Case Name: William M. Simpson et al. v. John Feltz
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1826
Citations: 1 McCord Eq. 213
Docket Number: 
Parties: William M. Simpson et al. v. John Feltz.
Judges: 
Reporter: South Carolina Equity Reports
Volume: 6
Pages: 213–220

Head Matter:
William M. Simpson et al. v. John Feltz.
This was a bill for an account and settlement of a copartnership as merchants. Two points arose. First, as to the quantity of cash received by the defendant; and, secondly, whether the defendant was a partner, or only a clerk. The complainants and defendant agreed to establish a store in Laurens district. The complainants were to furnish the stock of goods and the store house, and the defendant was to attend to the store, keep the books, receive the money and manage the whole concern, for which he was to receive one third of the profits realized. The defendant in his answer swore positively that he did not receive more cash than from thirty to fifty dollars, but surely less than fifty, during nineteen months that he kept the store, besides the sum of $170 which he had charged himself with. That the store was not a cash store, but one which generally sold on credit. That there .were several cash stores in the neighbourhood, which rendered their cash still less. Several witnesses on the part of the complainants swore that they kept stores in that part of the country, and that from their knowledge of the place and business of the defendant and complainants, and from a comparison with their own business, the defendant ought to have received fifty dollars per month. No cash book was produced, as it was alleged to have been burnt with the store.
What consti-nersh?p!0piUt*
1826.
Columbia.
The next question was, whether the defendant was liable with the complainants for the loss of the goods, which had been burnt, by accident, in the store. The defendant contended that he was not a partner, and therefore not liable for any accidental loss.
The Commissioner, (Mr James) reported against the defendant on both grounds, and deducted the loss of goods by the fire before he allowed the defendant a credit for a third of the profits; and also charged him with cash at fifty dollars per month. As to the question of copart-nership, the Commissioner assigned the following reasons for his report: to wit — “ My idea is, that by the word “ profits” is meant that which remains after the capital is restored and all the expenses of the concern paid. In this case the complainants furnished all the capital, and the defendant, as a compensation for vending the goods, was to receive one third part of the profits. It appears to me, therefore, that he should be considered a copartner, and not a clerk. £ If one advances funds for carrying on trade, and another furnishes his personal services, for which he is to receive a share of the profits, this will make them partners between themselves, and as regards third persons.’ Dobs et al. v. Halsey, 16 Johns. Rep. 34. 1 Comyn’s Dig. 277. Mr Justice Blackstone remarks, ‘ I think the true criterion, when money is advanced to a trader, is, to consider whether the profits or premium is certain and defined, or whether casual, indefinite and depending on the accidents of trade. In the former case it is a loan; in the latter a partnership.’ 1 Comyn’s Dig. 365. If then the defendant is to be con sidered a copartner is it not proper he should bear a part of the accidental losses •? In mercantile transactions, loss and gain are inseparably connected, and should be mutual and reciprocal. The advantage held out of receiving equal advantages: on the one hand to an admission of liability; on the other to sustain equal losses. ‘ Every man who has a share of the profits of a trade ought also to bear his share of the loss.’ 1 Comyn’s Dig. 258. I am therefore of opinion that the defendant is properly thus chargeable; in other words, that the amount of the burnt goods should be deducted from the profits before a division takes place.”
To which report the defendant excepted, on the grounds that the Commissioner ought not to have allowed more, on account of cash, than the amount set forth in the answer, which had not been contradicted by sufficient evidence, and that the defendant was no partner, and therefore not liable for any loss sustained by the burning of the goods.
The complainants also excepted to the report, on the ground that the Commissioner should have allowed interest on the balance due by the defendant from the first of January 1819, before which time all the moneys were received by him.
Thompson, Chancellor.
This case came on to be argued upon the exceptions to the report of the Commissioner. The first exception is, that the Commissioner ought not to have allowed more on account of cash sales than the amount set forth in defendant’s answer. The evidence in support of this item of the Commissioner’s report is very flimsy, weak and altogether conjectural: being founded on the opinion of merchants m the neigh-bourhood, whose situations were entirely different from that of complainants; they being owners of new cash stores, whereas that of complainants was a credit store.
