Cottle v. Leitch
Before: Sawyer
Synopsis
Dissolution of Partnership.—Where one partner has the management of the partnership affairs, and. makes false entries in the books, and defrauds his co-partner of a portion of the partnership receipts, and retains the same to his own use, the partner thus defrauded is entitled to a dissolution of the partnership and an accounting, even if the partnership was by agreement to continue for a fixed term and the term has not expired.
Idem.—If in such a case there has been an accounting between the partners, and the partner defrauded does not discover the fraud until after the accounting, he may sue for an accounting and dissolution, and on the trial may surcharge and falsify the account, without demanding a reaccounting prior to tho commencement of the action.
Accounting between Partners.—Whenever a partner is entitled to a dissolution, the talcing of an account is necessary, and follows as a matter of course.
By the Court, Sawyer, C. J. : This is an action for an account and dissolution of a partnership. The plaintiff alleges a partnership in a ferry; that under an arrangement between the parties the ferry was under the exclusive management and control of defendant during a period of three years, ending March 19th, 1865; that during this period the defendant had exclusive charge of the receipts and expenditures, collected the tolls, and kept an account thereof, claiming it to be a correct account of the affairs of the firm; that at the end of three years the ferry, in pursuance of said arrangement, was surrendered to the plaintiff to manage in the same manner for an equal period of time; that the defendant at the expiration of the three years’ management by him, pretended to settle with plaintiff on the basis of the accounts as kept by himself, and on said 19th of March, 1865, made an entry in said books of account in the firm name, stating that the accounts were settled to date; that plaintiff is unable to read and write, and he did [439]not discover that said accounts were false until after he took charge of said ferry; that since he has had charge of said ferry he has had said books critically examined by competent parties, and that he has satisfied himself, and he so avers the facts to be, that said defendant during the time he had charge of said ferry did not keep fair or correct accounts of the receipts and expenditures; but, on the contrary, that the amount of receipts entered and accounted for are much less than they really were, and that defendant has fraudulently retained to his own use large sums which belonged to plaintiff. An account and dissolution is asked. The defendant answered, denying the allegations relating to the false accounts, fraud, etc. At the trial, after the plaintiff closed his testimony, the defendant moved for a nonsuit, on the following grounds:
First—There is no proof of a demand for a reaccounting prior to the commencement of this action.
Second—The proof offered by plaintiff is insufficient to entitle him either to an opening of the account, or to surcharge and falsify the account settled between the parties prior to the commencement of the action.
Third—There is no evidence of an accounting by the plaintiff to the defendant of the copartnership affairs from Mai’ch, 1865, and thence hitherto and during the time that plaintiff has had the entire control of the copartnership property.
The motion being argued and submitted was sustained by the Court on the first ground, and it overruled the same on the second and third grounds.
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