Clay's Administrator v. Kelly

Citations

• 120 Va. 437
• 91 S.E. 621
• 1917 Va. LEXIS 129

Syllabus

<p>1. Partnership — Equity Jurisdiction—Accounting—Disclosure.—A partnership was formed to obtain and carry out a government contract. After the contract was obtained one of the partners, K., wished to withdraw and did so, receiving a consideration of five hundred dollars ($500) from the other partners. After his withdrawal he had no connection with the firm, except as one of the guarantors on the bond to the government. The partnership, unable to carry on the government work itself, desired to assign its contracts to another firm, M. & J., upon terms which promised a substantial profit to the partnership. But the firm, M. & J., upon assuming the contract, demanded the signature of the retiring partner, K., to the contract of assignment. This he refused to give without compensation, and under protest the partnership agreed to pay him one-tenth of the profits which it might realize from the contract with M. & J. The second firm, M. & J., finding itself unable to carry on the government contract, entered into an agreement with the partnership, by which their contract with it was canceled, and surrendered to the partnership the construction outfit on the site of the government works. The partnership then entered into a contract with a third firm, whereby the third firm took over the construction plant and the work to be done under the government contract, agreeing as a consideration for the transfer to pay the debts of the second firm, M. & J., which had been assumed by the partnership, and also to pay the partnership the sum of $65,000. To these two last transactions the retiring partner, K., was not a party. The retiring partner instituted a suit in equity against the partnership for a disclosure and an accounting. The defendants demurred to the bill on the ground that its allegations did not sufficiently charge a new partnership, which they alleged was essential to the standing of the complainant in a court of equity.</p> <p>Held: That complainant’s relationship to