Court Opinion

ID: 7338520
Source: CourtListenerOpinion
Date Created: 2022-07-25 23:32:11.967437+00
Date Added: 2024-06-11T16:20:14.256935
License: Public Domain

O’BRIEN, J.
The two questions which were principally contested Upon the trial, and which are again presented upon this appeal, are: First, whether this action for an accounting is maintainable, and, if :So, whether a money judgment could herein be awarded in favor of ¡Murchison; and, secondly, whether the so-called Murchison agreement is valid and binding upon the firm.
Upon this latter question, little need be added to what was said *323by the learned judge at special term in his opinion, wherein he pointed out the consideration which moved from Murchison to the firm, which consideration, we think, was sufficient to support the agreement.
The more serious question is the one first stated, — whether or not this action is maintainable. The general rule is that courts of equity will not sustain a copartnership suit for an accounting, except with a view to dissolve the partnership. Thus, in x Coll. Partn. (6th Ed.) § 282, it is said, “The account which a court of equity decrees between partners is usually consequent upon a dissolution, and Lord Eldon was inclined to hold that it must depend upon a dissolution.” And 2 Lindl. Partn. (4th Ed.) p. 1231, refers to “the old rule” that “a decree for an account between partners will not be made, save with a view to the final determination of all questions and cross-claims between them, and to a dissolution of the partnerships.” This author, however, clearly points out the relaxation of this rule, and refers to certain exceptions, the second of which he states (page 1231) to be “where the partnership is for a term of years still unexpired, and one partner has sought to exclude or expel his copartner, or to drive him to a dissolution,” under which circumstances an accounting may be granted without there being a dissolution of the firm. Here the partnership was engaged in important work which required time and the service of all the partners for its completion; and unless the questions about which they disagreed, and which were serious, could in some way be adjusted consistently with the rights of the partners under their firm agreement, it was evident that, to the great detriment of all, a dissolution would result. The principal contention between them was as to the construction of their partnership agreement, as bearing upon the contract entered into with Murchison, and how far this latter agreement was binding on the .firm. The defendant Hull insisted that he was entitled to withdraw one-third of all moneys from the firm as they were received for the work on the Clark buildings, and on his copartners he cast the burden of meeting"the obligations which they believed rested on the firm under the Murchison agreement. Were this to continue, it would unsettle the business of the partners, and widen the breach between them, and in the end would enable Hull, who had access to the firm’s bank account, to' withdraw his one-third in full, and place upon his two partners the burden of paying out of their share what they believed and conceded was due to Murchison. The settlement of this controversy was important, not only as affecting the liability of the firm, but also as being essential for that harmony between the parties which was necessary to enable them successfully to work together and complete their various contracts. ft must be remembered, moreover, that the dispute did not embrace all of the partnership transactions, but was confined and related solely to the difference arising over the Murchison contract; and the settlement of the dispute, and a construction of their firm agreement as bearing upon that controversy, in no way affected the rest of their partnership affairs. . We think, therefore, that this action is within the exception to the general rule that a court of equity will not take a partnership accounting, except in connection with the dissolution of the firm.
*324Another feature bearing upon the question of the right and jurisdiction of a court of equity to take .cognizance of the action arises from the fact that the rights of Murchison, a third party, are involved, who, excepting as to the contracts for the Clark buildings, is a stranger to the partnership. He has been made a codefendant by order of the court, not appealed from, and herein he was permitted to litigate his rights. The dispute, therefore, involving, as it did, a third party to the firm, was one which could properly be brought into equity for adjustment. Although Murchison was not originally a party, having been duly brought in and being there of right, the action is to be viewed as though he had originally been made a party. Thus considered, there was a serious difference of opinion among the partners as to whether the residence of Clark, constructed and to be constructed by the firm, was the one referred to in the Murchison agreement; Hull’s contention being that,' by reason of changes in the plans due to acquisition of a larger plot of land by Mr. Clark; the present building is entirely different from the one mentioned in such agreement, and that, in connection with the present building of Clark, Murchison is entitled to no payments from the firm. The direct question, therefore, is presented as to the construction to be given the written agreement between the firm and Murchison, upon which necessarily depend the rights and duties of the partners, not only as between themselves, but as regards Murchison. In one aspect of that agreement, Murchison might be regarded as a partner, because not only is he in name and designation on the plans held out as an associate architect with the others, but, regard being had to the manner in which he was to be paid, it might well have been held that with respect to the Clark buildings he was in effect a partner with the others. It is unnecessary, however, to determine this question, or to do more than refer to the facts bearing upon the controversy for the purpose of showing that, although a dissolution was not asked for or desired, it was still competent for the court, to the end that the firm might continue, to assume jurisdiction of this one subject of difference, and, upon a construction of the agreement, determine the respective rights of the parties.
This view' which we take of the controversy we think disposes as well of the contention that in such a suit it was not proper to award a money judgment in favor of Murchison. The defendant Hull insists that, as to Murchison’s claim, he was entitled to a trial by jury. As we have endeavored to point out, Murchison’s relation to the firm, if not strictly that of a partner, was that of a partner quoad hoc; and, in determining his rights in an action wherein both his contract and the partnership agreement were involved, it was permissible to direct, as was done, an accounting among all the parties or partners.
We deem it unnecessary to discuss the many subsidiary questions raised, because we think that they were properly disposed of at the special term. Having concluded that it was competent for the special term to order an accounting, and there being no valid ground for assailing the lines upon which the accounting was directed, and the parties agreeing as to the sums payable under the determination of the court, it follows that the judgment entered upon the decision, and in *325accordance with the stipulation of the parties, is right and should be affirmed, with costs.
VAN BRUNT, P. J., and PATTERSON, J., concur. LAUGHLIN, J., dissents.