Case ID: wis_42/html/0085-01.html
Source: Caselaw Access Project
Author: {"author": "Cole, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Upham and another vs. Hewitt and another, imp.
    
      Contract of Partnership,
    
    
      1. By the terms of a contract between A., B. and 0. as parties of the first Xiart, and X. and T. as xiarties of the second part, the former covenanted with the latter to “ commence immediately and work faithfully and constantly for ” X. and Y. until the logs there mentioned should he marketed; that they would take charge of the several logging: camps of X. and Y., to be started at such points as the latter should direct, in a certain county, hire men to run the same, cut, haul, hank, and run to a certain place, all the pine logs they could get out during the then axoproaching fall and winter, and do all said work in a good and suitable manner, and for the best interests of all the parties to said contract. In consideration thereof, X. and Y. covenanted on their part to pay for all stumpage upon the logs so to be cut, for all hired help and all teams necessary for getting out such logs, andfo-r all supplies and expenses necessary in cutting logs and getting them to market; and that when the logs were sold by them (X. and Y.), all the money so paid out by them should first be deducted from the amount paid for the logs, and the balance, with all teams and supplies then remaining on hand, should be divided in equal portions between the two parties above named, and the portion or share belonging to A., B. and C. should he “ full payment and compensation for the work and labor of said ” A., B. and C. Held, that this agreement constituted all the parties thereto partners, and rendered X. and Y. liable for supplies furnished to A., B. and C., upon the order of the latter, for the use of the logging camps while engaged in getting out logs under said contract.
    2. For supplies famished to A., B. and 0. for the use of their logging camps while engaged in getting out logs for other parties, and not under said contract, X. and Y. are not liable.
    APPEAL from the Circuit Court for Winnebago County.
    This action was brought in March, 1873, by Upham and Bussell, partners in business, against Hewitt, Jr., Hyde, Hedges, Garfield and Warwick, who are alleged to have been, for more than two years before the commencement of the action, partners in the logging and lumbering business, for au indebtedness of said last named partnership in the sum of $2,000, for goods sold and delivered to them by the plaintiffs between October 17, 1871, and January 1, 1873, at the village of Shawano, in the county of the same name. Hyde and Hewitt answered by a general denial, and an averment that they were never copartners with the other defendants; and they attached to their answer proper affidavits denying the partnership.
    Upon a trial before a referee, the plaintiffs introduced in evidence, against objection, a contract under seal entered into on the 17th of October, 1871, between Hedges, Garfield and Warwick as parties of the first part, and Hewitt and Hyde as parties of the second part. By the terms of this contract, Hedges, Garfield and Warwick covenant “that they will commence' immediately and work faithfully and constantly for said Hyde and Heioitt until the logs hereinafter mentioned shall be marketed in Oshkosh, in the summer of 1872, as follows, to wit: They are to take charge of the several logging camps of the said Hyde and Hewitt,- to be started at such points as Hyde and Hewitt shall, direct, in the county of Shawano; hire men to run the same; cut, haul, bank, and run to Oshkosh, all the pine logs they can get out during the coming fall and winter; and do all said work in a good and suitable manner, and for the best interests of all the parties hereto.” In consideration of the foregoing covenants, Hyde and 'Hewitt covenant on their part, “ that they will pay for all stumpage upon any and all pine logs so to be cut by the said parties of the first part, pay for all hired help and for all teams necessary for getting out said logs and running the same, and all supplies and expenses necessary in cutting, hauling, banking, rafting, running, moving, and towing the said logs; and when the said logs are sold at Oshkosh, or at the Wood river boom, by said Hyde and Hewitt, all the moneys paid out and expended by the said Hyde and Hewitt as aforesaid, shall be first deducted therefrom, and the balance, and all teams and supplies remaining after the sale of said logs, shall be divided between the parties hereto in equal portions — that is, one portion or share to the party of the first part, and one portion to the parties of the second part, which one portion or share shall be full payment and compensation for the work and labor of said parties of the first part as aforesaid.”
    The evidence for the plaintiffs tended to show that in the winter of 1871-2, Garfield, Hedges and Warwick carried on lumbering operations in pursuance of the foregoing contract; that they obtained from the plaintiffs supplies and cash for carrying on these operations, paying the men and running the logs, until the fall of 1872; that during the same period they drove logs for one McCord to the amount of 1,500,000 feet or more; that the supplies fnrnished by plaintiffs were used in running these last named logs, as well as in getting out and running logs under the above contract; that their orders on the plaintiffs were signed “Garfield & Hedges;” that the account in plaintiffs’ books, from which the bill of particulars in this action was taken, was in form an account with “ Garfield & Hedges; ” that plaintiffs had seen the contract above recited, before they commenced furnishing the supplies; that at several different dates between October 24, 1871, and February 6, 1872, Garfield & Hedges bad given them drafts on Hyde to balance the account to those dates respectively, which drafts were paid; and that on the 9th of March, 1872, Hyde, in person, paid at their office $1,700 in currency upon said account.
    For the defendants, Hedges testified that he toot the McCord logs to run for Garfield & Hedges, and that Hyde and Hewitt “ had nothing to do "with the running of those logs, that he knew of.” The defendant Hewitt testified: “ Garfield and Hedges told me, when the logs were rafted out, that I was to sell them to somebody; they told me to sell them to the highest bidder and pay the bills, and, if there was anything over, to pay Uphctm <& Bussell. I know there was nothing due Garfield and Hedges and Warwick at the times the logs were sold, on account of this contract.” This last statement was received against plaintiffs’ objection. On cross-examination, the witness said: “When the logs were sold, we took the notes of the parties who bought the logs, and divided them; and those notes I took and applied on moneys I „had paid out, so far as they would go. The logs did not come to enough, within seven hundred dollars, to pay the advances.”
    It appears that in May, 1872, Hedges and Garfield executed and delivered to Hyde and Hewitt a bill of sale of the logs cut under said contract, and certain other chattels, as follows: “ Oshkosh, May 20, 1872. For and in consideration of eleven hundred dollars, five hundred cash in hand, and authority to draw for six hundred dollars, and all other supplies which we have received, we do hereby sell and assign and hereby transfer to Henry Hewitt, Jr., and Welcome Hyde all the following described logs now lying in the Embarrass river [describing them]; in fact meaning to convey all our right, title and interest in any of the logs in the Embarrass river, cut and purchased for said Hyde and Hewitt/ also all horse teams, three yoke of eattle, six lumber sleighs, all camp equipage and tools, and chains, and blankets, and implements of any description, bought with the money advanced by said Hyde and Hewitt.”
    
