#### *Brown’s Ex’or v. Higginbotham & Co.

December, 1834,

Richmond.

[27 Am. Dec. 618.]

Partnership* — What Constitutes† — Case at Bar. — 3?. havinif leased a farm, B. put labourers on the farm under P.'s management, upon an agreement, that the nett profits, after deducting' all expenses, should be divided between them : Hist.d. this is a partnership, and. B. is liable for the debts contracted by P. for the concern.

Same* — Firm Debts — Payment by Partner after Dissolution with Funds of Third Person — Effect. ‡ — The rent due for the farm, and the overseer’s wages, are expenses to be deducted, and both partners-are liable for the same ; and P. being- theagentof H. & Co. and having- paid these debts of the partnership out of the funds of H. & Co., B. as well as P. is bound to refund the money to H. & Co., and this, though, such payment was made by F. alter dissolution of the partnership.

Same* — Continuation until Affairs Settled. § — Until the affairs of a partnership are settled, and outstanding- engagements made good, the partnership-must in contemplation of law have a continuances so far as respects the winding up of its affairs.

*Higginbotham*& Co. exhibited a bilf. against Robertson, executor of J. Brown, and C. Powell, in the superior court of chancery of Lynchburg, alleging, that Brown, in his lifetime, and Powell leased a farm of Sophia Crawford for a term of years, and cultivated the same in partnership, and divided the profits: that Powell, at the same time, was the agent and man*220■ager for the plaintiffs in mercantile business carried on by them in the neighbourhood of the farm: that during the time of Brown & Powell’s partnership in the farm, they contracted a debt of 316 dollars to the plaintiffs, for goods furnished and moneys paid by them on account of the partnership of Brown & Powell, and the charges were made to Brown & Powell on the plaintiffs’ books, by Powell himself: that this debt consisted, partly, of 170 dollars paid out of the plaintiffs’ funds to Mrs. Crawford for the rent of the partnership farm, partly of 80 dollars paid for the overseer’s wages, and the residue of goods furnished: that Powell had migrated from Virginia, having become wholly insolvent, and Brown had died, shortly after the termination of the partnership of Brown & Powell: that the debt due *the plaintiffs had not been paid; and they were entitled, in equity, to have satisfaction thereof due them by the partnership of Brown & Powell, out of the estate of the deceased partner Brown. And they prayed such relief. Robertson, the executor of Brown, answered, that his testator had informed him, that Powell leased the farm of Mrs. Crawford for three years; that in the third year he, Brown, placed a certain number of hands under the management of Powell, and was to receive two thirds of the nett proceeds of the crop made, after deducting all expenses; that these crops were disposed of by Powell, who received all the proceeds, and after paying the rent now claimed by the plaintiffs, and discharging the plaintiffs’ account for about 46 dollars, and all other expenses (whereof Powell rendered an account to Brown), there was a balance of 167 dollars of profits of the farm to be divided, of which, however, Powell never paid any part to Brown; and upon this information derived from his testator, Robertson denied, that Powell had any right to contract debts binding on Brown.

Powell was proceeded against as an absent defendant, and as to him the bill was taken pro confesso.

It appeared in evidence, that it was Powell who leased the land of Mrs. Crawford, and that he gave her his own bonds for the rents; and that it was after the lease was made, that the partnership between Brown and Powell was formed. It was proved that there was such a partnership between them, as the plaintiffs alleged; and that Powell, being the agent of the plaintiffs, had paid the rent due Mrs. Crawford and .the overseer’s wages, out of the plaintiffs’ funds, by giving them credit, respectively, in their accounts with Higginbotham & Co. for the sums due them from Brown & Powell; but the entries of these payments were made on the plaintiffs’ books by Powell’s directions, after the dissolution of the partnership of Brown & Powell. It appeared also, that Mrs. Crawford was indebted to Brown individually, about 42 dollars.

The chancellor decreed, that Robertson executor of Brown, should pay the plaintiffs 316 dollars, with interest *&c. out of the assets of his testator; from which decree Robertson appealed to this court.

Garland, for the appellant.

Stanard, for the appellees.

*

Partnership. — On matters relating to partnership, see monographic *note*on “Partnership.’'

