John Bracken, plaintiff in error, v. Michael Kennedy et al., defendants in error, 3 Scam. 558

Caton, Justice, delivered the opinion of the Court: This was a bill in chancery filed in the La Salle Circuit Court, by the complainant against the defen dants, for an account among partners. The bill states that in July, 1837, the complainant and defendants entered into partnership as canal contractors, and, as such partners, contracted with a canal company in Virginia, for the construction of

section .120 of their canal, and that they completed said

section 120 in August, 1838. That during the progress of the work, the complainant and Brady had the principal management of its construction, while most of the time Kennedy was absent. That at the same time Kennedy had an individual contract for the construction of sections 118 and 119 of the same canal, and Kennedy employed the complainant to superintend the completion of these sections. That this individual contract of Kennedy was unprofitable, and, in the course of its progress, became indebted to the copartnership section, 120, to about $8000, for work and labor éxpended on sections 118 and 119.

That the whole estimate for the company section, 120, was $32,320.90, including the work done on Kennedy’s individual sections, and that the costs of the same were $23,783.82, leaving a balance of profits to be divided among the partners of $8437.08. That the complainant has accounted with, and paid over to Brady his third of said profits ; and that there is now due from Kennedy to the complainant the sum of $3959.03, arising from said partnership transactions. That Kennedy has drawn estimates on the works, and has drawn his last on his individual contracts.

That no account has been taken or rendered between the said partners, and that Kennedy refuses to account. The bill prays that an account may be taken, &c. To this bill a demurrer was filed, which was sustained, and the bill dismissed. The first assignment of error is upon the decision of the Court in sustaining the demurrer, and this is the principal question in the case. In matters of controversy or difficulty between partners, it is now most usual, and by far the most convenient, to resort to a court of equity for their final adjudication and settlement.

The practice of this court is much better adapted to unravel, and definitely settle such complicated questions as frequently arise among partners than a court of law; and it is/now one of the most usual proceedings to be met with in courts of equity. It is not unusual that almost the entire proof of the merits of a case between partners is locked up in the bosoms of the parties themselves, or is contained in books and papers in the possession of one or the other party, and this court can afford the only key to the disclosure of the one, or the production of the other.

Here, either party may compel the other to purge his conscience, on oath, and declare the truth ; and the court will compel the production of all such papers and books, as may be necessary to elucidate the rights or liabilities of the parties. It is for this reason, also, that courts of equity have frequently exercised a concurrent jurisdiction with courts of law, in long and intricate accounts, running on both sides, between parties who are not partners, and have no interests in common.

It is true that courts of law still pretend to afford a remedy in case of difficulty between partners, by the action of account, but it is so incomplete and unsatisfactory, that it is now nearly obsolete; and the complaining partner almost universally lays his complaint before a court of chancery, where he finds a prompt and efficient remedy, from the superior facilities which it possesses of doing complete justice between the parties.

In a bill of this character, the existence of the partnership, the transaction of business by the firm, and no account among its members, are prominent features, and where they all appear, I am not prepared to say that the bill ought not in all cases to be retained. In this case, the bill shows that there was a special and limited partnership, the particular object of which is stated in it, as well as the nature and amount of the business transacted by the firm, and that no account has been had between the complainant and the defendant Kennedy, who refuses to account.

Here, then, is such a case as requires the interposition of a court of chancery, to settle and adjust the rights and claims of the several partners. It is true that the bill states that the complainant and Brady have settled as between themselves, and that the complainant has succeeded to all of the rights and interests of Brady in the partnership business ; but this does not make it the less necessary that an account should be had between the complainant and Kennedy, to settle their respective rights; and to accomplish this, it was necessary to make Brady a party to the bill.

The bill also states that the partnership advanced to Kennedy, one of its members, in work, and labor, &c., to the amount of some $8000, which is nearly the extent of the whole partnership profits, thus showing substantially that Kennedy had received nearly all of the profits of the work on

section 120. In what way could this be recovered back by the other members of the firm, or in what way could he be compelled to account for these advances, unless by the mode here adopted ? One member of a partnership cannot sue the firm at law for advances made by him to the joint concern ; nor can the firm sue an individual partner for anything that he may'have drawn out of the joint stock, or proceeds, no matter how much more than his share it might have been; and the reason is, that one man cannot occupy the double position of plaintiff and defendant at the same time.

The aid of this court is just as necessary to settle the account of these advances, as it is to settle the accounts arising out of the immediate transactions of the special business of the partnership. The bill then being sufficient in substance, although not so particular as might be desirable, the demurrer should have been overruled. This disposes also of the second error. The third error questions the right of the defendant to file a demurrer, when he was under a rule to answer. This he had a right to do. The filing either an answer, plea, or demurrer, was a compliance with the rule.

Had the defendant asked further time to answer, and upon that special application had it been granted him, it might have been improper to file a demurrer, without the leave of the Court; but even had such been the case, it would be too late now to raise the objection. The decision of the Court below is reversed, and the cause remanded, with directions that the complainant be permitted to amend his bill, if he thinks proper, and with leave for the defendant to answer. Decree reversed. 1 Story’s Eq. 610.