    The referee found the following among other facts: 2. That defendants, on the 17th of October, 1871, entered into a contract by which they became partners in the logging and lumbering business. 3. That by said contract, Hyde and Hevñtt agreed to pay for all men and supplies necessary to carry on said logging business. 4. That plaintiffs sold and delivered to defendants Garfield & Hedges supplies used in said logging business, and paid men who worked on said logs, to the amount of $3,953.17. 5. That defendants Garfield & Hedges took about 1,500,000 feet,of logs to run for other parties; and that the supplies furnished by plaintiffs were used as well in running these logs as those of defendants. 6. That there had been paid to plaintiffs, on account of such supplies and money furnished, $1,774.10. 8. That there was then due plaintiffs from defendants $2,079.07, with interest from March 13, 1873, amounting in all to $2,453. As conclusions of law,, the referee held, 1. That by the above described contract between them, the defendants became partners. 2. That plaintiffs were entitled to judgment against defendants for $2,453. Hewitt and Hyde excepted to all the above findings of fact except the fifth, and also to the conclusions of law. Plaintiffs moved to confirm the report of the referee, and for judgment thereon. At the hearing, the parties stipulated in open court, “ that if a deduction from the amount found due by the referee should be made, $600 was a ratable deduction to be made on account of the logs mentioned in the fifth finding of the referee.” The court ordered that the report and findings be modified by deducting $600 from the amount found due by the referee; that the report so modified be confirmed; and that plaintiffs have judgment against all the defendants for $1,744.50, and costs; and judgment was entered accordingly.
    
      Plaintiffs filed exceptions to tbe modification of tlie referee’s report; and both plaintiffs and tlie defendants Hyde and Hewitt appealed from tbe judgment.
    For tbe defendants Hyde and Hewitt, a brief was filed by Hoses Hooper and D. J. Parkinson, and tbe cause was argued orally by Hr. Hooper.
    
