Case ID: ny-st-rep_36/html/0847-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Catharine Smith, Resp’t, v. Frederick Wood, App’lt.
    
      (New York Common Pleas, General Term,
    
    
      Filed February 2, 1891.)
    
    Partnership—Where partner’s name does not appear he is not entitled TO SHARE IN GOOD WILL.
    Two persons, one of whom was confessedly insolvent, formed a partnership. It was agreed that the insolvent’s name should not appear in the firm dealings and that the real estate should he held in the name of the solvent partner. In an action for an accounting, Held, that the insolvent was not entitled to share in the good Will of the business, and that the real estate, for the time being, should remain in the possession of the solvent partner, who should be appointed receiver.
    Appeal from an interlocutory judgment of the equity term of this court.
    The following is the opinion below :
    Bookstaver, J.—This action is brought to dissolve a copartnership claimed by the plaintiff to have been formed between her husband, the assignor John Smith, with Frederick Wood.
    The only question to be determined is one of fact. There is no-dispute that sometime prior to August, 1887, said Smith and said Wood made some kind of an agreement. Plaintiff contends that that agreement was for a copartnership, then and thereto be formed, to be conducted under the style of Frederick Wood. Defendant denies this, and contends that the agreement was executory only, and was conditioned that the said Wood should take the said Smith into copartnership only when he should get clear of all his debts.
    Both parties testify very positively as to their understanding of what this agreement was, and each is in opposition to the other. There was no one present at the time the agreement was made, and it was wholly oral. It was well known to both of the parties at the time of making the agreement that Smith was insolvent, and owed a considerable sum of money.
    Under these circumstances it was impolitic that Smith’s name should appear as a partner; and I incline to the opinion that the plaintiff’s version of the agreement is the true one, and that there was a present copartnership of the plaintiff, with the understanding that Smith’s interest in the same should be kept secret until he had effected some kind of a compromise with his creditors. This I think best reconciles all the facts and testimony in the case. It accounts for the fact that Smith devoted his time to looking for a place where they could conduct business; that when he found it, he called Wood’s attention to it; that they together negotiated for it; and explains why the leasehold was taken in the name of Wood only; and also why Smith invested $1,500 of his wife’s money in the purchase; and also all his tools, machinery and stock, which before that time had been fully examined by the defendant Wood. It also accounts for the fact that Wood introduced Smith to the bank as his superintendent, and gave him a power of attorney, conferring upon him (Smith) unlimited right to draw money from the bank account as he saw fit, and he could draw therefrom for his own purposes such sums as he desired, which is inexplicable on the defendant’s theory of the case. It also accounts for Wood’s denial of the copartnership when the subject was brought to his attention, and for the various acts of dominion which Smith exercised in the business.
    I think, too, the fact ■ of the employment of the bookkeeper, and the way in which he made up his books, of which Wood must have had some knowledge, is strongly corroborative of the plaintiff’s contention.
    My judgment, therefore, is in favor of the plaintiff, and that there should be an accounting, between the parties. But inasmuch as Wood’s name only appeared in the business on such an accounting, no reckoning should be taken of the good will of the business, and the same should not in any way enter into the account. And the leasehold property should for the present remain in the possession of Wood, and that he be appointed the receiver, unless strong reasons are shown by the plaintiff in opposition thereto.
    
      Artemas B. Smith, for app’lt; Jeroloman & Arrowsmith, for resp’t.
   Per Curiam.

The judgment should be affirmed upon the opinion of the court below.

Allem, Bisohoff and Pryor, JJ., concur.