Maloy v. Associated Lace Makers' Co. — 30 N.Y. St. Rep. 153

Majority

p. 153

Michael F. Maloy, Resp’t, v. The Associated Lace Makers’ Co. et al., App’lts.

(Supreme Court, General Term, Second Department,

Filed February 10, 1890.)

Headnote

1. Partnebship—What constitutes.

Plaintiff and one Duden were partners under an agreement by which the former was to receive one-quarter of the profits after expenses were paid, not to be less than $5,000. Held, that there was a general partnership as between them.

2. Same—Assets.

Land was bought for the partnership use with borrowed money, which was repaid out of the profits by Duden. The title was taken in the name of a trustee and subsequently transferred to defendant without plaintiff's knowledge. Defendant was under Duden’s control and substantially owned by him. Held, that the land was partnership assets and that defendant was not a bona, fide purchaser.

3. Bar—Accounting.

Pendency of an action for a partnership accounting is not a bar to an action to set aside such conveyance.

Appeal from judgment in favor of plaintiff.

Action to set aside two deeds of land to defendants.

Martin J. Keogh, for app’lts; Benj. F. Tracy and Anthony Barrett, for resp’t.

Whatever may be the legal relation between Maloy and Duden as between themselves, the agreement gave the plaintiff a certain share of the net profits of the business. These profits paid for the land and the land is, therefore, subject to the partnership agreement.

The proof, however, shows a partnership between the partners. There is a common liability to the creditor and common right to the profits of the business in unequal proportions.

Nothing is said about capital and in point of fact no money capital was advanced from the business in this country.

Duden is a manufacturer of lace in Belgium and it seems as if the business was originally started to sell the goods of the foreign firm of which Duden was the sole owner or principal partner. Some four years after the formation of the partnership the partners hired a factory in Brooklyn and subsequently bought the property in Westchester county which is the subject of this action. The design was to build a lace factory. The land was paid for by borrowed money and subsequently repaid to the lender out of the profits of their business in America. The factory was built and paid for in the same way with a slight exception as to imported machinery.

The foreign partner Duden without the knowledge of the plaintiff took the title to the Westchester land in the name of the defendant Winslow. Winslow subsequently assigned the land to the corporation defendant which had been incorporated at Duden’s request and was under his control and was substantially if not entirely owned by him. This conveyance was also made without plaintiff’s consent. Under these facts the case falls within well-settled rules of equity jurisprudence. Winslow has no more than a nominal title. The land was partnership assets and the conveyance to the Associated Lace Makers’ Company was not a conveyance to a bona fide purchaser, but to Duden.

The action pending for an accounting is not a bar to this action, but the accounting cannot be had until it is determined whether or not this land is a partnership asset. If the accounting has left that out this action is proper to supplement the account, with the question of the ownership to be settled as between the partners.

The agreement made by the appellant that the purchase price of the land was charged to defendant Duden is disappointing in view of the evidence that the entries were made without the assent of the plaintiff and in view of the finding that they were made without plaintiff’s knowledge.

At least the question of who made the payment will be one for the accounting when it is settled that the land belonged to the partnership.

The judgment should, therefore, be affirmed, with costs.

Pratt, J., concurs.