DETERMINATION AS TO WHETHER. A PARTNERSHIP EXISTED.

Court of Appeals for Hamilton County

#### August Herrmann, Individually and as an Alleged Partner of Louis Werk and Charles E. Bultman, v. E. Bruce Rohn and Charles S. Geisinger et al.*

Decided, April 30, 1917.

*Partnership*— Contract *Which Constituted a Partnership*— Noiwith*standing a Declaration that a Partnership was Not*Intended— *Agreement in Writing Providing How a Possible Judgment in a Pending Cause Against the Parties ShoiUd be Liquidated*— Admis*sible in Evidence as an Admission Against Interest.*

1. The existence of partnership liability is not affected by stipulations in the contract between the parties that no partnership relation is to exist between them, and that one of the said parties is to have the absolute control and management of the business and be liable for the debts. *Wood*v. *Toilette,*7 O. S., 172, followed.

2. Where W and B enter into a contract whereby W lends B a sum of money with no stipulation for interest or 'repayment, B agreeing to turn over to W a percentage of the profits of his business and not to transfer the business without the consent of W and first giving him a privilege of purchase, and thereafter W actively engaged in securing credit for B and advises persons having dealings with B that he (W) is financially interested, liability for the debts of the business is incurred by W.

3. In an action against B, W and H as a partnership, upon cheeks of B and for money advanced to B as trustee to protect his account as broker, where partnership liability is denied by W and H and H’s contract with B was oral, an agreement signed by W and H a short time before the trial, provided fsr payment of any judgment which might be rendered against them and division of the amount of the judgment between them and that neither should settle without the consent of the other, is admissible in evidence as an admission against interest and a circumstance tending to show that they felt equally bound.

*290*Cogan, Williams & Ragland,*for plaintiffs in error.

*Victor Heintz, Geoffrey Goldsmith, Froome Morris, Litileford Hunemeyer, Bayly, Simmons & DeWitt,*for defendants in error.

*Charles Case*and *Carl Lehmann, contra.*

*

Motion to require the Court of Appeals to certify its record in this' case overruled by the Supreme Court, October 9, 1917.

Gorman, J.

In the Superior Court of Cincinnati the defendants in error, Rohn iand Geisinger, who were partners in Allentown, Pennsylvania, brought an action against August Herrmann, Louis Werk and Charles E. Bultman, to recover money on four causes of action set out in their petition. The first three causes' of action were upon checks issued by C. E. Bultman as trustee, and the fourth cause of action was for moneys .advanced to Charles E. Bultman, trustee, to protect said Bultman’s account as a broker. The total amount claimed was $13,703.43.

Upon the trial of the cause below to a jury, a verdict was returned in favor of plaintiffs and against all the defendants in the sum of $10,425.32.

Thereupon August Herrmann prosecuted error to this court and has filed his petition in error herein, and the defendant Louis Werk has filed a cross-petition in error, each seeking to reverse and set aside the verdict and judgment which was entered thereon in the superior court. The defendant Charles E. Bultman has not prosecuted error to the judgment.

The claim of plaintiffs was that these three defendants, August Herrmann, Louis Werk and C. E. Bultman, were partners doing business as brokers under the name of C. E. Bultman. A great mass of evidence was heard in the court below, and the cause having been fully considered by the court a motion to set aside the verdict was overruled and judgment entered thereon against all of the defendants.

It is claimed by plaintiff in error Herrmann: first, that there is not sufficient evidence in the record to show that he was a partner of Bultman; second, that the verdict is against the weight of the evidence; and, third, it is claimed that there was error in the admission of evidence and in the charge of the court and the failure to give certain special charges.

*291An examination of the record satisfies us that there was sufficient evidence to submit this ease to the jury so far as Herrmann is concerned. As to the defendant in error, Louis "Werk, we think that it is established by a preponderance of the evidence that Werk was a partner of Bultman.

It .appeared upon the trial that Louis Werk had entered into a written agreement with Charles E. Bultman on or about the 10th day of June, 1914, and we think the evidence warranted the jury in finding that Herrmann had entered into a similar contract at the same time with Bultman, although the evidence fails to show that Herrmann’s contract was in writing. This contract in substance provided that Werk was to loan $10,000 to Bultman. There was no time stipulated when this money was to be repaid or returned; no evidence of indebtedness taken; no interest to be paid upon the loan; nor was there any promise, whatsoever to repay the money. In the agreement the parties stipulated that they were not to be partners. It was further agreed that Werk .was not to be liable for any of the debts of the business, but that the business should be conducted by Bultman, and that he should have absolute control of the management thereof and be liable for all the debts. It was further stipulated that Bultman w.as not to transfer his business to any one without first obtaining the consent of Werk; and that Werk should have the'first privilege of purchasing the business. It was further stipulated that Werk was to receive fifteen per cent, out of the profits of the business. After the business was opened up, both Werk and Herrmann took an active part in securing credit for Bultman .and in advising persons who had dealings with Bultman that they were financially interested. Bultman at their request employed a friend of Herrman and Werk, who remained in the office of Bultman and was paid by Bultman, but who, as Bultman expressed it, was the most expensive piece of bric-a-brac he ever had about the office. This man made reports to Herrmann and to Werk as to the manner in which the business was conducted by Bultman. While the evidence does not disclose that Herrmann ever signed any written agreement such , as did Werk, it is in evidence that Herrmann agreed orally to sign a similar agreement.

