A PARTNERSHIP CASE

Taranaki Daily News, Volume LIV, Issue 76, 20 September 1911, Page 7

A PARTNERSHIP CASE

CLAIM FOR MONEY LENT. A case arising tint, of a local picture entertainment venture was heard at the New Plymouth Magistrate's Court yesterday morning, before Mr. H. S. Fitzherbert, S.M, Henry Edward Crust, one of the members of the Royal Pictures Syndicate, sued Max Emil Gjedsted, a former partner, for £IOO, moneys lent by the plaintiff to the defendant. Mr. A. H. Johnstone appeared for the plaintiff, and Mr. <'!. (irey for the defendant.

(Plaintiff's evidence was to the effect that he met (ijedsted in Auckland about April of this year, and arrangements were made for a partnership between a man named Colin, and Gjedsted and himself. The arrangement was that each of the partners should put in £l5O each, but later this was altered so that only £IOO would be necessary from each. When the time came, Gjedsted could not find the money, and he borrowed £IOO (from Crust, who in turn 'borrowed £IOO from Colin. Gjedsted was to have given witness an 1.6. U. for the amount, but this was not done. Gjedsted at that time expected to get the money from his father. The £3OO was paid into the partnership. In about three weeks more money was required, and Gjedsted being unable to find his share, went out of the partnership. There was no mention -at the time the loan was made that Gjedsted should repay the £IOO out of the profits. To Mr. Grey: The money was used in buying plant and in paying £IOO deposit on the lease of the theatre. This lease would expire on July 1, 1012. Colin took no active part iii the management. Under the deed of partnership Gjedsted and the plaintiff drew a •weekly salary, and the profits were to be shared equally. To Mr. Johnstone: Until the time came for the money to be paid into the partnership he did not know that Gjedsted had no means.

The evidence of the defendant had been taken on commission in Wellington, and he relied on the terms of the deed of dissolution from partnership, which he claimed relieved him from all liability in the matter.

Mr. Grey, addressing the Court, produced the deed of dissolution of partnership, which, he contended, contained an indemnity wide enough to cover tfhis liability.

The Magistrate: That's the question. Mr. Grey, continuing, said that the three men put ;n £IOO each, and Gjedsted's capital was still there. If Gjedsted still owed £IOO, what did he assign his share in the kinematograph, films! and lease for? What was he to get? The remaining partners had, in consideration of Gjedsted retiring, undertaken to pay all the debts of the partnership outstanding, rents, etc. Having in view the whole of the circumstances—that Gjedsted had not withdrawn his £100; that Colin and Crust were still using the plant purchased by the partnership and earning money in the theatre which they had leased, counsel contended that the deed of dissolution was intended to act, and did act, as an indemnity for his liability for £IOO to Crust.

Mr. Johnstone said that he had purposely avoided making reference to the profits or otherwise of this venture, but since Mr. Grey had asked what Gjedsted was to get in consideration for 'his retiring from the partnership, and had also stated that the remaining partners were deriving benefit from the use of Gjedsted's £IOO, he must tell the court that the firm lost £l5O in the first four weeks. The rent was far too high for them to pay, and the picture business was not paving now. The benefit that Gjedsted derived was in getting out of the heavy liabilities incurred, and he was very lucky, counsel thought, in netting out of it. Mr. .Johnstone argued that the indemnity provided in the deed could not be extended to cover the loan from Crust as a private individual to Gjedsted as another private individual Gjedsted owed the partnership nothing but he owed Crust, one of the partners' £IOO. The indemnity clause was one that would be found in all well drawn deeds for' dissolution of partnership—■Mr, Grey: .Who drew it I. The Court smiled, and Mr. Johnstone replied, modestly that it was evident that it was well drawn. Mr. Grey: T couldn't help askinn- that your Worship. Mr. Johnstone said he did not claim originality for the form of the deed • The S.M.: Come, Mr. Johnstone, we don't want all the secrets of the ollice. Mr. Fitzherbert promised to give his decision next day. What he had to decide was whether the deed referred to the liabilities of the partnership only, or if it was to go further and release Gjedsted from this liability as well.