Cochran v. Perry , 8 Watts & Serg. 262 ( 1844 )

The opinion of the Court was delivered by

Gibson, C. J.

It is unnecessary to consider the bills of exceptions to evidence, as the testimony proposed was clearly inadmissible to vary or contradict the written evidence on which the relation of the parties depended. They entered into partnership by written articles; and the act by which the plaintiff is alleged to have retired, as well as the act by which the defendants áre alleged to have continued the firm without him, was.reduced to writing; consequently, to have admitted a witness to establish the existence of exclusive partnership between the defendants when the services were rendered, would have allowed the legal effect of the documents to be controlled by parol proof. As much of the plaintiff’s evidence as was competent, then, being before the jury, the further question was on its sufficiency to make out a case.

The action was for services to a firm, of which the plaintiff was, at one time, confessedly a member; and it was necessary for him to show not only that he had retired from it in order to avoid an objection to the form of the action, but that the defendants were partners or joint contractor's when the services ’were rendered, in order to entitle him. to recover, on the merits. It is clear that a partner cannot, consistently with a continuance of the partnership, retire from the firm, or introduce another into it, without a provision for it in the articles, or at least without subsequent ratification by all the partners. The contract of partnership is founded in personal confidence reposed by the partners in each other* which they may be unwilling to repose in a substitute; and it is for this reason that an involuntary transfer by judicial sale of a partner’s share in the concern, has been held to dissolve it. Why should not a voluntary sale of it have the same effect? It has been held that a partner cannot transmit his capacity to act as such, by will or intestacy; and an act of bankruptcy is an immediate dissolution, because it vests his share in the partnership in his assignees. There can be no doubt that the same effect would be produced by a voluntary transfer to a stranger; and there is no reason to distinguish it from such a transfer to one or more of the copartners. The partners themselves may order it otherwise by a provision in the articles; or by subsequent agreement; but they may do so On their own terms; and a power to transfer a partner’s share to a copartner, as well as to a stranger, must be executed in the manner, and in conformity to the conditions prescribed. Partnerships are sometimes formed in consideration of peculiar qualities attributed to particular members, and the others may be unwilling to carry on the business without them. The fundamental articles in this case'prescribe that the original members or their successors may transfer their shares subject to restrictions; that a shareholder shall cease to be a"member after transfer; that the company shall keep transfer'books'; and the persons becoming members of the company by transfer on the books shall be entitled to receive d 'certificate in' a particular form. The plaintiff executed an agreement of transfer, not entered on the books, to two of his copartners; and it presents to him this dilemma: it was either a present transfer which dissolved the partnership, or it was an executory agreement which left it standing in the mean time, but left him standing also a member of it; and on the one or the other horn of which he must hang, unless some subsequent act of the defendants has released him.from it.

The agreement subsequent to the plaintiff’s irregular transfer, by which it was declared that Andrew Cochran owns the shares standing in the name of Richard Cochran, would undoubtedly be a sufficient act of confirmation as to all who executed it, if. it were unconditional; but it was also declared that persons having stock standing in the names of others, must forthwith cause the same to be transferred in the books of the company; thus evincing an opinion, well founded in principles of law, that an imperfect transfer, though it pass an equitable title to the transferee, introduces no difference into the relations of the partners with each other. But the confirmation was to depend on a condition precedent, which has not been performed. As no transfer has been shown in the books, the plaintiff remains the ostensible owner of the shares for partnership purposes, and a member of the firm as regards the company; in which character he can maintain no action against his copartners but account-render. Even had the confirmatory clause been unconditional, it would not have entitled him to recover in assumpsit against these defendants, inasmuch as one of them' (Wilcox) is not a party to it. He neither executed it nor did any other act to dispense with the original articles ; and as the plaintiff was bound to prove a joint contract by all, he cannot recover against them on the ground either that the original partnership was continued or a new one formed.

Judgment affirmed.