Marsh's Appeal.

"As to the question of compensation, I understand the law to be, and so rule, that, in the absence of express stipulation, no such charge can be sustained. That if a partner fraudulently withdraws from a firm, occasioning loss of profits and damage, it may be possible he may be made responsible in equity in a proper case, and with suflicient allegations. * * ** The bill, in effect, seeks to measure the value of the services rendered by the members to the firm, and to give some of them compensation for such service without any stipulation to that effect in the written agreement. The withdrawal of Geddes might have been sufficient cause for the dissolution of the partnership, and he might have been made responsible at law if the withdrawal had not been justifiable; but the other partners, in not adopting this course, cannot receive compensation for services rendered to the firm after the withdrawal, for what they did afterward was no more than they agreed to do when the partnership was formed. * * * I refuse to allow the charge made for loss of services as partner."

Exceptions were filed to the report by the complainants. They were overruled by the court, and a decree entered in accordance with the finding of the report. The plaintiffs appealed to the supreme

court.

G. F. Miller, for appellants. A partnership is to be regulated by the written articles so far as they go, but the partners will be bound by a verbal agreement. Casey on Part., 5 Law Lib. 3. Each partner must devote his attention and skill to the business of the firm. Pars. on Part. 6; 3 Kent's Com. 20. If losses occur by breach of duty by one partner, he must individually bear the loss. Id. 224; Caldwell v. Seiber, 7 Paige, 494; Crawshay v. Collins, 15 Ves. 226. If a partner quits the business for an unreasonable cause he should make good the loss. Howell v. Harvey, 5 Ark. 270. Bill in equity is the proper mode for settling partnership transactions. McFadden v. Hunt, 5 Watts & Serg. 468; McFadden v. Sallada, 6 Penn. St. 283.

J. C. Bucher, for appellee. An extra allowance cannot be made to a partner for services unless by special agreement. Collyer on Part., § 183; Story on Part., §§ 192, 198; Dougherty v. Van Nostrand, 1 Hoff. Ch. 68; Franklin v. Robinson, 1 Johns. Ch. 157; Burden v. Burden, 1 Ves. & Bea. 170; Bradford v. Kimberly, 3 Johns. Ch. 431; Lee v. Lashbrooke, 8 Dana, 219; Paine v. Thacher, 25 Wend. 450;

Marsh's Appeal.

Newland v. Tate, 3 Ired. Eq. 232; Caldwell v. Lieber, 7 Paige, 483; Phillips v. Turner, 2 Dev. & Bat. Eq. 123; Beatty v. Wray, 19 Penn. St. 516; Brown v. McFarland, 41 id. 129; Gyger's Appeal, 62 id. 73.

WILLIAMS, J. The only question in this case is, whether a partner who neglects and refuses, without reasonable cause, to perform the personal services which he has stipulated to render the partnership, is liable to account to the firm for the value of the services in the settlement of the partnership accounts. The master and the court below refused to charge the defendant with what would have been the value of his services to the firm if they had been rendered as agreed; because, in the absence of an express stipulation, partners are not entitled to compensation for their services, however unequal in value or amount; and to require the defendant to account for the value of his services would be, in effect, allowing compensation to the other members of the firm for the services they rendered. It is undoubtedly true, as a general rule, that partners are not entitled to charge each other, or the firm of which they are members, for their services in the copartnership business, unless there is a special agreement to that effect, or such agreement can be implied from the course of dealing between them. By the well-settled law of partnership, every partner is bound to work to the extent of his ability for the benefit of the whole, without regard to the services of his copartners, and without comparison of value; for services to the firm. cannot, from their very nature, be estimated and equalized by compensation of differences. Beatty v. Wray, 19 Penn. St. 519.

In the absence, therefore, of any special provision allowing compensation for services, the law will not make any, nor infer one from the greater industry or greater ability of any one partner. The doctrine seems to be that partners are considered as meeting on common ground, each engaged to do all he can for the common good; and whatever any one does, he has no claim for any thing beyond his equal share of the common benefit without the consent of his copartners. Parsons on Partnership, 229, 230. The principle on which the master and the court below refused to charge the defendant is too firmly imbedded in the law of partnership to admit of question; but the doubt is as to its applicability to the facts of this case. The plaintiffs are not seeking compensation for the services they rendered the partnership. They are simply seeking to charge the defendant with the loss occasioned the partnership by his refusal to render the VOL. VIII.-27

Marsh's Appeal.

services which he agreed to perform. If the partnership has suffered loss by his breach of the agreement, why should he not make good the loss, and put the firm in the same condition it would have been if he had not broken the agreement? If the defendant is compelled to make good the loss, each member of the firm, including himself, will receive his proportion of the amount in the distribution of the partnership assets, and in no just sense can this be regarded as compensation for the services individually rendered.

