Bast & Others' Appeal
Bast & Others' Appeal
Opinion of the Court
The opinion of the court was delivered, January 29th 1872, by
A careful consideration of the master’s report, and the exceptions thereto, present very clearly, we think, a case wherein one partner, the defendant’s testator, if he meant what they claim he did, attempted to realize profits for himself exclusively from and out of the business and capital of the firm, without authority from his copartners, and against the law of partnership generally.
There is always an implied obligation among partners “ to use the property of the firm for the benefit of those whose property it isCollyer on Part., § 179. So is it also an implied duty without any stipulation on the subject, that every partner shall abstain from engaging in any business which will “necessarily deprive the partnership of a portion of the skill, industry, diligence or capital which he is bound to employ thereinStory on Part., § 177. These are general principles regulating the duties and relations of partners, yet they may define them otherwise if they choose, provided they violate no positive law. In the absence, however, of special provisions, each partner is in a fiduciary relation to his copartners, and must devote all his energies for the promotion of the firm exclusively, and account for all moneys received by him in and through its legitimate business. These being the duties and obligations of every member of a partnership, he who claims exemption from them must show that it exists either in the terms of the organization, or by the assent of all his copartners. It must, therefore, be clear that partners have yielded their right to the labor of one of their fellows, or of profits earned in the business, before they can be estopped from claiming them.
We do not mean to discuss in detail the testimony reported in the case, in testing the accuracy of the master’s conclusions from it. To some extent we must treat it in general views. We need not argue to convince, but must investigate so that we may be well convinced ourselves of the proper conclusions to be deduced from the testimony. This we have done, and the result is, we find no reservation in the articles of partnership establishing the firm of Davis Pearson & Company, which allows any member of it to contract and do business for his own sole benefit, in the business of the firm, or elsewhere. Nor do we discover any express assent of the members of the firm otherwise, to that effect, in favor of Davis Pearson, for whom it is claimed by the appellees. The opposite, it seems to us, is plainly inferable from the testimony of
We have considered the testimony of Flubacher,: on this branch of the case, with great care, and we discover no evidence of any assent whatever, by the members of the firm of Davis Pearson & Co., that Davis Pearson was to be the contractor with the .government for the contract for himself, or that he was authorized so to contract with the association. Neither acts nor words in evidence, raise such an inference against his copartners. On the contrary, up to the time of the award of the contract to Flubacher, everything was done in the ordinary mode of .transacting business.in' the firm. The resident partners consulted together, prepared the bid their clerk was to put in, and it was a matter inquired of by Pearson, whether the business of the contract could all be done in their office. This looks like anything else than an individual contract. But again : Flubacher was the clerk of the firm, not the servant of Pearson. In the absence of qualifying testimony that he was to bid for a particular member of the firm, the presumption would undoubtedly be that he acted for the firm, and not for one of its members. This would assuredly give the contract to the firm. But all this was done in the absence of Bast and Taylor, and even if Lindsay had assented to all that is assumed, it would not hind his absent copartners, who gave no assent precedent or subsequently. We are looking for an express assent that Pearson should contract for his own benefit, and alone share with the associated coal companies the profits to be made out of their contract to furnish coal to the government under the award to Flubacher. A few of the grounds for the assumption by the appellees will be noticed.
The most prominent of these is, that Pearson signed the articles of association of the coal companies in his own name, and not in that of his firm. In the absence of any authority given him to do this, the theory is, that he did it to save from possible loss his partners, if the adventure should prove a losing concern. But as this was not communicated to his partners, and not assented to by them, it would not entitle him to take all the profits. But this was surmise at best, and an unreasonable surmise. It was not
Another matter relied on, is Lindsay’s signature to a receipt for Davis Pearson, for a portion of the profits of the contract of the association with the government. It is probable that as Pearson alone had signed the contract, although unknown and unauthorized by his copartners, the recéipt was put in that form by the clerk or cashier of the association, Mr. Wright, to accord with this fact, known doubtless to him, as he had the possession of the papers. Lindsay may too be presumed to have thought that the form of the receipt could not affect his firm in its right to profits, especially after having furnished the coal from which they were realized.
He might well conclude that if Pearson received the profits in his own name, it would furnish no reason why he should retain them. This could not directly result from the act, nor alone, was ”it a circumstance to presume assent to the action of Pearson for his own benefit, and we do not see anything in the testimony which aids it. Certainly not as against those knowing nothing of it. Lindsay must have known that the associated companies regarded their'firm as co-contractors. He must have seen the books when the receipt was given, if not at other times, and they showed that his firm was credited with the profits, and not Davis Pearson, and thus he probably believed the form of the receipt an unimportant thing, as it was, in our judgment. It did not estop him, nor any other copartner, from asserting the truth in the case. Many better reasons might be given for Lindsay’s receipt in the form it was given, than that he meant to do an act, or admit a fact, tending to cut himself out of four or five thousand
It is claimed that the silence of Pearson’s copartners about their profits for three years, is some proof that, they did not expect to share in them. By itself, it is nothing, absolutely nothing. Does it help to interpret any other act or acts in the aspects claimed ? We have considered this, and we think it does not. Circumstances to amount to proof, must point to and bear upon the facts to be proved, and be inconsistent with any opposite theory. A hundred reasons might account for this delay, just as satisfactorily, and more so than the one supposed. Pearson remained in the firm up to the time of his death, which occurred on the 21st of July 1868.
In conclusion, the name in which these profits were received, amounts also to little against the name and fact in which they were earned, and which the defendants’ testator must have known as a member of the association and firm both. His disposition of half of them by gift to Mr. Tucker, for the latter, in his testimony, repudiates any precedent contract to that effect, is no evidence of ownership, nor does it bind the firm. If he choose to give them away, it would not release him from accountability for them. His generosity must be at his own expense. He was a trustee for the firm, and could not legally apply the funds without the consent or assent of his copartners to anything but the firm business. The disposition he made of half these profits was not so applied. From a full consideration of the testimony, and the master’s report, we think the latter erred in so finding the facts from the testimony as to recommend a dismissal of the plaintiffs’ bill, and that the court erred in their pro forma decree dismissing said bill.
And now, January 29th 1872, the decree in this case dismissing the plaintiffs’ bill, is reversed, and the same is hereby reinstated, and referred to the former master, Charles H. T. Collis, Esq., to state an account between the parties to the bill. The costs to abide the final decree of the court.
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