Court Opinion

ID: 7191533
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:57:26.900979+00
Date Added: 2024-06-11T16:16:10.897007
License: Public Domain

Dissenting Opinion.
Spencer, J.
The facts of this case are identical with those of “ Chaffraix & Agar vs. Price, Hine & Tupper — Morton, Bliss & Co., Intervenors” — reported in 29 An. p.-176. It is unnecessary to repeat themhere. In that case plaintiffs sought to hold Morton, Bliss & Co. liable as princi*648pals or partners of Price, Hine & Tupper. In this they seek to hold John B. Lafltte & Co. in the same manner.
These cases have been contested with marked ability, learning, and research. The best legal talent of our State, as well as eminent foreign coiinsel, have engaged in their discussion.
The sole question is. what was the nature of the contract between the three Arms of Price, Hine & Tupper, Morton, Bliss & Co., and John B. Lafltte & Co., and what rights and obligations did it engender as between themselves and as to third persons ? If Price, Hine & Tupper were merely the employees of the other two Arms, and were furnished by the latter with money to buy the molasses, receiving a share of the profits as compensation — or, if Morton, Bliss & Co. and Lafltte & Co. were simply undisclosed and unknown principals, to whom plaintiffs gave no credit, and of whom they had no knowledge, then I do not hesitate to say that, after these principals have, in good faith, paid over the money due to Price, Hine & Tupper as re-imbursement of sums advanced or supposed to have been advanced by them, plaintiffs can not maintain an action against said principals for the price of goods sold to the employees. If I hand to my clerk a sum of money and direct him to buy for cash a certain article, and he squander the money and buy it on his own credit, from one who did not know him to be my clerk, to my mind it requires no authority beyond common sense and fairness to show that the vendor can not recover the price from me. This eminently fair and common-sense view is also that of the best considered authorities. See Armstrong vs. Stokes, L. R. 7, Q. B. 598.
If Price, Hine & Tupper were mere employees, receiving a share of the profits as compensation for their services, thefe was no partnership between them and their employers. See Hallett vs. Desban, 14 An. 529. But were they mere employees? That was the view I took in the case, as against Morton, Bliss & Co. Further consideration and discussion have changed my opinions upon the subject.
The salient fact, which in my opinion, demonstrates that they were not mere emplojmes in the transactions out of which this litigation arises, is that they were liable for losses. An agent or employee, acting * within the scope of his authority, and purchasing for another, can not, in the nature of things, be liable for losses suffered by his principal, beyond such part of anticipated profits as might be due him as compensation. It seems, indeed is broadly admitted, that under the agí eement between these three firms, any losses sustained in this venture, were to ■be borne by the parties in the same proportion that the profits were to •be divided, i. e. one half by Morton, Bliss & Co., one fourth by Lafltte & Co., and one fourth by Price, Hine & Tuppei'.
It would seein to be a corollary of this liability for losses, that P., H. *649& T. were bound by any contracts or obligations which Morton, Bliss & Oo. or Lafitte & Oo. might enter into with reference to the molasses. Thus if Morton, Bliss & Oo. had incurred a debt of $20,000 for the transportation, storage, or salvage of the goods, Price, Hiñe & Tupper would have been liable, at least and certainly to the extent of one fourth; for to that amount even Morton, Bliss & Oo. could recover against them. I do not see how they could avoid liability on such demand, by pleading, as defendants’ counsel does, that the molasses was the property of Morton, Bliss & Oo. The answer to this would be, that by the terms of your contract With Morton, Bliss & Oo. you bound yourselves for losses, and our claims are chargeable to that account.
