Smith v. Tarlton

The Chancellor. The misapplication of the copartnership funds, and other violations of duty in relation to the books, property and effects of the firm, by the defendant Finley, appear to make a proper case for the granting of an injunction against him. And I cannot see that there is any validity in either of the objections raised by the counsel of the defendants, to the parol agreement of copartnership. This was not, as the counsel supposes, an agreement which was not to be performed within one year; so as to require it to be in writing, under the statute of frauds. • But it was the formation of an immediate partnership between the parties, which partnership was to continue three years unless sooner dissolved by the consent of such parties. In this state no written articles are necessary to constitute a copartnership which is to take effect immediately; although a written agreement might be necessary to bind the parties to enter into a future copartnership to commence after the expiration of a year. But even where there was a parol agreement to enter into a partnership at a future day, and specifying the terms of such copartnership, I apprehend that if the parties went into copartnership at the [338] prescribed "time, without- agreeing upon-.any new terms, the former parol" agreement would be presumed - to -constitute-the terms on which such partnership was-entered into, and carried on. Nor is the objection well taken that- this partnership was invalid because a part of the business of the firm was to purchase real estate as a site for the foundry, and to erect a building thereon for the purpose of making iron-castings, &e. The case of Henderson v. Hudson, (1 Munf. Rep. 510,) referred to by the defendant’s counsel, was not a case of partnership, or of land purchased with partnership funds for the use of a copartnership firm. It was merely an attempt to create a trust, by parol, in lands purchased by an individual in his own name, and with his own funds. But real estate purchased with partnership funds for the-use of the firm, although the legal title is- in the member or members of the firm in whose name the conveyance is'taken, is in equity considered as the property of the firm, for the payment of its debts, and for- the purpose of adjusting the equitable claims of the copartners as between themselves. (Buchan v. Sumner, ante, p. 165.) The motion to dissolve the injunction must- therefore be- denied with costs.