†

Same — What Constitutes — Sharing in Profits. — In Robinson v. Allen, 85 Va. 725, 8 S. E. Rep. 835, Lewis, P., delivering the opinion of the court, said: “We think the true rule, sustained by the authorities, is this : That all persons who share the profits of the concern are *prima facie*partners as to third persons* but that in a case like the present, this presumption of partnership may be repelled by showing that the legal relation of partnership *inter se*does not exist. In *Brown's Ex'or v.*Higginbotham, 5 *Leigh*583, it was said by Tucker, P., that from an agreement to participate in the profits the law implies a partnership, and, therefore, a liability for the losses ; but he evidently meant profits which are received *as it principal.*Of course, if a person holds himseif out. as a partner, and thereby lends to the partnership the sanction of his credit, he renders himself liable to third persons as a partner, no matter what the agreement as between the parties themselves may be. But such is not the present case. Here the question in the lower court depended upon the agreement of the parties *inter*se.”

Same — Dissolution—Transfer of Partnership Debt.— In Peyton v. Stratton, 7G-ratt. 380,384, a partnership, dissolved by the death of one of its members, was largely indebted to its acting member for advances made for itin its business. The said acting member, being indebted to a commission merchant of himself and the firm, transferred to the commission merchant the debt due him *from the*firm in discharge of his debt due to the commission merchant, and credited the firm with the amount. It was held, nnder the authority of the principal case, and the circumstances of the case at bar, that the acting-member was authorized to make a transfer, and that the members of the firm were bound for the amount to the commission merchant.

‡

Same — Firm Debt — Payment by Agent after Dissolution— Liability of Partners. — See R., *D.*& Co. v. H. K. & Co., *7*W. Va. 642, citing the principal case.

Same — Same—Payment by Third Person after Dissolution at Request of Managing Partner.— Ln Conrad v. Buck, 21 W. Va. 413, the principal case is cited to sustain the decision, that the managing partner of a dissolved firm, having the authority to insure the property belonging to the firm, may bind the firm property by any proper agreement made by him with a third person for the payment of the premiums for such insurance.

§

Same — Continuance until Affairs Settled, — See principal case cited in R., D. & Co. v. H., *K.*& Co., *7*W. Va. 611.

TUCKER, P.

The only question of any difficulty in this case, I think, is as to the existence of the partnership; and I am of opinion, that the evidence sufficiently establishes it. Partnership is “a contract between two or more persons for joining together their money, goods, labour and skill, or either or all of them, upon an agreement to divide the gain or loss proportionably between them.” Wats, on Partn. 1. It is not confined to mercantile speculations or adventures, but may exist between mechanics, attorneys, carriers or farmers. Coope v. Eyre, 1 H. Black. 37. Its existence is established by proof of an actual community of interest, accompanied by an agreement to participate in the profits, and contribute to the losses of the concern. Such proof places beyond question the liability of the partner; but even without it, a party may be charged as partner, where he appears and exhibits himself to the world, as a person connected with the partnership, and as forming a component member of the firm. In this case, however, I do not think the evidence fixes upon Brown the character of a nominal partner; that is, of one who, without an interest in the concern, allows his name to be used, and holds himself out to the world as having an apparent interest. It must be admitted, I think, that Brown is not chargeable, unless such an actual' interest can be shewn in him, as constitutes a partnership; for as to the loose declarations and opinions of witnesses, that he was always considered a partner, they are to be very cautiously received, because of the danger of establishing so important a contract upon so weak a foundation. However, Brown’s interest is proved.

