Raymond v. Vaughan

McAllister, J. The first point made by appellant’s counsel is, that no copartnership relation ever existed between these parties, and that consequently none existed at the time that appellee became insane. The answer to that position is, that the formation of a partnership between them on or about Sept. 15, 1874, and its continuance to the time of appellee’s insanity and while he was in the asylum, are alleged in appellee’s bill, and its formation and continuance until appellee became insane are expressly admitted by appellant in his answer to that bill. The latter is therefore precluded from questioning the existence of the partnership at the time appellee became insane. But in connection with that position, appellant’s counsel say even if a partnership did exist, it was one determinable at the will of either party. We understand that the partnership between these parties was of that character. But counsel further say, that a dissolution of a partnership at will may be inferred from circumstances, although no notice to dissolve has been given, and the rule applies although one of the partners be a lunatic. Suppose the correctness of that proposition be conceded, does it not logically follow that the converse of it must also be true, and that the continuance of the partnership after appellee’s insanity may likewise be inferred from circumstances ? We have no doubt that it may, and that we regar 1 as a determinative principle in one aspect of this case. Counsel, however, not taking that view, supplement then- proposition with the further one that the adjudication of appellee’s insanity ipso facto dissolved the partnership. Chancellor Kent says: “ Insanity does not work a dissolution of partnership ipso facto. It depends upon circumstances under the sound discretion of the court of chancery.” 3 Kent’s Com., Holmes’ Ed., 58 Marg. 65; Story on Part., § 295; Ewell’s Lindley on Part., Vol. I, p. 224. We can not afford the space requisite to an analysis of the authorities bearing upon that proposition, and it is unnecessary, for no case has been cited, and we venture to say that none can be found, which holds that where one partner is adjudged to be affected with temporary insanity, and the same party chooses to continue the partnership notwithstanding, and has made large profits, and is called upon in a court of chancery by such formerly insane party, after restoration to reason, to account to him upon equitable principles for said - profits, such same party may defend against the claim by setting up that the adjudication of insanity ipso facto dissolved the partnership. • Such a decision would be against natural justice, and shock the moral sense of the common average of mankind. How, what are the circumstances as respects this part of the case? These parties had been copartners, doing a profitable business together, from about Sept. 15, 1874, to January 20, 1876, when an adjudication was made in the county court, that appellee was affected with temporary insanity. In that very order appellant was made custodian of his person, until he should be committed to the custody of the warden of the State Hospital for the Insane. Appellant upon his own petition was thereupon duly appointed conservator of his estate. He thereby voluntarily took upon himself a most sacred judiciary relation to appellee. That relation, upon the clearest doctrine of equity, not only disqualified appellant, but positively prohibited him from securing to himself any pecuniary interest or advantage, adverse to those of appellee, his ward. Occupying that position, appellant, having theretofoz-e in no maimer signified, by act, word or circumstance, his election to terminate the partnership, goes right along with its business as before, giving out, from time to time, by express declara^ tions, that he was cazTying on that business for the benefit of appellee as well as himself. Under the relations subsisting between these paz'ties, the fact being conceded by appellant that he actually continued to carry on the business the same as before, substantially, very slight ciz-cumstances would be sufficient, if any evidence at all were necessary, to show that he was canying it on under the paz’tnez’ship z-elations. The good will was an element of vahze, and even though there had been a dissolution, the appellant might he required to account. Pine v. Ormsbee, 2 Abb. Pr., N. S. 375; Cranshaw v. Collins, 15 Ves. 218. As to good will of the business, see 2 Ewell’s Lind. on Part. 859. The next position taken in argument by appellant’s counsel is, that the discharge of appellant by the county court, upon rendering his final account there as conservator, was a proceeding in rem, and, so long as it remains unreversed, is a complete bar to the relief sought by this bill, upon the principles of res adjudieafa. That proceeding, so far as it relates to the adjudication as to the status of appellee, was, in our opinion, in the nature of a proceeding im> rem,. But the matters upon which the right to and claim for an accounting are based, were of a wholly different nature. This claim was not included in the inventory which appellant made as conservator, nor mentioned in his final accounting, upon which he was discharged. Passing upon it, was in no respect necessary to the exercise of the jurisdiction of the court in the first instance, nor was it directly involved, or a necessary incident to any adjudication made. It was a matter of mere private individual right between these two parties, over which a court of chancery has jurisdiction, and over which, if the county court had any jurisdiction, it was in no sense exclusive. Besides, appellee was at the time confined in a lunatic asylum, and had no notice, actual or constructive. The distinction between those matters which are necessarily involved in a proceeding in rem, or in one in the nature of a proceeding in rem,, as to which the decree is conclusive against all the world, and matters inter jpa/rtes, or of mere private litigation, is recognized by the authorities, and has its foundation in the nature of things. 2 Smith’s Leading Cases, 7th Am. Ed., 632; 1 Greenleaf on Ev., § 550. To hold a claim barred by a proceeding in which it was in no wise involved, and of which the party to be estopped had no kind of notice, would be to subvert and trample upon some of the most essential, fundamental principles, upon which the doctrine of the conclusiveness of judgments and decrees is based; because appellee never had his day in court as to this claim. We are of opinion that the transaction between the parties in May, 1879, at Philadelphia, falls entirely short of a settlement of the claim, so as to bar appellee’s right to an accounting. This claim and the matters out of which it arises, were none of them mentioned by either party. Being of opinion that the evidence supports the decree, and that the points made against it are not well taken, it must he affirmed, Decree affirmed.