Case Name: Michael Hayes et al. v. William G. Fish
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1881-01
Citations: 36 Ohio St. 498
Docket Number: 
Parties: Michael Hayes et al. v. William G. Fish.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 36
Pages: 498–505

Head Matter:
Michael Hayes et al. v. William G. Fish.
A. agreed, in writing, to sell and convey to B., C., D. and E. four undivided fifths of certain lands, in consideration whereof the purchasers .agreed to pay $10,000 in installments, payable at stated times, the same to he paid as afterward specified in the writing. It was afterward, in the same written instrument, agreed that the vendor and purchasers should enter into a partnership for quarrying stone on the same lands, “ for the purpose of realizing the money necessary to make said payment of §10,000,” and that after defraying the expenses of the business, “the balance of all profits are to beapplied in payment of the $10,000, purchase price of said lands, as fast as the said profits are from time to time ascertained.” And that “afterthe said sum of $10,000 is paid as herein agreed, and from that time forward, all are to be equal partners, and to share equally the profits of the said business, and have an equal interest in the lands and all property of the firm.” Reid,
1. That the net profits of the partnership, to the extent of fhe purchase money, to wit, $10,000, including the part which would otherwise belong to the vendor, were appropriated to the use of the purchasers for the payment of the purchase-money, and for the reimbursement of any part of the purchase-money paid with other meahs.
2. Upon the failure qf profits to the extent, in whole or in part, of the purchase-price, no part of the purchase-money was to be remitted by the vendor on account of such deficiency of profits, unless such deficiency was caused by the default of the vendor.
3. After the dissolution of such firm, a decree for the specific performance of the contract, at the suit of the vendor against the purchasers, ought to be postponed to the settlement of the partnership accounts.
Error to tbe District Court of Lucas County.
The original action was brought by William G. Eish, as vendor, against Michael Hayes, John Z. Smith, James Hayes and J. H. Steadman, as vendees, in the court of common pleas of Lucas county, on March 21, 1874, to compel specific performance of a contract for the purchase of certain real estate. The contract was in writing, as follows:
“ This memorandum, made and entered into this 11th day of April, a. d. 1873, by and between William G. Fish and Sallie Fish (husband and wife) of the first part, and Michael Hayes, John Z. Smith, James Hayes and S. H. Steedman of the second part, witnesseth:
“ That said first parties this day have and hereby do contract and agree to sell to said second parties the undivided four-fifths part of sixty acres of land off the south side of the west half of the south-east quarter of section No. 29 in township number two (2) of the United States Eeserve in Lucas county, Ohio. Also four-fifths of the north half, of the south-east quarter of the south-west quarter of the same section. In consideration whereof the said second parties covenant and agree to pay to said first parties the sum of ten thousand dollars, as follows: First, eight hundred dollars ($800) down-at the ensealing of these presents. Second, ten hundred dollars ($1,000) within thirty days from this date. Third, to pay off from time to time as the same fall due and payable such debts of the first party as are a lien on the property above described, and such other debts of the first party as he may direct and may be agreed upon. The amount of all liens and debts so j>aid to be applied as payments upon said sum of ten thousand dollars as fast as paid, and after such liens and debts are paid, only the balance remaining, enough in the aggregate to make the said sum of ten thousand dollars is to be paid to said Fish (first party), and the same is to be paid as hereinafter specified. On completion of such payment of ten thousand dollars the first parties agree to convey to the said second parties as tenants in common the four-fifths of said lands above described, by a good and sufficient warranty deed in fee simple and free from incumbrances, said deed to have the legal effect of making such conveyance.