The defendant swears positively that his cash receipts, during the nineteen months which he was employed by. complainants, did not exceed fifty dollars, with the exception of ‡ 170 as stated in the bill. This, connected with the strong reasons assigned in the answer, induces the Court to rely thereon, rather than on the vag.ue conjectures of the witnesses for complainants. This exception is therefore sustained.
Tne second exception is, that the defendant ought not to be charged with any of the goods burnt. His liability is predicated on the mistaken ground that he was a copartner. The Court views him in no other light than that of a hireling; the only difference is in the mode of payment, and not in the capacity in which he acted. His being paid in meal of malt did not vary his duties. .The complainants were better satisfied to allow him a share of the profits than to give him standing wages, and he was content to receive them. This exception to the report must also be sustained.
There is only one exception relied on by complainants, which is that they should be allowed interest on the amount of moneys received by defendant. -
It appears there were several attempts to compromise this case, all of which proved ineffectual; nor does it appear to the Court to what amount, if any, the defendant is indebted to complainants. This exception must therefore be overruled.
The Court is of opinion that the proper mode to settle this pase is to charge the defendant with the amount of capital and credit him with the amount of profits; and the surplus (if any) to be divided between the parties agreeably to their original agreement. The costs to be paid out of th'e profits in the first instance.
From this decree the complainants appealed.
Dunlap, for the appellants, made the following points.
First. That the count was wrong in overruling the Commissioner’s report allowing $50 per month for cash sales, as the answer was sufficiently contradicted by evidence.
Second. That the Chancellor erred in decreeing that the defendant was not a copartner, and that he should only be allowed his share of the profits after deducting the loss sustained by the goods that were burnt.
Third. That the Chancellor should have allowed interest on the amount due from the defendant to the complainant.
Fourth. Because the mode of settlement directed by the decree was erroneous, viz. to charge the defendant with the capital, and to deduct therefrom the profits. For the more the partnership settled, the less the complainants would receive. He said if the partnership had continued until by judicious management the profits had amounted to more than the capital, the complainants would have lost their capital as well as their profits, and besides would have been in debt to their clerk.
Fifth. That the Chancellor was wrong in ordering the complainants to pay two thirds of the costs.
P. Fanow, contra,
cited 1 Mont, on Partn. 11, 12. Gow. on Partn. 15. Grace v. Smith, 2 W. Black. Rep. .998. Muzzy v. Whitney, 10 Johns. Rep. 226. Cheap v. Cramond, 4 Barn. & Aid. 663. Walden v. Sher-burne, 15 Johns. Rep. 409. Did it make a difference where a person undertakes to do a particular act and to receive a part of the profits, and where he enters into a general concern for an unlimited time, or to embrace successive investments
O’Neall, in reply,
referred to Dob v. Halsey, 16 Johns. Rep. 34. 1 Mont, on Part. 6. As to the question of interest he referred to 4 Desaus. Rep. 113.
nions^fwit-Xfprofits of a copartner-outweigh°the sweíofthede-fendant, co-
men”between merchants to and'for one°to superintend tne business and to receive the profits realized, (he putting in no stock) consti-nerahip! anda loss sustained by fire is mutual.
, What cases are copartner-arePnot!dWhat

Opinion:
Curia, per
Nott, .T.
In this case the Court concur in opinion with the Chancellor on the first exception to the report, for the reasons given in the decree. The defendant has sworn to a maximum, which he- declares unequivocally the cash receipts could not have exceeded, and in which he is sure he cannot be mistaken. OpPose<l to ^is are the opinions of gentlemen founded on data which do not authorize any certain conclusion. And however respectable the witnesses are, their opinions, which are merely conjectural as it regards this case, cannot outweigh the positive answer of the de-This Court therefore are of opinion that that exception was properly sustained by the Chancellor.
