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KARRICK v. HANNAMAN.

decided: November 29, 1897.

KARRICK
v.
HANNAMAN.



APPEAL FROM THE SUPREME COURT OF THE TERRITORY OF UTAH.

Author: Gray

[ 168 U.S. Page 333]

 MR. JUSTICE GRAY, after stating the case, delivered the opinion of the court.

Much of the argument for the appellant was devoted to a discussion of conflicting evidence, which is not open to examination by this court, its authority upon appeal from the Supreme Court of a Territory being limited to the question whether the facts found by that court support its judgment. Haws v. Victoria Co., 160 U.S. 303; Harrison v. Perea, ante, 311.

The principal question of law discussed in the opinion of the Supreme Court of the Territory, and at the argument in this court, was whether a partnership, which by the copartnership articles is to continue for a specified time, can be dissolved by one partner at his own will without the assent of the other before the expiration of that time.

It is universally conceded that a contract of partnership, containing no stipulation as to the time during which it shall

[ 168 U.S. Page 334]

     continue in force, does not endure for the life of the partners, or of either of them, nor for any longer time than their mutual consent, but may be dissolved by either partner at his own will at any time. Peacock v. Peacock, 16 Ves. 49; Crawshay v. Maule, 1 Swanst. 495; Meilson v. Mossend Iron Co., 11 App. Cas. 298; 3 Kent Com. 53; Story on Partnership, ยง 269.

Upon the question how far the status or relation of a partnership, which by the partnership agreement is to continue for a certain number of years, can be determined by one partner without the consent of the other before the expiration of that time, there has been some difference of opinion.

The principal reasons and authorities in favor of the position that a contract of partnership for a definite time cannot be dissolved at the mere will of one partner are stated or referred to in the opinion of the Supreme Court of the Territory in this case, reported in 9 Utah, 236.

Those which support the opposite view may be summed up as follows: A contract of partnership is one by which two or more persons agree to carry on a business for their common benefit, each contributing property or services, and having a community of interest in the profits. It is in effect a contract of mutual agency, each partner acting as a principal in his own behalf and as agent for his co-partner. Meeham v. Valentine, 145 U.S. 611. Every partnership creates a personal relation between the partners, rests upon their mutual consent, and exists between them only. Without their agreement or approval, no third person can become a member of the partnership, either by act of a single partner, or by operation of law; and the death or bankruptcy of a partner dissolves the partnership. 3 Kent Com. 25, 55, 58; Wilkins v. Davis, 2 Lowell, 511. So an absolute assignment by one partner of all his interest in the partnership to a stranger dissolves the partnership, although it does not make the assignee a tenant in common with the other partners in the partnership property. Bank v. Carrolton Railroad, 11 Wall. 624, 628; Marquand v. New York Manuf. Co., 17 Johns. 525, 528, 535. No partnership can efficiently or beneficially

[ 168 U.S. Page 335]

     carry on its business without the mutual confidence and co-operation of all the partners. Even when, by the partnership articles, they have covenanted with each other that the partnership shall continue for a certain period, the partnership may be dissolved at any time, at the will of any partner, so far as to put an end to the partnership relation and to the authority of each partner to act for all; but rendering the partner who breaks his covenant liable to an action at law for damages, as in other cases of breaches of contract. Skinner v. Dayton, 19 Johns. 513, 538; 3 Kent Com. 54, 55, 62; Cape Sable Co.'s Case, 3 Bland, 606, 674; Monroe v. Conner, 15 Maine, 178, 180; Mason v. Connell, 1 Whart. 381, 388; Slemmer's Appeal, 58 Penn. St. 168, 176; Blake v. Dorgan, 1 Greene (Iowa), 537, 540; Solomon v. Kirkwood, 55 Mich. 256, 259, 260. According to the authorities just cited, the only difference, so far as concerns the right of dissolution by one partner, between a partnership for an indefinite period and one for a specified term, is this: In the former case, the dissolution is no breach of the partnership agreement, and affords the other partner no ground of complaint. In the latter case, such a dissolution before the expiration of the time stipulated is a breach of the agreement, and as such to be compensated in damages. But in either case the action of one partner does actually dissolve the partnership.

A court of equity, doubtless, will not assist the partner breaking his contract to procure a dissolution of the partnership, because, upon familiar principles, a partner who has not fully and fairly performed the partnership agreement on his part has no standing in a court of equity to enforce and rights under the agreement. Marble Co. v. Ripley, 10 Wall. 339, 358. But, generally speaking, neither will it interfere at the suit of the other partner to prevent the dissolution, because, while it may compel the execution of articles of partnership so as to put the parties in the same position as if the articles had been executed as agreed, it will seldom, if ever, ...


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