
    William A. Brady, Respondent, v. Patrick T. Powers and Kate Kennedy, as Administratrix, etc., of James C. Kennedy, Deceased, Appellants, Impleaded with Amos G. Batchelder, Defendant.
    First Department,
    April 6, 1906.
    Partnership—payment of capital — proof sufficient to establish oral contract of partnership from year to year—notice of dissolution by answer denying partnership — when former partners not liable to account for renewal of lease—when failure of partners to account does not continue partnership after notice of dissolution.
    When the amount that a partner has agreed to contribute to partnership capital has by mutual consent been deducted from his share of the profits, it is a waiver of any defense his copartners may have had arising from his failure to pay the money.
    An oral contract of partnership for the purpose of holding bicycle races in. certain years is established by the fact that the other partners furnished the plaintiff statements of the box office receipts for those years, and subsequently made statements and appointments in regard to an accounting.
    In order to effect a dissolution of an oral partnership at will there must be a mutual agreement to dissolve, or a partner must give notice of his election to terminate the partnership, or the election must be' manifested by unequivocal acts or circumstances brought to the knowledge of the other partners.
    The bringing of an action to dissolve such partnership does not necessarily constitute an election to end the partnership; but when the answers of the defend‘ants in such action deny the existence of the partnership, they constitute a notice that the same is dissolved from the time such answers are served.
    Hence, although the plaintiff may establish a right to an accounting up to that period, it is error to order an accounting beyond the period of the service of such answers.
    Although the "defendants subsequent to such answers have taken new leases of the building where the bicycle races' were held, they are not liable to account to the plaintiff for such leases as representing the good will of the business • when the same were never taken for a longer period than the duration of the annual race, and were renewed from year to year. '
    When the partnership has no capital carried over from year to year, the plaintiff, although entitled to an accounting for certain years as to which the partnership is established, is not entitled to share in the profits of years subsequent to said notice of dissolution by answer, on the theory that, the defendants by failing to account have embarked his. money in the enterprise.. /
    Appeal by the defendants, Patrick T. Powers and another, from, an interlocutory judgment of the .Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 25th day of April, 1903, .dissolving a partnership between the original parties to the action and directing an accounting of the;profits; also from an order entered in said clerk’s office on the 1st day of December, 1904, confirming the report of a referee appointed by the said interlocutory judgment to take an accounting, and overruling the exceptions of the said defendants to such report; also from a final judgment of the Supreme Court in favor of the plaintiff, entered in said clerk’s office on the 14th day of December, 1904, pursuant to the aforesaid interlocutory" judgment, and also from an order entered in said clerk’s .offipe on the 10th day of April, 1905, denying a motion f6r leave to- file and serve nime pro tv/nc amended and supplemental exceptions.
    
      James A. Allen, for the appellants.
    
      David Gerber of counsel [Dittenhoefer, Gerber & James, attorneys], for the respondent.
   Clarke, J.:

y This action was brought for the dissolution of a partnership and ah accounting. The partnership related to the giving of bicycle exhibitions or races. • In May, 1897, the plaintiff ánd the defendants entered into an oral partnership arrangement to give bicycle exhibitions, each of the four parties to receive one-fourth of the profits and share the losses in the same proportion. At that time the exhibitions .contemplated were outdoor ” exhibitions. In August, 1897, it was agreed, that the plaintiff should have an interest in indoor racing. Prior td that, Powers, Kennedy and Batehelder had been holding these indoor races, and the plaintiff asked to be allowed to come in. After some opposition and considerable discussion, it was agreed that Brady, in consideration of his paying $2,000, should have a twenty-five per cent, interest in indoor bicycle racing at Madison Square Garden. Brady did not pay this money to the partnership, hut it was subtracted from his share of the proceeds of the next meet after the agreement. That fact establishes a waiver of any defense which his partners might have had of his claim to an interest in indoor racing on account of his failure to pay. this money. Exhibitions were given in Madison Square Garden in 1897 and 1898. Settlements for these years had been had between the parties. TSTo settlement having been had after the exhibitions of 1899 and 1900, this action was commenced on the 18th of January, 1901. The defendants denied the continued existence of the partnership. The learned justice who-tried the case said, in his opinion on granting the interlocutory judgment: “ The partnership interest of the plaintiff up to a specified time is conceded, the acts of the parties satisfy me that the partnership was not dissolved but was continued and is still in existence.”

