Court Opinion

ID: 7338521
Source: CourtListenerOpinion
Date Created: 2022-07-25 23:32:11.96892+00
Date Added: 2024-06-11T16:20:14.258565
License: Public Domain

McLAUGHLIN, J.
(dissenting). The complaint alleged that the plaintiffs and the appellant, Hull, at and for some time prior to the commencement of this action, were copartners, and as such entered into an agreement with the defendant Murchison, by which they agreed to pay to him io per cent, of the gross commissions for the work which they did as architects on the residence of one William A. Clark; that thereafter a disagreement arose between the copartners as to the validity of the agreement entered into with Murchison, and as to the liability of the copartnership to him for payments theretofore and thereafter to be made; that the defendant Hull had withdrawn from the copartnership funds in excess of what he was entitled to, and appropriated them to his own use; that a dissolution of the copartnership was not desired, but that judgment was asked that an accounting be had between the copartners of all matters relating to the copartnership to the commencement of the action, and that it be determined whether the agreement with Murchison was binding upon the firm; and for such other and further relief as might be just and proper. The answer of the defendant Hull put in issue the validity of the agreement, and the payments made by. reason of it to Murchison; denied that he had withdrawn from the firm any sum of money to which he was not entitled; and alleged that the plaintiff Hewlett made the agreement with Murchison on his own behalf, and not otherwise-, and without the knowledge or consent of the other members of the firm; and asked that an accounting be had, and a judgment awarded against the plaintiffs for the amount of such unauthorized payments. After issue had been thus joined, Murchison, upon his own application, was made a defendant to the action, and as such interposed an answer in which he substantially admitted all of the allegations of the complaint, and denied all of the allegations as to new matter set up in the answer of the defendant Hull; alleged the making of the agreement with the firm; and asked that a judgment be given him for whatever sum might be found to be due from the firm to him under the agreement. At the trial the only questions litigated were whether Murchison’s agreement was binding upon the firm, and, if so, whether the plaintiffs were entitled to a judgment against the defendant Hull for the amounts which he had- drawn out of the assets of the firm, corresponding to what would have been his share had not certain payments, to which he objected, been made by the firm to Murchison. After both parties had rested, the defendant Hull moved to dismiss the complaint upon the ground, among others, that no cause had been established justifying an accounting between the partners, and there was no ground for equitable relief. The motion was denied, and subsequently the court made a decision to the effect that the Murchison agreement was binding upon the firm, and that he was entitled to judg*326ment for whatever amount might be found due him, on an accounting, from the firm, and that the defendant Hull was liable tó the plaintiffs for the sums before mentioned, which he had drawn out of the firm; and an interlocutory judgment was directed accordingly. To save the expense of a reference to determine these several amounts, the same were agreed upon, and final judgment was entered in favor of the plaintiffs against Hull, and in favor of Murchison against the firm, from which, as well as from the interlocutory judgment, the defendant Hull appealed.
I am unable to concur in the prevailing opinion that the judgments should be affirmed. In the view which I take of this record, no ground whatever was shown for equitable relief. There was no dispute between the partners, except as to whether or not Murchison’s agreement was binding upon the firm. That presented, not an equitable, but a legal, question, and the validity of that agreement could not be determined under the pretense of an accounting between the partners. None of them either wanted or asked for a dissolution of the firm, and a dissolution was not decreed, nor was an accounting between them ordered. As I understand the law, a court of equity will not entertain jurisdiction of the affairs of a partnership until by its decree a final judgment of the business of the partnership can be effected (2 Beach, Mod. Eq. Jur. par. 873; 1 Coll. Partn. [6th Ed.] § 282; 2 Lindl. Partn. [4th Ed.] p. 1231; Thompson v. Lowe, 111 Ind. 272, 12 N. E. 476); in other words, that disagreements between partners will only be settled by a court of equity when a dissolution is desired or has taken place. This seems to be the general rule, and, indeed, is conceded in the prevailing opinion; but it is there said that it has been modified, at least to the extent of directing an accounting where the partnership extends for a term of years, and one of the partners has sought to exclude or expel his copartner, or to drive him into dissolution. It may well be doubted whether this rule has been modified to the extent. suggested. But whether it -has or not, it has no application to the facts here presented. Here there has been no accounting directed between the partners, nor has a dissolution been decreed, nor do any of the partners want a dissolution. All that has been done is to determine that Murchison has an agreement which is binding upon the firm, and by reason of which he has a valid claim for a specified sum, for which judgment is directed in his favor, and that the defendant Hull having objected to certain payments theretofore made to him, and withdrawn from the firm’s assets a sum corresponding to his interest in such payments, the other two partners were • entitled to a judgment against him for that amount. As to the claim of Murchison, no basis whatever was presented for the exercise of the. equitable powers of the court. If the claim was a valid one, the firm should, as it did, pay it. If invalid, then the parties disputing it were entitled to a jury trial. As to the judgment against Hull, whether he had withdrawn from the firm’s assets sums to which he was not entitled could only be determined when the firm was dissolved and an accounting had.
It is, indeed, a novel proposition that whenever a disagreement arises between partners, and neither of them desires or asks for a dissolution *327of the copartnership agreement, that they can rush into a court of equity, and have that court determine which one is right and which one is wrong. I do not believe that the court ought to permit its equitable powers to be used in this way, and for these reasons, the question having been presented on a motion to dismiss the complaint at the close of the trial, I think the judgment against the defendant Hull should be reversed, with costs.