Biernan's Adm'r v. Braches

• Decision Date: 31 March 1851
• Citation: 14 Mo. 24
• Parties: BIERNAN'S ADMINISTRATOR v. BRACHES.
• Court: Missouri Supreme Court

14 Mo. 24

BIERNAN'S ADMINISTRATOR

v.BRACHES.

Supreme Court of Missouri.

March Term, 1851.

APPEAL FROM ST. LOUIS CIRCUIT COURT.

WHITTELSEY, for Appellant. 1st. Can one partner sue another at law for an indebtedness arising from the partnership transactions, before the settlement of the partnership concerns, the payment of the debts and the striking of a balance? 2nd. Under the articles of co-partnership, does this case come within the rule of law above stated?

1. In support of the first proposition, see Stothert v. Knox, 5 Mo. R. 112; Murray v. Bogert, 14 Johns. R. 318; 2 Conn. R. 425; 1 Wend. R. 532.

2. The next question is, does this case come within the operation of the rule? We do not deny that one partner may act and deal with another, in the

same manner as with a stranger, in all matters not belonging to the partnership. But the point at issue is, whether these partners have so done-- whether the matters are partnership or not. For this purpose a careful examination of the articles of co-partnership are necessary. By these articles Biernan, the intestate, was to advance on his share of the capital the land and the distillery, building and fixtures. But as these were not of sufficient capacity for the business intended, Braches was to advance money for the increase of capacity, to the amount of $2,000, and $4,000 more as business capital--both of these sums without interest, and Biernan charging no rents for the buildings. In the books of the concern the amount of plaintiff's bill, of $5,353 96, was charged as a loan to Biernan. The partnership was to be of indefinite duration, and was not to be dissolved until the profits amounted to $8,000, over and above the advance made by Braches to carry on the business. Section 23 of articles, thus clearly making loans and business and capital an undivided subject of the partnership business. By an amended article of January 8th, 1849, Braches was allowed to withdraw from the profits of the concern, the whole amount expended, as soon as the profits amounted to $4,000, so that the advances should be repaid out of the profits by article 21. Profits and losses were to be equally divided. The law implies that partners are to be reimbursed at the dissolution, the capital each has advanced, after paying first the debts of the concern, and the balance will be profits to be divided between the partners. The agreement between these partners only reduced to writing what the law implied. Biernan owning the land, buildings and fixtures go to him, and the money advanced by the other partner goes back to him, no matter how they have been expended; whether in the buildings or the common transactions of the concern; and yet no one would suppose, in such a case, that one partner could sue the other for his advance until a dissolution and a settlement. The moneys expended on the land would still form part of the partnership capital, to be returned to the advancing partner, no matter who he might be, or what might be the character of the advances, whether it be lands, buildings and distilleries, fixtures or money. If the money has been expended in buildings, the partner owning the buildings must repay those advances to the other partner. So that, in these articles, the parties have merely expressed what the law is. 3 Kent's Com. 23, 24, 28; 6 Wend. 263; 16 Vesey, 49; Collyer on Partn. 65; West on Ship.; 1 Vesey, 142; Collyer on Partn. 83, 84; Gilmore v. Brown, 14 Mass. R. 128. It was decided in Lee v. Sashbrook, 8 Dana, 214, to be a general principle, that no one partner is entitled to compensation for his services to the firm, nor for interest on money advanced or deposited with the firm for its use, without a special agreement, or some special circumstance to justify it. The general conclusion of law is, that partnership losses are to be equally borne, and the profits equally divided, and this is the rule, although the contribution between the parties consisted entirely of money by one and entirely of labor by the other. Gould v. Gould, Wendell, 263. “When an account is taken,” says Ld. Hardwicke, “each is entitled to be allowed against the other everything he has advanced or brought in as a partnership transaction, and to charge the other in account with what the other has not brought in, or has taken out more than he ought, and nothing is to be considered his share but the proportion of the residue on the balance of the account.” Collyer, 65. The Supreme Court in this State, in Stothert v. Knox, 5 Mo. R. 112, 118, state the rule correctly, that while the partnership concerns remain unadjusted, one co-partner cannot maintain assumpsit against the others, and this most certainly is a case calling for the interposition of the rule. As the parties, by their own acts, have converted the moneys advanced into capital of the co-partnership, one co-partner cannot be allowed to withdraw his share until the concerns are adjusted, so as to diminish the capital stock liable to the payment of the partnership debts. Relying upon the principles of law, the construction of the articles of co-partnership, the appellant insists that the court below erred in refusing the instructions asked by the...