Case Name: Henry W. Penny, Plaintiff and Appellant, v. Garret C. Black, Defendant and Respondent
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1862-05-10
Citations: 9 Bosw. 310
Docket Number: 
Parties: Henry W. Penny, Plaintiff and Appellant, v. Garret C. Black, Defendant and Respondent.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 22
Pages: 310–317

Head Matter:
Henry W. Penny, Plaintiff and Appellant, v. Garret C. Black, Defendant and Respondent.
1. In a copartnership, the partners may stipulate simply as to the profits, where one is to furnish all' the materials, while both may bestow labor; and in such case, the only specific interest of all is in the profits, and, as to the property, the partnership is only in the use or employment of it as an instrument of profit.
2. Where C. and B. formed a partnership in the business of making, selling and letting chronometers, 0. contributing all the capital, and B. giving his labor only, and receiving his salary and a share of the profits, and 0. agreed to put into the stock of such partnership certain chronometers which were his property, upon a stipulation “ that they should be taken at a fair valuation, as a stock in trade, so that upon a sale of them at the usual market price, the profit usual in that branch of business might be made on them," but this agreement was never reduced to writing, as was intended, nor was a valuation ever fixed upon; and, after dissolution of the firm, both partners remained in the store they had occupied as partners, and 0. let the chronometers in his own name, and kept his own accounts of them, and there was some evidence that it was understood between the parties that 0. was to take the stock and pay the debts:
• Held that, after such dissolution, the chronometers were the property of 0., and that his lessee of one of them could recover possession of it from B., who had taken it away from him.
3. Upon such an agreement, the chronometers did not become the property of the firm, but continued always the property of 0., the firm having a permission to use them.
4. Held further, that, if this were not so, yet the evidence in this case was sufficient to show that, upon the dissolution of the firm, B. had relinquished any interest in them and retransferred them to them to 0.
(Before Moncrief, Robertson, White, Barbour and Monell, J. J.)
Heard, March 15, 1862;
decided, May 10, 1862.
This was an action to recover possession of a chronometer, to which the plaintiff claimed to be entitled as bailee for hire of one Frederick Creighton.
The instrument in question, which was numbered 1,354, had been the property of Mr. Creighton, in the year 1853; prior to that time it had belonged to the firm of Bliss & Creighton, of which he was a member, and which had conducted the business of manufacturing, selling and letting out similar instruments for upwards of twenty years. These instruments were numbered, for the purpose of identification. On the dissolution of that firm, their stock was divided, and the instrument in question, among 150 others, became the sole property of Creighton.
On the trial the plaintiff introduced in evidence, a complaint verified by the defendant’s oath in an action brought by him against Creighton. In that complaint a verbal agreement was set up between the defendant and Creighton, made about the 18th of April, 1853, to become partners under the name of Creighton & Black, in the business of making, selling and letting out chronometers; by it the defendant was not to contribute any capital, which was all to be furnished by Creighton, both parties equally devoting their time and labor to the business. The defendant was to draw a salary of $1,000 a year to be guaranteed to him, whether there were profits or not, nothing being said about losses, and of the remaining net profits he was to receive one-fifth and Creighton the other four-fifths. The business was conducted under such firm until the 18th April, 1856, when it was terminated by a notice from Creighton. The defendant had further alleged in such complaint that Creighton “put into the stock of such new “partnership” the stock which he derived from the old firm of Bliss & Creighton, but without affixing any price to the chronometers, “ but it was agreed that they should “ be taken at their fair value as a stock in trade, so that ' “ upon a sale of them at the usual market price thereof, the “ profit usual in that branch of business might be made on “ them,” and that it was further agreed that an instrument in writing should be drawn up as soon as convenient, which was never done.
The defendant being examined in the present action, as a witness for himself, testified, on his cross-examination, that he “ never agreed to the price of any of the chronometers; “they were to be taken at a valuation; no prices were “ affixed to the goods at the time of the commencement “ of the business of Creighton & Black; there never was “ any agreement * * * as to the prices or values, to be put “ upon those articles including the chronometer in question.” A list of sold chronometers was made out by Creighton, assisted by a bookkeeper, (Sayer,) shortly before the dissolution, headed, “A list of chronometers on hand, “ January 1st, 1855,” and prices were affixed thereto; no list had ever been made before.
The defendant objected to the prices affixed, upon the ground that it was more than they sold for, claiming that it was double their real value. A day or two after the dissolution of the firm \t was agreed between the parties .that persons should be appointed to value the stock, at the prices at which it ought to come in, and what it was worth after the dissolution.
