Reiter v. Morton

Mr. Justice Green delivered the opinion of the court, November 22d 1880. We are of opinion that several of the assignments of error are sustained, and upon them this case must be reversed. The action was covenant brought by one of two partners upon articles of partnership to recover damages for the wrongful dissolution of the partnership by the defendant. The plea was covenants performed absque hoe. In answer to the defendant’s fourth point the court charged the jury that it was not necessary, in the first instance, for the plaintiff to prove performance of all the covenants on his part to be performed; and that it was not necessary that the plaintiff should have satisfied the jury that the defendant, without cause, failed to perform his covenants. On the contrary, the court charged that it was necessary for the defendant to prove that, without cause on his part, the plaintiff neglected to keep his covenants. In other words, although the very cause of action was not the mere dissolution, but the wrongful dissolution of the partnership by the defendant, the plaintiff was not required to prove it, but the burden was on the defendant to prove a rightful dissolu [240] tion. In this we think there was error. If a partner dissolves the contract for good cause he has a lawful right to do so. The technical breach is no breach at all. To show a breach which entitles the plaintiff to recover he must show a wrongful breach. It is absolutely necessary to allege a wrongful breach in his narr., and that was done in this case, not only in the narr., but also in the affidavit of claim. Being necessary to aver it, it was also necessary to prove it, unless the defendant by his plea admitted the cause of action. But he did not do this. Ilis plea directly put in issue the plaintiff’s performance. It is a very familiar rule, often held by this court, that the plea of covenants performed absque hoe puts the plaintiff to proof of performance: Martin v. Hammon, 8 Barr 270; Wilkinson v. Turnpike Co., 6 Id. 398; Turnpike Co. v. McCullough, 1 Casey 303; Zents v. Legnard, 20 P. F. Smith 192. The court having held that the burden was on the defendant, and not on the plaintiff' in the first instance, in their answers to the defendant’s fourth point and the plaintiff’s fourth point, were in error as complained of in the first and second assignments of error, and these assignments are therefore sustained. Third error. We think the dedefendant was entitled to an unqualified answer in the affirmative to his second point, though perhaps we would not reverse for that reason alone. Fourth error. The plaintiff offered and was permitted to read in evidence detached portions of an entire sentence contained in his own affidavit of claim, thus: '“That said firm engaged in the business from said date last mentioned and continued in business as a firm until the 14th day of October 1878, when said defendant * * * dissolved said partnership.” In point of fact there is no such sentence in the affidavit of claim, nevertheless the court permitted it to be read just as if it were-there and in that exact form. In reality, in the blank indicated by the stars above, the following words occur in the affidavit of claim, “ without any just cause or reason, and without any breach of duty on part of plaintiff to justify the same, wrongfully.” Now the affidavit of defence contains no single and independent admission that the firm was dissolved by the defendant’s act on October 14th 1878. The affidavit of defence vehemently denies that there was any wrongful or causeless dissolution of' the firm, but on the contrary asserts that the plaintiff violated his covenants in particulars which are specified, and thus compelled a dissolution. Now the plaintiff, by getting in evidence what purported to be a bare admission of dissolution by the act of the defendant, was enabled to make out a technical breach of the articles of partnership without giving the affidavit of defence or any part of it in evidence, withr out calling the defendant to prove it, and without putting himself on the stand as a witness to prove it. Of course if there had been a distinct and independent assertion of dissolution by the act of the [241] defendant in the affidavit of claim, and a corresponding distinct and independent admission of such dissolution in the affidavit of defence, the defendant would have been obliged to submit to these consequences. But as we have already shown there was no such assertion on the one hand nor admission on the other. To pick out words from different portions of the affidavit of claim and put them together, so as-to make a sentence and then offer them as a whole, is certainly not warranted by any precedent or any principle, and we cannot sanction it. The fourth assignment of error is therefore sustained. Fifth, sixth and seventh errors. The sixth article of the partnership agreement provided that the capital of the firm should be $12,000, to be paid in pro rata, as the need of the business should require. Of .this sum Reiter was to furnish $8000 and Morton $4000. According to this, whenever payments of capital were required to be paid in, each partner was to contribute his proportionate share of the whole amount. Such was the written agreement arrived at after much preliminary discussion. On the .trial the plaintiff offered and was permitted, under objection and exception, to prove a parol agreement made several days before the -written agreement was executed, to the effect that if he (Morton) would consent to make the capital stock $12,000 instead of $6000, he (Reiter) would first contribute his share of the capital stock to the full amount before calling upon Morton for anything in excess of the $2000 which he agreed to pay in at the commencement. Without doubt this was a material change in the terms of the written agreement. There was no allegation or proof that it was omitted to be