Case Name: BROWN v. FINCH
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1892-02
Citations: 28 Abb. N. Cas. 36
Docket Number: 
Parties: BROWN v. FINCH.
Judges: 
Reporter: Abbott's New Cases
Volume: 28
Pages: 36–47

Head Matter:
BROWN v. FINCH.
N. Y. Supreme Court, General Term, First Department;
February, 1892.
1. Partnership ; Widow of deceased partner sharing in profits not a partner.J As between the parties under articles of co-partnership which provide that upon the death of a partner, the business shall continue during the life of his widow, and the survivor shall pay her a monthly stipend, the widow is not necessarily a partner, even if interested in the profits.
2. The same.] The capital of a firm of two members conducting an advertising agency consisted chiefly in the good-will of the business contributed by B. By the articles of co-partnership ' in the case of the death of B, the surviving partner had the right to continue the business and to take sole charge of its management, subject only to the duty of paying to B’s widow a portion of the profits. No interest in the good-will was con ferred on B’s widow which could extend beyond her life, and upon her death it was to belong absolutely to the surviving partner. B having died, and a disagreement having arisen between his widow and partner, held', that the surviving partner and B’s widow were not, so clearly as to entitle the widow to the appointment of a receiver, pendente lite, .partners, notwithstanding the articles of co-partnership expressly provided that the death of either partner should not work a dissolution of the partnership.
Appeal from an order of the Special Term appointing a receiver during the pendency of an action, and enjoining defendant.
The action was brought by Sophia Brown individually and as executrix of Edward H. Brown against Lafayette J. Finch for an accounting, and that a partnership should be decreed dissolved.
Upon granting the order appointing the receiver, ti e following memorandum was filed by Lawrence J.:
“ I think there can be no doubt that the relationship between the parties to this action was that of partners. Under such a state of facts, the appointment of a receiver, where helpless difficulties arise between the partners, is almost a matter of course. Upon the affidavits presented upon this motion, it is apparent that the difficulties between the parties are of such a character that their right can only be adjusted by a judicial investigation and determination. It follows, therefore, that the motion for a receiver must be granted.”
The further facts are fully stated in the opinion.
Louis V. Booraem and Wm. B. McNiece (Booraem, Hamilton & Beckett, attorneys), for appellant.
I. No co-partnership existed ( Citing Stewart v. Robinson, 115 N. Y. 328; Kennedy v. Porter, 109 Id. 526, 550; Lindley on Partnership, 435 ; London Ass. Co. v. Drennen, 116 U.S. 461).
II. Agreements that capital shall, remain in a partnership after the death of a partner are valid and binding upon the estate of deceased (Citing Burwell v. Mandeville, 2 How. 560; Wild v. Davenport, 48 N. J. S. C. 137; Scholefield v. Echelberger, 7 Pet. 586; Dunn v. Collins, 6 How. 418 ; Story on Partnership, § 261a ).
III. A receiver will not be appointed unless necessary to preserve property and protect plaintiff’s rights (Citing Gregory v. Gregory, 33 N. Y. Super. Ct. I ; Goodyear v. Betts, 7 How. 187; Jackson v. De Forest, 14 How. Pr. 82; Goulding v. Bain, 4 Sandf. 716 ).
IV. A receiver will not be appointed on application of an executor of a deceased partner without special reason. (Lindley on Partnership, p. 549).
Dittenhoefer & Gerber, for respondent.
I. In an action for the dissolution of a partnership it is not necéssary to show gross misconduct to justify the appointment of a receiver. (Citing Lindley on Partnership, 228; Bishop v. Breckels, 1 Hoffman Ch. 534; Harrison v. Tennant, 21 Beav. 482; Arthur v. Lacey, Law Journal, March 10th, 1891; Martin v. Van Schaick, 4 Paiges Ch. 479; Lloreens v. Costa, 5 Weekly Dig. 484; White v. Calefas, 33 Super Ct. 299; Beach on Receivers, § 557).
See note at the end of this case.

Opinion:
VAN Brunt, P. J.
It is apparent from the memorandum made by the court upon the appointment of the receiver herein, that it was based upon the fact that the parties to the action were partners with each other, and that as irreconcilable difficulties had arisen between them, the appointment of a receiver became a matter of course.
We fail to see how it is possible to hold the plaintiff and defendant as co-partners in the business which was being conducted by the defendant under the firm name of Brown & Pulverman. The complaint was not drawn upon any such theory, and the affidavit of the plaintiff upon which this motion was founded, admits that such was, not the fact. The plaintiff declares that the co-partnership was dissolved by the death of her testator, and the relief demanded is that an account be taken of all the dealings and transactions of said co-partnership from the time of its commencement to the time of its dissolution by the death of Brown, and that the defendant account for all his dealings and transactions in regard to the property, assets and effects of said co-partnership since such dissolution, and farther, that the said co-partnership be adjudged and decreed to be dissolved.
This latter prayer was merely asking for a legal adjudication, that by the death of. Brown, the co-partnership had been dissolved, and not in any way was it claimed that the plaintiff was entitled to any relief except as representing the interest of Brown deceased.