If, then, the value of the services is the measure of the loss, why should not the defendant be charged with their value? It may be that in the absence of any agreement to render the special services, he would not be chargeable for his neglect to perform them. The question is not whether one partner, in the absence of an express agreement, is entitled to compensation for the services he may render, or whether, if he fails to render any, he is liable to the partnership for the breach of the implied obligation to exercise diligence and skill, and to devote his services and labors for the promotion of the common benefit of the firm. But the question with which we have to deal is, whether a partner who agrees to render special service to the firm, for the performance of which he is well qualified, and which was one of the inducements for the other members to enter the partnership, is liable to account for the value of such service, if he wrongfully refuses to perform it? If, says Mr. Justice STORY, the partnership suffers any loss from the gross negligence, unskillfulness, fraud or wanton misconduct of any partner in the course of partnership business, he will ordinarily be responsible over to the other partners for all the losses and injuries, and damages sustained thereby, whether directly or through their own liability to third persons. Of course all losses, injuries and damages sustained by the partnership from the positive breach of the stipulations contained in the articles of partnership on the part of any partner, are to be borne exclusively by that partner, and he must respond over to the other therefor. Story's Partnership, § 169. If this be the law why should not the defendant be answerable to the partnership for his breach of the agreement to perform the services stipulated? The master has found, upon competent and sufficient evidence, that there was a verbal understanding among the partners, at the time of the formation of the partnership, that each should take a particular part of the business; that the defendant, Geddes, was to manage the finances; that he was a careful and correct

Marsh's Appeal.

business man, well qualified for the position, and was given that place on account of his fitness for it; and that he performed this duty until he withdrew his services; that to have dissolved the firm at that time would have been at the risk of great loss in the then condition of the business; and that the proof is sufficient to sustain the amount charged by complainants for loss of service, if, under the law, they are competent to make the charge. But why should there be a doubt in regard to their right to charge the defendant with the amount of the loss? Why should not a partner be just as responsible for the breach of his agreement to render personal services to the partnership as for the breach of any other stipulation in the partnership contract? No good reason can be suggested why there should not be the same rule of accountability in the one case as in the other. It has been held that where, by the articles of copartnership, one partner is exempted from the duty of rendering his personal service to the joint business, if he afterward does render such services, at the instance and request of his copartners, he will be entitled to a reasonable compensation therefor. The general rule that one partner cannot charge the firm for his services is founded on the principle that each partner is bound to devote his skill and labor to the promotion of the common benefit of the corcern, and is inapplicable where the reason of it fails. Lewis v. Moffet, 11 Ill. 392. And so it has been held that where partners agree to invest equal amounts of money in their common business, and one advances a larger sum than the other, he is entitled, upon settlement, to an allowance of interest on one-half of the excess so advanced by him from the date of its appropriation to the use of the firm. Reynolds v. Mardis, 17 Ala. 32. And why, by parity of principle, should not one partner be entitled, upon settlement of partnership accounts, to charge his copartner with the value of the services which he agreed to give and refused to render? If the defendant had made profit by engaging in other business in violation of his contract, it is settled that the plaintiffs would have their option, either to sue for damages for the breach of the contract, or to bring a bill in equity to compel an account. Moritz v. Peebles, 4 E. D. Smith, 135. And it would seem to follow that they have the same option as it respects the remedy for the defendant's refusal, in violation of his contract, to render the services which he agreed to perform. The court below was, therefore, in error in not requiring the defendant to account to the partnership for the loss occasioned by

The North American Life and Accident Insurance Co. v. Burroughs.

his breach of the agreement. The proper measure of the damages, under the circumstances of the case, is the value of the services wrongfully withheld. The decree must, therefore, be set aside, and the record remitted to the common pleas, with instructions to charge the defendant in the settlement of the partnership accounts with the value of the services which he agreed and wrongfully refused to render, and to distribute the partnership funds to the partners entitled thereto, in accordance with the principles laid down in this opinion.

Decree accordingly.

NOTE. In the absence of any special agreement, partners are not entitled to charge for services. Franklin v. Robinson, 1 John. Ch. 164; Bradford v. Kimberley, 3 id. 434; Hill v. Matta, 12 La. Ann. 179; Cuntiff v. Duersville Manuf. Co., 7 R. I. 325; Hutchinson v. Smith, 5 Irish Eq. 123; Zimmerman v. Huber, 29 Ala. 380.

Nor without special agreement is a surviving partner entitled to compensation for closing up the business. Piper v. Smith, 1 Head. 94; Patten v. Calhoun, 4 Grat. 138: Gygers' Appeal, 1 Am. Rep. 382. Nor for carrying on the business. Stocken v. Dawson, 6 Beav. 371; Burden v. Burden, 1 Vesey & B. 170. But see Griggs v. Clark, 23 Cal. 430, where the surviving partner was allowed compensation to be deducted from the profits for services in taking care of the stock, although it was held that he was not entitled to compensation in winding up the affairs of the firm. So, in Hutchinson v. Onderdonk, 2 Halst. Ch. 300, the surviving partner was allowed three per cent for services in settling the business of the concern. See, also, Hite v. Hite, 1 B. Mon. 179. So when one of the partners is an attorney, and accounts are divided between the parties to collect, no allowance can be made to the attorney partner for collections. But, if he had been employed by the firm to bring suits as an attorney, he would have been entitled to compensation, as that is an additional employment outside of the firm business. Vanduzer v. McMillan, 37 Ga. 311.-REP.

THE NORTH AMERICAN LIFE AND ACCIDENT INSURANCE Co., plaintiffs in error, v. BURROUGHS.

(69 Penn. St. 43.)

Accident insurance-accidental injury.

An accident insurance policy was issued containing a stipulation that the insurance should not embrace any "death caused by natural disease, surgical operation, unreasonable imprudence." While the insured, who used to be a farmer, was pitching hay in the field of a relative whom he was visiting, the handle of the pitchfork slipped through his hands and struck him in the bowels, inflicting an injury which produced peritoneal inflamation, in conse quence of which he died. Held, that this was a case of death resulting from an injury occasioned by "accident."