Hubbard v. Guild

Headnote

A solvent partner is not entitled by law to the sole administration of the assets of the partnership, which is dissolved by the separate insolvency, of one or more of the partners.

This was an appeal from an order granting an injunction, and appointing a receiver, in an action for settling the accounts, and

paying the debts of a dissolved partnership. It was admitted that the partnership was dissolved by the personal insolvency of some of the plaintiffs, but it was proved to the satisfaction of the court that the defendant, Guild, was entirely solvent. His counsel, therefore, insisted that his legal rights were exactly the same as those of a surviving partner, and consequently, as there was no allegation of fraud or mismanagement, that he was entitled to the sole administration of the partnership assets. The court said, that had there been a provision in the articles of co-partnership, that in the event which had happened, the solvent partner should alone be entitled to settle the accounts, dispose of the property, and close • the affairs of the firm, they would have felt it their duty to give it full effect, by dissolving the injunction, and discharging the order for a receiver; but that in the absence of such a provision, and of any express decision or authority, they could not be governed by the imperfect analogy upon which the counsel had insisted. They could not say that the insolvent partners were divested of their ¡legal rights as joint owners of the partnership assets, and deprived of all agency or voice in closing the business of the firm. In their opinion, the right of the plaintiffs to demand the appointment of a receiver, was exactly the same that it would have been had the partnership been dissolved from any other cause than their own insolvency.

The court added, that they saw no reason why the defendant should not himself be appointed the receiver, .if he would give the necessary security. It seemed to them that in all cases where the dissolution "of a partnership is occasioned solely by the insolvency of one of the partners, the solvent partner ought to be appointed receiver, when his capacity and integrity are unqxiestioned. The referee, therefore, to whom the appointment was referred, might, upon due inquiry, report the name of the defendant.