159-NLR-NLR-V-39-WICKRAMASURIYA-et-al.-v.-DE-SILVA-et-al.pdf
FERNANDO A.J.—Wickramasuriya v. De Silva.' 573
1®37Present: Hearne J. and Fernando A.J.
WICKRAMASURIYA et al. v. DE SILVA et al.
D. C. Colombo, 5,165.*
Partnership—Agreement for an indefinite period—Terminable at will—Notice
of termination—Service of summons in partnership action.
Where, according to the terms of a partnership deed, the partnershipwas to continue after the death of a partner as a partnership among theheirs of the deceased partner and the surviving partners,—
Held, that the partnership created by the deed was one for an indefiniteperiod and was therefore terminable at will.
A partnership at will may be terminated by notice.
Service of summons in an action for dissolution of the partnershipamounts to such notice./
y^PPEAL from a judgment of the District Judge of Colombo.
N. E. Weerasooria (with him Gratiaen and J. A. T. Perera), for firstdefendant, appellant.
H. V. Perera, K.C. (with him D. W. Fernando), for plaintiffs, respond-ents.
N. K. Ghoksy, for second to sixth defendants, appellants.
Cur. adv. vult.
July 30, 1937. Fernando A.J.-~
The plaintiffs brought this action for a dissolution of the partnershipexisting between them and the first defendant, and constituted bythe agreement P 6 dated July 2, 1933, and they complained that the firstdefendant had done certain acts which made it impossible for the plaintiffsto continue the partnership business with the first defendant, and thatsuch conduct was in terms of section 35 d of the Partnership Act of 1890calculated to affect the’carrying on of the business, and that circumstanceshad arisen which rendered it just and equitable that the partnershipshould be dissolved. They alleged that due notice had been given to thefirst defendant of the fact that the said business should be dissolved.They prayed that pending the dissolution the plaintiffs be authorizedto carry on the business or in the alternative that the first plaintiff beappointed receiver for the beneficial winding up of the business. Thefirst defendant filed answer alleging that on account of certain acts doneby the first plaintiff, the first plaintiff was not entitled to an order for thedissolution of the partnership, and he prayed that plaintiff’s action bedismissed, for an injunction restraining the first plaintiff from carryingon the business, and that the first plaintiff be ordered to render an accountto the first defendant.
When the case came on for trial, a number of issues was framed, andthe learned District Judge after framing the issues, and after somediscussion on certain of these issues, decided to try the issues set out byhim at page 49 of the type written copy of the record. He held that thepartnership subsisting at the time of the action was. the partnership
574FERNANDO A.J.—Wickramasuriya v. De Silva.
created by deed P 6. On issues 2 and 3 he held that the partnershipwas duly registered, and that the plaintiffs could maintain the action.On issues 5, 6, and 7 he held that the deed P 6 created a valid fidei com-■missum under which a seven-ninths share of' the business passed to thedonees, subject to the life-interest of the first plaintiff, and subject tocertain other conditions recited in that deed. He also held on issue 15 Fthat the partnership created by deed P 6 was a partnership for anundefined period, and therefore, a partnership at will. He then held onissues 15 b and 15 c, that the plaintiffs were entitled to a dissolution of thepartnership as from the date of the service of the summons in this actionon the first defendant, that is to say, as from June 10, 1936, and accord-ingly entered judgment for the plaintiffs declaring that the partnershipshall be deemed to have been dissolved as from June 10, 1936, orderingan account to be taken on that footing, and also a sale of the assets of thepartnership. He also appointed the first plaintiff receiver for the purpose-of winding up of the business.
The first defendant appeals against this order, and Counsel for theappellant argued that the partnership created by P 6 was not a .partner-ship at will. His case was that the terms of P 6 clearly showed that thepartnership was to exist during the life of the first plaintiff, and was tocontinue even after the death of the first plaintiff as. a partnership betweenthe first defendant and the 2nd to 4th plaintiffs, and 2nd to 5thdefendants. On this footing, he argued that the partnership must beregarded as one created for the lifetime of the first plaintiff, and that assuch it was a partnership for a definite period. It is admitted that thelaw that applies is the English law, that is to say, the Partnership Actof 1890 N (53 & 54 Victoria C. 39), and section 26 (1) of that Act providesthat “ where no fixed term has been agreed upon for the duration of thepartnership, any party may determine the partnership at any time ongiving notice of his intention so to do to all the other partners, andLindley in his Treatise on the Imw of Partnership (9th ed.), atp. 174, states the effect of this sub-section in these words: “in otherwords, the result of a contract of partnership is a partnership at will,unless some agreement to the contrary can be proved ”. Section 32 ofthe Act further provides that subject to any agreement between theparties, a partnership is dissolved if entered into for an undefined timeby any partner giving notice to the other or others of his intention todissolve the partnership ”. It also provides that in the case of notice asabove, the partnership is dissolved from the date mentioned in the notice,or if no date is so mentioned, as from the date of the communication ofthe notice. It seems to me that the case of Crawshay v. MauleL, isclear authority for the proposition that the partnership created by thedeed P 6 was a partnership for an indefinite period, and therefore, termin-able at will. “ Th^ general doctrine ”, said Lord Eldon in that case,“ with respect to a trading partnership is that where there is no agreementfor its continuance, any one of the partners may terminate it, andadmitting the serious inconveniences which sometimes ensue, it becomesus to recollect the formidable evils which would attend the oppositedoctrine ; nor is it clear that a better rule could be suggested
1 SwansUm 495.
FERNANDO A.J.—Wickramasuriya v. De Silva.