The case having been tried before the amendment to section 1022 of the Code of Civil Procedure made by chapter 85 of the Ldws of 1903 which required separate findings of fact and conclusions of law, we have not had the assistance of such findings, and have been compelled to examine with minute care all of this voluminous record on this appeal and, having done so, we find the conclusion that the partnership had not been dissolved up to the time of the commencement of the action fully supported by the evidence. As to the existence and continuance of the partnership relation to October, 1900, there is no longer any pretense of dispute. Powers, one of the defendants, testified that the termination of plaintiff’s interest was in October, 1900, the settlement of the Twentieth Century Athletic Club suit, and that he would have no objection to a judgment in favor "of the plaintiff and directing an accounting down to that time. Kennedy,. the other defendant, testified that they had a general settlement in October, 1900, and everything ended then. So that there is no question but there was a partnership, created by oral agreement, without time limitation, under which indoor bicycle races were to be conducted at the Madison Square Garden in the

city of Hew York, and that' such races were so- conducted in the winter of 1891, 1898 and 1899. The defendants claim, however that before-the race meeting in December, 1900¿ this partnership Was terminated and all, matters settled in October, 1900. - If so, there should be no accounting after 1899.

These men Were all engaged in many and various ventures, sometimes together and. often apart. They were in - no sense general partners. They joined in special ventures. The plaintiff in the case at bar had brought suit against the Twentieth Century Athletic Club and Powers and Kennedy, claiming .that he was a partner in that_enterprise, and-by. injunction had tied up a considerable amount of money. That venture, was for the purpose of giving pugilistic exhibitions^ and was in no way connected with bicycling. That suit was discontinued, and plaintiff received; $1,058. Defendants' claim. • that the $1,058 represented,moneys which plaintiff claimed to be due him growing out of bicycling' matters, and that the payment thereof settled all of their affairs and terminated all Of their arrangements. Ho release-was executedmr delivered. Ho writing passed. The plaintiff testified that, for reasons advanced by a friend whose name did not appear in the casé, he was induced to settle the Twentieth Century Athletic Club suit and release thé money, but said that defendants ought to pay him back certain sums he had advanced.; that he gave them a paper showing his claims.against them. That paper read's: Advanced P. T. Powers and J. C. Kennedy $600 to bring bicycle riders here lastyear. An accounting of last. 6 day race which I have never rec’d, $258 adv. Kennedyon his note which I hold to send.H-awkins to Gala. $200 advanced Kennedy on his note •last May before leaving for Europe.” But he claimed that that " settlement was solely in regard to the Twentieth Century Club suit, in no. way involved bicycling matters, except as to the sums advanced, and" that the paper itself showed'he was claiming an accounting of the last, six-day race, which he had never received.

There was evidence to-sustain and require the Special Term’s conclusion that the settlement pleaded in bar has * * * ' no bearing on the present issues, but. related to transactions entirely foreign^to the matters litigated.” .. .

. The testimony of plaintiff and Kennedy is in direct contradiction as to the conversation' had at the time of settlement, and the witness Sullivan, called by defendants in'corroboration, must be dismissed from consideration, as the story told by him- is simply impossible, as he narrates a conversation about events which did not occur until over two months after the date of" the alleged conversation. -In addition the conduct of the parties is utterly at variance with the fact of any such settlement as claimed by the defendants. The defendants furnished the plaintiff statements of box office receipts each night of the meet, and subsequent thereto made statements and appointments in regard to an accounting which are consistent only with a continuance of the partnership. Their testimony upon the stand was so often contradicted by their previous affidavits and by written papers as to leave their evidence unreliable and to warrant the court which heard and saw them in resolving doubtful questions of fact against them.

The interlocutory judgment declaring a partnership and providing for an accounting was required by the evidence. But I am of the opinion that it went too far. The suit was instituted on the 18th of January, 1901, after the race meet of December, 1900. The interlocutory judgment was not entered until the 25th day of April, 1903. In the meantime the race meets of 1901 and 1902 had been held. The interlocutory judgment provided that the accounting should be had “for the year 1899, and thereafter to the' time of the entry of this judgment.” The referee, in accordance with the interlocutory judgment, ' carried . the accounting down through the year 1902. I think that the defendants are not liable to account to-the plaintiff for the proceeds of the races of 1901 and 1902. .At the time of the commencement, of this action the sole business of the partnership consisted in giving a six-day bicycle race in Madison Square Garden once a year. A peculiarity of this partnership is that it had no working capital, it had no particular assets of any kind, save the right to lease Madison Square Garden for a six-day race, which plaintiff testifies .was reserved to them by the managers of the garden because they had first conceived the idea of giving these races. In order to effect a dissolution of this partnership at will, there must have been a mutual agreement to dissolve, or there must have been notice by a party desiring a dissolution to his copartners of his election to terminate the partnership or his election must be manifested by unequivocal acts or circumstances'brought to the knowledge of the other -party which signify the exercise of the will of the former -that the partnership be dissolved.” " (Spears v. Willis, 151 N. Y. 449.)

Up to the time of the bringing of this action, as the court below' found, there had been no agreement to dissolve and no notice by one of the partners to the others that lie exercised his power 'of dissolving the partnership. The only facts before the court, other than those which preceded the bringing of this action, Which have any bearing on the question of the dissolution of tile partnership, are that plaintiff had brought an action for an accounting and served his complaint on the defendants, his copartners, and that, they had served their answers upon him in which they denied their liability to account.

