Case Name: ROBERT HIND v. EBEN P. LOW
Court: Supreme Court of the State of Hawaii
Jurisdiction: Hawaii
Decision Date: 1902-11-07
Citations: 14 Haw. 438
Docket Number: 
Parties: ROBERT HIND v. EBEN P. LOW.
Judges: Frear, C.J., Galbraith and Perry, JJ.
Reporter: Hawaii Reports
Volume: 14
Pages: 438–442

Head Matter:
ROBERT HIND v. EBEN P. LOW.
Appeal from Circuit Judge, First Circuit.
Submitted October 14, 1902.
Decided November 7, 1902.
Frear, C.J., Galbraith and Perry, JJ.
A partnership of indefinite duration may be dissolved at will, and one formed for a specified period may be dissolved dn equity for . cause, and probably it may be dissolved at will before rtihe expiration of such period, though the -one so dissolving it will be liable to an action for damages for breach of contract and may be denied assistance in equity.
But if the agreement of partnership, though specifying a definite term, also provides that the partnership may be dissolved at the will of any partner at any time, any partner may so dissolve it at will without liability to action for breach of contract or denial of assistance in equity in respect to an accounting and winding up.
• The agreement in question is held to be of this character.
The court should not interpolate words dn a contract unless necessary to effectuate the intention of the parties as gathered from the whole instrument.
An agreement to arbitrate which is general and does not make submission to arbitration >a condition precedent to the right to -sue •does not prevent suit without first submitting to arbitration.

Opinion:
OPINION OF THE COURT BY
FREAR, C.J.
This .is a bill for an accounting and for winding up a partnership. The bill sets out the agreement of partnership, dated October 1, 1893, between the plaintiff and defendant, under which they have ever since conducted a large -stock ranch at Hohala on the island of Hawaii; also certain reasons why the plaintiff desires a dissolution of the partnership-, the fact that he has notified the defendant that it is dissolved, has demanded a settlement,' the defendant's refusal, etc., and prays for an accounting and a sale of the property and distribution of the proceeds. The1 answer, which, like the bill, is somewhat lengthy, goes into the various reasons alleged by the plaintiff for his desire to dissolve the partnership', and alleges that no good cause exists for its dissolution, and that by the terms of the agreement the partnership is to continue for the term of twenty-five years and misunderstandings are to be settled by arbitration.
The Circuit Judge, treating the answer as a demurrer, overruled it on the ground that the partnership could be dissolved at will under the terms of the agreement. He did not go into the question of arbitration. The defendant appealed.
The only questions before us are whether the agreement permits a dissolution of the partnership by one of the partners without cause before the expiration of the twenty-five years for which the partnership was formed, and. whether the provision for arbitration prevents the plaintiff from coming into equity.
There is no' doubt that a partnership foimed for rio particular period may be dissolved at will by any partner, and that a partnership formed for a particular period may be dissolved for cause in equity before the expiration of that period. And probably the preponderance of authority at the present time supports the view that a partnership, though formed for a particular period, may be terminated at will by any partner before the expiration of that period, although by doing so such partner renders himself liable to an action for damages for breach of contract and may be denied the assistance of a court of equity. See Karrick v. Hannaman, 168 U. S. 328; Lapenta v. Lettieri, 72 Conn. 377; Shumaker, Partn., 409-414; 2 Bates, Partn., §577; Mechem, Partn., §239. But, although a partnership is foimed for a definite period so as to continue for that period, unless sooner dissolved, and so as to determine by limitation at the expiration of that period, unless further continued by a new agreement, express or implied, the agreement of partnership may contain a provision that the partnership may be dis solved before the expiration of the specified period upon the happening of certain contingencies or at the will of any partner, in which case, if any partner, in accordance with such provision, dissolves the partnership before the expiration of such period, he will not be liable in an action for damages or denied assistance in equity. See Swift v. Ward, 80 Ia, 700.