575
Counsel next argued that even if this partnership could be terminatedat will, the District Judge was wrong in holding that the contract hadterminated on the .date of the service of summons. v His contention wasthat a party could either ask for a dissolution by Court or terminate thecontract by notice. If he came to Court asking the Court to dissolve thepartnership on grounds of misconduct, &c., it was not open to him to askthe Court to declare that the partnership had been terminated by theservice of the summons in the action. He contended that a party’srights must be determined by the Court according to the pleadings filedby him, and that a party could not be allowed to add a fresh cause ofaction to the cause of action already pleaded by him in his plaint. Thefirst plaintiff had prayed for a dissolution .on the ground of misconduct,and he could not be allowed to amend that plaint in order to allege thatthe partnership had terminated by notice. Here again, I think the caseis covered by authority. It was held in Syers v. Syers * that the answerfiled by a defendant who submitted that there was no partnership, andthat if there was a partnership, it was a partnership at will, and had beendetermined by a letter previously written by him, had the effect of puttingand end to the partnership. “ If the partnership ”, said Lord Cairns,“was not terminated by that letter, there is in this answer the clearestintimation that the will of the partners is against any continuance of thepartnership; and whether that will is expressed by a letter or by ananswer or in any other way. is immaterial. There is no technicality, nomagic as to the mode of expression. There is here the clearest intimationgiven by the answer that if there is a partnership, the defendant wishesit no longer to continue ”.
The principle is clear. A partnership terminable by will can beterminated by notice, and notice may be given in one of several ways.The filing of a pleading in Court stating that the partnership has beendissolved or praying that it should be dissolved is an indication of theintention of the person who files that pleading to terminate the partner-ship, and even if his plea that it has terminated previously fails, thatpleading itself will be regarded as a notice coming into effect on that date.There were earlier decisions in which it had been held that a writ takenout by the plaintiff was a sufficient notice of termination, and in Syers v.Syers (supra) the answer was given the same effect.
I would hold therefore that the learned District Judge was right incoming to the conclusion that this partnership had been terminated bythe service of summons in this action on the first defendant. That wasa clear intimation to the first defendant that the first plaintiff wished toterminate the partnership. In the circumstances it was unnecessary forthe Court to proceed any further or to inquire into the ground on whichthe first plaintiff had asked for a dissolution.
It was urged for the appellant that the learned District Judge shouldnot have appointed the first plaintiff, receiver for the purpose of windingup the business, and that the first defendant had no opportunity ofshowing cause against that- appointment. As a matter of fact, in' theplaint, the plaintiffs asked that the first plaintiff -be appointed receiver towind up the business, and the first defendant in his answer prayed that
* (1876) 1 A. C. 174.
576FERNANDO AJ.—Wickramasuriya v. De Silva.-
the first plaintiff be restrained by- injunction from carrying on the business.
It was necessary, therefore, to make some order with regard to thebusiness pending the action, and oh June .29, 1936, the parties agreedthat the first plaintiff -be: appointed receiver and manager of the businesspending the action on certain conditions set out in the order made on thatdate. The learned District Judge does not expressly state why heappointed the first-plaintiff as receiver for the purpose of winding up thebusiness, but the question whether the first plaintiff should continue inthe office of receiver pending the action came up before the same learnedJudge on November 13, and he was then of opinion that the businesscould not be carried on with advantage both to the first plaintiff and tothe first defendant by a person other than the first plaintiff. Perhaps inthese circumstances, he did not think any further inquiry necessary. Atthe same time the first defendant had no opportunity of showing causeagainst the appointment, and there is. no reason why he should not havebeen allowed to urge any objections he wished to offer. I do not think ■it necessary, however, for this reason to interfere with the order made bythe learned Judge inasmuch as the first defendant can still be given anopportunity to show cause against that order, in other words, the desiredobject may be obtained by allowing the first defendant to apply to theDistrict Judge for an .order removing the first plaintiff from the office ofreceiver to which he has been appointed. I would, therefore, directthat the first defendant be allowed within three weeks of .the receipt ofthis record in the District Court to file an application for the removalfrom office of the first plaintiff setting out the reasons if any, on which hebases his application. That application if filed, may be dealt with bythe Court under section 674 of the Civil Procedure Code.
Subject to the above directions, the appeal is dismissed, and theappellant will pay to the respondents their costs of this appeal.
Hearne J.—I agree.
Appeal dismissed.
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