Court Opinion

ID: 7962512
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:47:35.86799+00
Date Added: 2024-06-11T16:34:32.283403
License: Public Domain

Berry, J.
By tbs Gowrt The plaintiff and the defendants Tyler and Baldwin entered into a partnership tor the manufacture of staves and heading. Tyler and Baldwin contributed to the capital stock a certain mill and machinery, and were to conduct the business. The plaintiff was to contribute $3,000 in money, of which he paid in only $2,542.32. In the written articles of ¡partnership, it was agreed, that “ at the end, or other sooner determination of their copartnership, the said copartners, each to the other, shall and will make a true, just and final account of all things relating to their said business, and at such expiration, the said Charles JR. Tyler and William A. Baldwin shall retain said mill, and the said Edward B. Palmer shall be paid such sum, or sums, as he may have advanced under this agreement as capital stock, and for carrying on said "business, and that then, all gain and increase thereof which shall appear to be remaining, either in money, goods, wares, debts, or otherwise, shall be divided between them, share and share alike, * "x" "x" said parties to share "x" * profits and losses equally between the said three parties, one equal one-third thei'eóf to each.”
The partnership has expired by lapse of time, the business having proved unsuccessful on account of the improvi*111dent, unskilful and inattentive management thereof by Tyler and Baldwin. The result has been a loss of the whole amount contributed by the plaintiff, and the creation of debts against the firm. The plaintiff has been unable to ascertain from Tyler and Baldwin what is the precise condition of the affairs of the partnership. Disputes have arisen between the. plaintiff and partners in reference to claims made by the latter, and the transactions of the firm, and the plaintiff insists that the rights of the parties cannot be adjusted, and the bnsiness of the concern settled without suit. He therefore asks that an account may be taken. His right to such account, upon the foregoing state of facts set up in his complaint, is clear. The position taken by the defendants’ counsel, that as plaintiff has failed to contribute the full amount which he was to contribute by the partnership agreement, he has no right to call for an account, is, as we shall endeavor to show hereafter, manifestly indefensible.
Shortly before the expiration of the partnership, Tyler, as the complaint alleges, knowing the condition of the business and corruptly contriving with the defendants Metzner and Black, to evade the payment of his, said Tyler’s shave of said-losses, and thereby to cheat both said plaintiff and said Baldwin, secretly made a pretended sham sale of all the stave machinery in said mill, and part of the capital stock of said firm, including a planer bought and paid for with plaintiff’s said money, and of the value of $250, as and for his own individual property, unto said Metzner and Black, who had, at and before such sham sale, and before the delivery of such machinery, and before payment of anything thereon, due notice and knowledge of the rights of said plaintiff and said Baldwin under said contract (of partnership,) in and to said machinery ; yet said pretended vendees thereafter, secretly and fraudulently abstracted said *112machinery from said mill, and from the possession of said firm, and now claim the same as their sole property under said sale from said Tyler, free and clear from -all claim on the part of said plaintiff and Baldwin under said contract of copartnership. The complaint also alleges, that before and since said pretended sale, said Tyler has been, as plaintiff is informed and believes, secretly disposing of other of the effects of said firm, and appropriating the proceeds thereof to his own use, to wit: staves, heading and stock, without rendering an account to said firm; and that, aside from said mill and machinery, said Tyler and Baldwin are without means or resources, wherewith to pay their share of the losses aforesaid, and worthless.
The plaintiff further avers in his complaint, that he has “in equity, * * a lien upon said mill and machinery, to the extent of the money so advanced by him, less his share of such losses, which right, said defendants Tyler and Baldwin, as well as Metzner and Black, deny.” The complaint prays for an account of the partnership business; that a receiver may be appointed to hold the mill and machinery pending the suit; that the defendants may be enjoined from disposing of the same during said pendency; that the sale to Metzner and Black may be vacated and the machinery turned over to the receiver; that the plaintiff may be adjudged to have a specific lien upon said mill and machinery to the extent of all the money by him so advanced, less one-third of said losses ; that the mill and machinery may be sold and the proceeds applied in satisfaction of such lien, and the costs of this suit, and for such further and other relief, &c.
