that he should not be retained.' But, in the case of partnerships, the court, having in view the interests of the parties, will, if the circumstances are such as to admit of it, that is, if he is not shown to be disqualified from any cause, often appoint one of the partners as receiver, and this generally is the wisest course. But it is held that, in cases where one of the partners is appointed, he must serve without compensation." In a Tennessee case it was held that even if the partner acting as receiver used the funds received by him as receiver, in his own business from which he realized a profit, his copartners could not compel him to account for the profits, but that he would be liable only to account for the interest upon the money at a legal rate. The appointment of a receiver, as we have previously stated, operates as an injunction, but if any of the partners or other persons interfere with the property, or threaten to do so, in a manner that is likely to be productive of injury thereto, or that will lessen the efficacy of the appointment, the court will specially restrain them from so doing." 8 When a partnership is dissolved by decree the court will appoint a receiver as a matter of course upon the application of either of the partners in the course of winding up and settling the partnership business, but in an action between partners to recover a balance due from the firm, the court will not appoint a receiver to sell joint property, until the exact interest of each partner in such property is judicially ascertained. Neither will a receiver be appointed where the facts are doubtful; nor where all the equities of the complaint are denied. A decree in the settlement of a partnership should settle the whole matter so as to render further litigation unnecessary between the partners, consequently the report of a Master or referee, that omits a statement of the accounts between each of the partners, is defective," and the court will not appoint a receiver to sell property belonging to the partners jointly until it is ascertained judicially what interest each partner has in it, unless insolvency is alleged, nor even then, if the defendants offer to indemnify the plaintiff against loss from delay." 9 1 Williamson v. Wilson, Bland, 418. 2 Hubbard v. Guild, 1 Duer (N.Y. Sup. Ct.), 662; Wilson v. Greenwood, 1 Swanst. 471; Blakeney v. Dufaur, 15 Beav. 40; Brenan v. Preston, 2 De G. M. & G. 813. 3 See 3 Daniel's Ch. Pr. 1972. 4 Whitesides v. Lafferty, 3 Humph. (Tenn.) 150. Skip v. Harwood, 3 Atk. 564. For form of bill, orders, etc., see appendix. SEC. 396. Plea of account stated. Court will not generally interfere after settlement. Statute of Limitations. SEC 397. SEC. 398. SEC. 399. Releases and awards. SEC. 403. Practice, when fact of partnership is disputed. When bill in equity between partners will lie. SEC. 386. Having already considered the equitable rights between partners, we have necessarily noticed the various kinds of relief which may be prayed for by a bill filed between them in a court of equity. We have seen that a bill will lie for the specific performance of a partnership agreement, for the enforcement by injunction of the rights of a partner under a series of breaches of covenant committed by his copartner, for an account under a particular breach of covenant, for a dissolution and general account of the partnership, and, concurrently with the relief last mentioned, for a sale of the partnership effects, for an injunction from receiving the partnership moneys and negotiating the partnership securities, and for a manager or receiver. To these various heads of equity may be added those which arise in cases of fraud in mutual partnership transactions. Thus it has been held that a person who has been induced by fraudulent 2 representations to enter into partnership may file a bill for a return of the premium,' or for an account and receiver and that the partnership may be declared void. So, it seems clear, that in many cases a bill may be filed by one partner for the delivery up of a false instrument executed by the other partner, on which the partnership might be sued, even though unsuccessfully, at law. Lord Thurlow, however, refused to extend this doctrine to the case of a promissory note, alleged to have been made in the name of the firm after the dissolution of partnership. The bill prayed that the note might be delivered up to be canceled, or the plaintiff's name erased. Lord Thurlow said that, in decreeing such relief, he must determine that, whereever one party hath an instrument upon which he cannot maintain an action at law, he must be decreed to give it up; and that the bent of his inclination was against laying down the rule to this extent.◄ Parties. SEC. 387. To a bill for an account of partnership transactions, all the partners should be parties. To a bill filed for payment of a share in a partnership adventure, all the parties having shares must be parties. In a bill filed by a partner in respect of a fraud committed against him by his copartner and a third person, the latter should be joined as a defendant, if relief is sought against his acts, as where it is necessary that he should deliver up a fraudulent instrument,' or that he should be restrained from paying money to the fraudulent 1 Per Lord Eldon, Tattersall v. Groote, 2 Bos. & P. 131; Pillans v. Harkness, Colles' P. C. 442; Hamil v. Stokes, Daniel, 20; Evans v. Bicknell, 6 Ves. 174. Ex parte Broome, 1 Rose, 71. Lord Erskine, however, was of opinion that such a question would be more properly tried at law in an action for damages; and at all events, that if the fraud charged by the bill was not most fully made out by evidence, the bill should be dismissed with costs. His Lordship accordingly adopted that course in Clifford v. Brooke, 13 Ves. 132. Upon this case Mr. Hovenden observes that its circumstances are distinguishable from those alleged in Ex parte Broome, and that, though in the last-named case a bill was sustained on the ground of fraud, the relief there prayed was not merely satisfaction for money advanced, but the prayer was extended to other relief, of a nature which a court of equity alone could give. 2 Hov. Supp. 327. In Clifford v. Brooke, the prayer seems to have been for mere satisfaction of the sum advanced. 