, 1874-12-14
a Partner O. Trustee for the Benefit
Of the Firm.
Profits on Ills 0utsido Transactions on
Firm Assets Belong to tho Firm.
Concenlment Of Such Transac.
tions q Fraud in Itself,
What a Bill Of Sa1c Covers.


decision OF tho Supreme Court Of Missouri on
tho rights aud duties Of partners, and shows n
1ocidod bnt gratifying ADVANCE In tho teudonoy
OF court ot equity to rid Itself of tho tranl-
mels of technical rules, aud administer Justice
OIL hroad and equitable grounds.
THE CASE
waa that Of George pomeroy, appellant, ngainht
William II. Deuton. respondent. Ill appeal from
St. Louis Circuit Court. and waa d suit in tho
uature Of u bill Ill equity. It appoars that tho
pIaiutlff Rl,tl defendant woro for number Of
yoars copartnors uI,dor tho nano and stylo Of
Pu1ueroy d Bonton, engaged in the Wholesale
dry goods business, in tue City OF 81. Louis,
whore tho del ontlant resided and managed the
buA,lcAB Of tho ilrtn whilo tho pln,niiG lea,ded
in tin City Of Now iork, anendod to Tho Affairs
OF tho firm at that point, anC Baldon Visited IT.
Louis. Tho potittun III tho case in aupstauoe
chargoB TINT tue defendant, III violation Of tho
ner, and without tho knowledge or consent Of
plnintiT, uHod tho 1noucy, CREDITS. nnd nSHoss Of
tho film n tho purchase Of Government vollch-
GIN aud WHISKY. and III various othor ways i!ls-
OF thu hrn, wl.oroby ho realized Immense prof
its TINT ho fraudutontlY omitted to charga my
OF tneyo mA.teEs on tho partnership bools
that subsequently lie forwarded to plaintiT
faIAo balA,'ee-sheet parportnE to be correct
tho speoutatons in which dofondant had
baen engaged or tho. psollts he bud re-
allzed; that this balauce'Bhoot defendant.
though knowing tho contrary, assured plaintiff
was corroot that by theso REPRESENTATIVES,
aud other fraudulent conduct aud contliy-
u,lceB, dofentiant induced tho plaintiff.
who rolled Buely Oh lilo defendant nud Ills
representations, to nottlo with him on The bRslB
OF the balance-shoot, mud to sell cut to him
his entire interest IN Tho firm for &216 o00 sum
far below it's real worth. Tine petition concluded
NTH prayer for opening thu settlement aud
taking MI account AZ to the matter co1nplatnod
Gutious OF tho petition were denledby tho ai,swer.
which alBo tot mp ns
fl:,T MATTER OF DEFEHsn, ...
that defendant had purchased of plaintiff his
ton, poineroy, non.ou It Co., poucroy. Dnrlsoe
Il Co., aud Iomeroy l. Durkee, for tho SUM OF
S275,00U, hnd received bill OF talo therefor,
whereby thu firm Of pomcroy IL Donton was dis
Holvcd and tho cntiso interest OF Planti1 i'll the
goods, property, and assets. Of that firm were
conveyed or a2Bigncd to defendant, on the 1st
dny of january, 1865, and ti,nt plaintiH from
tlnt time forward had no further interest, right,
or CLAIM, III tho 1ifn Of Pon,eroy l. Ueiton, or tho
other firms mentioned, and that pinintiH waB
thereby barred Of having tile relief prayed.
