Case Name: William F. Clark, as Executor of the Last Will and Testament of Thomas Sutton, Deceased, Respondent, v. Bronson Rumsey and Others, Appellants, Impleaded with Others
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1901-03
Citations: 59 A.D. 435
Docket Number: 
Parties: William F. Clark, as Executor of the Last Will and Testament of Thomas Sutton, Deceased, Respondent, v. Bronson Rumsey and Others, Appellants, Impleaded with Others.
Judges: 
Reporter: Appellate Division Reports
Volume: 59
Pages: 435–440

Head Matter:
William F. Clark, as Executor of the Last Will and Testament of Thomas Sutton, Deceased, Respondent, v. Bronson Rumsey and Others, Appellants, Impleaded with Others.
Partnership — an agreement to subscribe towards the expense of drilling a gas wed does not create it — what appearances do not indicate a partnership.
The following agreement: “We, the undersigned, agree to pay the sum set opposite our several names to Henry W. Watson, room 100, White Building, whenever called upon, for the purpose of drilling and putting down a gas well on Grand Island on the property of The Morrahuiga Park Land Company, adjoining Sour Spring Grove.. 'If gas is found in paying quantities each subscriber to this fund is to share in the proceeds or profits of the well in the same proportion as he subscribes for the putting down of the same. Not over $50 is to be paid for the privilege of putting down this well to the owners of the land,” does not constitute the subscribers thereto partners as to a third party who, with full knowledge of the situation, entered into a contract with the executive committee appointed by the subscribers to drill the gas well. Circumstances showing that the third party was not misled by any appearances indicating the existence of a copartnership, considered.
Appeal by the defendants, Bronson Rumsey and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Miagara on the 8th day of March, 1899, upon the decision of the court rendered after a trial at the Miagara Trial Term, a jury having been waived.
On or about the 2d day of June, 1892, the appellants, together with fifteen other parties, entered into a.written agreement of which the following is a copy, viz.:
“ Buffalo, June 2, 1892.
“ We, the undersigned, agree to pay the sum set opposite our several names to Henry W. Watson, room 100, White Building, whenever called upon, for the purpose of drilling and putting down a gas well on Grand Island on the property of The Morrahuiga Park Land Company, adjoining Sour Spring Grove. If gas is found in paying quantities each subscriber to this fund is to share in the proceeds or profits of the well in the same proportion as he subscribes for the putting down of the same. Mot over $50 is. to be paid for the privilege of putting down this well to the owners of the land.”
Each of the parties to this instrument subscribed the sum of $100, which created a fund amounting in the aggregate to $2,000.'
On the 14th day of June, 1892, at a meeting of certain of the subscribers, an organization was perfected by the election of a president^ vice-president, secretary and treasurer; and upon the day following an executive committee was appointéd' which subsequently entered into a contract with Thomas Sutton, the plaintiff’s testator, by the terms of which he agreed to drill a well upon the premises mentioned in the foregoing agreement, which well was not to extend beyond 1,500 feet in depth. As ho gas was found when this point was reached, supplementary contracts were made with Sutton, the result of which was that the well ultimately reached a depth of 8,128 feet, the. cost of which according to the terms of the various Contracts amounted to $4,640.70.
After the amount originally subscribed was exhausted, several of the subscribers, including the appellant Baethig, increased their subscriptions, in consequence of which the sum of $3,502.30 was realized. This sum was applied towards the payment of the amount due Sutton upon his contracts, which left a balance unpaid of $1,138.40. Failing to obtain any further payments, Sutton brought an action in the Supreme Court against Henry W. Watson, as treasurer of'the company, under the provisions of section 1919 of the Code of Civil Procedure, and in due course of time obtained a judgment therein for the amount of his claim, with costs. An execution was thereafter issued upon such judgment, and the same having been returned unsatisfied, this action was brought against .the subscribers, and a defense was interposed by each of the five' appellants above named. Hone of these appellants attended any of the meetings of the company, and when called upon for additional subscriptions,, they, with the exception of the appellant Baethig, either refused to respond or ignored the notices which were sent to them.
■ The issues joined .herein were brought to trial at a term of court held in Hiagara county on the 16th day of February, 1898, and a jury having been waived, a trial was had before the justice presiding at that term, who found in favor of the plaintiff for the full amount of his claim, with costs, and from the judgment subsequently entered thereon this appeal is brought. ’ . •
Ansley Wilcox, for the appellants.
Charles Hickey, for the respondent.

Opinion:
Adams, P. J.:
The theory upon which this action was brought, tried and determined was that the defendants were liable as copartners for the balance due upon the Sutton contracts; and it is now contended that the subscription agreement of June 2, 1892, created a joint liability upon the part of the persons signing the same, which established both inter se and as to third persons the relation of copartners. The principal question, therefore, with which we have to deal upon this, review involves the correctness of this contention, and is one which in so far as it appertains to a copartnership relation between the subscribers themselves, rests solely upon the fact that by the agreement of June second each subscriber to the fund- created thereby was "to share in the proceeds or profits of the well in the same proportion as he subscribes for the putting down of the same."