    They argued, 1. That tbe contract did not mate Hyde and Hewitt partners witb tbe other defendants, inter sese. Tbe contract gives each party a share in the profits, if any, as compensation for capital or services, which does not make a partnership. JDwvnel v. Stone, 30 Me., 384; Hazmd v. Hazard, 1 Story, 371; Bice v. Austin, 17 Mass., 205; Loomis v. Marshall, 12 Conn., 69; Demvy v. Galoot, 6 Met., 82; Judson v. Adorns, 8 Cush., 556; 5 Pick., 177; Buddick v. Otis, 33 Iowa, 402; Christian v. Crocker, 25 Ark., 327; Lvntner v. Hilliken, 47 Ill., 178; Collyer on Part., §§ 32-35. ' This was one venture, and not a series of ventures in which profits might be accumulated which should stand as security for subsequent debts. Loomis v. Marshall and Judson v. Adams, supra; Ford v. Smith, 27 Wis., 261; Braley v. Goddard, 49 Me., 115; Hawkins v. McIntyre, 45 Yt., 496. There was to be no division of profits here until after all debts were incurred and paid, so that nobody could give any credit on account of profits earned in business. An essential element in copartnership is a control by each partner of tlie whole property, that is, a power of sale by each partner. Braley v. Goddard and JDwvnel v. Stone, supra/ Woodward v. 0owing, 41 Me., 9; Knoiolton v. Reed, 38 id., 246-254; 3 Kent’s Com., 20, 22, 116, 117; Story on Part., 449, §§ 89, 90. But here the title to the property was in Hyde and Hewitt, and the logs were to be sold only by them, as appears in the contract. This view is not contradicted by the bill of sale, which was simply a release of the claims of Garfield and Hedges to the profits, and was evidently so understood. 2. That the contract and the dealings under it did not make Hyde and Hewitt partners as to the plaintiffs/ for the latter. gave tbe former no credit. They trusted Garfield & Hedges. And they knew tbe terms of this contract before tbey extended any credit. 3. That tbe only canse of action stated in tbe complaint against Hyde and Hewitt is, that tbey were co-partners with tbe other defendants; that tbe contract put in evidence was not admissible to establish any other cause of action; and that tbe rule is still good, that a recovery must be according to tbe allegations and proofs. Filert v. Oshkosh, 14 Wis., 586, 590; Yowng v. Lego, 36 id., 397; Johnson v. Fil-kimgton, 39 id., 62, 66. 4. That if the complaint could be construed as stating a cause of action upon a contract by Hyde and Hewitt to pay for goods sold by plaintiffs to tbe other defendants, still plaintiffs could not recover. (1) It is logically held in many cases that no person can recover on a promise, except tbe person to whom it is made. Lawrenee v. Fox, 20 N. Y., 275, dissenting opinion of ComstooK. J., and cases there cited; Olapp v. Lawton, 31 Conn., 103; Treat v. Stanton, 14 id., 451. (2) Tbe case does not come within that class of cases which hold that one may sue on a promise made for his benefit to a third person, (a) Hyde and Hewitt did not, by the contract, promise to pay to the plavntiffs. When they promised to pay for all hired help, they did not promise to pay to each man hired to perform any work in the camp; so when they promised to pay for supplies, there was no promise to pay to each person of whom supplies were obtained. Oarnegie v. Morrison, 2 Met., 381; <Hemes v. Stock-well, 33 Me., 341; Seaman v. Whitney, 24 Wend., 260; Weston v. Baker, 12 Johns., 281; Barker v. BthokUn, 2 Eenio, 47; Fiehelberger v. Mwdoek, 10 Md., 373. (b) Garfield, Hedges and Warwick certainly had a right of action for the money here sued for. These supplies were furnished by them, and charged to them. Gould Hyde and Hewitt be subject to suit by both tbe plaintiffs and tbeir codefendants at the same time? Putney v. Farnham, 27 Wis., 190. (c) Plaintiff's wore at least bound to show that Hyde and Hewitt had in tbeir bands a fund out of wbicb tbey ought to pay this claim. This tbey did not show; but on tbe contrary tbe proof was that Hyde and Hewitt bad fulfilled tbeir contract with tbe other defendants. Mellen v. Whipple, 1 Gray, 317; Lawrence v. Fox, supra; Grow v. Rogers, 1 Strange, 592; Brewer v. Dyer, 1 Cush., 340. (d) Such promises have no negotiable quality, and cannot be transferred from party to party. /Seaman v. Whitney, supra. To sustain this action, tbe promise must be construed as a floating one, resting wherever Garfield, Hedges and Warwick got credit, or with any one paying these bills. 4. That if plaintiffs ever bad a right of action on tbe promise of Hyde and Hewitt to Garfield, Hedges and Warwick, tbeir suit herein against the last named promisees is a bar to tbeir action against Hyde and Hewitt. Rams-dale v. Horton, 3 Pa. St., 330. 5. That tbe promise was to pay for such supplies, etc., as were “ necessary in cutting, etc., tbe said logs; ” and there was no proof that tbe supplies here sued for were necessary for that purpose, while there was proof that a part of tbe supplies charged were not necessary for that purpose, but were used (and that with plaintiffs’ knowledge) for running other logs to market; that if tbe other defendants were copartners with Hyde and Hewitt, it was only in respect to logs cut under tbe contract; that if, on tbe other band, tbey were Hyde and Hewitt’s agents, tbey were such only as to getting out the same logs; and that tbe evidence as to supplies used in running to market tbe Mc-Cord logs was admissible under tbe general denial.
    For tbe plaintiffs, a brief was filed by Fellcer <& Weisbrod, and tbe cause was argued orally by Charles W. Fellcer.
    