Again, it seems to me, that by this agreement to pay losses, Price, Hiñe & Tupper (supposing them to be solvent) had involved in this transaction, proportionably, the same thing as Morton, Bliss & Oo. It can not be disputed that, even inter se, as between the three firms themselves, Price, Hiñe & Tupper risked in this venture one fourth of the entire cost of the molasses, plus one fourth of all expenses. If by deterioration or other accident the molasses lost all or part of its value, it was their loss, just as much so, proportionably, as it was that of Morton, Bliss & Oo. If they had been participants in the profits and losses to the extent of one half instead, of one fourth their interest in this venture would have been both in nature and amount identical with that of Morton, Bliss & Oo. Are such equality and identity of risk and interest characteristics of the relation of principal and agent, of employer and employee? It is elementary that these are not indicia or consequences of the contract of mandate. . Under the facts of this case, I see no more reason to say that Price, Hiñe & Tupper were agents cr employees of Morton, Bliss & Oo. than that Morton, Bliss & Oo. were employees of Price, Hiñe & Tupper. True, Morton, Bliss & Oo. agreed to bear half the losses, in consideration of receiving half the profits; but it is equally true that Price, Hiñe & Tupper agreed to bear one fourth the losses in consideration of receiving one fourth the profits. In what respect did the nature and character of their interest and risk differ ? We can not distinguish between them, on account of the fact that, by the agreement, Price, Hiñe & Tupper were to devote themselves exclusively to the selection and purchase of the goods — Lafitte & Oo. to receiving and forwarding them and disbursing tne money, and Morton, Bliss & Oo. to the advancing of the capital, and selling of the goods. These facts have no significance. Such divisions of labor, power, and responsibility are too frequent among persons associated in business to afford ground for distinguishing this case from others. I see no escape from the conclusion that Price, Hiñe & Tupper were principals in this association, as much so as either of the other firms — having proportionably the same stake *650in the adventure, the same interest in its results, whether profit or loss. Nor do I perceive how it can be said that, after the molasses passed into the hands of Lafltte & Oo. Price, Hiñe & Tupper had no interest in it. We have seen that, had this property been lost, or been absorbed by expenses and charges, Price, Hiñe & Tupper would have borne one fourth the loss, just as Morton, Bliss & Oo. and Lafltte & Oo. would have borne, between them, the other three fourths. Where a man is not a guarantor or underwriter, how can it be said that he has no interest in a thing when its destruction is his loss ? It seems to me that they were joint owners of this property. And why not ? Did the mere fact that Morton, Bliss & Oo. or Lafltte & Co. under an agreement so to do, furnished the money to buy goods for joint account and risk of themselves and another exclude that other from a joint ownership in the thing so bought ? Or does the fact that by the 'agreement of these parties the thing so bought was to be immediately placed in the name, care, and disposal of one of the associates repel or exclude the idea of joint interest therein? To my mind this was at most a mere precaution, and is no sufficient evidence of exclusive ownership in Morton, Bliss & Co. or Lafltte & Co.
My convictions in this regard are strengthened by the further consideration that the facts of this case repel the idea that there were two sales, one from Chaffraix & Agar to Price, Iiine & Tupper, and another from the latter to Lafltte & Co. or Morton, Bliss & Co. The propert’ never stood for a moment in the separate name of Price, Hiñe & Tupper. The delivery, by transfer on the books of the warehouse, was direct from Chaffraix & Agar to Lafltte & Co. Besides, as between Price, Hiñe & Tupper and their associates, the transaction lacked one indispensable element of a sale, to wit: a “ fixed and determined price.” “ The ptice” says Civil Code, art. 2439, “must be certain, that is to say, fixed and determined by the parties.” Here there was no price “ fixed and determined.” A vendor, in the nature of things, can not be held liable as such for losses suffered by the purchaser on resale of the thing bought, or for deteriorations proceeding from accidental and subsequent causes. It is inconsistent with the nature of the contract of sale. In this case nobody knew or could know what Price, Hiñe & Tupper were to get. It depended upon the fluctuations of the market and the hazard of circumstances. The sums which they received from Lafltte & Co. were not the price of a sale. They were re-imbursements, according to agreement, of sums paid or supposed to have been paid, for account and in furtherance of the common enterprise.
We find, therefore, that Price, Hiñe & Tupper were neither vendors of the molasses nor mere agents in its purchase, but on the contrary, that they were principals, equals and associates of Morton, Bliss & Co. *651and Lafltte & Oo. in an association whose purpose and object were the / purchase and sale of molasses for a limited period, the profits and losses ¡! to be .divided and borne in stated proportions, each member of the asso-j ciation having assigned to it distinct duties to perform, having a jointlj common interest of precisely the same nature and differing only in SI amount.
What, then, was the relation existing between these firms, according to the laws and jurisprudence of Louisiana ? Eor if these afford us a clear and satisfactory answer we are not at liberty to go further; and need not perplex ourselves more, in the vain effort to reconcile the conflicting jurisprudence of other States and countries.