An examination of the articles of partnership annexed to the complaint -shows that the relation of partners does not exist between the plaintiff and the defendant, and that the co-partnership did not continue after the death of the plaintiff's testator, unless a co-partnership can be composed of one individual. The defendant was merely the surviving partner of a partnership which had been dissolved, and carrying on business as such according to the terms of the articles of co-partnership between himself and the plaintiff's testator.
It is to be observed that by the articles of co-partnership it is provided that the death of either of the parties shall work a dissolution of the partnership, but that in the event of the death of the party of the first part, viz.: Finch, the party of the second part (the defendant), shall continue the business and pay the widow of the party of the first part $100 a month during her life from the profits arising on the interest of said party of the first part as it existed at the time of his death; and that on the first days of January and June, a balance should be struck, and the defendant should pay to the said widow the amount of any balance to her credit; and further, the said widow of said party of the first part shall have a. right, either by herself or her authorized representative, to examine the books of the firm at any time.
This latter provision shows conclusively that it was not the intention of the parties that the widow should be a partner, otherwise it would have been entirely unnecessary to grant an authority upon the part of the widow to examine the books.
Then follows a provision in respect to what should be done in case of the death of the defendant. In the event of his widow surviving him she is to be paid a monthly stipend and a balance of profits by the party of the first part, but no provision is mad for an examination of the books by the widow of the defendant; and it would hardly be claimed under this provision that in case of the death of the defendant, his widow would have been entitled to exercise the rights of a partner.
The articles contained the further provision, that whenever the partnership was terminated for any cause, there should be an accounting and adjustment of co-partnership affairs, and that the party of the first part, or his legal representatives, within six months, shall pay to the defendant the sum to his credit on • the books of the firm at the time of the dissolution, together with his proportionate share of the profits and increase of the firm; and then provided that the good-will and firm name should be the exclusive property in any event, of the party of the first part and his representatives, except as provided in sections 18 and 19.
By paragraph 18 it is provided that in the event of the death of either of the parties not leaving a widow or in the event of the death of the widow of either of the parties during the continuance of the agreement, then the entire good-will of the business shall belong to the sur viving partner, subject only to a legal accounting to the legal representatives of said deceased partner, or if he dies leaving a .widow him surviving, then to the legal representatives of his widow for the profits accrued at the time of the death of said deceased partner or at the time of the death of his widow, if said partner dies leaving a widow him surviving.
Paragraph 19 provides that after the death of both Brown and his widow, the firm name may be used by the defendant to continue the business on his own account, but he shall have no power to use said firm name except in accordance with the terms of the agreement, at any time prior to the death of Brown or his widow, without written agreement to that effect.
These provisions show that it was the intention of these articles that the business should continue during the lifetime of th,e partners, and if either of them died, of his widow, in order to provide for such widow during her life; and that if the partner Brown died first, leaving a widow, upon the death of the widow, the defendant.was absolutely entitled to the good-will and firm name, without being liable in any way to the legal representatives of said Brown or of his widow.
The articles further provide for an indefinite continuance of the partnership unless six months' notice should be given by either of the parties thereto, or the widow of the partner Brown. They provide that in case of a dissolution of the co-partnership, by notice from the defendant after the death of Brown, and without the consent of his widow, the defendant should not, during the lifetime of the widow, act as an advertising agent, etc., within certain limits.
Under these circumstances, it is difficult to see how the relation of partners existed between the plaintiff and defendant. Whatever her rights may be in respect to this business, it does not seem to be that of partner. . Neither has the plaintiff any interest in the firm name or good will of the business which can extend beyond her life, as the provision of the articles is that after her death the defendant shall own the firm name and be at liberty to continue the business without accounting either to Brown's representatives or to his widow's.
We think that if a claim was made against the plaintiff as a co-partner in this business, for losses.sustained in the business, the claimants would find it exceedingly difficult to hold her individually or representatively liable therefor.
It having been the manifest intention of the parties that, in case of the death of either, the survivor should continue the business and have sole charge thereof, there should be exceedingly cogent reasons adduced before the court should deprive the surviving partner of the fruits of that which had been assured to him by the agreement with his co-partner. Táking possession of the business in question would seem to be its absolute destruction, and would work irreparable injury to the defendant, who alone has the right to continúe the same.
The facts presented upon the moving affidavits are denied in the main, and the true condition of affairs can only be ascertained by the examination of witnesses, and there is no evidence that irreparable injury will happen to the plaintiff if final relief is postponed until the decision of the questions of fact upon the trial.
In the decision of this appeal we express no opinion as to what the ultimate rights of the plaintiff might be in an action brought in the form of the one at bar, leaving that question to be determined upon the trial of the case.
We think,, therefore, that the order appointing the receiver should be reversed, with $10 costs and disbursements to the defendant to abide the final event.
Patterson, J., concurs.
For a special provision of law allowing a partner to be appointed manager pending litigation, see Code Civ. Pro. § 1947, and 2 Abb. New Pr. & F. 184-187.