Marwick and Mitchell v. Kerr

Marwick and Mitchell v. Kerr

The payments from Peat (and Garratt) were for a one-quarter interest in the business and its goodwill, as shown by the written agreements and subsequent ratification; because the payments related to partnership goodwill and the senior partners failed to disclose them, the sums are partnership property and the junior partner is entitled to an accounting and a proportionate share.

Citation
(1916) 53 SCR 1
Parties
Appellant; Defendant; Senior Partner: James Marwick; Appellant; Defendant; Senior Partner: Simpson R. Mitchell; Respondent; Plaintiff; Junior Partner: David S. Kerr
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
1 February 1916
Procedural Posture
Civil Appeal (contract/partnership) / Appeal to Supreme Court of Canada From Court of King's Bench, Quebec; Final Decision Affirming Lower Court and Ordering an Accounting
Outcome
Appeal dismissed; judgment of the Court of King's Bench and Superior Court affirmed; appellants ordered to render an account and in default to pay the specified sum.
Legal Topics
Goodwill, Accounting Between Partners, Duty of Disclosure, Ratification of Partnership Agreements, Admission of Partners, Constructive Character of Payments for Goodwill
Source Language
English
Contract Partnership Equity Property Accounting Goodwill Accounting Between Partners Duty of Disclosure +3 more

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Parties

James Marwick

Appellant; Defendant; Senior Partner

Simpson R. Mitchell

Appellant; Defendant; Senior Partner

David S. Kerr

Respondent; Plaintiff; Junior Partner

Procedural Posture

Civil Appeal (contract/partnership) / Appeal to Supreme Court of Canada From Court of King's Bench, Quebec; Final Decision Affirming Lower Court and Ordering an Accounting

Legal Issues

  1. 1 Whether sums paid by incoming firm (W. B. Peat & Co.) to senior partners were payments for the partnership's goodwill or payments for the seniors' individual interests
  2. 2 Whether senior partners' failure to disclose payments defeated their claim to retain them personally
  3. 3 Whether the August and October partnership documents and subsequent ratification establish that the one-fourth interest was taken from the firm

Ratio Decidendi

The payments from Peat (and Garratt) were for a one-quarter interest in the business and its goodwill, as shown by the written agreements and subsequent ratification; because the payments related to partnership goodwill and the senior partners failed to disclose them, the sums are partnership property and the junior partner is entitled to an accounting and a proportionate share.

Court Disposition

Appeal dismissed; judgment of the Court of King's Bench and Superior Court affirmed; appellants ordered to render an account and in default to pay the specified sum.

Orders

  • Appeal dismissed with costs.
  • Appellants ordered to render an account of the sums received from W. B. Peat & Co. and Percy Garratt and to account to the respondent for his proportionate share.