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Bachubai and L.A. Watkins Vs. Shamji Jadowji - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtMumbai
Decided On
Judge
Reported in(1885)ILR9Bom536
AppellantBachubai and L.A. Watkins
RespondentShamji Jadowji
Excerpt:
partnership - continuing firm--partnership for a fixed term--death of partner--power of partner to nominate successor--general devise not an exercise of power--effect of defautt in exercising power of nomination--good-will--valuable asset--practice--misjoinder. - - but it has been contended that she also is entitled to share in the 'good-will' of the business as an asset of the firm. assuming (which may well be doubted) that the term 'good-will' is applicable to a business of this nature, it is plain that it is attached to the name of the firm which, by the partnership agreement itself, is to be used by the surviving partners or partner for their own benefit. such an arrangement between the partners must take away all value from the good-will; the master of the rolls under similar..........partners, honmasji and shamji jadowji: so that, henceforward, they were the only partners in the firm-hormasji being entitled to sixty shares of the 'profits, and shamji jadowji to forty shares.6. hormasji died in november, 1882. the firm has continued to act as the agents of the company; and this suit is brought by hormasji's widow, bachubai, claiming her husband's share of the profits earned since his death.7. the first question to be determined in the case is, whether hormasji's will operated as an exercise of the power of nominating a successor in the firm given by clause 11 of the partnership agreement? if it did, then, of course, the plaintiff is entitled to what she claims in this suit.8. in support of the plaintiff's contention on this point we were 'referred to the case of.....
Judgment:

Charles Sargent, C.J.

1. This is a suit brought by the widow of a deceased partner in the firm of Vunmalidass, Jagjivan, Shaniji and Company to recover a share in the profits-made by that firm since the death of her husband, which took place on the 30th November, 1882.

2. The firm in question was formed in the year 1873 with the view of obtaining the agency of The New Great Eastern Spinning and Weaving Company, limited. The firm originally consisted of three partners, viz., Vunmalidaass Jiva, Jagjivan Hemji, and the defendant, Shamji Jadowji, who were to divide the profits between them according to the terms of the partnership agreement, which by one clause, (the 4th), provided that the agency to the company was to be obtained for thirty years, and by another clause, (the 11th), provided that, in the event of a vacancy occurring in the partnership within that period by the death or by the retirement of any partner, such partner should have a right or nominating a successor. By this clause each successive partner was to have the same right of nomination.

3. The firm, constituted under this agreement, obtained the agency to the company, and entered upon its duties as agents, and from that time until now the firm has been the agents of the company, the agency being the only business of the firm, and the single source of all the profits which it has made.

4. On the 16th August, 1874, Yunmalidass, one of the partners, died, and by his will he appointed Kessar, his wife, to succeed him as partner in the firm, thus exercising the power given to him by the 11th clause of the partnership agreement. Kessar, by an agreement, dated the 2nd August, 1875, sold the interest in the partnership, which she had thus acquired, to Hormasji Nowroji Sakalatwdlla, who, therefore, became and was recognized as a partner of the firm.

5. Jagjivan Hemji, another of the original partners, became involved in pecuniary difficulties, and he, on the 19th November, 1876, transferred his interest in the firm to the other partners, Honmasji and Shamji Jadowji: so that, henceforward, they were the only partners in the firm-Hormasji being entitled to sixty shares of the 'profits, and Shamji Jadowji to forty shares.

6. Hormasji died in November, 1882. The firm has continued to act as the agents of the company; and this suit is brought by Hormasji's widow, Bachubai, claiming her husband's share of the profits earned since his death.

7. The first question to be determined in the case is, whether Hormasji's will operated as an exercise of the power of nominating a successor in the firm given by Clause 11 of the partnership agreement? If it did, then, of course, the plaintiff is entitled to what she claims in this suit.

