185 Ky. 397 | Ky. Ct. App. | 1919
Opinion of the Court by
Affirming.
For many years R. N. Tyrie has been the owner of a farm near Princeton, containing a deposit of fluorspar. In the year 1901, he leased the mineral rights to C. C. Larkin, F. T. Satterfield and John W. Hollowell for a period of ninety-nine years. In addition to certain royalties, the lease provided for the payment of an annual rental of $50.00 on or before the tenth day of January in each year, and for a forfeiture of the lease in case of nonpayment on or before that time.
The lease was continued in effect until the year 1911, when Larkin left the state and surrendered his interest. A new lease was then executed to Satterfield and Hollowell, containing the same terms and conditions as the prior lease, with the exception that the rental was payable on or before January 15th in each year. The annual rental was regularly paid up to and including that due January 15, 1916. About the first of December of that year, the lessees sublet the property to a man by the' name of Conger, by a lease providing for the payment of the annual rental on January 10th of each year. Conger worked for a while, but did not make the $50.00 payment due on January 10th, nor did Satterfield and Hollowell make the payment to Tyrie due on January 15th. Within five or ten days thereafter, Hollowell arranged with Tyrie for the execution to him individually of a new lease, upon practically the same terms and conditions. This lease was formally executed on January 30, 1917. Some time in December, Hollowell had met J. R. Frazier, who agreed to inspect the property. He looked at the property about January 1st, and stated that he would return and talk the matter over. On February 15th, Hollowell sublet the property to Frazier with an option to purchase the lease for $25,000.00. In the month of May, 1917, Satterfield learned that Hollowell had taken a new lease in his own name and was then developing the property.
According to plaintiff, the annual rental of $50.00 was paid to Tyrie by depositing that sum to his credit in bank. The payments were always made by Hollowell and plaintiff would settle with Hollowell, sometimes before and sometimes after the fifteenth day of January. Plaintiff had at least three conversations with Hollowell in reference to the renewal of the lease. During the last conversation, which occurred in January, 1917, he told Hollowell that it was about time to pay on the Tyrie lease, and offered to give him a check. Hollowell replied that it was not necessary to give a check that day, as there was plenty of time. Plaintiff had a further conversation with Hollowell on the night of January 17th. In that conversation he asked Hollowell if he had paid Tyrie.
Hollowell replied that he had not paid and that' the lease had run out. Plaintiff then asked Hollowell to go to bank in the morning and deposit a check to Tyrie ?s credit.
Hollowell replied that he would think the matter over and plaintiff said, “All right.” At no time did Hollowell notify plaintiff that he was going to let the lease lapse.
According to Hollowell and Tyrie, plaintiff tried in the month of January, 1916, to induce Tyrie to lower the rental or take a one-third interest in the lease, saying that if Tyrie did not do so plaintiff would stop payment. Hollowell says that, after this conversation, he and plaintiff agreed to pay for the year 1916, with the understanding that if they did not dispose of the property they would not continue the lease for the following year. Though they did sublet the property to Conger, Conger did not pay the rental due on January 10th,- and therefore abandoned the lease. However, Hollowell did not notify plaintiff of this fact. Hollowell also denies that he had any conversation with plaintiff about renewing the lease. He admits, however, that he had a conversation with him in January, in which plaintiff offered to discuss
It is first insisted that plaintiff should have been denied relief in a court of equity because his petition showed that lie had an adequate remedy at law. This contention is without merit. The object of the suit was to have it adjudged that defendant held the new lease in trust for the partnership, and to require him to convey a half interest therein to plaintiff. In other words, the suit was to enforce a constructive trust, and this was sufficient to confer jurisdiction on a court of equity to hear and determine the whole matter. Oelrichs v. Spain, 15 Wall. 211, 21 U. S. L. Ed. 43.
With respect to the main issue, it is the insistence of plaintiff that a partner cannot deprive his co-partner of an interest in the lease by permitting it to be forfeited, and then obtaining a new lease in his own name. On the. other hand, defendant contends that this is a case where one partnership! deal was closed, and that defendant did not owe to plaintiff the duty of inviting him into a new partnership. The principles of law- applicable to a. case' of this kind are well settled. In the first place, there is no-relation of trust or confidence known to the law that requires of the parties a higher degree of good faith than that of a partnership. Nothing less than absolute fairness will suffice. Each partner is the confidential agent
Following these rules, it has been often held that when a member of a partnership, upon the expiration of a lease to the firm, renews it in his own. name, it inures to the benefit of the firm. Clegg v. Edmonson, 8 De G. M. & G. 787; 26 L. J. Ch. N. S. 673, 3 Jur. N. S. 299; Clegg v. Fishwick, 1 Macn. & G. 294, 1 Hall & Tw. 396, 19 L. J. Ch. N. S. 49, 13 Jur. 993; Featherstonhaugh v. Fenwick, 17 Ves. Jr. 298, 11 Revised Rep. 77; Alder v. Fouracre, 3 Swanst 489, 19 Revised Rep. 256; Clements v. Hall, 2 De G. & J. 173, 27 L. J. Ch. N. S. 349, 4 Jur. N. S. 494, 6 Week. Rep. 358, reversing 24 Beav. 333; Hawkins v. Hawkins, 4 Jur. N. S. 1044. In Knapp v. Reed (Neb.) 130 N. W. 430, 32 L. R. A. (N. S.) 869, it was held that when a partnership is carrying on a business in premises which it holds under a lease, neither partner can, without the consent of the other, take a renewal of the lease in his own name and so exclude the other partner. In Mitchell v. Reed, 61 N. Y. 123, 19 Am. Rep. 252, it was held that one member of a co-partnership cannot during its existence, without the knowledge of his co-partner, take a renewal lease for his own benefit of premises leased by the firm, although the term of the renewal lease does not begin until after the co-partnership had expired by its own limitation.
Examining the facts of this case in the light of these principles, what do we find? Merely the contention that Hollowell had a right to secure the new lease because a year before he and plaintiff had agreed that if the property was not disposed of, they-would not continue the lease.' As a ’matter of fact, however, the• property was disposed of to Conger, and though it be true that Conger failed to pay the rental due'on January 10th and thereby forfeited the lease, plaintiff was never notified of this fact. And even if it.--be conceded that plaintiff was mis
Judgment affirmed.