“ Second. And the parties named in this instrument (saving and excepting the said Sallie Fish, wife of said "William G-. Fish), for the purpose of realizing the, money necessary to make said payment of ten thousand dollars, this day have and hereby do enter into a copartnership under the name, style and firm of Wm. G-. Fish & Company.. The place of business of said company to be on the land above described. Its business the quarrying and sale of stone, also the making, burning and marketing of lime. Its 'duration until dissolved by a majority of the members. The names of the partners áre William G. Fish, Michael Hayes, John Z. Smith, James Iiayes and S. H. S teed-man. Each partner is to have an equal interest and to share equally in the profits and losses. Each partner to give his individual labor, time, and attention to the business, unless by consent of parties a substitute is agreed upon from time to dime, by which the personal services of a partner are dispensed with. From the amount of the net sales and profits there shall be deducted first and paid the necessary expenses incurred in carrying on the business. After such expenses 'are defrayed the balance of all profits are to be applied in payment of ten thousand dollars purchase-price of said lands, as fast as the said profits are from time to time ascertained. In making such payments the company may first apply money to pay the liens on said lands and -the debts of said Fish, and may, if they so prefer, make their payments to the creditors direct. After the said sum of ten thousand dollars is paid as herein agreed, and from that time forward, all are to be equal partners and to share equally the profits of the said business and to have equal interests in the lands and all property of the firm.” [Signed.]
The plaintiff, in his petition, having alleged performance and readiness to perform said contract on his part, and a failure to perform on behalf of defendants, prayed for an account of the amount due from defendants, and for the sale of said lands to satisfy the same, &c.
The defendants, by their answer, averred that they had paid to plaintiff the sum of $800 and $1,000, as stipulated, and had discharged a portion of the liens on said property, and had arranged with the creditors for an extension of time for the balance; and had also placed in the hands of plaintiff the further sum of $1,186.80, which he had promised to apply on balance of said liens, but had failed to do, and denied that they had failed to perform said contract on their part.
And they further answered, in substance, that the formation of the partnership as therein set forth was the principal inducement to said contract, and the object in making said purchase was solely for the purposes of the partnership. That the amount ($10,000) agreed to be paid for the four-fifths of the land was, in fact, the estimated value of the whole. That all the members of the firm were to contribute equally to the payment thereof. That the net profits of said business were the means for the payment of the whole of the price, and for the reimbursement of individual means used, in such payment. That the plaintiff was made the financial agent of the company, and during his management he appropriated to himself and embezzled large sums of money. And, instead of advancing i tbe interests of the company, he had destroyed its credit, diminished its profits, &c. Wherefore, they prayed for a dissolution of the firm and a settlement of all its affairs, and that the whole of said real estate, as a partnership asset, might be subjected to the payment of its debts, including any unpaid portion of the purchase price, &c. Upon the new matter contained in the answer, issue was joined by reply.
A decree having been rendered in the court of common pleas in favor of the plaintiff, the cause was taken by appeal to the district court.
In the district court the cause was submitted to and tried by a referee, who reported in favor of the plaintiff, finding that there was due from defendants, of said purchase-money, $6,140.95, which should have been paid upon said liens, subject to a deduction of $798.26, in the hands of the plaintiff.
Said referee also reported that “ The partnership mentioned in the pleadings should be declared dissolved,” and that, £<In determining the amount due from the defendants as hereinbefore stated, the undersigned holds and decides, as the true construction of the said contract, that the amount of the liens thereby stipulated to be paid to make up, with the cash payments to the plaintiff, William J. Fish, the sum of $10,000, was payable by the defendants alone, and not by all the partners jointly.” To which decision the defendants excepted.
The report of the referee was confirmed by the court, and the cause was remanded to the court of common pleas, with instructions to order the sale of the four-fifths of said land, to satisfy the amount so found due from the defendants, the same remaining unpaid, upon satisfactory proof that the plaintiff had applied the sum so found in his hands, to wit, $798.26, to the- credit of defendants.
The partnership was dissolved by the decree, but the partnership accounts were not stated either in the report of the referee or the decree.
The cause being again in the court of common pleas, on mandate from the district court, on motion of the plaintiff for an order of sale of the four-fifths of said premises, and upon the following testimony alone, the court granted the motion and ordered the sale, to wit:
“ And thereupon came the said plaintiff and offered in evidence the appearance docket of this court, volume 21, at page 297, upon which there appears an entry of which the following is a true copy.
