De Rees v. Costaguta

275 F. 172 | 2d Cir. | 1921

HOUGH, Circuit Judge

(after stating the facts as above). The record submitted is most confused, and stuffed with matter irrelevant to any question before us, viz. affidavits by which one party or the other sought to induce the trial court to grant or refuse a receivership.

[ 1 ] Plaintiff brought an earlier suit to accomplish the same purpose here sought. That bill was dismissed for lack of jurisdiction, and appeal taken direct to the Supreme Court, which dismissed the appeal (De Rees v. Costaguta, 254 U. S. 166, 41 Sup. Ct. 69, 65 L. Ed. -). Thereupon the present bill was filed, and it is now urged that the earlier decree is a flat bar to the present proceeding. We cannot entertain this question on this record. Such a. defense is not raised by any pleading, and we have not the earlier roll before us.

[2j It is, however, plain that since any injunctive relief or any receivership pendente lite could only be granted if the bill contained a well-pleaded cause of action, the hearing below was in effect one upon genera] demurrer to the bill as amended by adding to it the contract hereinabove set forth. It being elementary that one who prays for any preliminary relief may always be challenged as to the sufficiency of his alleged cause of action, we shall proceed to consider the cause as upon a motion to dismiss, on the ground that the bill does not set forth any cause of action entitling plaintiff to the relief demanded.

[3] This is primarily a bill for an accounting; an account is prayed for, and without it the bill would fail, for such matters as a receivership and preliminary injunction cannot per se be the subject of suit in equity.

The right to an account, and therefore to all other relief, and to ari account in the courts of the United States, depends upon the simultaneous possession by plaintiff of the following legal rights:

(1) He and Costaguta must have been partners, not only in respect of their joint or several liabilities to the outside world, but inter sese;

(2) As such partner he must possess or be entitled to a lien upon partnership property within the jurisdiction of the court, and

(3) Even if a partner in his relations with Costaguta he must be entitled to eject the latter from the position of liquidating partner.

It may well be that plaintiff has been permitted so to deal with the outside world that third parties may hold both him and Costaguta as partners when one at least of the quasi firm never intended that relation. Sun., etc., Co. v. Kountz Line, 122 U. S. 583, 7 Sup. Ct. 1278, 30 L. Ed. 1137.

It is both unnecessary and unprofitable to discuss the maze of decisions seeking definition of the partnership concept. Cf. 20 R. C. L. 823 et seq. The matter is one of general law, and we must apply the doctrine of our highest court as stated in Meehan v. Valentine, 145 U. S. 611, 620, 12 Sup. Ct. 972, 36 L. Ed. 835. Cf. Re Kobre, 224 Fed. 104, 106, 139 C. C. A. 660.

[4, 5] We must therefore look at the “agreement and intention of the parties themselves [which] should govern all the cases,” and in this case that intention is contained in a formal document which must speak for itself, and which the plaintiff cannot enlarge or vary by parol, though (as may be noted) no such endeavor is made in this hill. ■ Plaintiff says, in substance, that he rests upon the agreement.

/[6] Upon consideration of what plaintiff calls the partnership articles, we hold that that contract created no partnership inter sese between Costaguta and De Rees, because there was no intent to create that “community of interest with the other partners in the whole property and business,” which is the essence of partnership under the decisions ruling with us.

Plaintiff's theory is, and necessarily must be, that tire “hosiery section” was in and of itself a partnership entity. On the contrary, section 1 plainly contemplates no more than the creation of a new department in an old business, which plaintiff was “to manage”; when at the home office De Rees is reduced by sections 2 and 3 to the position of an important clerk, and his “complete liberty” in North America or Europe is limited to such sums as Costaguta might put at his disposal.

It is admitted in the bill that all the hosiery bought by De Rees was bought in the name of the Costaguta firm, and it is evident from the whole purport of the written agreement that what was so bought became instantly, not the property of the hosiery section entity, but of Costaguta.

This is the essential lack of community interest on the part of De Rees; he had no community in that which he acquired for the hosiery section, and his interest in the profits did not arise until under section 5 a balance was struck and the resulting profits ascertained. And even to his share of the profits his instant right was limited to 50 per cent; the balance being, under section 7, retained by Costaguta, obviously by way of security. Again, the forfeiture provided for in section 8 in the event of plaintiff’s not devoting “all his activity to the service of the section” is wholly inconsistent with that equality of opportunity and authority normally inherent in a partner.

Perhaps the most important consideration is that by any reading of sections 11 and 12 the absolute right of liquidation and sole custody of all assets belong to Costaguta alone. Under such an agreement all that plaintiff could ever have on winding up is a demand against the sole authorized liquidator, i. e. Costaguta.

[7J If is, however, urged that even such absolute right to liquidation as Costaguta possesses does not take away De Rees’s right to an account, and it may be admitted that this is true. But assuming its truth, he cannot have an accounting against persons who can only be brought in under Judicial Code, § 57, unless he is a full partner with Hen upon the partnership property, such lien as was recognized in Hoyt v. Sprague, 103 U. S. 613, 625, 26 L. Ed. 585.

If, as we have held, plaintiff and Costaguta were never partners inter sese, then plaintiff never had a lien, and if he has no lien he cannot invoke section 57.

P'or these reasons it is not thought necessary to inquire into the exact limitations of service by advertisement under the Code section referred to; but because the nature of the relation between the parties was such that there never could be any assets of the hosiery section upon which De Rees had a lien, it is thought plain that this bill does not disclose a cause of action upon which recovery can ever be had.

Therefore the decision below was essentially proper, but is modified so as to dismiss the bill as against the nonresident defendants for lack of jurisdiction, and as against the American European Company on the merits, and, as so modified, the decree appealed from is affirmed, with costs.