I say advisedly we are not at liberty to go outside of our own law if it affords a solution. It should be borne in mind that the dispositions of the Code of 1808 (p. 400, art. 61), which expressly subordinated its provisions “ to the laws and usages of commerce,” as also those of the Code of 1825 (arts. 2823 and 2798), which make reference to a “ commercial code” as paramount in matters of commercial partnership, have been expunged from and find no place in the Code of 1870. We are therefore no longer at liberty to subordinate the provisions of the Civil Code “to the laws and usages of commerce.” These “laws and usages” are rules of decision for us now only when and to the extent that the Civil Code is silent.
The provisions of our Code pertinent to this question of partnership are as follows;
Civil Code, art. 2801. “ Partnership is a synallagmatic and commutative contract made between two or morepérsons for the mutual participation in the profits which may accrue from property, credit, skill, or industry, furnished in determined proportions by the parties.”
Article 281 9. “Property, credit, skill, and industry being the sources from which the profits of a partnership may be drawn, each of the partners may furnish either or all of these in such proportions as they may mutually agree.”
Article 2813. “ A participation in the profits of a partnership carries with it a liability to contribute between the parties to the expenses and losses. But the proportion, like that of the profits, may be regulated by the stipulation of the parties, and, where they make none, is provided for by law.”
Article 2814. “A stipulation that one of the contracting parties shall participate in the profits of the partnership but shall not contribute to losses is void, both as it regards the partners and third persons. But in the case of a partnership in commendam, hereinafter provided for, the liability to loss may be limited to the amount of the stock furnished.”
*652Article 2825. “Commercial partnerships are such as are formed:
“1. For the purchase of any personal property, and the sale thereof, either in the same state or changed by manufacture.”
“ 2. For buying or selling any personal property whatever, as factors or brokers.”
“ 3. For carrying personal property for hire, in ships or other vessels.”
Article 2852. “ All the provisions of this title are also applicable to commercial partnership, except as otherwise provided for.”
Article 2827. “ Commercial partnerships are divided into two kinds, general and special.”
In order to constitute a commercial partnership therefore, under our Code, there must be an agreement between two or more persons acting as principals, whereby they are to furnish respectively either property, credit, skill, or industry, or all of these, in determined proportions, for the purpose of buying or selling personal property for their own account or as brokers or factors, or for the purpose of carrying persons or property for hire in ships or other vessels, for their mutual profit or loss in such proportions as the agreement or the law determines.
It will be seen that liability for losses is an element always and necessarily present in a partnership, and never in the contract of agency. Let us apply the test of these rules to the instant case.
There was an agreement between these three firms as equals and principals, whereby Morton, Bliss & Co. agreed to furnish the money, and Lafitte & Co. to disburse it, and to receive and forward the goods which Price, Hiñe & Tupperwere to select and purchase, for the purpose of reselling them for joint account of the parties, the profits and losses resulting to be borne in stated proportions. We find that the nature of the interest and risk of these several firms in this vénture is the same, each embarking and staking, if need be, its whole fortune to make good losses resulting from it.
There is present here every element necessary to constitute those three firms special commercial partners.
Although I think there was a joint ownership of the three firms in the molasses, I do not regard that as a material question. It matters not whether they were partners in the profits and losses only, or in the capital also. I know no law that prevents a partner, as between himself and copartner, retaining the ownership of what he “ furnishes” as capital, if he so stipulates. The Code simply says he “furnishes” property, credit, etc. This does not necessarily imply that he. must transfer the ownership of such property to the firm. He may limit the right of the firm to the use of the property he “ furnishes,” but he is neverthe*653less a partner. Besides, it is well settled that joint ownership in the capital is not of the essence of the contract of partnership. See Story-on Partnership, sec. 27; R. C. C. 2829.
If we turn now from the Code to the decisions of our own courts I think we will find them in entire harmony with the foregoing views.
In McDonald vs. Millaudon, 5 L. 403, the defendant was held liable as a partner under the following facts: He advanced $20,000 to the firm of W. & D. Flower, and stipulated that he was to receive ten per cent interest on his advance and one third the profits. He contended just as is done in this case, that there ivas no consent or agreement on Ms part to become a partner, that his name was not used or known in the firm, and that there was not under our law any such thing as an implied partnership. But the court held otherwise and said: “ The Supreme Court of the United States has lately declared the rule to be perfectly settled, that a party who shares in the profits, although his name be not in the firm, is responsible for its debts. In the present case, the defendant contracted for these profits, and received them.” 5 Peters, 561.
