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Collins v. Lewis - 283 S.W.2d 258 (Tex. Civ. App. 1955)

Rule:

A court of equity, doubtless, will not assist the partner breaking his contract to procure a dissolution of the partnership, because, upon familiar principles, a partner who has not fully and fairly performed the partnership agreement on his part has no standing in a court of equity to enforce any rights under the agreement.

Facts:

Collins (with members of his family) and Lewis (with members of his family) entered into a 50-50 partnership in the operation of a cafeteria. Some time later, Collins became disillusioned with working with Lewis and filed suit, seeking receivership of the partnership business, judicial dissolution of the partnership, and foreclosure of mortgage upon Lewis’ interest in the partnership assets. Lewis filed a cross-action for damages for breach of contract in the event dissolution was decreed. At the conclusion of the trial, the jury returned a verdict denying all the reliefs sought by Collins, who appealed to the intermediate appellate court.

Issue:

Can a partner who breaks his contract procure a dissolution of the partnership?

Answer:

No.

Conclusion:

The Texas Court of Civil Appeals held that pursuing the dissolution of partnership presents the problem of possible liability for such damages as flow from the breach of contract. The Court agreed with Collins' premise that there is no such thing as an indissoluble partnership only in the sense that there always exists the power, as opposed to the right, of dissolution. But legal right to dissolution rests in equity, as does the right to relief from the provisions of any legal contract.  The jury has found that Lewis has delivered his obligation under the partnership agreement, while Collins refused to do so. Thus, Collins had no right to dissolve the partnership.

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