Boyd v. Mynatt , 4 Ala. 79 ( 1842 )

GQLDTHWAITE, J.

This case was retained under consideration, because it was supposed to involve a principle entirely novel, and with respect to which there seems to be an entire absence of decision.

The Chancellor dismissed the bill at the final hearing, because he considered the unsuccessful prosecution of the partnership business as owing, chiefly, if not entirely, to the omission by the complainant to supply the capital agreed by him to be supplied.

The default of the complainant in this, as well as in some other matters, may be conceded as sufficiently established by the proof, but yet it is clear the partnership was carried on under the articles for more than a year, and also that no settlement of the partnership transactions has been had with the assent of both parties.

Under these circumstances, if the complainant eannot enforce a settlement in equity, it is clear he is without relief. The decree dismissing the bill assumes that the complainant is not entitled to an account, because the defendant will not be more than compensated for injuries sustained by the complainant’s neglect or refusal to comply with his covenants, even when he is permitted to retain all the joint effects shown to be in his hands.

We think this view cannot be sustained, and that if it was adopted it must lead to a practice which would prove exceedingly inconvenient. In most cases of bills for the settlement of partnership accounts, the defendant would insist on compensation for the breaches of the covenants contained in the articles, and the account of the partnership transactions, would be embarrassed or delayed with the inquiry into these damages, which all authorities agree must be ascertained by a suit at law. [Story o'n Part. 327.]

The practice established in courts of equity on this subject, is to read the articles of partnership, when they contain clauses which have not been acted on, as if these clauses were expunged, or were not inserted therein. Jackson v. Sedgwick, 1 Swanston, 460, 469; Collyer on Part. B. 2, Ch. 2, §139, 2d ed.]

In the application of this rule, no injurious results can ever flow, as the party injured by a breach of stipulations contained in the articles, always has an ample remedy at law, and can' exert it equally as speedily as his adversary can obtain an account in equity. _

The case of insolvency may present ari exemption to this rule, but whether it does, is not necessary now to be determined, as it is not iuvolved in this case.

The decree must be reversed, and as there was no action by the Chancellor upon the exceptions, it must be remanded in order that an examination may be made of the correctness of the Master’s report.