After the 18th of April, 1856, the dissolution of the firm, the defendant remained in the store previously occupied by it, for some time, until after June, during which time Creighton let out chronometers previously belonging to him, including the one in question, and such agreements were entered in' a private book of his. A son of Creighton’s testified that the defendant, in a conversation with his father, after the dissolution, said “ he had been there “ fifteen or twenty years, and there ought to be something “coming to him,” upon which Creighton said, he “had .“ not put any stock in and could not take any out,” to which the defendant seems not to have made any reply. Another witness (Hawley) testified that before the dissolution, he asked the defendant “what was going to be “ done about the stock and debts of Creighton & Black,” and that the latter said, “ Creighton was to pay the debts “ and continue on in the old place,” and that “ Creighton ■ “ was to keep the stock and pay the debts.”
. The chronometer in question was fully completed before the formation of the partnership of Creighton & Black, and was let by Creighton in his own name, in June, 1856, to the plaintiff, who undertook, by a written agreement, to return it, “ at the end of the voyage,” on which he was then proceeding, “ or ivithin twelve months.” After the voyage expired, the defendant possessed himself of the instrument in question, from a cook on board of the plaintiff’s vessel, without plaintiff’s assent, and this action was brought in October, 1856, to recover possession of it.
Evidence was admitted on the trial to prove a usage, by which the written agreement of the plaintiff was made to bind the plaintiff to restore the article hired, at the end of the voyage, or of a year, whichever should sooner happen; and the Beferee found the existence of such a usage. He also found that the chronometer was the partnership property of Greighton & Black, at the time of its bailment to the plaintiff, and that the defendant was entitled to its possession.
Exceptions were duly filed to the findings of the Beferee.
On a former appeal in this case, from a report and judgment in favor of the plaintiff, the question decided was the competency of the defendant as a witness. (6 Bosw., 50.)
C. A. Hand, for plaintiff, (appellant.)
I. The admission of evidence of custom, to vary the legal construction of the written agreement, was error.
II. By the clear rules of law, the plaintiff had the election at which period, (the expiration of the voyage or of-twelve months,) to terminate the hiring. (Comyn Dig. “ Cond.” K. 1; Bac. Abr. “ Cond.” P; Id., “ Election ” B.; Chit. on Cont., 729; McNitt v. Clark, 7 Johns., 465.)
III. The act of the defendant left the plaintiff defenseless against Greighton, whose original title as bailor he was forbidden to dispute. (Marvin v. Elwood, 11 Paige, 365; and see Bates v. Stanton, 1 Duer, 84.)
IV. Upon the whole testimony of defendant he had no title to the property. The copartnership was in the use only. The only partnership that can be implied, where the capital belonged entirely to one of the partners, is a partnership in the use of the capital. (Vide Chase v. Barrett, 4 Paige, 148.) This ceased with the dissolution and withdrawal of defendant, which was previous to the letting, and thenceforth his interest was solely in the previous profits'; and his leaving the property with Creighton, and other acts, implied, also, a relinquishment of any legal title.
Benjamin G. Hitchings, for defendant, (respondent.)
I. All the facts necessary to make out the right of the defendant to the possession of the chronometer are distinctly found by the Referee; and, moreover, there is not even a conflict of evidence upon any material fact in the case.
II. Upon the facts found, the conclusions of law found by the Referee, among which is that the defendant was entitled to the possession of the chronometer, are unquestionable. Hothing is clearer than that either copartner is entitled to the possession of the partnership property. It is equally clear that a third party cannot recover it from the possession of one partner, in order to give it to another.
III. The plaintiff, derives no ground upon which to maintain this action, from the fact that the chronometer had been let out on hire to him by Oreighton, or from the terms of the agreement by which it had been so let to him.
1. After the dissolution, Oreighton could not let out partnership property to hire, so as to give a valid title against his copartner.
He merely held the partnership property as trustee for settling up the partnership business. He could sell it, but not trade with it, or lease it. (Story on Part., § 322, et seq.; 3 Kent’s Com., 4th ed., 63, 64; Gow on Part., 253; Coll. on Part,, §§ 545, 546.)
2. Even if plaintiff had an election under his contract to keep the property for a further period after the expiration of the voyage, he made no such claim, and did not put his demand upon any such ground, but simply upon the ground that he wanted to deliver the chronometer to Oreighton.
3. The agreement or receipt referred to is not to be construed as plaintiff’s counsel contends; but it means that the chronometer is to be returned at the end of the voyage, or, if the voyage is not ended within twelve months, at the expiration of that period of time.
