Court Opinion

ID: 8057801
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:34:42.344506+00
Date Added: 2024-06-11T16:37:55.525473
License: Public Domain

Elmeb, J.
The judge of the Circuit Court having
charged the jury that Abraham Bell & Son were liable, jointly with B. Brundred, Son & Co., for the debts contracted by the latter firm, in pursuance of the agreement entered into on the second day of February, 1853, and directed them to find a verdict for the plaintiffs; the propriety of that charge and direction depends upon the legal effect of the agreement. If the effect was, as .is now insisted, to make the members of the firm of Bell & Son joint partners with the members of the firm of B. Brundred, Son &. Co. the charge was correct, it being undoubtedly a question of law, which it was the duty of the court, to decide, whether the undisputed facts of the ease did .or .did not make the parties legal partners.
No question of fact was submitted to the jury. It w$s not alleged that A. Bell & Son were held out to the plaintiffs or to others, as .partners in the business of B. Brundred, Son & Co., and no question of their liability arising in that manner was raised. The latter firm was engaged' in the business of manufacturing machinery, at Oldham works, near Paterson, in this state, and the firm of A. Bell & Son was a commission house in the .city of New York. As such, they transacted the business of the manufacturers, disposed of their manufactured stock, collected their drafts and bills, and made them advances of money to enable them to carry on their business. A large balance, having become due to the commission merchants, mortgages were given, and an assignment of their tools made to them by B. Brundred, Son & Co., for tlieir better security. Afterwards the agreement in question was entered into, and the business carried on as before. The lumber for which the note in suit was given, by the firm of B. Brundred, Son & Co., was ordered in the name of that firm, by one of the partners therein, and charged to them in the books of the plaintiffs.
There seems to be no reason to believe that A. Bell & *279Son intended to become partners in tlie business of B. Brundred, Son & Co., and this was not much insisted on. But the argument relied on by the counsel of the defendants in error, the plaintiffs in the original suit, is that the effect of the agreement of February 2, 1853, was to entitle the firm of Bell & Son to participate in the subsequent profits made by B. Brundred, Son & Co. in their business, and thus to render them in law partners of that firm, at least so far as third parties were concerned. It cannot be doubted that, as the law is established, persons may become partners • as to third parties, who are not partners as between themselves. This effect is produced wherever such persons become entitled to an actual participation in the profits of the business, as profits, and so that they are entitled to an account, and have a specific lien or a preference in payment over creditors, and thus have the full benefit of the profits of the business without any corresponding risk in case of loss. Grace v. Smith, 2 W. Black. 998; Ex parte Hamper, 17 Ves. 403 ; Champion v. Bostwick, 18 Wend. 184; Denny v. Cabot, 6 Metc. 82; Barry v. Nesham and Lowthin, 3 Man. Gram, & Scott 641; Cushman v. Bailey, 1 Hill 526. If however, tlie true construction of this agreement was, as is insisted, that it gives a right to Bell & Son to take all the profits of the business, after paying to the partners of the firm of B. Brundred, Son & Co. the sums stipulated in consideration of their services, I am not satisfied that it would have rendered them partners. They would not, upon that construction, take the profits, as such, that is, so that their gain would be more or less in proportion to the profits earned, but would take them simply as creditors, in payment of a prior debt. The profits, as such, would enure to the benefit of the firm of B. Brundred, Son & Co., after the agreement, as truly as they did before. Nor would those who had trusted the latter firm have any ground of complaint, because the debts incurred in carrying on the business would be first paid before profits would accrue.
*280But, in my opinion, it is a misapprehension of the agreement in question to consider it as transferring the profits of the business to' Bell & Son. Nothing is said about profits, nor was their amount of any importance to Bell & Son, except that the greater they should prove to be, the less they might be called on to advance, and the more they would receive a discharge of their debt. Tlioir interest in the profits was the interest of creditors, and not of participators, who were to gain or lose in proportion to what those profits should turn out to be. The agreement gives the entire management and control of the business of B. Brundred, Son & Co. to Bell & Son, with power to collect all moneys due to the first named firm, and to pay their indebtedness at, their pleasure. The machinery on hand manufactured, in whole or in part, was stipulated to be delivered to Bell & Son, in payment of the prior indebtedness. Brundred, >3on & Co. were not to contract any indebtedness without the written consent of Bell & Son, and the acting partners of the former were limited to draw only specified sums for the support of their families. The firm of Bell & Son were authorized to employ an .agent to superintend the business under their direction, part of whose salary was paid by them, and part out of the business of B. Brundred, Son & Co. Power was also given to A. Bell & Son to discontinue the business after a period named, and to dispose of the stock and fixtures at auction.
This arrangement, it might perhaps be' plausibly argued, was an assignment of the property and business to Bell & Son, and rendered them liable to account for it; or it may, perhaps, have constituted them the real principals in the business, carried on for their benefit in the name of B. Brundred, Son & Co., as their agents; but I can see no ground for holding them to be partners, and liable jointly with B. Brundred, Son & Co., for the debts contracted before or after the agreement. The business was carried on *281after tlic agreement, precisely as it had been before. B. Brunclred, Son & Co. acted as the manufacturers, and, as saeli, contracted debts in their own names and upon their own credit, while A. Bell & Son acted as commission merchants, collecting, receiving, and paying in that capacity. The old debts appear to have been treated like the new ones, and provided for, as occasion required, in the same way. Whatever, therefore, may have been the rights of the creditors of B. Brundred & Son, as against A. Bell & Sou, either at law or in equity, as to which no opinion is meant to be intimated, I am clear that there was no partnership and no joint liability, as the legal effect of the agreement entered into between these parties, and that the judgment must be reversed.
The Ciiibf Justice, and Justices Potts and Ykedenbubgh concurred.
Cubd in Voorhees v. Jones, 5 Dutch. 373; Affirmed 1 Dutch. 674.