Opinion
March, 1899.
Rudolph Marks, for plaintiff.
Glover, Sweezy Glover, for defendants.
I do not think that the proofs, taken as a whole, sustain the plaintiff's contention that his copartners, the defendants, have been guilty of any violation of duty towards him, especially if we accept the version of the copartnership agreement which they have testified to and which I am disposed to credit. But as it is plain that there are apparently irreconcilable differences and personal ill-will between the partners, rendering any co-operation in the business apparently impossible, a condition exists which is usually deemed sufficient to lead the court to pronounce a dissolution, even though the term of the copartnership has not expired. When, however, the plaintiff, at the very threshold of the litigation, applies for an injunction restraining his copartners from carrying on the business or in any way interfering with its property, and also for the appointment of a receiver, the court will exercise its discretion in the matter, and where it appears that the injury to the parties which would result from granting these drastic provisional remedies will be far greater than any advantage they would serve, they certainly should not be allowed. I think that such is the case here.
The partnership is a theatrical one, and is maintaining a stock company of some twenty-five or thirty actors under contracts of employment until May 1, 1899. The assets consist of some money in bank, scenery and other equipment of the stage, and an interest in the lease of the Germania Theatre, which is subject to the payment of a rental of $12,000 a year. It will thus be seen that the ability of the partnership to meet its accruing obligations, as well as the value of its property, depends very largely upon the continuance of its business. Should the injunction issue and a receiver be appointed, I am quite satisfied that there would be little, if anything, to be distributed among the partners after the claims against the business had been satisfied; indeed, the probabilities are that the debts would considerably exceed the value of the assets, for, while the fixed charges against the firm would continue, the source of reimbursement, namely, the ability to use the company and the theatre to earn money to meet such charges, would be gone.
No question is raised as to the solvency of the firm and the rights or interests of creditors are not involved. It also appears that the defendants are men of ample responsibility. The plaintiff certainly makes no question of it, so that there is no reason for the appointment of a receiver to preserve the property on the ground of pecuniary irresponsibility. Being satisfied that it would be disastrous to the defendants, as well as to the plaintiff himself, to grant the relief which the latter seeks on this motion, the question then arises, is there any method by which the business of the copartnership may be continued during the pendency of this action, subject to the supervision of the court, which would be free from the disadvantages to which attention has been called? I think that there is, under section 1947 of the Code of Civil Procedure, which provides that, "In an action brought to dissolve a partnership, or for an accounting between partners, or affecting the continued prosecution of the business, the court may, in its discretion, by order, authorize the partnership business to be continued, during the pendency of the action by one or more of the partners, upon their executing and filing with the clerk an undertaking, in such a sum and with such sureties as the order prescribes, to the effect that they will obey all orders of the court, in the action, and perform all things which the judgment therein requires them to perform."
The power thus conferred upon the court finds a most appropriate occasion for its exercise in this case, which plainly falls within the class of cases which the legislature had in mind in enacting the section. The plaintiff would thus be afforded all of the protection he may need without the defendants being subjected to any serious injury, as, in addition to the security which the undertaking to be given affords, he is in a position at any time by motion to appeal to the court, to prevent any improper conduct on the part of the managing partners designated by the order.
While refusing, as I do, to grant the injunction asked for, or to appoint a receiver, I have the power, which I propose to exercise, under the alternative provision for other relief contained in the order to show cause, on which this motion is made, to make an order under this section of the Code. The plaintiff may, therefore, take an order authorizing the copartnership business to be continued during the pendency of the action by the defendants on the conditions prescribed in the section. I will hear counsel with respect to the amount of the undertaking on the settlement of the order.
Ordered accordingly.