, if he can be protected and secured by injunction, does not desire a dissolution, but prefers a continuation of the partnership according to the spirit and end of the association. In this case, though there is no prayer for dissolution, yet, as Penn has been selling the books and does not deny that he refuses to permit Pirtle to control or participate in the sale of the residue, we think the circuit court had power to decree, and ought to have decreed, some relief, if the allegations of the bill as to the terms of the partnership be true. [After construing the partnership agreement:] From this view of the case, it would seem that, under the circumstances of this case, Pirtle is entitled to a decree for an account, and for securing to him his equalcontrol over the books, and correspondent participation in the sale or disposition of them, by a partial injunction or otherwise, so as to effect that end most securely and appropriately; and consequently the absolute dismission of the bill was improvident. Wherefore it is decreed and ordered that the decree of the circuit court be reversed, and the cause remanded.

SHANNON et al. v. WRIGHT.

(Court of Appeals of Maryland, 1883. 60 Md. 521.)

The appellee, together with the appellants, were copartners in the business of manufacturing and dealing in metals in the city of Baltimore, under the firm name of Shannon, Wright & Co. A bill was filed by the appellee against the appellants, asking for an injunction and the appointment of a receiver. The case is further stated in the opinion of the court.

RITCHIE, J. This is an appeal from an order of the circuit court. of Baltimore City appointing a receiver and granting an injunction. Our duty, therefore, is simply to determine whether the case stated by the complainant was one which justified the passage of the order appealed from. Without pausing to dwell upon those averments of the complainant which impute fraudulent misrepresentations to the defendants as to the value of the firm's assets and its business, by which he was induced to enter into a partnership with them, which has disproportionately engulfed his means and exposed him to great loss, we find in the specific allegations of clause 10 of the bill ample ground for the equitable interposition he has invoked. That clause is as follows: "And now your orator charges that debts are due by, and suits are pending against, the firm, and that the defendants, having the money of the firm in their possession, refuse to apply it toward the payment of said debts; that they refuse to give any money to your orator; that they refuse to permit your orator's counsel to examine the books of the firm; that they refuse to allow a competent bookkeeper, selected by your orator, to examine the books of the firm; that

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in order to anticipate debts owing to the firm, and thus get the firm's money in their pockets, they have drawn drafts in the name of the firm upon their customers, and procured the same to be discounted by their lawyer and others at exorbitant rates of interest; that without the knowledge or consent of your orator they have given notes of the firm in settlement of debts not owing by the firm, one of said debts being for clothing purchased by D. R. Shannon and John T. Shannon individually; that without the knowledge or consent of your orator the said D. R. and John T. Shannon have offset their own debts. by sales of merchandise of the firm of Shannon, Wright & Co.;, that they have no tangible property outside of their interest in said firm; that they represent themselves to be three stubborn brothers, and express their intention of litigating the matters in controversy by means of the firm's money until they have ruined your orator; that the said D. R. Shannon and John T. Shannon refuse to return the money which has been advanced to pay their debts; that defendants declare themselves to be unwilling to continue said partnership, even if your orator was willing, and yet they utterly refuse to dissolve the partnership; that they threaten to make contracts in the name of the firm, knowing they cannot be carried out, which contracts, if made, will render your orator liable in damages; that judgments will shortly be entered against the firm, and your orator damaged, unless the money in the hands of the defendants be applied to the payment of the notes sued on, as.above stated; and your orator charges that unless immediate relief be given by way of an injunction and receiver, which he is advised is the proper remedy, he will be reduced from a reasonable competence to poverty."

There is evidently here set out such a case of alleged fraud and imminent danger to the complainant's interest in the partnership property as justifies a receiver and an injunction-proceedings which do not determine the rights of the parties, but simply protect the property from injury or destruction until those rights can be further inquired into or adjudicated. The order appealed from must be affirmed. Order affirmed, and cause remanded.

KATZ v. BREWINGTON.

(71 Md. 79, 21 Atl. 139.)

See ante, p. 433, for a report of the case.

SUTRO v. WAGNER.

(Court of Chancery of New Jersey, 1873. 23 N. J. Eq. 388.)

There was notice on part of defendant of a motion to dissolve an injunction heretofore granted in this suit, and a notice on part of complainant for the appointment of a receiver. By consent, both motions. were argued together.

