Murphy v Power

• Jurisdiction: Ireland
• Judgment Date: 26 March 1923
• Docket Number: (1922. No. 525.)
• Date: 26 March 1923
• Court: Court of Appeal (Irish Free State)

Appeal. (I. F. S.)

(1922. No. 525.)

Murphy v. Power

In the MATTER of an Indenture of Partnership dated November 8th, 1909, Between THOMAS POWER and JOHN HENRY POWER. MARY MURPHY and PATRICK CAREW

Plaintiffs

JOHN HENRY POWER, Defendant (1)

Partnership - Option to purchase - Expiration of term - Continuance of business without fresh article - Partnership Act, 1890 (53 & 54 Vict. c. 39), s. 27, sub-s. 1 -Death - Pre-emption clause - Inconsistent alternative - Application to partnership at will.

Appeal from an order of the Master of the Rolls dated December 8th, 1922, whereby it was declared that clause 16 of the instrument mentioned in the title hereof applied only during the ten years therein stated, and did not apply in the events which had happened; and that on the death of Thomas Power on April 5th, 1921, John Henry Power was not entitled to purchase the share of the said Thomas Power upon the terms contained in the said instrument.

On November 8, 1909, Thos. Power and John Henry Power entered into a deed of partnership whereby they agreed to carry on as partners, under the name of Wm. Dwyer & Co., the business of wholesale grocers and retail wine and spirit merchants at Clonmel, County Tipperary. The duration of the partnership was limited to a period of ten years from June 1st, 1909. The terms of the deed provided that a salary of £200 per annum was to be paid to Thomas Power, but that no salary should be paid to John Henry Power. The net profits of the business were to be divided equally between the partners, and in like proportion they

were to bear all losses, including loss of capital. Clause 16 was in the following terms:—

"In the event of the said John Henry Power predeceasing the said Thomas Power during the said period of ten years, his share or interest in the partnership assets shall, subject to its obligations, go to such person or persons as he shall by deed or will or codicil appoint. Such person or persons shall not be entitled to interfere with or take part in the management of the business, but shall be entitled to share in the profits and liable to share in the losses during the remainder of the said period of ten years in the same way as the said John Henry Power would have done if he had lived. If the said John Henry Power shall not appoint any such person or persons, then the said Thomas Power shall be entitled to purchase the share or interest of his deceased partner in the assets of the partnership business on the terms hereinafter mentioned. In the event of the said Thomas Power predeceasing the said John Henry Power during the said period of ten years, the said John Henry Power shall be entitled to purchase the share or interest of the said Thomas Power in the partnership assets on the terms hereinafter mentioned; or if he shall not so purchase same, he shall be entitled to have the said Thomas Power's share of the partnership assets continued in the business for the remainder of the said period of ten years; but the personal representatives of the said Thomas Power or their assigns shall not be entitled in any way to interfere with or take any part in the management of the business, but they shall be entitled to the said Thomas Power's share of the profits of the partnership, and shall be liable to bear his share of the losses in the same manner as he would have done if he had lived, provided, however, that the said John Henry Power shall not be entitled to exercise this option unless he shall within three months from the death of the said Thomas Power elect in writing to exercise it; failing such election the partnership shall at once determine."

The terms of purchase provided that the purchase price should be the amount at which the share stood in the last balance sheet prepared prior to the death of the deceased. The purchase-money was to be paid by ten equal instalments at intervals of six calendar months, together with interest on the amount for the time being remaining unpaid at the rate of 5 per cent. per annum.

The ten years came to an end on May 31st, 1919. Neither of the partners died during the period. The business was continued as a partnership without any fresh agreement or deed until April 5th, 1921, when Thomas Power died. By his will, dated March 21st, 1919, Thomas Power bequeathed two-thirds of his residuary estate to Mary Murphy and Patrick Carew, the plaintiffs. The testator did not specifically bequeath his share or interest in the business of William Dwyer & Co., but concerning the same directed as follows:—"It is my will that my executors shall have two years during which to realize my assets to the best advantage, having regard in this respect especially to my share or interest in the business of William Dwyer & Co., Clonmel." On May 28th, 1921, John Henry Power purported to elect in writing to exercise an option to purchase the share of the deceased in the business. Thereupon the plaintiffs issued a summons asking the Court to determine the following questions:—

1. Whether clause 16 of the said instrument enabling the survivor to purchase the share of the deceased partner applied only during the period of ten years therein mentioned, or whether same applied to a partnership at will continued after the expiration of the said period of ten years.

2. Whether on the death of Thomas Power on the 5th April, 1921, said John Henry Power was entitled to purchase the share of the said Thomas Power upon the terms mentioned in the said instrument.

3. If so, whether the said John Henry Power validly exercised the option to purchase the share of the said Thomas Power, deceased.

4. And for a declaration that the plaintiffs as residuary legatees under the will of said Thomas Power were entitled to have the said partnership wound up.

From the order of the Master of the Rolls declaring that upon the true construction of the deed of partnership and in the events which had happened, clause 16, enabling the survivor to purchase the share of the deceased partner, applied only during the period of ten years therein mentioned, and did not apply to a partnership at will continued after the expiration of the said period of ten years, the defendant appealed.

A and B entered into a partnership deed by which they agreed to carry on business for a period of ten years. One of the clauses in the deed provided that in the event of A predeceasing B during the term of ten years, B should be entitled to purchase the share or interest of A in the partnership assets, or if he should not so purchase same...