IV. The evidence of the custom of the chronometer trade, in explanation of the receipt or agreement, was admissible; for if the words of the instrument are not ambiguous, they mean what the parol evidence proved, and, therefore, the explanation of it is immaterial. If ambiguous, the evidence was admissible to explain and give a construction to it. (Coit v. The Commercial Ins. Co., 7 J. R., 385; Goodyear v. Ogden, 4 Hill, 104; Dawson v. Kittle, 4 Id., 107.)

Opinion:
By the Court—Robertson, J.
It is plain, that the question first passed upon by the Referee, of the property in the article in question, lies at the foundation of the plaintiff's right of possession.
Unless Creighton, on the formation of the firm of Creighton & Black, actually transferred and delivered the article in question, so as to become the joint property of the partners, he would still remain the owner. Ho mere agreement to contribute any articles, to become the subject of partnership dealings, would be sufficient, without an actual transfer and delivery; nor would even the subsequent employment of them in such partnership business, by itself, establish the sale and delivery of them to all the partners, as partnership stock. It is possible for partners to stipulate simply as to the profits of a business, where one is to furnish all the materials with which it is to be carried on, while both may bestow their labor; the only specific interest of all, in such case, is in the profits, Coll, on Part., § 17,18,) and the partnership is only in the use or employment of the articles as instruments of profit, (Champion v. Bostwick, 18 Wend., 183; Chase v. Barrett, 4 Paige, 148; Everett v. Coe, 5 Denio, 180; Coll, on Part.; § 18, n. 1.) The statements of the defendant show that, as to some parts of the agreement of the partners, it was merely inchoate, and the stipulations conditional; thus it was agreed that Creighton should put in his former stock, at- such a fair valuation as would enable the parties to make an ordinary profit; but such price never was settled, and, on occasion of the only attempt to do so, the parties disagreed, and upon the ground, as stated by the defendant, that no profit could be made out of them, thus recognizing in a measure the right of Creighton to retain the ownership of the .articles, provided he did not charge the firm more than was sufficient to leave room for profit; but not only does no price seem ever to have been determined, or written instrument executed, but no credit was given in the books, or entry made, respecting the oWnership of the articles; they remained, except so far as they were used in the business of Creighton & Black, the same as before as to ownership, unless the mere agreement to transfer operated as a legal transfer, which it did not. The joint possession of them by both parties was equally consistent with a transfer of property and permission to use, and by itself was no evidence of an executed transfer. The determination of the value, which was an essential condition to a transfer, never took place; and unless we are at liberty to infer a sale, upon a quantum meruit, and an • agreement to pay upon demand, there was no undertaking by the defendant to pay anything. Besides this, it would be difficult to determine what interest the defendant would take, under the supposed agreement, in the stock when transferred,—what rights he would have in them, if the partnership had been dissolved immediately after it was formed. If it was governed by his interest in the profits, that was $1,000 a year and a fifth of the surplus; the proportions, therefore, could not be determined from that; and the parties must be supposed to acquire an equal interest in the capital stock. If so, the result would have been that the defendant acquired by such an agreement an ownership of one undivided half of the stock of Creighton, without paying anything, upon an undertaking to pay one-half the value, without any provision for deducting that price from his share of the profits,—a result not to be inferred without positive evi deuce, or as an unavoidable conclusion from circumstances. It would seem that the effort to arrange the price to be paid Oreighton for the stock contributed by him, was not made until the close of the partnership, until which time the arrangement remained in the same indeterminate condition. The probability that no definite arrangement ever was made as to the transfer of the stock, is strongly increased, if not made certainty, by the testimony of young Creighton, to the effect that the defendant was not to withdraw any stock, because he had put none in; that of Hawley, to whom the defendant admitted that Oreighton was to take the stock and pay the debts; and the fact that the latter dealt with the stock as his own, after the dissolution. The finding of the Referee, that the chronometer in question was the property of the firm of Creighton & Black, is unsupported by evidence, and against evidence.
But even were such conclusion untenable, the same evidence would go to make out a case of transfer or release of the stock, after the dissolution, to Oreighton. The defendant had not paid for his interest in it, if any, and it was not unreasonable to believe he had relinquished such interest, upon an agreement to protect him against the debts; and his subsequent acquiescence in the resumption by Creighton of his entire ownership of the articles forming such stock, without any formal release, completed the retransfer in the same informal way in which the original transfer had been made.
The report of the Referee was, therefore, erroneous on one of those two grounds, and should be set aside. It, therefore, becomes unnecessary to pass upon the question of the different interpretation of the agreement made by the plaintiff, by means of the usage found by the Referee.
The judgment must be reversed, the report of the Referee set aside, the order of reference discharged, and a new trial had, with costs to abide the event.