“ June 3. — This day there was shown me a paper writing of which the following is a true copy, viz.:
“ William E. Fish, eb al.
vs.
Michael Hayes, eb al.
“Received of William G-. Fish seven hundred and ninety-eight and twenty-six one-hundredths dollars in full satisfaction of the amount found due from said Fish by the court in said cause, and we hereby release the said defendants from all obligation to pay the same.
“ Jefe. Miller,
John Miller.”
. To the introduction of this testimony the defendants excepted.
On proceedings in error, the district court affirmed the order of sale, as decreed by the court of common pleas. .
This proceeding is now prosecuted in this. court to reverse the order of sale made by the court of common pleas, the judgment of the district court affirming the same, and also the decree of the district court, confirming the report of the referee.
G. H. Scribner and II. H. Dodge, for plaintiffs in error.
A. H. Me Vey, for defendants in error.

Opinion:
McIlvaine, J.
The testimony offered by the plaintiff below, in the court of common pleas, under the mandate from the district court, in support of liis motion for an order of sale, was incompetent.
The principal question in the case, however, arises upon the decree of the district court, confirming the report of the referee, and relates to the construction of the agreement between the parties. Although the intent of the parties appears, at first glance upon the face of the agreement, to be somewhat involved in uncertainty, yet, upon careful consideration of all the stipulations contained in it, we think it quite clear that the construction of the referee was wrong.
While it may be said that this written instrument embodies two contracts, one for the sale of land, the other for the formation of a partnership, it is nevertheless quite apparent that each was an inducement for the other, and neither, as a separate contract, would have been entered into without the other; so that the meaning of the terms and stipulations of each must be construed in the light and by the aid of the other.
It is true that plaintiffs in error agreed to pay defendant in error (and his wife) $10,000, for four-fifths of the lands described. To the defendant in error, directly, $1,800, at times specified; then certain debts of the defendant in error, liens on the land, or other debts to be designated and agreed upon; and balance, if any, to the defendant in error; but it was expressly stipulated that the same should he paid as iher&mafiter specified. The subsequent specifications were that the vendor and the vendees should enter into a partnership for quarrying stone and marketing lime upon the premises, for the purpose of realizing the money necessary to make payment of the $10,000 purchase-money, and that the net profits of the partnership business should be applied in the payment of $10,000, purchase price of said lands. The interest of each and every partner in the net profits was to be so applied. This included the interest of the vendor as a partner of the firm. The inducement to the purchase, offered by the vendor to the purchasers, was, that his interest in the profits of the partnership should be dedicated as a means in their hands for the payment of the whole of the purchase-money; and then it was further stipulated that, " after the said sum of ten thousand dollars is paid as herein agreed, and from that time forward, all are to be equal partners, and to share equally the profits of the said business, and to have equal interests in the lands and all the property of the firm." This clause clearly shows that the interest of the vendor in the profits of the business was to be appropriated to the use and benefit of the purchasers, until such profits should equal the purchase price of the land.
"We do not think that these subsequent stipulations released the purchasers from making payment at the times specified in the agreement, in case the net profits of the business did not accrue within the times named; but if other -means should be used in making payments at the time specified, the entire net profits of the concern were pledged to their re-imbursement. -Nor do we think that it was the intent of the parties that any portion of the purchase-money should be remitted in case no profits were realized by the firm, or if the profits should prove insufficient to folly discharge the debt.
' Upon the true construction of this contract, we think that the entire net profits of the business, to the extent of $10,000. if so much were realized, were to be surrendered to the use of the purchasers; but for any deficiency in that amount the vendor was not chargeable, unless such deficiency was caused by his default.
From these views, it follows, that upon the dissolution of the partnership, an account and settlement of its affairs should have been taken. And it also follows that the decree of the district court must be reversed for error in construing said-contract.
. Judgment of common pleas, and also the judgment of the district court affirming the same, and the judgment of the district court on appeal, are reversed, and cause remanded to the district court for further proceedings.