3 See Jackman v. Mitchell, 13 Ves. 581; Mayor of Colchester v. Lowten, 1 Ves. & B. 244. 4 Ryan v. Mackmath, 3 Bro. 15. And it should seem that upon the same principles a court of equity will refuse an injunction to restrain the use of the partnership name after the dissolution. In both cases a successful defense may be made at law. Opinions on this point appear to differ. See D. Sir Samuel Romilly, arg. 13 Ves. 585; D. Sir John Leach, 3 Russ. 432, line 3; and the case of Hodgson v. Murray, 2 Sim. 515; 3 id. 283; Hawkshaw v. Perkins, 2 Swanst. 543. 5 Thomas v. Leigh, 2 Vez. 312; Longe v. Younge, 2 Sim. 369; Mitf. Pl. 164; Story's Eq. Pl., chap. 4, $167; Calvert on Parties, chap. 3, § 19. 7 Ireton v. Lewis, Rep. temp. Finch. 96. partner,1 or from indorsing or negotiating a partnership bill which he` has fraudulently taken from such partner. In a bill by partners against a copartner, to have the benefit of a fraudulent transaction. clandestinely committed by the latter, not only they who were partners at the time of the fraud and have since retired, but they also who have become partners since the fraud, should be plaintiffs, if they share by agreement the stock, profits, and benefits of the old partnership. And, generally, all persons who have such an interest in the matters in litigation, as that their rights may be affected by the decree, should strictly be parties to the suit. Hence, when partnership stock is standing in the name of one of the defendant partners, the governor and company of the Bank of England must be made parties to the suit, in order that they may be restrained from transferring the stock. So, also, where the bill prays for an injunction to restrain execution against the partnership effects, the sheriff should be made a party.* Effect of bankruptcy of defendant. SEC. 388. When a partner, plaintiff or defendant, becomes bankrupt pending a suit between them for an account, the suit becomes defective, and the assignees must be brought before the court by supplemental bill.' Effect of death of defendant. SEC. 389. When a partner, plaintiff or defendant, dies pending a suit between the partners for an account, the suit becomes to that extent defective, and can only be continued by a revivor as to the representatives of the deceased party.s Assignee in bankruptcy may bring, when. SEC. 390. After the bankruptcy of a partner, a bill for an account may be filed by the assignees against the solvent partners,' or 'Master v. Kirton, 3 Ves. 74. See Alsager v. Rowley, 6 id. 748; Duff v. East India Comp., 15 id. 198. Hood v. Aston, 1 Russ. 412. 3 Fawcett v. Whitehouse, Russ. & M. 143. 4 Lubé Equity Pl. 282. The exceptions seem to be, where the interest of the party is very remote, or his rights depend upon the establishment of prior claims, or there is already before the court a person competent to protect them. Id.; and see Mitf. Pl. 165. Toulmin v. Copeland, 6 Price, 405: Scott v. Bank of England, 2 Younge & Jerv. 327. 6 Bevan v. Lewis, 1 Sim. 376. 'If, upon the bankruptcy of one of several plaintiffs, the cause be not proceeded with, the defendant may obtain the usual order to dismiss for want of prosecution. Caddick v. Masson, 1 Sim. 501. Lubé Eq. Pl. 285; Boddy v. Kent, 1 Mer. 364; Falloweson v. Williams, 11 Ves. 306. 91 Swanst. 471. their representatives and the bankrupt partner. Generally speaking, the bankrupt himself cannot file a bill relating to his estate after the bankruptcy. But it is evident that there may be exceptions to this rule. Thus, upon the bankruptcy of a firm, it seems clear that any one of the bankrupts may file a bill against a creditor and the assignees for an account, provided there be specific charges of fraud on the part of the creditor, and of collusion on the part of the assignees, and likewise of a refusal by the latter to institute a suit against the creditor for the benefit of the plaintiff.* It has likewise been laid down, though the point was not expressly decided, that a bankrupt may file a bill for an account and an injunction to restrain proceedings at law, without making his assignees parties to the suit. In the case which gave rise to this opinion, an action had been brought against the bankrupts by certain persons claiming to be creditors, but who it seems had had partnership dealings with the bankrupts, and who, as alleged by the bankrupts, would have been found indebted to them on a balance of the accounts. To a bill filed by the bankrupts against the plaintiffs at law for a discovery, an account, and payment of the balance, an injunction and general relief, the latter pleaded the bankruptcy of the plaintiffs in equity as a bar to the suit, but Sir Thomas Plumer overruled the plea, observing that these demands arising out of partnership transactions could not be adjusted in the action at law as a set-off; that although the plaintiffs were not entitled to that part of the relief which sought the 12 Mer. 119. In West v. Skip, a crossbill was filed by the assignees of Ralph Harwood against Skip and the execu tion creditors of the partnership. The bil prayed "That the said defendants may account with and deliver to the plaintiffs the possession of the said partnership brewhouse, utensils, stock, debts, and effects of or belonging to the bankrupt's estate, and may account for and pay to the plaintiffs all such money, notes, and effects, as they or the said receiver have or hath received by and out of the same, that so they may be sold, disposed of, or applied to or for the benefit of the plaintiffs, and of such other creditors of the said bankrupt, who have already proved their debts, or shall seek relief under the said commission; or in case any of the defendants have a right to a priority to the plaintiffs and the rest of the said bankrupt's joint creditors, and to have a satisfaction of any of the said de fendants' demands, then, that an ac- 3 Co. B. L. 513, 7th ed.; Tarleton v. Hornby, 1 You. & Col. 172. 4 Benfield v. Solomons, 9 Ves. 77. But see 3 Madd. 158. |