A Practical Treatise on the Law of Partnership

SECTION V.

Of the Right to an Injunction.

ALTHOUGH, as we have already seen (a), a Court of equity will not interfere to restrain the violation of a particular covenant between partners, yet, where one party has committed such breaches of duty as would warrant a decree for a dissolution, the Court will relieve against the future acts of the offender by injunction. Thus, where one partner has involved the partnership in debt, or has himself become insolvent, the Court will restrain him from drawing, accepting, and indorsing bills in the name of the firm, and from receiving the partnership debts (b). So, it will restrain an action brought by one

(a) Ante, p. 162.

(b) Williams v. Bingley, 2 Vern. 278, Mr. Raithby's note; Master v. Kirton, 3 Ves. 74; Lawson v. Morgan, 1 Price, 303; Hood v. Aston, 1 Russ. 412; and see Seaton on Decrees, 306. In Williams v. Bingley, the bill prayed for an injunction and dissolution. On motion for a special injunction, "upon hearing the said affidavit, and the six clerk's certificate, his Lordship doth order, that an injunction be awarded to restrain the defendant, Thomas Bingley, from negotiating or accepting any bill of exchange or promissory note, except for partnership purposes, or doing anything in the name and firm of the partnership, except for partnership purposes; and from receiving and applying any money belonging to the said copartnership, except for partnership purposes, until the said defendant shall fully answer the plaintiff's bill, and this Court make an order to the contrary." R. L. 1805, B. 51. It is believed that this suit

was afterwards compromised. The usual form of the order is simply, "that the defendant be restrained from entering into any contract or contracts, and from accepting &c. any bills &c., in the name of the copartnership." Seaton, 308. Where there has been collusion between a partner and a third person, an injunction may be awarded against the latter also. See Jervis v. White, 7 Ves. 412. In Master v. Kirton, one N., a debtor of the firm, had colluded with the defendant K. The bill prayed for an injunction against the debtor, to restrain him from paying, and against the defendant K., to restrain him from receiving the money. On motion for the injunction, it was stated, that since the coming in of the answers, the partnership between the plaintiff and the defendant J. K. had been dissolved, and a deed of dissolution had been executed by all parties thereto, and the defendant K. had assigned over his interest in the partnership stocks, deeds, monies,

partner against his copartner, on a separate and private account, upon payment by the latter of the money due into Court (a). So, it will restrain the overbearing and oppression of one partner (b); or the application of partnership property to a use not warranted by the articles (c); or an execution against the partnership property for the separate debt of one partner (d).

The mere circumstance that a partner gives a partnership bill for his separate debt, may or may not lay a ground for the issuing of an injunction against its negotiation; for the person who takes it may or may not have some reason for supposing, that his debtor had a right or authority so to use the partnership name. But where it appears that an individual partner, indebted to the partnership, being unable to pay his separate bill holden by his bankers, substitutes for it, by a negotiation with them, a partnership security, made and given without the consent or knowledge of his copartners, and the bankers are aware that it is so given without their consent or knowledge; that is a case which comes within the principle upon which the Court has always been in the habit of inter

securities, and effects, to the plaintiffs; and the plaintiffs, by virtue of the power contained in the assignment from the said defendant J. K., had commenced an action against the defendant J. N. on the said bonds, in the name of the defendant J. K.; which action had been tried and a verdict obtained therein against the defendant J. N. It was therefore prayed "that an injunction may be awarded, to restrain the defendant J. N. from paying to the said J. K. the monies now due and owing from him upon and by virtue of the several bonds, bearing date &c., for securing the two several sums of &c., and interest, or any part thereof; and that the defendant J. K. may in like manner be restrained from receiving the same, or any part thereof; and also, from releasing or discharging the said J. N. from the

payment thereof, or from the action commenced by the said plaintiffs in his Majesty's Court of King's Bench, in the name of the said defendant J. K., against the said defendant J. N., or the judgment to be obtained in such action, or any execution or executions, or other proceedings to be had or taken therein by the said plaintiffs in the name of the said defendant J. K., against the said defendant J. N.; " and it was ordered accordingly. R. L. 1796, B. 428.

(a) Gold v. Canham, 2 Swanst. 325.

(b) Charlton v. Poulter, 1 Ves. 429; 19 Ves. 148.

(d) Taylor v. Field, 4 Ves. 396; Bevan v. Lewis, 1 Sim. 376. See post, Book 3, chap. 6, the concluding section.

fering by injunction (a). Accordingly, in one case, an injunction was granted ex parte, to restrain the negotiation of a bill of exchange by a holder, who had given valuable consideration for it, but who had notice that it had been improperly accepted by a partner of the plaintiffs in the partnership name (b). And in another case, where the holder took the bill after the plaintiff's partner had obtained an injunction, but before the order was drawn up, the Court not only extended the injunction to the holder, but ordered the security to be deposited with the Master, and it was afterwards cancelled by consent (c).