    Tbey contended, 1. That tbe contract in evidence showed that tbe parties thereto were not only to share in tbe profits arising from a sale of tbe logs, but were also to share equally in certain other partnership property, viz., “teams and supplies;” that tbe bill of sale taken by Hyde & Hewitt, of tbe interest of Hedges and Garfield in tbe logs, teams, sleighs, etc., show that Hedges and Garfield were regarded as having an interest in the property, and not as mere hired men; and that, as all the defendants had united to carry on the business for their mutual profit, one party contributing the capital and the other party the labor and skill, under a contract which entitled them to a communion of profits, a community of interest in the property, and the right to an account, they were partners, not only as to third persons, but also inter sese. 2. That a stipulation to share net profits is in law and fact a stipulation to share losses (20 ~Wis., 117; 7 Ohio St., 172; Story on Part., §§ 20, 21, 56); and that the provisions of the contract between the defendants for a division of net profits rendered them partners at least as to third persons. Grace v. Smith, 2 W. Black., 998; Waugh v. Carver, 1 Smith’s L. 0., 968, notes; Hickman v. Cox, 18 O. B., 617; Whitney v. Ludvngton, 17 "Wis., 140; Gilbamk v. Stephenson, 31 id., 592; Heskethv. Blaneha/t'd, 4 East, 144; Dob v. Halsey, 16 Johns., 34-40; Walden v. Sherburne, 15 id., 409; (Champion v. Bostwick, 18 "Wend., 175; Manhattan Brass Co. v. Sears, 45 N. Y., 797; Leggett v. Hyde, 58 id., 272; CatskillBank v. Gray, 14 Barb., 471; Everett v. Coe, 5 Denio, 180; Cushman v. Bailey, 1 Hill, 526; Bucknam v. Barwwm, 15 Conn., 72; Purviance v. McClvntee, 6 S. & R., 259; Brigham v. Clark, 100 Mass., 430; Cox v. Delano, 3 Dev. Law, 89; Ward v. Thompson, 22 How. (U.S.), 330; Woodv. Vallette, 7 Ohio St., 172;, 8 Kent's Com. (Comstock’s ed.), 20, 25; Story on Part., §'§ 56-62. 3. That if Hyde and Hewitt were not liable as copartners with the other defendants, then they were liable on the ground that Hedges and Garfield were their agents in the transaction of this business with plaintiffs; and that the contract between the defendants was an open letter of credit on the part of Hyde and Hewitt, valid in the hands of whoever furnished the means to Garfield and Hedges to carry on this enterprise. Union Bank v. Coster’s Ex’rs, 3 N. Y., 203, 214. 4. That the circuit court erred in modifying the referee’s report and deducting tbe amount of supplies used in running tbe McCord logs. If tbis matter was a defense, it should have been pleaded. If defendants were partners, it is no defense. If Garfield and Hedges were merely agents or servants of Hyde and Hewitt, the misapplication by tbe servant of moneys or goods furnished for tbe benefit of tbe master, is no defense to an action against tbe master; and it is not pretended that plaintiffs bad any knowledge that tbe supplies ■were intended for any other purpose than that named in tbe contract between tbe defendants.
   Cole, J.

