Gusdorff v. Schleisner

Roberts, J.,

delivered the opinion of the Court.

The facts out of which this controversy arises, are substantially, that on the 6th of February, 1896, Lewis A. Gusdorff, the appellant, and Solomon Schleisner, the appellee, agreed in writing under seal, to become partners in the general merchandising business for the term of three years, commencing on the first of July, 1896, and ending on the 30th day of June, 1899; that by the terms of said agreement the respective sums which each partner was to con-. *372 tribute to the partnership capital, was expressly stipulated as well as the times when said sums were to be paid; that by the fourth paragraph of said contract of partnership it was agreed, “that the capital of said partnership shall consist of the sum of thirty thousand ($30,000) dollars, which shall be brought in by the said partners in the following proportions, namely: The sum of ten thousand ($10,000) dollars by the said Solomon Schleisner, and ten thousand ($10,000) dollars by the said Lewis A. Gusdorff, and the said sums so advanced by the said partners shall be paid into the Third National Bank of Baltimore, to the credit of said partnership, on or before the fourth day of August, eighteen hundred and ninety-six, and the said Lewis A. Gusdorff shall contribute an additional ten thousand ($ 10,000) dollars to said partnership on or before the thirty-first day •of December, eighteen hundred and ninety-six, by deposit-ring the same in the bank aforesaid to the credit of said -partnershipand further by the eighth paragraph of said .agreement it was agreed, “that said partners shall not, without the consent in writing of the other, employ any of -the moneys, goods or effects belonging to the said partnership, or engage the credit thereof in any matter or thing ■except on the account of or for the use and benefit of the .said partnership ; nor shall said partners, by himself, or with .any other person or persons whomsoever, during the continuance of the said partnership, directly or indirectly engage in any other mercantile pursuit, but his time and attention shall be devoted to the partnership which are by these articles formedThe bill prays for relief as follows :

1st. For a dissolution of the copartnership existing between the appellant and the appellee.

2nd. For a specific performance in part of the articles of •copartnership, to the effect that the appellee be required to ■contribute to the copartnership capital the sum of $8,000 .in accordance with the terms of said agreement.

3rd. For the appointment of a receiver to take charge of Tthe ^partnership assets.

*373 4th. For the writ of injunction to restrain the appellee from withdrawing from certain banks named in the bill his personal funds standing to his credit therein and from disposing of any of the partnership assets in any manner whatever.

Upon filing the bill, an injunction was issued and a receiver appointed. The appellee answered the bill denying all its material allegations, and demurred to the jurisdiction of the Court below to grant specific performance of the contract of copartnership and to restrain the appellee from withdrawing his individual deposits from the banks named in. the bill. The Court sustained the demurrer and dissolved the injunction, and from the action of the Court below this appeal is taken. The appellant in his printed brief says, “ The only contest raised by the demurrer to this bill and decided by the Court below, is as to the power of the Court to issue an injunction, restraining Schleisner from drawing his $8,000, or thereabouts, out of bank and converting it to his own use, until the further order of the Court; and that is the sole question for this Court to decide. ”

In passing upon this contention it will be necessary for us to examine briefly some of the other questions named in the bill, as throwing light upon the proposition conceded to be the leading and only inquiry on this appeal. There is exhibited with the bill a duplicate of the articles of co-partnership, certain paragraphs of which we have set out in this opinion, that the same may assist in the presentation of the object and purpose sought to be accomplished by the bill. The truth of the facts set out in the bill, where they are properly pleaded, will not be questioned, but where the bill alleges a fact expressly negatived by the contract of partnership filed with the bill, such representation of fact cannot be said to be properly pleaded, nor is it entitled to be accepted as true. On the contrary, the-bill and exhibit being read and construed together, show very clearly that “ said partners shall not, by himself, or with any other person or persons whomsoever, during the continuance of the *374 said partnership, directly or indirectly engage in any other mercantile pursuit, but his time and attention shall be devoted to the partnership which is by these articles formed.” So that the meaning sought to be placed upon the clause of the articles of copartnership just quoted, is not even for the purposes of pleading to be considered as admitted, for the manifest reason that the concession of the allegation contained in the bill would be an express denial of the clause just referred to. Such a construction cannot be permitted, as the copartnership agreement is the sole foundation upon which the bill rests and from which the proceeding takes its source. According to the statement of facts contained in the bill no benefit can now reasonably be expected to result to either party by the specific performance of the contract of copartnership, as it is conceded that the appellee is so far physically disabled from disease as to be incapable of engaging in any business, or the supervision of the same; and it is further admitted by the appellant, that in consequence of his being engaged in other business, as a member of the firm of Gusdorff Bros., he is unable to give his personal attention and supervision to the business of the firm of Sol. Schleisner & Co. So that we are here confronted with a state of case in which neither partner is able to manage the affairs of the firm, notwithstanding the articles of copartnership stipulate that “ during the continuance of the partnership, neither party shall, directly or indirectly, engage in any other mercantile pursuit, but his time and attention shall be devoted to the partnership which is by these articles formed.” It is a universal rule of equity that he who asks for a specific performance must himself be in a condition to perform. Morgan v. Morgan, 2 Wheat. 290 . Mr. Pomeroy says it is well settled, as a general rule, that an agreement to enter into a partnership, which would be literally performed by executing the partnership articles, or to carry on a partnership already established, will not be -specifically enforced. Pomeroy on Contracts (Specific Perform.), sec. 290; 2 Lindley on Partn., 5 ed. 476; Fry *375 on Specif. Perform., 3 Am. ed. 681; Scott v. Rayment, L. R. 7, Eq. 112; Buck v. Smith, 29 Mich. 166 ; Meason v. Kaine, 63 Pa. St. 335; Sichel v. Mosenthal, 30 Beav. 371.

