Pugh v. . Newbern

Brogden, I. The question of law presented is this: Has one partner the right to have the other partner arrested for an alleged wrongful conversion of partnership funds in a civil action brought for an accounting ? The general rule is that one partner cannot sue another partner at law until there has been a complete settlement of the partnership affairs and a balance struck. Graham v. Holt, 25 N. C., 300; Newby v. Harrell, 99 N. C., 149; Loan Association v. Ferrell, 114 N. C., 301; Ledford v. Emerson, 140 N. C., 288; Dowd v. Holbrook, 152 N. C., 547; Martin v. McBryde, 182 N. C., 175. Thus, in Loan Association v. Ferrell, supra, the following principle of law was approved: “It is well settled in this State, as elsewhere, that one partner cannot sue another upon a demand arising out of the partnership transaction in the absence of a settlement of the accounts.” Again, in Ledford v. Emerson, supra, Justice Hoke declares the law thus: “It is a well recognized principle that during the continuance of a partnership, one partner cannot sue another on any special transaction which may be made an item of charge or discharge in a general partnership account. This has sometimes been put on the ground that such a suit would necessitate that the party complained of should be both plaintiff and defendant. But I apprehend a reason of more moment is that as to such a transaction, till a full accounting is had, it cannot be ascertained or declared what portion of such claims belong to the one or the other; and so it is true that one partner, during the continuance of the partnership, cannot ordinarily bring trover or trespass against the other by reason of acts concerning partnership property, unless the same be destroyed or removed entirely beyond the reach or control of the complaining party, for one has no more right to deal with the property than the other.” This general rule is supported by the decided *261 weight of authority. Many of the leading authorities are collected in a valuable note found in 21 A. L. R., p. 12. There are, however, well established exceptions to the general rule. A partner may maintain an action at law against his copartner upon claims growing out of the following state of facts: 1. Claims not connected with the partnership. 2. Claims for an agreed final balance. 3. Claims upon express personal contracts between the partners. 4. Failure to comply with an agreement constituting a condition precedent to the formation of the partnership. 5. Where the partnership is termihated, all debts paid, and the partnership affairs otherwise adjusted with nothing remaining to be done but to pay over the amount due by one to the other, such amount involving no complicated reckoning. 6. Where the partnership is for a single venture or special purpose, which has been accomplished, and nothing remains to be done except to pay over the claimant’s share. 7. When the joint property has been wrongfully destroyed or converted. 8. When one partner has been guilty of fraud in contracting the debt' or in incurring the obligation or by concealing the property or by other device defeating the rights of the complaining party. Newby v. Harrell, supra; Ledford v. Emerson, supra; Martin v. McBryde, supra; Owen v. Meroney, 136 N. C., 475. In the ease now under consideration the trial judge found no facts, but it clearly appears from the’pleadings that there are serious disputes of fact between the parties, the settlement of which will require a more or less complicated reckoning. By fair interpretation, the complaint is based upon the, theory of an accounting between the parties. There is no allegation of fraud in the making of the contract itself, as appeared in the case of Ledford v. Emerson, supra, and, as the entire case rests upon the theory of an accounting and an adjustment of contrary demands between the parties, it does not fall within the boundaries of any of the exceptions recognized by law. Hence, it cannot be ascertained what portion of the money in controversy belongs to each of the parties or whether, indeed, any part thereof would belong to the plaintiff. Therefore, we are of the opinion that the arrest of the defendant was improvidently granted, and that the trial judge was in error in refusing to vacate the order of arrest made in the cause. Reversed.