Hoffman v. Hauptner — 135 A.D. 148

Majority

p. 148

George C. Hoffman, Respondent, v. Charles Hauptner, Appellant.

First Department,

December 17, 1909.

Headnote

Partnership — dissolution by time limit — accounting — receiver pendente lite.

No suit to dissolve a partnership is necessary where it has ceased to exist by reason of the expiration of the time set in the articles of partnership; but a suit for an accounting lies.

A receiver should not he appointed pending an accounting where the plaintiff has no claim .upon the firm, but is deeply indebted thereto, and has refused to abide by a clause in the partnership agreement providing that on dissolution the affairs shall be wound up by appraisers representing all parties.

p. 149

Appeal by the defendant, Charles Hauptner, from an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the 7th day of October, 1909, appointing a receiver pendente lite of the late firm of Charles Hauptner & Co.

Henry B. Wesselman of counsel [James E. Bennet, attorney], for the appellant.

Herbert H. Maass, for the respondent.

Charles' Hauptner and George 0. Hoffman were members of a partnership, Charles Hauptner & Co., under written articles of partnership, which expired by limitation on the 31st of August, 1909, but which by agreenient was extended by three several stipulations to the thirteenth day of September.

The articles provided that at the expiration or. earlier termination of the agreement, “ and within ten days thereafter, the several partners, or their respective executors, administrators or personal representatives or assigns, shall appoint an appraiser to represent the interest or estate of said partners respectively; and the appraisers so chosen may select a third, and said appraisers shall proceed forthwith to fix tlie value of the assets of said business, including stock, fixtures, good will, claims and bills receivable, after deducting therefrom all liabilities of the firm, and at the valuation so fixed said Charles Hauptner or his legal representatives shall have the first privilege to purchase said assets. Upon his failure or refusal to purchase the same at the valuation so fixed by said appraisers,” the other partner “will have the like privilege. In case neither party shall elect to purchase, then said business shall be wound up as speedily as possible, the stock in trade, fixtures and good will shall be sold at public auction, unless otherwise determined by mutual consent; all debts and liabilities of the firm shall be paid, and all outstanding claims collected, and the proceeds shall be disposed of as follows: To the said Charles Hauptner shall be paid a sum equal to all the capital contributed by him and not withdrawn, including the appraised value of the stock and fixtures and the agreed value of the good will by him contributed at the commence

p. 150

ment of the business; ” -to the other partner “ all capital by him contributed during the continuance of this agreement' and not withdrawn. If the amount realized from the assets of the business shall not be sufficient tó pay said amounts in full, then said assets are to be divided proportionately. If the same shall be more than sufficient, the remainder of said assets shall be divided equally, * * * and a like division or distribution of the assets shall he made in case either partner or his personal representatives shall. elect to become the purchaser thereof as hereinbefore provided.”

In May defendant informed plaintiff that it would be impracti•cable to continue the partnership after August thirty-first and proposed that an inventory be taken, statement made up and the affairs of the partnership amicably adjusted. Plaintiff stated that under no circumstances would he agree to ‘an. inventory or appraisal. Defendant said he was willing to carry out in .all respects the partnership agreement. Plaintiff replied that he did not intend to carry out that part of the- agreement or be a party to the dissolution according to the methods set. forth therein. On August, eighteenth defendant asked that an inventory he taken at once in order that they might determine their partnership interest 'and the net assets of the business and plaintiff again refused.. He left the store on August twenty-sixth and ha's not. since returned.

An inventory was taken showing that Hauptner’s interest in the ' firm was about $40,000; that Hoffman had drawn out all of his capital and owed the firm over $7,000 and liad given a note in the firm name for about $5,000 move and that the net assets of the firm amounted- to about $31,000. Defendant offered to sell liis interest in the business, but if plaintiff did not wish to buy, offere.d to give him a general release, assume the .liabilities and take over the assets. Defendant named an appraiser, plaintiff refused to. ■ At the close of business on September thirteenth, defendants accountant’s statement showed the net assets were then- $31,543.72. Hauptner thereupon charged his account oh the books with, the said sum, took- over the assets and assumed the liabilities.

Hauptner then caused a corporation to be formed under the name of Charles Hauptner Company, and executed a bill of sale of what he had .bought; whereupon Hoffman brought this action for an accounting, dissolution of the firm and for a receiver..

p. 151

An action for an accounting was proper,'but-as the partnership was dissolved by limitation, no aetlon for a dissolution was necessary or could be had. The articles provided á method for' winding up which defendant followed but which plaintiff refused''to-observe. The appointment of a receiver, under all the circumstances, was improper and ill advised.

Upon the showing made here plaintiff owns nothing of the-partnership property, but is deeply in debt thereto.

The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Ingraham, Lahghlin, Houghton and Scott, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.