Stone v. Fouse
Before: Heydenfeldt
Synopsis
The contract declared, on, contained a covenant for stipulated damages, and by the same contract, the parties were constituted partners. The plaintiffs prayed judgment for the liquidated damages, and for an account, and dissolution of the partnership. Defendant demurred, assigning for cause that two causes of action, the one of legal, and the other of equitable jurisdiction, could not be joined, and the District Court sustained the demurrer. Held, that this was error.
Partners cannot sue one another at law, for any of the business or undertakings of the partnership. This can only be done in chancery, by asking for a dissolution and an account.
If damages accrue in such proceedings, if liquidated, they can be settled by the court, if unliquidated, by directing an issue to have them ascertained.
Plaintiffs cannot sue on this contract in any form, without seeking an account and dissolution.
Heydenfeldt, Justice, delivered the opinion of the court. Wells, Justice, concurred.
The District Judge sustained the demurrer, on the ground that one of the plaintiffs’ propositions for relief was such as can only be sought in a court of law, and the other only in a court of chancery. In this I think he is clearly in error. Although the written contract between the parties contains a covenant for stipulated damages, yet it is by this same contract that they are constituted partners, and partners cannot sue one another at law, in respect to any of the business or undertakings of the partnership.
It can only be done in chancery, by asking a dissolution and account. In such a proceeding, if by the failure to perform covenants, damages accrue, which would be legally considered as liquidated, they could be easily adjusted by a court of equity, and no question would be left for a jury to pass upon. Or in the event the damages are held to be unliquidated, an issue would be directed out of chancery, in order to have them ascertained by a jury. It is very certain that the plaintiffs cannot sue upon this contract in any form, without seeking an account and dissolution.
Judgment reversed and remanded.
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