8. In support of the plaintiff's contention on this point we were 'referred to the case of Ponton v. Dunne 1 R & M. 403. (His lordship stated the facts of that case.) In that case, however, it is to be observed that the power was not to appoint a partner in the firm, but merely the person who was to take the deceased partner's share in the profits of the partnership in respect of which the surviving partner was to be a trustee for such person, and the case merely decided that a general bequest would operate as an exercise of such an appointment. Here, however, the power is to appoint a partner in the firm; and it requires, we think, a specific direction in that behalf, either in express terms or, at any rate, by a specific disposal of the deceased partner's interest in the firm, neither of which is to be found in Hormasji's will, which was made before the partnership was thought of. The case of Beamish v. Bean ish Ir. R 4 Eq. 120 where the circumstances were substantially the same as in the present case, supports this view. We must hold, therefore, that Hormasji's will did not operate as an exercise of the power of nominating his successor, and did not constitute the plaintiff a partner in the firm.

9. What, then, was the effect of Hormasji's death upon the partnership? Section 253, Clause 9 of the Indian Contract Act provides that the result, in the absence of any contract to the contrary, is to dissolve the partnership, whether entered into for a fixed time or not. It was contended for the plaintiff that such a contract, although not found in express terms, must be implied in this case. It was argued that the object of the partnership was to carry on the agency business of the company for thirty years, which, it was said, could only be effected by the continuance of the firm, as both the memorandum and articles of association of the com. pany provided for the agency being given to the firm of Vunmali-dass, Jagjivan, Shamji and Company. But those documents, do not provide only for the firm of Vunmali, dass, Jagjivan Shamji and Company, as then constituted, being the agents of the company, but also for its being so whatever member or members that firm might, for the time being, consist of. Whether, therefore, the business was continued by a firm of Vunmalidass, Jagjivan, Shamji. and Company, consisting of the surviving partners and the representatives of deceased partners, or of the surviving partners or partner, alone, there would equally be a firm of Vunmalidass, Jagjivan, Shamji and Company within the contemplation of the memorandum and articles of association , and, looking at the nature of the duties of the agents as defined fey Clause 104 of the articles of association, coupled with the peculiar language of Clause 11, and the important circumstance that there was no capital employed in the business, we think it was intended that, in default of nomination of a successor by a retiring or deceased partner, the agency should be parried on by the continuing or surviving partners or partner in the name of Vunmalidass, Jagjivan, Shamji and Company.

10. Under these circumstances, the plaintiff is, of course, entitled to an account up to the date of Hormasji's death. But it has been contended that she also is entitled to share in the 'good-will' of the business as an asset of the firm. Assuming (which may well be doubted) that the term 'good-will' is applicable to a business of this nature, it is plain that it is attached to the name of the firm which, by the partnership agreement itself, is to be used by the surviving partners or partner for their own benefit. Such an arrangement between the partners must take away all value from the good-will; even if it be not,-as Mr. Justice Lindley in his treatise on Partnership, p. 887 (3rd ed.), considers it to be-inconsistent with its being an asset at all. The Master of the Rolls under similar circumstances refused to refer to it to chambers to determine the value of the good-will-35 Beav; and such is the proper course, we think, to adopt on the present occasion.

11. But it was argued that there was a contract on the part of the company to continue to employ this firm as its agents; and that such a contract was a valuable asset to a share in which the. plaintiff is entitled. The cases of Ambler v. Bolton L.R. 14 Eq. 427 and McClean v. Kennard L.R. 9 Ch. Ap. 336 were relied upon as cases in point. In those cases there were contracts entered into during the partnership, which would have rendered the estate of the deceased partner liable in the event of loss, and in the profits of which, therefore, the estate of the deceased partner was entitled to participate. Such contracts are, in their nature, assets of a partnership. But here there was simply a contract determinable at any time by the company, the profits of which would be derived entirely by the services of the surviving partners or partner, and in respect of which no liability could be incurred by the deceased partner. It cannot, therefore, in our opinion be regarded as an asset of the firm.

12. Under these circumstances, we must reverse the decree of the Court below, and dismiss the suit with costs.


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