Court Opinion

ID: 9643976
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:45:31.95645+00
Date Added: 2024-06-11T18:11:06.749539
License: Public Domain

HENRY, Justice,
dissenting.
I respectfully dissent.
I cannot, in good conscience, acquiesce in the conclusions reached by my colleagues. While I am not prepared to say that Nathan Couch practiced a fraud upon his partner, there is no escape from the conclusion that there was an appalling breach of a fiduciary duty bordering upon sharp practices. This transaction simply cannot withstand the scrutiny of a court of equity. Courts, as Chancellor Gibson observes, “require good faith in dealings between men, and reprobate bad faith.” Gibson’s Suits in Chancery § 48 (4th ed. 1937). Just as a physician diagnoses internal disease by external signs, so do courts of equity diagnose and expose and treat practices that do not harmonize with good faith.
There are subtleties, refinements, shapes, forms and disguises presented in this record. When stripped to bare essentials, and analyzed in the light of fundamental fairness, they point unerringly to an unwholesome, unsavory and unfair transaction which, in my view, may not stand. We look to the record.
The laundry was purchased by Nathan Couch and his employee of twenty-six years, Robert Cude, without a lease, on September 9,1975, for the sum of $7,000.00. They changed the name from the “Wash-time Laundrymat” to the “C&C Laundry-mat” and continued to operate it without a lease and in the same location: They replaced all machines with new ones. After owning and operating it for seven years and seven months, it was sold for $800.00. The *557written appraisal of record shows the same laundry, the same or newer equipment, at the same location, and the same operation without a lease to have been worth $10,-000.00.
Nathan Couch instituted suit for dissolution of the partnership and for the appointment of a receiver. The receiver is appointed and directed to “sell all property and assets of the partnership. . . .’’As conducted, the sale was only as to the equipment and did not include the goodwill of a going business. What happened? The answer: Nathan Couch.
He stripped the partnership of its primary asset, the goodwill, by the simple expedient of an announced requirement that there would be no lease and the purchaser was expected to remove all equipment forthwith. This operated to shoot his partner out of the saddle.
At some time prior to the sale Nathan Couch’s son, Dr. Charles Edward Couch, entered the picture, as the agent, servant and representative of his father. Dr. Couch, at the time, was practicing medicine in Memphis with Dr. Alan Platkin. Dr. Couch induced Dr. Platkin’s father, Lewis Platkin, to come from Memphis to Humboldt, some ninety or more miles away, and purchase the laundry.1 It is clear that Lewis Platkins was acting for Dr. Couch and that Dr. Couch had full authority from his father.
It is equally clear that the purchase money was paid either by Nathan Couch or through his Cadillac-Oldsmobile Agency owned 75% by him and 25% by Dr. Couch. Following what I am constrained to view as a premeditated plan to take over the laundry, the purchase was made, after the sale had been chilled by a no-lease, get-out announcement, the consideration paid, and immediately thereafter the utilities were converted to the name of “Couch’s Laundromat.”
Shortly thereafter the name of the establishment was changed to C Laundromat and then to Couch Laundromat. Immediately after the sale, Mr. Couch and Dr. Couch started to operate the business, and the record shows that, as of the date of the trial, June 2,1977, they were still operating it, almost four years after the purchase at the receiver’s sale.
The following testimony by Dr. Couch is significant:
Q. Was it not your intention to continue %y(3) 28. if your father bought the laundry equipment to continue the operation as it had been done?
A. I suppose so.
Q. So when your father became the high bidder you, in his behalf, carried out that intention, did you not?
A. Yes.
This testimony speaks more eloquently of the intent to squeeze out Robert Cude and take over the business than any language I might use.
Viewed from any angle, Nathan Couch failed to deal in good faith with his partner by advising him that he intended to purchase the partnership property and continue to operate the business. Instead the purchase was sly and surreptitious, and actually accomplished by using the court as an unwitting instrumentality through which this plan was consummated.
Nathan Couch has continued the business of the firm and has enjoyed all the benefits stemming from a direct succession and continuation of a going business. Moreover, he has appropriated to his own use and benefit the goodwill of a going business, for which the most elementary principles of equity and fair play demand that he pay just and reasonable compensation.
This whole transaction shocks my conscience. Justice Cardozo’s famed remark in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546 (1928) is apt:
*558Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties.
I would reverse and remand to the trial court with instructions to determine the value of the partnership, as a going business, assuming a lease for the period this business has been operated by Couch since the sale, and for the entry of a decree making an appropriate award.
FONES, J., joins in this dissent.

. Lewis Platkin was a total stranger to those in attendance at the sale and he did not bother to make himself known until after the purchase. Cude did not know him. Dr. Couch was practicing medicine in Memphis and Nathan Couch was in his place of business playing tonk.