It is undoubtedly true, as has been declared by a text writer of undoubted authority, that " Partnership is prima facie the result of an agreement to share profits, although nothing may be said about losses, and although there may be no common stock." (Lind. Part. [4th Am. ed.] *19.) But the same author also asserts what is equally true, that it is inaccurate to say that community of profit is the test of partnership, but that, more properly speaking, it may be said- that " "Whether persons are really partners or not is a question of intention, to be decided by a consideration of the whole agreement into which they have entered and ought not to be made to turn on one or two Only of the clauses in it." (Id.)
Applying, therefore, the rule last stated to the case in hand, it seems quite clear that" the respondent's contention, so far as this particular branch of it is concerned, has no satisfactory foundation upon which to rest.
So far as the instrument itself is concerned, there is absolutely nothing in its language which, by the most liberal construction, could be tortured into the declaration of an intention upon the part of the subscribers to establish a copartnership relation save the single sentence above quoted, and the evidence dehors the contract absolutely repels any such idea. Not only was there no agreement not to share in whatever loss might result from the enterprise, btit so far as these appellants are concerned they took no part in any of the meetings and evinced no interest whatever in what occurred subsequent to the signing of the contract. They simply pledged themselves to pay $100 each to defray the expense of sinking a well, and, with the exception of the appellant Baethig, refused to increase their subscriptions or to pay any attention to calls made upon them for further financial aid. Obviously they regarded the instrument signed by them as a subscription paper, pure and simple, and by their action manifested a purpose to limit their liability to the amount severally subscribed by them and not to create a joint liability which should make them jointly and severally liable for any obligation incurred. -
Nor do we think the language relied upon is fairly open to the construction claimed for it.
The contract in question did not contemplate the conduct of a business of a continuous nature nor one which would necessarily or probably result in the earning of profits or the creating of losses, and although the word " profits " is used in connection with the word " proceeds," we think it cannot be regarded as qualifying the word first used, but rather as a redundant expression which was intended to convey no additional or different' meaning.
It is a legal maxim that " He who considers merely the letter of an instrument, goes but skin-deep into its meaning" (Broom Leg. Max. [6th Am. ed.] *657, *659); and in elaborating this most suggestive maxim the learned author says : " The meaning of particular words, indeed, in statutes, as well as in other instruments, is to be found, not so much in a strict etymological propriety of language, nor even in popular use, as in the subject or occasion on which they are used and the object that is intended to be attajmedP
Considered, therefore, in this light, we think the agreement entered into by these appellants was simply one to pay certain definite sums of money to-defray the expenses of sinking a gas well,
and in the event that gas was found in paying quantities to share in the proceeds thereof, if any there were. This certainly was not such a community of profit as to constitute a partnership (Lind. Part. *17; Collyer Part. [6th Am. ed.] § 29), and such being the case, we fail to discover wherein it can be successfully contended, that the subscribers were partners inter se.
The view of the question to which we have thus given expression is one which has the support of adjudicated cases in this and many other States, and it is likewise one which we think is founded in reason as well as authority. (Hudson v. Spaulding, 6 N. Y. Supp. 877; Hall v. Thayer, 53 Mass. [12 Metc.] 130 ; Gibbons v. Grinsel, 79 Wis. 365; Moss v. Wilson, 40 Cal. 159 ; Davis v. Belford, 70 Mich. 120; Ward v. Brigham, 127 Mass. 24; Frost v. Williams, 2 S. Dak. 457.)
We come, therefore, to a consideration of the second branch of the plaintiff's contention, viz., that as to third parties the appellants are liable as copartners.
The theory upon which such a liability arises is that persons who hold themselves out to the world as partners by dealing in such a manner as' to create the appearance of partnership to the injury of innocent third parties, are estopped from denying that their actual relation is not what their acts would seem to indicate it to be. The rule is thus stated by Collyer on Partnership: " Persons become liable as partners to third persons, either by contracting the legal relation of partners inter se, or by holding themselves out to the world as partners. He who lends his name and credit to the firm is liable for the debts and engagements of the body; " but only " to those who are thereby led to believe that he is a partner, and who give credits to the supposed firm under that belief." (Yol. 1 [6th Am. ed.], §. 5 and note 2:)
We think the case is quite barren of any evidence tending to show that Sutton supposed the subscription paper was a partnership obligation, or that he was led to give any credit to these appellants under the belief that they were members of a firm. Indeed, so far as the evidence discloses, he did not even know that they had signed the paper when he entered upon his contract. He did know, however (and this, it seems to us, is quite significant), all about the original subscription and the limit of the subscribers' liability, for he was present when the first four names were signed thereto, and at one time agreed to take two shares in the enterprise, although he subsequently decided not to do so. Moreover, he -attended nearly all the meetings and was, therefore, conversant with the situation of affairs, and must have known,who of the subscribers refused to respond to calls for additional payments. In short, he knew quite as much about the circumstances under which the business was conducted ás any other man, and if the subscribers were not in fact copartners, it cannot now be claimed with any propriety that he had any reason to believe that they sustained that relation towards each other or that he was induced to give credit under that belief.
We think that, in so far as the facts found and the conclusions reached by the learned trial court are at variance with the foregoing views, error was committed which requires that a new trial should be granted, and to that end the judgment appealed from must be reversed.
Judgment reversed upon both the law and the facts, and a new trial ordered, with costs to thé appellants to abide event.
All concurred, except Spuing, J., not sitting.
Judgment reversed upon both the law and the facts, and new trial ordered, with costs to the appellants to abide event.