1952 M. No. 2170
 1 All ER 779
23rd February 1953
Facts of the Case
The plaintiff and the defendants were partners in a partnership at will and conducted the business of fashion and commercial photographers.
The defendant wanted to start and conduct a business of commercial and fashion photography. For this purpose, he took on a lease of certain premises for a period of 7 years at £400 per year in Shepherd’s Market, which became the premises for conducting the business. The furniture and studio equipment also belonged to the defendant. The defendant started the business. As he was not skilled himself, he hired others to work for him. In January 1950, the defendant invited the plaintiff to work as a business partner. The plaintiff worked as a freelance photographer at this time and was a well known commercial photographer. First, he occasionally worked at the defendant’s studio but started working there full time in April 1950. He brought in a considerable amount of goodwill and connexions to the business. Both brought in some negatives. There were only two agreed on terms of the partnership, these being:
- The profits were to be shared equally.
- The plaintiff shall receive £125 monthly on his account of share of profits.
Both parties wanted to legalize the partnership and in accordance with this, the plaintiff talked to his solicitors, who on his behalf wrote to the defendant. The parties contemplated carrying on the business as a limited company, but nothing further had been decided. Subsequently, the parties quarrelled and the partnership was dissolved in May 1952.
During the dissolution, it was held that no terms were to be implied, except those which were essential to the efficacy of the business. Also, although the lease was the defendant’s property, the rent and other expenses were to be debited to the partnership.
On February 19, an order was made. This order declared that there was a partnership between the plaintiff and the defendant from April 1, 1950, to May 30, 1952.
Issues before the Court
- Whether there was a partnership.
- If there was a partnership, what were the assets of the partnership?
Ratio of the Case
The judge observed that a partnership did exist between the two parties and the only term which had been agreed upon was the equal sharing of profits. The question before the court was with respect to what were the assets of the partnership. As assumed, the stock-in-trade such as films and negatives were brought in as assets to the partnership and thus were assets of the same. The judge stated that no more agreements shall be implied between the parties than ones that are essential to the efficacy of the business.
The judge observed that nothing except the negatives brought by both parties had gone into the partnership as assets and if they wish to, both the parties can take away their own negatives. The judge on the topic of the negatives stated that the negatives of photographs that had been used up in the course of the partnership are an asset belonging to the partnership.
The judge stated that the goodwill brought in by both parties shall not be counted as an asset of the partnership. The reason given by him was that although the parties contemplated on attributing some value to the goodwill, nothing was ever finalized and thus goodwill cannot be said to be a partnership asset. Therefore, now that the partners have separated, they both shall keep their own respective connexions.
Decision of the Court
The court held that the lease, equipment and furniture were brought in by the defendant, and was thus his personal property. Also, the negatives brought in were the property of the respective bringers. The goodwill of both parties shall not form any part of the partnership assets. The only assets of the partnership were the stock-in-trade and consumable chattels.
The court also held that no depreciation shall be charged to the partnership. The court lastly, held that the partnership shall be debited for the expenses of rent, rates and insurance for the time that it had occupied the premises.
The author is Om Gupta, a first-year law student pursuing BBA-LLB from the University School of Law and Legal Studies.
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