The first item of relief prayed for is that the existing partnership between the parties to this proceeding be dissolved, and this is asked by the appellant upon the admitted fact that the appellee’s physical condition is such that it is impossible for him to engage in any business, and as conceded by the bill the appellee upon ascertaining the condition of his health informed the appellant “ that the only course to pursue would be to wind up the business at once, &c., suggesting an assignment for the benefit of creditors as the best thing to do.”

The various sums of money which the appellee had deposited in the banks heretofore mentioned were still in those banks at the time the bill was filed, and would necessarily have passed to the hands of any trustee named by said partners for the benefit of the firm’s creditors, but this proposition was declined by the appellant, who preferred the appointment of a receiver and the granting of an injunction, and as a result this bill was filed. The bill contains no allegation of the insolvency of the appellee, and it is a reasonable inference that if he had been insolvent the appellant would not have entered into a copartnership with him for the term of three years commencing on the first day of July, 1896, and which employed a capital of $30,000. The bill was filed on the 19th of August, 1896, fifty days after the partnership was to become an active business concern. Each partner, prior to the fourth of August, 1896, contributed to the capital of said partnership the sum of $2,000, and neither partner has made any further contribution to the capital, although the appellant claims to have been always ready and willing to contribute such sum or sums as he had contracted to pay, but it is charged that the appellee has failed to contribute the amount which he has, by the terms of said contract agreed to pay, although repeatedly requested so to do ; and it is further charged that *376 the appellee has incurred, or sought to incur on the credit of said firm, liabilities to a large amount, and that the appellant has always been able and willing to comply with his part of said articles of copartnership. The facts thus enumerated sufficiently explain the character of the controversy. Speaking of a proceeding of this nature, Mr. Justice Martin, delivering the opinion of this Court in Geiger v. Green, 4 Gill, 475 , said, “ It is an acknowledged principle in the exercise of that branch of equity jurisprudence, which respects the specific performance of contracts, that it is not a matter of right in the parties, but the application is addressed to the sound and reasonable discretion of the Court; it is granted or withheld according to the circumstances of the case, and a Court of Equity must be satisfied that the contract sought to be enforced is fair and just, and reasonable, and equal in all its parts, and founded on an adequate consideration, before the Court will interpose with this extraordinary assistance.” Measured by the requirements of this rule, should this application recommend itself to the favorable consideration of a Court of Equity ? We think not. The bill fails to satisfactorily show that the appellant is without a full and adequate remedy at law, or that the appellee is unable to respond in damages for such loss as the appellant may have sustained by the conduct of the appellee in failing to keep and observe the articles of copartnership. Nor is the appellant entitled to relief in this proceeding, because of the failure of the appellee to give to the partnership affairs his personal attention and supervision, since, in this particular respect, the appellant is equally at fault in the observance of the terms of his contract. It may be contended that one partner cannot sue the other at law in an action of account, unless there be an account stated, yet it is equally so, that he may in covenant, if the articles be under seal, and any covenant or agreement in them be violated. Wadsworth v. Manning et al., 4 Md. 70 .

In conclusion and as decisive of the qtiestion which the *377 appellant charges is “the sole question for this Court to' decide,” we think the Court below correctly determined that it had not jurisdiction to restrain the appellee from dealing with his individual deposits as his own property. In Spiller v. Spiller, 3 Swans. 557, the bill prayed specific performance of an agreement to sell certain copyhold premises. Lord Eldon, delivering the opinion of the Court, said, “ I wish it to be understood as my opinion, that, in general, on a bill for the specific performance of an agreement to sell, the plaintiff is not entitled to restrain the owner from dealing with his property; a different doctrine would operate to control the rights of ownership, although the agreement was such as could not be performed.” We think the rule thus announced equally applicable to the case at bar. There is nothing in this, case to justify the granting of the writ of injunction, and we have, after the most careful examination, failed to discover a single authority sustaining any such view.

(Decided March 31st, 1897.)

As a consequence of the reasons heretofore assigned the order of the Court below sustaining the demurrer to the bill of complaint and dissolving the injunction is hereby affirmed with costs.

Order affirmed with costs.