TIL QuESTIuEHt
tho Court said, wcto two namoly: Tirat, did tho
defendanL appropriate tho credits or funds OF
tho rnl 10 ilis own private t,Ho u the purchase
WAS such appropriation nude without tho con-
Bent or in fraud or tho rights Of tho plaintiff
In regard TO these questions tho Court held TINT
tho oyidonce showed cunrlslslyoly that the de-
inQdant hnd, IN contravcntun Of tile articles Of
typartnprship, aud of Lis duty rs partner, ap-
piop11utcd its moneys and credits to his own
private uso i'll the purchase Of vouchers aud
iEhwinos, for which he mover accounted, but
OH tho contrary induced the plaintiff to execute
to him bill, Of sale sufficiently comprehensive
in form to embrace the formers ontire interest
III the tirm; when tho balance-Bheot which waH
used NJ thu husa wllch tho salo was effected,
most distant allusion to. tho profits fraudu-
lontly. roulizud by tho defendant. and
OF which, as shown by the testimony, plaintiff
WAS entirely unaware repoa.ng, az he did, in do
fontfant and his representations the most lnplc-
it confidence. II was no oxctso for, nor did 1t
lia III the mouth Of, tho dofondunt to aver that
plaintiff might haYo discovered tho wrong and
prevented its accomplishment had ha exercised
wateI4fntness. The maxim, as claitned by the
| defontant that q court OF equity
ONLY MELpED a vloILANT PARTY,
was not applicable in tho present case for it only
| applied when 4 patty, being npprscd Of his
rlEhtH, neglected to enforce them, and court Of
| equity which would make such q poryeree appli-
ea.iun Of ono Of its fundamental maxirns as that
| seemingly inBlstcd on by defendants counsel.
| woulu become the efficient ally OF the yig,lant
wropg-doer, prove recreant to its paBt history,
and tue principles OH which its very jurisdiction
| rested
Tho evidence also showed that tho balance
sheet waB the basis Of aettlomant, and thut tue
private whisky transactions uf the defendant
were not included theron. 1udood, tho Court
sat the dofendant would not venture to deny
| w1,At the plaintiff positively asserted, that hu
knew nothing of tue whisky or voucher trans-
uctious OF tie defendant until long nftor the dis
solution Of the firm. Manifcstly plaintiff could
not yield aHAent to nor wpivo thnt Of which llo
WAS ignorant. Even II 1t woro conceded, for the
aake Of argument. that the defendant was per-
mittcd to WitEdraw from tho capital of tho firm
considerable sum for his own use, still that
would by no means authorize the speculations
| Into which he plunged; aud thnt wAa
| AppANENT FOR HEvEnAL. REAsoSB:
| Firat, tho aricieB Of copartnershlp expressly
forbade them. SECOND, tho snaas which defeud-
| ant might have drawn for hiA Individual uHe ware
fur exceeded In amount BY shohe rcally employed
fnotorily appears IN evidence that tho amounta
| which could have beon legltiMntely drawn Wero
ever actuuly embarked IN thuae apeculationH.
| Aud fourth, that good faith which should Le tho
| anilnatiug principle Of Rll mercantile aABocia-
lions should have restrained tho defendant from,
ombasklng the funds Or credits Of the firm out
hide OF their leg!t!mato scope mud for his own
| individual benefit.
For not only are gross frauda committed by
| one partnor nHRinst another prohibited. but
TRANSACTIONS of i more plausible nature, as ln'
| trigueA fur private advantage, wore hold HI Of
| toneea uEa1nHt the partnership equally forbid
den md therefore rcliey1blo IN court OF equity.
| 1t had accordingly bon.l hold tlnt ono partner
was accountable III equity to lia copartuer for
his proportion Of tho profits Of venture, al
Though outside Of tho FIRMS scope Of business.
It tho money Tor wlat il laptanount thor0to,
lilo crclits) Of the ilru! we're used in such von.
turo. 30 fur had tue rulo which .cquires tho ut
moyt good filth botween copArtners prevailed,
tuut Tnere partner, In violation OF tlo partner
ship asticloH, but wllllont using tha partnership
fluids tuerator, embarked in outside enterprise,
CONT Of equity would docseo hin copartnor as a
partncr with him IN bllcn separate baalnoBB
And u bill! ualing such allegations bad bann hold
malntailable, n1,d that M account could be tax
Ell, although IN notluu Ut lnw would be lor thu
breach Of tho articles.
Ths allegation tlAt tile dofentlant waH
| CHARGED WITH 1NTEnEnr -
OH call OIL nlonoya in hia hnndB WAS not sut1,-
oiunt, for he must he held a,lBwelabla aa well
for tho profits lo as derived ont Ut tho pnrtnor.
aAin fMlaa. Thrown against I4itton, I. WINS.
lIu.1 IL ntch III oYtent had courts Of equity
gouo III tllat dlroctlon that II tero wers MI,
douhs uH tn wuotn tho funds IN S,tuh case bolonG