Johnson v. Jackson

• Decision Date: 03 December 1908
• Citation: 114 S.W. 260
• Parties: JOHNSON v. JACKSON.
• Court: Kentucky Court of Appeals

114 S.W. 260

JOHNSON v. JACKSON.

Court of Appeals of Kentucky.

December 3, 1908

Appeal from Circuit Court, Daviess County.

"To be officially reported."

Action by Rolla A. Jackson against Jesse R. Johnson for settlement of a partnership. Judgment for plaintiff, and defendant appeals. Affirmed.

C. S Walker and Sweeney, Ellis & Sweeney, for appellant.

W. E. Aud and Elliot B. Mason, for appellee.

CLAY C.

Plaintiff Rolla A. Jackson, and defendant, Jesse R. Johnson, entered into a partnership in the saloon business on March 25, 1903 and continued the business until June 24th of that year, when they sold the business to one A. W. Jarboe. No time was fixed for the duration of the partnership. Plaintiff furnished the whole of the capital, amounting to $3,250, for the purchase of the saloon business. Defendant furnished 25 barrels of whisky worth $25 per barrel. When the partnership business was sold out, the purchaser made a check for $1,500 to defendant, and also to plaintiff a check for $1,500, less the amount which the plaintiff owed him at the time. Five barrels of the whisky furnished by defendant were used in the business, and when the business was sold, the proceeds of the remaining 20 barrels were divided between plaintiff and defendant. After the dissolution of the partnership, defendant was frequently on plaintiff's notes in the bank, and plaintiff borrowed from defendant the sum of $2,000 secured by a lien on a tract of land which the plaintiff then owned. About four years after the business was sold, the plaintiff instituted this action to recover of the defendant $1,500 paid to him by the purchaser of the business, and for a settlement of the partnership affairs. The lower court required the plaintiff to elect whether he would proceed for the $1,500 or for a settlement of the partnership. Plaintiff elected to proceed for the $1,500. Thereafter he instituted a separate action for the settlement of the partnership. These two actions were subsequently consolidated. The defendant defended on the ground that the contract of partnership provided that he was to have an equal share, not only in the profits of the business, but in the capital invested, and that upon a sale of the partnership business the capital was divided according to the contract, and the partnership affairs then and there settled. Plaintiff replied, denying that there had been a settlement of the partnership, and charging that the payment of the $1,500 to the defendant was procured by fraud, or made as the result of mistake. The trial court held, as a matter of fact, that the contract of partnership provided that the plaintiff and defendant should be equal partners, not only in the profits, but in the capital invested in the business. He further held that the contract of partnership was void for uncertainty, and such as a court of equity could not tolerate. After finding that the amount of profits had been about equally divided between plaintiff and defendant, the court held that the $300 paid by defendant to plaintiff for the latter's half of the 20 barrels of whisky not used should be credited to the defendant; that the 5 barrels of whisky used in the business, to the value of $125, should likewise be credited; also that plaintiff should be charged one-half of the salary of the assistant barkeeper employed to help the defendant. The latter sum amounted to $72. The court then gave judgment in favor of the plaintiff for $1,003, with interest from the day suit was brought, and for his costs. From this judgment the defendant appeals.

It is earnestly contended by counsel for appellant that the court erred in holding the contract of partnership void. In this contention we agree. The mere fact that no time is provided for the duration of the partnership does not render the contract of partnership void. It is simply a partnership at will, which either partner may dissolve at any time, at his option, without a concurring liability for damages to his copartner, however serious the loss occasioned thereby. According to some authorities, a partnership at will may be dissolved by any partner at any time, sua sponte, and his motive cannot be investigated. According to others, dissolution must be made in good faith, and not at an unreasonable time. Thus renunciation is held not to be made bona fide, where one partner renounces in order to appropriate to himself the profits which his partner is entitled to receive. 22 Am. & Eng. Ency. of Law (2d Ed.) 204, 205; Rice v. Angell, 73 Tex. 350, 11 S.W. 338, 3 L.R.A. 769; Howell v. Harvey, 5 Ark. 270, 39 Am.Dec. 376; Karrick v. Hannaman, 168 U.S. 328, 18 S.Ct. 135, 42 L.Ed. 484. By the decided weight of authority, a contract of partnership to last during the mutual will of the parties is valid. The mere fact that the period of its continuance is indefinite does not render it void.

Though not agreeing with the trial court that the contract of partnership was void for uncertainty, we are of the opinion that the judgment entered below may be sustained upon other grounds. The law of partnership is well settled that, where the question is one of the division of profits, the presumption is that the profits are to be divided equally. 22 Am. & Eng. Ency. of Law (2d Ed.) 101; Lee v. Lashbrooke 8 Dana, 214; Honore v. Colmesnil, 1 J. J. Marsh. 506. Furthermore, such equality will be presumed, notwithstanding the fact that the contributions to the firm capital are not equal, and whether the...