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Colonial Cases

Lee v. Curtis, 1900

[partnership]


 

Lee v. Curtis

Supreme Court for China and Japan
Hannen CJ, 24 January 1900
Source: North China Herald, 30 January 1900


 

LAW REPORTS.

H.B.M.'S SUPREME COURT.

Shanghai, 24th January.

Before Sir Nicholas J. Hannen, Chief Justice,

LEE v. CURTIS.

This was a case in which James Lee sued for the dissolution of his partnership with William Curtis, and the return of the premium put by him (Lee) into the business. Mr. D. McNeill and Mr. L. E. P. James were for the plaintiff, and Mr. F. Ellis (Messrs. Browett and Ellis) for the defendant.

   The plaintiff's petition showed:-

- The defendant is a British subject resident at Shanghai aforesaid.

- The defendant is a British subject resident at Shanghai aforesaid.

- The defendant on the 6th day of December, 1899, entered into a contract in writing with the plaintiff whereby it was mutually covenanted and agreed that the parties thereto should become partners equally in the business of hotel and restaurant proprietors upon and subject to the conditions therein contained, to which said contract the plaintiff craves leave to refer on the trial of this suit.

- The plaintiff has fulfilled and is ready and willing to fulfil all the terms of the said contract, but the defendant has refused, and still refuses to carry out the terms of the said contract.

- In particular the defendant has neglected and neglects and refuses to keep proper books of account, and to make proper entries therein as required by paragraph 9 of the said contract, and has obstructed the said plaintiff and prevented him from having proper access to inspect, examine and copy the said partnership books, and has not been faithful to the plaintiff in all partnership transactions, and has neglected and refused to furnish the plaintiff with correct accounts and statements as required by paragraph 10 of the said contract of partnership, and has contrary to paragraph 11 of the said contract of partnership, engaged and discharged servants in the employment of the partnership, and has so acted as to prejudicially affect the carrying on of the said partnership business.

The plaintiff therefore prays:-

1.- That it may be decreed that the said partnership may be dissolved and that the affairs of the partnership be wound up.

2.- That an account be taken of the partnership dealings between the plaintiff and defendant under the said contract of the 6th day of December, 1899, and that the amount found to be due to plaintiff thereunder may be forthwith paid to him.

3.- That the sum of $5,000, paid by the plaintiff under the said contract as his share of the capital of the said partnership, be returned to him with interest thereon at the Rate  of £7 per cent per annum from the said 6th day of December, 1899, or in the altertnative

4. - That the defendant do pay to the plaintiff the sum of $5,100 damages for breach of the said contract.

5. - That the defendant do pay to the plaintiff his costs of suit.

6.- That the plaintiff may have such further and other relief as to the Court may seem meet.

   The defendant's answer was as follows:-    

 1.- The defendant admits paragraphs 1, 2 and 3 of plaintiff's petition.

2.- The defendant denies the allegations contained in paragraph 4 and 5 of plaintiff's petition and leaves the same to be proved.

   In further reply to the plaintiff's petition the defendant says:-

3. - That he has, in accordance with the provisions of clause 10  of the Deed of Partnership executed by the  plaintiff and defendant, requested the plaintiff to render to him a detailed statement of all monies received by him (the plaintiff) since the commemceent of the partnership in connection with the business of the partnership, but that the plaintiff has not rendered such statement.

4. - The defendant admits that upon a dissolution of the partnership, and the business of the partnership remaining the property of the defendant, there would be a sum of money due from the defendant to the plaintiff, but it is impossible to arrive at an exact amount of such sum until correct accounts have been rendered by the plaintiff to the defendant.

   Mr. McNeill said the case had already been before his Lordship, but now came up practically for the settlement of the terms upon which the inevitable dissolution of the partnership must take place. Mr. Ellis agreed that there was no objection on either side for a dissolution, and the question was as to the terms on which it should take place. Mr. McNeill then read the pleadings, and referred to the main point of the case as being whether Mr. Lee was entitled to a return of the sum paid by him as premium.  As to the fact s of the case, Mr. Lee came to Shanghai during 1899, and, being familiar with the hotel business, looked about for some investment in his line of business for a small capital of which he was in possession. He met Mr. Curtis and thought the business a good one to go into. Mr. Curtis' position was that the business, although good, was so hampered by outstanding liabilities that it could not do itself justice  

   Partnership was entered into by a deeds dated the 6th of December, and was to continue for a term of two years. At that time Mr. Curtis was in ill-health and therefore Mr. Lee assumed direction of both branches of the business. He engaged a bookkeeper named Cohen to help him with the accounts. Mr. Curtis got better, however, and began then to exhibit certain peculiarities. Mr. Curtis seemed not to think that the partner had an equal right to share in the management of the business, and thought that he could exclude Mr. Lee entirely from the Szechuen-road house, and leave him only the management of the Canton-road premises. Mr. Lee went round from time to time and was, of course, entitled to see the books of the business. He was not allowed to see them, however, for they were kept, on some pretext, in Mr. Curtis' private room, to which Mr. Lee had no access. Certain omissions in the entering of the books came to Mr. Lee's knowledge, and he went to the book keeper. Mr. Cohen, who first said that they were due to the fact that Mr. Curtis had not furnished him with a proper statement and finally said that he was Mr. Curtis' servant, and not Mr. Lee's.
   #That was not all. Mr. Curtis had apparently failed seriously and grossly in the duty of keeping proper books. There was no doubt whatever that the entries of some of the sums received were not made in the partnership books, but in other books. When a partner went to inspect the books, he was entitled to expect to find in them all the entries that his fellow-partner should fairly have made. Mr. Curtis had also acquired a habit of taking from the stores of the partnership whatever he required, and omitting to enter sucnh matters in the books. Further, from the commencement of the partnership Mr. Lee had been worried and pressed by creditors, who did not come of their own accord, but were directed to do so by Mr. Curtis.

   That was not quite the worst of the matter of these creditors. There was a statement by Mr. Curtis - at the time the deed was drawn up- of the amount of his indebtedness, but he seemed to have omitted all reference to certain claims outstanding in respect of rent and gas. Mr. Mc Neill went into other matters of a like nature, and finished his recital of Mr. Curtis' deviations from the terms of the contract by saying that his (Mr. Curtis') private household arrangements seemed to be of a peculiar nature. He had such a large number of housemaids that some boarders left the premises, and others made complaint to Mr. Lee. That seemed to show that Mr. Curtis was not the proper man to be in partnership, and that he had not been dealing fairly with his co-partner. Finally, Mr. McNeill quoted the law on the question.

   At this point his Lordship expressed a wish to confer privately with the counsel on both sides. This he did, and afterwards the clients were consulted.

   When his Lordship returned to Court he said -I understand that by counsel you are willing that this order should be made: that the partnership should be dissolved, that an account be taken, and that $4,000 of the premium be returned by Mr. Curtis to Mr. Lee, payable in two instalments, to be secured on the furniture of the partnership premises, and the costs to come out of the partnership assets.

   It was further agreed that Mr. A. R. Leake should take the account, and that the receiver recently appointed should remain in charge of the business until this had been done. 

Published by Centre for Comparative Law, History and Governance at Macquarie Law School