Lake v. Sealy

• Decision Date: 23 January 1936
• Docket Number: 4 Div. 845
• Citation: 165 So. 399,231 Ala. 466
• Parties: LAKE v. SEALY et al.
• Court: Alabama Supreme Court

165 So. 399

231 Ala. 466

LAKE v. SEALY et al.

4 Div. 845

Supreme Court of Alabama

January 23, 1936

Appeal from Circuit Court, Houston County; D.C. Halstead, Judge.

Bill in equity by R.R. Lake against J.R. Sealy, C.S. Sealy, Jr., and Malcolm N. McCaskill. From a decree sustaining a demurrer to the bill, complainant appeals.

Affirmed.

O.S Lewis and E.S. Thigpen, both of Dothan, for appellant.

F.M Gaines and T.E. Buntin, both of Dothan, and Sollie & Sollie of Ozark, for appellees.

BROWN Justice.

The complainant, appellant here, rests the equity of the bill on his asserted right to have the court decree a dissolution of the partnership between himself and McCaskill, state the account between the parties, sell the assets of the partnership, and distribute the residue of the proceeds of the partnership after paying the partnership debts.

Taking the averments of the bill as true, treating defects apparent on the face of the bill as amended, as must be done in considering the general demurrer for want of equity ( McDuffie et al. v. Lynchburg Shoe Co. et al., 178 Ala. 268, 59 So. 567), the partnership was dissolved by operation of law on the 29th of April, 1933, when McCaskill transferred his entire interest in the partnership and the assets to the defendants J.R. and C.S. Sealy, Jr. Code 1923, § 9379.

There is nothing in the averments of the bill, or in the paper executed by McCaskill to the other defendant, made "Exhibit A" to the bill, showing that complainant and Snyder, who was then a member of the partnership, "had wholly abandoned the business to" McCaskill, or that they were incapable of acting. Code 1923, § 9376. Therefore, the Sealys were charged, as a matter of law, with McCaskill's lack of authority to dispose of complainant's interest or the interest of Snyder; yet McCaskill had the right, reserved by the partnership agreement, Exhibit B, to transfer his interest to the Sealys, and the transfer of his interest was a sufficient consideration for the release by the Sealys of the debt due to them from the partnership.

There is nothing in the bill's averments showing that the partnership owed any other debt, or that there was any basis for an accounting between the complainant and McCaskill or Snyder. It appears from the averments of the bill and the exhibits that McCaskill and Snyder now have no interest in the property right accruing to complainant and McCaskill, as individuals, under the contract with the Sealys, made "Exhibit A" to the bill.

A contract of partnership is essentially one involving the highest degree of reciprocity of personal obligation and trust, and partnership relations are presumed to be based on the mutual trust and confidence of each partner in the skill, knowledge, and integrity of every other partner, and they, inter se, are under mutual personal obligation and liability to render a true account and full information of all matters affecting the partnership, and to account for any benefit derived from any transaction concerning the partnership property, name, or business; and this personal obligation to account, where a necessity therefor exists, cannot be avoided by a transfer or assignment by a partner of his interest in the partnership and its assets. 47 C.J. 1161, § 844; Public Trustee v. Elder, [1926, Eng.] Ch.Div. page 776; Tolhurst v. Associated Portland Cement Manufacturers, [1902, Eng.] 2 K.B. pp. 660-669.

But in the circumstances disclosed by the bill no necessity exists for an accounting by the partners inter se, and no one, not even complainant, would be benefited, and a court of equity will not enter upon such useless investigation. Dugger v. Tutwiler et al., 129 Ala. 258, 30 So. 91; Baker v. Tennent, 108 Wash. 663, 185 P.

576; 47 C.J. pp. 1156, 1157, § 837. Therefore, the bill, viewed as one to require an accounting between partners, is without equity.

While the bill is subject to demurrable defects pointed out by some of the specific grounds of demurrer, when viewed as a bill for discovery and relief, treating amendable defects as amended, it is not subject to the general demurrer for want of equity.

The property right acquired by the complainant Lake & McCaskill under the contract with the Sealys, of date November 4, 1931 was a one-fourth interest in all the "oil and gas leases and landowners' royalties" owned and held by J.R. and C.S. Sealy, Jr., on said date; "Also a 1/4 (one-fourth) interest in all oil, gas and mineral rights on lands owned by J.R. Sealy in fee simple," classified in the nomenclature of the law of real property as incorporeal hereditaments. 50 C.J. p. 758, § 31; Marrs et al. v. City of Oxford et al. (D.C.) 24 F. (2d) 541; Federal Oil Co. v. Western Oil Co. et al. (C.C.) 112 F. 373; Phillips v. Springfield Crude Oil Company et al., 76 Kan. 783, 92 P. 1119; Rich v. Doneghey et al., 71 Okl. 204, 177 P. 86, 3 A.L.R. 352; Caldwell v. Fulton, 31 Pa. 475, 72 Am.Dec. 760; Clayborn et al. v. Camilla Red Ash Coal Co., Inc., et al., 128 Va. 383, 105 S.E. 117, ...