Opinion
October, 1897.
C.L. Davis, for plaintiff.
Dailey, Bell Crane, for defendant.
On May 12, 1894, the plaintiff, defendant and one Hazen entered into articles of copartnership for the carrying on the business of manufacturing and selling "vermouth" and other cordials. Scott and Hazen contributed the stock, fixtures and good will of the business theretofore carried on by them, and plaintiff agreed to contribute $2,500, of which $2,000 was to be paid at once, and $500 when required. The agreement contained a special provision that plaintiff might withdraw from the firm by giving his partners five months' written notice of his intention so to do, at the and of which time he was to receive a return "from the partnership" of the capital contributed. This means a return from Scott and Hazen to whom the money was given. The purpose is manifest throughout, that five months after the plaintiff elected to retire from the firm, he was to be restored to the condition he occupied before he entered it, and this intention of the parties, gathered from their writings, acts and conduct, must, as between them, be regarded in construing the contract. 5 Wait's Act. Def. 114, 115; 2 Pars. Cont. (6th ed.) 494. Even if the language of the promisors might be understood in more senses than one, it is to be interpreted in the sense in which they had reason to suppose it was understood by the promisee. Ransom v. Wheelwright, 17 Misc. 141. Hazen became dissatisfied, and filed a bill for the dissolution of the firm. Plaintiff placed the suit in charge of his attorney, and a settlement was effected by which it was agreed that Hazen should leave the firm and transfer his interest therein to the remaining partners. The agreement bears date July 21, 1894, and contains mutual covenants. The retirement of Hazen, the practical "vermouth" manufacturer of the concern, did not assist the business, which continued to decline until it became a total wreck. The legal effect of the dissolution agreement was to discharge Hazen from the covenant to refund the plaintiff's advances, but did not impair the latter's right of action against the defendant, who by the same instrument consented to such discharge. Code, § 1942. The effect, therefore, of Hazen's retirement was to leave the partnership agreement in other respects unaffected by the change and thereafter binding upon the remaining partners, and as a consequence the obligation to restore the plaintiff's contribution of capital devolved upon the defendant alone. Clarke Cont. (Hornbook ed.) 612, 615. Indeed, the plaintiff testified that this understanding was distinctly had with the defendant, and that he signed the dissolution agreement in consideration of the defendant's express promise that he would individually perform the covenant to return his money. The defendant had the undoubted right to bind himself in this manner. Story Part., § 192. Though the complaint contains much extraneous matter that might well have been omitted, the action is founded on the special provision of the articles to return to the plaintiff his contribution of capital, and the obligation of the defendant to answer for its performance. The agreement to restore the plaintiff's money may have been an indiscreet one for the defendant to make, but it was evidently the inducing cause of the contract, not made to depend upon the success or failure of the enterprise or on any condition other than the plaintiff's pleasure, signified by the service of a five months' notice, which was given on August 22, 1894, and suit was brought after the specified time had expired. While partners cannot sue one another at law for any of the business or undertakings of the partnership, they may so sue each other for a breach of any distinct covenant in the partnership agreement. Glover v. Tuck, 24 Wend. 153; Paine v. Thacher, 25 id. 450; Wills v. Simmonds, 8 Hun, 189; Madge v. Puig, 12 id. 15; Bagley v. Smith, 10 N.Y. 489; and see Mawatt v. Londesborough, 3 E. B. 307; 4 id. 1. And where adequate relief may in such case be obtained equity will not interfere. Duncan v. Lyon, 3 Johns. Ch. 360; Kinloch v. Hamlin, 2 Hill. Ch. 19; Hunt v. Gookin, 6 Vt. 462. In short, whenever the cause of action is distinct from the partnership accounts, and does not involve their consideration, an action at law will lie. 1 Wait's Law Pr. 552. Courts cannot make contracts for parties, but must enforce those made by them and as they made them. True, the plaintiff did not furnish the entire capital he agreed to contribute, but this furnishes no justification for keeping what he did pay in, for such is contrary to the spirit of the agreement. While the defendant and Hazen might have insisted upon strict and full performance by the plaintiff as a condition precedent, they had the right to, and did, waive such performance when they accepted what he tendered, with knowledge that he could not contribute all he agreed, for the substantial reason that he could not raise the money. The only effect, therefore, of failing to pay in all the capital he agreed to contribute was to make him a debtor to the firm to the extent of the amount unpaid (Story Part., § 203); but in view of the special covenant to return what was paid in, and the plaintiff's election to enforce such return, this phase of the case, under the pleadings, is material now only as limiting the amount to be refunded. The defendant must be credited with $57.65 which the plaintiff received from the firm, and the latter is entitled to judgment for $1,542.35, with $246.93 interest, aggregating $1,789.28.
Ordered accordingly.