To establish it, it must be shewn, that the parties have joined together their money, goods, labour or skill, or either or all of them, upon an agreement to participate in the profits, *from which is also implied by law a liability for the losses; for no stipulation can protect a party who receives the profits, from a corresponding responsibility for losses. Ex parte Hamper, 17 Ves. 412. I think it cannot be doubted, that these parties did join together their property, labour and skill. The defendant acknowledges, that Brown told him, ‘‘he placed under the management of Powell a certain number of hands. ’ ’ Here, then, was an union of the property of Brown with the management of Powell. Moreover, they were placed on a farm, of which Powell was the lessee. He thus brought into the concern his skill and labour, and his lease also, and Brown brought in his slaves. It is proved, that Brown, in speaking of these transactions, recognized the partnership in the farm; and the overseer deposes, that Brown took an interest in the farm, which justified the belief that he was a partner; that he frequently visited it, and inquired about its progress, and as the witness thinks,- said, in his presence, that he was in partnership with Powell in the farm. With this testimony, I do not perceive how we can question the fact that there was an union of the property on the *221one hand, and of property and attention on the other, between these two parties; and this too, with a distinct admission by each, of the power of the other over the affairs of the concern; for Brown admitted that he had placed his hands under the management of Powell; and Powell has abundantly admitted Brown’s interest, and, of course, his powers as a partner. It is, indeed, worthy of remark, that Brown did not tell the defendant Robertson, that he had hired his slaves to Powell, but that he had put them under his management. This implies, that he also still retained control over them. If he did so, it must either have been as partner, which is the matter to be proved, or as owner, in which case his liability would be unquestionable, as Powell, in this view, would be only his agent. Then, was there an agreement to participate in the profits? This is, in effect, admitted; for Brown told the defendant Robertson, that he was to receive two thirds of the nett proceeds of the crop, deducting all expenses. Now, the profits were precisely *the nett proceeds of crop, after deducting all expenses; therefore, he was to receive two thirds of the profits. If he had bargained to receive two thirds of the crop, without regard to the expenses, some doubt, perhaps, might be thrown over the question; but as the expenses were first to be deducted, it is obvious that he was not only to participate in profits, but to be affected by losses; for if the expenses exceeded the crops, he was to get nothing. Moreover, being thus entitled to profits, and affected by losses, he could not limit or contract that liability, so as to affect third persons. For, even if it had been expressly agreed, that he should not be affected with losses, farther than the whole amount of the crop, that agreement would not have absolved him from a further liability, so far as third persons were concerned. Gow on Partn. 19, 20.

If there was a partnership in this case, I think the decree is manifestly right. It is objected, indeed, that Mrs. Crawford’s rent was not properly chargeable against the partnership. I cannot think so. By the agreement, Brown was to have two thirds, deducting all expenses. The rent under the lease was one of those expenses. By the agreement, then, the rent was to be paid out of the crops of the concern. The lease was brought into the concern by Powell. Though he was the original renter, yet when he formed the partnership, the lease was in effect assigned to the partnership. Admitting the partnership, this is obvious; and if so, then, as assignees, the partners were liable to the lessor. Powell was no longer the tenant, but Powell & Brown, as partners, were tenants; and as terretenants they were responsible for the rent, and it has been properly charged against the firm, by Higginbotham & Co. who paid it. In this aspect, it is perfectly unimportant, when the entry was made, since the partnership was liable for the amount. The same remark applies to the wages of the overseer, which being a fair charge against the firm, it was entirely unimportant when the entry was made. Both debts were due either to Mrs. Crawford and the overseer, or to Higginbotham & Co. who had paid them; and as Higginbotham & Co. *paid them by direction of one of the firm of Brown & Powell, though, after its dissolution, it cannot be regarded as an officious payment. For until the affairs of a partnership are settled, and outstanding engagements are made good, the-partnership must in legal contemplation have a continuance, so far at least as respects winding them up. Gow 312, [287,], 15 Ves. 226, 7; 16 Ves. 57; 1 Swanst. 480.

As to the 42 dollars due from Mrs. Crawford to Brown, it is obvious that he could not have set off this debt at law, even against her. But whether he could do so or not in equity, I am of opinion, that as Higginbotham & Co. at the instance of Powell, paid off the whole 170 dollars to Mrs. Crawford, they are not liable to the set-off at law or in equity.

I do not perceive, that Powell’s being the agent of Higginbotham & Co. makes any difference in the case. As their agent he bound them, indeed, by his acts, and therefore they cannot now gainsay the credits to Mrs. Crawford and the overseer, though they should lose the amount. But he was also partner of Brown, and when he took up goods for the firm, or paid debts of the firm out of Higginbotham & Co.’s funds, he was certainly acting for himself and partner, and the firm is chargeable accordingly. Upon the whole 1 am of opinion, that there is no error in the decree and that it must be in all things affirmed.

The other judges concurred.

Decree affirmed.