Dunham v. Presby
| Decision Date | 06 May 1876 |
| Citation | 120 Mass. 285 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | Josiah Dunham v. Herbert W. Presby & others |
Argued March 26, 1874.
Suffolk. Bill in equity for a settlement of the affairs of a partnership. An argument was had upon the questions made by the pleadings in March 1874, by G. F. Homer, for the plaintiff; W. Colburn, for the defendant Presby; and W Gaston, for F. W. Bird, another defendant; and in March 1876 upon the suggestion of the court, upon the question of the legality of the transactions between the partners, as appearing upon the master's report, by the same counsel except that E. C. Bumpus appeared in the place of W. Colburn for the defendant Presby. The case is stated in the opinion.
Bill dismissed.
It appears from the bill, answers and report of the master that in April 1864 the plaintiff with the three defendants entered into a partnership to hire a store at Norfolk, Virginia, and carry on a wholesale and retail trade in such goods as would command a ready sale. Each partner was to contribute fifteen hundred dollars to the capital stock, and share equally in the profits and losses of the business. The defendant Presby was to have the control and management of the business at Norfolk, the others continuing to reside in Massachusetts, and it is to be presumed, from a settlement afterwards made between the parties, that Presby was also to be allowed for his services and expenses at Norfolk as the managing partner. There is nothing in the papers before us to show, or from which it is to be implied, that the business thus entered upon was not perfectly legitimate and legal.
In the month of May following, and while Presby was at Norfolk, one Johnston, then acting as adjutant to the general in command, suggested to Presby that he could make money by sending goods into that part of North Carolina known as the "neutral territory," and exchange them for cotton, provided that the assistance of one Harney could be obtained, who was well acquainted with that part of North Carolina and competent to conduct the business. In pursuance of this suggestion, Presby met Johnston and Harney. Johnston then proposed that Presby should furnish the capital for the enterprise, that he, Johnston, should procure from the general in command the permits necessary to legitimate the traffic, and should receive for that service one third of the net profits; that Harney should superintend the purchase of the cotton and its transportation to Norfolk, and for so doing should also receive one third the net profits; and that Presby should be entitled to the remaining third. It is to be presumed from the character of this transaction, and the fact that permits of some kind were necessary to carry on this trade, that the cotton was to be obtained outside the military lines of the United States forces. Presby thought the terms unreasonable, but entered into the arrangement with Johnston and Harney. On his return to Boston during the same month, he reported to his three associates in the original partnership the enterprise in which he was to engage with Johnston and Harney, but at Johnston's request he did not mention his name. His associates, understanding fully all the terms and conditions under which the enterprise was to be conducted, authorized him to embark in it on joint account, each agreeing to furnish his share of the necessary capital.
We cannot but regard this as a separate and distinct undertaking, wholly apart from the purposes of the original partnership, requiring not only a new advance of capital, but, from the nature of the arrangement and the division of profits to Harney and Johnston, requiring separate accounts to be kept, not necessarily connected with the original partnership accounts.
In June following the parties again met in Boston, and it was agreed that Presby should take an account of the stock of goods in the store on July 1, and purchase them at cost prices, that the company should be dissolved on that day, the undertaking abandoned, and that Presby should forward and sell all cotton then on hand. The account of stock in the store was taken by Presby, and he also had on hand forty-six bales of cotton...
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