Brown v. Dennison , 49 N.Y.S. 420 ( 1897 )

Hirschberg, J.

The parties were copartners until.January. 31, 1897, under the firm name of Dennison & Brown. Their partnership agreement provided that at the close of the copartner-, ship, the defendant should take immediate possession of all of the assets, and should wind up the business and settle the affairs of the copartnership, as provided for in articles 13 and 14 of said agreement. Article 13 related to the manner in which the affairs of the firm should -be wound up in case the defendant availed himself of the privilege of purchasing his partner’s interests as conferred by article 11. This is in effect provided that if the defendant desired to purchase-such interests he should'notify his partners of such intention ten days before the termination of the copartnership; that he. should pay to the. plaintiff Brown the sum shown by the books to be due him, together with $1,200- for his good will in the business, and to the plaintiff Lent the sum shown by the books to be due him, together with $1 for his good will in the business; and that on the receipt of the moneys above specified, or a tender thereof, the plaintiffs should give to the defendant a bill of sale of their entire respective interests and good will in the partnership and business. Article 13 provided that if the defendant decided to "avail himself of the option- or privilege so ■ conferred by article. 11, he should pay to the plaintiffs the amount which should be due them within sixty days- after taking possession of the property. Article -14 provided in case the said defendant should not take advantage of the option or privilege granted, that then the debts of the firm should be paid, the- assets converted into cash as soon as practicable, without serious sacrifice, and the net property of the firm distributed among the parties according to their rights and interests as fixed by the agreement.

On the 21st of January, 1897, the defendant gave the plaintiffs due notice that he availed himself of the option' to purchase, and on the 31st of January, he took possession of the firm property. The parties thereupon adjusted, and agreed upon, the sums due the plaintiffs, respectively, as follows: There was found to be due the plaintiff Brown the. sum. of $13,551.02, and to be ‘due to the firm from the plaintiff Lent the sum of $821.11. The plaintiff Brown, however, agreed that Lent’s indebtedness should be charged against the amount due to him, thereby reducing the sum to $12,732.91, and making,- with the $1,200 for the good will, the sum of $13,932.91 as the purchase price of the property and good will required to be paid by the defendant under the terms of the option. The defendant never paid any part of this sum. On the 1st day of February, 1897, he transferred all the property of the firm to a new copartnership formed by him and his sons under the firm name of Dennison & Sons, and when at the expiration of the sixty days, the plaintiffs tendered him the bill of sale and demanded payment of the money, he refused to pay the agreed price or any part of it. The plaintiffs thereupon notified the defendant that they rescinded the agreement to sell at the price stated, and would enforce their legal rights as partners in the firm. This action is accordingly brought for an accounting and the appointment of a receiver.

The defendant, in his answer, substantially admits all the allegations herein recited, but sets up a counterclaim or offset in the sum of $20,000, and asks judgment for a balance of $6,000. Thé counterclaim or offset is based on the assertion that the plaintiffs for months prior to the close of their copartnership term were unlawfully undermining its business, procuring patronage in its line for rival concerns, and especially for a firm of which they had then agreed to become members, violating the terms of the copartnership agreement by not devoting their whole time and best . endeavors to the firm’s interests, and thereby and in other kindred ways, impairing the value of the good will of the business to the defendant’s damáge in the sum named.

.On the trial, the plaintiffs moved for an interlocutory judgment • upon the pleadings, and it was conceded that the facts as stated in the pleadings furnished all the.information in the possession of the parties and essential to the ultimate decision of the case.

The plaintiffs are entitled to the relief sought. The claim of the defendant is that the sale to him was consummated; that the title to the property passed to him, .leaving him liable for the purchase price to be recovered in an action at law, in which his counterclaim may be. interposed and litigated. Undoubtedly the defendant had under the copartnership agreement the right to the possession of the property, together with the right of selling and disposing of it; but, as against his partners, the only way he could become the sole owmer was by buying and paying for it. The contract contemplated payment in cash, and he cannot, therefore, pay for the property by merely complaining that he has agreed to give more for it than it is. worth. The contract was executory, The plaintiffs agreed to sell and to execute and deliver a bill of salé, upon- receiving payment. The defendant being lawfully in possession, agreed .to buy and pay in cash. When the time arrived for the payment and the,delivery of the bill of sale, the defendant refused to carry out the agreement, and the plaintiffs have elected to treat it as abrogated. Title cotild not be taken by an ■election to purchase without performance or its equivalent in readiness and offer to perform. Hull v. Cartledge, 18 App. Div. 61; In re Wright, L. R., 10 Ch. Div. 554.

It is alleged in the answer that the transfer to Dennison & Eons was made with, the plaintiffs’ knowledge and assent, but I •do not see .that that fact affects the situation. It occurred within ten days of the time when the defendant took possession, and consequently fifty days before the time when payment by him was compellable. The defendant claims that the provision for the bill of sale was waived by such knowledge and assent. Had the transfer taken place after the expiration of the sixty days, there might be some force in this contention, but, under the circumstances, I see no justification for the assertion that the plaintiffs waived any of their rights under the partnership agreement. The •defendant must account for the value of the copartnership property and good will which he has sold, and an interlocutory judgment will be granted, appointing a receiver and a referee.

Ordered accordingly. ■