Court Opinion

ID: 6424122
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:02:27.39405+00
Date Added: 2024-06-11T15:51:54.449444
License: Public Domain

Knowlton, J.
The master found that the partnership property sold by the defendant Charles E. Chapin, the surviving partner, was worth at the time of the sale $4,729, although it brought at auction only $2,571.90. This was a finding of fact to which no exception was taken, and it appears to have been well supported by the evidence. If the sale had been made in good faith and in the exercise of a sound discretion, the partner making it would have been chargeable only for the proceeds of it. But it was his duty to obtain for the property all that he reasonably could, for the benefit of the executor of his deceased copartner as well as for himself, and while he held the legal title he held it subject to a kind of trust which equity will enforce in favor of those interested in it. About a month before the sale, he had obtained a lease of the place where the property was being used, which had previously been occupied by the firm, and there was no sale or offer of sale of the good will at the auction, or of any right to remain on the premises, or to retain the plant and equipment there. He made the sale to his son, and, when it was completed, entered into partnership with him and continued to conduct the same business, using the same plant and equipment at the same place. These facts warranted the finding of the master that the defendant Charles E. Chapin did not exercise good faith and sound discretion in endeavoring to obtain for the partnership property as much as he reasonably could, and he is therefore chargeable with what he ought to have got for it.
The defendant Charles T. Chapin was not a copartner in the original firm, and is not accountable for any part of the assets of it, unless he became so through his purchase at the auction sale. The master finds that “ neither fraud nor unfair dealing is imputable to him in that purchase,” and that “ the title passed to him”; but he also finds “ that his relations both to the deceased and surviving partner subject him to any equity enforceable against the latter, and prevent his claiming to hold the plaintiff’s property as a purchaser, without notice, for the price it was sold to him.” This last finding does not enable the plaintiff or the other defendant to recover of him, on account of his purchase, anything more than the purchase price, and does not put him in the position of the surviving partner, who is accountable for the *38partnership assets at the price which he ought to have obtained for them. The allegations of the bill and the findings of the-master put his liability solely on the ground of his purchase. The plaintiff, in his case against Charles E. Chapin, seeks to hold him on the ground that, by the sale, he made a final disposition of the property, and so made himself accountable for its value. The claim against him is inconsistent with an attempt to pursue the assets beyond him, and to recover them from Charles T. Chapin. If the plaintiff charged an improper and fraudulent sale by Charles E. Chapin, and asked on that account for the appointment of a receiver, and showed that Charles T. Chapin bought with notice of the plaintiff’s equities, and that the sale could not properly be made, it might well be that a receiver could be authorized to take the property out of Charles T. Chapin’s hands, or that he could be compelled to pay the value of it if he had sold it to an innocent purchaser or otherwise disposed of it. But under this bill we are of opinion that no recovery can be had against him, and that Charles E. Chapin is liable to the plaintiff for the whole amount found due him by the master. Decree accordingly.