Case Name: John B. Smith, Resp't, v. William F. Lennon et al., App'lts
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1891-04-17
Citations: 37 N.Y. St. Rep. 937
Docket Number: 
Parties: John B. Smith, Resp’t, v. William F. Lennon et al., App’lts.
Judges: 
Reporter: New York State Reporter
Volume: 37
Pages: 937–939

Head Matter:
John B. Smith, Resp’t, v. William F. Lennon et al., App’lts.
(Supreme Court, General Term, First Department,
Filed April 17, 1891.)
1. Partnership—Agreement to share profits.
One party has the right to agree with another for a loan of money for the prosecution of an enterprise and may agree as compensation to pay a certain proportion of the profits arising therefrom, without the relation of partners arising between themselves.
2. Same—Foreclosure—Defense.
In an action to foreclose a mortgage the defendant claimed that the mortgaged premises were bought by himself and plaintiff’s assignor as a joint adventure, said assignor furnishing the purchase money, defendant to repair the buildings, the assignor to sell them and receive a portion of the profits, and that the mortgage was only given as a voucher for the advances so made by the assignor. It appeared that the agreement between defendant and the assignor of the mortgage did not make them partners and that defendant had paid interest to plaintiff. Held, that the defense was not made out.
Appeal from, judgment of foreclosure and sale entered after trial of the action at the special term.
George W. Miller, for app’lts; A. C. Fransioli, for resp’t.

Opinion:
Van Brunt, P. J.
This action was brought to foreclose a mortgage given by the defendant Lennon to one Arthur L. Meyer to secure the sum of five thousand two hundred and fifty dollars and by said Meyer assigned to the plaintiff.
The defendant claimed that the house upon which the mortgage was an apparent lien was bought as a joint adventure of Meyer and Lennon, that Meyer was to furnish the purchase price over and above, a first mortgage upon the premises and that the defendant Lennon was to repair the house, and Meyer was to sell it at $25,000, and the profits were to be divided in certain proportions, the bond and mortgage in suit being given simply as a voucher to Meyer for his contribution of capital in the enterprise. If the defendant Lennon has in this action established any defense which would have been available to him had this action been brought by the original mortgagee, Meyer, he can insist upon such defense against the plaintiff, the assignee of Meyer, because it is well established that the assignee of a mortgage takes it subject to all of the equities existing between the original parties thereto, and so far as the remedies thereon are concerned stands precisely in the shoes of his assignee.
But it is not equally true that even if there was an agreement between Lennon and Meyer to divide the profits upon a sale of the houses, that they thereby necessarily became partners inter sese. Whatever in respect to creditors of the enterprise might be the effect of such an agreement, as between the parties themselves their rights and obligations were to be determined by the agreement.
One party had the right to agree with the other for a loan of money for the prosecution of the enterprise and might agree as compensation to pay a certain proportion of the profits arising therefrom without the relation of partners arising between themselves.
This is the kind of agreement that the court found existed between Meyer and the defendant Lennon in the case at bar, and that no copartnership was established. It is true that Lennon swore to a partnership agreement and that he was uncontradicted by oral testimony, but he was contradicted by all the documentary evidence in the case, by the bond and mortgage, by the agreement of May 26, 1886, and it was shown by his evidence in the case of Lennon v. Stiles that he was willing to swear to anything which he thought necessary to advance his interests and that he could not be believed under oath.
The true agreement between the parties was undoubtedly contained in the agreement of May 26th. It may be that Meyer said he could sell the house for $25,000, when finished, but it was no part of the agreement that he should not get his money back if he did not do so. The mortgage was given in order that he should do so, and when Meyer assigns the mortgage Lennon pays the interest to the mortgagee, although, if his story is correct, he was under no greater obligation to pay than Meyer. Upon the whole case we see no reason for disturbing the conclusion of the learned judge below and the judgment appealed from should be affirmed, with costs.
Daniels and Lawrence, JJ., concur.