It is undoubtedly the rule, as contended by the respondent, that the bringing of an action by one' partner against his copartners for an accounting does not necessarily constitute an election on his part to dissolve the partnership (Sanger v. French, 157 N. Y. 235), and I do not consider the bringing of this action an election on the part of the plaintiff to exercise his right to dissolve the partnership, for in his complaint he expressly considers the partnership as existing," and asks that it be dissolved by the court rather than proclaiming its dissolution by his own act.

There is in the answers of. the defendants Powers and Kennedy, Who at the time of the commencement of this action were the only partners .of-the plaintiff,"this,statement: “There is no partnership now existing between the plaintiff herein and the defendants in this action and that every and all .business relations heretofore existing between the plaintiff and these defendants have terminated and ceased to, exist and do not now exist and have not existed at the commencement of this action.” It seems to me that, although the court specifically found against this contention, which was based on •the alleged settlement in October, 1900, nevertheless it spoke as of the time When served, so far as the future relations of these pay-ties were concerned, aud that this was an unequivocal notice on the part -of the defendants Powers and Kennedy tlia-t they elected to terminate the partnership. It is true that they do not. say in so many words, “ We elect to terminate the partnership',” but there can be no possible doubt of their intention that the partnership be. considered •dissolved, within the rule of Spears v. Willis (supra).

Respondent contends that even if the appellants have given sufficient notice to him of their intention to terminate the partnership, jet the partnership does not terminate until the appellants cease to carry on these races; that they can only terminate the partnership with a view to winding up its affairs; that since the defendants Powers and Kennedy have continued to give these races in the same place, they have appropriated the good will of the business, “ which in and of itself required the wrongdoers to account for the profits made from that business thus continuéd.” In support of this contention respondent cites Mitchell v. Reed (61 N. Y. 123) and Struthers v. Pearce (51 id. 357), where it was held that where, during the existence of a continuing copartnership, one or more of the partners, without the knowledge of the others, obtained a lease in their own name of premises leased and used by the firm, the same became partnership property, and upon dissolution it must be treated as a partnership asset, and each partner was entitled to his portion of its value. These cases are not authorities which can govern this case, for the reason that it does not appear that the lease of the garden for the races of 1901 and 1902 were taken by Powers and Kennedy before the service of their answers in this case, which terminated the partnership. From all that appears, a lease was never taken for a longer period than the time of the annual race, and the lease was renewed each year.

Again, the cases are only authority for the point that the offending partners are liable to account for the value of the new lease, and not that they are liable to account to the other partners for a proportionate share of the profits of the business the same as if the ^partnership had not been dissolved. Respondent cites also the case of Slater v. Slater (175 N. Y. 143), which holds that where a partnership has been dissolved by the death of one of its members, the firm name and good will are assets of the partnership, which must be accounted for to the representative of the deceased partner. That case is only an authority for the point that the firm name and good will are partnership assets, not for respondent’s main proposition.

Respondent claims that since appellants have retained the proceeds of the race-of 1900, and whatever profits were made in 1901 and 1902 were made out of the cash assets of the partnership so retained, he is entitled to his share of-the proceeds- of the" investment of those assets. This would be true, if it had been shown that appellants did in fact use the proceeds of thé .race of 1900 to carry on the'races of 1901-and 1902, but this nowhere appears, and, therefore, respondent’s claim fails, as the cases cited by him show. '

It does not appear that there was ever any amount carried over upon which, as capital, the business of the.next meet Was started. • Privileges of various kinds were sold, and from, the moneys-thus received and on the credit of the enterprise the preliminary arrangements were met, the box receipts being the source to which all •looked for compensation. The business being of this ephemeral character, no capital being embarked or employed, it seems l,o me that upon no principle of equity can the'plaintiff rightly-share in the' profits of the two years in which he confessedly took no part in the business, in which the only money of his which by any. hypothesis " could be- considered as embarked in the transaction was the unascertained share of the profits theretofore made, and after by his complaint he had asked a dissolution and by the answers .the defendants.had notified him of a dissolution on their part of this partnership at will.' „

It seems to me, therefore, that the interlocutory judgment should be modified -by striking out tlie provisions for an accounting and thereafter to the time of the entry pf this judgment,” and inserting in lieu thereof after the. words “ for the year 1899 ” the words “ and 1900,” and- that the order confirming the referee’s report and the final judgment should be modified by confining the same to a confirmation of the report só far as-it states the account for the years 1899 and 1900, and that judgment be directed in favor of the plain: tiff, for $1,220.38 for .1899 and $4,864.91 for .1900; W-ith interest thereon, ánd as so modified affirmed, without costs.to any party.

O’Brien, P. J., Ingraham, Laughlin and Houghton, JJ., concurred.

Judgment and order -modified as directed in opinion, and as modified affirmed, without costs. Settle order on notice.  