The defendants, Metzner and Black, demur to the complaint :
I. — “Because it does not state facts sufficient to consti*113tute a cause of action against the said defendants.” In support of this ground of demurrer, it is urged that the plaintiff cannot call for an account, because he did not contribute to the capital stock the full sum of $3000, as he had agreed to do. This failure upon the part of the plaintiff may be a matter to be considered in adjusting the affairs of the partnership, but he was a partner- notwithstanding his default, and as such possessed of a right and interest in the partnership property, and to ascertain and secure the same, he can certainly call for an account. It is further said that by the terms of the agreement the mill was to revert to Tyler and Baldwin at the expiration of the partnership, and the plaintiff was to have his share in money, .and that the effect of this is to cut off any partner’s lien in favor of the plaintiff upon the mill, the plaintiff’s cause of action being thereby reduced to a mere claim against Tyler & Baldwin, for the payment of money ; but the argument is in our opinion based upon a mistaken construction of the partnership articles in this respect. The provision referred to and which we have before quoted at length, was intended to point out the manner in which the common property should be distributed upon the expiration of the partnership, and the adjustment of its affairs. It was a provision having reference to a final settlement between the partners. The reverting of the mill to Tyler and Baldwin, the payment to the plaintiff, and the division of gains, were to be contemporaneous acts in the final adjustment. There is nothing to warrant the idea that the plaintiff was to lose his partner’s lien, his right as such partner in the entire assets of the concern until the whole business was adjusted and the distribution completed. It is further argued that there is no allegation that Metzner and Black are insolvent, or unable to respond in damages for any act which they have committed. If *114the plaintiff is entitled to alien upon the partnership property, the solvency or insolvency of Metzner and Black are alike immaterial. The second ground of demurrer, and which is principally relied on by the defendants is, that several causes of action have been in said complaint improperly united. It is said that there is: 1st, a cause of action against Tyler and Baldwin for- an account with which Metzner and Black have nothing to do; 2d, a cause of action in tort against Metzner and Black for taking the machinery, with which Baldwin and Tyler have no concern; 3d, a cause of action by the plaintiff against Metzner and Black, and possibly against Tyler, for taking the “planer bought with plaintiff’s money, and his own individual property;” and that with this Baldwin has nothing to do. That portion (before quoted) of the complaint in which the defendant’s counsel supposes that the third cause of action is set up, is somewhat obscure, but the counsel misconstrues it. The evident meaning is that Tyler sold the machinery as his {Tyler's) individual property. There is then no such third cause of action attempted to be set up as the counsel supposes. As to the objection made to the joinder of the first and second supposed causes of action, it is to be observed, that the manifest purpose of this action is to obtain a complete and final settlement of the business of the partnership.
To accomplish this it is necessary, first of all, that an account should be taken, in order that the condition of things, and the rights and obligations of the firm, and of its individual members, may be ascertained. Then if it should turn out, in accordance with the plaintiff’s claim, that there are firm debts in existence, and losses to be shared by his copartners, and money to be paid to him out of the assets of the concern, as provided in the partnership articles, he *115has a right to insist that the firm property shall be appropriated so that the debts shall be paid, the losses fairly ap - portioned, and the obligations to himself discharged; for purposes of this kind, he, as a partner, has a lien upon partnership assets; (Arnold vs. Wainwright, 6 Minn. 358; 2 St. Eq. Juris, § 1243; Collyer on Partnershirp, 5th Am. Ed. § 125 et seq.) and if any portion of the partnership assets has by the combined and collusive action of his copartner and other persons been transferred to such other persons through a sham sale, for the purpose of putting the same out of his reach, and in fraud of the partnership, he has the fight to follow it, and subject it to his lien, and to the accomplishment of the purposes for which the lien exists. Why should not all this be embraced in one action ? The object is single, viz: to bring about a complete and final settlement of the business of the partnership. The simple ascertainment of the condition of the partnership accounts, does not accomplish this object, but in order to obtain a complete and effectual remedy, it is necessary to go farther, and carry the adjustment into practical effect. We can conceive of no reason why complete relief should not be afforded in one action, so that in the case at bar, the plaintiff may not only compel his copartners to account, but may compel the just .appropriation of the partnership property, and for this purpose lay hold of it, whether it is in the hands of his copartners or of other persons.' There is here no union of several incongruous causes of action such as is forbidden by section 98, ch.%66 Gen. Stat., .cited and relied upon by counsel. The subject of this action is the partnership business of the plaintiff and Tyler and Baldwin. This action is brought to wind up such partnership business, and for that purpose, and as a preliminary step, to take an account. The transactions of Tyler and Baldwin, and of Metzner & Black, as *116set out in the complaint, are to be judicially investigated, in order that the object of the suit may be fully attained, and complete justice administered, in the spirit of equity. Though there may be some matters to be inquired into, to which neither Baldwin nor Metzner & Black may be called upon to answer, yet the general subject matter and object of the proceedings, and the cause of action, is single, and affects all the parties to the action. See North vs. Bradway, 9 Minn. 183; Fish vs. Berkey, 10 Minn. 203; N. Y. & N. H. R. R. Co. vs. Schuyler, 17 N. Y. 604. Whether the plaintiff is entitled to all the relief prayed for, it is not necessary to determine at this time.
The order overruling the demurrer is affirmed.