Lee v. Lashbrooke

• Decision Date: 20 April 1839
• Citation: 38 Ky. 214
• Parties: H. and P. Lee v. Lashbrooke. Lashbrooke v. H. and P. Lee.
• Court: Kentucky Court of Appeals

38 Ky. 214

H. and P. Lee v. Lashbrooke.

Lashbrooke v. H. and P. Lee.

Court of Appeals of Kentucky.

April 20, 1839

FROM THE CIRCUIT COURT FOR MASON COUNTY.

Mr Hord and Messrs. Payne and Waller for the Lees.

Mr Owsley and Mr. Beatty for Lashbrooke.

OPINION

ROBERTSON CHIEF JUSTICE:

In the absence of any evidence of a contract to the contrary, the legal presumption is that, each of the three co-partners were to be entitled to co-equal shares of the profits of the joint concern, and that each was to contribute whatever of personal service and proper assistance he reasonably could to sustain and promote the objects of the partnership.

In general partnerships, where there is no special agreement as to the profits, the legal presumption is that they are to be equally divided. So, also, where there is no special agreement as to the services to be rendered by the partners respectively, the sumption is, that each is to do what he can for the common benefit. And--

No one of several partners is entitled to compensation for services to the firm, without a special agreement for it. Nor will interest be alowed to any partner, for money advanced to, or deposited with, the firm, for its use, but from the time of a general settlement or dissolution, unless there is a special contract, or some very peculiar circircumstance to justify it.

Facts and circumstances showing that the general principles above indicated, are applicable to this case.

In such a case it is a general rule, fixed as it is just, that neither of the partners will be entitled either to compensation from the others, for any service voluntarily rendered by him, in the partnership business, or to interest on balances from time to time in the partnership account, or on deposits, or advances of money, for the use of the firm and before a general settlement or dissolution. To bring a case within any exception from this general rule, resulting from the nature and objects of general partnership and the implied understanding of the co-partners, there must be either a special agreement, or some very special and peculiar state of facts.

As to interest and compensation, in this case, no contract or special state of case appears in favor of any allowance. On the contrary, the facts strongly repel all claim to interest on the one side, or to compensation on the other.

As to interest claimed by H. & P. Lee, for money deposited with and for the use of the firm, several considerations fortify the general rule.

1. Looking to the condition of the parties, and the service expected to be performed by each, it would be unreasonable to presume that Lashbrooke, upon whom nearly all the burden of buying and vending the goods was devolved, would have entered into a general partnership entitling his co-partners to equal profits, had not their credit and their ability to assist and sustain the establishment with whatever funds it might need from time to time, been considered by him as an equivalent for his capital and services. Why should H. Lee, especially, receive one third of the profits, without making some extra contribution in the use of money, to counterbalance the extra services of Lashbrooke?

2. Lashbrooke's services appear to have been nearly equal to the interest on moneys advanced at various times by H. & P. Lee; and the value of those services, and interest on balances due from time to time on their individual and joint accounts, would altogether equal, if not exceed, the amount of interest correctly calculated on the funds advanced by them.

3. The state of the accounts and the conduct of the parties during the partnership, and for some time after dissolution, rather imply that there was no understanding or expectation that interest was to be charged against Lashbrooke, for one third of the deposits for the use of the firm.

We are clear, therefore, in the conclusion that the Circuit Court was right in disallowing the claim for interest.

And we are equally clear that, the disallowance of Lashbrook's claim for extra services was also right; because it does not appear that he did more than was expected when the partnership commenced; or that, by contract or otherwise, since that time, there is has been any unusual or unexpected change in the condition or attitude of any of the partners. It is evident, therefore that, so far as his services are concerned, there is nothing to repel the implication arising from the character of the general partnership, as originally formed. And, moreover, Lashbrook should not charge for services, without accounting for some interest for an extra equivalent; to wit, the contribution of money on the other side.

