Brew v. Hastings

196 Pa. 222 | Pa. | 1900

Opinion by

Mr. Justice Dean,

. George W. Jackson and defendants, by written agreement, .on September 1, 1897, formed a copartnership, in the banking business at Bellefonte, Centre County, Pa.. On October 22, of the same year, Jackson died. On August 10, 1898, his administrators filed this bill, praying, (1) for a decree of dissolu*228tion; (2) for an account; (3) for a receiver. The defendants denied the right to a decree in plaintiffs’ favor on any one of the prayers, averring that the agreement stipulated for the continuance of the partnership for the term of ten years from its date, and that the death of a member during that period should not work a dissolution,, but that his interest should remain in the partnership, his representatives, however, to have no voice or control in the management; his estate, nevertheless, to receive six per cent on the amount of capital invested by him, and further, to receive such share of the earnings as the deceased would have been entitled to had he lived. It was further averred that while negotiations looking to a closing out of the entire interest of Jackson had been opened between the parties after his death, they were still pending when the bill was filed, and they, therefore, rested for defense on the written agreement. Evidence was taken on motion for preliminary decree, as to whether there had been as a fact, a parol agreement between plaintiffs and defendants for a dissolution, and as to whether the deceased partner at his death was insolvent. The court below does not find, positively, that there was a parol dissolution of the partnership after the death of Jackson, but says defendants considered it dissolved. Further, it found, that Jackson, at his death, was practically insolvent, and in substance, held, as a matter of law, that an insolvent member of a partnership could not tie up his estate or part of it by a partnership agreement of this nature so as to protect it from possession for purposes of administration by his legal representatives ; that such agreement was, in effect, a fraud upon creditors. It was, therefore, decreed, that the partnership be dissolved ; that defendants’ account, and that plaintiffs have full access to the books, accounts and papers of the partnership. Further, that if the parties failed to arrive at' a satisfactory accounting and settlement within sixty days, that then an expert accountant would be appointed by the court as an assistant to the court.

From this decree, it necessarily followed, that if defendants did not submit, a receiver would have to be appointed to enforce it, which was the alternative prayer of the bill.

We now have this appeal by defendants, who assign for error the action of the court.

*229As to the fact found by the court, that there was, by parol, an agreement for a dissolution of the partnership, there is no evidence worthy the name to sustain the finding. There were propositions from both sides for settlement, not acceded to by either, and no conclusion reached; this is so manifest that it would be a waste of time to narrate the evidence bearing upon the question. Necessarily, the partnership was dissolved, as concerned any further personal participation in the control or management by Jackson, and the agreement positively stipulated, that in that event, his representatives were to be excluded during the term. The plaintiffs in their negotiations sought a settlement for his interest immediately; defendants were not averse to such settlement, but they were wide apart as to the amount to be paid for the interest of the deceased partner; on this, their minds never met. The averments of the bill, especially the ninth and tenth paragraphs show such was the view of plaintiffs.

As to the fact, that the estate of Jackson is insolvent, and therefore such an agreement was a fraud upon his creditors, the reasoning of the learned judge is singularly inconclusive. Admit as a fact, which is at least doubtful, that Jackson, at the date of the agreement, when he bound himself as the other three partners did, was insolvent, there is no averment that the others had knowledge of such fact, or that there was any fraud or collusion between them. Why, then, even if Jackson intended to tie up this part of his estate in a perfectly fair and business-like agreement, should they suffer ? But is it a fraud, actual or constructive, upon creditors, for a debtor to enter into a partnership agreement in a legitimate business, with a prospect of gain, for a term of years ? The extent, value and place of the investment can be known with proximate certainty by all creditors. Nothing is concealed. The investment of capital in a copartnership in the banking business was as open as a loan secured by mortgage of record payable in ten years, or the lease of a farm to a tenant for the same period. It in no proper sense put the investment out of the reach of creditors; at' most, it only modified or changed the form of remedy to reach it. The learned judge of the court below has cited no authority in support of his view; we are confident there are none. All .our cases are directly to the contrary. “ Stipula*230tions in articles of copartnership for the continuance of the firm after the death of a member and uiitil the consent of all the partners is given to a dissolution, are valid and binding, and on the death of an individual partner will prevent a dissolution Leaf’s Appeal, 105 Pa. 505. This quotation is but a summary of the law as laid down by this court seventy-five years ago in Gratz v. Bayard, 11 S. & R. 41, and followed ever since, the last case being Wilcox v. Derickson, 168 Pa. 335. All the text writers, Story on Partnership, Teller on Executors, Collyer on Partnerships and Williams on Executors, state the law to be substantially as quoted. The decree does not rest on either reason or authority. If it were carried to its probable result, the court would take possession of the bank through its own officer, as receiver, and wind up its affairs in the interest of creditors. This business courts generally seek to avoid. In the interests of the public, sometimes they take possession of carrying corporations and in rare cases of business partnerships, but only with great reluctance. There is no reason why, even in a doubtful case, they should dissolve a perfectly solvent banking partnership in the interest of importunate creditors or complaining representatives of a deceased. member, in the face of an express stipulation by all the partners, to the contrary. As both parties have treated this as a final hearing, the decree is reversed, and the bill is dismissed at costs of appellee.