The plaintiff's contention is that the agreement in question is of this last above mentioned kind, and that the partnership in question may be dissolved at will by either partner. The question is therefore whether that is the proper construction of the agreement. The clauses bearing upon this question are the following:
"The said parties agree to associate themselves as Copartners, for a period of twenty-five years from this date', in the business," &c.
"And further, should either partner desire, or should death of either of the parties, or other reasons, make it necessary, they, the said copartners, will each to the other, or, in case of death of either, the surviving party to the executors or administrators of the party deceased, make a. full, accurate and final account of the condition of the partnership as aforesaid, and will, fairly and accurately, adjust the same. And also- upon taking in inventory of said Capital Stock, with increase and profit thereon, which shall appear or is found to be remaining, all such remainder shall be equally apportioned and divided between them, the said copartners, their executors or administrators, share and share alike."
"It is also agreed, should either partner desire to retire or wish to sell his half interest, the retiring partner should give the refusal and first chance to his partner to buy all his title and interest in said Copartnership."
The plaintiff contends that the second of these quoted paragraphs, fortified by the third, makes the partnership terminable at the "desire" of either partner. Counsel for the defendant contend that the second paragraph, if read literally, is inconsistent with the first, and that consequently in order to harmonize them, the second paragraph, which, if either, is the ambiguous one, should not be construed literally. Counsel differ as to just how it should be construed to make it harmonize with the first paragraph. One contends that it should be held to mean that the partnership may be terminated at the "desire" of either party "for cause," although nothing, is said about cause. The others contend that it should be so- terminable "after the expiration of the twenty-five years," although nothing is said as to the time when the desire may be exercised.
The presumption is that the parties meant just what they said, and the court should not add to the language of the agreement unless it is clear from the whole instrument that that is necessary in order to effectuate the intention of the parties. The view that the parties meant what they said when they wrote "desire" in the second and third of these paragraphs without qualification, is supported by several other considerations. For instance, in the same sentence in the second paragraph, and in immediate connection with "desire," two other causes of dissolution are mentioned, namely, "death of either of the parties," and "other reasons," each of which obviously had reference to the time within the twenty-five years. The third paragraph also obviously had reference to the same period. It may be added that the partnership would terminate ipso facto under the first paragraph at the end of the prescribed period and that there was therefore no' occasion for a provision that it might be terminated at "desire" thereafter. Furthermore, there is no necessary inconsistency between the first and second paragraphs. The two may be construed together as meaning that the partnership should continue for twenty-five years and then determine, unless determined sooner or continued longer by some further act or event. It is common to insert in agreements of partnership for a specified period a provision for dissolution at will after a certain time within such period, and, if that can be done, it can with equal consistency, if not so wisely,- be agreed that that option may be exercised at any time. A form for just such an agreement is found in Jones' Forms, 5th Ed., 632.
The clause relating to arbitration is as follows:
"It is also agreed that in case of a misunderstanding arising with the partners hereto, which cannot be settled between them selves, such difference of opinion shall be settled by arbitration, upon the following! conditions to wit: Each party to choose ono arbitrator, which two thus elected shall choose a third; the three thus chosen to determine the merits of the case, and arrange the basis of a settlement."
Kinney, Ballou & McGlmaham, and H. A. Bigelow and S. H. Derby for plaintiff.
T. I. Dillon, J. A. Magoon, J. Lightfoot and E. G. Peters for defendant.
It is difficult to see how a question of the "desire" of one of the partners to terminate the partnership could come within the scope of this provision or be a suitable matter for arbitration. But, however that may be, it is well settled that an agreement to arbitrate which, as here, is general and does not make a submission to arbitration a condition precedent to the right to sue, does not prevent suit without previous arbitration. Pearl v. Harris, 121 Mass. 390; Hamilton v. Home Ins. Co., 137 U. S. 370; Kinney v. Baltimore & O. Emp. Ass., 15 L. R. A. (W. Va.) 192 and Note; 2 Am. & Eng. Enc. Law, 2nd. Ed. 570 et seq.
The decision and decree appealed from are affirmed and the ease remitted to the Circuit Judge for such further proceedings as may be proper.