Opinion ID: 1183168
Heading Depth: 1
Heading Rank: 3

Heading: Sharing of Losses

Text: 7. The sharing of losses when they occur is one of the major elements of a partnership in the absence of an agreement to the contrary. McKee v. Capitol Dairies, 164 Or 1, 99 P2d 1013; Elliott v. Murphy Timber Co., 117 Or 387, 244 P 91; Devereaux v. Cockerline, 179 Or 229, 170 P2d 727. Viewed in isolation, the failure to share losses may not determine the status of the relationship for it is perfectly consistent with the existence of a partnership that one partner assumes all the losses. But this result ordinarily arises by express agreement. If a partnership does exist, absent agreement to the contrary, an obligation to share the losses is implied from the relationship. An agreement between partners may provide for a disproportionate sharing of the losses or even the assumption by one partner of all the losses. Devereaux v. Cockerline, supra. Thus, in reviewing the activities of the parties to determine whether their conduct is that of co-partners in a venture, whether they share the losses is a material element. If they share the losses they are in one respect functioning as a partnership; conversely, the absence of a sharing of losses is a circumstance mitigating against the existence of a partnership. We quote again from the testimony of plaintiff's witness Ralph Killinger who swore on cross examination: Q Now then, Mr. Killinger, in the event Killinger and Sons, during the operation of the corn picker, lost money you recognized you wouldn't have any claim against Mr. Wallace for any part of your loss? A No, I wouldn't have any claim. Q In other words, if you lost money on your corn picker that would be too bad for you? A Correct. Counsel for the plaintiff failed to alter this testimony on redirect examination. Ralph Killinger also testified during this redirect questioning that if a farmer failed to pay him for the picking and hauling operation he did not believe he would have to pay Wallace. This is the only instance revealed by the record in which Wallace would sustain a loss because the corn picking operation sustained a loss. We do not equate this with the factor of sharing losses attributable as an element of partnership. It is idle to speculate on the types of losses that could arise in an operation such as this, but there certainly must be more than simply the loss from an uncollected debt. It is not necessary for us to determine the exact status of Wallace; we are called upon only to decide whether he was a joint adventurer with George Killinger & Sons. An individual, such as Wallace, could be either an employee or an independent contractor if his compensation was contingent upon collection of moneys by some one in a higher status such as the Killingers. It is too far removed from the ordinary concept of shared losses to be considered indicative of partnership. Smith v. McGowan & Sons, 131 Or 522, 284 P 189, presents a similar situation. One issue in that case involved the existence of a partnership between plaintiff Smith and one Rogers. Rogers, an Oregon resident, had a commercial fishing license and a leasehold interest in some docks and fishing equipment. Smith, a commercial fisherman, was a Washington resident and could not obtain the required Oregon fishing license. Rogers and Smith entered into an agreement whereby Rogers was to allow Smith to use his license and leased property and was to receive 2 per cent of the gross receipts from sale of fish. They had an understanding that Rogers was not to receive his 2 per cent if there were no profits or if the profits did not justify the payment. The decision held there was no partnership. Rogers' compensation was contingent on there being sufficient profit from the fishing operation, while Wallace's payments were contingent only on collection of the accounts.