Nakdimen v. Brownfield, Administratrix , 204 Ark. 343 ( 1942 )

This suit was brought in the chancery court of Sebastian county, Greenwood district, by appellant, surviving partner, against appellee, the administratrix of the estate of the deceased partner, V. R. Brownfield, for the adjustment and settlement of the partnership affairs between the partners themselves during the time they conducted the partnership business. It was not a suit to wind up the partnership after the death of V. R. Brownfield. It was the privilege and duty of the Surviving partner, I. H. Nakdimen, to do that, and he did so by collecting the debts due the partnership and applying the proceeds thereof and the other assets of the partnership toward the partnership indebtedness. The assets of the partnership were not sufficient to pay all the partnership debts, so the unpaid creditors sued I. H. Nakdimen individually and compelled him to pay them. He then brought this suit not only for contribution from the estate of his deceased partner, but alleged and offered to prove that in the conduct of the partnership business by his deceased partner, he, his deceased partner, drew out of the partnership assets much more than appellant and prayed for an accounting between them. It was alleged that his deceased partner bought certain real estate with partnership assets and took the title thereto in his individual name, and that appellee as administratrix included in her inventory of the estate of deceased certain property whereas said property was purchased with partnership funds and was an as set of the partnership, and that the value of the real estate should be taken into account in a partnership settlement between them. It was also alleged that no partnership books were kept by the deceased partner as it was his duty to do under the written contract of partnership between them, and that a partnership adjustment between them would have to be ascertained from an examination of bills receivable and bills payable, check stubs and returned checks covering a long period of time and prayed for a complete accounting and settlement between appellant and his deceased partner.

The trial court took the view that appellant as surviving partner should wind up the partnership and sue the administratrix of the estate of the deceased partner in a court of law for whatever amount he might conclude was due him. In other words, the court dismissed the complaint for want of equity.

I am of the opinion that the chancery court was the only court that had the jurisdiction to adjust the partnership affairs between the partners, and that no other court has jurisdiction to do so. This court said in the case of Holloway v. Morris, 182 Ark. 1096, 34 S.W.2d 750, that: "No specific money claim or demand can exist in favor of one partner against another growing out of the partnership affairs until there has been a settlement and some amount found to be due from one to another. Hence, until the affairs of the partnership are wound up, the state of the account between the partners is inchoate and continuous." To the same effect is the case of Evans v. Hoyt, 153 Ark. 334, 240 S.W. 409.

In the case of Luke v. Rhodes, 117 Ark. 600,176 S.W. 111, this court said: "The adjustment of partnership affairs is inherently a matter for the intervention of a court of equity, although a resort thereto is not necessary where the parties can adjust such matters themselves."

This court also said in the case of Short v. Thompson,170 Ark. 931, 282 S.W. 14, quoting from page 933, that: "Equity jurisdiction is practically exclusive in proceedings for an account and a settlement of partnership affairs, and this includes for an accounting between the partners themselves."

This court also said in the case of Tankersley v. Patterson, 176 Ark. 1013, 5 S.W.2d 309: "In a suit for accounting and settlement of partnership affairs, the jurisdiction of equity is practically exclusive."

I think the trial court instead of dismissing appellant's complaint for want of jurisdiction should have tried the case upon its merits, and for that reason I am dissenting from the majority opinion in this case.

Mr. Justice SMITH and Mr. Justice MEHAFFY join me in this dissent.