*292Both Herrmann and "Werk .advanced the amount of money which each agreed to advance, and it can not be doubted, we think, that the evidence adduced was sufficient to warrant the jury in returning a'verdict against both Herrmann and Werk as well as .against Bultman.

However this may be, we can not say that the verdict is so manifestly against the weight of the evidence as to require us to set aside the judgment and return the cause to the superior court for a new trial. The trial court heard the evidence, saw the witnesses face to face, observed their demeanor and their conduct. The jury also had the same opportunity as the trial court. They returned this verdict and the trial court refused to set it aside upon the ground that it was manifestly against the weight of the evidence, or upon the ground that there was insufficient evidence. A reviewing court under such circumstances should hesitate to set .aside a verdict and judgment on the ground that the same is against the weight of the evidence.

Notwithstanding the fact that both ILerrmann and Werk testified that they did not intend to be partners, and notwithstanding the fact that in Werk’s agreement and in the .agreement which Herrmann was to sign — if he did not sign it — they were not to be partners, the question as to the partnership was not to be determined by their declarations.

It was held in *Wood*v. *Vallette,*7 O. S., 172, that notwithstanding the fact that the parties stipulated they were not to be partners, the question as to the partnership was to be determined by the acts a^d conduct and the agreements of the parties.

The case of *Wood*v. *Vallette, supra,*was under consideration in the later ease of *Harvey*v. *Childs,*28 O. S., 319, and in that ease the court distinguished the case of *Wood*v. *Vallette*from the ease that was under consideration. The case of *Harvey*v. *Childs*was a single transaction and not involving a series of transactions or a business enterprise. But the ease of *Wood*v. *Vallette*was approved in *Harvey*v. *Childs.*

It was also held in the case of *Cox*v. *Hickman,*99 E. C. L., 27, decided by the House of Lords, that a partnership could be implied in law by the acts and conduct of the parties, and the *293.agreements entered into by them, notwithstanding the fact they had stipulated they were not to be partners.

In the case at bar there is no question but that Bultman was authorized to act for Werk and Herrmann. Their agreement was that they were to participate in the profits. The advancement of the money which each was to make to Bultman does not bear any of the ear-marks of a loan, but has the characteristic indicia of .advancements in the business.

As was well said in the case of *Beecher*v. *Busch,*45 Mich., 189:

> “It is nevertheless possible for parties to intend no partnership and yet to form one. If they .agree upon an arrangement which is a partnership in fact, it is of no importance that they call it something else, or that they even expressly declare that they are not to be partners.”

This statement of the law is in line with the rule laid down in *Wood*v. *Vallette, supra.*

It is objected by counsel for Herrmann that a certain agreement entered into between Werk and Herrmann, three days before the case was tried in the court below, was improperly admitted in evidence. This agreement was in writing, signed by Herrmann and Werk, and in substance provided that in the litigation pending against Herrmann and Werk in the Superior Court of Cincinnati, if a judgment should be rendered against either or both, or it should be necessary to pay any claims in those actions, Herrmann would pay all sums up to $10,000| with interest, that being the amount which W.erk had contributed as a loan to Bultman; and for all sums above $10,000 and interest, each of the parties, Herrmann .and Werk, would be liable and pay in equal proportions or fifty per cent, thereof. The parties further agreed not to settle or compromise any suits or claims involved in said litigation without the consent of the other. Each of the parties agreed to furnish his own attorney to defend the actions and the claims, and to p,ay one-half of the costs and expenses, if any.

We think this paper was admissible in evidence against both Herrmann and Werk, as admissions against interest and cir*294cumstances tending to show that they both felt equally bound, each for one-half of any judgment that might be rendered against either.

Upon a careful consideration of the entire case and the record, we have come to the conclusion that there is no error in the record prejudicial to either plaintiff in error or the cross-petitioner in error, Louis Wert. It appears to us that substantial justice was done by the court and jury in the trial below, and the judgment is therefore affirmed.

Jones, P. J., and Hamilton, J., concur.