Smith v. Proskey

Patterson, J. (dissenting):

I dissent from the conclusion of the court in this case. The appeal involves only the construction of the agreement for the dissolution of the partnership that existed between Harlan P. Smith, the plaintiff’s testator, and the defendant. The concrete question with respect to the chattels replevied is, whether under that agreement such a title to those chattels was conferred upon Smith as would, upon his death, prevent the defendant, as surviving partner, *24retaking them for the purpose of proceeding with, the liquidation of the affairs of the firm.

It seems to me that the proper construction of the agreement requires an affirmative answer to that question. Smith was made the liquidating partner, and. all the stock in trade, book accounts and; other assets of the firm were vested in him for that purpose. If the agreement stopped there, there would be no difficulty in upholding the defendant’s contention that, on the death of Smith, the defendant had the right to proceed with the liquidation and to repossess himself of the assets and book accounts for that - purpose. But much more was contemplated and provided for by the agreement. The plaintiff’s testator was to reduce the assets, the stock in trade and book accounts, to cash. He was to discharge all the existing obligations of the firm, including all sums of money which he had paid into the firm, with interest thereon, if he should be entitled by law to such interest. That does not refer merely to loans of money that might have been made, but it relates equally to capital that may have been paid into the firm by Smith. There is nothing in the agreement which required the plaintiff’s testator to pay to the defendant any money he might have paid in. .The defendant had no interest after the liquidation should be completed, except under the clause of the agreement which provides that after the debts shall be paid and the plaintiff’s testator shall have been repaid with interest any moneys which he might have paid into the firm, “ the net profits of the business to date shall then be ascertained according to law and equally divided between the parties hereto;” Furthermore, under this agreement, provision is made for transferring to the defendant in his own right that which otherwise would have been an asset of the firm in liquidation. The agreement provides that the lease of the premises now occupied by the firm at Ho. 849-853 Broadway shall be assigned from this date to Mr. Proskey, and he may carry on the business there under the same or any other firm name-as he may prefer.” Here the lease of the premises and (by the right to use the firm name) the good will of the business are transferred to the defendant. There appears to have been a' complete severance of the rights and of the relations of the partners under this agreement. The liquidation was to be conducted absolutely by the one partner. The lease of the premises upon which the *25business had been conducted and the right to use the firm, name was transferred to another. Manifestly the plaintiffs testator under this agreement stood in some other relation to his copartner than that of a mere liquidator. U nder that agreement he was entitled to the possession of the assets and the book accounts and the stock of goods as security for the payment to himself after the debts of the firm were discharged of whatever moneys he may have put into that concern without liability on an accounting for anything the defendant may have contributed to the firm. The defendant’s interest in the liquidation was confined expressly to a share in the net profits.

I think it was within the contemplation of the parties that the stock in trade, book accounts and the other assets of the firm should not go back into the possession of the defendant; and that for the relinquishment of his right to that possession he received the assignment of a lease and the right to do business under the firm name if he wished to continue its use for his own benefit.

There is no question in which creditors are interested. The whole subject is merely one of construction. What did the parties intend ? I am of the opinion that the demurrer was well decided at the Special Term.

Hatch, J., concurred.

Judgment reversed and complaint dismissed, with costs, with leave to appellant to apply to Special Term for extra allowance.