Court Opinion

ID: 3576682
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:28:38.131933+00
Date Added: 2024-06-11T14:07:18.838770
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 188 
A partnership is defined to be a contract of two or more persons, to place their money, effects, labor, or skill, or some or all of them, in lawful commerce or business, and to divide the profits and bear the loss in certain proportions. (3 Kent'sCom. 5th ed. 23.) And to constitute a partnership in a single concern, there must be a joint undertaking to share in the profit and loss. (Bostwick v. Champion, 18 Wend. 580, and casesthere cited; Green v. Beesley, 2 Bing. N.C. 108.) In the case under consideration, each party was to stock a particular portion of the stage route from Saratoga to Sandy Hill, Glen's Falls, and Whitehall, and each was to receive fare for the passengers in proportion to the distance they should be by them respectively conveyed. Neither party had by the terms of the contract, any interest *Page 190 
in or control over the stock or road of the other; nor were any expenses upon any part of the route to be borne jointly. The question of their liability to third persons is not here involved. In such a case a different rule prevails from the one which determines whether persons as between themselves are partners. (Waland v. Elkins, 1 Starkie, 272; Bostwick v.Champion and others, 11 Wend. 571; same case in error, 18Wend. 175.) In the case last cited the tolls at turnpike gates on the whole route were to be deducted from the fare of passengers and the balance was to be divided among the proprietors of the route in proportion to the distance agreed to be run by each proprietor; each of whom was to provide his own carriages, horses and drivers. Justice Nelson, who delivered the opinion of the court in that case, put his decision mainly upon the ground that the proprietors all shared in the patronage of each passenger, and should be therefore jointly liable to passengers and third persons for damages occasioned by the negligence of the driver upon either section of the route; he however, in conclusion, concedes that the proprietors as among themselves might not be partners, and might be liable to each other the same as if their interests were several. And Chancellor Walworth, who delivered the opinion in the same case in the court of errors, concedes, that as between the proprietor whose driver occasioned the injury and the other proprietors, he ought to sustain the loss and would be bound to make it good to them; but that, inasmuch as the passage money constituted a common fund out of which the tolls on the whole route were first to be paid, the division of the residue was a division of the profits of a joint concern so as to constitute a partnership as between themselves as to that fund, and entitled either to an account as against the others; and hence they were liable to third persons as to every thing as to which the different owners of that fund had a joint or common interest. How far they would be liable to third persons for any thing else than injuries occasioned to passengers and their baggage and to those who sustained *Page 191 
damage occasioned by the negligence of their drivers, is not decided; he however expressly says, that the only debts or expenses for which they would be jointly liable as between themselves, were the tolls upon the whole line; and the joint profits to be divided was the whole passage money after paying the tolls. Whatever may have been the joint liability of the parties to this suit to third persons need not be determined here, for the reason that no case has arisen in which it is claimed that a liability has accrued, the damages resulting from which should, as between themselves, be deducted from the amount of fare belonging to either. By the demurrer it is admitted to be a simple case of shares in the fare in proportion to the distance the passengers and their baggage were conveyed by each, from which no deduction was to be made for joint expenses or losses of any description; the funds to be divided were their gross earnings, and not profits, as profits. To constitute persons partners as between themselves, there must be an interest in the profits, as profits; each party must by the agreement participate in some way in the losses as well as the profits; an agreement to divide the gross earnings as in this case, does not constitute the parties to it partners. (Story on Partnership, § 34.) The reason why a remedy has been denied at law to one partner as against another, except upon a covenant to account, or upon a promise to pay a final balance, is, on account of the difficulty of adjusting complicated accounts between them. (1Chitty's Pleadings, 44.) The division of gross earnings presents no such difficulty. The court whose judgment is now under consideration, was governed by the authority of the case ofFromont v. Coupland, (2 Bing. 170.) If that case was, as it seemed to have been understood by the supreme court, an agreement to divide the gross earnings, and not the profits as such, it is in point, and authority for the decision appealed from, and in conflict with the settled law both before and since, establishing the requisites of an agreement to make persons partners as between themselves. The case is badly reported. The parties to *Page 192 
it had been running a coach from Bath to London, the plaintiff finding horses for one part of the road and the defendant for another; the profits of each party were calculated according to the number of miles covered by his own horses. It does not appear to whom the coach belonged, or by whom the cost of the repairs and use of it, or the damages occasioned by its destruction were to be borne; or whether the profits to be divided were the gross earnings, or net profits, after paying the expenses of the coach. If the latter, as in all probability it was, the profits in such case would be net and not gross; then it would be in principle like the case of Cheap v. Cramond, (4 Barn.  Ald. 663,) where a deduction of commissions from the gross profits was held by Abbott, Ch. J. to constitute a partnership, quoad hoc. In the case of Fromont v. Coupland, the court did not discuss the question of partnership, but assumed that one existed; this clearly they would not have done, in a case where gross earnings only, from which nothing was to be deducted, were to be divided. That case was cited in Green v. Beesley, (2 Bing. N.C. 108,) in which the principle is clearly conceded by Tindall, Ch. J. that a mutual participation in profit and loss is indispensable to a partnership; and Park, J. in the same case, held that by the agreement before them, there was no participation in profit and loss, but that it was a case of partnership. Not however because there was to be a division of gross earnings, but because the agreement to divide was made to depend upon the punctual performance of other stipulations. Thus it will be seen that the court in which the case of Fromont v.Coupland was decided have not regarded it as authority for holding that a partnership was constituted by a simple agreement to divide gross earnings. The parties to this suit are not, either upon principle or authority, partners, as between themselves.
The causes of demurrer assigned upon the record reach no other point, but upon the argument another cause was insisted upon, viz: that there is no sufficient averment in the *Page 193 
declaration of a balance in the hands of the defendant belonging to the plaintiffs. This objection is well taken. The naked allegation that the defendant has received one thousand dollars of fare from passengers by no means shows what portion of it, if any, remained due to the plaintiffs for the fare of passengers conveyed by their teams. The breach assigned that the defendant has not paid over the balance in his hands belonging to the plaintiffs, has nothing to rest upon, there being no averment of any balance in the defendant's hands belonging to them. Upon this ground the declaration is defective, and the judgment of the supreme court must, therefore, be affirmed.
Judgment affirmed