Where a partnership has been dissolved, and any of the quondam partners attempt to carry on the business for their own benefit, the Court will interfere by injunction (d). And if an account has been finally settled between the parties, and one partner is indemnified by the other from the debts of the copartnership, then, if the indemnified partner be afterwards compelled to pay a partnership debt, he may retain money of the other partner to an equal amount, subsequently coming into his hands, although such money be paid on the separate account of the other partner. Hence, upon payment of the money into Court, he may obtain an injunction to restrain all proceedings at law by the other partner, to recover the money so retained (e).

Upon the death of a partner, occasions will arise for injunctions between the survivors and the representatives of the deceased. Thus, where an agreement is entered into with one partner for a lease to that partner alone, but the lease is in fact for the benefit of the partnership, upon the death of the partner with whom the contract was made, the Court will grant an injunction to restrain his executor from disposing of the lease when granted, except for partnership purposes (f). On the other hand, upon motion by the representatives of a deceased partner, an injunction will be granted to restrain the surviving partner from bringing ejectment, upon his title as surviving lessee of the partnership premises (g).

(a) Per Lord Eldon, 1 Russ. 415. (b) Hood v. Aston, 1 Russ. 412.

311; 2 Swanst. 325; Fran. Max. 36.

(f) Alder v. Fouracre, 3 Swanst.

489.

(g) Elliot v. Brown, 3 Swanst.

(e) Gold v. Canham, 1 Ca. Ch. 489, n.

I. 2. It seems clear, that a Court of equity will sometimes award an injunction against one partner, without dissolving the partnership; perhaps even where the delinquency of that partner is not sufficient to warrant a dissolution. At any rate, it certainly seems to have been held, that a Court of equity will restrain the gross personal misconduct of a partner, without compelling a dissolution of the partnership before the expiration of the term. In Charlton v. Poulter (a), a bill was filed by Richard Charlton, senior and junior, partners in a brewery, charging great misconduct by the defendant, the third partner, in disobliging and turning away the customers, prevailing on the servants to leave the brewhouse, assaulting and obstructing them, causing them to quit their service, locking up the books, retaining as servants (without the plaintiffs' consent) bruisers and boxers who obstructed the trade, threatening to ruin the trade, and refusing to account. The bill prayed, that, at the end of the partnership, the stock and utensils might be valued, and that the defendant might be compelled to receive one third part of the value, and for an injunction restraining the defendant from any act to the obstruction or damage of the trade. On motion after answer for an injunction, it was ordered, that the defendant be restrained from using force, either by himself or any other person or persons, to the obstruction or interruption of the brewing trade in question, and from removing or displacing any of the servants hired or employed by the partners, or the major part of them, in carrying on the trade, without leave of the Court; and from carrying away or removing out of the counting-house belonging to the partnership any partnership books or papers relating to the said trade; and upon the plaintiffs' submission, it was further ordered, that the plaintiff's be restrained in like manner.

The opinion, that a partner's misconduct may be restrained by injunction, without the necessity of a dissolution, is sanctioned by Lord Eldon in the case of Goodman v. Whitcomb (b). The parties in that case being partners in the business of carpet manufacturers, the bill was filed for a dissolution of the partnership, and the usual accounts. One of the grievances stated in the bill was, that the defendant had sold goods at an

(a) 19 Ves. 148, n.

(b) 1 Jac. & Walk. 592.

under price, and exchanged others for household furniture, which he had appropriated to his own use. Lord Eldon said, that trifling circumstances of conduct were not sufficient to authorize the Court to award a dissolution. It was stated, that the defendant had exchanged carpets for household furniture; that, perhaps, might be an improper act; but still, there might be a thousand reasons why the Court should not do more than restrain him in future from so doing; more particularly, as it was stated by the answer, that he did it because he thought it the best thing that could be done.

I. 3. A Court of equity, however, will be reluctant to award an injunction against a partner, unless there be grounds for a dissolution; and in many cases such a course would be attended with obvious inconvenience to the parties (a). And cases may arise, where an injunction cannot with propriety be granted, whether the parties do or do not contemplate a dissolution of the partnership, and even though the party against whom the injunction is sought may have acted contrary to the spirit of the partnership arrangements. Thus, two persons agreed to work a coach from Bristol to London, one providing horses for a part of the road, and the other for the remainder. In consequence of the horses of one having been taken in execution, the other provided horses for that part which had been undertaken by the first. He afterwards persisted in providing horses for the whole journey, and claimed the whole profits. Upon a motion for an injunction to restrain him from so work. ing the coaches, Lord Eldon refused the injunction. "It is difficult," said his Lordship, "to understand how such a case can be the proper subject of the jurisdiction of this Court by injunction. If I enjoin the defendant from bringing horses to convey the coaches between the limits in question, I must enjoin the plaintiff from not bringing horses there. I cannot restrain the defendant, unless I have the means of assuring him that he shall find the plaintiff's horses ready. I should otherwise enjoin him from doing that which if he omits to do, he will be liable to actions by every person whom he has undertaken to convey from Bristol to London (b)."

(a) Marshall v. Colman, 2 Jac. & Walk. 266.

(b) Smith v. Fromont, 2 Swanst. 330. In this case Lord Eldon said,

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A Practical Treatise on the Law of Partnership: With an Appendix of Forms