inserted in the written agreement by fraud or mistake, and we are clearly of opinion that it was error to admit'the testimony. After it was admitted the court gave it effect in the answers to the first point of the defendant and the second point of the plaintiff, and allowed the jury to find a verdict founded upon their belief in the testimony as to the existence of the parol agreement. Now the defendant alleged as one of the-causes justifying him in dissolving the partnership that, in an emergency when additional capital was required to be paid in, he called upon Morton to pay in his proportion of the additional sum required, but that Morton refused to do it, and in consequence of that, certain maturing paper of the firm went to protest. If the parol agreement was to control the rights and duties of the partners, Morton was justified in his refusal, and Reiter was denied the benefit of that refusal as a justifying cause of his act of dissolution. This subject-matter therefore became material to the determination of the issue on trial, and it was allowed by the court to have that effect. In this also there was error. The written agreement was the law of the parties, and could not.be altered, changed or modified in this way. The case is so clear a violation [242] of the rule against permitting evidence of a previous parol agreement to change the terms of a subsequent written agreement between the parties, that it is unnecessary to cite authorities or engage in any extended reasoning upon the subject. The defendant’s first point should have been affirmed without qualification, and the plaintiff’s second point should have been refused. The fifth, sixth and seventh assignments of error are sustained. Eighth error. We think the defendant’s third point should have been affirmed without qualification, but it was substantially affirmed, and we do not see material error in the additional remarks and illustrations presented in the charge. For the same reason we should not be inclined to reverse for anything contained in the charge in answer to the plaintiff’s first point and complained of in the ninth assignment of error. We think the tenth, assignment is not sustained. It was competent, in estimating the value of the contract as the measure of damages, to show the actual condition and situation of the business and assets of the firm. Without such testimony it would be difficult, perhaps impossible, for the jury to arrive at any intelligent conclusion as to what damage the plaintiff sustained by the alleged causeless dissolution of the partnership by the defendant. Eleventh error. The answer of the court to the plaintiff’s third point as to the measure of dam- ■ ages was in the main correct. But the court went further than the point, and practically gave the jury permission to consider what would be the probable profits of the business if carried on in the future. True they sought to limit the jury as to the manner and extent to which they should allow these possible future profits to influence their present estimate of the value of the contract, but still the door was thrown open and the jury were permitted to wander into the region of speculative and conjectural profits of a manufacturing business. It would be highly dangerous to allow such a latitude of inquiry in such a case. It is absolutely impossible for any human being to say whether a business of this character will be or can be a profitable business during a period of fifteen years. The contingencies which affect that question are so numerous and so various in their character, they depend upon so many and such different influences, causes and events, that no degree of human judgment or foresight can in the least degree predetermine them or their results. A financial panic, which is but a single agency out of many, may convert a prosperous and profitable business into a source of disaster and ruin. So, too, a comparison of the cost of manufacture with the selling price of the article is utterly unreliable, for the simple reason that the elements of the computation on both sides are subject to constant fluctuations. A manufacturing business may be very prosperous one year, and quite ruinous the next, and hence all human estimate as to what will be its condition during a future period of fifteen years [243] can only be speculative and conjectural. True the court did not give so unlimited a license to the jury in this case, hut from a portion of the language used the jury might well have so inferred. In this there was error, and to this extent the eleventh assignment is sustained. We apprehend that in such an action as this the measure of damages would be the actual money value of the plaintiff’s interest in the contract of partnership at the time of the breach. What would the interest sell for to a person willing to buy and having the means to buy ? As illustrating this question the actual state and condition of the property, business and assets of the firm at the time, together with proof as to actual results accomplished, whether of profit or loss or both, in the past, would be competent evidence. Beyond this, at least so far as conjectural profits in the future are concerned, it would not be safe to go. In these remarks we do not mean in any way .to change or qualify the existing state of the law as to proof of profits in particular cases and in single transactions. There are many such when proof of the profit which might have been realized had there been no breach, is eminently proper. .What we decide now is the rule for this particular class of cases. We think it was competent to make the proof offered and rejected in the thirteenth assignment, because it was applying the test of actual experience in the past to the present value of the interest, but as there really was no evidence in the case of future profits, we would not reverse' for that reason. Judgment reversed, and a venire de novo awarded