So in Purdy vs. Hood, 5 N. S. 626, the court said: “ But when personal property is acquired jointly by two or more persons, for the express purpose of being sold on joint account with a view to gain, it appears to us that a partnership is created in relation thereto, and that the rights and claims of the parties must be regulated agreeably to rules appertaining to such contracts.”
The case of Robertson vs. Lizardi, 4 R. 300, discloses the following facts : McKenzie & Co. and Lizardi & Co. agreed to make on joint account certain cotton speculations. McKenzie & Co. were to buy the cotton in their own name in Mobile, with funds raised on bills drawn by them upon Lizardi & Co. of Liverpool, and the cotton was to be shipped to and sold by Lizardi & Co. in Liverpool for joint account. The question was whether the two firms were partners. The court said :
“ The parties certainly contemplated a participation in the profits of the cotton trade during the season, and that is sufficient to constitute them partners, as to third persons dealing with them, or either of them, in relation to that branch of trade. Story on Partnership, sections 55, 103; 3 Kent’s Commentaries (1st edition), page 17.
“It is, however, contended by the counsel for the defendants, that the parties never contemplated a general partnership; and he infers this from their having assumed no social name, from there being no capital ■provided, no partnership books opened, no provision made for expenses, and because no such thing is named in their correspondence. Let it be admitted that all this is true, and that there was not between the defendants and McKenzie & Co. a regular formal and general partnership; yet the moment it is shown that, for a limited period, and in relation to *654a particular branch of commerce, they were to buy and sell on joint account and participate in the profits, they became thereby as to third persons partners in relation to that trade. There may be cases in which, in point of fact, the parties are not partners inter se, and yet are held liable, as such, toward third persons dealing with one of them. This was the doctrine recognized by this court in the case of McDonald vs. Millaudon, 5 La. 409.”
In Boudreaux vs. Martinez, 25 An. 167, it was said: “ The liability of secret or dormant partners in commercial partnership in all cases like the present is so well established and so universally recognized that authorities need scarcely be referred to. In the case of a dormant or secret partner the credit is manifestly given only to the ostensible partner, for no other party is known. Still, however, it is not treated as an exclusive credit, for the law in all cases of this sort founds its decision upon the ground that the creditor has had a choice or election of his debtor, which can not be where the partner is dormant or unknown.”
In Jenkins vs. Howard, 21 An. 597, the court says: “A single adventure of the character of that 'made by these parties, a commercial operation, where the purpose is to buy and afterward sell the commodity for profit, constitutes the parties commercial partners, and creates a commercial partnership, quoad the single transaction.”
In Cooley vs. Broad, 29 An. 345, this court said in reference to a clause in the contract declaring that it was not a partnership: “ When there exist all the conditions which by law create a legal relation, the effects flowing from such relation will follow whether the parties foresaw and intended them or not. * * * The fact that the parties had made stipulations between themselyes as to their liability for each other’s debts, or as to the proportion of their several responsibilities, can not affect third persons,” etc. In other words, we then held that if the parties have agreed to do certain things, and the doing of those things is made bylaw a partnership, it matters not whether the parties call themselves partners or not, nor whether they intended to be such or not. We must regard things, not names.
In Case vs. Beauregard, 1 Otto 134, the Supreme Court of the United States use this language, interpreting the Code of Louisiana: “ There was in this agreement all the essential'conditions for the creation of a partnership — provisions for a union of services and money, and a division of profits and losses. The postponement of á division of profits between the three partners until the capital advanced by two of'them should be refunded, with interest, did not alter the character of the .agreement as one of partnership, nor the liability of all the partners to third persons for debts contracted in the prosecution of its business. It was sufficient to create the partnership relation that profits to be ulti*655-mately divided between the parties were contemplated from their joint enterprise. Civil Code of 1870, art. 2811.”
I will only add to this list of our own authorities, expounding our . own law, what Mr. Lindley says in his work on Partnership, 3d edition, page 19.
“ An agreement to share profits and losses may be said to be the type of a partnership contract. Whatever differences of opinion there may be as to other matters, it admits of no doubt whatever that persons engaged, in any trade, business, or adventure, upon the terms of sharing profits and losses arising therefrom, are partners in that trade, business, or adventure.”
