Partnership

• Pages: 733-755

Accountability of partners Para. 1701

PARTNERSHIPS

(1) ACCOUNTABILITY OF PARTNERS

1701. Sharing profit in a partnership.

“In considering the implication of the similarity in the nature of the business of both

firms to which we have referred, we recall to mind the statement of cotton, L.J. in

Dean v. Mac Dowell (1878) 8 Ch. D. 345 at p 354 about the rules and principles of

accountability of partners. It reads: - “There are clear rules and principles which

entitle one partner to share in the profits made by his co-partners. If profit is made by

business, within the scope of the partnership business, then the partner who is engag-

ing in that secretly cannot say that it is no partnership business. It is that which he

ought to have engaged in only for the purpose of the partnership.

Again, if he makes any profit by the use of any property of the partnership,

including, I may say, information which the partnership is entitled to, there the profit is

made out to the partnership property, and therefore, of course, it must be brought into

the partnership account. So, again if from his position as partner he gets a business

which is profitable, or if from his position as partner he gets an interest in partnership

property, or in that which the partnership requires for the purpose of the partnership,

he cannot hold it for himself, because he acquires it by his position as partner, and

acquiring it by means of that fiduciary position, he must bring it into the partnership

account. That is the obligation arising from the fiduciary relation which partners bear

one to another.” From the above statement of the law, with which we agree, it seems

to us that the defendant would be liable to account to the plaintiff if, and only if, the

contracts executed by both the Faramobi Enterprises & Co. and the Faramobi Enter-

prises for the N.P.M.C. come within the scope of the partnership business. We will

now proceed to consider whether they did.

The contracts concerned are clearly not those of “Forwarding, Clearing and

Shipping Agents”. They are also not related to the work of “Building and Civil Engi-

neering Contractors” which is the only additional business included in those enumer-

ated in the heading of the invoices of the Faramobi Enterprises. The only other busi-

ness which both firms have held themselves out to be capable of performing, as

shown in the heading of their respective invoices, is that of “Stevedoring Contrac-

tors”. It now remains for us to consider whether there is evidence to show that the

contracts on which the plaintiff’s claim is based comes within the scope of the work

of “stevedoring contractors”. According to the Shorter Oxford English Dictionary,

a “stevedore” is one employed to load and unload the cargoes of a ship. It follows

from this that a stevedoring contract is one under which stevedores are employed to

load and unload the cargoes of a ship while a stevedoring contractor is a special kind

of labour contractor.

To say, therefore, that a labour contractor, in the particular circumstances of

the case in hand, where almost all the invoices show that the contracts consist mainly

of loading produce into ships or unloading them from ships, is different from steve-

doring contactor is to create a distinction without a difference. The learned trial

Judge was therefore in error in drawing such a distinction. We are sure that if he had

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given due regard to the evidence of Dawodu, the senior Accountant, of the N.P.M.C.

(1st P1/W.) that the payments were made for stevedoring contracts” and that the

files (Exs B and B1) containing the Invoices were marked “Labour/Contractors Bill”,

and also to the evidence of Coker (2nd P1/W), the Principal Shipping Officer of the

N.P.M.C, in which he said that this “department deals with the award of shipping

contract” and that for purposes of these contracts the two firms – Faramobi Enter-

prises & Co. and Faramobi Enterprises – were dealt with by the N.P.M.C. as one

and the same firm, the learned trial Judge would not have come to this vital but

erroneous conclusion.

Moreover, it should have been clear to him that the defendant used a busi-

ness name which is very similar to that of the partnership firm with a completely

different name but he chose not to do so. There can be no doubt that the use of that

name for his own firm was calculated to mislead the N.P.M.C, and did mislead that

Company into thinking that the contracts were still being awarded to Faramobi Enter-

prises & Co. What the defendant appears to have done is to use his own firm to carry

out the contract which were earlier being performed by the partnership firm of

Faramobi Enterprises & Co. As a partner, the defendant is not allowed to derive any

exclusive advantage by engaging in transactions in rivalry with the firm. To use the

words of the learned editor of Lindley on Partnership, 11th Edition, at pp. 398-399,

this is because: - “A partner, moreover, is not allowed, in transacting the partnership

affairs, to carry on for his own sole benefit any separate trade or business which

were it not for his connection with the partnership, he would not have been in a

position to carry on. Bound to do his best for the firm, he is not at liberty to labour for

himself to their detriment; and if his connection with the firm enables him to acquire

gain, he cannot appropriated that gain to himself on the pretence that it arose from a

separate transaction with which the firm had nothing to do”.

In dismissing the claim for account the learned trial Judge observed that he

had before him evidence that it was the Western Nigeria Marketing Board and not

the N.P.M.C. which appointed the defendant’s firm as one of its contractors. That

evidence was not pleaded and should have been ignored. Moreover, even if it was

pleaded, since nobody from the Board was called by the defendant to testify to this

effect, we do not see how the learned trial Judge, on the basis of the inconclusive

contents of some letter and the clearly unreliable testimony to Mr. Nathan Marsh,

could have made that specious observation.

Furthermore, since the granting of a stevedoring licence was also not pleaded

by any of the parties and is therefore not in issue in the case, the learned trial Judge

should not have referred to the failure of the plaintiff to prove that the partnership

firm has obtained such a licence; he should also not have allowed the absence of

such proof to affect his consideration of the plaintiff’s claim. In any case, failure to

obtain such a licence could only mean that Faramobi Enterprises & Co. has not been

licenced to carry out the work of “stevedoring contractors” and also that it has been

carrying out the work of a legal partnership illegally. Even if this were so, we are of

the view that the plaintiff would still be entitled to an account. On this point, we would

like to refer to another observation of the learned editors of Lindley on Partnership,

11th Edition, p. 149-150. It reads: - If an illegal act has been performed in carrying on