With regard to the second exception, the Court concur in the opinion expressed by the Commissioner in bis report. And the authorities relied on clearly support him in the views which he has taken. The bill states that the complainants and defendant entered into partnership in trade and merchandize; that the defen-1 1 , dant was to superintend the business of the store, and to receive one third of " the profits realized by the said The defendant in his answer admits that he did . . enter into partnership with the complainants, as m the bill stated, and that he was to receive one third of the profits as therein stated. If therefore the defendant's , . . r , , . , " acknowledgment ot the tact is to be used as evidence of the copartnership, every thing required to be proved is admitted. The terms of the contract admit of no other construction. He was to receive one third of the profits realized by the firm. In the case of Grace v. Smith, 2 Black. Rep. 998, Chief Justice De Grey says, " every man who has a share of the profits of a trade ought also to bear his share of the loss." Judge Blackstone in the same case says, " I think the true intention is to conJ . sider whether profit is certain and defined; or casual, indefinite and depending on the accidents of trade. In the former case, when money is advanced it is a loan; in the latter a partnership." And I take it that that is the distinction which runs through all the cases : if a person derives a certain emolument from,, the trade then he is not a partner ; if his emoluments depend upon the profit and loss, then he is considered as such. There is a particular class of cases in which, although a person may receive a share of the profits only, he will not be . , . . ' considered a partner, as where he is to receive a share of the profits of a mere isolated transaction; such as the case of Muzzy v. Whitney, 10 Johns. Rep. 226, the cases there cited. But then the question was, merely whether the defendant was a partner in such a sense °f the word that an action at law could not be maintained against him.
¡nJa certain " emolument from a trade does not con-nerehip^but if emoiument depends 0n profit and ^partnership3
And in the present case, it is no farther necessary to go into the inquiry than to ascertain the true construction of the contract with regard to the compensation which he was entitled to receive. And there can be but little doubt that he must be considered so far a partner as to share in the profit and loss. The profits " realized" by the firm could have been only such as remained after the losses were deducted. It is admitted, that he was liable to the losses usually incident to mercantile speculation, such as bad debts and the like. But suppose a hogshead of brandy or pipe of wine had sprang a leak and had been lost; or that the rain had beat in and destroyed a quantity of sugar or salt; or that by some misfortune a quantity of crockery or glass had been broken or destroyed: all these must have been carried to the account of profit and loss, and must so far Have reduced the dividend of the defendant; and if the loss should turn out to be equal to the profit, it would not be difficult to ascertain how much was realized by the firm. Whether the loss should happen by fire or by either of the casualties above mentioned could not, in my opinion, alter the result. The parties had all embarked their fortunes in one common concern, and were all equally dependent on the success of their undertaking for the profits which they were to receive. It was inconsistent with the nature of the contract that one should gain and the other lose. I am of opinion therefore, that the decree of the Chancellor on this point should be reversed, and that the exception be overruled.
Where one money^Tan-other, the that he kept pose of profit", and thaUio fore payinter-6S
copartner^re-his hands he toeSstPayi""
The exception on the part of the complainants in relation to interest I think ought to be sustained. - The rule in England — if the opinion of Lord Ellenbokough in the case of De Haviland v. Bowerbank, 1 Campb. Rep. 50, is to be considered as authority on that point, — is that a person shall not be required to pay interest, except where there is an express stipulation to that effect, or where it may be inferred from the course of dealing between them that such was the understanding; or where it can be proved that the party has used the money and derived a profit from it.
But our rule has been, where one man has retained the money of another, to presume that he kept it for pUrp0se 0f profit, and that therefore he ought to pay interest upon it, Goddard v. Bullon, 1 Nott & M'Cord's Rep. 46. The balance due by the defendant is so much 0f the funds of the firm retained by him to which he was not entitled, and for the use of which he ought therefore PaY interest. On this point also the decree of the Chancellor must be reversed.
With regard to the costs the Court is not disposed to interfere.
It is therefore ordered and decreed, that the case be referred to the Commissioner to amend his report in conformity with the principles herein laid down.
Decree reversed,