De Vita v. Loprete

72 A. 1007, 75 N.J. Eq. 418, 1909 N.J. Ch. LEXIS 87

• Court: New Jersey Court of Chancery
• Decided: March 22, 1909
• Status: Published

Opinion

Lbaming, V. C.

1 think that the demurrer must be sustained.

It will be observed that the agreement of June 18th, 1903, is not an agreement whereby the three parties formed a partnership and constituted themselves present partners, but is rather, an agreement contemplating the formation of a future partnership.

It is not always easy to determine when a contemplated partnership becomes a partnership in praesenti. The test usually applied to determine whether a partnership exists is by ascertaining from the terms of the agreement whether any time has to elapse or any act remains to be done before the right to share profits accrues. 1 Lind. Part. (ed. 1888) *20; McCabe v. Sinclair, 66 N. J. Eg. (21 Dick.) 24, 30; 30 Cyc. 358. The agreement set forth in the bill contemplates that before the parties shall enter upon the anticipated business certain property owned by Michael Loprete shall be purchased at a price to bo fixed, and then provides that if they (complainant and Demetrio Loprete), or either of them, enter into the said partnership, they will each pay to Michael Loprete one-tliird oE the value of the said property. I think it clear that a'partnership between the three parties cannot be said to have been consuinmated, and that the bill cannot, in consequence, be sustained as a bill filed by a partner for the enforcement of partnership rights.

It will also be observed that the bill is not filed for the specific performance of the agreement to form a partnership; it is therefore unnecessary to here determine whether a bill of that nature could he sustained under the facts stated. •

Nor is the bill filed for discovery in aid of a pending or proposed action at law for damages for breach of contract, to the end that a discovery may be had of matters peculiarly within the knowledge of defendant Michael Loprete in order that the value of the business may be more accurately ascertained and established before a court of law. See 1 Story Eq. Pl. § 311.

The right asserted by the bill is that complainant is entitled to one-third of the profits of the business now being conducted by defendant Michael Loprete. Assuming that the bill discloses a contract whereby, for a sufficient consideration, each party to the contract became the agent of the other parties for the procurement of the municipal contract, I do not think that the case falls within that class of cases where a court of equity will impress a trust upon the subject-matter for the benefit of the defrauded parties and administer the trust for their use. The subject-matter here involved is an active business which defendant Michael Loprete is conducting with his own capital and labor and at his own risk. Complainant can only attain a plane of equality with defendant Michael Loprete in that business by the contribution of a proportionate amount of capital and labor and the assumption of liability for losses. That condition, so far as liability for loss is concerned, can only be attained through specific performance, and as already stated, specific performance is not here sought. A court of equity must administer equitable relief upon equitable terms and not by way of punishment. For such damages as complainant may have sustained by reason of the breach of the contract, the law courts can afford an adequate remedy.

I am unable to discern any theory upon which equitable relief can be administered under the present bill, and will advise a decree sustaining the demurrer. '