ZABRISKIE, Ch. This suit is by one partner against the other for a dissolution, an account, and a receiver. The grounds of complaint are: A failure by the defendant to fulfill his partnership obligations, his neglect and refusal to proceed with any efficiency in the business, his fraudulent appropriation of the funds, and his fraudulent voluntary conveyance of his separate property to his son, for the purpose of placing it beyond the reach of creditors of the firm, so as to leave the complainant's separate property liable for the debts of the firm beyond its assets, and giving notice of such transfer to the mercantile agency, for the purpose of ruining the credit of the firm.

The answer of the defendant denies some of these charges, but not all. The voluntary transfer of his separate property, and the notice of it to the mercantile agency, are not denied. These, in connection with some other matters not denied, are sufficient to show that the defendant had deliberately resolved to break up and ruin the business of the firm; and the personal relations of the two partners are such that they can never carry on the. business together to advantage. The injunction must be retained, and a receiver appointed.

The motion to dissolve is denied, with costs.1

1 In McElvey v. Lewis, 76 N. Y. 373 (1879), in an action for the dissolution of a partnership and the appointment of a receiver, it was said: "In the absence of any provision in the partnership agreement as to the division of property or manner of closing its affairs, it was proper to appoint a receiver. Law v. Ford, 2 Paige (N. Y.) 310; Martin v. Van Schaick, 4 Id. 479. And Lord Eldon, in Goodman v. Whitcomb, 1 Jac. & W. 569, says: 'If the court can see that a dissolution must be declared, it follows very much of course that a receiver must be appointed.' This is the general rule, and no sufficient reason is suggested for making this case an exception. It is doubtless true, as the appellant argues, that a receiver will not be appointed for the mere reason that the partners quarrel; but that is because this will not of itself be a sufficient ground for severing the connection between them. Collyer on Partnership, 197 In the case before us the partnership has been dissolved, and the defendant's answer shows that there is property concerning the division of which the par ties have not agreed, and other property, the lease and good will, in regard to which there is a difference; the defendant claiming the whole interest in both to the exclusion of the plaintiff."

SECTION 3.-ACCOUNTING AND DISTRIBUTION.

GROTH et al. v. KERSTING et al.

(Supreme Court of Colorado, 1896. 23 Colo. 213, 47 Pac. 393.)

HAYT, C. J. The defendants in error, Fritz Kersting and August Wilmsmeier, commenced suit against plaintiffs in error, Louis Groth and Ferdinand B. Becker. This action was numbered 13,115 in the district court. The complaint in the suit, as originally instituted, contained two causes of action. The first, which was directed against the defendant Groth alone, is an action by two partners against the third member of the firm for an accounting. The second cause of action was against both of the defendants, upon an account stated. At the time of the institution of this suit, an attachment was issued in aid thereof, and sustained upon final hearing. To the original complaint a demurrer was interposed, and sustained. Thereafter the complaint was amended, and the first cause dropped therefrom. This first cause of action was subsequently made the basis of an independent suit, designated in the district court as No. 13,900. After the issues were joined in the two causes, they were consolidated, and referred to I. E. Barnum, as referee, to take testimony, and report findings. As a result of the proceedings had before the referee, the plaintiffs in both cases were successful. Exceptions to the report were in due time filed, and overruled by the court. In accordance with the findings of the referee, the district court rendered judgment for the plaintiffs for the sum of $8,751.54, against both defendants, and an individual judgment against Groth alone for the sum of $1,936.70. From this judgment a writ of error was sued out from the Court of Appeals, in which court the judgment of the district court was in all things affirmed. See Groth v. Kersting, 4 Colo. App. 395, 36 Pac. 156. From this latter judgment the cause is brought here by error.

It is claimed that the referee's report, which formed the basis of the decree in the district court, as well as that of the Court of Appeals, is manifestly erroneous, in that it fails to provide for the repayment to each partner of his contribution to the business. Undoubtedly, the usual order of distribution of the assets of a copartnership upon dissolution is as stated by counsel, to wit: (1) Payment of the debts. or liabilities due third persons; (2) repaying to each partner his advances; (3) repaying to each partner his capital; (4) division of the balance as profits. While this is the usual order, it may be altered by agreement of the parties, and in this case we think, from the evidence and the conditions under which the copartnership was formed and the