We are inclined to bold that tbe agreement dated 17tb of October, 1871, which was offered in evidence, constituted tbe parties to it partners inter sese in tbe logging adventure. There are doubtless expressions in tbe contract which militate against tbis construction; but, looking at tbe whole instrument, we think tbis tbe better and more reasonable interpretation to place upon it. Tbe learned counsel for Hyde and Hewitt insists that tbe contract does not make bis clients partners with tbe other defendants, but only gives each party a share of tbe profits, if any, as compensation for capital or services, which, be says, does not necessarily constitute a partnership. And he suggests various considerations and inferences drawn from tbe agreement, in support of that view. But there are several clauses which negative tbis construction.' Hedges, Garfield and Warwick agreed to take charge of tbe logging camps of Hyde and Hewitt, to be started at such points in Shawano county as the latter should direct; hire men to run the same; cut, haul, bank, and run to Oshkosh, all the pine logs they could get out during the coming fall and winter, and “ do all said work in a good and suitable manner, and for the best interests of all the parties hereto.” Hyde and Hewitt agreed to pay the stumpage upon all the logs so cut; pay for all hired help, teams and supplies necessary for getting outrunning and booming the logs; and they also retained the right to sell the same. When the logs were sold, all the money paid out and expended by Hyde and Hewitt was to be first deducted from the proceeds of the sale, and “ the balance, and all teams and supplies remaining, * * shall be divided between the parties hereto in equal portions, that is, one portion or share to the parties of the first part, and one portion to the party of the second part.” It was a case where labor and skill were contributed to the business on one side, and capital on the other. There was necessarily a communion of profit and loss; for, if there were no profits or the business proved a losing one, Hedges, Garfield and Warwick would lose their labor expended in getting out and marketing the logs, while Hyde and Hewitt would lose on their advances or capital. But the profits of the business, that is, the excess in the value of the returns over the advances, and all teams and supplies, were to be divided between them. The parties were therefore interested in the profits themselves, as profits. It is true, for their security for advances made, Hyde and Hewitt reserved the right'to themselves to sell the logs, as was done by Ludington in Whitney v. Ludington, 17 Wis., 141. But this stipulation might well be made, and still the parties intend to create, and in fact create, a partnership in the business. So, while the stipulation was that the logs were to be sold only by Hyde and Hewitt, it is plain, we think, that the title to the property was not in them alone, but in all the partners. And if the logs had been injured or destroyed while being run to market, an action 'for damages against the wrongdoer would necessarily have been brought in the name of all the partners in interest.

' The agreement in this case may not be essentially different from the contract before the court in Braley v. Goddard, 49 Me., 115, which was held not to constitute a partnership between the parties. There the plaintiff had not the unqualified, right to dispose of that portion of the lumber belonging to him by the contract, after all prior claims were dischai’ged, and no authority to dispose of any further portion on any terms whatever; The court say such a stipulation was entirely inconsistent with the rights of a member of a copartnership, who has the power to make contracts, incur liabilities, manage the whole business, and dispose of the whole property of the partnership for its purposes, in the same manner and with the same power as all the partners could, acting together. There is no doubt that ordinarily each partner possesses full power and authority to dispose of the partnership property for partnership purposes, unless restricted by the articles of agreement. Rut, “ whenever there are written articles or particular stipulations between the partners, these will regulate their respective powers and authorities inter sese, although not, if unknown, in their dealings with third persons.” Stoiy on Part., § 101. The power reserved by Hyde and Hewitt to dispose of the logs does not have the effect to destroy the legal character of the instrument as we have construed it. Indeed, the case seems strictly analogous to that of Whitney v. Ludington, supra. It follows from these views that Hyde and Hewitt are liable with their codefendants for the goods sold and supplies furnished by the plaintiffs for the partnership business.

On the other appeal, we think the court was right in deducting from the plaintiffs’ bill the amount of supplies furnished to run the McCord logs. That was a matter entirely outside the scope of the partnership business. The goods were not charged to the partnership, nor does it appear that they were sold on the faith and credit of the partnership agreement, which the plaintiffs had examined. Hyde and Hewitt had not agreed to pay for supplies furnished to run any logs except those got out under the contract. They had nothing whatever to do with the McCord logs; and we fail to perceive upon what principle it can be successfully claimed that, they are liable to pay for supplies furnished for running them.

By the 0ourt. --Those portions of the judgment appealed from in each case are affirmed.