While there are many adjudged cases cited by defendant from the decisions of other States and countries which militate more or less against these views of Lindley, I do not think any well-considered case to the contrary of the doctrine announced by him can be found in our own reports. I do not think that Edwards vs. Fairbanks and Gilman, 27 An. 449, or Belden vs. Read, 27 An. 103, go to the extent claimed by defendant. But if they do, the weight of authority is greatly against them.
There is so much conflict and discordance among the decisions of the courts of our sister States and foreign countries that it would be idle to review them, and impossible. I think, to reconcile- them. I feel constrained to follow the beaten track of our own jurisprudence on this subject, which, in my opinion, is uniform and consistent, to the effect that where two or more persons agree to combine their property, credit, skill, or industry, for the purpose of buying and selling personal property, and of dividing the profits and loss thereof among themselves as principals, there exists between them a commercial partnership, which may be “ general” or “ special” according to the scope or duration of its operations.
The fact that one or more of the persons so combining and associating themselves are unknown to the public, and that credit in any particular transaction is extended in fact only to the ostensible and known operator, makes no sort of difference as to the liability of his unknown associates. The sole question is, ivere they partners ? not whether they were known as such. Surely at this day nobody will or can dispute the liability of a secret partner. It is elementary, and citation of authority would be “carrying coals to Newcastle.”
Our Oode declares that commercial partners are liable in solido. It ■does not distinguish between a “ general” and “ special” partnership, in thus fixing the liability of the partners. If the debt was contracted in the course of the common business, each partner is bound for the whole. *656Nor is this liability lessened or varied by any secret or private agreements between the partners as to the power or right of any one of them to contract debts or create obligations. The moment they became partners the law declares them bound toward third persons for the acts of each other relative to the common business. The fact therefore that Price, Hine & Tupper were forbidden to use the name of either of the other associated firms has no significance if the three firms were in law partners.
So far as the equities are concerned, I do not think they are so pronounced on either side as to constitute an important element of decision in the case. Defendants trusted their money and plaintiffs perhaps trusted their goods to Price, Hine & Tupper, who squandered the former and did not pay for the latter. But it may be asked what principle of equity, under this state of facts, would allow defendants to take plaintiffs’ goods in order to make good their loss which their own associate caused them by misuse of their money ? I confess that I can see no superior equity in defendants’ claims over those of plaintiffs. I am not sure but that equity as well as the law is with the plaintiffs.
Under our Code, if the purchaser do not pay the price, the vendor may resolve the sale and claim back the thing. C. C. 2539, 2041. This right of resolution is not confined by our Code to sales of any particular kinds of property. The doctrine of the French law, as to the instant prescription of movables by a purchaser in good faith is not found in our Code. So far as I can find this right of resolution is not defeated by subsequent alienations. Marcadé, vol. 4, page 489, vol. 6, pp. 289 and 290. It rests upon that broad principle of law and equity, that in all commutative contracts what is given or promised by one party is not only the cause of but a condition to what is given <or promised by the other party. Plaintiffs, therefore, in law and 'equity, had a right to take back their property not paid for, the possession of which had, as I think the evidence discloses, been fraudulently taken from them, not by Morton, Bliss & Co. or by Lafitte & Co., but by persons with whom they were unfortunately associated. I do not think plaintiffs intended or consented to give possession until the money was paid. Under these circumstances I do not see how, upon equitable principles, Morton, Bliss & Co. and Lafitte & Co. can be permitted to save themselves from loss— nay perhaps make a profit, at the expense of plaintiffs. It can not be denied that under some form or other they were the associates of Price, Hine & Tupper. Even if these three firms bo treated not as commercial partners, but as associates “en participation,” (a contract however, which, as I think, is not known to our law, unless it fall under the class of “special commercial partnerships,”) still we find that by the laws of France governing such associations the participants can not withdraw the assets of *657•the association to the prejudice of its creditors. They risk what they put in. See Troubat on Limited Partnership, p. 26, section 18.
Now that is precisely what Morton, Bliss & Co. and Lafitte & Co. have done or are seeking to do. Taking defendants’ own view, these three firms associated themselves for a joint adventure in the purchase and sale of molasses. By every principle of right the money they put in or the property purchased with it, should be held to answer for debts contracted in the course of the business.
The judgment below was in favor of plaintiffs and against Jas. B. Lafitte & Co., and is correct, 1 think. I therefore dissent from the opinion of tho court in this case.