Case ID: mass_23/html/0375-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Calvin Bailey versus George Clark.
    Where C furnished money to D to be employed in trade, either by D alone or m partnership with a third person, the net profits to be equally divided between C and D, and D entered into partnership with B, it was held that as between C and D this was only a loan, though as to creditors dealing with D they would have been considered as partners ; but that B, who, before he entered into partnership, knew the nature of the transaction between C and D, was not entitled to claim against C as a partner of D.
    B, as surviving partner of D, erroneously supposing the firm to be solvent and indebted to D, paid money to C on account of his claim against D, and thereupon took a receipt for the same of D’s administratrix, and she took one of C. Held tnsr. B’s remedy to recover back the money, as paid by mistake, was against the administratrix, and not against C.
    This was an action of assumpsit on the common money counts to recover the sum of 2500 dollars.
    At the trial it was proved, that on the 11th of June, 1817, Clark made an agreement under seal with Charles A. Den-net, in which he covenants to pay to Dennet the sum of 4000 dollars, and to let him have the use of it for three years, and Dennet covenants to employ it in trade, either by himself, or in partnership with such other person as he may select; and they mutually agree to receive each a moiety of the net profits, Dennet’s share to be in full satisfaction for his trouble and services.
    On the 25th of the same June, Dennet entered into a general copartnership with Bailey, for three years, and each paid in as capital stock, the sum of 4888 dollars. Bailey then knew of the agreement between Clark and Dennet.
    On the 12th of December, 1819, Dennet died, and Bailey proceeded to settle the concerns of the partnership. On the 20th of January, 1821, 2500 dollars were paid to Clark by Bailey, and thereupon Clark gave a receipt, stating that he had received that sum of the administratrix of Dennet, on account of the deceased ; and the administratrix at the same time gave a receipt, stating thou she had received that sum of Bailey, surv ving partner of the firm of Bailey and Dennet, on account of the deceased. There was evidence in the case tending to show that this payment was made by Bailey under the beliei that such an amount would be coming from the firm to Den-net; which belief proved to be erroneous. It was testified that Bailey said all the debts of the firm were paid, and that the firm owed him for money advanced for that purpose.
    
      June 20th.
    
    The plaintiff contended, 1. that if Clark, by virtue of the agreement of June 11th, was a partner of Bailey & Dennet, he was liable to refund the sum of 2500 dollars paid to him by Bailey under the belief that the firm was solvent at the time of Dennet’s decease, and that such an amount or more would be coming to Dennet upon the final settlement of the copartnership concerns ; and that this was the proper form of action for the recovery thereof: — Or, 2. that if Clark was not a partner of Bailey and Dennet, then he was liable to refund the sum in question paid to him by Bailey on account of money said to be due to him from Dennet’s estate, under the belief that the firm of Bailey & Dennet was solvent at the time of Dennet’s decease and at the time of such payment, and that such an amount or more would be coming to the estate of Den-net upon the final settlement of the copartnership concerns ; and that this is the proper form of action for the recovery thereof.
    The defendant insisted, that as it regards Bailey & Dennet, he was not a copartner, and not bound to refund this money or any part of it, and not involved in their concerns in any other manner than as his interest might be further affected by the insolvency of Dennet ; and that if he was a copartner, this action could not be maintained against him.
    If the Court should be of opinion that the defendant was thus chargeable, and that the action' could be sustained, the case was to be sent to auditors.
    
      iS. D. Parker and Mason, for the plaintiff.
    In regard to third persons, and likewise as between themselves, Clark and Dennet were partners, by virtue of the agreement of the 11 th of June. Montag. on Partn. 2, 6, in notis ; Carey on Partn. 77; Peacock v. Peacock, 2 Campb. 45; and Clark in fact, though perhaps without any such intention, became a partner of Bailey and Dennet. But if Bailey was not a copartner of Clark and Dennet, then he stands toward them in the situation of creditors dealing with Dennet, in regard to whom they mus* be considered as partners. Supposing the three to have been partners, this action of assumpsit will lie. All the debts due from the firm have been paid. See Fanning v. Chadwick, 3 Pick. 420, and authorities there cited ; Brinley v. Kupfer, ante, p. 179.
    
      June 26th.
    
    If there was no partnership between Clark and Dennet, yet as Bailey has paid the money to Clark by mistake, the Court will not require two actions to be brought, one by Bailey against Dennet’s administratrix and another by her against Clark, but, to avoid circuity, will permit Bailey to recover in the present action.
    S. Hubbard and W. J. Hubbard, contra,
    
    contended that there was no partnership between Clark and Dennet, but only a loan of money ; Gow on Partn. 9 ; Gill v. Kuhn, 6 Serg. & Rawle, 333; Lowry v. Brooks, 2 M‘Cord, 421; Hesketh v. Blanchard, 4 East, 144; and if so, and if the money was paid by mistake, that the action should have been against the administratrix of Dennet’s estate ; and that if Clark was-a partner of Bailey and Dennet, assumpsit would not lie before a final settlement of the partnership concerns. Holmes v. Higgins, 1 Barn. & Cressw. 74; Bovill v. Hammond, 6 Barn. & Cressw. 149.
   Per Curiam.

Whether the plaintiff has a right to recover, depends on the question whether Clark was a partner of Den net. Clark was a lender of money to assist Dennet, and instead of interest he was to receive half the net profits. This is the meaning of the instrument, though as to creditors dealing with Dennet there would be a partnership. Bailey knew the state of things between Clark and Dennet, and that the transaction was merely a loan ; so he cannot be considered as a creditor of Clark and Dennet. There was a debt due from Dennet to Clark, and Bailey paid it, probably from the funds of Bailey and Dennet; and in such case he will have a claim against Dennet’s estate, if it shall appear that a balance is due from Dennet to the firm.

Plaintiff nonsuit. 
      
       See Collyer on Partn. 56, n. (9); 214, and n. (64.)