Case ID: nc_174/html/0198-01.html
Source: Caselaw Access Project
Author: {"author": "Clark, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BURROUGHS ADDING MACHINE COMPANY v. L. G. MORROW & CO.
    (Filed 3 October, 1917.)
    Partnership — Dissolution—New Agreement — Profits—Individual Liability.
    Where a partnership, A. & B., has been dissolved by the mutual consent of the parties, who thereupon enter into another written agreement, assuming some of the contracts of the former partnership, and changing its name to A. & Co., giving the management to A. and providing specifically that B. shall receive “his pro rata share of the net profits” of the business, the new arrangement having been signed by both of them, but is in many respects ambiguous or unintelligible: Held,, by the clear provision of the contract, a partnership has been created, making B. liable for the debts incurred in the business, there being nothing to show the profits were looked to only as a method of compensating B. for services rendered.
    Brown, J., dissenting.
    
      Appeal by George E. Moore from Stacy, J., at March Term, 1917, of Pitt.
    
      Outlaw & Darden for Plaintiff.
    
    
      Albion Dunn and STcinner & Cooper for appellant.
    
   Clark, J.

This action is to recover $175, purchase price of an adding machine, the contract to purchase being signed by “L. G. Morrow & Co., by L. G. Morrow, Manager.” L. G. Morrow and G. E. Moore were partners in the firm of Morrow & Moore, which was dissolved 12 June, 1914. Thereafter, on 20 June, 1914, L. G. Morrow and G. E. Moore entered into articles of agreement, reciting that L. G. Morow and G. E. Moore had dissolved their partnership, and without repudiating that dissolution in any way, and agreeing that the firm of L. G. Morrow & Co. should be liable for certain contracts therein specified, which had been made between the firm of Morrow & Moore and certain parties named, and annulling a former contract by which L. G.’ Morrow was to deliver a deed for certain property to G. E. Moore upon a consideration of $1,500, and leaving that matter optional with said Morrow and certain other agreements in regard to the business of the former firm of Morrow & Moore, the following provision is added: “It is hereby agreed by the said G. E. Moore that he shall continue in said business during the year 1914, and that he will be and remain vigilant and active in securing in good faith all business possible for the L. G. Morrow Co.” There is a further provision that “The firm business of L. G. Morrow & Oo.” shall be managed by L. G. Morrow, and that no one connected with or interested in said firm and business shall have authority to make any contract without the permission of L. G. Morrow, manager.” There is also a further provision that “no one interested in the firm of L. G. Morrow & Co. shall have authority to purchase tobacco without the permission of L. G. Morrow, manager; that the sales shall be managed by L. G. Morrow, and that no one connected with the firm of L. G. Morrow & Co. shall in any way interfere with sales of tobacco,” and that “All parties interested in or connected with the firm of L. G. Morrow & Oo. agree that all checks drawn by L. G. Morrow & Co. shall be countersigned by L. G. Morrow & Co.” There is also this provision: “The said G. E. Moore shall be entitled to his pro rata share of the net proceeds of said tobacco business during the year 1914.”

On 3 August, 1914, L. G. Morrow & Co. bought of plaintiff an adding machine at the price of $175. This proceeding was begun before a magistrate to recover the above sum, against L. G. Morrow and George E. Moore, alleging partnership. George E. Moore defended upon the ground that he was not a partner.

Tbe judge, on tbe trial in tbe Superior Court, recited tbe terms of tbe contract, and charged that tbe instrument referred to “made Moore .a partner in tbe tobacco business for tbe year 1914, because, under tire agreement, be was to take a part of tbe profits, and that would render him liable for tbe debt.” Moore excepted to this instruction and, tbe jury having found against him, appealed.

Tbe contract is a very confused and complicated instrument. Moore’s counsel very frankly says in bis brief: “We must confess that tbe contract is clouded in doubt, and it is indeed bard to say exactly what it does mean, or what function it was intended that it should perform. It is flooded with inconsistencies, and ambiguities are abundant. In fact, after reading tbe contract, we know of no language that will so well describe it as tbe language of Mr. Greenleaf, as follows: ‘The instrument is valuable, not only for its intrinsic complication, which is insuperable, but also for its lamentable ambiguity of phrase and'confusion of terminology’ ”; but there is no ambiguity in tbe agreement that Moore “is to remain in tbe business during 1914, and shall receive bis sbar'e of net proceeds.”

Tbe firm of Morrow & Moore was dissolved, and subsequently on 20 June, 1914, tbe agreement between Morrow & Moore was executed. This contract specifies that Moore was to share in tbe profits for tbe year 1914. There are several references in this contract that Morrow alone of those interested in tbe business was to sign checks and have control over tbe business as manager. And there is no evidence tending to show that any one bad' any interest in tbe business besides L. G. Morrow, except G. E. Moore, and as to him there is this agreement: “In case and provided the said repayment is made, as provided in this tbe fifth article of these agreements, then tbe said G. E. Moore shall be entitled to bis pro rata share of tbe net proceeds of said tobacco business during tbe year 1914.” Why was Moore a party to tbe above agreement unless be was a partner in tbe new firm. In Cossack v. Burgwyn, 112 N. C., 305, tbe Court held that one who shares in tbe profits of a business, either from capital invested, or for services rendered, becomes a partner and liable as such. Tbe Court held that one who loans money to an individual or firm and takes security for tbe same, and besides tbe security, a profit from tbe business is received by him, becomes a partner in tbe business and liable for its debts.

In Webb v. Hicks, 123 N. C., 244, tbe Court held, citing Jones v. Call, 93 N. C., 170; Kootz v. Tuvian, 118 N. C., 393: “When tbe facts are undisputed, what constitutes a partnership is a question of law, and tbe usual, not tbe universal, test is participation in tbe profits and losses of tbe business. In Norfleet v. Ins. Co., 160 N. C., 327, it is held that tbe obligation of tbe partner is joint and several.

Tbe agreement bere is in writing, and tbe facts are not disputed, and tbe judge did not err in telling tbe jury tbat as tbe defendant Moore was to share in tbe profits, be was liable for tbe debt wbicb was incurred in carrying on tbe business. It would be otherwise if it were shown tbat tbe share in tbe profits was merely a method of fixing tbe amount of tbe salary.

Exception was taken to tbe verification of tbe account, but it was verified and proven in tbe manner required by Revisal, 1625. Nall v. Kelly, 169 N. C., 718. This made out a prima facie case for tbe goods sold. Lipensky v. Revell, 167 N. C., 508. Tbe issue was in proper form.

We find

No error.

EeowN, J., dissents.