Court Opinion

ID: 6548303
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:21:33.893233+00
Date Added: 2024-06-11T15:56:02.041442
License: Public Domain

Hart, J. (after stating the facts). In the case at bar the court found that a partnership had existed between the plaintiff and defendant, and that there was community of interest between them in the funds arising from the sale of the property, but refused to give plaintiff the relief prayed for because the contract of partnership was tainted with immorality. The finding of the chancellor that there was a partnership was not contrary to the weight of the evidence, and, according to the settled rules in this State, his finding in that regard will be sustained. We are of the opinion, however, that he was wrong in dismissing plaintiff’s complaint for want of equity. Her suit was not brought to enforce the contract of partnership or any of its stipulations. The partnership was ended when the property was sold. All of the partnership property consisted of the homestead in the State of Washington and the personal property situated on it. According to the testimony of the plaintiff, the partnership enterprise in which she and the defendant had been engaged had been fully completed, and they had voluntarily agreed upon a division of the profits; that, pursuant to this agreement of division, she had $2,500 as her share of the profits, which she permitted defendant to keep for her for reinvestment. It is true that defendant denies this; but we think that, when the conduct of the parties and the circumstances in connection therewith are duly .considered, the testimony of the plaintiff is entitled to more credence than that of the defendant. In this view of the case, the question whether the contract of partnership at the time it was formed was void as against public policy is not the controlling question in the case, but the question is whether or not one partner, having received the profits of the partnership and having voluntarily agreed with his co-partner to a division thereof, is liable to such other for his share of the profits. “Although a contract may be illegal, it does not follow that it is illegal or immoral for the parties to it; after its completion, to fairly settle and adjust the profits and losses which have resulted from it. The vice of the contract does not enter into such settlement.” DeLeon v. Trevino, 49 Tex. 88. The court said: “In the case of Brooks v. Martin, on a bill in equity by one partner against the other to set aside a contract of sale of his interest in the partnership venture, the Supreme Court of the United States held that, ‘after a partnership contract confessedly against public policy has been carried out and money contributed 'by one of the parties has passed into other forms, the results of the contemplated operation completed, a partner in whose hands the profits are can not refuse to account for and divide them on the ground of the illegal character of the original contract.’ (2 Wall. 70.) Now, surely, if the court will lend its aid to compel an accounting, and enforce the payment of the amount found to foe due by one partner to the other, it can not be that it should interpose to relieve one of the partners from his voluntary accounting on the ground of illegality of the original partnership enterprise, which, after completion, had been thus voluntarily settled and adjusted. “In the case of Planters’ Bank v. Union Bank, 16 Wall. 483, the court again says: ‘Nor should the court have charged that, in the circumstances of this case, no action would lie for the proceeds of the sale of Confederate bonds which had been sent by the plaintiffs to the defendants for sale, and which had been sold by them, though the proceeds had been carried to the credit of the plaintiffs, and made a part of the account. It may be that no action would lie against a purchaser of the bonds, or against the defendants, on any engagement made by them'to sell. Such a contract would have been illegal. But when the illegal transaction had been consummated, when no court has been called upon to give aid to it, when the proceeds of sale have been actually received, and received in that which the law recognized as having value, and when they have been carried to the credit of the plaintiffs, the case is different. The court is then not asked to enforce an illegal contract. The plaintiffs do not require the aid of any illegal transaction to establish their case.’ ” See also Pfeuffer v. Maltby, 54 Tex. 461; Wegner v. Biering, 65 Tex. 511; McBlair v. Gibbes, 17 How. (U. S.) 232. In discussing the principles of law applicable to a state of facts similar to those presnted in the record, the court in the case of Morgan v. Morgan, 1 Tex. Civ. App. 319, said: “Applying these principles to the case at bar, if it be conceded that the relations of John E. Morgan and appellant were illegal, and that their contract to live together and divide the property they might accumulate would not sustain an action in behalf of either of them if brought thereon, still we believe it can not be said that, after the contract has been voluntarily executed by both and the property has been acquired, the courts will refuse to recognize their respective interests therein.” In this view of this case, it is not necessary to decide whether the relation of -concubinage between-the parties to this suit was incidental, and was not the motive and cause of them living together as -husband and wife and forming the partnership; for we hold that,, although the partnership may have been illegally formed on account of the consideration for it being the living together of the parties illegally as husband and wife, yet when the -contract has been executed without the aid of the courts by the voluntary acts of the -parties and a division of the profits has been agreed upon, such division of profits forms a new contract, which is collateral to and not contaminated by the original contract, and that the partner entitled to a share of such profits may enforce -his right thert-o in the courts. It follows that the -court erred in dismissing the -complaint, and the -decree will be reversed, and the cause will be remanded with -directions to the chancellor to enter a decree not inconsistent with this opinion.