Nor do we perceive any error or injustice in charging H. Lee, as the Circuit Court did, with McChord's notes. From his admission, as proved, it may be inferred, that the understanding of the parties was, that he was to be responsible for that debt due to the firm by that son-in-law of his, to whom it was given as an advancement. And this deduction, whether, in fact, just or not, is fortified by the uncertain and perhaps insolvent condition of McChord, when he contracted the debt with the firm, and the fact also, that H. Lee seems to have agreed to pay and does not object to pay the accounts of his children with the firm.

But we are inclined to think that, the charge of Amsberry's account to H. & P. Lee, is scarcely justified by the facts reported by the commissioners, or any facts deducible from the record.

And it also seems to us, that P. Lee ought not to be charged with so much of house expenses as was incurred for fuel, candles, & c. used necessarily in the counting room and store.

But we see no just objection to charging P. Lee, as the decree has done, with the good notes and accounts to the firm:--(1.) because he consented to that charge, and, (2) because, by taking and keeping the books and evidences of debts to the firm, he assumed a right and incurred a responsibility which might justly have justified the charge of perhaps more than the decree has charged. And, as to the account of Ballinger and Dewess, the only debts he objected to, we see no good objection to charging him with them, because it appears that he might have collected them since he has had the books in his possession, and withheld them from Lashbrooks.

The good debts due to a partnership may be charged to one of the firm by his consent; and the fact that he has taken and retained the books, may also justify such charge. See the petition and response. post.

In charging Lashbrooke with one third of the rent for the store house and appurtenances, it seems to us that the Circuit Judge departed from the principle upon which he refused to allow interest on money advanced and compensation for services rendered. As it appears to have been understood, when the parties entered into partnership, that the business was to be continued in that house it seems to us that the inference of reason as well as law, is that the partner who owned the house contributed the use of it, as a part of his share of capital, and as some equivalent for the personal services of his co-partners. And this deduction is strengthened by the fact, that no credit appears to have been ever given to H. Lee for rent, or claimed by him, during the subsistence of the partnership--although he had access to the books, and frequently inspected his account. The use of the house must, in the absence of any fact to the contrary, be deemed to have been, and intended to be, a part of the joint stock contributed by the partner w?? was not expected to attend personally to the store, and not to be charged against the other partners who were to do all the active business of the concern.

One of 3 partners owning the house in which the business was commenced and carried on, it is presumed that he contributed the use of the house as capital, and is not entitled to rent for it, from the firm--especially as he was not an active partner.

According to the pleadings and proofs, we are of the opinion that there was no error in dissolving the injunction with damages.

Wherefore, the decree is reversed, and the cause is remanded, with leave to make further inquiry as to the expenses charged for fuel, candles, & c. for the use of the counting room and store, and as to Amsberry's account; and for another decree according to the principles adjudged in this opinion.

PETITION FOR A RE-HEARING.

By Mr. Hord.

May 4.

The counsel of the Lees would respectfully solicit the Court to reconsider some of the questions decided in this cause.

1. From the most mature reflection they have been enabled to give to this cause, they can not come to the conclusion that Peter Lee should be charged with the accounts due to the firm, supposed to be good by the commissioners. These accounts amount to the sum of $7374 54 cents. Peter Lee should not be compelled to take those accounts, unless he has done some act that renders it just and proper that he should be charged with them. The Court, in their opinion rendered, considers that he should be charged with them, for two reasons: 1st. " Because he consented to the charge. And, 2d. Because by taking and keeping the books and evidences of debts to the firm, he assumed and incurred a responsibility which might justly have justified the charge of perhaps more than the decree has charged."

We are inclined to the opinion that the facts of the case will not warrant the conclusion deduced by the Court.

There is no evidence in the cause, other than the decree of the Court, that Peter Lee agreed or consented to be charged with the said accounts, and it is respectfully contended that the statement made in the decree, does not warrant the conclusion that he did assent to take them....