Court Opinion

ID: 5218525
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:28:28.719149+00
Date Added: 2024-06-11T08:27:28.946984
License: Public Domain

Scott, J.:
This case' is brought before us by cross-appeals from an interlocutory judgment, of dissolution of a copartnership. Defendant appeals *671because, as lie says, no judgment of dissolution should have been granted. Plaintiff appeals because the dissolution is decreed to take effect as of the date of the judgment instead of an earlier date when the plaintiff undertook to dissolve the firm by notice.
Plaintiff and defendant are copartners in the firm known as Barclay & Co. No. 15, being the fifteenth renewal of a copartnership which commenced to do business in 1873 under the same firm name. Except for a comparatively brief period, defendant has been a member of all o'f these successive copartnerships. The plaintiff’s uncle, his brother (now deceased) and plaintiff himself have from time to time been members of the copartnership. The present copartnership began in 1904, and was extended from time to time, having been finally extended on January 4, 1907, so that it now runs, under the terms of the partnership articles, to January 1, 1913.
The business of the firm consists of the manufacture and sale, chiefly to Central and South America, of soap's and toilet articles under proprietary or fanciful names. There is a factory at Bayonne, N. J., where about fifty people are employed under a superintendent, and general offices and a storehouse in the city of New York. The firm employs about ten traveling salesmen, and maintains a legal department to protect its trade mark interests. For the use of the firm name, good will, trade marks, copyrights and labels the-firm pays annually to plaintiff and the estate of W. O. Barclay, deceased, a sum equal to fifty-five per cent of the net profits of the business. Defendant’s contribution to the capital of the firm is somewhat larger than plaintiff’s, and he is entitled to a' somewhat larger share of the profits.
The defendant appears to have been always very attentive to the business of the copartnership until May 10,1908, when he was seized with a paralytic stroke resulting from the rupture of a blood vessel in the brain. Since that attack and down to the time of the trial he had given no attention to the business. During the greater part of the time certainly, and probably during the whole of it, his physical condition was such that he could not attend to business. The physicians called- as witnesses by,defendant, and who, by reason of their personal observation of defendant were better able to form an opinion as to the course of the disease than were the physicians called *672by plaintiff, testified that said defendant had shown a constant physical improvement, and that his mental condition was and has been perfectly normal, and they agreed that in the course of time, perhaps in a few months, he would be able to resume an active part in the management of the firm business.
The plaintiff claims in the first place that under one of the clauses of the. articles of copartnership he had the right to terminate, the partnership in consecpience of defendant’s continued although involuntary absence, and that he exercised that right and thereby ipso facto dissolved the firm. Hi's second claim is that defendant has become permanently physically incapacitated to bear his share of the burdens of tlie copartnership and for that reason the copartnership should be dissolved. The clause of the articles under which plaintiff claims the right to dissolve the firm by a notice reads as follows: “VII. At all times during the continuance of said copartnership, each partner shall give reasonable time, attention and attendance to, and nse reasonable endeavors in the business of said copartnership, and shall, with reasonable skill and power, exert himself for the joint interest, profit and advantage' of said copartnership, and shall' truly and energetically,- with the joint stock and increase of said business, sell, deal and merchandise. The alleged breach of any of the provisions of this Section VH of these articles by either party hereto shall not give to the other party hereto any right to damages or to any relief whatsoever, until thirty days after written notice by such other -party specifying in detail the acts or omissions deemed by such other party to constitute'such breach and stating that for any such breach, accruing after such thirty days,, damages will be demanded.”
It is not unusual in copartnership articles to find a clause obligating the copartners to give their time .and attention to the business, but the form of the clause just quoted is unusual. It calls upon each partner, to give, not all of his time, but reasonable time to the business, mid- to • use, not his best endeavors, but reasonable endeavors towards the furtherance of-sueh business. Since men may fairly differ in their conceptions of what is “ reasonable,” the clause .-.provides that for alleged breaches either party may :claim damages of the other. A locus poenitentice of thirty days is given'after one ' party has given the other notice that it is alleged tliat breaches have *673been committed, and that, notice may state, not as plaintiff undertook to do, that be would dissolve the firm, but that damages would be demanded. The whole intent of the clause seems to be to assure to each partner a certain latitude'in his personal attendance upon and devotion to the business, with a provision for the payment of damages by either one who might unreasonably take advantage of this latitude. The clause did not in our opinion contemplate a dissolution of the firm ipso facto by the service of a notice by one partner upon the other, even in the case of a long-continued .absence. The plaintiff’s first contention, therefore, cannot be maintained; This disposes of his appeal. Of course, a long-continued and willful neglect of the business might furnish a sufficient ground for the dissolution of a firm, but that is not the case here presented.
The second claim to a dissolution, based upon the supposed permanent incapacity of defendant, presents an interesting question, and yet one upon which very little has been written. It is well settled that insanity on the part of one partner does not of itself dissolve a partnership, and that a copartnership will only be dissolved even upon that ground when the court is satisfied that the disability is permanent and not temporary. (Friedburgher v. Jaberg, 20 Abb. N. C. 279 ; Raymond v. Vaughan, 128 Ill. 256.) The only case at all similar to the present which' the learning and industry of counsel have enabled them to cite to us is Whitwell v. Arthur (35 Beav. 140). That case much resembles the present, and the' incapacity at the time of the trial had continued for nearly the same length of time that defendant’s incapacity had continued when this case was tried. Lord Bomilly, M. B., said: “ This is a suit for the dissolution of a partnership on the ground of the permanent incapacity of the defendant. The defendant was seized with a paralytic attack in January, 1864, and in November following the bill was filed. I think on reading the evidence that, during the whole of this interval the defendant was incapable of performing the duties which he had covenanted to perform by the articles of partnership. But I think that he has improved in health- since that time and that in June, 1865, down to which time the medical evidence extends, he was competent to perform his duties, though I cannot say he was then perfectly competent or as competent as he had been previous *674to his illness. I think on the evidence that there is not sufficient to justify the dissolution of the partnership, and the medical men look forward to an improvement in his health.” The action was accordingly stayed, with leave to plaintiff to renew the application after an interval.' We consider that this outlines the. correct rule to be applied to a case like the present, to wit, that a partnership will not be dissolved in consequence of the physical incapacity of a partner which is temporary in its nature, although prolonged, but will be dissolved for total and permanent incapacity. The Special Term has found that defendant is totally incapacitated, and that siich incapacity is so far permanent that it will continue during the remainder of the copartnership term. We are of opinion that this finding is scarcely justified by what we consider the more reliable medical testimony, because given by these physicians who are best situated to form a judgment. The result of the medical testimony, as we read it, is : (1) That defendant’s illness incapacitated him for the time .being from performing his duties as a partner ; (2) that such incapacity continued down to the time of the trial* (3) that there is a probability that at some time in the future, before the end of 'the copartnership term, he will be so far restored to health that he can, at least partially, perform his duties as a partner. How full and complete performance he should be required to render in order to prevent dissolution we are not now called upon to deter- " mine. The articles required only reasonable time and reasonable efforts, and it is significant that, although plaintiff is very desirous of a dissolution, he did not testify that defendant’s long absence had in anywise interfered with the business of the firm or with its prosperity, or had cast upon plaintiff himself any unusually onerous burden. Hpon the whole^case we are of opinion that the plaintiff failed to make out a case which would justify a dissolution. Hpon a new trial a different aspect may be presented.
The judgment must be reversed and a new trial granted* with costs to the defendant to abide the event.
Clarke and Miller, JJ., concurred.